Full-year results |
2 March 2023 |
- |
Net operating revenue, excluding performance related fees, increased by 1% demonstrating the strength of our business. |
- |
Operating profit, a key performance indicator (KPI), was robust at £723.0 million. These results were achieved in the face of challenging markets and lower performance fees. |
- |
Statutory pre-tax profit of £586.9 million was impacted by mark-to-market movements on balance sheet items and acquisition related costs including amortisation. |
- |
Our three-year investment performance ¹ KPI remained strong, with 73% of assets outperforming. |
- |
Schroders Capital, our private assets business, achieved record fundraising of £17.5 billion. Similarly, our wealth management advice businesses delivered strong organic growth of 6.6%. |
- |
Net new business (NNB) was resilient at £(1.6) billion (excluding joint ventures and associates) given the volatile fourth quarter. 2023 has started positively, particularly in Schroders Solutions. |
- |
The Board has recommended a final dividend of 15.0 pence per share, making a total dividend of 21.5 pence per share. |
¹ Please refer to Additional Information for more information about client investment performance.
|
Year ended £m |
Year ended £m |
Change |
Net operating revenue excluding performance fees and net carried interest |
2,301.9 |
2,276.8 |
1% |
Net operating income |
2,475.5 |
2,520.0 |
(2%) |
Operating expenses |
(1,752.5) |
(1,679.0) |
4% |
Operating profit |
723.0 |
841.0 |
(14%) |
Assets under management (£billion) |
737.5 |
766.7 |
(4%) |
Profit before tax |
586.9 |
764.1 |
(23%) |
Basic operating earnings per share (pence) |
37.4 |
43.0 |
(13%) |
Dividend per share (pence) |
21.5 |
21.4 |
- |
Peter Harrison, Group Chief Executive, said :
"The market challenges of 2022 provided a stress test for our strategy. I am encouraged by our resilient performance and that our strategy is working. The businesses we have been building in recent years - across wealth management, private assets and solutions - performed strongly. They are all playing an increasingly important part in our growth and now represent 53% of the Group's AUM.
Schroders Capital, our private assets business, had a record year with £17.5 billion of fundraising, with particular strength in real estate and private equity. Despite the market dynamics, our wealth management advice businesses had a good year, delivering strong organic growth of 6.6%, while we also continued to build scale in Schroders Solutions.
Our strength more broadly is underpinned by our approach to sustainability. We were early investors in ESG and the technology that underpins our capabilities in this area. This has proven to be the right decision and we will continue to invest in 2023 and beyond.
2023 has started positively, particularly in Schroders Solutions. We are confident about our trajectory: our clients require broad, actively-managed solutions and we have built the capability to meet that need."
Our successful pivot towards higher growth areas meant our revenues were more resilient during what was a challenging year for our industry. As a result, our financial performance was robust as it benefitted from strong growth generated in Schroders Wealth Management and Schroders Capital.
We hit multiple key milestones in sustainability in 2022. We are the largest investment manager by AUM to have its greenhouse gas emission reduction goal formally validated by the Science Based Targets initiative (SBTi). Our award-winning Engagement Blueprint was published at the start of the year to reinforce further our firmwide active ownership ambitions going forward. We're also proud to have topped the list of financial institutions in this year's Global Canopy Forest 500 report, a ranking of companies and global financial institutions deemed "powerbrokers of zero deforestation" and to be placed 5th in ShareAction's 2023 report ranking 77 asset managers on their approach to responsible investment.
We made progress on our governance ambitions this year as we successfully completed the enfranchisement of our non-voting shares in September 2022, we now have only one share class, and we have equal gender representation on our plc Board. Dame Elizabeth Corley became Chair of the plc Board in April 2022.
2022 was a challenging year for markets, which inevitably affected our revenues. Despite this backdrop, our net operating revenues excluding performance fees and net carried interest increased by 1%, demonstrating the strength of our business and the success of our strategy. Our Wealth Management segment performed particularly strongly with net operating revenues up 10%, reaching £394.3 million (2021: 360.0 million). Despite the high-water marks set in 2021, we generated better than expected performance fees of £43.0 million (2021: 94.4 million) and net carried interest of £16.5 million (2021: 31.9 million). Overall net operating income remained stable at £2,475.5 million (2021: 2,520.0 million). This includes our share of profit from our joint ventures and associates of £77.6 million (2021: 88.2 million).
Operating expenses were £1,752.5 million (2021: 1,679.0 million) across the Asset and Wealth Management segments. The increase reflects the additional operating costs of the three strategic acquisitions which also contributed to an increase in headcount this year. However, we were able to manage compensation costs well and operating staff costs were lower than the previous year at £1,121.2 million (2021: 1,136.3 million).
Operating non-compensation costs increased to £631.3 million (2021: 542.7 million) as we continued to invest in our business. This was principally driven by the acquisitions we made in 2022 and the organic build out of our businesses in high growth markets. We also accelerated our cloud migration programme, which we now expect to deliver cost savings earlier than anticipated. Travel and marketing expenditure normalised post-pandemic as we increasingly met clients in-person. The underlying effect of inflation on our cost base was only 2.5%, as a result of our focus on cost efficiencies. This meant an operating cost to net operating income ratio of 71% (2021: 67%) and an operating compensation to net operating income ratio of 45% (2021: 45%).
These movements meant that operating profit reduced to £723.0 million (2021: 841.0 million). Profit before tax was £586.9 million (2021: 764.1 million) and profit after tax was £486.2 million (2021: 623.8 million) as they were further impacted by mark-to-market movements on balance sheet items and acquisition related costs including amortisation.
AUM ended the year 4% lower at £737.5 billion (2021: 766.7 billion). Market and foreign exchange movements reduced AUM by £73.6 billion, while acquisitions contributed £52.0 billion. After a strong first half, volatility in the fourth quarter led to net outflows for the year of £7.6 billion (2021: inflows of £37.3 billion) including associates and joint ventures.
Providing excellent investment performance to our clients through active management is what drives our financial performance. Our KPI held up well, with 73% (2021: 79%) of assets outperforming their relevant comparator over three years. 86% of our public market AUM had a better SustainEx™ score than their benchmark (2021: 77%).
£bn |
Asset Management |
Wealth Management |
Total excl. JVs and Associates |
JVs and Associates |
Group total |
1 January 2022 (restated)² |
534.0 |
101.6 |
635.6 |
131.1 |
766.7 |
Gross inflows |
113.6 |
14.5 |
128.1 |
240.9 |
369.0 |
Gross outflows |
(120.6) |
(9.1) |
(129.7) |
(246.9) |
(376.6) |
Net flows |
(7.0) |
5.4 |
(1.6) |
(6.0) |
(7.6) |
Acquisitions |
51.9 |
0.1 |
52.0 |
- |
52.0 |
Markets, FX and investment performance³ |
(60.5) |
(9.0) |
(69.5) |
(4.1) |
(73.6) |
31 December 2022 |
518.4 |
98.1 |
616.5 |
121.0 |
737.5 |
² Wealth Management AUM has been restated to reflect the basis on which contractual revenues are earned by the Group. As reported at the half-year results, AUM is now recognised where separate contractual client relationships exist that generate incremental revenues for the Group.
³ Includes currency movements which increased AUM by around £37.3 billion.
The Board has recommended a final dividend of 15.0 pence (2021 final restated dividend: 14.9 pence⁴). This will bring the total dividend for the year to 21.5 pence (2021 total restated dividend: 21.4 pence⁴), representing a payout ratio of 57% of operating earnings per share. The final dividend will be paid on 4 May 2023 to shareholders on the register on 24 March 2023.
⁴ Dividends per share have been restated following the simplification of the Company's dual share class structure (see note 13).
We successfully pivoted towards higher growth areas and higher longevity, primarily through Schroders Wealth Management, Schroders Capital and Schroders Solutions. One key priority is to get closer to the consumer to avoid disintermediation and increase client longevity.
We are achieving this by growing Schroders Wealth Management through:
- |
expanding Cazenove Capital outside of London and the South East; |
- |
growing Schroders Personal Wealth; and |
- |
increasing Benchmark's market share in the UK adviser market. |
We have been expanding Schroders Capital, our private assets and alternatives brand . We now have a complete private markets capability offering across all four private markets asset classes: private equity, private debt, infrastructure and real estate . We will increase its operational leverage by:
- |
using Schroders global client group to bring all capabilities to clients; and |
- |
being a key provider of tailored private markets solutions for clients. |
We have established Schroders Solutions, a market-leading offering. We will grow our market share by:
- |
becoming the fiduciary manager to more clients in the UK; |
- |
integrating our global private asset expertise into solutions for clients; and |
- |
expanding our solutions leadership internationally. |
Schroders Investment Management, our public markets business, also offers growth opportunities. We are aiming to grow this business through:
- |
geographic expansion including in India, China and South America; |
- |
broadening our thematic range following the success of our energy transition, disruption and other strategies; and |
- |
maintaining our leadership in sustainability and active ownership. |
The combination of these efforts effectively pivots our business towards higher margin, higher growth and higher longevity areas, which will lead to higher and more resilient earnings over the medium term. Our growth has become self-reinforcing as the ability to serve clients in one area enhances our ability to serve clients in other areas.
The merits of our strategic choices and diversification were demonstrated in 2022. Although our Schroders Investment Management business, including Asset Management associates, came under pressure with the fall of public markets, Schroders Wealth Management and Schroders Capital performed well, delivering £12.0 billion of NNB combined (2021: 13.0 billion). Schroders Solutions successfully navigated the gilt crisis and ended the year broadly flat with net outflows of £0.2 billion (2021: net outflows of £1.5 billion).
Across our strategic growth areas of Schroders Wealth Management, Schroders Capital and Schroders Solutions, AUM rose 4% from £374.4 billion in 2021 to £389.9 billion in 2022. T hese businesses now represent 53% of our total business compared to 49% in the previous year.
Our wealth management business saw particularly strong growth, with our advice businesses generating organic growth of 6.6%, and exceeding the target for the year. Our high-net-worth (HNW), ultra-high-net-worth (UHNW) and charities businesses and specifically our Cazenove Capital advised business in the UK were key factors behind this, generating strong organic NNB growth of 8%, a confirmation of the success of our strategy. The principal drivers were: the successful build-out of Cazenove's business-owner franchise across the UK regions where we attracted talented advisers in Birmingham, Leeds, Bristol and Manchester; strong investment performance in volatile markets, which continued to reduce attrition and led existing clients to add to their portfolios and refer new clients; and Cazenove Capital's leading reputation in sustainable investment which attracted new UHNW clients, family offices and charity clients. Since winning the "ESG Olympics", a public tender showcasing the specialist expertise of 59 wealth managers, Cazenove Capital has seen flows from sustainable mandates grow significantly, representing gross flows of circa. 80% for our charity business this year. Benchmark Capital also performed well and generated NNB of over 6% in 2022 and increased the number of adviser firms by 16 to 171. Schroders Personal Wealth, our partnership with Lloyds Banking Group, also generated encouraging gross new business of 9%. We will hold an investor session focusing on Schroders Wealth Management on 13 June 2023.
Net operating income increased by 6% to £406.8 million (2021: 382.5 million). This was supported by the higher interest rate environment which led to a rise in net banking interest, increasing from £11.1 million in 2021 to £36.9 million in 2022. AUM closed the period slightly lower at £98.1 billion (2021: 101.6 billion), due to the impact of market movements. This comprised £60.4 billion (2021: 61.4 billion) of advised AUM, £17.3 billion (2021: 18.7 billion) of platform AUM and £20.4 billion (2021: 21.5 billion) of managed AUM. Schroders Personal Wealth AUM ended the year at £13.3 billion (2021: 14.7 billion).
