Interim Results

Schroders PLC 13 August 2004 Press Release 13th August 2004 Schroders plc Interim Results to 30th June 2004 • Asset management profit before exceptional items £52.0 million (H1 2003: £21.4 million) • Profit before tax and goodwill amortisation £65.8 million (H1 2003: £32.4 million) • Profit before tax £60.8 million (H1 2003: £27.2 million) • Funds under management £100.0 billion (31st December 2003: £98.9 billion*, 30th June 2003: £90.9 billion*) • Increased interim dividend of 6.5 pence per share (interim dividend 2003: 5.5 pence per share) * Restatement of assets predominantly due to the inclusion of additional Private Banking funds previously omitted ---------------------- ---------- ---------- ---------- Six months Six months Year ended ended 30th ended 30th 31st December June 2004 June 2003 2003 (unaudited) (unaudited) (restated) £mn £mn £mn ---------- ---------- ---------- Asset management profit before 52.0 21.4 60.5 exceptional items Exceptional items - profit on 2.7 2.4 2.4 disposal of business/subsidiary undertakings ---------- ---------- ---------- Asset management profit 54.7 23.8 62.9 Private equity 13.9 12.0 16.8 Group net income/(costs) (2.8) (3.4) (4.4) ---------- ---------- ---------- Profit before tax and goodwill 65.8 32.4 75.3 Goodwill amortisation (5.0) (5.2) (10.3) ---------- ---------- ---------- Profit before tax 60.8 27.2 65.0 ---------- ---------- ---------- Contacts: Schroders Michael Dobson Chief Executive +44 (0) 20 7658 6962 Jonathan Asquith Chief Financial Officer +44 (0) 20 7658 6565 Julian Samways Head of Corporate +44 (0) 20 7658 6166 Communications The Maitland Consultancy William Clutterbuck +44 (0) 20 7379 5151 Management Statement The strong upward trend in profitability continued in the first half of 2004. Whilst equity markets were broadly flat in the first half, average market levels were higher than in the same period in 2003, which positively impacted asset management revenues. Group net revenues were £240.4 million, an increase of 19 per cent. from £202.4 million in the first half of 2003. Group costs were in line with the first half of last year at £201.4 million (H1 2003: £200.0 million). Asset management profit before exceptional items was £52.0 million (H1 2003: £21.4 million). Private equity contributed £13.9 million to Group profit before tax (H1 2003: £12.0 million) as we benefited from carried interests and realisations from Schroder Ventures funds and a rise in the share price of SVG Capital plc. In May we sold a US small cap equity business in Boston in order to focus our resources in this asset class exclusively on our highly successful US small cap business in New York. This led to an exceptional gain of £2.7 million during the period. Profit before tax and goodwill was £65.8 million (H1 2003: £32.4 million) and profit before tax was £60.8 million (H1 2003: £27.2 million). Investment Overall, good investment performance was achieved across a range of UK and European equity products, Japanese equities, small cap equities globally and international fixed income. Our UK multi-asset pooled fund continued to outperform and is ahead of its benchmark over one, three and five years. Retail fund performance continues to be strong, with over two thirds of UK and Luxembourg domiciled retail assets above the peer group median over one and three years. This is reflected in the 29 awards won by Schroders' funds in the year to date. In addition to core products, we now have a proven range of high alpha equity funds. Combined with our absolute return capabilities encompassing equities, emerging market debt, funds of hedge funds, structured products and a comprehensive range of specialist property funds, we are well placed to benefit from the increasing global demand for specialist investment products. Distribution From an opening position of £98.9 billion as at the end of December 2003, funds under management rose 1.1 per cent. during the period to £100.0 billion. Funds under management 30th June 2004 31st December 2003 £bn £bn -------------------- ------------ ------------ Institutional 68.4 71.4 Retail 25.6 22.1 Private Banking 6.0 5.4 -------------------- ------------ ------------ 100.0 98.9* -------------------- ------------ ------------ * Restatement of assets predominantly due to the inclusion of additional Private Banking funds previously omitted. After a net business outflow of £1.4 billion in the first quarter there was a net inflow in the second quarter of £0.1 billion to give a net outflow, including Private Banking, of £1.3 billion