News releases

Half-year results 2018 - Press Release

26/07/2018

  • Net income before exceptional items up 11% to £1,086.1 million (H1 2017: £974.4 million)
  • Profit before tax and exceptional items up 10% to £397.1 million (H1 2017: £361.5 million)
  • Profit before tax up 8% to £371.1 million (H1 2017: £342.8 million)
  • Assets under management and administration £449.4 billion (31 December 2017: £447.0 billion)
  • Net inflows £1.2 billion (H1 2017: £0.8 billion)
  • Interim dividend up 3% to 35.0 pence per share (interim dividend 2017: 34.0 pence per share)
 Six months ended
30 June 2018
£m
Six months ended
30 June 2017
£m
Year ended
31 December 2017
£m
Net income 1,086.1

974.4

2,068.9

Operating expenses (689.0)

(612.9)

(1,268.6)

Profit before tax and exceptional items 397.1

361.5

800.3

Profit before tax 371.1 342.8 760.2
Basic earnings per share before exceptional items (pence) 114.0 103.5 226.9
Basic earnings per share (pence) 106.0 97.8 215.3
Ratio of total costs to net income (%) 63% 63% 61%
Dividend (pence per share) 35.0 34.0 113.0

Peter Harrison, Group Chief Executive, commented: “We have delivered good results in the first half of 2018 with profit before tax and exceptional items increasing 10% to £397.1 million. Against a challenging backdrop we have delivered robust revenue growth through our strategy of focusing on new markets and by continuing to evolve our products and solutions.

Our diversified business model has again proven its worth. Wealth Management has seen strong client demand and we have continued to expand our capabilities within Private Assets and Alternatives, offsetting industry headwinds in other areas. We remain confident that we can generate growth through the cycle and that we are well placed to continue to create value for our clients and shareholders over the long term.”

Management Statement

Our diversified business model has continued to perform well in the first half of 2018, with strategic investments in new markets and product solutions delivering revenue growth.

Net income before exceptional items increased by 11% to £1,086.1 million (H1 2017: £974.4 million), including £16.1 million of performance fees (H1 2017: £13.8 million) and carried interest of £19.6 million (H1 2017: nil) (see note 3(b)). Profit before tax and exceptional items grew 10% to £397.1 million (H1 2017: £361.5 million).

In the first half of the year, we generated net new business of £1.2 billion (H1 2017: £0.8 billion). Net inflows from Institutional clients were offset by redemptions within the Intermediary sales channel. There was net new business from Wealth Management clients of £1.2 billion.

Assets under management and administration at the end of the period were £449.4 billion (31 December 2017: £447.0 billion).

Asset Management

Asset management net income before exceptional items was up 12% to £921.5 million (H1 2017: £820.0 million), including carried interest of £19.6 million (H1 2017: nil) and performance fees of £15.8 million (H1 2017: £13.2 million). Profit before tax and exceptional items rose 12% to £347.4 million (H1 2017: £310.6 million) and profit before tax increased 10% to £332.2 million (H1 2017: £301.0 million). Assets under management at the end of June 2018 were £389.3 billion (31 December 2017: £389.8 billion).

The net operating revenue margin before performance fees and carried interest was 45 basis points (FY 2017: 45 basis points).

There was no net new business in the first half of the year (H1 2017: £0.2 billion), as inflows from Institutional clients were offset by outflows in the Intermediary sales channel.

The Institutional sales channel saw strong demand from clients in North America and Latin America, offset by outflows in continental Europe and Australia. There were net inflows into Multi-asset and Private Assets and Alternatives strategies, partially offset by redemptions from Equity mandates. Institutional assets under management at the end of June 2018 were £257.2 billion.

In the Intermediary sales channel, outflows from sub-advised clients more than offset net positive branded fund sales, particularly in North America and Asia Pacific. Intermediary assets under management at the end of June 2018 were £132.1 billion.

We have continued to strategically invest in the future growth of the business. In May, we acquired Algonquin Management Partners S.A., a specialist pan-European hotels investment and management business, which complements our existing Real Estate expertise. This acquisition added £1.6 billion of Institutional assets under management and accelerated growth in our Private Assets and Alternatives capabilities.

Wealth Management

Wealth Management net income rose 8% to £143.8 million (H1 2017: £133.7 million), including performance fees of £0.3 million (H1 2017: £0.6 million). Profit before tax and exceptional items was up 7% to £48.7 million (H1 2017: £45.5 million) and profit before tax increased 4% to £37.9 million (H1 2017: £36.4 million).

There were net inflows of £1.2 billion (H1 2017: £0.6 billion) in the first half of the year, £0.7 billion of which came from clients of Benchmark Capital.

Assets under management and administration at the end of June were £60.1 billion (31 December 2017: £57.2 billion).

The net operating revenue margin before performance fees was 62 basis points (FY 2017: 61 basis points).

Group

The Group segment comprises central costs and returns on investment capital. Profit before tax and exceptional items in the first half of 2018 was £1.0 million (H1 2017: £5.4 million). Total equity at 30 June 2018 was £3.5 billion (31 December 2017: £3.5 billion).

Dividend

The Board has declared an interim dividend of 35.0 pence per share (interim dividend 2017: 34.0 pence per share). The dividend will be payable on 20 September 2018 to shareholders on the register at 17 August 2018.

Outlook

The first half of 2018 saw continued industry headwinds. However, we continue to believe that there are growth opportunities, including in some of the key strategic areas where we have been investing for the future.

Our diversified business model has shown that it can deliver growth through the market cycle. We remain committed to delivering on our strategy of building on the investments we have made, as well as looking for select additional opportunities to further develop our business. 

Our core focus remains on helping our clients achieve their financial goals and build their future prosperity.

For further information, please contact:

Investors

Alex James, Investor Relations - +44 (0)20 7658 4308 | alex.james@schroders.com

Press

Beth Saint, Head of Communications - +44 (0)20 7658 6168 | beth.saint@schroders.com

Anita Scott, Brunswick - +44 (0)20 7404 5959 | schroders@brunswickgroup.com