Operating expenses came in at £276.9 million (2021: 254.2 million) as a result of our continued investment in our people and technology platforms. The segment therefore ended the year generating £129.9 million (2021: 128.3 million) of operating profit. The net operating revenue margin before performance fees increased by 2 basis points to 40 basis points (2021: 38 basis points), largely due to changes in the interest rate environment during the year.
Over the past six years we have built a comprehensive private assets business, Schroders Capital, through a targeted program of bolt-on acquisitions. In total, we have acquired £24.6 billion of private markets AUM since 2016 which we have almost doubled to £47.4 billion. Our acquisition of Adveq in 2017 is a good example of how we have successfully grown a new capability. We acquired a high quality business, which was led by an impressive management team but needed access to a strong brand, an effective product development machine and a global distribution network founded on strong, deep client relationships. It managed £6.0 billion at the time of acquisition, but by leveraging our global reach we have grown the AUM by 90%. Today, the capability known as Schroders Capital Private Equity manages £11.4 billion. This included winning some sizeable private equity mandates across Europe last year.
In 2022, we further strengthened Schroders Capital and completed the acquisition of a 75% stake of Greencoat Capital, a leading European renewable infrastructure manager , and Cairn Real Estate in the Netherlands . The two transactions added a combined £8.8 billion of AUM. Schroders Capital now has a full private market offering and our focus will turn to increasing the operational leverage of the business over the next few years, increasing its NNB and revenue contribution.
Fee earning AUM increased by 32% during 2022 to £68.3 billion (2021: 51.7 billion), whilst AUM plus non-fee earning dry powder increased from £54.2 billion in 2021 to £72.3 billion. Non-fee earning dry powder stood at £4.0 billion (2021: 2.5 billion) at the end of 2022. This was supported by fundraising of £17.5 billion (2021: 12.4 billion). Strong fundraising throughout the year meant Schroders Capital generated NNB of £6.4 billion (2021: 6.9 billion), with strong demand for our real estate capability which saw net inflows of £5.0 billion. The revenue margin excluding performance fees and carried interest reduced by 1 basis point to 61 basis points (2021: 62 basis points) as we transferred our emerging market debt desk to our Institutional business area in order to better align with our management structures.
Schroders Solutions benefitted from acquiring River & Mercantile's Solutions business at the beginning of 2022. The enhanced capabilities of Schroders Solutions enabled two sizable mandate wins in the first half. In the third quarter, the segment was inevitably impacted by the gilt crisis. Despite only having acquired River & Mercantile's Solutions business at the start of the year, we navigated the crisis well and delivered the liquidity our clients needed to meet their collateral calls. In total, NNB was broadly flat at £(0.2) billion (2021: (1.5) billion). The interest rate rises contributed to a reduction in the value of our AUM. However, this generally benefitted our LDI clients as the value of their liabilities reduced, helping them move closer to their objective of achieving a buyout.
Solutions AUM rose by 2%, ending the year at £210.2 billion (2021: 206.4 billion), driven by the acquisition of River & Mercantile's Solutions business, which added £43.1 billion of AUM. Net operating revenue increased by 6% year-on-year to £292.2 million (2021: 276.4 million). Schroders Solutions now represents 29% of our Group AUM and 12% of net operating revenue. Solutions net operating revenue margin excluding performance fees fell by 1 basis point to 13 basis points (2021: 14 basis points), reflecting a shift towards bigger, more scalable mandates.
Schroders Investment Management, our public markets business, continued to invest in the development of our product offering.
We have enjoyed a successful history of partnerships which has provided us with access to high growth markets via a strong domestic brand. This is the case in North America, where we have partnered with Hartford Funds to access the vast US intermediary market. The Hartford Schroders International Stock Fund saw the highest net flows of any product within Mutual Funds in 2022 and led to the Hartford Schroders range delivering £750 million of NNB. The range closed the year at nearly £11 billion of AUM. In total, this partnership has contributed £5.8 billion of NNB over the last five years and grown its AUM at a compound annual growth rate of 19%.
Despite these successes, our Mutual Funds business area saw net outflows of £5.9 billion (2021: net inflows of £8.1 billion) as it was impacted by risk-off client sentiment across most regions. AUM in Mutual Funds was £100.8 billion (2021: 116.9 billion). Mutual Fund revenue margin dropped by 1 basis point to 71 basis points (2021: 72 basis points), due to a change in business mix as the adverse market conditions had a greater impact on our higher margin products.
Institutional generated positive NNB of £0.3 billion in the second half of 2022, which was helped by our WMC (Wealth Management Company) in China, which generated positive NNB of £2.3 billion. However, this was offset by two one-off mandate losses in the first half of the year, leading to net outflows of £7.3 billion (2021: 2.5 billion of net outflows). AUM closed the year at £139.1 billion (2021: 159.0 billion), reflecting the impact of the market decline in the year. The business area generated £520.5 million (2021: 601.0 million) of net operating revenue. The net operating revenue margin excluding performance fees and carried interest increased by 3 basis points from 31 basis points last year to 34 basis points at the end of 2022, helping to partly mitigate the impact of the broader headwinds.
Our Asset Management associates have delivered cumulative NNB of over £35 billion over the past four years. Being a cyclical high-growth business, our Fund Management Company venture in China with Bank of Communications was impacted by the fixed income dislocation towards the tail-end of 2022. As a result, Asset Management associates ended the year with net outflows of £6.2 billion (2021: net inflows of £20.2 billion).
Across the Group, our purpose is to deliver excellent investment performance. We do this whilst also focussing on delivering exceptional client service and offering distinctive solutions that help us to increase client longevity and differentiate us from the rest of the market. This is a key driver of future organic growth. Excluding joint ventures and associates, our gross outflow rate as a percentage of opening AUM was 20% in 2022, compared to 25% when we set our strategy six years ago. In real terms, this means that instead of replacing the entirety of our client base every four years, this is extended to every five years, improving our ability to generate long term growth and more resilient earnings due to higher longevity.
Forecasts for markets and the global economy in 2023 remain mixed. Our strategy is working, and we firmly believe that current industry dynamics will only accelerate the trends that we have been repositioning the business for. Our strategic growth areas of Schroders Wealth Management, Schroders Capital and Schroders Solutions are an increasingly important part of our future success. Our continued efforts have been rewarded and 2023 has started positively, particularly in Schroders Solutions. In addition, we believe that leadership in sustainability will be a critical success factor going forward.
We are confident in the businesses we have built for the long term. In uncertain times, our diverse business model enables us to focus on the long term interests of our clients and shareholders.
For further information, please contact:
Investors |
|
|
|
Simonetta Harding |
Investor Relations |
Tel: +44 (0)20 7658 3442 |
Simonetta.Harding@schroders.com |
Katie Wagstaff |
Investor Relations |
Tel: +44 (0)20 7658 1985 |
Katie.Wagstaff@Schroders.com |
Press |
|
|
|
Andy Pearce |
Media Relations |
Tel: +44 (0)20 7658 2203 |
Andy.Pearce@Schroders.com |
Simone Selzer |
Brunswick |
Tel: +44 (0)20 7404 5959 |
Schroders@Brunswickgroup.com |
Copies of this announcement are available on the Schroders website: www.schroders.com . Peter Harrison, Group Chief Executive, and Richard Keers, Chief Financial Officer, are hosting a presentation for the investment community to discuss the Group's full-year results at 9.00 a.m. GMT on Thursday, 2 March 2023. Once registered on https://www.schroders.events/Annualresults2022 a link to the call will be shared via email. A replay will be available from midday on Thursday, 2 March 2023 at www.schroders.com/ir .
Please visit https://www.schroders.com/en/investor-relations/ to learn how we handle personal data.
This announcement and the Schroders website may contain forward-looking statements with respect to the financial condition, performance and position, strategy, results of operations and businesses of the Schroders Group. Such statements and forecasts involve risk and uncertainty because they are based on current expectations and assumptions but relate to events and depend upon circumstances in the future and you should not place reliance on them. Without limitation, any statements preceded or followed by or that include the words 'targets', 'plans', 'sees', 'believes', 'expects', 'aims', 'confident', 'will have', 'will be', 'will ensure', 'likely', 'estimates', 'foresee' or 'anticipates' or the negative of these terms or other similar terms are intended to identify such forward-looking statements. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward-looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors' current view and information known to them at the date of this statement. The Directors do not make any undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Nothing in this announcement or in the Annual Report and Accounts or on the Schroders website should be construed as a forecast, estimate or projection of future financial performance.
In September, we completed the simplification of our share structure by enfranchising our non-voting shares. Now all shareholders have the same rights. Under the enfranchisement each non-voting share was converted into an ordinary share and the existing holders of ordinary shares received a bonus issue of three additional ordinary shares for every 17 ordinary shares to compensate them for the dilution of their voting rights. Subsequent to the enfranchisement and bonus issue, the ordinary shares were sub-divided into five new ordinary shares.
Client investment performance is a measure of how investments are performing relative to a benchmark or other comparator. As an active asset manager, we prioritise consistently delivering positive investment outcomes for our clients which is why our three year investment performance is a key performance indicator for the Group. It is calculated internally by Schroders to give shareholders and financial analysts general guidance on how our invested assets are performing. The data is aggregated and is intended to provide information for comparison to prior reporting periods only. It is not intended for clients or potential clients investing in our products. All calculations for investment performance are made gross of fees with the exception of those for which the stated comparator is a net of fees competitor ranking. When a product's investment performance is disclosed in product or client documentation it is specific to the strategy or product. Performance will either be shown net of fees at the relevant fund share-class level or it will be shown gross of fees with a fee schedule for the strategy supplied.
|
Percentage of assets outperforming |
||
|
One-year |
Three-years |
Five-years |
To 31 December 2022 |
44% |
73% |
76% |
To 31 December 2021 |
74% |
79% |
78% |
The calculation includes virtually all applicable assets under management that have a complete track record over the one-year, three-year and five-year reporting periods, respectively.