for the year to date (H1 2003: net inflow £0.2 billion). Net outflows of institutional funds were £4.5 billion (H1 2003: net outflows of £2.5 billion). Restructuring by clients from balanced and multi-asset mandates contributed to a net outflow of £4.0 billion in the UK. We also had net outflows from our North American business. Net inflows totalled £1.0 billion in Asia Pacific and continental Europe. Gross retail sales were £7.6 billion during the period, an increase of almost 40 per cent. on the same period last year. Net retail sales were £2.9 billion, (H1 2003: £2.9 billion) with a net inflow of £1.9 billion from the UK and continental Europe and £1.0 billion from Asia Pacific. Net sales in the second quarter slowed in line with industry trends. Retail inflows were spread across a range of asset classes, with European and Asian equities and bonds attracting the strongest demand. Further to the continued success of our UK, European and Japan Alpha products, which now have over £1.2 billion under management, we launched an Asian Alpha fund in January and announced the launch of multi-manager funds in the UK. The success of our third party distribution network was highlighted by two industry surveys showing that we were the most used sub-advisor in Europe and that in the first quarter of 2004 we were industry leaders in growing our business with European financial institutions. Private Banking Following the re-positioning of the Private Bank, new business levels have improved with net inflows of £0.3 billion in the period compared with an outflow of £0.2 billion in the first half of 2003. We also increased revenues in banking and structured products. In the UK, we continued to strengthen our market position in key intermediary distribution channels leading to increased new business referrals and we won several new mandates in the charity and endowments sector. Outlook and Dividend In the light of the Group's improved profitability and strong financial position, the Board believes that it would be appropriate to increase the aggregate dividend payment for the year whilst reducing the imbalance between the interim and final dividends. Accordingly, the Board has decided to increase the interim dividend by 1.0 pence to 6.5 pence per share. The interim dividend will be paid on 23rd September to shareholders on the register at 27th August 2004. In early July we announced that Internet Finance Partners LP, a controlled limited partnership which is consolidated for accounting purposes, had agreed a private equity disposal for cash. This transaction is expected to result in the recognition of a profit of approximately US$90 million (US$60 million after allowing for minority interest entitlements) in the third quarter. We continue to see a fundamental change in the mix of our business. Low margin balanced and multi-asset institutional mandates are restructuring which results in an outflow of funds but a limited impact on revenues. On the other hand we are winning new mandates at higher margins in specialist equity and fixed income due to our investment performance and product innovation. We expect this trend to continue. Consolidated Profit and Loss Account Six months Six months Six months Year ended ended 30th ended 30th ended 31st 31st December June 2004 June 2003 December 2003 2003 (unaudited) (unaudited) (unaudited) (restated) £mn £mn £mn £mn ------------------------ ---------- ---------- ---------- ----------- Net revenues - continuing 240.4 202.3 225.2 427.5 operations - discontinued operations - 0.1 - 0.1 ---------- ---------- ---------- ----------- 240.4 202.4 225.2 427.6 Gains/(losses) on current asset 4.0 11.0 5.5 16.5 investments Administrative expenses (194.4) (189.8) (197.8) (387.6) Depreciation (2.0) (5.0) (3.3) (8.3) Amortisation of goodwill (5.0) (5.2) (5.1) (10.3) ---------- ---------- ---------- ----------- Group operating profit/(loss) - continuing operations 43.0 13.8 24.5 38.3 - discontinued operations - (0.4) - (0.4) ---------- ---------- ---------- ----------- 43.0 13.4 24.5 37.9 Share of operating profit of 2.6 0.1 2.4 2.5 associated undertakings ---------- ---------- ---------- ----------- Total operating profit 45.6 13.5 26.9 40.4 Profit on disposal of business/ subsidiary undertakings - continuing operations 2.7 - - - - discontinued operations - 2.4 - 2.4 Interest receivable and similar 12.8 12.1 12.7 24.8 income Amounts written off fixed asset - (0.5) (1.4) (1.9) investments Interest payable and similar (0.3) (0.3) (0.4) (0.7) charges ---------- ---------- ---------- ----------- Profit