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We are a leading provider of active asset
management, advisory and wealth management
services. Recognised widely as a leader in
sustainability. Few investment managers can
match the combination of capabilities and global
reach that we offer.
This breadth of services across public and private
markets allows us to design distinctive solutions
for the diverse needs of clients. They look to
us to provide excellent long-term investment
outcomes, and it is our duty always to act in their
best interests.
That is a responsibility we take seriously – and we
believe that when we succeed for clients, society
and the wider world benefit too.
Our Annual General Meeting (AGM) will be
held at 1 London Wall Place, London, EC2Y 5AU
and electronically via a live broadcast on
25 April 2024 at 11:30am.
Strategic report
Key performance indicators 2
Our strengths 4
Chair’s statement 6
Delivering growth 8
Group Chief Executive’s statement 10
Strategy 14
Sustainable business 18
Our business model 20
Prioritising performance 22
Business and financial review 24
Investing sustainably 28
Climate-related financial disclosures 30
Risk management 38
Stakeholder engagement 44
Non-financial and sustainability
information statement 46
Viability and going concern statement 47
Governance
Board of Directors
and Company Secretary 50
Corporate governance report 54
Nominations Committee report 64
Audit and Risk Committee report 66
Remuneration report 74
Directors’ report 94
Statement of Directors’ responsibilities 99
Financial statements
Consolidated financial statements 103
Schroders plc financial statements 154
Independent auditor’s report 175
Shareholder information
Shareholder information 184
Five-year consolidated financial summary 185
Glossary 186
Our purpose is to provide excellent
investment performance to clients
through active management.
By serving clients, we serve
wider society. Channelling capital
into sustainable and durable
businessesaccelerates positive
change in the world.
Funding the future is a privilege;
we use it wisely and responsibly.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
1
Strategic report
The outcomes we measure
Basic operating earnings pershare (p)
Our objective
We aim to grow earnings per share consistently,
recognising the potential impact of market volatility
on results in the short term.
How we performed
32.5p
In 2023, basic operating earnings per share was
32.5 pence, a decrease of 13% on 2022.
Assets under management (£bn)
Our objective
We aim to grow our AUM over time in excess of market
growth through positive investment outperformance and
net new business. As a sterling-denominated reporter,
currency movements also impact asset levels.
How we performed
£750.6bn
At the end of 2023, AUM stood at £750.6 billion, an
increase of 2% on 2022. Investment performance
increased AUM by £37.1 billion, offset by in year currency
movements of £25.8 billion. Net new business increased
total AUM by £1.0 billion.
Net new business (£bn)
Our objective
We seek to generate positive net new business
across the Group.
How we performed
£1.0bn
Net new business, excluding our joint ventures and
associates, was £9.7 billion in 2023. Net new business,
including joint ventures and associates, was £1.0 billion.
Our strategic growth areas contributed strongly, with
£23.1 billion of net new business.
Net operating income (£m)
Our objective
Net operating income comprises net operating revenue earned
from the assets we manage, net gains on co-investments,
share of profit of joint ventures and associates, and other
income. We aim to grow net operating income over time.
How we performed
£2,419.0m
Net operating income for 2023 was £2,419.0 million,
down £56.5 million from 2022. Net operating revenue
from our strategic growth areas of Wealth Management
and Private Markets increased by £28.9 million and
£53.0 million respectively.
Key performance indicators
2,419.0
202
3
2,475.5
202
2
2,520.0
202
1
2,135.8
202
0
2,095.2
201
9
32.5
202
3
37.4
202
2
43.0
202
1
34.9
202
0
35.6
201
9
750.6
202
3
737.5
202
2
766.7
202
1
694.4
202
0
592.8
201
9
1.0
202
3
-7.6
202
2
37.3
202
1
62.7
202
0
54.3
201
9
Schroders Annual Report and Accounts 2023
2
Client investment performance (%)
Our objective
We target at least 60% of our AUM outperforming their
stated comparator over a rolling three-year period.
How we performed
60%
We have consistently delivered positive outcomes for
clients over the medium and long term. With 60% of
assets outperforming their relevant comparator over
three years, and 77% over five years, we have successfully
met our target for the past six consecutive years.
Retention of highly-rated employees (%)
Our objective
Developing and retaining talented people is key to our
ongoing success. We actively monitor retention, focusing
on those who have received a strong performance rating.
How we performed
96%
Our highly-rated employees retention rate increased this
year to 96%. This represents a committed and engaged
workforce, aligned with our values.
Dividend per share (p)
Our objective
Our policy is to provide shareholders with a progressive
and sustainable dividend, targeting a payout ratio of
around 50%.
How we performed
21.5p
The Board has recommended a final dividend of
15.0 pence per share, bringing the total dividend for the
year to 21.5 pence per share. This represents a payout
ratio of 66%.
Portfolio temperature score (°C)
Our objective
We aim to achieve a portfolio temperature score of 2.2°C
for our in-scope assets by 2030. This score is based on
the targets set by investee companies across their Scope
1 and 2 emissions.
How we performed
2.5°C
The portfolio temperature score of in-scope assets fell to
2.5°C at the end of 2023. This is ahead of the pace
of reduction required to meet our target.
60
202
3
73
202
2
79
202
1
72
202
0
70
201
9
2.5
202
3
2.6
202
2
2.8
202
1
2.9
202
0
2.9201
9
96202
3
94
202
2
94
202
1
94
202
0
94
201
9
21.5202
3
21.5
202
2
21.4
202
1
20.0
202
0
20.0
201
9
Schroders Annual Report and Accounts 2023
Strategic report
Overview
Governance Shareholder informationFinancial statements
3
Our strengths
1 2
The breadth and depth of
capabilities we have built…
…powered by innovation
and a long-term outlook…
We have developed a wide range of
servicesto match clients’ evolving needs.
The solutions we offer now span more
investment capabilities than ever, and we can
serve them in more places around the world.
We can act in the long-term interests of
our clients and stakeholders because of our
ownership structure. The underlying stability
of our long-term ownership frees us to
innovate and respond with agility to change.
Assets under management
1
Built to deliver
long-term client value
Over recent years we have successfully reshaped our business by growing into areas where we
seegreater demand and where we can better serve clients. Several factors have made this change
possible: our long-term perspective, culture and leadership in sustainability. We have a 220-year
history of successful adaptation. Throughout that time we have always focused on serving clients.
Accessible
private markets
We launched the UK’s first Long Term
Asset Fund (LTAF) for individual investors.
Pioneers in
tokenised assets
We joined in initiatives to test the use of blockchain
for the future of investment management.
AI for employees globally
We rolled out secure technology, built on the
latest GPT models, to support productivity.
By business (%)
Wealth
Management 17
Solutions 30
Private Markets 9
Public Markets 44
By region (£ billion)
UK 366.0
Europe, Middle
East and Africa 107.3
Asia Pacific 186.1
Americas 91.2
1. Includes AUM from joint ventures and associates.
£750.6bn
38
locations globally
Schroders Annual Report and Accounts 2023
4
3 4
…enabled by our people
and culture…
…strengthened by
leadership in sustainability.
Our inclusive culture allows us to attract
and retain outstanding talent. We believe that
our active investment approach, on which this
expertise depends, delivers superior outcomes
for clients.
We view sustainability as an important
source of potential long-term investment
performance. It is in the interests of our
clients to address the risks and opportunities
of environmental and social change.
MSCI ESG Rating,
AAA
This puts us in the top 10% of our sector.
CDP ‘A’ top 2%
We are among the leading companies
assessed for transparency and performance
on climate change.
88%
Portfolios with SustainEx™ score
above their benchmark.
96%
Our retention of highly-rated
employees increased from 94% in 2022.
87%
Our people who are proud to
work for Schroders.
Glassdoor Employees’
ChoiceAward
We were named one of the UK’s top 50 best places
to work in 2023.
Schroders Annual Report and Accounts 2023
Strategic report
Overview
Governance Shareholder informationFinancial statements
5
Chair’s statement
Long-term
active strategy
In my first Chair’s statement last year, I
highlighted Schroders’ singular long-term
approach, which arises largely from its
ownership structure and its 220-year
history of navigating change. 2023
brought renewed headwinds and
geopolitical uncertainty, and as I write in
these pages again, I continue to see that
long-term approach as one of Schroders’
distinctive attributes.
Taking a truly strategic view has enabled
the business to act with conviction. Strategy
must always be actively managed and evolve
over time to reflect changes in circumstances,
and it is the Board’s responsibility to test
continuously both the viability and
deliverability of that strategy on behalf of all
stakeholders. Conviction requires leadership
positions to be taken across all aspects of
the strategy – delivery for clients, operational
efficiency, regulation and broader factors
such as sustainability.
Our approach also enables innovation
and the thoughtful application of new
technologies. The focus is always to ensure
that our clients reap the rewards, while
other stakeholders also benefit – including
Schroders’ employees, shareholders,
suppliers and the wider communities in
which we operate.
While our long-term approach and conviction
in our strategic diversification continue to
provide resilient results, the Board is acutely
aware of the need to adapt to changes in our
sector to preserve and grow value. We are
not complacent; the current environment
demands constant review and attention.
In 2023, we drove growth in areas of our
strategic focus, such as Wealth Management
and Private Markets. We also won significant
mandates in Solutions, where we are
entrusted with full fiduciary responsibility for
our clients’ assets.
Our strength is our
ability to look beyond
the distractions of today
and remain committed
to our strategy.
Dame Elizabeth Corley
Chair
We delivered an increase in our assets
under management to £750.6 billion and
attracted new clients with net new business
of £9.7 billion (before joint ventures and
associates), a notable achievement given
the difficulties facing active asset managers
across the world. We are pleased with the
quality of new business we secured, but
acknowledge that this was not sufficient to
deliver year-on-year bottom line growth
despite rigorous and thoughtful cost control.
In 2023, we reported operating profit of
£661.0 million and profit before tax of
£487.6 million.
As Peter Harrison, our Group Chief Executive,
and Richard Oldfield, Chief Financial Officer,
set out in their sections of this report, we
have managed our resources very carefully,
but always with key imperatives in mind.
These are that clients should continue to
receive the services and attention they
expect; that our control environment remains
strong; that we continue to innovate for the
future, and that talented employees see us
as the preferred place to work.
Achieving balance takes agility and skill, for
which I and the Board are grateful to our
executive Directors and their teams. With
continued market uncertainty and some
sectoral headwinds likely to continue, this
approach to running the business will
remain in 2024.
We continue to have a strong capital
position and this, combined with our financial
performance, has enabled the Board to
recommend an unchanged final dividend of
15.0 pence per share (2022: 15.0 pence). This
brings the full year dividend to 21.5 pence
per share (2022: 21.5 pence).
Schroders Annual Report and Accounts 2023
6
Subject to shareholder approval at the
Annual General Meeting the final dividend
will be paid on 2 May 2024 to shareholders
on the register on 22 March 2024.
Our resilience in the face of challenging
circumstances has arisen from our deliberate
and carefully executed long-term strategy.
First set out by Peter Harrison in 2016, it has
been regularly reviewed, stress-tested and
ratified by the Board.
The strategy, to bring together global
asset management capabilities across
public and private markets, and to develop
world-leading wealth management
services, is working. It has shown how the
core investment management, services and
platform strengths of the business can be
applied to counter a more challenging
operating environment.
Our position as a leading global active
manager brings responsibility. One aspect of
the business in which I take particular pride
is our recognised leadership in sustainability.
We view the consideration of sustainability as
fundamental to our fiduciary responsibilities
to deliver long-term returns. We constantly
search for investment opportunities in
transition technologies, mitigation and
renewable energy sources. We look for
investable opportunities to achieve a more
circular economy, while also considering the
societal and community aspects of the goal
to reach net zero by 2050.
This, coupled with active engagement as
a way of adding value to clients’ assets, is a
true differentiator for Schroders and delivers
stronger returns over the longer term.
Our People
In 2023, we redoubled our collective efforts
to improve inclusion and diversity across
Schroders, an area of focus that the Board
cares deeply about. We met with leaders
of our Employee Resource Groups last year
to understand how the Company can
encourage inclusion. We plan to meet
with them again this year to discuss
our progress.
Linked to our “Inclusion at Schroders”
report was the inaugural publication of
our ethnicity pay gap report, a significant
milestone, after a comprehensive
programme of engagement with our
employees to gather the required data.
There has been plenty to learn, and we
acknowledge we are not where we aspire
to be.
This coming year, we will work tirelessly to
address the inclusion and diversity imbalance
across not just our workforce, but also
the wider asset management industry, as
we believe an inclusive and diverse workforce
is directly linked to better outcomes for
our clients, and thus our shareholders.
We are a people business. This is not a trite
phrase but a fundamental truth about
how we create value for our stakeholders.
We rely on the talent and dedication of each
member of our team wherever they are
located and whatever their role. The Board
and management team may determine the
strategy, but only our people can execute it
and deliver value for our clients.
Whenever I meet colleagues, I am
consistently impressed by their ability to
innovate and adapt and by their commitment
to the Company. The professionalism and
resilience of our people continues to inspire
me. On behalf of the whole Board, I would
like to express our thanks for your
tremendous efforts.
The Board
Just as we need to keep evolving our strategy,
so the skills around the Board table need to
develop. We have seen several changes on
the Board in the last year. In August, Paul
Edgecliffe-Johnson stood down as he needed
to focus on his new executive role. In the
short time he was with us, Paul added a
valuable new perspective and, on behalf of
the Company, I would like to thank him for
his contributions. Annette Thomas joined us
in September as an independent non-
executive Director. Her digital, data and
analytics expertise will be of great benefit
to us as we continue to invest in these
important areas.
At the end of the year we said goodbye to
Richard Keers, our Chief Financial Officer for
the last 10 years. Richard has been not only a
highly effective and dedicated CFO, but also a
great colleague to Peter Harrison and many
others. The Board is grateful to Richard for
all he has done for the Company. After a
thorough search, we appointed Richard
Oldfield as CFO and a Director in October.
In January 2024, Iain Mackay and Frederic
Wakeman joined the Board as independent
non-executive Directors, bringing invaluable
global public company and private assets
experience respectively. Further details of
their skills and backgrounds, together with
more information on all the Board changes
are provided in the Governance section of
this report.
Sadly, our next AGM will see the departure of
Rhian Davies who, having served almost nine
years, has decided not to seek re-election.
We owe Rhian a huge debt of gratitude for
the contribution she has made, especially
during her tenure as Chair of the Audit and
Risk Committee. Her thoroughness and
attention to detail are legendary and have
served us well. Rhian will be succeeded by
Iain Mackay.