Applicable assets under management does not include our joint ventures and associates and excludes £79.3 billion of assets, principally comprising those managed by third parties or held on an execution-only basis, assets managed by Schroders Capital Real Estate Hotels, non-discretionary assets and assets held on a custody-only basis as well as Wealth Management platform assets on the Benchmark Fusion platform. Performance is calculated relative to the relevant comparator for each investment strategy as summarised below. These fall into one of four categories, the percentages for each of which refer to the three-year calculation:
- |
For 72% of assets included in the calculation, the comparator is the relevant benchmark. |
- |
If the relevant comparator is to competitor rankings, the relative position of the fund to its peer group on a like-for-like basis is used to calculate performance. This applies to 9% of assets in the calculation. |
- |
Assets for which the relevant comparator is an absolute return target are measured against that absolute target. This applies to 12% of assets in the calculation. |
- |
Assets with no specific outperformance objective, including those with a buy and maintain objective, are measured against a cash alternative, if applicable. This applies to 7% of assets in the calculation. |
for the year ended 31 December 2022
|
Notes |
2022 £m |
2021¹ £m |
|
Revenue |
|
2,891.7 |
2,959.5 |
|
Cost of sales |
|
(530.3) |
(556.4) |
|
Net operating revenue |
2 |
2,361.4 |
2,403.1 |
|
|
|
|
|
|
|
Of which: Performance fees |
|
43.0 |
94.4 |
|
Net carried interest income |
|
16.5 |
31.9 |
|
Net operating revenue excluding performance-based revenues |
|
2,301.9 |
2,276.8 |
|
|
|
|
|
Share of profit of associates and joint ventures |
8 |
77.6 |
88.2 |
|
Other operating income |
|
36.5 |
28.7 |
|
Net operating income |
|
2,475.5 |
2,520.0 |
|
|
|
|
|
|
Operating expenses |
3 |
(1,752.5) |
(1,679.0) |
|
Operating profit |
|
723.0 |
841.0 |
|
|
|
|
|
|
Central costs |
3 |
(48.8) |
(53.6) |
|
Net (loss)/gain on financial instruments and other income |
|
(6.7) |
43.9 |
|
Interest income/(expense) |
|
5.8 |
(2.0) |
|
Acquisition costs and related items |
3 |
(86.4) |
(65.2) |
|
Profit before tax |
|
586.9 |
764.1 |
|
Tax |
4(a) |
(100.7) |
(140.3) |
|
Profit after tax² |
|
486.2 |
623.8 |
|
Earnings per share³ |
|
|
|
|
Basic |
5 |
30.4p |
38.7p |
|
Diluted |
5 |
29.9p |
38.1p |
|
Operating earnings per share³ |
|
|
|
|
Basic |
5 |
37.4p |
43.0p |
|
Diluted |
5 |
36.7p |
42.2p |
¹The 2021 comparatives have been re-presented (see note 1).
²Non-controlling interest is presented in the statement of changes in equity.
³Earnings per share has been restated following the simplification of the Company's dual share class structure (see note 13).
for the year ended 31 December 2022
|
Notes |
2022 |
2021 |
Profit after tax¹ |
|
486.2 |
623.8 |
Items that may or have been reclassified to the income statement: |
|
|
|
Net exchange differences on translation of foreign operations after hedging |
|
148.6 |
(19.0) |
Net loss on financial assets at fair value through other comprehensive income |
|
(1.5) |
(2.8) |
Net gain on financial assets at fair value through other comprehensive income held by associates |
8 |
- |
0.1 |
Tax on items taken directly to other comprehensive income |
4(b) |
(0.2) |
1.1 |
|
|
146.9 |
(20.6) |
Items that will not be reclassified to the income statement: |
|
|
|
Net actuarial (loss)/gain on defined benefit pension schemes |
12 |
(66.0) |
27.6 |
Tax on items taken directly to other comprehensive income |
4(b) |
16.5 |
(6.7) |
|
|
(49.5) |
20.9 |
Other comprehensive income for the year, net of tax¹ |
|
97.4 |
0.3 |
Total comprehensive income for the year¹ |
|
583.6 |
624.1 |
¹Non-controlling interest is presented in the statement of changes in equity.
at 31 December 2022
|
Notes |
2022 |
2021 |
Assets |
|
|
|
Cash and cash equivalents |
|
4,440.3 |
4,207.3 |
Trade and other receivables |
7 |
896.5 |
1,000.9 |
Financial assets |
7 |
2,670.3 |
3,132.3 |
Associates and joint ventures |
8 |
497.7 |
466.7 |
Property, plant and equipment |
9, 10 |
524.1 |
560.0 |
Goodwill and intangible assets |
11 |
1,929.5 |
1,168.5 |
Deferred tax |
|
185.8 |
145.0 |
Retirement benefit scheme surplus |
12 |
136.3 |
197.9 |
|
|
11,280.5 |
10,878.6 |
Assets backing unit-linked liabilities |
|
|
|
Cash and cash equivalents |
|
605.0 |
911.7 |
Financial assets |
|
9,449.1 |
12,551.4 |
|
7 |
10,054.1 |
13,463.1 |
Total assets |
|
21,334.6 |
24,341.7 |
Liabilities |
|
|
|
Trade and other payables |
7 |
1,049.5 |
1,115.0 |
Financial liabilities |
7 |
5,140.1 |
4,793.6 |
Current tax |
|
73.1 |
52.2 |
Lease liabilities |
10 |
361.0 |
373.8 |
Provisions |
|
25.4 |
26.8 |
Deferred tax |
|
138.9 |
80.4 |
Retirement benefit scheme deficits |
|
12.8 |
11.1 |
|
|
6,800.8 |
6,452.9 |
Unit-linked liabilities |
7 |
10,054.1 |
13,463.1 |
|
|
|
|
Total liabilities |
|
16,854.9 |
19,916.0 |
|
|
|
|
Net assets |
|
4,479.7 |
4,425.7 |
|
|
|
|
Total equity¹ |
|
4,479.7 |
4,425.7 |
¹Non-controlling interest is presented in the statement of changes in equity.
for the year ended 31 December 2022
|
|
Attributable to owners of the parent |
|
|
||||||
|
Notes |
Share - |
Share
premium |
Own shares |
Net exchange differences |
Associates
and joint ventures reserve |
Profit and loss reserve |
Total |
Non- controlling interest |
Total equity |
At |
|
282.5 |
124.2 |
(150.2) |
144.6 |
183.4 |
3,701.4 |
4,285.9 |
139.8 |
4,425.7 |
Profit for the year |
|
- |
- |
- |
- |
71.5 |
408.2 |
479.7 |
6.5 |
486.2 |
Other comprehensive income¹ |
|
- |
- |
- |
146.6 |
- |
(51.2) |
95.4 |
2.0 |
97.4 |
Total comprehensive income for the year |
|
- |
- |
- |
146.6 |
71.5 |
357.0 |
575.1 |
8.5 |
583.6 |
Own shares purchased |
14 |
- |
- |
(120.2) |
- |
- |
- |
(120.2) |
- |
(120.2) |
Share-based payments |
|
- |
- |
- |
- |
- |
68.2 |
68.2 |
- |
68.2 |
Tax in respect of share schemes |
4(c) |
- |
- |
- |
- |
- |
(3.4) |
(3.4) |
- |
(3.4) |
Other movements² |
|
- |
- |
- |
- |
- |
(113.3) |
(113.3) |
(15.2) |
(128.5) |
Bonus issue |
13 |
39.9 |
(39.9) |
- |
- |
- |
(4.3) |
(4.3) |
- |
(4.3) |
Dividends |
6 |
- |
- |
- |
- |
- |
(332.1) |
(332.1) |
(9.3) |
(341.4) |
Transactions with shareholders |
|
39.9 |
(39.9) |
(120.2) |
- |
- |
(384.9) |
(505.1) |
(24.5) |
(529.6) |
Transfers |
|
- |
- |
85.3 |
- |
(51.3) |
(34.0) |
- |
- |
- |
At |
|
322.4 |
84.3 |
(185.1) |
291.2 |
203.6 |
3,639.5 |
4,355.9 |
123.8 |
4,479.7 |
¹Other comprehensive income reported in the net exchange differences reserve comprises the net foreign exchange gain on the translation of foreign operations net of hedging. Other comprehensive income reported in the associates and joint ventures reserve represents post-tax fair value movements on financial assets at fair value through other comprehensive income. Other comprehensive income reported in the profit and loss reserve comprises the post-tax actuarial loss on the Group's retirement benefit schemes and post-tax fair value movements on financial assets at fair value through other comprehensive income.
²Other movements principally comprises amounts relating to financial liabilities in respect of options to purchase the remaining non-controlling interest in certain subsidiaries (see note 7).
for the year ended 31 December 2021
|
|
Attributable to owners of the parent |
|
|
||||||
|
Notes |
Share capital |
Share premium |
Own shares |
Net exchange differences |
Associates |
Profit |
Total |
Non- |
Total |
At 1 January 2021 |
|
282.5 |
124.2 |
(159.8) |
165.6 |
133.6 |
3,456.7 |
4,002.8 |
83.1 |
4,085.9 |
Profit for the year |
|
- |
- |
- |
- |
79.3 |
532.6 |
611.9 |
11.9 |
623.8 |
Other comprehensive income¹ |
|
- |
- |
- |
(21.0) |
0.1 |
19.2 |
(1.7) |
2.0 |
0.3 |
Total comprehensive income for the year |
|
- |
- |
- |
(21.0) |
79.4 |
551.8 |
610.2 |
13.9 |
624.1 |
Own shares purchased |
14 |
- |
- |
(75.3) |
- |
- |
- |
(75.3) |
- |
(75.3) |
Share-based payments |
|
- |
- |
- |
- |
- |
89.5 |
89.5 |
- |
89.5 |
Tax in respect of share schemes |
4(c) |
- |
- |
- |
- |
- |
4.7 |
4.7 |
- |
4.7 |
Other movements² |
|
- |
- |
- |
- |
- |
(27.4) |
(27.4) |
52.6 |
25.2 |
Dividends |
6 |
- |
- |
- |
- |
- |
(318.6) |
(318.6) |
(9.8) |
(328.4) |
Transactions with shareholders |
|
- |
- |
(75.3) |
- |
- |
(251.8) |
(327.1) |
42.8 |
(284.3) |
Transfers |
|
- |
- |
84.9 |
- |
(29.6) |
(55.3) |
- |
- |
- |
At |
|
282.5 |
124.2 |
(150.2) |
144.6 |
183.4 |
3,701.4 |
4,285.9 |
139.8 |
4,425.7 |
¹Other comprehensive income reported in the net exchange differences reserve comprises the net foreign exchange loss on the translation of foreign operations net of hedging. Other comprehensive income reported in the associates and joint ventures reserve represents post-tax fair value movements on financial assets at fair value through other comprehensive income. Other comprehensive income reported in the profit and loss reserve comprises the post-tax actuarial gain on the Group's retirement benefit scheme surplus and post-tax fair value movements on financial assets at fair value through other comprehensive income.
²Other movements include amounts relating to the purchase of additional interests in subsidiaries.
for the year ended 31 December 2022
Notes |
2022 |
2021 |
|
Net cash from operating activities¹ |
15 |
972.8 |
1,234.2 |
Cash flows from investing activities |
|
|
|
Net acquisition of businesses, associates and joint ventures |
|
(607.5) |
(18.7) |
Net acquisition of property, plant and equipment and software |
|
(104.3) |
(89.4) |
Acquisition of financial assets |
|
(1,734.7) |
(1,946.0) |
Disposal of financial assets |
|
1,820.4 |
2,123.9 |
Non-banking interest received |
|
7.3 |
12.5 |
Distributions received from associates and joint ventures |
|
15.0 |
35.1 |
Net cash (used in)/from investing activities |
|
(603.8) |
117.4 |
Cash flows from financing activities |
|
|
|
Purchase of subsidiary shares from non-controlling interest holders |
|
(13.6) |
(32.4) |
Cash from non-controlling interest holders |
|
- |
54.5 |
Lease payments |
10 |
(51.3) |
(47.5) |
Acquisition of own shares |
14 |
(120.2) |
(75.3) |
Dividends paid |
6 |
(341.4) |
(328.4) |
Other |
|
(6.8) |
(0.6) |
Net cash used in financing activities |
|
(533.3) |
(429.7) |
Net (decrease)/increase in cash and cash equivalents |
|
(164.3) |
921.9 |
Opening cash and cash equivalents |
|
5,119.0 |
4,215.9 |
Net (decrease)/increase in cash and cash equivalents |
|
(164.3) |
921.9 |
Effect of exchange rate changes |
|
90.6 |
(18.8) |
Closing cash and cash equivalents |
|
5,045.3 |
5,119.0 |
Closing cash and cash equivalents consists of: |
|
|
|
Cash and cash equivalents available for use by the Group |
|
4,409.8 |
4,075.5 |
Cash held in consolidated pooled investment vehicles |
|
30.5 |
131.8 |
Cash and cash equivalents presented within assets |
|
4,440.3 |
4,207.3 |
Cash and cash equivalents presented within assets backing unit-linked liabilities |
|
605.0 |
911.7 |
Closing cash and cash equivalents |
|
5,045.3 |
5,119.0 |
¹Includes Wealth Management interest income received of £75.3 million (2021: 11.3 million) and interest paid of £38.4 million (2021: 0.2 million).