on ordinary activities before 60.8 27.2 37.8 65.0 tax Tax on profit on ordinary (14.8) (4.7) (11.7) (16.4) activities ---------- ---------- ---------- ----------- Profit attributable to 46.0 22.5 26.1 48.6 shareholders Dividends (18.8) (16.1) (37.6) (53.7) ---------- ---------- ---------- ----------- Retained profit/(loss) for the 27.2 6.4 (11.5) (5.1) period ---------- ---------- ---------- ----------- Basic earnings per share 15.8p 7.6p 8.9p 16.5p Diluted earnings per share 15.7p 7.6p 8.8p 16.4p ---------- ---------- ---------- ----------- Statement of Total Consolidated Recognised Gains and Losses ----------------------- ----------- ---------- ----------- Six months Six months Year ended ended 30th ended 30th 31st December June 2004 June 2003 2003 (unaudited) (unaudited) (restated) £mn £mn £mn ----------- ---------- ----------- Profit attributable to shareholders 46.0 22.5 48.6 for the period Exchange translation adjustments to (8.0) 0.5 (7.6) foreign currency net investments ----------- ---------- ----------- Total recognised gains and losses 38.0 23.0 41.0 ----------- ---------- ----------- Reconciliation of Movements in Consolidated Shareholders' Funds ----------------------- ----------- ---------- ----------- Six months Six months Year ended ended ended 30th 31st December 30th June 2004 June 2003 2003 (unaudited) (unaudited) (restated) £mn £mn £mn ----------- ---------- ----------- Profit attributable to 46.0 22.5 48.6 shareholders for the period Dividends (18.8) (16.1) (53.7) ----------- ---------- ----------- 27.2 6.4 (5.1) New share capital subscribed 0.1 - 4.8 Reduction in shares to be issued - - (5.0) Transfer of own shares at cost to - (10.8) (10.8) reserves at 1st January 2003 Acquisition of own shares (8.2) (7.8) (12.6) Disposal of own shares 13.0 10.3 10.3 Reversal of unrealised losses on - 3.3 3.3 own shares taken in prior years Exchange translation adjustments (8.0) 0.5 (7.6) ----------- ---------- ----------- Net movement in shareholders' 24.1 1.9 (22.7) funds Opening shareholders' funds 1,029.2 1,051.9 1,051.9 ----------- ---------- ----------- Closing shareholders' funds 1,053.3 1,053.8 1,029.2 ----------- ---------- ----------- Consolidated Balance Sheet ----------------------- ---------- ---------- ---------- 30th June 30th June 31st December 2004 2003 2003 (unaudited) (unaudited) (restated) £mn £mn £mn ----------------------- ---------- ---------- ---------- Fixed assets Intangible assets - goodwill 19.4 29.7 24.5 Tangible assets 8.9 12.8 10.1 Investments 120.4 106.2 116.6 ---------- ---------- ---------- 148.7 148.7 151.2 ---------- ---------- ---------- Current assets Debtors due after more than one 247.9 241.2 266.2 year Debtors due within one year 556.3 584.8 499.9 Investments 1,333.5 1,184.7 1,245.0 Cash and balances with banks 448.6 651.2 462.9 ---------- ---------- ---------- 2,586.3 2,661.9 2,474.0 Creditors - amounts falling due (1,475.5) (1,490.0) (1,350.6) within one year ---------- ---------- ---------- Net current assets 1,110.8 1,171.9 1,123.4 ---------- ---------- ---------- Total assets less current 1,259.5 1,320.6 1,274.6 liabilities Creditors - amounts falling due (176.7) (223.0) (213.0) after more than one year Provisions for liabilities and (29.5) (43.8) (32.4) charges ---------- ---------- ---------- Net assets 1,053.3 1,053.8 1,029.2 ---------- ---------- ---------- Capital and reserves Called up share capital 296.3 295.7 296.3 Share premium account 22.1 17.8 22.0 Shares to be issued 4.9 9.9 4.9 Capital reserves 141.3 138.9 130.8 Profit and loss account 588.7 591.5 575.2 ---------- ---------- ---------- Equity shareholders' funds 1,053.3 1,053.8 1,029.2 ---------- ---------- ---------- Consolidated Cash Flow Statement --------------------- ---------- ----------- ----------- Six months Six months Year ended ended 30th ended 30th 31st December June 2004 June 2003 2003 (unaudited) (unaudited) (restated) £mn £mn £mn --------------------- ---------- ----------- ----------- Net cash inflow from operating 108.5 231.0 129.9 activities Dividends/distributions 0.1 0.3 - received from associates Returns on investments and 14.3 12.5 25.5 servicing of finance Taxation (8.3) (5.3) (9.2) Capital expenditure and (3.8) (6.0) (14.9) financial investments Acquisitions and disposals 3.6 4.4 1.4 Dividends paid (37.7) (37.5) (53.4) Management of liquid (62.7) (371.0) (157.3) resources Financing 4.9 2.5 (2.3) ---------- ----------- ----------- Increase/(decrease) in cash 18.9 (169.1) (80.3) ---------- ----------- ----------- Reconciliation of operating profit to net cash inflow