I would like to thank all my colleagues on the
Board for their diligence and contribution.
Every year we expect more from our
Directors, both non-executive and executive,
and they always continue to deliver.
Dame Elizabeth Corley
Chair
28 February 2024
Schroders Annual Report and Accounts 2023
Strategic report
Overview
Governance Shareholder informationFinancial statements
7
DELIVERING
 GROWTH
Schroders Annual Report and Accounts 2023
8
Discover how our long-term strategy
and business model are allowing us to
expand, even in the face ofongoing
macroeconomic changes andchallenging
market conditions.
Group Chief Executive’s statement 10
Strategy 14
Sustainable business 18
Our business model 20
Schroders Annual Report and Accounts 2023
9
Shareholder information Financial statementsGovernance
Schroders Annual Report and Accounts 2023
Strategic report
Delivering growth
Group Chief Executive’s statement
Performing
strongly despite
headwinds
Seven years ago, we set out Schroders’
strategy based on our analysis of the
trends likely to play out in the years ahead.
That strategy has stood the test of time.
It gave us resilience in the challenging
year of 2023 and enabled us to perform
strongly relative to the wider industry.
It remains relevant for the future.
Over recent years, the capabilities and size
of our business have changed significantly,
and we are fortunate that our stable
ownership structure allows us to keep our
sights on the long term. We have pivoted
towards higher longevity and higher margin
areas of strategic growth such as Wealth
Management and Private Markets, which
generated positive growth for the business in
2023. We have reshaped the business for the
future, and the resilient performance in 2023
was a proof point of our success.
Our performance underlines how our
strategy differentiates us from our peers.
Getting to this position has taken years of
planning and investment, and while the
benefits are apparent now, we can be
confident that more will come through.
In 2023, our revenues and profits were
impacted by the fall in markets the year
before. However, despite the industry
headwinds, we saw notable growth in
assets under management and positive
net new business, winning some important
and valuable clients.
Navigating a year
of global turbulence
Many of the problems confronting investors
in 2023 have been years in the making.
They were evident a decade ago but today
they are more acute, more visible and in
some cases – for those not prepared –
more damaging.
When we set our strategy in 2016, we were
witnessing a shift from active to passive
investment management. Fees were under
pressure. Public markets were dropping from
favour, with both investors and fund raisers
looking increasingly to private markets.
Technology innovation was a catalyst for
change and more was on the horizon.
Those issues were important then: they have
become critical now.
There are wider external factors which are
harder to prepare for. In 2023, geopolitical
stress-points formed only part of the
backdrop to a period of extreme change
– socially and economically. With inflation and
interest rates having risen rapidly in 2022,
last year was still very much about navigating
the aftermath of one of the largest monetary
experiments in history. The record flows of
$1.7 trillion into US money market funds in
2023, boosting assets to $6.3 trillion
1
, was
evidence of this: cash, for the first time in
many years, became a viable competitor to
risk assets.
Central banks battled to quell inflation, with
average inflation across the G7 group of
major economies declining to 3% year-on-
year in December, from a peak of almost
8% in 2022. This continued to drive volatility
in public and private markets, posing
challenges for us and our clients.
The imperative of decarbonisation
gained further momentum, increasingly
underpinning the everyday decisions that
we
make as investors and our clients make in
their businesses. While 2023 was hailed as
“the year of AI”, it marked only the first chapter
in a new wave of technological disruption.
The foundations of
change and growth are
in place; the benefits
are already apparent
and more will follow.
Peter Harrison
Group Chief Executive
Schroders Annual Report and Accounts 2023
10
We have seized opportunities
instructural trends
Core to the strategy we set out seven years
ago was to identify opportunities within what
appeared, at first glance, to be threats to
the industry. Hence the careful, deliberate
build-out of Schroders Capital, our private
markets business. The explosive growth
in private markets since then, and the
comparative decline in public ones, has
posed a mounting dilemma for our clients.
Initial public offering exits in the US totalled
$6.8 billion in 2023. This was just 2% of the
$297 billion total value of IPOs in 2021’s
bumper year.
3
By the start of 2023 less than
15% of US companies with revenue of over
$100 million were listed on a stock market.
4
Schroders Capital offers a solution to
investors with public-only exposure – but it
has become more than that; it has become
a source of innovation within the private
market space in its own right. For example,
through Schroders Greencoat, we are giving
investors access to private infrastructure and
at the same time, driving cutting-edge wind
and solar technologies.
As part of our strategic goal of connecting
more closely with clients we have built our
multiple wealth brands serving different
market segments from affluent to ultra-high-
net-worth customers. Similarly, the growth of
outsourced chief investment officer (OCIO)
offerings in the pensions arena was initially
a concern, but the creation of Schroders
Solutions, as an independent unit within the
wider Group, has become a significant draw
for new business.
As part of our conviction that active
management is the right approach, we have
taken a leadership position in sustainability
and stewardship. We have amassed deep
intellectual capital in Schroders’ range of
tools, for instance SustainEx™, which helps us
better understand and measure sustainability
exposures, risks and opportunities. This is
also true of our data and governance
processes. Our investment into all of these
areas is increasingly validated by both
external events and clients’ expectations.
2023 was the warmest year on record,
registering a global temperature of 1.48°C
above the 1850-1900 pre-industrial average.
5
Our industry is responsible for reallocating
billions of dollars of capital that will be
needed to realise net zero commitments.
88% of our public market AUM had a better
SustainEx™ score
6
than their benchmark,
up from 86% in 2022. Schroders’ portfolio
temperature score of in-scope
7
assets fell to
2.5°C as at the end of 2023. The huge risks
and opportunities posed by the energy
transition mean many clients expect
sustainability considerations to be deeply
embedded in our oversight of their assets.
The narrowness of markets in 2023
was
striking; this is a tricky backdrop for
investment performance for active managers,
particularly given the significant volatility in
bond markets. Over three and five years, 60%
and 77% of client assets have outperformed
their respective benchmarks
8
. These figures
are impacted by the performance of multi-
asset portfolios that are measured against
absolute return benchmarks.
Global revenue shifting significantly to private markets by 2027
2
1. U.S. Money Market Fund Monitor | Office of Financial Research.
2. BCG, Global Asset Management 2023. Figures may not sum due to rounding.
3. PitchBook, 2023 Annual US PE breakdown.
4. S&P Capital IQ data as of December 2022; Statistics of US Business; Bain analysis.
5. Copernicus Climate Service, December 2023.
6. Portfolios are considered in scope for assessment if SustainEx™ data coverage
of both fund and benchmark is greater than 66.7%. Where one portfolio holds
another portfolio, such cross-holdings can lead to double-counting.
7. Current in-scope asset classes for SBTi include listed equities, corporate bonds,
real estate investment trusts and exchange-traded funds. This represents more
than 50% of our AUM.
8. For more information about how we calculate client investment performance
see the Glossary on page 186.
Alternative assets
Active specialities
Solutions, LDI, and balanced
Active core
Passive
Peter Harrison
Group Chief Executive
$133bn $180bn $260bn $376bn $386bn $470bn
3%
34%
6%
26%
31%
$42bn
$3bn
$46bn
$8bn
$35bn
$11bn $22bn$6bn $22bn $30bn
17%
$65bn
$67bn
10%
$38bn
$16bn
9%
$44bn
18%
$68bn
24%
15%
$72bn
50%
$193bn
41%
55%
$258bn
2005 2010 2015 2021 2022 2027E
6%
14%
4%3%
22%
$56bn
24%
$43bn
12%
$30bn
9%
23%
$59bn
$43bn
40%
$103bn
$73bn
46%
$172bn
6%6%
19%
11%
19%
$70bn
$41bn
$71bn
Product type
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
11
Strategic report
Delivering growth
Group Chief Executive’s statement continued
Last year, we focused on re-shaping the
world-class technology platform we have
developed, enabling us to offer Schroders’
expanded range of products to clients. This
process of unlocking additional value by
bringing different components of the Group’s
capabilities together for clients was a major
piece of work in 2023 and the foundations
are laid for success stretching far into
the future.
The mass arrival of generative AI heralds
painful disruption for many industries. But
it promises big wins for businesses which
become early adopters, identifying and
harnessing its potential. In 2023, we rolled
out our AI tool, Genie, to our people
worldwide. We are actively developing
use-cases in our investment processes
and across diverse business functions.
AI captures headlines, but new technologies
are driving disruption on other fronts also.
We see digital assets and tokenisation as
a powerful emergent trend which will
significantly impact investment management,
increasing transparency, efficiency and
security – and driving down costs. As an
example of Schroders’ work in this area,
2023 saw the formal launch of the “Project
Guardian” initiative, in collaboration with
regulators and partners in Asia and
elsewhere, which will explore the capabilities
of tokenised investment vehicles.
The migration of growth around the globe
is both a challenge and an opportunity for
businesses. Capturing geographic growth
is part of the story of our strategic success,
and we have made recent gains in Asia,
but geographic expansion is not something
limited to Schroders’ recent history. In
October 2023, we were proud to celebrate
100 years of Schroders in New York, where
in 1923 we founded a bank with the stated
ambition of becoming a “first-class name”.
Thanks to the work of generations of
colleagues that aspiration has been
achieved and maintained.
Future growth will come from many parts of
the world. We now operate in 38 locations
and we continue to see China as a key
market in the decades ahead. Following the
launch of our Wealth Management Company
venture with Bank of Communications in
April 2022, in December 2023 we reached
another significant milestone, launching the
first product within our new wholly-owned
Fund Management Company, which raised
RMB 1.3 billion (£140 million) in its first
two weeks.
The groundwork for future growth
is in place and it is delivering
Our capabilities and the scope of our client
offering have developed significantly over
recent years, anticipating the increasingly
complex needs of our clients.
As part of this, we made a series of
acquisitions and funded organic growth
in several areas within the private markets
sphere. In 2017, Schroders bought private
equity specialist Adveq. Subsequent
acquisitions added a wider range of
capabilities to our offering: we bought
majority stakes in leading impact manager
BlueOrchard in 2019 and renewable energy
specialist Greencoat Capital in 2022. These
have become key components of Schroders
Capital’s capability.
Today, our reach is broad: Schroders
Greencoat funds are the largest financial
owner of operational solar and wind assets
in the UK. We have financed 30 million micro,
small and medium enterprises and have
created or maintained over 100 million jobs,
a feat made possible by the impact expertise
and vast experience within BlueOrchard.
In 2023, we launched a European Long-Term
Investment Fund (ELTIF) to clients within the
EU. In August, we were approved to launch
the first equivalent UK investment vehicle,
the Long-Term Asset Fund (LTAF). These
investments help “democratise” private
assets, allowing access to a wider audience
of individual investors, something we see as
a core theme in private markets.
In Wealth Management our platform has
similarly widened. As a result, in 2023 we saw
new business flows as more clients across
the wealth spectrum entrusted us with their
assets. In the high and ultra-high-net-worth
segments, our investment in regional UK
branches of Cazenove Capital has paid off.
Our 2018 partnership with Lloyds Banking
Group is delivering in this space and through
the ongoing growth of our mass affluent joint
venture, Schroders Personal Wealth.
Our solutions business continued on the
success of earlier years. The gilt crisis of
2022 had alerted pension clients to potential
tsunamis as markets adjusted to higher
rates. In light of those dangers, our model
and the levels of service we were able to
provide, following the acquisition of River and
Mercantile’s UK solutions division in 2022,
emerged as winners. We subsequently saw
the business return to net inflows with
positive feedback from clients and
consultants alike.
In all, we have acquired and integrated 14
specialist businesses since 2016, reshaping
our client offering, differentiating ourselves
from competitors and remaining faithful to
the tenets of our strategy.
Making our voice heard in the
interest of clients, shareholders
andsociety
The problems we seek to address as a
business are those our clients grapple with
too. We are clear in the positions we take on
sustainability, impact, diversity and inclusion,
as we see these as aligned with the success
of our clients and their investments.
We also raise our concerns on other issues.
In the UK, for example, I am pleased to be
part of the UK Treasury’s Capital Market
Industry Taskforce, established in 2023 with
the aim to shape capital market reform in
the UK but also to influence the conversation
about the role of investment more widely.
This is not a UK-specific debate.
At their heart, these conversations all return
to the vital role investment can play in
delivering fairer, more prosperous societies
– and a more sustainable environment. We
would argue, as is central to our approach
of stewardship and active management, that
there need not be a binary choice between
growth and public interest: we can seek both.
Schroders Annual Report and Accounts 2023
12
We are clear in the
positions we take on
sustainability, impact,
diversity and inclusion,
as we see these as
aligned with the
success of our clients
and their investments.
We are active in working with governments
and regulators to steer the reforms that are
beneficial to clients and all our stakeholders.
The work we have done in 2023 in
supporting the ELTIF and LTAF initiatives
in Europe and the UK, for example, and
ground-breaking developments of tokenised
solutions in Singapore, are the early fruit of
our growing expertise and presence.
Quality of execution
Strategy does not win on its own: it needs
quality execution.
Schroders’ long-term DNA means that our
decisions are executed with commitment and
thoroughness. The achievements outlined
above are multi-year in nature and have
involved significant backing. We understood
the importance of the commitment. By virtue
of our ownership structure and long-term
culture we have been able to attract the
first-class talent to deliver it. We empower,
develop and aim to retain our people. We
are proud that 96% of our highly-rated
employees remain with us year after year.
Our people are proud to work for Schroders,
and it is that connected empowerment that
drives excellence for clients.
In October, we welcomed Richard Oldfield
as Chief Financial Officer. Richard was Vice
Chairman and Global Markets Leader at
PwC where he led market-facing initiatives.
He brings valuable expertise from a global
advisory environment, where clients sit in
the heart of a complex ecosystem.
I would like to wish Richard Keers, our
out-going Chief Financial Officer, a fulfilling
retirement, and thank him for the dedication
he has shown to advancing Schroders’
strategic ambitions over his ten-year tenure.
Finally, a thank you to all our talented
employees who have worked tirelessly to
deliver for our clients in difficult market
conditions. Our achievements are made
possible by their commitment, integrity and
passion, values which form the foundation of
our ongoing success.
Peter Harrison
Group Chief Executive
28 February 2024
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
13
Strategic report
Delivering growth
Strategy
Our strategy is
driving growth…
Our strategy has been in progress for more than seven years. It was
founded on our understanding of the changing needs of clients and
wider changes triggered by macroeconomic and industry trends. We
have deliberately shifted our business to capture these opportunities.
Our strategy
Lead in sustainability
Leadership in sustainability is central to our ambition to deliver for stakeholders over the long term.