(a) Basis of preparation
The financial information included in this statement does not constitute the Group's statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for 2021 have been delivered to the Registrar of Companies and the auditor's opinion on those accounts was unqualified and did not contain a statement made under Section 498(2) or Section 498(3) of the Act. An unqualified auditor's opinion has also been issued on the statutory accounts for the year ended 31 December 2022, which will be delivered to the Registrar of Companies in due course.
The consolidated financial statements are prepared in accordance with UK-adopted international accounting standards and in conformity with the requirements of the Companies Act 2006.
(b) Future accounting developments
The Group did not implement the requirements of any other Standards or Interpretations that were in issue but were not required to be adopted by the Group at the year end date. No other Standards or Interpretations have been issued that are expected to have a material impact on the consolidated financial statements.
(c) Going concern
The Group has considerable financial resources, a broad range of products and a geographically diversified business. As a consequence, the Directors believe that the Group is well placed to manage its business risks in the context of the current economic outlook. Accordingly, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for twelve months from the date the Annual Report and Accounts are approved. They therefore continue to adopt the going concern basis in preparing the Annual Report and Accounts.
(d) Presentational changes
The consolidated income statement has been re-presented to show both operating profit generated from the Group's business segments and profit before tax. The new presentation provides information that is more relevant to understanding the performance of the Group's operating activities. It also provides greater prominence to items of income and expense that are managed outside of the business segments, see note 3. The segmental reporting note has also been re-presented, see note 2. A reconciliation of operating profit to profit before tax and exceptional items is provided below.
Reconciliation of operating profit to profit before tax and exceptional items
Year ended 31 December |
|
2022 £m |
2021 £m |
|
Operating profit |
|
723.0 |
841.0 |
|
Less: |
|
|
|
|
|
Central costs |
|
(48.8) |
(53.6) |
|
Net (loss)/gain on financial instruments and other income |
|
(6.7) |
45.3 |
|
Non-banking interest income |
|
6.3 |
3.5 |
|
|
|
(49.2) |
(4.8) |
|
|
|
|
|
Profit before tax and exceptional items |
|
673.8 |
836.2 |
(a) Operating segments
The Group has two operating segments: Asset Management and Wealth Management. The Asset Management segment principally comprises investment management including advisory services in respect of equity, fixed income, multi-asset and private assets and alternatives products. The Wealth Management segment principally comprises investment management, wealth planning and financial advice, platform services and banking services.
Segmental information is presented on the same basis as that provided for internal reporting purposes to the Group's chief operating decision maker, the Group Chief Executive. The segmental reporting note has been re-presented to reflect the changes made to the income statement (see note 1) and to present the results of Schroders Personal Wealth (SPW) within share of profit of associates and joint ventures using the equity accounting method. The results of SPW were previously consolidated on a proportional basis within the Wealth Management segment for the purpose of segmental reporting. This new presentation reflects changes to the basis on which the Group monitors the performance of the business.
Operating expenses represent the costs incurred in running the Asset Management and Wealth Management segments and include an allocation of costs between the individual business segments on a basis that aligns the charge with the resources employed by the Group in respect of particular business functions. This allocation provides management with the relevant information as to the business performance to effectively manage and control expenditure. Operating expenses exclude items related to acquisitions and central management activities (see note 3). The reconciliation of operating profit to profit before tax is available on the income statement.
Asset |
Wealth |
Total |
|
|||
Year ended 31 December 2022 |
£m |
£m |
£m |
|||
Revenue |
2,441.9 |
449.8 |
2,891.7 |
|||
Cost of sales |
(474.8) |
(55.5) |
(530.3) |
|||
Net operating revenue |
1,967.1 |
394.3 |
2,361.4 |
|||
|
|
|
|
|||
|
Of which: Performance fees |
42.6 |
0.4 |
43.0 |
||
|
Net carried interest income |
16.5 |
- |
16.5 |
||
|
Net operating revenue excluding performance-based revenues |
1,908.0 |
393.9 |
2,301.9 |
||
|
|
|
|
|||
Share of profit of associates and joint ventures |
73.6 |
4.0 |
77.6 |
|||
Other operating income |
28.0 |
8.5 |
36.5 |
|||
Net operating income |
2,068.7 |
406.8 |
2,475.5 |
|||
Operating expenses |
(1,475.6) |
(276.9) |
(1,752.5) |
|||
Operating profit |
593.1 |
129.9 |
723.0 |
|||
|
|
|
|
|||
Asset |
Wealth |
Total |
||
Year ended 31 December 2021¹ |
£m |
£m |
£m |
|
Revenue |
2,582.5 |
377.0 |
2,959.5 |
|
Cost of sales |
(539.4) |
(17.0) |
(556.4) |
|
Net operating revenue |
2,043.1 |
360.0 |
2,403.1 |
|
|
|
|
|
|
|
Of which: Performance fees |
94.2 |
0.2 |
94.4 |
|
Net carried interest income |
31.9 |
- |
31.9 |
|
Net operating revenue excluding performance-based revenues |
1,917.0 |
359.8 |
2,276.8 |
|
|
|
|
|
Share of profit of associates and joint ventures |
73.9 |
14.3 |
88.2 |
|
Other operating income |
20.5 |
8.2 |
28.7 |
|
Net operating income |
2,137.5 |
382.5 |
2,520.0 |
|
Operating expenses |
(1,424.8) |
(254.2) |
(1,679.0) |
|
Operating profit |
712.7 |
128.3 |
841.0 |
¹The 2021 comparatives have been re-presented (see note 1).
(b) Net operating revenue by segment is presented below:
Asset |
Wealth |
Total |
|
Year ended 31 December 2022 |
£m |
£m |
£m |
Management fees |
2,334.5 |
335.2 |
2,669.7 |
Performance fees |
42.6 |
0.4 |
43.0 |
Carried interest |
32.3 |
- |
32.3 |
Other fees |
32.5 |
38.9 |
71.4 |
Wealth Management interest income |
- |
75.3 |
75.3 |
Revenue |
2,441.9 |
449.8 |
2,891.7 |
Fee expense |
(459.0) |
(17.1) |
(476.1) |
Cost of financial obligations in respect of carried interest |
(15.8) |
- |
(15.8) |
Wealth Management interest expense |
- |
(38.4) |
(38.4) |
Cost of sales |
(474.8) |
(55.5) |
(530.3) |
Net operating revenue |
1,967.1 |
394.3 |
2,361.4 |
Asset |
Wealth |
Total |
|
Year ended 31 December 2021¹ |
£m |
£m |
£m |
Management fees |
2,388.6 |
329.1 |
2,717.7 |
Performance fees |
94.2 |
0.2 |
94.4 |
Carried interest |
71.5 |
- |
71.5 |
Other fees |
28.2 |
36.4 |
64.6 |
Wealth Management interest income |
- |
11.3 |
11.3 |
Revenue |
2,582.5 |
377.0 |
2,959.5 |
Fee expense |
(499.8) |
(16.8) |
(516.6) |
Cost of financial obligations in respect of carried interest |
(39.6) |
- |
(39.6) |
Wealth Management interest expense |
- |
(0.2) |
(0.2) |
Cost of sales |
(539.4) |
(17.0) |
(556.4) |
Net operating revenue |
2,043.1 |
360.0 |
2,403.1 |
¹The 2021 comparatives have been re-presented (see note 1).
(c) Net operating revenue by region is presented below based on the location of clients:
|
UK |
Continental Europe & Middle East |
Asia Pacific |
Americas |
Total |
Year ended 31 December 2022 |
£m |
£m |
£m |
£m |
£m |
Management fees |
882.9 |
814.1 |
608.9 |
363.8 |
2,669.7 |
Performance fees |
6.5 |
15.4 |
8.2 |
12.9 |
43.0 |
Carried interest |
- |
32.3 |
- |
- |
32.3 |
Other fees |
37.5 |
25.9 |
8.0 |
- |
71.4 |
Wealth Management interest income |
65.7 |
8.1 |
1.5 |
- |
75.3 |
Revenue |
992.6 |
895.8 |
626.6 |
376.7 |
2,891.7 |
Fee expense |
(58.5) |
(196.2) |
(169.1) |
(52.3) |
(476.1) |
Cost of financial obligations in respect of carried interest |
- |
(15.8) |
- |
- |
(15.8) |
Wealth management interest expense |
(38.3) |
- |
(0.1) |
- |
(38.4) |
Cost of sales |
(96.8) |
(212.0) |
(169.2) |
(52.3) |
(530.3) |
Net operating revenue |
895.8 |
683.8 |
457.4 |
324.4 |
2,361.4 |
|
UK |
Continental Europe & Middle East |
Asia Pacific |
Americas |
Total |
Year ended 31 December 2021¹ |
£m |
£m |
£m |
£m |
£m |
Management fees |
833.3 |
869.0 |
643.3 |
372.1 |
2,717.7 |
Performance fees |
8.2 |
32.0 |
28.9 |
25.3 |
94.4 |
Carried interest |
- |
71.5 |
- |
- |
71.5 |
Other fees |
30.8 |
23.2 |
10.4 |
0.2 |
64.6 |
Wealth Management interest income |
10.3 |
0.9 |
0.1 |
- |
11.3 |
Revenue |
882.6 |
996.6 |
682.7 |
397.6 |
2,959.5 |
Fee expense |
(66.3) |
(215.5) |
(181.7) |
(53.1) |
(516.6) |
Cost of financial obligations in respect of carried interest |
- |
(39.6) |
- |
- |
(39.6) |
Wealth management interest expense |
(0.2) |
- |
- |
- |
(0.2) |
Cost of sales |
(66.5) |
(255.1) |
(181.7) |
(53.1) |
(556.4) |
Net operating revenue |
816.1 |
741.5 |
501.0 |
344.5 |
2,403.1 |
¹The 2021 comparatives have been re-presented (see note 1).