from operating activities --------------------- ---------- ----------- ----------- Six months Six months Year ended ended 30th ended 31st December June 2004 30th June 2003 2003 (unaudited) (unaudited) (restated) £mn £mn £mn --------------------- ---------- ----------- ----------- Operating profit 45.6 13.5 40.4 Depreciation of tangible fixed 2.0 5.0 8.3 assets Amortisation and impairment of 5.0 5.2 10.3 goodwill Other non-cash payments (10.7) (6.5) (14.7) Changes in working capital 66.6 213.8 85.6 ---------- ----------- ----------- Net cash inflow from operating 108.5 231.0 129.9 activities ---------- ----------- ----------- Reconciliation of movement in cash --------------------- ---------- ----------- ----------- At 30th June Cash flow At 31st December 2004 2003 (unaudited) (unaudited) £mn £mn £mn --------------------- ---------- ----------- ----------- Cash and balances with banks - 219.7 14.7 205.0 repayable on demand Cash and balances with banks - 228.9 257.9 other ---------- ------------ Cash and balances with banks 448.6 462.9 ---------- ------------ Exchange adjustments 4.2 ----------- Increase in cash 18.9 ----------- Note to the accounts During the period, the Group has adopted UITF Abstract 38 'Accounting for ESOP trusts' ('UITF38'). The principal requirements of the Abstract that affect these financial statements are: first, that where a company has holdings in its own shares held within ESOP trusts and the shares have not vested unconditionally in employees, the consideration paid for the shares should be deducted in arriving at shareholders' funds; secondly, consideration paid or received for the purchase or sale of a company's own shares in an ESOP trust should be shown as separate amounts in the reconciliation of movements in shareholders' funds; and, thirdly, no gain or loss should be recognised in the profit and loss account or statement of total recognised gains and losses on the purchase, sale, issue or cancellation of the company's own shares. As a result of the first and third requirements, comparative amounts in the profit and loss account and balance sheet have been restated as follows: ---------- ---------- --------- Profit and loss account (extracts) Six months Six months Year ended ended June ended December 2003 December 2003 2003 (unaudited) (unaudited) £mn £mn £mn ---------- ---------- --------- Gains on current asset investments Gains on current asset investments prior to 11.0 6.1 17.1 adoption of UITF38 Adjustment to gains on own shares as a - (0.6) (0.6) result of adoption of UITF38 ---------- ---------- --------- Restated gains on current asset 11.0 5.5 16.5 investments ---------- ---------- --------- Retained profit/(loss) for the period Retained profit/(loss) for the period prior 6.4 (10.9) (4.5) to adoption of UITF38 Adjustment to profit/(loss) as a result of - (0.6) (0.6) adoption of UITF38 ---------- ---------- --------- Restated retained profit/(loss) for the 6.4 (11.5) (5.1) period ---------- ---------- --------- Earnings per share - basic Based on profit attributable to 7.6p 9.1p 16.7p shareholders prior to adoption of UITF38 Based on profit attributable to 7.6p 8.9p 16.5p shareholders after adoption of UITF38 ---------- ---------- --------- Earnings per share - diluted Based on profit attributable to 7.6p 9.0p 16.6p shareholders prior to adoption of UITF38 Based on profit attributable to 7.6p 8.8p 16.4p shareholders after adoption of UITF38 ---------- ---------- --------- ---------- ----------- Balance sheet (extracts) 30th June 31st December 2003 2003 (unaudited) £mn £mn ---------- ----------- Current assets - investments/own shares Investments/own shares prior to adoption of 1,189.7 10.4 UITF38* Transfer of own shares to reserves (5.0) (10.4) ---------- ----------- Restated investments/own shares 1,184.7 - ---------- ----------- Net assets Net assets prior to adoption of UITF38 1,058.8 1,039.6 Adjustment to net assets as a result of (5.0) (10.4) adoption of UITF38 ---------- ----------- Restated net assets 1,053.8 1,029.2 ---------- ----------- *'Own shares' were included within 'Investments' in the Group's published accounts for years ended prior to 31st December 2003. In the 2003 'Annual Report & Accounts', 'Own shares' were included as a separate line item. ----------------------------- ---------- ----------- Six months Year ended ended 30th June 31st December 2003 2003 (unaudited) £mn £mn ----------------------------- ---------- ----------- Cash flow ----------------------------- ---------- ----------- Transfer of net disposals/(acquisitions) of own