Build closer
relationships
with clients
Close connections with clients enable us
to provide more relevant and tailored
investment solutions. They also promote
longer client relationships.
We are growing our wealth management
business across the spectrum of client
needs. We are also expanding our role as
a provider of tailored solutions to pension
and insurance clients, and other owners
of long-term assets.
Answering increasing client demand for
holistic advice helps us address downward
pressure on fees.
Expand our
private markets
business
By building a more comprehensive set of
capabilities across all private asset classes –
infrastructure, private debt, private equity
and real estate – we can now service clients
who are under-allocated to private markets
and who seek exposure. The ongoing decline
in public markets relative to their private
counterparts supports this element of
our strategy.
Future innovations such as tokenisation will
enable us to offer these assets to a wider
range of clients.
Grow
asset
management
Identifying businesses with the greatest
potential for excess returns from future
growth remains a key client need. We have
built a core set of global and differentiated
products that are actively managed. This
helps us meet growing demand for thematic,
sustainable solutions, and the characteristics
of these products shelter us from some
pricing pressures.
Our strategic partnerships give us access
to some of the world’s largest and most
promising markets such as the US, China
and India.
£453.6bn
Our focus areas
have grown
from 35%
of our AUM…
…to 56%
of our AUM
£750.6bn
Assets under management
1
1. Including joint ventures and associates.
Wealth Management 17%
Solutions 30%
Private Markets 9%
Public Markets 44%
2023
2016
Schroders Annual Report and Accounts 2023
14
…in a changing landscape
Global forces
Disruptive technologies
Generative AI and robotics will change
industries and economies in unpredictable
ways. Significant improved efficiencies are
possible, while potential challenges include
data management, lost employment and
regulatory challenges.
Deglobalisation
Growing conflicts and geopolitical
tensions are leading governments and
industries to rethink supply chains and
allocation of capital.
Decarbonisation
The transformation of global energy
systems needed to meet 2050 net zero
emissions targets demands enormous
investment. Estimates suggest $100 trillion
is needed between now and 2050.
Debt
Growing public debt around the world
increasingly shapes the market backdrop
and government fiscal policies.
Demographics
Ageing populations and migration are
driving increased need for healthcare and
pension spending in wealthier countries.
At the same time, debt and low growth
are creating economic constraints.
1. Digital and AI wealth management in Asia | McKinsey, 2023.
2. Polarisation and Financial Services Regulation, FSA 2000; Financial advice firms
in 2020 – Platforum, 2020.
3. BCG Global Asset Management 2023.
4. Schroders Global Investor Study 2023.
5. S&P Capital IQ data as of December 2022; Statistics of US Business; Bain analysis.
Opportunities
Global growth
in pensions
and savings
By 2026, an additional $2 trillion
investable assets will be accrued
by affluent and mass affluent
people in Asia alone.
1
UK advice gap
The number of financial advisers
working in the UK has fallen by
200,000 between 1991 and 2021.
2
Private market
expansion
The share of global asset
management revenues derived
from private markets is expected
to reach 55% by 2027.
3
Demand for
sustainable
investment
71% of expert investors strongly
agree that active engagement
adds value.
4
Industry trends
The search for
investment performance
By the start of 2023, less than
15% of US companies with
revenue of over $100 million
were listed on a stock market.
5
In contrast, private markets are
growing as companies seek
alternative sources of capital.
Pricing pressures
The popularity of passive
investments, which track indices,
is driving down fees across
the market.
The cost of doing business –
including technology, data, cyber
security defences and regulation
– continues to rise.
Changing investor needs
Demands for decarbonisation
and sustainability play an
increasing role in clients’
investment decisions.
With higher interest rates,
cash is playing a greater role
in clients’ active allocations.
Meanwhile, pension fund
trustees are increasingly
reviewing governance
and assessing the potential
benefits of an outsourced
investment approach.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
15
Strategic report
Delivering growth
Strategy continued
Our progress in 2023
How we delivered in our areas of strategic focus while improving operational efficiency
Continued to pioneer
new investment vehicles
We see digital assets and
tokenisation – turning
investment units into digital
tokens – as a powerful trend
which will impact asset
management, increasing
transparency, efficiency and
security, and driving down costs.
In June 2023, we announced our
participation in the Monetary
Authority of Singapore’s initiative
with key industry partners to test
the feasibility of tokenised assets
while considering and managing
risks to financial stability and
integrity. This is one of several
collaborations on tokenisation.
* Expand our private
markets business.
Introduced AI platform
for employees
Schroders’ internal AI assistant,
Genie, became available to
employees globally. Built on the
latest GPT models, Genie was
deployed rapidly and has over
1,800 weekly active users. There
are 80+ distinct use-cases across
the Group, including investment
research, translations and
software development.
Expanded our
renewables portfolio
Schroders Greencoat
entered into a joint venture
with UK independent energy
infrastructure development
company Carlton Power in early
2023; by the end of the year, the
venture – known as the Green
Hydrogen Energy Company –
had secured its first three
contracts from the Government
for sites across the
UK for hydrogen production.
The green hydrogen produced
will be used for industrial and
manufacturing companies in
local areas, helping decarbonise
their operations. Our focus is
on financing the projects,
leveraging the UK’s renewable
energy expertise.
* Expand our private markets
business, Lead in sustainability.
Grew Wealth Management
while reducing costs
We delivered strong flows of 8%
for advised Wealth Management.
This was achieved while
relocating roles from our service
centre in Zurich to the UK, to
drive efficiencies and support
our growth ambitions for our
wealth management businesses
globally. We saw positive organic
growth in our high-net-worth,
ultra-high-net-worth and charity
businesses during the year, with
particularly strong net new flows
at Cazenove Capital in the UK.
The current cost-of-living crisis
saw some investors prioritise
immediate spending. Despite
this, Benchmark Capital, our
adviser business, and Schroders
Personal Wealth, our joint
venture with Lloyds Banking
Group in the mass affluent client
segment, both attracted positive
flows, demonstrating resilience
in the current climate.
* Build closer relationships
with clients.
Schroders Annual Report and Accounts 2023
16
Delivered innovative ways
to access private markets
The opportunities for individual
investors to access private markets
are limited. To expand the options
available, the Financial Conduct
Authority introduced a Long-Term
Asset Fund (LTAF), to facilitate
investment in less liquid assets
such as private equity, property
and infrastructure. In March 2023,
Schroders Capital received
Financial Conduct Authority (FCA)
approval to launch the UK’s
first LTAF.
In addition, BlueOrchard launched
the Green Earth Impact Fund and
the Gender, Diversity and Inclusion
Fund; and the £1.1 billion
commercial real estate mandate
we secured was a compelling
endorsement a prestigious family
office client placed in our
operational and sustainability
expertise. Schroders Greencoat
plays a key role in allowing our
clients to finance the energy
transition. We were delighted
to be awarded a mandate by a
partnership of local government
pension schemes seeking to
deliver local impact and their
pathway to a greener grid.
* Expand our private markets
business, Lead in sustainability.
Reached further
milestones in sustainability
Our introduction of a new active
equity solution, the Customised
Decarbonisation Pathway, is
allowing us to help clients
effectively manage their climate
commitments. It is enabled by
our net zero alignment and
engagement framework and
overseen by an advisory group
comprising a range of specialists
from across our business.
In May, we launched carbon offset
share classes, providing investors
in our Global Climate Leaders
portfolio with the choice to offset
carbon emissions associated with
their underlying fund holdings.
Schroders was named “top
financial institution” in the Global
Canopy Forest 500 report, and we
were a 2023 signatory to the UK
Stewardship Code.
* Grow asset management,
Lead in sustainability.
Attracted new clients to
our solutions business
We saw £12 billion of inflows into
Solutions this year, driven by
strong demand for OCIO and LDI
services, one of our largest Asset
Management mandate wins,
cementing our position as a
trusted partner of choice
in Solutions.
We were awarded LDI Manager
of the Year at the European
Pensions awards, recognition
of our exceptional work in
navigating challenging market
conditions.
Mandate wins from high profile
charities highlighted our ability to
provide bespoke offerings to
clients by combining expertise
across our UK charities business
(in Cazenove Capital) and fiduciary
management specialists in our
solutions business.
* Grow asset management.
As we seek continued progress
against our strategy in 2024,
we are targeting these near-
term areas of focus
Client connection
Delivering our broad set of capabilities to
diverse, global clients requires a renewed focus
on productivity. Ensuring our Client Group has
the tools and data to deliver the whole firm to
the client is essential.
Wealth performance
Remaining committed to exceptional client
service and investment outperformance will
support continued growth.
Strategic partnerships
Schroders has a long history of successful
partnerships. Forming new partnerships and
nurturing existing ones is central to our
near-term growth strategy.
AI transformation
2024 will see continued assessment of how
we can embed the power of AI and other
technologies to drive greater efficiency and
improved products and service.
Employee engagement
Our people are our greatest asset, and we
want to be an employer of choice. Motivating,
rewarding and retaining our employees, and
creating an inclusive, diverse culture, will enable
us to better serve our clients.
* Our progress helps us deliver our strategy.
Read more on our strategic pillars on page 14.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
17
Strategic report
Delivering growth
Sustainable business
Acting with purpose
Long-term sustainability is a key basis
onwhich we assess the companies we
invest in. It is also central to the way
weoperate our own business, and we
expect to lead by example.
Our people
The commitment, drive and innovation
of our people enable us to deliver our
strategy successfully.
We aim to attract people with the skills and
passion to help us achieve our purpose.
This means creating a high-performing
culture that is inclusive, encourages diversity
of thought and provides employees with
opportunities to grow.
To maintain our position as an employer
of choice, we aspire to offer:
• Purpose, inspiration and inclusion.
• Fair pay for performance.
• A positive environment that prioritises
wellbeing.
• High-quality work and personal growth
opportunities.
Fair pay for performance
We aim to recognise and reward employees
with holistic compensation and benefits.
Our remuneration approach centres around
inclusion and fairness. Salary and bonus
decisions are governed by our Fair Pay for
Performance framework, meaning each
decision takes into account:
• Annual performance – Group-wide, team
and individual performance, including
behaviours and conduct.
• Market context – reviewing pay levels
and outlook among relevant comparators,
as well as wider economic conditions.
• Relativities and diversity – validation and
challenge of compensation proposals to
ensure fairness versus peers and markets.
• Individual context – considering
the skills, experience and potential of
each employee.
Carefully balancing all these factors allows
annual pay outcomes to be fair and drive
high performance.
We aim to provide generous benefits and
support to our employees compared with
local market norms. Our flexible offering
empowers people to choose options that
suit them.
Purpose, inspiration and inclusion
Data supports our view that an inclusive
culture and cognitive diversity deliver the
best outcomes for clients. This year, we
launched our 2030 inclusion and diversity
goals, covering multi-year inclusion,
transparency and diversity aspirations.
We hold ourselves accountable to change
through voluntary disclosures. We have
voluntarily published our gender pay gap
since 2017 and published our UK Ethnicity
Pay Gap this year, having achieved 80%
disclosure from our UK employees. For
further details on our workforce diversity
targets and progress, see page 96.
In keeping with our Equal Opportunities
policy, we give full and fair consideration to
all employment applications, including those
from disabled people, considering their
aptitudes, skills, behaviours and abilities.
If employees become disabled, we continue
to employ them wherever possible, with
retraining if necessary to enable continued
career development.
Find out more in our Inclusion Report at
www.schroders.com/paygap.
Glassdoor
Employees’
ChoiceAward
Named one of the UK’s top
50 best places to work 2023
What matters
to you at work?
Our ability to attract and retain
high-performing employees globally
is critical to delivering our strategy.
We have been recruiting into our
Schroders Campus in Horsham this
year and work hard to explain to
people what makes working at
Schroders special.
Our values
Excellence
Our commitment to excellence
fuels our drive to create value
for all stakeholders and a thriving
long-term future for our business.
Innovation and teamwork
We disrupt the status quo,
anticipate future opportunities,
and embrace the transformative
power of teamwork. We aim to
deliver value by valuing individual
contributions and by harnessing
the power of collaboration.
Passion and integrity
We are determined in our ambition
and pragmatic in delivery. We carry
out our responsibilities with great
care, energy and determination.
This is complemented by a culture
of transparency and accountability.
Schroders Annual Report and Accounts 2023
18
Positive work environment
that prioritises wellbeing
We give our people autonomy and flexibility
within a supportive environment. Our global
Flexible Working Charter sits at the centre of
our inclusive culture and is an advantage in
attracting talent.
Our Wellbeing framework focuses on building
a healthy culture and ways of working.
Our Wellbeing Community is one of the
largest voluntary communities in the firm.
Recognising the growing challenges faced
by those with caring responsibilities, we have
enhanced our support for all carers, ranging
from childcare to elder care.
Our local Wellbeing Hubs map out the
extensive support and benefits available to
employees. This includes guidance tailored
by specific career and life events including
divorce, infertility, menopause, financial
worries and more.
High-quality work andpersonal
growth opportunities
We support the development and career
aspirations of our people through training
and new opportunities driven by the growth
of the business.
Regular employee feedback helps us
prioritise initiatives with the goal of attracting
and retaining the best people. Our Global
Employee Forum is chaired by our Senior
Independent Director and meets regularly
during the year.
“Spark”, our global learning platform, provides
digital courses on personal effectiveness,
technical knowledge and leadership skills.
We develop bespoke learning opportunities
to give our people the skills they need to
deliver our strategy, such as in sustainable
investment, data analytics techniques and
the Spotlight Programme, a career
development initiative tailored to ensure we
have a robust pipeline of emerging talent.
Our Sustainable Leadership Programme
prepares future senior leaders to adopt a
holistic approach, focusing on purpose and
clients, whilst fostering growth through the
right behaviours and networks.
Investing
For more information about our approach to
investing sustainably, see page 28.
Planet
To learn about how we are performing
against our commitments on climate change,
see page 30.
Community
Community investment is a core part of our
culture; developing our people’s talents and
helping us act with purpose.
Our approach is overseen by our Global
Charity Committee, which reports to our
Group Sustainability and Impact Committee,
with regional committees, champions and
Employee Resource Groups to mobilise and
co-ordinate activities.
Corporate giving
In 2023, we committed £5.4 million
1
to
charitable causes around the world (2022:
£5.2 million), £1.4 million of which was
outside the UK (2022: £1.4 million).
Donations committed to
charitable causes
£5.4 million
2022: £5.2 million
Employees who agree we demonstrate
our corporate responsibility
87%
to support the environment and society
Retention of
high-performing employees
96%
This represents a committed
and engaged workforce.