Estimates and judgements - revenueThe principle estimates and judgements for revenue relate to carried interest. Carried interest represents the Group's contractual right to a share of the profits of 122 private asset investment vehicles (2021: 113 vehicles), if certain performance hurdles are met. It is recognised when the relevant services have been provided and it is highly probable that a significant reversal will not occur. The amount of carried interest that will ultimately be received by the Group is dependent on the cash flows realised by the respective investment vehicles when the underlying investments are successfully disposed of. The resultant cash flows are assessed against the applicable performance hurdle, which is dependent on the capital invested and the timing and quantum of distributions. For accounting purposes, the outcome is discounted to determine the present value of the carried interest to be recognised. The actual amount receivable at maturity will depend on the realised value and may differ from the projected value. The Group estimates the cash flows that will be received by the investment vehicles with reference to the current fair value of the underlying investments. Judgement is applied to determine certain assumptions used in the estimate. Those assumptions principally relate to the future growth and the timing of distributions. No future growth is assumed, reflecting the uncertainty of future investment returns. The timing of distributions to clients is based on individual investment managers' expectations as to the realisation of cash flows from the successful disposal of the underlying securities. The Group assesses the maturity of the respective investment vehicles by reference to the percentage of committed capital invested and original capital returned to clients. This helps the Group to understand whether a significant risk of reversal exists and to determine whether the revenue should be recognised or further constrained in accordance with the accounting standards. |
Estimates and judgements - cost of salesThe principle estimates and judgements for cost of sales relate to carried interest. The crystallisation of associated financial obligations in respect of carried interest (carried interest payable) is contingent on the Group receiving the related revenue. The areas of estimates and judgements are the same as those used to determine the present value of the carried interest receivable, adjusted to reflect the portion that is payable to third parties. The actual amount payable at maturity will depend on the realised value of the carried interest receivable and may differ from the projected value. An increase in the growth rate of 3% would increase cost of sales by £3.1 million (2021: 3.6 million), although this would be smaller than the corresponding increase in revenue. An average acceleration/delay in crystallisation dates of one year would increase/reduce cost of sales by £2.1 million/£2.0 million (2021: 3.0 million/£4.2 million) and this amount would be lower than the corresponding increase/reduction in revenue. |
Expenses comprise operating expenses, central costs and acquisition costs and related items. Operating expenses are those costs incurred through the operating activities of the Group's operating segments; Asset Management and Wealth Management. Central costs are those arising from capital and treasury management activities, corporate development and strategy activities and the costs associated with the governance and corporate management of the Group. Acquisition costs and related items include deal costs associated with corporate transactions and costs associated with the integration of acquired businesses and amortisation of acquired intangible assets.
Year ended 31 December |
2022 £m |
2021 £m |
Operating expenses |
1,752.5 |
1,679.0 |
Central costs |
48.8 |
53.6 |
Acquisition costs and related items |
86.4 |
65.2 |
Total expenses |
1,887.7 |
1,797.8 |
Year ended 31 December |
2022 £m |
2021 £m |
Salaries, wages and other remuneration |
1,001.1 |
1,034.6 |
Social security costs |
88.2 |
104.9 |
Pension costs |
66.1 |
57.4 |
Employee benefits expense |
1,155.4 |
1,196.9 |
Net loss/(gain) on financial instruments held to hedge deferred cash awards |
11.7 |
(22.2) |
Employee benefits expense - net of hedging |
1,167.1 |
1,174.7 |
The employee benefits expense net of hedging includes £19.7 million (2021: 6.6 million) that is presented within acquisition costs and related items.
(a) Analysis of tax charge reported in the income statement
Year ended 31 December |
2022 £m |
2021 £m |
UK current year charge |
71.6 |
71.1 |
Rest of the world current year charge |
74.7 |
104.4 |
Prior year adjustments |
1.8 |
33.6 |
Total current tax |
148.1 |
209.1 |
Origination and reversal of temporary differences |
(29.8) |
(31.2) |
Prior year adjustments |
(3.0) |
(34.4) |
Effect of changes in corporation tax rates |
(14.6) |
(3.2) |
Total deferred tax |
(47.4) |
(68.8) |
Tax charge reported in the income statement |
100.7 |
140.3 |
(b) Analysis of tax (credit)/charge reported in other comprehensive income
Year ended 31 December |
2022 £m |
2021 £m |
Deferred tax (credit)/charge on actuarial gains and losses on defined benefit pension schemes |
(12.6) |
5.2 |
Deferred tax charge/(credit) on other movements through other comprehensive income |
0.1 |
(1.0) |
Deferred tax - effect of changes in corporation tax rates |
(3.8) |
1.4 |
Tax (credit)/charge reported in other comprehensive income |
(16.3) |
5.6 |
(c) Analysis of tax charge/(credit) reported in equity
Year ended 31 December |
2022 £m |
2021 £m |
Current tax credit on Deferred Award Plan and other share-based remuneration |
(1.5) |
(3.7) |
Deferred tax charge/(credit) on Deferred Award Plan and other share-based remuneration |
5.7 |
(0.8) |
Deferred tax - effect of changes in corporation tax rates |
(0.8) |
(0.2) |
Tax charge/(credit) reported in equity |
3.4 |
(4.7) |
(d) Factors affecting tax charge for the year
The UK standard rate of corporation tax for 2022 is 19% (2021: standard rate of 19%). The tax charge for the year is higher (2021: higher) than a charge based on the UK standard rate. The differences are explained below:
Year ended 31 December |
2022 £m |
2021 £m |
Profit before tax |
586.9 |
764.1 |
Less share of profit of associates and joint ventures |
(71.5) |
(79.3) |
Profit before tax of Group entities |
515.4 |
684.8 |
|
|
|
Profit before tax of consolidated Group entities multiplied by corporation tax at the UK standard rate |
97.9 |
130.1 |
Effects of:
Different statutory tax rates of overseas jurisdictions |
(0.4) |
6.7 |
Permanent differences including non-taxable income and non-deductible expenses |
7.7 |
6.9 |
Net movement in temporary timing differences for which no deferred tax is recognised |
11.3 |
0.6 |
Deferred tax adjustments in respect of changes in corporation tax rates |
(14.6) |
(3.2) |
Prior year adjustments |
(1.2) |
(0.8) |
Tax charge reported in the income statement |
100.7 |
140.3 |
Estimates and judgementsThe calculation of the Group's tax charge involves a degree of estimation and judgement. Liabilities relating to open and judgemental matters, including those in relation to deferred taxes, are based on the Group's assessment of the most likely outcome based on the information available. As a result, certain tax amounts are based on estimates using factors that are relevant to the specific judgement. The Group engages constructively and transparently with tax authorities with a view to early resolution of any uncertain tax matters. Where the final tax outcome of these matters is different from the amounts provided, such differences will impact the tax charge in a future period. Such estimates are based on assumptions made on the probability of potential challenge within certain jurisdictions and the possible outcome based on relevant facts and circumstances, including local tax laws. There was no individual judgemental component of the tax expense that was material to the Group results when taking into account the likely range of potential outcomes (2021: none). |
Reconciliation of the figures used in calculating basic and diluted earnings per share:
Year ended 31 December |
2022 Number Millions |
2021 Number Millions¹ |
Weighted average number of shares used in the calculation of basic earnings per share |
1,576.6 |
1,580.1 |
Effect of dilutive potential shares - share options |
27.4 |
27.0 |
Effect of dilutive potential shares - contingently issuable shares |
0.4 |
0.4 |
Weighted average number of shares used in the calculation of diluted earnings |
1,604.4 |
1,607.5 |
¹The 2021 comparatives have been restated following the simplification of the Company's dual share class structure (see note 13).
Profit after tax attributable to non-controlling interest was £6.5 million (2021: 11.9 million).
Operating earnings per share calculations are based on operating profit after tax of £599.4 million (2021: 693.6 million) less non-controlling operating earnings of £10.4 million (2021: 14.7 million).
|
2023 |
2022 |
2021 |
|||
|
£m |
Pence |
£m |
Pence |
£m |
Pence |
Prior year final dividend paid |
|
|
231.5 |
14.9 |
217.3 |
13.9 |
Interim dividend paid |
|
|
100.6 |
6.5 |
101.3 |
6.5 |
Total dividends paid |
|
|
332.1 |
21.4 |
318.6 |
20.4 |
|
|
|
|
|
|
|
Current year final dividend recommended |
232.8 |
15.0 |
|
|
|
|
¹Dividends per share have been restated following the simplification of the Company's dual share class structure (see note 13).
Dividends of £12.6 million (2021: 9.1 million) on shares held by employee benefit trusts have been waived and dividends may not be paid on treasury shares. The Board has recommended a 2022 final dividend of 15.0 pence per share (2021 restated final dividend: 14.9 pence), amounting to £232.8 million (2021 final dividend: £231.5 million). The dividend will be paid on 4 May 2023 to shareholders on the register at 24 March 2023 and will be accounted for in 2023.
In addition, the Group paid £9.3 million of dividends to holders of non-controlling interests in subsidiaries of the Group during 2022 (2021: 9.8 million), resulting in total dividends paid of £341.4 million (2021: 328.4 million).
The Company offers a dividend reinvestment plan (DRIP). The last date for shareholders to elect to participate in the DRIP for the purposes of the 2022 final dividend is 12 April 2023. Further details are contained on the Group's website.