shares from 'Management of liquid resources' to 'Financing' 2.5 (2.3) ----------------------------- ---------- ----------- Financial information for the year ended 31st December 2003 is presented in Format 1 of Schedule 4 to the Companies Act 1985, adapted to include an additional item, 'Gains/(losses) on current asset investments'. The interim financial information has been prepared on the basis of the accounting policies set out in the Group's 2003 Annual Report & Accounts. This announcement was approved by the Board of Directors on 12th August 2004. The financial information set out above does not constitute full accounts within the meaning of section 240 of the Companies Act 1985. The full statutory accounts for 2003 received an unqualified audit report and have been delivered to the Registrar of Companies. The Interim Report for the six months to 30th June 2004 will be published in the Daily Telegraph on 14th August 2004. The Interim Report, which has been extracted from this announcement and which includes the independent review report by the auditors, has been prepared in accordance with the Listing Rules of the Financial Services Authority. Set out below is the full text of the Interim Report. Further copies of this announcement and the Interim Report are available from the Company Secretary at 31 Gresham Street, London, EC2V 7QA (email: company.secretary@schroders.com telephone 020 7658 3646) and will be available on the Group's website at www.schroders.com together with further information about the results. Schroders plc Interim Report 2004 To be published in the Daily Telegraph on 14th August 2004 'Financial Highlights: • Asset management profit before exceptional items £52.0 million (H1 2003: £21.4 million) • Profit before tax and goodwill amortisation £65.8 million (H1 2003: £32.4 million) • Profit before tax £60.8 million (H1 2003: £27.2 million) • Funds under management £100.0 billion (31 December 2003 : £98.9 billion*, 30 June 2003: £90.9 billion*) • Increased interim dividend of 6.5p per share (interim dividend 2003: 5.5p per share) *Restatement of assets predominantly due to the inclusion of additional Private Banking funds previously omitted. The strong upward trend in profitability continued in the first half of 2004. Whilst equity markets were broadly flat in the first half, average market levels were higher than in the same period in 2003, which positively impacted asset management revenues. Overall, good investment performance was achieved across a range of UK and European equity products, Japanese equities, small cap equities globally and international fixed income. Our UK multi-asset pooled fund continued to outperform and is ahead of its benchmark over one, three and five years. Retail fund performance continues to be strong, with over two thirds of UK and Luxembourg domiciled retail assets above the peer group median over one and three years. In addition to core products, we now have a proven range of high alpha equity funds and we are well placed to benefit from the increasing global demand for specialist investment products. In July we announced a private equity disposal for cash which is expected to result in an attributable profit of approximately US$60 million in the third quarter. In the light of the Group's improved profitability and strong financial position, the Board believes that it would be appropriate to increase the aggregate dividend payment for the year whilst reducing the imbalance between the interim and final dividends. Accordingly, the Board has decided to increase the interim dividend by 1 pence to 6.5 pence per share. We continue to see a fundamental change in the mix of our business. Low margin balanced and multi-asset institutional mandates are restructuring which results in an outflow of funds but a limited impact on revenues. On the other hand we are winning new mandates at higher margins in specialist equity and fixed income due to our investment performance and product innovation. We expect this trend to continue. Independent Review Report to Schroders plc Introduction We have been instructed by Schroders plc to review the financial information which comprises the summary consolidated profit and loss account, the summary consolidated balance sheet and the summary consolidated cash flow statement. We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The Interim Report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. The maintenance and integrity of the Schroders plc website is the responsibility of the Directors; the work carried out by the