Our commitment
to inclusion
87%
Employees who agree that we are committed
to inclusion and diversity in the workplace.
Employees who recommend
Schroders as a good place to work
86%
We outperformed the benchmark
for high-performing companies.
Employees who are
shareholders of the company
71%
This creates strong alignment for stakeholders.
1. We have included charitable sponsorships,
memberships and research in 2023 as per the
Business for Societal Impact (B4SI) methodology.
We are looking to increase our impact reporting.
2. Calculated using the B4SI methodology.
Charity partnerships
Our charity partnerships focus on improving
equality and protecting the planet. They give
our employees opportunities to get involved
through: supporting mental health; tackling
equity and social mobility; promoting
entrepreneurship, innovation and leadership
in young people; and protecting the
environment.
Employee giving
We provide generous matching schemes
to support our people in volunteering,
fundraising or donating. From offering 16
hours of paid volunteer leave per year to
payroll matching, we encourage our people
to offer their skills and time.
Our employees registered 5,344 hours of
volunteering during office hours in 2023,
a 46% increase from 2022. This equates to
a monetary value of almost £500,000
2
.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
19
Strategic report
Delivering growth
Our business model
Delivering the
whole firm
We have two business segments, Asset and Wealth
Management. The breadth of capabilities within these
segments gives us scale and reach to understand and
serve our clients’ complex needs, with actively managed
investment solutions across public and private markets.
Infrastructure
Delivery of our services across Asset and Wealth Management is made possible by our robust and scalable operating platform.
Critical capabilities that support the business include Technology, Operations, Finance, Risk, Human Resources, Compliance, Legal,
Governance, Internal Audit and Tax.
Our investment strategies cover:
• Equities
• Fixed income
• Infrastructure
• Multi-asset
• Private debt
• Private equity
• Real estate
• Risk mitigation
Solutions
£228.3bn AUM
Our solutions business helps institutional
clients answer the most complex investment
challenges at scale with strategic advice, an
advanced investment process and integrated
implementation model. Clients benefit from
access to our investment expertise across
public and private markets.
Public Markets
£237.7bn AUM
Our investment expertise across publicly-
listed asset classes and markets means
we
can meet clients’ investment needs at
different phases of the economic and market
cycle. Our mutual funds deliver a wide range
of investment strategies that are distributed
to retail clients through intermediaries and
investment platforms. Segregated accounts
support institutional clients by enabling us to
provide more tailored investment strategies
across asset classes.
Private Markets
£66.2bn AUM
Private markets offer investors the
opportunity to access returns from assets that
are not otherwise available through public
markets. Investment opportunities across
private equity, private debt, real estate and
infrastructure have historically been available
only to institutional investors and ultra-high-
net-worth clients. Innovations we are making
in new collective investment vehicles mean
they are increasingly available to a wider
range of clients.
Wealth Management
£110.2bn AUM
Our wealth management businesses,
Cazenove Capital in the UK and Schroders
Wealth Management internationally, provide
investment and advisory services to high-
and
ultra-high-net-worth clients. Benchmark
Capital offers financial planning and advice
to
a broad range of clients and provides
an
investment platform used by advisors
across the UK to help them meet the needs
of
their clients.
Associates and
joint ventures
£14.3bn AUM
Our joint venture with Lloyds Banking
Group, Schroders Personal Wealth,
offers financial advice to affluent clients.
Associates and joint ventures
£93.9bn AUM
We partner with leading firms,
including Bank of Communications in
China and Axis in India, to access these
high-growth markets.
Wealth Management
Investment, advisory and platform
services across the wealth spectrum.
Asset Management
Active investment management across public and private
markets through mutual funds and institutional mandates.
Schroders Annual Report and Accounts 2023
20
Our process
How our business works
We aim to achieve our purpose by combining investment expertise with extensive market
data to actively manage clients’ investment capital.
To do this we need to attract and develop talented employees and maintain a robust,
scalable operating platform. By serving clients’ needs we aim to deliver positive outcomes
for all stakeholders.
Understand our
clients’ needs
We develop a clear view of clients’ evolving
needs by focusing our resources around key
client segments. This supports our goal to
build deeper, longer-lasting relationships. In
Asset Management we offer investment
opportunities across public and private
markets that respond to clients’ needs in
different circumstances. In Wealth
Management, we also direct our resources
to
meet clients’ needs across the wealth
spectrum through differentiated brands and
tailored client services.
Responsible stewards of assets
We are stewards of £750 billion of assets.
By managing them responsibly we can
deliver better performance for our clients.
We believe that responsible investing
is helping businesses in their transition to
a more sustainable model.
Growing people’s
savings and pensions
We strive to create a brighter future for our
clients, investors and planet.
It is imperative that we never lose sight of
the individuals who entrust us with their
savings, which is why clients are at the heart
of everything we do.
Shareholder returns
Creating shareholder value goes hand in
hand with our core aim of providing
excellent performance to clients. Being
able to service client needs, while
thoughtfully allocating capital to higher
growth areas, allows us to generate stable
returns for our shareholders over the
long term.
Create innovative
products and solutions
We recognise that clients have a wide
variety of needs and goals. By combining
client insights with market knowledge, data
and our strong investment capabilities, we
can design bespoke products and solutions.
These are designed to fit
our clients’ risk and return profiles, and any
sustainability preferences. They are
rigorously tested to ensure that they are fit
for purpose.
How we create value over the long term
Investee company engagements
6,724
Dividend per share
21.5p
Client meetings
34,518
For more information on our stakeholders see page 44.
Actively manage investments
Asset Management
Our experienced investment professionals
specialise by asset class, taking an active
approach to managing solutions designed
to build our clients’ future prosperity over
the long term.
Wealth Management
Relationship management teams draw
on research and analysis from Cazenove
Capital’s central investment strategy, and then
overlay clients’ individual needs to choose the
most suitable investments.
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How we earn money
We charge fees as a
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assets under management
and when clients use our
platform or advisory
services. We may also
earn performance-based
revenues.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
21
Strategic report
Delivering growth
PRIORITISING
 PERFORMANCE
22
Schroders Annual Report and Accounts 2023
Learn about the financial performance
ofour business and the robust risk
management framework across our
diversified business.
Business and financial review
24
Investing sustainably
28
Climate-related financial disclosures
30
Risk management 38
Stakeholder engagement 44
Non-financial and sustainability
information statement 46
Viability and going concern statement 47
23
Schroders Annual Report and Accounts 2023
Strategic report
Prioritising performance
Shareholder informationFinancial statementsGovernance
Business and financial review
Conviction in
our strategy
In the five months
sincejoining,
I have witnessed
the remarkable daily
innovation that sets
Schroders apart.
The energy and
enthusiasm are truly
astonishing. From
product development
toartificial intelligence,
Schroders is ahead of
the curve, delivering
cutting-edge solutions
to our valued clients.
This year’s results continue to
demonstrate that our strategy is the
right one. We generated growth through
positive net inflows of £9.7 billion
(excluding joint ventures and associates).
Our financial performance remained
resilient, showcasing the benefits of
our client-centric strategy in the face
of what continue to be challenging
market conditions.
We reported an operating profit of
£661.0 million (2022: £723.0 million)
and profit before tax of £487.6 million
(2022: £586.9 million). Profit after tax was
£402.6 million (2022: £486.2 million). The
Board has recommended a final dividend
of 15.0 pence per share (2022: 15.0 pence
per share). This results in a total dividend
for the year of 21.5 pence per share
(2022: 21.5 pence per share), and a
payout ratio of 66% (2022: 57%).
Growth through our
client-centric strategy
Our strategy, as outlined in the Group
Chief Executive’s statement, is built on a
deep understanding of both investment
markets, and importantly, our clients’
needs. This informs our decisions, and
enables us to develop the right expertise
to deliver the solutions that address their
specific requirements. The investments
we have made in our strategic growth
areas of Wealth Management, Private
Markets and Solutions, combined with
our know-how in Public Markets, have
positioned us with the investment
capabilities required to achieve this.
The value of this strategy is highlighted by
the positive net new business we generated
across these three strategic growth areas. In
2023, our combined net inflows from Wealth
Management, Private Markets and Solutions
amounted to £23.1 billion (excluding joint
ventures and associates). The closing AUM
of these areas rose by 9% to £404.7 billion
(2022: £371.6 billion), and the net operating
revenue generated by them now accounts
for 48% of our total net operating revenue
(2022: 45%).
Importantly, these businesses not only
showed solid growth during the year, they
also provide a revenue stream with greater
longevity. The three-year average longevity
for these businesses ranges between 7 and
11 years, helping dampen the impact of a
risk-off environment and further supporting
the longer-term rebalancing of our business.
Perhaps unsurprisingly, our public markets
business, comprising Mutual Funds and
Institutional business areas, was not immune
to the broader industry headwinds. In
addition, amid heightened market volatility,
the rise in interest rates made cash a
competing option for generating returns.
These factors led to net outflows of
£13.4 billion in this business.
Overall, across the Group we generated
net inflows of £9.7 billion (excluding joint
ventures and associates) during the year.
In addition, the investment returns we
generated further bolstered our AUM.
As a result, and despite a foreign exchange
headwind of £19 billion, our closing AUM
(excluding joint ventures and associates)
increased by 4%, to £642.4 billion (2022:
£616.5 billion). We also continued to provide
long-term returns to our clients, with 77% of
our assets outperforming their benchmarks
over a five-year period.
Despite the growth in closing AUM, the
timing of movements meant that our
average AUM was 3% lower than in 2022
Richard Oldfield
Chief Financial Officer
Schroders Annual Report and Accounts 2023
24
at £619.7 billion (2022: £636.2 billion). This
reflected the impact of the significant market
falls towards the end of 2022, which did
not recover until late 2023. We were able to
largely mitigate the impact of this through
an increase in performance-based revenues,
which were 42% higher on the back of
returns generated for our clients. The growth
in net banking interest helped to offset the
impact further, meaning we saw only a
marginal 1% reduction in our net operating
revenue. This provides a further illustration
of the benefits of our diversified business
model. Overall, we generated net operating
revenue of £2,334.4 million (2022:
£2,361.4 million).
In recent years, we have seen significant
growth from our strategic partnerships
in Asset Management, including our
longstanding interest in our venture with
Bank of Communications. Developing these
relationships continues to be an important
part of our strategy. That said, in 2023, their
financial performance was impacted by
adverse foreign exchange movements
and the unfavourable market sentiment,
particularly in China. Within Wealth
Management, our joint venture, Schroders
Personal Wealth, began a strategic
restructuring to position itself for future
growth as part of its next phase of
development. Overall, across the Group, our
returns from joint ventures and associates
reduced to £51.1 million (2022: £77.6 million).
The returns from these interests are included
in our net operating income, which totalled
£2,419.0 million for the year (2022:
£2,475.5 million).
Our growth in recent years has led to a
broader client base, with different segments
requiring increasingly sophisticated,
specialist solutions. As part of our client-
focused approach, we have realigned our
Client Group to better meet the requirement
of clients across Wealth, Long-term Asset
Owners, Pensions and Retirement and
Insurance. This change positions us well
for the next phase of our evolution.
Simplifying and streamlining
our operating platform
Increasing the scalability of our operating
platform enables us to focus our resources
on adding value for our clients.
This year, we have made further progress
in simplifying our technology, leveraging
centres of excellence and streamlining
our processes.
The implementation of our Cloud
programme has yielded significant IT
improvements, providing us with enhanced
efficiency, agility and a reduced carbon
footprint as we move away from legacy
hardware assets and infrastructure.
Moreover, we have successfully avoided the
need for substantial costs associated with
overheads such as server enhancements,
and the simplification of our operating
structure has enabled us to carry out a
focused restructuring programme during
the year.
We are also continuing to benefit from
our centres of excellence. Our Schroders
campus in Horsham is a prime example of
this. Established in 2019, this campus has
been instrumental in providing operational
support to a significant portion of our Group
globally. In 2023, we took the decision to
leverage this capability further by
commencing the relocation of our wealth
management service centre from Zurich.
The move, which will complete in 2024,
brings together our Asset Management
and Wealth Management operating centres,
allowing us to benefit from operational
synergies and deliver ongoing cost savings.
The year was also marked by further
streamlining efforts following the acquisitions
we completed in 2022. In Solutions, we
completed the integration of River and
Mercantile’s solutions business which has
allowed us to meet the increasingly complex
needs of pension fund clients and furthers
our ambition to become the provider
of choice for fiduciary management.
In Schroders Capital, the acquisitions in
2022 mean we have largely completed
the build-out of our capabilities. We
are now focused on enhancing our
operating platform across these asset
classes to provide a scalable platform for
further growth.
These changes clearly benefit our business
and enable us to serve our clients better.
They also demonstrate the fact that we are
working hard to combat the inflationary
pressures we are seeing around the globe.
Our non-compensation costs for the
year increased by 2% to £645.6 million
(2022: £631.3 million). This reflects our
continued focus on cost discipline in the face
of inflationary pressures along with some
one-off benefits received during the year.
We have been equally disciplined in our
approach to compensation costs. These
costs reduced slightly to £1,112.4 million
(2022: £1,121.2 million). This represents
an operating compensation ratio of 46%
(2022: 45%), which balances strong cost
management with the need to support our
talent and continue to invest in strategic
growth areas. Our people are paramount to
the successful delivery of our strategy and we
are therefore proud to note that 96% of our
high-performing employees were retained
in 2023.
After bringing all of these components
together, we generated an operating profit
of £661.0 million (2022: £723.0 million).
Restructuring costs and
other non-operating items
Our commitment to building a healthy
business and proactively dealing with change
in the industry has meant we have reviewed
our operating activities and restructured
parts of the Group. This has led to a
restructuring charge of £86.2 million.
The costs are largely compensation in nature,
and principally relate to the simplification of
our technology footprint, the relocation of
our wealth management servicing platform
along with reorganising our Client Group and
other parts of the business. These initiatives
allow us to reinvest our resources in the
capabilities needed for long-term growth
and in creating value for our clients
and shareholders.
Central costs increased to £52.9 million from
£48.8 million in 2022. These represent costs
associated with the corporate management
and governance of the Group and the costs
incurred as part of our strategic corporate
development and treasury activities.
The Group holds seed and investment capital
and we generated a net gain on financial
instruments and other income of
£32.1 million (2022: loss of £6.7 million) and
net interest income increased to £23.6 million
(2022: £5.8 million). Acquisition costs and
related items increased slightly to
£90.0 million (2022: £86.4 million), principally
due to higher amortisation costs.
The combined impact of these movements
along with the profit from our operating
segments resulted in a profit before tax
for the year of £487.6 million (2022:
£586.9 million). Profit after tax was
£402.6 million (2022: £486.2 million).