Estimates and judgementsThe Group holds financial instruments that are measured at fair value. The fair value of financial instruments may be derived from readily available sources or may require some estimation. The degree of estimation involved depends on the individual financial instrument and is reflected in the fair value hierarchy below. Judgements may include determining which valuation approach to apply as well as determining appropriate assumptions. For level 2 and 3 financial instruments, the judgement applied by the Group gives rise to an estimate of fair value. The approach to determining the fair value estimate of level 2 and 3 financial instruments is set out below. The fair value levels are based on the degree to which the fair value is observable and are defined as follows: |
|
- |
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities and principally comprise investments in pooled investment vehicles, quoted equities, government debt and exchange-traded derivatives. |
- |
Level 2 fair value measurements are those derived from prices that are not traded in an active market but are determined using valuation techniques, which make maximum use of observable market data. The Group's level 2 financial instruments principally comprise foreign exchange contracts, certain debt securities and asset and mortgage backed securities. Valuation techniques may include using a broker quote in an inactive market or an evaluated price based on a compilation of primarily observable market information utilising information readily available via external sources. For funds not priced on a daily basis, the net asset value which is issued monthly or quarterly is used. |
- |
Level 3 fair value measurements are those derived from valuation techniques that include significant inputs that are not based on observable market data. |
The Group's level 3 financial assets principally comprise holdings in pooled investment vehicles, including private equity funds, and holdings in property investment vehicles that operate hotel businesses. The pooled investment vehicles are measured in accordance with International Private Equity and Venture Capital Valuation Guidelines 2018 using the valuation technique that is most suitable to the applicable investment. The property investment vehicles are valued based on the expected future cash flows that could be generated from the underlying hotel businesses. Given the application of different valuation techniques, and as the investments are not homogenous in nature, there are no significant assumptions or reasonably possible alternatives that would lead to a material change in fair value. The Group's financial liabilities categorised as level 3 principally consist of third party liabilities related to carried interest arrangements, obligations arising from contingent consideration and other liabilities to purchase the remaining interest in acquired subsidiaries. Information about the estimates and judgements made in determining the fair value of carried interest payable is set out in note 2. Liabilities in respect of options to purchase the remaining interest in certain subsidiaries require judgement in determining the appropriate assumptions to be applied in the estimation of the fair value. The amount that will ultimately be paid in relation to an option is dependent on the future earnings of the subsidiary and may be subject to a cap over the enterprise value. In estimating the liability, the assumptions principally relate to the future earnings of the business and the rate applied to discount the liability back to present value. The future earnings of the applicable subsidiaries are estimated using different methodologies and consequently there is no one assumption that is individually material to the valuation. Discount rates between 11% and 13% have been used to discount these liabilities. An increase/decrease in the discount rate of two percentage points would decrease/increase the financial liability by £19 million/£17 million. The remaining level 3 liabilities are measured using different valuation methodologies and assumptions, and there are no assumptions that are individually significant or reasonably possible alternatives that would lead to a material change in fair value. |
The Group holds certain assets and liabilities at fair value. Their categorisation within the fair value hierarchy is shown below:
|
2022 |
||||
|
Level 1 £m |
Level 2 £m |
Level 3 £m |
Not at £m |
Total £m |
Financial assets at amortised cost: |
|
|
|
|
|
Loans and advances to banks |
- |
- |
- |
122.8 |
122.8 |
Loans and advances to clients |
- |
- |
- |
615.6 |
615.6 |
Debt securities |
- |
- |
- |
263.9 |
263.9 |
|
- |
- |
- |
1,002.3 |
1,002.3 |
Financial assets at fair value through other comprehensive income: |
|
|
|
|
|
Debt securities |
588.4 |
3.5 |
- |
- |
591.9 |
|
588.4 |
3.5 |
- |
- |
591.9 |
Financial assets at fair value through profit or loss: |
|||||
Debt securities |
21.9 |
126.2 |
- |
- |
148.1 |
Pooled investment vehicles |
462.4 |
60.2 |
179.6 |
- |
702.2 |
Equities |
190.8 |
0.5 |
11.6 |
- |
202.9 |
Derivative contracts |
5.9 |
17.0 |
- |
- |
22.9 |
|
681.0 |
203.9 |
191.2 |
- |
1,076.1 |
Total financial assets |
1,269.4 |
207.4 |
191.2 |
1,002.3 |
2,670.3 |
Trade and other receivables |
2.6 |
- |
- |
893.9 |
896.5 |
Assets backing unit-linked liabilities |
7,515.6 |
1,812.6 |
22.8 |
703.1 |
10,054.1 |
|
8,787.6 |
2,020.0 |
214.0 |
2,599.3 |
13,620.9 |
Financial liabilities at amortised cost: |
|
|
|
|
|
Client accounts |
- |
- |
- |
4,532.8 |
4,532.8 |
Deposits by banks |
- |
- |
- |
59.4 |
59.4 |
Other financial liabilities |
- |
- |
- |
3.7 |
3.7 |
|
- |
- |
- |
4,595.9 |
4,595.9 |
Financial liabilities at fair value through profit or loss: |
|||||
Derivative contracts |
3.7 |
24.6 |
- |
- |
28.3 |
Other financial liabilities |
205.8 |
- |
91.4 |
- |
297.2 |
|
209.5 |
24.6 |
91.4 |
- |
325.5 |
|
|
|
|
|
|
Liabilities to purchase subsidiary shares |
- |
- |
218.7 |
- |
218.7 |
|
|
|
|
|
|
Total financial liabilities |
209.5 |
24.6 |
310.1 |
4,595.9 |
5,140.1 |
Trade and other payables |
214.9 |
- |
- |
834.6 |
1,049.5 |
Unit-linked liabilities |
9,996.1 |
48.7 |
- |
9.3 |
10,054.1 |
|
10,420.5 |
73.3 |
310.1 |
5,439.8 |
16,243.7 |
|
2021 |
|||||
|
Level 1 £m |
Level 2 £m |
Level 3 £m |
Not at £m |
Total £m |
|
Financial assets at amortised cost: |
|
|
|
|
|
|
Loans and advances to banks |
- |
- |
- |
153.0 |
153.0 |
|
Loans and advances to clients |
- |
- |
- |
614.0 |
614.0 |
|
Debt securities |
- |
- |
- |
109.9 |
109.9 |
|
|
- |
- |
- |
876.9 |
876.9 |
|
Financial assets at fair value through other comprehensive income: |
|
|
|
|
|
|
Debt securities |
405.7 |
4.2 |
- |
- |
409.9 |
|
|
405.7 |
4.2 |
- |
- |
409.9 |
|
|
||||||
Financial assets at fair value through profit or loss: |
||||||
Debt securities |
185.5 |
231.1 |
4.0 |
- |
420.6 |
|
Pooled investment vehicles |
603.9 |
38.0 |
135.1 |
- |
777.0 |
|
Equities |
557.8 |
4.1 |
8.2 |
- |
570.1 |
|
Derivative contracts |
28.5 |
49.3 |
- |
- |
77.8 |
|
|
1,375.7 |
322.5 |
147.3 |
- |
1,845.5 |
|
Total financial assets |
1,781.4 |
326.7 |
147.3 |
876.9 |
3,132.3 |
|
Trade and other receivables |
2.5 |
- |
- |
998.4 |
1,000.9 |
|
Assets backing unit-linked liabilities |
10,800.5 |
1,598.0 |
22.9 |
1,041.7 |
13,463.1 |
|
|
12,584.4 |
1,924.7 |
170.2 |
2,917.0 |
17,596.3 |
|
Financial liabilities at amortised cost: |
|
|
|
|
|
|
Client accounts |
- |
- |
- |
3,748.3 |
3,748.3 |
|
Deposits by banks |
- |
- |
- |
69.9 |
69.9 |
|
Other financial liabilities |
- |
- |
- |
4.4 |
4.4 |
|
|
- |
- |
- |
3,822.6 |
3,822.6 |
|
Financial liabilities at fair value: |
||||||
Derivative contracts |
29.8 |
58.5 |
- |
- |
88.3 |
|
Other financial liabilities |
733.0 |
- |
149.7 |
- |
882.7 |
|
|
762.8 |
58.5 |
149.7 |
- |
971.0 |
|
Total financial liabilities |
762.8 |
58.5 |
149.7 |
3,822.6 |
4,793.6 |
|
Trade and other payables |
200.2 |
- |
- |
914.8 |
1,115.0 |
|
Unit-linked liabilities |
13,369.6 |
77.7 |
- |
15.8 |
13,463.1 |
|
|
14,332.6 |
136.2 |
149.7 |
4,753.2 |
19,371.7 |
|
The Group has recognised a net loss on financial instruments at fair value through profit and loss of £10.9 million (2021: gain of £18.7 million). A net loss on financial instruments at fair value through other comprehensive income of £0.1 million (2021: gain of £1.8 million) has been transferred to the income statement.
The fair value of financial assets and liabilities at amortised cost approximates their carrying value. No financial assets or liabilities were transferred between levels during 2022 (2021: none).
Movements in financial assets and liabilities categorised as level 3 during the year were:
|
2022 |
2021 |
|||||
|
Financial assets at FVTPL £m |
Assets £m |
Financial liabilities at FVTPL £m |
Liabilities to purchase subsidiary shares £m |
Financial assets at FVTPL £m |
Assets £m |
Financial liabilities at FVTPL £m |
At 1 January |
147.3 |
22.9 |
88.9 |
60.8 |
138.3 |
28.1 |
143.7 |
Exchange translation adjustments |
13.2 |
0.6 |
8.1 |
7.5 |
(3.8) |
(1.1) |
(2.7) |
Net gain or loss recognised in the income statement |
(0.8) |
5.6 |
18.1 |
- |
42.4 |
10.4 |
59.0 |
Additions |
48.2 |
- |
2.2 |
173.0 |
29.3 |
- |
1.1 |
Disposals |
(16.7) |
(6.3) |
(25.9) |
(21.4) |
(58.9) |
(14.5) |
(51.4) |
Remeasurements |
- |
- |
- |
(1.2) |
- |
- |
- |
At 31 December |
191.2 |
22.8 |
91.4 |
218.7 |
147.3 |
22.9 |
149.7 |
|
2022 |
2021 |
||||
|
Associates £m |
Joint £m |
Total £m |
Associates £m |
Joint £m |
Total £m |
At 1 January |
260.6 |
206.1 |
466.7 |
211.0 |
194.2 |
405.2 |
Exchange translation adjustments |
7.4 |
0.4 |
7.8 |
6.1 |
(0.1) |
6.0 |
Additions |
1.7 |
1.6 |
3.3 |
1.1 |
5.9 |
7.0 |
Disposals |
(0.3) |
- |
(0.3) |
(0.8) |
- |
(0.8) |
Profit for the year after tax¹ |
72.7 |
(1.2) |
71.5 |
72.3 |
7.0 |
79.3 |
Gains recognised in other comprehensive income |
- |
- |
- |
0.1 |
- |
0.1 |
Distributions of profit |
(37.3) |
(14.0) |
(51.3) |
(29.2) |
(0.9) |
(30.1) |
At 31 December |
304.8 |
192.9 |
497.7 |
260.6 |
206.1 |
466.7 |
¹Share of profit of associates and joint ventures as presented on the face of the income statement excludes acquisition costs and related items net of tax of £6.1 million (2021: 8.9 million).
|
Leasehold improvements |
Land and buildings |
Other assets |
Total |
Cost |
|
|
|
|
At 1 January 2022 |
194.6 |
19.7 |
165.8 |
380.1 |
Exchange translation adjustments |
5.1 |
- |
4.6 |
9.7 |
Additions |
7.6 |
- |
12.1 |
19.7 |
Disposals |
(0.3) |
- |
(13.5) |
(13.8) |
At 31 December 2022 |
207.0 |
19.7 |
169.0 |
395.7 |
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
At 1 January 2022 |
(59.2) |
(1.8) |
(89.2) |
(150.2) |
Exchange translation adjustments |
(2.5) |
- |
(3.0) |
(5.5) |
Depreciation charge |
(14.3) |
(0.4) |
(21.3) |
(36.0) |
Disposals |
0.3 |
- |
1.5 |
1.8 |
At 31 December 2022 |
(75.7) |
(2.2) |
(112.0) |
(189.9) |
|
|
|
|
|
Net book value at 31 December 2022 |
131.3 |
17.5 |
57.0 |
205.8 |
Right-of-use assets (note 10) |
|
|
|
318.3 |
Property, plant and equipment net book value at 31 December 2022 |
524.1 |
|||
|
Leasehold improvements |
Land and buildings |
Other assets |
Total |
Cost |
|
|
|
|
At 1 January 2021 |
188.7 |
19.7 |
157.5 |
365.9 |
Exchange translation adjustments |
(0.8) |
- |
(1.6) |
(2.4) |
Additions |
11.2 |
- |
14.8 |
26.0 |
Disposals |
(4.5) |
- |
(4.9) |
(9.4) |
At 31 December 2021 |
194.6 |
19.7 |
165.8 |
380.1 |
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
At 1 January 2021 |
(50.7) |
(1.3) |
(77.8) |
(129.8) |
Exchange translation adjustments |
0.6 |
- |
0.8 |
1.4 |
Depreciation charge |
(13.6) |
(0.5) |
(17.1) |
(31.2) |
Disposals |
4.5 |
- |
4.9 |
9.4 |
At 31 December 2021 |
(59.2) |
(1.8) |
(89.2) |
(150.2) |
|
|
|
|
|
Net book value at 31 December 2021 |
135.4 |
17.9 |
76.6 |
229.9 |
Right-of-use assets (note 10) |
|
|
|
330.1 |
Property, plant and equipment net book value at 31 December 2021 |
560.0 |
|||
|
|
|
2022 |
2021 |
||
|
Right-of-use assets |
Lease liabilities |
Right-of-use assets |
Lease liabilities |
At 1 January |
330.1 |
373.8 |
354.8 |
397.2 |
Exchange translation adjustments |
9.8 |
12.3 |
(1.8) |
(1.2) |
Additions and remeasurements of lease obligations |
18.0 |
15.6 |
14.5 |
14.5 |
Lease payments |
- |
(51.3) |
- |
(47.5) |
Depreciation charge |
(39.6) |
- |
(37.4) |
- |
Interest expense |
- |
10.6 |
- |
10.8 |
At 31 December |
318.3 |
361.0 |
330.1 |
373.8 |
The depreciation charge and interest expense relating to leases are recorded within operating expenses.
