Schroders Interim Results. Chief Executive Michael Dobson. 8 August trusted heritage advanced thinking

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1 Schroders 2008 Interim Results trusted heritage advanced thinking Chief Executive Michael Dobson 8 August 2008

2 2008 Interim Results Asset Management profit before tax million 11% (H1 2007: million) Private Banking profit before tax 22.3 million 40% (H1 2007: 15.9 million) Private Equity profit before tax 7.4 million 80% (H1 2007: 36.2 million) Group loss before tax 30.7 million (H profit: 10.3 million) Total profit before tax million 27% (H1 2007: million) Funds under management billion 6% (2007: billion) Dividend 10.0 pence per share 11% (H1 2007: 9.0 pence per share) 1

3 Overview: Asset Management and Private Banking Profits up 14% despite difficult market conditions Income and profit growth in Asset Management Successfully repositioning Institutional Challenging market conditions in Retail Higher margins up 8bps to 65bps Continued growth in Private Banking profitability 2

4 Successfully repositioning Institutional New business wins up 28% to 7.3bn Net inflows in Q Additional 4bn advisory mandate Strong momentum in new products Net Institutional outflows reduced bn 4 2 LDI Multi-Asset Fixed Income Quantitative equities Alternatives Positive net new business in UK Swiss Re acquisition (1.1) (3.4) (4.1) (4.6) (6.5) H H H H H Source: Schroders 3

5 Challenging conditions in Retail Market volatility impacting retail demand worldwide Record industry outflows in Europe Falling sales in UK, Asia Pacific H1 Record net industry outflows in Europe bn H H H H H H H Feri SalesWatch data, All Europe, ex Money Market including local to local and cross-border 4

6 Diversity of Retail business Revenues up 22% Net outflows 0.2bn Positive flows Q1, negative Q2 Inflows in UK, Asia, Americas offset outflows in Europe June 2008 Retail FUM by region 8% 27% Inflows in: Alternatives, Emerging market equities & Global equities Outflows in European equities and bonds 41% Emphasis on defensive range: Diversified total return Income maximiser Cautious managed 24% UK Europe Asia Americas 5 * Retail and sub-advisory gross sales

7 Continued growth in Private Banking profitability Turnaround completed Improving income, containing costs Leveraging Swiss platform Singapore acquisition mn H H H Income (lhs) Costs (lhs) PBT ( mn) 6

8 Schroders 2008 Interim Results Chief Financial Officer Stephen Brooks 8 August 2008

9 Profit before tax Asset Management 13.5mn Private Banking 6.4mn Revenue As anticipated, challenging market conditions have (2.2) reduced (2.2) the level - of Private Equity realisations Admin SVIL H1 07 H1 08 Mv mt (27.4) (1.4) Total (28.8) H Private Equity (28.8)mn Group (41.0)mn 185.6mn H Fair value write downs on seed capital investment and fixed income securities during Q PBT H Q1 08 (36.7) Q H1 08 (30.7) Mv mt (41.0) 135.7mn 0 8

10 Key ratios Profit before Tax ( mn) AM & PB cost: income ratio (%) H H H H H H Gross profit margins (bps) Compensation costs: operating revenues ratio (%) H H H H H H

11 Financial performance of our core businesses Resilient performance in Asset Management and Private Banking AM & PB Income 461.9mn 12% AM & PB Costs 302.9mn 11% Total 200 Performance fees H1 07 H Mv mt H H H PBT(rhs) Income (lhs) Costs (lhs) 0 10

12 Group Income statement Continued growth in gross profit margins mn Revenue Cost of sales Gross profit Administrative Gross expenses profit margins (bps) Operating profit Net finance 55income Associates and joint ventures Profit before tax Tax H Effective tax rate (%) Profit after tax 60 H Basic earnings per share 68 H H (118.2) (318.9) (35.5) p H (109.1) (285.9) (45.6) p 11

13 Group income statement mn Revenue Cost of sales Gross profit Administrative expenses Operating profit Net finance income Associates and joint ventures Profit before tax Tax Effective tax rate (%) Profit after tax Basic earnings per share H (118.2) (318.9) (35.5) p H (109.1) (285.9) (45.6) p 12

14 Underlying earnings per share Core businesses June 2006 June 2007 June 2008 EPS from core businesses continues to increase 71.8m spent on repurchase of over 8.5 million non-voting shares 13

15 Group costs Administrative expenses mn % of total H1-08 H1-07 Staff costs Other costs including: Depreciation and amortisation Total No of employees (year-end) 2,998 2,782 Key Drivers Compensation costs: operating revenue ratio reduced to 45% Investment in key infrastructure projects Targeted marketing and brand expenditure 14

16 Group costs Marketing and project expenditure Marketing spend ( mn) IT spend ( mn) H H H H H H

17 Segmental results

18 Asset Management Continued income growth Asset Management ( mn) Gross profit margins (bps) Income 406.0mn 12% Costs 269.3mn 12% H H H H H H PBT Income Costs 17

19 Asset Management Income ( mn) H H H Institutional Retail 18

20 Private Banking 60 Income 55.9mn 18% Costs 33.6mn 6% H H H PBT Income Costs 0 19

21 Private Equity Reduced Private Equity H1 PBT of 7.4mn as anticipated (H1 2007: 36.2mn) Total private equity investments of 126mn Unrealised profit within reserves of 62.3mn 20

22 Group Income Q Q H Seed Capital (7.7) (1.0) (8.7) Fixed Income (25.8) 7.6 (18.2) Third party hedge funds & other Total (30.6) 13.7 (16.9) Profit before tax (36.7) 6.0 (30.7) 21

23 Group Capital allocation mn 30 June March Dec 2007 Cash and cash equivalents Fixed income: mortgage and asset backed securities Third party hedge funds Seed capital Private Banking net assets Private Equity Pension fund surplus Other net assets Shareholders equity 1,617 1,704 1,696 22

24 Outlook

25 Outlook Challenging market environment to continue Balancing cost discipline and investment for future growth Well positioned longer-term diversity of business balance sheet strength 24

26 Forward-Looking Statements These presentation slides contain certain forward-looking statements and forecasts with respect to the financial condition and results of the businesses of Schroders plc These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by those forward-looking statements and forecasts. Nothing in this presentation should be construed as a profit forecast 25