Reflecting on 2023
While the year brought considerable
challenges to the asset management
industry, I am proud of Schroders’ resilient
performance and am convinced that this
is due to our unwavering commitment to
our strategy.
Through the incremental steps taken
to develop all parts of the business, we
are positioning ourselves to serve clients
across all parts of the investment
management sphere.
Richard Oldfield
Chief Financial Officer
28 February 2024
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
25
Strategic report
Prioritising performance
Business and financial review continued
Public Markets
Asset
Management
Wealth
Management
Total (excl.
JVs and
associates)
Joint
ventures and
associates£ billion
Private
Markets Solutions
Mutual
Funds Institutional
Group
Total
Opening AUM 68.3 210.2 100.8 139.1 518.4 98.1 616.5 121.0 737.5
Restatement
1
(4.6) (0.4) 4.0 1.0 – – – – –
Revised opening 63.7 209.8 104.8 140.1 518.4 98.1 616.5 121.0 737.5
Transfers
2
– – – (2.2) (2.2) – (2.2) 2.2 –
Gross inflows 9.3 46.3 30.4 22.3 108.3 17.8 126.1 330.8 456.9
Gross outflows (4.8) (34.3) (34.6) (31.5) (105.2) (11.2) (116.4) (339.5) (455.9)
Net new business 4.5 12.0 (4.2) (9.2) 3.1 6.6 9.7 (8.7) 1.0
Acquisitions – – – – – 0.8 0.8 – 0.8
Investment returns
3
(2.0) 6.5 2.9 5.5 12.9 4.7 17.6 (6.3) 11.3
Closing AUM 66.2 228.3 103.5 134.2 532.2 110.2 642.4 108.2 750.6
1. Real Estate Securities and externally managed GAIA funds have been reclassified to align with management responsibility. Associated revenues and margins have also
been restated throughout this Business and financial review.
2. Our interest in BoCom wealth management company has been reclassified from a subsidiary to an associate.
3. Includes markets, foreign exchange and investment performance. Foreign exchange decreased AUM (including joint ventures and associates) by around £25.8 billion
(2022: increase of £37.3 billion) and decreased AUM (excluding joint ventures and associates) by £18.6 billion (2022: increase of £34.0 billion).
Asset Management
Our Asset Management segment
experienced robust performance despite
ongoing market challenges.
The growth of our Asset Management
AUM to £532.2 billion (2022: £518.4 billion)
reflects our ability to navigate changing
market conditions through our diversified
business model and deliver value to
our clients.
This growth in AUM was driven by two
of our strategic growth areas: Private
Markets and Solutions, demonstrating
the alignment of our business strategy
with the market opportunity.
Net operating revenue, however,
reduced by 3% to £1,911.2 million
(2022: £1,967.1 million) largely as a result
of the market dynamics facing our public
markets business.
Results
£532.2bn
Assets under management
(2022: £518.4 billion)
£3.1bn
Net new business
(2022: -£7.0 billion)
£510.5m
Operating profit
(2022: £593.1 million)
Our business experienced good fundraising
in 2023 despite the broader slowdown in
market activity, winning £9.3 billion
(2022: £14.2 billion) of gross fundraising.
This drove strong net new business flows of
£4.5 billion (2022: £6.6 billion) with positive
flows across our four pillars: private equity,
private debt, infrastructure and real estate.
As at 31 December 2023, we had an
additional £4.0 billion (2022: £4.0 billion)
in non-fee-earning dry powder ready to be
deployed. Flows in our real estate business
were particularly strong, at £1.6 billion
(2022: £4.8 billion). Overall, net operating
revenue grew by 14% to £422.8 million
(2022: £369.8 million), with an increase in
management fees as well as record
performance-based revenues of £54.5 million
(2022: £18.8 million). The net operating
revenue margin, excluding performance fees
and carried interest, reduced to 57 basis
points (2022: 60 basis points) principally due
to lower real estate transaction fees.
Solutions generated impressive net inflows
of £12.0 billion (2022: nil), driven by strong
flows into our OCIO and LDI businesses. This
demonstrates the strength of our fiduciary
services following last year’s acquisition of
River and Mercantile’s solutions business.
Due to the timing of these flows, in particular
strong net new business in the latter part of
the year, and the impact of the gilt crisis on
the value of AUM towards the end of 2022,
our average AUM reduced to £212.1 billion
(2022: £225.0 billion). Net operating revenue
therefore declined to £268.5 million (2022:
£293.6 million) and the associated margin
excluding performance fees decreased to
12 basis points (2022: 13 basis points).
The rise in risk-free rates alongside wider
market volatility led to £4.2 billion and
£9.2 billion of outflows in our traditional
asset management businesses, Mutual
Funds and Institutional. While management
fees declined in the year, we continued to
perform for clients, generating £20.8 million
of institutional performance fees (2022:
£32.1 million). Overall, net operating revenue
for Mutual Funds and Institutional reduced
to £1,219.9 million (2022: £1,303.7 million).
Given the outflows from higher-margin
equity products, Mutual Funds net operating
revenue margin excluding performance fees
decreased to 69 basis points (2022: 71 basis
points). Our Institutional net operating
revenue margin increased by 1 basis point to
35 basis points (2022: 34 basis points) due to
outflows from lower-margin mandates.
The share of profits from our Asset
Management associates and joint ventures
generated a return of £48.7 million (2022:
£73.6 million), representing a reduction from
2022. Our strategic partnerships, such as
Bank of Communications in China and Axis in
India, are not only key contributors to Asset
Management operating profit but also
enable us to take advantage of further
opportunities in the markets in which they
operate. Performance during 2023 was
however impacted by adverse foreign
exchange movements and unfavourable
market sentiment.
Operating expenses in Asset Management
remained largely flat at £1,471.7 million
(2022: £1,475.6 million), reflecting our
continued focus on cost control despite
inflationary pressures.
Overall, these movements resulted in
operating profit of £510.5 million
(2022: £593.1 million) for the Asset
Management segment.
Schroders Annual Report and Accounts 2023
26
Wealth
Management
Wealth Management thrived in 2023,
achieving strong performance across all
three service lines: advice, managed assets
and our Benchmark platform.
A record high AUM of £110.2 billion
(2022: £98.1 billion) was supported by strong
net inflows of £6.6 billion: £4.9 billion in
advised; £0.5 billion in platform; and
£1.2 billion from managed assets.
Our advised business in particular had an
excellent year, achieving an NNB growth rate
of 8% and gaining further market share
through our UK regional development and
the strength of our charities business.
Across the Wealth Management segment,
net operating revenue increased by 7% to
£423.2 million (2022: £394.3 million), with
good growth in management fees and
higher net interest income. The net operating
revenue margin increased to 41 basis points
(2022: 40 basis points) reflecting the rise in
interest rates.
Schroders Personal Wealth was more
impacted by the UK’s difficult economic
environment but delivered positive net
flows of £0.3 billion regardless. Our Wealth
Management associates and joint ventures
generated £2.4 million of share of profits
during the year (2022: £4.0 million).
Operating expenses increased slightly to
£286.3 million (2022: £276.9 million).
The increase in the year principally reflects
our continued investment in this growth
area, both through strategic hires and
enhancements to our IT platform. As a result
of these movements, operating profit for the
segment increased by 16% to £150.5 million
(2022 £129.9 million).
In light of the overall market environment,
this represents very strong performance.
Results
£110.2bn
Assets under management
(2022: £98.1 billion)
£6.6bn
Net new business
(2022: £5.4 billion)
£150.5m
Operating profit
(2022: £129.9 million)
Financial strength
and liquidity
Our year-end capital position remains strong,
with a capital surplus of £630 million (2022:
£655 million).
The Group’s net assets were £4.5 billion
(2022: £4.5 billion). The different forms of
business that we conduct affect our total
assets and liquidity. Generally, assets that
are managed by the Group on behalf of
clients are not included in the consolidated
statement of financial position. There are,
however, certain exceptions to this.
Within Asset Management, certain clients
invest through life insurance policies that
are managed by our life company, Schroder
Pensions Management Limited. The assets
backing these policies are held by the life
company and are therefore included in the
consolidated statement of financial position
along with a matching policyholder liability.
Additionally, we consolidate certain pooled
funds which we are deemed to control under
accounting standards.
Within Wealth Management, the subsidiaries
that provide banking services are legally
responsible for the banking assets and
liabilities. They are therefore included in the
consolidated statement of financial position.
The assets are managed to earn a net
interest margin whilst having regard for the
liquidity demands that may arise from clients.
After adjusting for these structures, the
Group’s total assets comprised cash and
other financial assets of £2.2 billion (2022:
£2.4 billion) and other assets of £4.1 billion
(2022: £4.1 billion).
Cash and financial assets includes both
investment capital (mainly comprising cash,
cash-like funds and other funds managed by
the Group) and seed capital. During 2023,
investment capital increased by £73 million to
£257 million (2022: £184 million) and our
seed capital decreased to £314 million (2022:
£363 million).
Other assets include goodwill and intangible
assets, which are inadmissible for regulatory
purposes, and assets that support our
ongoing operating activities in the form of
working capital.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
27
Strategic report
Prioritising performance
Investing sustainably
Understanding and managing
social and environmental change…
Sustainability is integral to the way we
advise many of our clients, solve their
investment problems, and manage
their investments for the long term –
itis not a standalone activity.
Our operating context
Environmental and social change has the
potential to impact every economy, industry
and investment portfolio. Exposure to the
risks and opportunities these changes create
is unavoidable. Social and political views of
climate change, nature loss, inequality and
human rights failures are diverse. Our clients,
however, share a common goal of requiring
investment returns against a backdrop
of change.
2023 saw further backlash from some
quarters towards the premise of sustainable
investment. At the same time, many
advocates became increasingly vocal. This
divergence of views is likely to continue. It
does not alter our conviction that to deliver
the portfolios and performance our clients
expect, it is critical we continue to proactively
understand, measure and manage
sustainability-related risks and opportunities.
Our approach to
investingsustainably
The current focus by regulators is helping
establish common standards for sustainable
investment products and increased
transparency about the sustainability
characteristics of our funds. However, we
believe that effective sustainable investment
goes beyond complying with standard,
“off-the-shelf” ratings.
Active ownership
Constructive and committed engagement
with management teams at the companies
and assets we invest in is an important part
of our active investment approach. The table
below offers a snapshot of our engagement
in numbers.
Our approach is centred on incorporating an
understanding of social and environmental
trends into investment decisions and
stewardship. Trends like climate change,
nature loss, inequality and social unrest
can pose material risks. They can also
provide sources of opportunity. We treat
sustainability as a key investment question,
into which we invest time and resources to
establish distinctive insights. These are
underpinned by decades of sustainable
investment experience.
We recognise that clients have a wide
variety of needs and goals in relation to
sustainability, and we have established clear
frameworks to deliver thoughtful solutions.
Some clients seek opportunities to invest in
strategies that provide exposure to specific
sustainability themes, or which have a
positive impact on tackling those challenges.
We are able to provide strategies focused
on those goals. Doing so is not simple.
Identifying and understanding sustainability
themes and their consequences requires a
combination of sustainability, industry and
investment expertise.
A focus in 2023 has been on establishing
an impact framework building on more
than two decades of experience and industry
leadership in BlueOrchard. We became a
signatory to the Operating Principles for
Impact Management in 2022, and in
2023 we were pleased to be added to
BlueMark’s Practice Leaderboard, following
its assessment of our alignment to
those principles.
Engagements by theme*
Climate change 38%
Human capital management 26%
Corporate governance 15%
Natural capital and biodiversity 13%
Human rights 5%
Diversity and inclusion 3%
Climate+ LTAF
Democratisation of private markets is
something we were eager to make
available to our clients, and in March
2023, Schroders received FCA approval
to launch the UK’s first LTAF.
The fund, Climate+, is focused on private
asset investments that relate to climate
mitigation, adaption, biodiversity and
social vulnerabilities – an area we know
is important to many pension savers.
It is managed by Schroders Capital, our
private markets business, and available
to UK savers in certain pension funds
that have appointed Schroders to
manage their assets.
* The 4,020 total does not include letters sent
following AGM meetings to explain our voting
decisions. In 2023, we sent over 2,700 such letters
to investee companies, bringing our total number
of engagements to 6,724.
Schroders Annual Report and Accounts 2023
28
…so we can serve clients’ needs
Understanding
sustainabilityexposure
The integration and application of
sustainability factors into investment
decisions are an important part of our
strategy. Our dedicated Sustainable
Investment Team works with investment
colleagues across public and private
markets to develop research and build
proprietary models. SustainEx™, which
focuses on public market securities,
helps investment teams understand
and measure sustainability exposures,
risks and opportunities.
Individual investment desks, covering
Schroder-managed strategies, are
accredited on how sustainability issues
are identified, examined and incorporated
into investment decisions.
Active engagement in
ourclients’ interests
Engaging with the management teams
of companies in which we invest to
encourage and support them in adapting
to emerging social and environmental
pressures can be an important source
of value.
Our Engagement Blueprint, recently
extended to include private markets,
describes the areas on which we focus
and our approach. Each quarter, we
report our progress on engagement
with portfolio companies.
We view engagement and voting as
opportunities to influence portfolio
companies, which must be considered
on a case-by-case basis.
Meeting demand
withnewsolutions
Demand for sustainable investment
strategies continues to outpace the
wider global fund market. There is
particularly strong growth in demand for
products providing exposure to specific
sustainability themes or which deliver
positive impacts to help tackle social and
environmental challenges.
It is important that sustainable investment
strategies deliver the outcomes clients
want to achieve – rather than simply
comply with standardised requirements.
Recognised for excellence in
ESG Integration
Investment Week’s Excellence in
ESG Integration award.
Portfolios with SustainEx™
score above their benchmark
88%
(for portfolios to which these
scores can be applied).
53
pieces of substantive sustainability research.
6,724
sustainability-focused engagements
with 4,443 companies.
7,141
The number of shareholder meetings
we voted on.
73,370
The number of resolutions we voted on.
17
New sustainable investment
funds launched.
Climate+ LTAF
Launch of new private markets
Long-Term Asset Fund facilitated access
to investments in less-liquid assets.
Top of the
Global Canopy
Forest 500
Leading financial institution for
action on deforestation.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
29
Strategic report
Prioritising performance
Climate-related financial disclosures
Climate change represents an unavoidable risk to global
economies, industries and investment portfolios, but also
a source of opportunity. Meeting the commitments global
leaders made in Paris in 2015 to limit temperature rise to
below 2°C – and the targets to reach net zero, which have
been established in countries representing close to 90%
of global economic output – will inevitably be disruptive.