|
Goodwill £m |
Acquired £m |
Software £m |
Total £m |
Cost |
|
|
|
|
At 1 January 2022 |
803.4 |
361.9 |
470.7 |
1,636.0 |
Exchange translation adjustments |
36.1 |
15.7 |
4.7 |
56.5 |
Additions |
400.2 |
332.4 |
97.6 |
830.2 |
At 31 December 2022 |
1,239.7 |
710.0 |
573.0 |
2,522.7 |
Accumulated amortisation |
|
|
|
|
At 1 January 2022 |
- |
(252.8) |
(214.7) |
(467.5) |
Exchange translation adjustments |
- |
(8.9) |
(3.5) |
(12.4) |
Amortisation charge |
- |
(47.1) |
(66.2) |
(113.3) |
At 31 December 2022 |
- |
(308.8) |
(284.4) |
(593.2) |
|
|
|
|
|
Carrying amount at 31 December 2022 |
1,239.7 |
401.2 |
288.6 |
1,929.5 |
|
Goodwill £m |
Acquired £m |
Software £m |
Total £m |
Cost |
|
|
|
|
At 1 January 2021 |
811.7 |
362.8 |
413.2 |
1,587.7 |
Exchange translation adjustments |
(8.3) |
(3.2) |
(0.8) |
(12.3) |
Additions |
- |
2.3 |
63.4 |
65.7 |
Disposals |
- |
- |
(5.1) |
(5.1) |
At 31 December 2021 |
803.4 |
361.9 |
470.7 |
1,636.0 |
Accumulated amortisation |
|
|
|
|
At 1 January 2021 |
- |
(220.2) |
(159.5) |
(379.7) |
Exchange translation adjustments |
- |
0.9 |
0.6 |
1.5 |
Amortisation charge for the year |
- |
(33.5) |
(60.7) |
(94.2) |
Disposals |
- |
- |
4.9 |
4.9 |
At 31 December 2021 |
- |
(252.8) |
(214.7) |
(467.5) |
|
|
|
|
|
Carrying amount at 31 December 2021 |
803.4 |
109.1 |
256.0 |
1,168.5 |
The Group acquired £328.8 million of identifiable intangible assets as a result of business combinations during 2022 (2021: none). The Group acquired £3.6 million (2021: 2.3 million) of customer contracts through Benchmark Capital that were not considered to be business combinations.
Estimates and judgementsThe Group estimates the fair value of identifiable intangible assets acquired at the acquisition date based on forecast profits, taking account of synergies, derived from existing contractual arrangements. This assessment involves judgement in determining assumptions relating to potential future revenues, profit margins, appropriate discount rates and the expected duration of client relationships. The difference between the fair value of the consideration and the value of the identifiable assets and liabilities acquired, including intangible assets, is accounted for as goodwill. At each reporting date, the Group applies judgement to determine whether there is any indication that an acquired intangible asset may be impaired. If any indication exists, a full assessment is undertaken. Goodwill is assessed for impairment on an annual basis. If the assessment of goodwill or an acquired intangible asset determines that the carrying value exceeds the estimated recoverable amount at that time, the assets are written down to their recoverable amount. The recoverable amount of goodwill is determined using a discounted cash flow model. Any impairment is recognised in the income statement and cannot be reversed. Goodwill acquired in a business combination is allocated to the CGUs that are expected to benefit from that business combination. For all relevant acquisitions the Group has determined the lowest level CGU for Asset Management acquisitions is the segment. The Benchmark Capital business within Wealth Management is assessed separately from the rest of Wealth Management. Of the total goodwill, £1,009.6 million (2021: 574.9 million) is allocated to Asset Management and £230.1 million (2021: 228.5 million) is allocated to Wealth Management, of which £68.2 million (2021: 68.1 million) relates to Benchmark Capital. The recoverable amounts of the CGUs are determined from value-in-use calculations applying a discounted cash flow model using the Group's five-year strategic business plan cash flows. The key assumptions on which the Group's cash flow projections are based include long-term market growth rates of 2% per annum (2021: 2%), a pre-tax discount rate of 12% (2021: 10%), expected flows and expected changes to revenue margins. The results of the calculations indicate that goodwill is not impaired. Movements in the growth rate and/or the discount rate of 1% would not lead to any impairment. This is due to the amount of goodwill allocated to the relevant CGU relative to the size of the relevant future profitability estimate. A comparison of actual results to the projected results used to assess goodwill impairment in prior years shows that the Group would have recognised no changes (2021: nil) to its goodwill asset in the year as a result of inaccurate projections. The recoverable amount of acquired intangible assets is the greater of fair value less costs to sell and the updated discounted valuation of the remaining net residual income stream. Any impairment is recognised in the income statement but may be reversed if relevant conditions improve. |
Movements in respect of the assets and liabilities of the UK defined benefit scheme, Schroders Retirement Benefits Scheme (the Scheme), are:
2022 |
2021 |
|
At 1 January |
1,070.6 |
1,077.2 |
Interest on assets |
21.0 |
14.8 |
Remeasurement of assets |
(345.2) |
20.1 |
Benefits paid |
(38.5) |
(40.5) |
Administrative expenses¹ |
(1.4) |
(1.0) |
Fair value of plan assets |
706.5 |
1,070.6 |
At 1 January |
(872.7) |
(909.0) |
Interest cost |
(17.1) |
(12.4) |
Actuarial gains due to change in demographic assumptions |
0.2 |
1.0 |
Actuarial gains due to change in financial assumptions |
299.4 |
18.6 |
Actuarial losses due to experience |
(18.5) |
(11.4) |
Benefits paid |
38.5 |
40.5 |
Present value of funded obligations |
(570.2) |
(872.7) |
|
|
|
Net assets |
136.3 |
197.9 |
¹Following the last completed triennial valuation it was agreed that certain administrative expenses of the scheme would be paid out of the scheme surplus. The approach will be reviewed as part of the next triennial valuation.
The amount recognised in the statement of comprehensive income includes a loss of £1.9 million (2021: 0.7 million) in respect of other defined benefit schemes.
The principal financial assumptions used for the Scheme are:
2022 |
2021 |
|
Discount rate |
4.8 |
2.0 |
RPI inflation rate |
3.2 |
3.3 |
CPI inflation rate |
2.5 |
2.9 |
Future pension increases (for benefits earned before 13 August 2007) |
3.0 |
3.2 |
Future pension increases (for benefits earned after 13 August 2007) |
2.0 |
2.2 |
Average number of years a current pensioner is expected to live beyond age 60: |
Years |
Years |
Men |
28 |
28 |
Women |
30 |
30 |
Average number of years future pensioners currently aged 45 are expected to live beyond age 60: |
Years |
Years |
Men |
29 |
29 |
Women |
30 |
30 |
The last completed triennial valuation of the Scheme was carried out as at 31 December 2020. The funding level at that date was 107% on the technical provisions basis and no contribution to the Scheme was required. The next triennial valuation is due as at 31 December 2023 and will be performed in 2024.
Estimates and judgementsThe Group estimates the carrying value of the Scheme by applying judgement to determine the valuation of the pension obligation using member data and applying the Scheme rules. The Scheme assets are mainly quoted in an active market. The sensitivity to those assumptions is set out below. The most significant judgemental assumption relates to mortality rates, which are inherently uncertain. The Group's mortality assumptions are based on standard mortality tables with Continuous Mortality Investigation core projection factors and a long-term rate of mortality improvement of 1.0% (2021: 1.0%) per annum. An additional adjustment, an "A parameter" set to 0.25% (2021: 0.25%) per annum, allows for the typically higher rate of mortality improvement among members of the Scheme compared to general population statistics. The latest base mortality tables have been adopted with no scaling (2021: nil) following a Scheme specific review of the membership data. The Group reviews its assumptions annually in conjunction with its independent actuaries and considers this adjustment appropriate given the geographic and demographic profile of Scheme members. Other assumptions for pension obligations are based in part on current market conditions. |
|
Number |
Ordinary |
Non-voting ordinary |
Total |
Share premium |
At 1 January 2022 |
282.5 |
226.0 |
56.5 |
282.5 |
124.2 |
Enfranchisement of non-voting shares |
- |
56.5 |
(56.5) |
- |
- |
Compensatory Bonus Issue |
39.9 |
39.9 |
- |
39.9 |
(39.9) |
Sub-Division of shares |
1,289.7 |
- |
- |
- |
- |
At 31 December 2022 |
1,612.1 |
322.4 |
- |
322.4 |
84.3 |
|
Number |
Ordinary |
Non-voting ordinary |
Total |
Share premium |
At 1 January 2021 |
282.5 |
226.0 |
56.5 |
282.5 |
124.2 |
At 31 December 2021 |
282.5 |
226.0 |
56.5 |
282.5 |
124.2 |
On 20 September 2022, the Company completed the simplification of its dual share class structure. All non-voting ordinary shares were re-designated as ordinary shares with full voting rights (Enfranchisement); holders of existing ordinary shares received a bonus issue of three additional ordinary shares for every seventeen held (Compensatory Bonus Issue). Following the Enfranchisement and Compensatory Bonus Issue, each ordinary share of £1 was sub-divided into five ordinary shares of 20 pence (Sub-Division).
The compensatory bonus issue resulted in the Company's share capital increasing by £39.9 million. All 39.9 million bonus shares were fully paid at their nominal value of £1 from the Company's share premium account.
Own shares include the Group's shares that are held by employee benefit trusts.
Movements in own shares during the year were as follows:
|
2022 |
2021 |
At 1 January |
(150.2) |
(159.8) |
Own shares purchased |
(120.2) |
(75.3) |
Awards vested |
85.3 |
84.9 |
At 31 December |
(185.1) |
(150.2) |
During the year 4.9 million own shares (2021: 2.1 million own shares) were purchased and held for hedging share-based awards. 3.7 million shares (2021: 3.1 million shares) awarded to employees vested in the period and were transferred out of own shares.
The total number of shares in the Company held within the Group's employee benefit trusts comprise:
|
2022 |
2021¹ |
||||
|
Number of vested shares |
Number of unvested shares |
Total |
Number of vested shares |
Number of unvested shares |
Total |
Ordinary shares |
23.5 |
37.2 |
60.7 |
3.3 |
5.2 |
8.5 |
Non-voting ordinary shares |
- |
- |
- |
- |
- |
- |
|
23.5 |
37.2 |
60.7 |
3.3 |
5.2 |
8.5 |
¹A simplification of the Company's dual share class structure took place in 2022 (see note 13). The number of shares in 2021 comparatives have not been restated. Had 2021 been restated the number of vested shares would be 19.4 million and the number of unvested shares would be 30.6 million.
2022 £m |
2021 £m |
|
Profit before tax |
586.9 |
764.1 |
Adjustments for income statement non-cash movements: |
|
|
Depreciation of property, plant and equipment and amortisation of intangible assets |
188.9 |
162.8 |
Net loss/(gain) on financial instruments |
11.0 |
(20.5) |
Share-based payments |
68.2 |
89.5 |
Net (release)/charge for provisions |
(2.6) |
1.9 |
Other non-cash movements¹ |
43.5 |
(8.0) |
|
309.0 |
225.7 |
Adjustments for which the cash effects are investing activities: |
|
|
Interest (income)/expense |
(5.8) |
2.0 |
Interest expense on lease liabilities |
10.6 |
10.8 |
Share of profit of associates and joint ventures after amortisation |
(71.5) |
(79.3) |
|
(66.7) |
(66.5) |
Adjustments for statement of financial position movements: |
|
|
Decrease/(increase) in loans and advances within Wealth Management |
64.5 |
(96.1) |
Decrease/(increase) in trade and other receivables |
68.9 |
(10.5) |
Increase in deposits and client accounts within Wealth Management |
682.7 |
212.9 |
(Decrease)/increase in trade and other payables, other financial liabilities and provisions |
(159.6) |
149.4 |
|
656.5 |
255.7 |
Adjustments for Life Company and consolidated pooled investment vehicles movements: |
|
|
Net decrease/(increase) in financial assets backing unit-linked liabilities |
3,102.3 |
(1,211.5) |
Net (decrease)/increase in unit-linked liabilities |
(3,409.0) |
1,376.9 |
Net (decrease)/increase in cash within consolidated pooled investment vehicles |
(101.3) |
84.1 |
|
(408.0) |
249.5 |
Tax paid |
(104.9) |
(194.3) |
Net cash from operating activities |
972.8 |
1,234.2 |
¹Other non-cash movements primarily consist of exchange translation adjustments, before hedging activities.