Auditors does not involve consideration of these matters and, accordingly, the Auditors accept no responsibility for any changes that may have occurred to the Interim Report since it was initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2004. PricewaterhouseCoopers LLP Chartered Accountants, London 12 August 2004 Summary Consolidated Profit and Loss Account Six months Six months Year ended ended ended 31 Dec 2003 30 June 2004 30 June 2003 (restated)* (unaudited) (unaudited)* £mn £mn £mn Net - continuing 240.4 202.3 427.5 revenues operations - discontinued - 0.1 0.1 operations 240.4 202.4 427.6 Operating - continuing 45.6 13.9 40.8 profit/(loss) operations - discontinued - (0.4) (0.4) operations 45.6 13.5 40.4 Profit on disposal of business/ subsidiary undertakings - continuing 2.7 - - operations - discontinued - 2.4 2.4 operations Amounts written off fixed asset - (0.5) (1.9) investments Net interest income 12.5 11.8 24.1 Profit on ordinary activities 60.8 27.2 65.0 before tax Tax on profit on ordinary (14.8) (4.7) (16.4) activities Profit attributable to 46.0 22.5 48.6 shareholders Dividends (18.8) (16.1) (53.7) Retained profit/(loss) for the 27.2 6.4 (5.1) period Basic earnings per share 15.8p 7.6p 16.5p Diluted earnings per share 15.7p 7.6p 16.4p Summary Consolidated Balance Sheet 30 June 2004 30 June 2003 31 Dec 2003 (unaudited) (unaudited)* (restated)* £mn £mn £mn Fixed assets 148.7 148.7 151.2 Debtors 804.2 826.0 766.1 Investments 1,333.5 1,184.7 1,245.0 Cash and balances with banks 448.6 651.2 462.9 2,586.3 2,661.9 2,474.0 Creditors - amounts falling due (1,475.5) (1,490.0) (1,350.6) within one year Net current assets 1,110.8 1,171.9 1,123.4 Total assets less current 1,259.5 1,320.6 1,274.6 liabilities Creditors - amounts falling due (176.7) (223.0) (213.0) after more than one year Provisions for liabilities and (29.5) (43.8) (32.4) charges Net assets/total shareholders' 1,053.3 1,053.8 1,029.2 funds Summary Consolidated Cash Flow Statement Six months Six months Year ended ended ended 31 Dec 2003 30 June 2004 30 June 2003 (restated) (unaudited) (unaudited) £mn £mn £mn Net cash inflow from operating 108.5 231.0 129.9 activities Dividends/distributions received 0.1 0.3 - from associates Returns on investments and 14.3 12.5 25.5 servicing of finance Taxation (8.3) (5.3) (9.2) Capital expenditure and (3.8) (6.0) (14.9) financial investments Acquisitions and disposals 3.6 4.4 1.4 Dividends paid (37.7) (37.5) (53.4) Management of liquid resources (62.7) (371.0) (157.3) Financing 4.9 2.5 (2.3) Increase/(decrease) in cash 18.9 (169.1) (80.3) * The Group has adopted UITF Abstract 38 'Accounting for ESOP trusts' during the period. Comparative amounts, where necessary, have been restated. The effects of the adoption are as follows: for the year ended 31 December 2003, operating profit has been reduced by £0.6 million: basic and diluted EPS comparatives for the year ended 31 December 2003 have each been reduced by 0.2p; net assets of the Group have been reduced by £10.4 million at 31 December 2003; and by £5.0 million at 30 June 2003; and cash flows from the acquisition and disposal of own shares have been reclassified from 'Management of liquid resources' to 'Financing'. This Interim Report was approved by the Board of Directors on 12 August 2004. The financial information set out above does not constitute full accounts within the meaning of section 240 of the Companies Act 1985. The full statutory accounts for 2003 received an unqualified audit report and have been delivered to the Registrar of Companies. The Interim Results announcement 2004 as released to the London Stock Exchange on 13 August 2004, which contains additional details, is available on the Schroders website www.schroders.com together with further information about the results. Copies of the Interim Results announcement 2004 and this Interim Report can also be obtained by emailing company.secretary@schroders.com or by telephoning 020 7658 3646. The interim dividend will be paid on 23 September 2004 to shareholders on the register as at 27 August 2004. Schroders plc. Registered No. 3909886. Registered office 31 Gresham Street, London, EC2V 7QA.' Forward-looking statements This announcement contains certain forward-looking statements and forecasts with respect to the financial condition, results of operations and businesses of Schroders plc and its subsidiaries. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast. ---------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange

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