As a global investment manager, it is our responsibility to
deliver investment performance for our clients through
ourunderstanding of how the impacts of climate change
andnature loss will affect assets and investments.
Our climate change strategy
We have made a series of climate and nature-related commitments
to support achieving net zero by 2050 or sooner. These span
both the investments we manage and our own operations. These
commitments build on years of research, risk analysis, proprietary
tool development and action to understand and manage the
risks and transition opportunities posed by climate change and
biodiversity loss. We were among the first 20 financial institutions
to have our targets formally validated by the Science Based Targets
initiative (SBTi). The validation confirmed that our Scope 1 and 2
targets are in line with a 1.5°C trajectory and that our relevant AUM
is also targeted to be fully aligned with a 1.5°C pathway by 2040.
Our transition plan has four key pillars of action: our insights,
our influence, our innovation and our ability to use our position
to inspire others.
For Earth Day in April, our employees
volunteered to support six
impact-led environmental events
and initiatives across the globe.
1. www.schroders.com/tcfd
Meeting our climate
commitments
Reporting on climate matters
The following section is in accordance with the Companies
(Strategic Report) (Climate-related Financial Disclosures)
Regulations 2022. We have also produced a supplemental
detailed Climate Report to provide a more comprehensive
and tailored view for our stakeholders in accordance with
the FCA Listing Rule 9.8.6R(8). The following, read together
with our detailed Climate Report (which can be found on our
website
1
) is our response to, and is consistent with, all the
recommendations and relevant recommended disclosures
of the Task Force on Climate-related Financial Disclosures (TCFD).
These disclosures describe how we incorporate climate-related
risks and opportunities into governance, strategy, risk
management, metrics and targets and how we are responding
to the expectations of our stakeholders.
The investments
wemanage
2023 key metrics
Our own
operations
2023 key metrics
22.4 MtCO
2
e
Financed Scope 1 and 2
carbon emissions
(2022: 22.9 MtCO
2
e)
4,409 tCO
2
e
Scope 1 and 2 location-based
GHG emissions
(2022: 4,500 tCO
2
e)
53.9 tCO
2
e/$m
invested
Financed Scope 1 and 2 carbon
footprint
(2022: 59.1 tCO
2
e/$m)
98%
Percentage of global renewable
electricity consumption
(2022: 95%)
2.5°C
Temperature score for Scope 1 and 2
carbon emissions at portfolio level
(2022: 2.6°C)
13,265 tCO
2
e
Scope 3 business travel
GHG emissions
(2022: 8,675 tCO
2
e)
23%
Percentage of suppliers
(by GHG emissions) with
a science-based target
(2022: 25%)
Schroders Annual Report and Accounts 2023
30
Validated science-based targets.
1. Includes Scope 1 and 2 financed emissions for Schroders
direct listed equity, corporate bonds, REITs and ETFs.
2. Includes Scope 1, 2 and 3 financed emissions for Schroders
direct listed equity, corporate bonds, REITs and ETFs.
3. Third-party funds (including Schroders funds), which
Cazenove Capital selects within their discretionary business.
4. A proportion of Schroders Capital Real Estate directly
invested in UK and European discretionary mandates.
5. From a 2019 base year.
6. From a 2022 base year.
7. By greenhouse gas emissions.
All target years are by 31 December.
Our climate change strategy
Transitioning the
investments we manage to deliver
value over the longer term
Transitioning our
operations to lead the
way and have impact
 
Align portfolios
to a 2.2ºC
pathway
by 2030
1
State net zero
ambition for all
third-party listed
equity and credit
funds by 2030
3
Reduce carbon intensity of
Scope 1, 2 and 3 (tenant energy
consumption in Schroders
Capital Real Estate) by 16% by
2025 and 36%
by 2030
4,5
 
Reduce Scope
1 and 2 emissions
by 46% by 2030
5
 
Achieve 100%
renewable
electricity by 2025
 
Reduce
business travel
emissions
by 50% by 2030
5
 
Encourage our
suppliers to set
science-based
targets so that
67%
7
have done
so by 2026
2.5ºC
achieved
Near-term targets and progress
Insights
Measure and manage
exposure in our clients’
investment portfolios
1
Influence
Encourage and support
companies to act
more sustainably
2
Innovate
Develop investment
products and innovative
solutions to meet
clients’ needs
3
4
Inspire
Lead by example in our own
corporate actions
Key pillars of action
1.5°C
science-based pathway
Net zero
by 2050 or sooner
 
Align portfolios
to a 1.5ºC
pathway
by 2040
2
Achieve net zero
or net-zero aligned
pathways for all third-
party funds by 2040
3
2.8ºC
achieved
Long-term targets and
progress
35%
achieved
98%
achieved
39%
achieved
23%
achieved
Reduce Scope 1
and 2 emissions
intensity of Schroders
Greencoat assets by
50% by 2030
6
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
31
Strategic report
Prioritising performance
Climate-related financial disclosures continued
Strategy
Our sustainability strategy is embedded throughout our business.
Our strategic and financial planning process includes an assessment
of any changes needed to respond to climate and nature-related risks
and opportunities.
Risks and opportunities
By setting and meeting our targets, we expect the assets we invest in
will be less exposed to the risks of the transition. To embed this across
our investment business, our consistent, principles-based framework
for ESG integration requires each investment desk to consider
climate-related risks and opportunities. We complement this process
with an annual accreditation requiring each investment desk to
articulate how these factors are incorporated into their investment
process. This annual submission is reviewed and approved by the
central Sustainable Investment team.
The approach to identifying, assessing and managing climate risks
and opportunities differs depending on the category of asset class
and business:
• For our listed assets, the models and data encompassed in our
Climate Analytics Framework supports our investment teams to be
able to identify and assess climate-related risks and opportunities,
augmenting their own company and industry insights.
• For our private markets business, individual asset classes have
developed dedicated scorecards.
• In our wealth management business, and multi-manager teams,
we assess third-party managers on their alignment to the Paris
Agreement and the extent to which they consider climate-related
risks and opportunities in their investments.
For our own operations, we identify and assess climate-related risks
and opportunities by carrying out an annual inventory of all relevant
greenhouse gas (GHG) emissions. Our key operational risks and
opportunities are managed by the relevant business functions,
supported by the Corporate Sustainability team. The Group
Sustainability and Impact (GSI) Committee recommends the overall
strategy and monitors the progress against our targets.
The following tables show the climate-related risks and opportunities
related to the investments we manage and our own operations, along
with the time horizons in which we expect them to materialise.
• Short term: 0–5 years aligns with our strategic planning, business
forecasting, and viability assessment. Our RCA methodology
focuses on identifying and assessing risks that may crystallise
within the next five years, including physical climate risks for our
offices. It also reflects the typical investment duration of our clients.
• Medium term: 6-10 years is considered “near term” by the SBTi. This
timeframe reflects the period in which we expect material changes
in the climate exposures of investee companies resulting from our
engagement with their management teams.
• Long term: Beyond 10 years, the physical impacts of climate
change will intensify and the level of political action to address
climate change will become clearer. Our business may be
influenced by different climate scenarios over this extended period.
Investment
portfolio
risks Description Timeframe
Impact
Business
impact Actions to mitigate risk1.5°C 2°C 3°C
Transition:
Current
regulation
Potential risk of
regulatory breaches from
existing climate-related
regulation
Short
Regulatory
fine
We have invested significantly in data and technology
infrastructure, data security, and portfolio analysis and monitoring.
We have a sustainability regulatory programme that assesses
systematically the impact of new climate regulation and supports
with the implementation of live regulation.
Transition:
Future policy
and legal
Changes to climate-
related regulation that
impact our investee
companies’ products
and services
Medium
Reduced
revenues
We include the consideration of climate risks and opportunities in
our annual ESG integration accreditation process. Examples
include climate risk scorecards by our infrastructure debt business
and a maturity scale assessment adopted by our wealth
management business.
Transition:
Market
Climate change impacting
our product demand
through changing client
behaviour
Short
Reduced
revenues
We have developed our new Climate Product Framework, aligning
our private and public markets products to client decarbonisation
outcomes.
We conduct client surveys, for both institutional and retail clients,
to assess product demand.
Transition:
Reputational
Perception of not
having met our net
zero commitments
Medium
Reduced
revenues
and/or
litigation risk
We have established our climate engagement programme
(outlined in more detail on page 35).
Physical: Acute
The impact on investee
company operations from
extreme weather events
Medium
Reduced
revenues
Where data is available, we undertake scenario analysis to
determine the exposure of our investments to the physical risks of
climate change.
Physical:
Chronic
The impact on investee
company operations
from long-run changes
in climate
Long
Reduced
revenues
To the extent data allows, we undertake scenario analysis to
determine the exposure of our investments to the physical risks of
climate change.
The tables on pages 32 and 33 set out our assessment of different climate-related scenarios, enabling us to adapt and respond to climate-
related risks and opportunities and take appropriate mitigating actions where required. This analysis and framework supports our ongoing
strategic and business model resilience in respect of climate-related challenges and risks.
Impact rating
L o w
Medium
High
Timeframe
Short term: 0-5 years
Medium term: 6-10 years
Long term: 10+ years
Climate risks
Schroders Annual Report and Accounts 2023
32
Operational
risks
Impact
Description Timeframe
Operational
impact on
Schroders
Science -based
target impact Rating Actions to mitigate risk
Transition:
Policy and legal
Increased carbon
pricing on our
own emissions
Long Increased
costs
N/A
Our specialist teams monitor and analyse the impact of
regulatory change. Business change teams integrate
regulatory requirements into business processes.
Transition:
Policy and legal
Increased regulatory
requirements
Short Increased
costs
Scope 3 supply
chain target
Our specialist teams monitor and analyse the impact of
regulatory change. Business change teams integrate
regulatory requirements into business processes.
Transition:
Technology
Costs to transition
to lower emissions
technology for
own emissions
Medium Increased
costs
Increased
GHG
emissions
Scope 1 and
2 target
Scope 3 business
travel target
RE100 target
We carry out feasibility studies and modelling at property
level. We implement specific initiatives dependent on
technology (for example, building management system
upgrades, onsite renewables, electric car charging points).
Transition:
Market
Increased volatility
in energy prices
due to supply
chain disruptions
Short Increased
costs
Increased
GHG
emissions
Scope 1 and
2 target
RE100 target
We monitor contracts at property level. Where we procure
directly, we carry out energy market analysis and a tender
process to achieve a competitive price. RE100-compliant
contracts are prioritised and, where possible, onsite
renewables are being pursued.
Transition:
Reputation
Perception of not
having responded
appropriately to
climate challenges
Short Reduced
revenues
N/A
We monitor external benchmarks and emerging best
practice (for example, CDP) to improve performance. We
are implementing a detailed Climate Transition Action Plan.
Physical: Acute
and chronic
The impact on
physical operations
of extreme weather
events or changes
in temperature
Short Increased
business
disruption,
capital
expenditure
and insurance
costs
Scope 1 and
2 target
We use a real estate climate risk model (provided by
Verisk Maplecroft).
We conduct risk assessments of our office locations,
evaluating 23 individual acute (for example, drought, flood,
severe storm) and chronic (for example, heat stress, water
stress, air quality) risk indicators.
Impact rating
Low
Medium High
Investment
portfolio
opportunities
Description Timeframe
Impact
Business
impact Actions to take advantage of the opportunity1.5°C 2°C 3°C
Technology
New revenue opportunities for
our investee companies from
patents in technologies tackling
climate change
Short–
Medium
Increased
revenue
We have developed new tools that enable investment teams
to assess whether companies stand to benefit from the net
zero transition.
Products and
services: Climate
mitigation
New revenue opportunities from
investment strategies focused on
mitigating climate change, such
as investments in renewable
infrastructure and green
technology
Short–
Medium
Increased
revenue
We develop new investment strategies that focus on
different themes arising from the net zero transition, such
as the Global Energy Transition strategy, or our investment
in Schroders Greencoat.
Products and
services: Climate
adaptation
New revenue opportunities from
investment strategies focused on
supporting climate adaptation,
such as investment in flood
defences or nature-based
solutions
Medium–
Long
Increased
revenue
We develop new investment strategies that focus on investing
in the infrastructure and technologies that aim to protect
communities from the impacts of climate change, such as the
Sustainable Food and Water strategy.
Market
Increased demand for
climate-focused investment
strategies due to increased
regulation impacting our clients
Medium
Increased
revenue
We have established a Decarbonisation Group to develop a
framework that will support clients with their decarbonisation
investment objectives.
Operational
opportunities Description Timeframe
Impact
Actions to take advantage of the opportunity
Operational
impact on
Schroders
Science -based
target impact Rating
Resource
efficiency
Increased energy
efficiency of offices
Short Decreased
GHG emissions
and operating
costs
Scope 1 and
2 target
The implementation of ISO 14001 Environmental Management
System (EMS) certification, energy audits, feasibility studies
and modelling at a property level inform our energy efficiency
practices. We have introduced specific energy-efficiency
initiatives, for example, implementing Building Management
System upgrades.
Energy source
Lower emission
sources and
increased resilience
of energy for
offices and car fleet
Short Decreased
GHG emissions.
Short-term
increase
in costs
Scope 1 and
2 target
RE100 target
We conduct energy audits, feasibility studies and modelling
at property and fleet level. We have introduced specific GHG
emission reduction initiatives (for example, implementing
onsite renewables, switching to hybrid/electric company cars).
Climate opportunities
Impact rating
Low
Medium
High
Climate risks continued
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
33
Strategic report
Prioritising performance
Climate-related financial disclosures continued
Our transition plan has four key pillars of action: our insights, our
influence, our innovation and our ability to use our position to
inspire others. A more detailed description of these levers of change
can be found on our climate change strategy diagram on page 31.
1
Insights: Measure and manage exposure
in our clients’ investment portfolios
In 2023, the near-term (2030) Scope 1 and 2 temperature score of
our listed equity, corporate bond, REITs and ETF exposure reduced
from 2.6°C to 2.5°C, and the long-term Scope 1, 2 and 3
temperature score from 2.9°C to 2.8°C.
The investments we manage are exposed to climate risks but also
opportunities associated with the net zero transition. Climate risk
and opportunities exposure can vary widely between asset classes,
sectors and regions, which highlights the value in diversification.
In Schroders Capital, we have sought to take advantage of the
opportunities associated with the transition by investing in
technology that aims to tackle climate change. This is evidenced by
our acquisition of a leading renewables infrastructure investment
manager, Greencoat Capital (now Schroders Greencoat) in 2022.