The Group completed four business combinations during the year ended 31 December 2022.
The most significant of these transactions completed on 11 April 2022, when the Group acquired 75% of the issued share capital of Greencoat Capital Holdings Limited (Greencoat), a leader in European renewables, for a total consideration of £357.5 million. The acquisition contributed £7.7 billion of Asset Management AUM and strengthens the Group's Private Asset capabilities.
On 31 January 2022, the Group acquired 100% of the issued share capital of River and Mercantile Investments Limited (River and Mercantile), the Solutions division of River and Mercantile Group plc for a total consideration of £238.6 million. The acquisition contributed £43.1 billion of Asset Management AUM and strengthens the Group's position in the UK fiduciary management market.
The Group completed two further acquisitions during the year for a combined consideration of £29.2 million. These acquisitions contributed £1.2 billion of AUM.
The fair value of net assets acquired in the transactions together with goodwill and intangible assets arising are as follows:
Net assets acquired: |
Greencoat |
River and Mercantile |
Other |
Total |
Cash |
13.0 |
8.9 |
5.2 |
27.1 |
Property, plant and equipment |
0.9 |
- |
0.3 |
1.2 |
Trade and other receivables |
8.4 |
22.8 |
2.9 |
34.1 |
Financial assets |
6.0 |
- |
1.3 |
7.3 |
Trade and other payables |
(28.5) |
(13.9) |
(8.0) |
(50.4) |
Tangible net assets |
(0.2) |
17.8 |
1.7 |
19.3 |
|
|
|
|
|
Goodwill |
228.2 |
154.1 |
17.9 |
400.2 |
Intangible assets arising on acquisition |
228.4 |
87.9 |
12.5 |
328.8 |
Deferred tax arising on acquisition |
(55.8) |
(21.2) |
(2.9) |
(79.9) |
Non-controlling interest |
(43.1) |
- |
- |
(43.1) |
Total |
357.5 |
238.6 |
29.2 |
625.3 |
|
|
|
|
|
Satisfied by: |
|
|
|
|
Cash |
357.5 |
238.6 |
25.8 |
621.9 |
Contingent/deferred consideration |
- |
- |
2.8 |
2.8 |
Fair value of Group's pre-existing interest |
- |
- |
0.6 |
0.6 |
Total |
357.5 |
238.6 |
29.2 |
625.3 |
The goodwill arising on acquisition is attributable to the value from:
- |
Additional investment capabilities; |
- |
A broader platform for business growth; |
- |
Talented management and employees; and |
- |
Opportunities for synergies from combining certain activities. |
Goodwill will not be deductible for tax purposes.
In the period between the acquisition dates and 31 December 2022, the four acquired businesses contributed £93.8 million to the Group's net operating income. The contribution to operating profit was £28.1 million.
If the acquisitions had been completed on 1 January 2022, the Group's net operating income for the year would have been £2,489.1 million and the operating profit for the year on the same basis would have been £727.6 million.
Estimates and judgementsThe fair value of certain items of consideration, assets acquired and liabilities assumed requires some estimation. For intangible assets this estimation required assumptions regarding the level of future management fees that will be earned over the relevant period. The net impact of changes to these assumptions would be to change the carrying value of individual assets and liabilities with a corresponding change to goodwill. |
Our key risks and mitigations can be read by accessing the link below.
Click on or paste the following link into your web browser to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/5973R_1-2023-3-1.pdf
To the best of their knowledge and belief, each of the Directors listed below confirms that:
- |
The consolidated financial statements of Schroders plc, prepared in accordance with UK-adopted international accounting standards and in conformity with the requirements of Companies Act, which give a true and fair view of the assets, liabilities, financial position and profit of Schroders plc and the undertakings included in the consolidation taken as a whole; |
- |
The announcement includes a fair summary of the development and performance of the business and the position of Schroders plc and the undertakings included in the consolidation taken as a whole and a description of the principal risks and uncertainties that they face; |
- |
So far as each Director is aware, there is no relevant audit information of which Schroders plc's auditors are unaware; and |
- |
They have each taken all the steps that ought to have been taken by them as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information. |
Directors:
Dame Elizabeth Corley |
Chair |
Peter Harrison |
Group Chief Executive |
Richard Keers |
Chief Financial Officer |
Ian King |
Senior Independent Director |
Sir Damon Buffini |
Independent non-executive Director |
Rhian Davies |
Independent non-executive Director |
Paul Edgecliffe-Johnson |
Independent non-executive Director |
Rakhi Goss-Custard |
Independent non-executive Director |
Deborah Waterhouse |
Independent non-executive Director |
Matthew Westerman |
Independent non-executive Director |
Claire Fitzalan Howard |
Non-executive Director |
Leonie Schroder |
Non-executive Director |
1 March 2023
|
2022 |
2021 |
2020 |
2019 |
2018 |
|||
Operating profit before tax |
723.0 |
841.0 |
698.5 |
709.7 |
779.7 |
|||
Tax |
(123.6) |
(147.4) |
(134.9) |
(144.2) |
(166.1) |
|||
Operating profit after tax |
599.4 |
693.6 |
563.6 |
565.5 |
613.6 |
|||
|
|
|
|
|
|
|||
|
2022 |
2021 |
2020 |
2019 |
2018 |
|||
Profit before tax |
586.9 |
764.1 |
610.5 |
624.6 |
649.9 |
|||
Tax |
(100.7) |
(140.3) |
(124.5) |
(128.9) |
(145.2) |
|||
Profit after tax |
486.2 |
623.8 |
486.0 |
495.7 |
504.7 |
|||
|
|
|
|
|
|
|||
Operating earnings per share: |
2022 |
2021 |
2020 |
2019 |
2018 |
|||
Basic earnings per share¹ |
37.4 |
43.0 |
34.9 |
35.6 |
38.8 |
|||
Diluted earnings per share¹ |
36.7 |
42.2 |
34.3 |
35.0 |
38.1 |
|||
|
|
|
|
|
|
|||
Earnings per share: |
2022 |
2021 |
2020 |
2019 |
2018 |
|||
Basic earnings per share¹ |
30.4 |
38.7 |
30.2 |
31.4 |
32.1 |
|||
Diluted earnings per share¹ |
29.9 |
38.1 |
29.7 |
30.8 |
31.5 |
|||
|
|
|
|
|
|
|||
Dividends |
2022 |
2021 |
2020 |
2019 |
2018 |
|||
Cost (£m) |
332.1 |
318.6 |
311.7 |
312.3 |
311.7 |
|||
Pence per share² |
21.4 |
20.4 |
20.0 |
20.0 |
20.0 |
|||
|
|
|
|
|
|
|||
Total equity (£m) |
4,479.7 |
4,425.7 |
4,085.9 |
3,847.5 |
3,621.2 |
|||
|
|
|
|
|
|
|||
Net assets per share (pence)³ |
278 |
275 |
253 |
239 |
225 |
|||
¹See note 5 for the basis of this calculation. Prior year comparatives have been restated following the simplification of the Company's dual share class structure (see note 13).
²Dividends per share are those amounts approved by the shareholders to be paid within the year on a per share basis to the shareholders on the register at the specified dates. Prior year comparatives have been restated following the simplification of the Company's dual share class structure (see note 13).
³Net assets per share are calculated by using the actual number of shares in issue at the year-end date. Prior year comparatives have been restated following the simplification of the Company's dual share class structure (see note 13).
31 December |
2022 |
2021 |
2020 |
2019 |
2018 |
Sterling: |
|
|
|
|
|
Euro |
1.13 |
1.19 |
1.12 |
1.18 |
1.11 |
US dollar |
1.20 |
1.35 |
1.37 |
1.32 |
1.27 |
Swiss franc |
1.11 |
1.23 |
1.21 |
1.28 |
1.26 |
Australian dollar |
1.77 |
1.86 |
1.77 |
1.88 |
1.81 |
Hong Kong dollar |
9.39 |
10.56 |
10.60 |
10.32 |
9.97 |
Japanese yen |
158.72 |
155.97 |
141.13 |
143.97 |
139.73 |
Singaporean dollar |
1.61 |
1.83 |
1.81 |
1.78 |
1.74 |
Chinese renminbi |
8.36 |
8.63 |
8.89 |
9.23 |
8.74 |
Assets under Management (AUM) |
AUM represents the aggregate value of client assets managed, advised or otherwise contracted, from which the Group, including joint ventures and associates, earns operating revenue. Asset Management AUM includes investment management, fiduciary management and liability management services. For Schroders Capital Private Equity, the aggregate value of assets managed includes client commitments on which we earn fees. This is changed to the lower of committed funds and net asset value, typically after seven years from the initial investment, in line with the fee basis. Wealth Management AUM comprises the aggregate value of assets where Schroders provides advice or discretionary management (Advised AUM), platform services (Platform AUM) and investment management services (Managed AUM). Advised AUM comprises assets where Schroders provides discretionary or advisory management services including assets where the client independently makes investment decisions. Platform AUM represents the value of assets on the Benchmark Fusion platform. The Fusion platform enables financial advisors to administer and manage their clients' accounts by providing dealing and settlement services, valuation statements and custody services through a third party. Managed AUM includes assets where the client invests in Schroders' funds. |
Dry powder and non-fee earning dry powder |
Within Schroders Capital, fundraising comprises new funds invested into our products and contractual commitments from clients to invest their capital in the future. These commitments are called upon once relevant investments have been identified and the capital is to be deployed. Uncalled commitments are referred to as dry powder. Depending on the applicable fee arrangements, dry powder may or may not attract management fees. Uncalled commitments that do not attract fees are referred to as non-fee earning dry powder. |
Exceptional items |
Exceptional items are significant items of income and expenditure that were previously presented separately by virtue of their nature. They related principally to items arising from acquisitions undertaken by the Group. |
Fundraising |
This is a term used in our Schroders Capital business comprising new funds invested into our products and contractual commitments from clients to invest their capital in the future. |
Operating earnings per share |
Operating profit after tax excluding non-controlling operating earnings divided by the relevant weighted average number of shares. The presentation of operating earnings per share provides transparency from our operational activities to aid understanding of the financial performance. |
Operating profit |
Profit before tax but excluding revenue and expenditure that does not fall into the core operations of Asset Management or Wealth Management, or are acquisition related in nature. |
Other operating income |
Other operating income primarily relates to gains and losses on co-investments and foreign exchange. |
Payout ratio |
The total dividend per share in respect of the year divided by the operating basic earnings per share. |
Profit before tax and exceptional items |
Profit before tax but excluding exceptional items. This presentation provides transparency of recurring revenue and expenditure from our operational activities to aid understanding of the financial performance of the Group. |
Total compensation ratio |
Compensation costs, excluding those recognised within 'Acquisition costs and related items', divided by net operating income. By targeting a total compensation ratio of 45% to 49%, depending upon market conditions, we align the interests of shareholders and employees. |