This disparity in exposures across asset classes means we cannot
take a single approach to the integration of climate-related risks
and opportunities by our investment teams. Different factors will
be more relevant to certain asset classes than others. An Implied
Temperature Rise (ITR) metric that assesses a company’s net zero
ambition will be less relevant for an infrastructure strategy that aims
to assess the emissions saved over the lifetime of the asset: a wind
turbine replacing a coal power plant, for instance. To tackle this
challenge, in 2023 we upgraded our ESG integration accreditation
framework, requiring each of our more than 65 investment desks to
outline how they systematically consider climate-related risks and
opportunities in their investment process and evidence with case
studies how they have engaged on the topic of climate. This
framework is global, covering Schroders’ public-markets, private-
markets, and wealth businesses. It is principles-based, requiring
each of the business areas to consider climate related risks and
opportunities in a way that is relevant to them.
2023 scenario analysis findings
We consider climate scenario analysis to be a valuable tool for
better understanding climate risks and opportunities. Climate
scenario analysis can inform investment decision-making. Where
possible, we have quantitatively analysed the exposure of our
investment holdings to physical and transition climate risks under
a range of climate scenarios. We align our choice of scenarios to
the externally defined set of reference scenarios provided by the
Network for Greening the Financial System (NGFS)
1
. Some scenarios
assume stringent carbon policies and rapid decarbonisation, while
others assume slow and uncoordinated policy action.
The scenarios used are not intended to be predictions of the future,
but rather to enable us to understand and consider the risks and
opportunities from different possible outcomes. The models are
built on the assumption that companies in which we invest make no
change or adaptation over time. Furthermore, this analysis is based
on a snapshot of current holdings and does not consider action to
mitigate risk, such as engagement or portfolio changes.
Under the lens of aggregated climate VaR
2
in Figure 1, our covered
investments are most exposed to climate risks under a 1.5°C
scenario, with a potential impact of -14% of current market value.
This impact diminishes slightly under 2°C (-12%) and 3°C (-10%)
scenarios. In general, the model shows that transition risks are
greater than physical risk. It is important to note that the model
outputs are one view of the world and do not necessarily reflect
the potential longer term physical implications of climate change,
particularly given the complex and connected nature of physical
risks, such as the catalytic effect of tipping points. The horizontal
lines in Figure 1 represent the aggregated climate VaR of the
covered investments, while the columns represent the value for
each individual sector. There are marked differences in the profiles
Figure 1. Covered investments exposure to aggregated
climate risk, broken down by sector
3
Figure 2. Covered investments physical and transition
risk exposure, broken down by sector
4
Exposure scale: $90bn $9bn
-50
0
-10
-20
-30
-40
Aggregated Climate VaR (%)
Aggregated 1.5°C Climate VaR
Aggregated below 2°C Climate VaR
Aggregated below 3°C Climate VaR
Oil & Gas
Health care
Technology
Financials
Telecommunications
Consumer services
Industrials
Consumer goods
Utilities
Basic materials
-30.0
-60.0 0.0-12.0-24.0-36.0-48.0
0.0
-6.0
-12.0
-18.0
-24.0
Physical VaR – Aggressive scenario (%)
Transition VaR – 1.5°C scenario (%)
Financials
Telecommunications
Consumer goods
Oil and gas
Industrials
Consumer services
Basic materials
Health care
Technology
Utilities
1. The NGFS scenarios are developed by a group of central banks to support the
scaling of climate risk analysis. More information available here:
https://www.ngfs.net/en
2. Aggregated climate Value at Risk (VaR) is an assessment of climate-related risks
and opportunities across different climate scenarios developed by MSCI.
3. Schroders’ aggregated sectoral climate risk analysis using MSCI Climate VaR.
Certain information ©2023 MSCI ESG Research LLC. Reproduced by permission.
4. Schroders’ sectoral analysis of extreme physical and transition risk scenarios using
MSCI Climate VaR. Certain information ©2023 MSCI ESG Research LLC.
Reproduced by permission.
Schroders Annual Report and Accounts 2023
34
A solutions approach to net zero
These strategies target specific emissions
reduction, either relative to a benchmark
or on an absolute basis.
This includes both sustainable and non-
sustainable funds.
These strategies invest in companies
or assets which are actively transitioning
to a lower carbon business model
and are reducing their exposure to
GHG emissions.
This includes strategies such as the Global
Climate Leaders and Carbon Neutral
Credit strategies.
These strategies invest in companies that
have products and services that actively
contribute to specific climate-related
outcomes through technological
development and innovation.
This includes both sustainable and impact
strategies such as the Global Energy
Transition and BlueOrchard Emerging
Market Climate Bond strategies.
Lower carbon
Designed for clients with
a decarbonisation objective
and which want to invest
in core strategies
Climate action
Designed for clients
that want to invest in
companies transitioning
to net zero
Climate solutions
Designed for clients
that want to invest
in solutions tackling
climate change
of different sectors of the economy, with aggregated climate risk
becoming progressively more concentrated in sectors like basic
materials and oil and gas under more aggressive transition scenarios.
The negative implications of physical climate impacts are outweighed
by the transition risk impacts under the stringent policy scenario that
will be needed to deliver global climate goals. The chart in Figure 2
summarises the sector exposures in a high-risk scenario for both
physical and transition risks. The size of the bubbles represents the
share of our in-scope AUM invested in that sector.
Climate scenario analysis is more challenging for our private markets
business, where a consistent quantitative approach is not feasible.
Each asset class integrates climate differently, based on how
climate change risks or opportunities impact investments and the
availability of data and methodologies. Proprietary ESG scorecards
inform this approach, with climate change categories weighted based
on their materiality for specific sectors, regions, or asset types, and
contribute to the overall ESG score for each investment.
2
Influence: Track and hold
investee companies to account
We believe we can most effectively manage climate exposure by
engaging with the most material carbon emitters in the portfolios
we manage. We do not believe that divestment is the best starting
point for investors to decarbonise portfolios. We apply this principle
across both listed equities and corporate bond investments. Our
approach is summarised in a five-point Climate Engagement and
Escalation Framework:
1. Climate expectations: the climate objectives we expect large and
medium-sized companies to adopt.
2. Company prioritisation and selection: how we develop our climate
engagement priority list.
3. Monitor progress: we use our tools to monitor progress against
our climate expectations.
4. Voting policy: we either endorse resolutions that align with our
climate approach or provide an explanation for our non-
endorsement of resolutions.
5. Escalation policy: where we see no meaningful progress towards
our objectives, we have a framework for escalation.
In 2023, we engaged with 743 companies setting 677 objectives.
We also undertook 119 collaborative engagements over the period.
The distinct characteristics of private markets investment strategies
– typically longer investment horizons – provide us with an
opportunity to build operational and financial value from origination
to exit. In many cases for private markets, our first goal is to improve
the quality and level of disclosure on climate materiality, emissions
and decarbonisation, or to gain a deeper understanding of how
potential risks have been considered, priced and mitigated. When we
directly own a real asset, we look at how the asset’s exposure and
impact on climate change can be reduced, how the asset will evolve
to ensure its resilience to climate risks, and how the asset interacts
with local stakeholders.
In Wealth Management, we engage directly with our investment
managers. Approximately 60% of our managers have made a net
zero commitment, yet very few have formally implemented those
commitments into their underlying funds. By engaging them to
promote progress towards net zero within their funds, our objective
is that they, in turn, will encourage the underlying companies they
own. In the short term, our engagement will focus on accelerating
progress by building our understanding and sharing best practice.
We will concentrate our efforts on the managers still yet to make a
commitment, prioritising those with business models that make
setting a commitment less challenging.
3
Innovate: A solutions approach to net zero
We understand that our clients are at different stages of their net
zero transition journey and have different views of the climate
challenge. This is why we have designed our climate product
framework to focus more on our clients’ targeted decarbonisation
outcomes, while also expanding the options available to our clients.
Since we launched the Global Climate Change (GCC) strategy in 2007,
our climate-focused range has grown to over 15 strategies across
public and private markets. Though our aim is for all Schroders
strategies to align to our commitments, given their unique investment
approach, their trajectories will vary and may not always be linear.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
35
Strategic report
Prioritising performance
Climate-related financial disclosures continued
4
Inspire: Transitioning
our own operations to net zero
Our operational climate change strategy focuses on reducing GHG
emissions and resource use across our operations. We are doing this
by decreasing energy demand, increasing energy efficiency and
switching to low-carbon electricity sources. We also aim to reduce our
business travel and engage with our supply chain to encourage them
to set their own science-based targets.
In 2023, our total Scope 1 and 2 GHG emissions decreased by 35%
from the 2019 base year and decreased by 2% compared with 2022.
The SBTi defines a 4.2% reduction in GHG emissions in linear annual
terms, to be in line with a 1.5°C trajectory. This means that our 2023
Scope 1 and 2 GHG emissions should represent a minimum of 16.8%
reduction against our 2019 base year emissions, against which we
achieved a 35% reduction. Although we recognise our progress will
not be linear, we are currently on track with a 1.5°C aligned science-
based pathway.
We have also increased the annual sourcing of renewable electricity
to 98%, compared with 95% in 2022. Our 2023 figures are in line with
the RE100 criteria, which will be assessed and verified in our 2024
CDP submission. This increase was primarily due to the increased
purchase of renewable electricity certificates for our global locations,
where we could not directly influence the electricity supply, as well as
electricity contracts being changed to renewable-based supplies.
We continue to develop site-specific net zero action plans and to
attain ISO 14001 Environmental Management System certification
across our largest office sites, as well as transition our company car
fleet to hybrid or fully electric by 2025 to support these targets.
Our operational Scope 3 value chain emissions (excluding our
financed emissions) are about 31 times larger than our Scope 1 and 2
emissions. As 96% of these Scope 3 emissions relate to business
travel and our supply chain, we have chosen to set additional targets
for these areas. Business travel emissions have decreased by 39%
from the 2019 base year, but have increased by 53% compared with
2022 as business travel continued to increase. We will continue to
manage this closely and challenge ourselves on the purpose,
frequency and mode of travel.
Taking a similar approach to our active ownership programme with
investee companies, we have a supplier engagement plan under
which we encourage and support our suppliers to act more
sustainably. In 2023, 23% of our suppliers in scope
1
(by GHG
emissions) had set a science-based target. This is a 2% decrease,
compared to 2022, and is due to changes in supplier spend and
updated emissions factors in sectors that contribute a high
proportion to our spend.
Risk management
Our principal risks are set out on pages 41 to 43. Given the
importance of climate-related risks to our business, ‘Sustainability risk
including climate change’ has been identified as one of our principal
risks. There is an accompanying risk appetite statement, approved by
the Board, which enables us to provide an assessment of risk position
versus our risk appetite on an annual basis, while monitoring
performance throughout the year.
Climate and nature-related risks are managed in accordance with
the same ‘three lines of defence’ model we use for all risks. The
heads of each business area are ultimately responsible for ensuring
risks are identified, assessed and managed by investment teams.
Independent monitoring is then carried out by the second line of
defence. Internal Audit provides independent assurance over the
operation of controls. We recognise that climate change in particular
is a pervasive risk across many of our key risk types. Heads of
business areas across the Group are responsible for identifying these
risks and assessing the impacts to their business areas in line with
their functional responsibilities.
Governance
The Board is responsible for approving the Group’s strategy, which
includes our sustainability strategy. The Board has delegated overall
responsibility for the delivery of the Group’s strategy to the Group
Chief Executive, who has the authority to delegate further while
retaining overall responsibility for the delivery of our strategy. In
discharging its responsibilities, the Board takes appropriate account
of the interests of our stakeholders, including clients and wider
society. Our governance framework enables the Board to have
oversight of the climate and nature-related risks and opportunities
impacting our business. Through this framework, the Board receives
regular briefings on sustainability matters, including climate and
nature-related issues.
• The Board was updated on how sustainability trends, for both our
own operations and the investments we manage, were shaping our
industry, and on progress on some key issues including climate
change, biodiversity, human rights and community investment.
• At our annual Board strategy meeting, the Board noted our
leadership position in sustainability as part of the Group Chief
Executive’s strategy paper. The Board also noted several climate
and nature-related developments as part of the Governance report.
The Audit and Risk Committee receives reports from management
on key risks to ensure they are considered at Board level. As
‘Sustainability risk including climate change’ is identified as a key
business risk, the Audit and Risk Committee received information
quarterly to assess how it is being managed. During 2023, the Audit
and Risk Committee had five meetings. For more information on the
Audit and Risk Committee, see pages 66 to 73.
Within our governance structure, sustainability is integrated across
our business areas. There are a number of management committees
and working groups that assess, advise on and oversee climate and
nature-related risks and opportunities.
Our key sustainability management committee is the GSI Committee.
The GSI Committee provides advice to the Group Chief Executive to
assist him in discharging his responsibilities regarding sustainability
and impact. The GSI Committee monitors our climate and nature-
related targets with progress reported to the Board (for more
information on our targets, see our Climate Report 2023)
2
. The
obligations of our climate transition plan are monitored by the GSI
Committee as part of reviewing our sustainability strategy. This
includes monitoring progress towards our science-based targets.
During 2023, the GSI Committee had six meetings. For further
information on our climate and nature governance structure,
see our Climate Report 2023.
2
Our remuneration structures emphasise the strategic importance
of climate-related issues. Executive Directors have sustainability
measures in their annual bonus and Long-Term Incentive Plan (LTIP)
scorecards. Performance against these measures impacts their
compensation outcomes.
Metrics and targets
We use a number of metrics and targets to track progress against
our climate change strategy to ensure that we are responding
appropriately to the climate-related risks and opportunities facing
our business. Please refer to page 31 for more detail on our net
zero targets.
We have developed an ESG Risk Dashboard to monitor financed
emissions and portfolio risks. This is incorporated into the investment
risk management processes and includes, among other sustainability
metrics, a product’s carbon footprint Weighted Average Carbon
Intensity (WACI) for Scope 1 and 2 emissions, plus Carbon VaR,
calculated using our proprietary Carbon VaR tool.
1. Includes Scope 3 categories 1 Purchased goods and services; 2 Capital goods;
and 4 Upstream transportation and distribution.
2. www.schroders.com/tcfd
Schroders Annual Report and Accounts 2023
36
We recognise that emissions data is frequently based on estimates
or proxy data and, as a result, provides an imperfect view of portfolio
exposures or risks. The data we rely on can also change materially
from one year to the next, as data quality improves or estimation
methods change. We continue to work to ensure the data we use
is as accurate as possible, but highlight that any outputs should be
interpreted as approximate and not precise.
Our operational data is reviewed internally; through an environmental
accounting tool, we are able to log targets and track progress. We also
make sure that the most up-to-date, relevant emission factors are
used in line with the Greenhouse Gas Protocol, a global standardised
framework to measure and manage greenhouse gas emissions.
Our operational GHG emissions, target progress, waste and water
data are externally assured by Incendium Consulting Ltd.
The SBTi requires that targets shall be reviewed, and if necessary,
recalculated and revalidated at least every five years, to reflect
material changes in climate science and business context.
We review our GHG inventory annually and will restate our data
and/or recalculate our science-based targets when required.
This submission includes our Scope 3 category 15 carbon emissions
and the implied temperature rise of our entire portfolio across all
in-scope asset classes (listed equities, corporate bonds, real estate
investment trusts (REITs) and exchange-traded funds (ETFs). Where
available, we use the estimates provided by our data vendor, and we
use our own methodology, which is based on Partnership of Carbon
Accounting Financials (PCAF) principles, where not. The objective of
estimation is to provide as complete and representative a picture of
portfolio emissions as we believe is possible. Carbon and climate
data reported by companies is frequently incomplete and based on
inconsistent assumptions. This data forms the basis of our financed
emissions calculations, which should be considered estimates rather
than precise figures. We have followed PCAF principles in calculating
our financed emissions, but recognise that the underlying data can
change materially as reported data increases and estimation
methodologies improve.
2023 metrics
Our financed GHG emissions
Metrics Scope 2023 2022
2019
(base year) Units
Total carbon emissions
Scope 1 and 2 22.4 22.9 39.1 MtCO
2
e
Scope 3 149.6 163.7 223.1 MtCO
2
e
Carbon footprint
Scope 1 and 2 53.9 59.1 95.5 tCO
2
e/$m invested
Scope 3
1
360.3 423.7 550.0 tCO
2
e/$m invested
Weighted average carbon intensity (WACI) Scope 1 and 2 105.7 145.8 176.7 tCO
2
e/$m revenue
Portfolio temperature score Scope 1 and 2 2.5°C 2.6°C 2.9°C Celsius
2023 metrics
Our operational GHG emissions
Greenhouse gas emissions (tCO
2
e) 2023 2022
2019
(base year)
Total Scope 1 emissions 661 789 1,110
Total Scope 2 emissions (location-based) 3,748 3,711 5,718
Total Scope 2 emissions (market-based) 504 717 3,255
Total Scope 1 and 2 emissions (location-
based)
4,409 4,500 6,828
Of which UK Scope 1 and 2 (location-based) 2,725 2,767 4,621
Total Scope 1 and 2 emissions (market-
based)
1,165 1,506 4,365
Of which UK Scope 1 and 2 (market-based) 625 809 2,408
Total Scope 3 operational emissions 136,582 117,417 115,048
Metrics
Scope 1 and 2 tCO₂e per employee 0.69 0.73 1.27
Global energy consumption (kWhs)
Total energy consumption 18,608,188 19,258,182 26,265,797
Of which UK energy consumption 12,810,625 13,410,123 18,495,195
Streamlined Energy and
Carbon Reporting (SECR)
Our 2023 operational metrics provide details
on our total operational GHG emissions
and energy data and is in line with the
Streamlined Energy and Carbon Reporting
(SECR) requirements.
For a more detail on our operational
emissions please refer to our Climate
Report 2023.
2
Energy efficiency measures
We are committed to minimising the
environmental impact of our operations
and to delivering continuous improvement
in our environmental performance. We are
doing this by decreasing energy demand
and switching to low carbon electricity
sources. Our office energy efficiency
measures include equipment and lighting
upgrades, and adjusting temperature set
points and plant run times.
1. Requirement to report Scope 3 financed emissions is phased, see page 49 of the
PCAF standard for more detail https://carbonaccountingfinancials.com/standard
2. www.schroders.com/tcfd
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
37
Strategic report
Prioritising performance
Risk management
Our risk
management
framework
We are exposed to a variety of risks as a result of our global
business activities and are committed to operating within
a strong system of internal control. Our Risk Management
framework enables management to identify, manage and
escalate risks so that we can pursue our business strategy
without exposing the Group to significant regulatory
breaches, losses or reputational damage.
As our business has continued to expand into areas of strategic
growth, we have pivoted resources towards supporting these
areas. We appointed a Head of Risk, Private Markets in 2023
to consolidate our oversight of the Schroders Capital business.
Additionally, we have adapted our Risk and Compliance
recruitment strategy to focus on recruiting staff with private
markets experience to enable us to provide knowledgeable
and effective oversight across our diverse business.
Managing risks
The Board is accountable for the maintenance of a prudent and
effective system of internal control and risk management. It
assesses the most significant risks facing the business, and also
uses quantitative exposure measures, such as stress tests, where
appropriate, to understand the potential impact on the business.
Non-executive oversight of the Risk Management framework
process with respect to standards of integrity, risk management and
internal control is exercised through the Audit and Risk Committee.
Risk management is embedded in all areas of the Group. The Group
Chief Executive and Group Management Committee (GMC), as an
advisory committee to the Group Chief Executive, regularly review
the key risks we face. They are also responsible for monitoring that
the individual behaviours in the teams they manage reflect the
values and control standards of the business. Legal entity boards
fulfil their obligations for managing risks in line with regulatory and
legal requirements.
The executive oversight of risk is delegated by the Group Chief
Executive to the Chief Financial Officer. The Chief Financial Officer
is responsible for the Group’s risk and control framework, and
chairs the Group Risk Committee (GRC). The GRC supports the Chief
Financial Officer in discharging his risk management responsibilities.
The GRC reviews and monitors the adequacy and effectiveness of the
Group’s Risk Management framework, including relevant policies and
limits. It also reviews emerging risks and changes to existing risks.
The GRC is supported by a number of sub-committees, including
the Group Conflicts Committee, the Financial Crime Committee
and the Information Security Risk Oversight Committee. These
sub-committees review and challenge risks and report significant
risk matters to the GRC.
Lines of defence
The first line of defence in managing and mitigating risk consists of
the business functions and line managers across the Group. Heads
of each function take the lead role in identifying potential risks and
implementing and maintaining appropriate controls to manage
these risks. They do this by applying our Risk and Control
Assessment (RCA) process.
Line management is supplemented by oversight functions, including
Risk, Compliance, Legal, Governance, Finance, Tax and Human
Resources. These constitute the second line of defence. The
compliance assurance programme reviews the effective operation
of relevant key processes against regulatory requirements.
Internal Audit provides retrospective, independent assurance
over the operation of controls, and forms the third line of defence.
The internal audit programme includes reviews of risk management
processes and recommendations to improve the control
environment. The team also carries out thematic compliance
monitoring work.
We maintain comprehensive insurance cover with a broad range
of policies covering a number of insurable events.
Risk appetite
Our risk appetite statements articulate the levels of risk the Board
is willing to take in pursuit of the Group’s strategy. They cover
all our key risks (excluding strategic risk, as this risk type mainly
comprises factors that are external to our operating model).
We have a Group level risk appetite statement and a number
of entity level statements.
Each risk appetite statement is supported by a number of metrics
and tolerances to enable us to provide an assessment of risk
position against risk appetite using a Red, Amber, Yellow, Green
rating. In 2023, we reviewed the way we describe each rating and
updated the descriptions to provide additional clarity to the Audit
and Risk Committee and Board on the situations in which they
would need to take action.
Market shocks (and volatility)
Market shocks in 2023 continued to test our emerging risk and
crisis management processes. The collapse of Silicon Valley and
First Republic Banks reiterated the need for us to maintain strong
oversight enabling early identification of potential issues. Our ability
to gather exposures quickly across the Group was tested and
proved effective.
Credit Suisse’s vulnerability was flagged by Group Credit Risk at an
early stage. At the time of the eventual collapse of the bank we had
immaterial exposures as the credit risk process and early warning
signs mitigated any material business impact to portfolios and our
corporate balance sheet.
We are mindful of a number of elections, globally, in 2024 which
may impact the business environment in which we operate.
Three lines of defence
Group Risk
Committee
Group
Management
Committee
Audit
andRisk
Committee
3rd line
Internal
independent
assurance
2nd line
Control and
oversight functions
1st line
Business operations
and support
Schroders Annual Report and Accounts 2023
38
Managing the risks associated
withArtificial Intelligence (AI)
As a business we are harnessing the power of AI to boost
productivity and decision-making. As well as starting to
test and adopt third-party products such as Microsoft365
Copilot, we have developed an internal AI tool leveraging
models such as ChatGPT, that enables employees to
interact with and query data efficiently while maintaining
the security of our client and proprietary information.
While AI provides opportunities, there is a risk it increases
the effectiveness of cyber threats such as deep fakes (where
a video/audio recording of a person is digitally manipulated)
or produces inaccurate information. Consuming this
information could impact investment decisions or our
reputation. To manage potential risks, we have established
a set of principles and guidelines that govern the use of AI
within Schroders. They support our goal to use AI in a way
that aligns with our corporate values and complies with
relevant laws and regulations including data confidentiality
obligations. A Steering Committee has been set up to
provide strategic direction, supported by a Responsible
AI Working Group for oversight and guidance, and an AI
Use Case Working Group which provides a central review of
our use of AI throughout the firm. A core principle of our
approach to AI is that all outputs are reviewed for accuracy
and reliability prior to being used.
Developments
in our risk
management
approach
Supporting areas of strategic growth
To support the implementation of robust controls within Schroders
Capital as it expands, and enhance our oversight at the appropriate
pace, we have adapted our risk and compliance approach. We have
consolidated our oversight of Schroders Capital business processes
and investment portfolios by appointing a Head of Risk, Private
Markets and we have actively recruited risk and compliance staff
with private markets experience to enable comprehensive
oversight of diverse business areas such as Real Estate and
Insurance-Linked Securities. This enhanced supervision supports
the ‘‘democratisation’’ of private markets initiative within Schroders
Capital, including oversight of product development processes.
Our Wealth Management Risk and Compliance function continues
to provide effective oversight while the business expands. A key
focus in 2023 (and into 2024) was the provision of guidance
and second-line oversight on a strategic initiative to close the
existing service centre in Zurich and transfer the functions to
the Schroders campus in Horsham.
Regulatory initiatives
The Consumer Duty, which came into force in the UK on 31 July
2023, has been implemented across the Group. A comprehensive
programme, involving first-line and second-line representatives, was
completed to support compliance with the new rules. This included
staff training and enhancements to functional area policies and
procedures. A Consumer Duty Forum has been established to
oversee these new rules across the business. To demonstrate
ongoing compliance, each UK-regulated entity board reviews and
endorses an assessment of the entity’s delivery of good outcomes
for its retail customers, at least annually.
Given the Group’s strategic focus on sustainability and the level
of regulatory scrutiny on sustainability matters in connection with
asset managers, we have performed a review of our second-line
oversight processes for sustainability. The review resulted in
enhanced collaboration with our Sustainability team to bring
our existing controls together.
Investment risk
Despite strong performance through the gilt crisis in 2022, we have
continued to enhance the resilience of our LDI offering. In addition
to larger liquidity buffers and enhanced internal systems, we have
created a library of playbooks, templates and guidance notes to
record the lessons from 2022 and be well prepared for a future
crisis. The effectiveness of our crisis preparations has been recently
validated in a cross-functional ‘‘war game’’, where participants were
presented in real time with a series of different scenarios, which
progressively increased in severity. This successfully tested our ability
to identify high-risk areas quickly.
To support the oversight of investment risk control frameworks across
the Group we have developed robotic process automation. This is
embedded in our investment risk process and checks that controls
across a wide range of portfolios are implemented and documented
accurately. The use of robotic automation replaces a manual process
introducing significant efficiency, allowing investment risk managers
to focus on other value-add initiatives, and reduced operational risk.
The assets of the solutions business acquired from River and
Mercantile in 2022 have been migrated to our core investment
management system. This integration into the Group operating
model has reduced risk and created efficiencies in first-line and
second-line oversight. Front-office systems to support the investment
desks, along with client and consultant portals, are now integrated
with our core investment management system, yielding further
operational efficiencies.
Cyber risk
The Information Security Risk Oversight Committee continues
to oversee the management of cyber risk. Our Group-wide multi-year
programme to accelerate the evolution of our cyber defences is
progressing well. We have recently developed advanced attacker
metrics to enable the Audit and Risk Committee and GRC to monitor
and challenge progress to improve the cyber risk profile. Attacks by
organised crime groups (for example, targeted ransomware) remain
a risk for financial services, and Schroders is no exception.
Schroders Annual Report and Accounts 2023
Shareholder informationFinancial statements
39
GovernanceStrategic report
Prioritising performance
How we are performing: Risk management continued
Risk assessment
During the normal course of business, emerging risks and changes
to our existing risks are identified throughout the year. Risks are
reviewed and discussed at relevant risk committees (for example,
the GRC) and Board meetings. Periodically, we also complete a
formal assessment of the risks faced by our business using a
top-down and bottom-up approach.
The top-down approach uses analysis from the Risk team and
discussions with GMC members and subject matter experts around
the Group. Existing risks and emerging risk trends are reviewed
against the current internal and external environment, geopolitical
factors, market conditions, changing client demand and regulatory
sentiment. Our regulators aim to ensure market integrity, good
conduct, appropriate consumer protection, and the promotion
of competition within the industry are also taken into account.
Each risk is then analysed to assess how it can be managed
and mitigated.
The bottom-up approach uses the results from our RCAs, trends
in risk events and high-impact issues logged in our operational
risk database.
The results of these assessments are used to inform our key risks,
which are presented to the GRC prior to the GMC, Audit and Risk
Committee and Board meetings.
We have reviewed the list of key risks and identified a sub-set that
we believe represents the Group’s principal risks. This is not an
exhaustive list, but these are the principal risks most likely to impact
our strategy, business model, external reputation and future
performance. The numeric icons are for presentational purposes
only and do not indicate a rank. The risks represent our exposure
after mitigating controls are applied.
Trend arrows are included below to show how our risk profile has
changed since last year. Commentary to explain the changes can
be found on the following pages.
We confirm that the Group has an effective risk and controls
process, supported by an appropriate governance framework.
Our strategy mitigates our strategic risks
1
2 4
8
Build closer
relationships
with clients
Grow asset
management
Expand private
markets
Movement versus
prior yearposition
Categories of risk
Increased Strategic risk
Decreased Business risk
Remained the same Operational risk
Principal risks 2023 2022
1
Business model disruption
2
Changing investor requirements
3
Conduct and regulatory risk
4
Fee attrition
5
Financial instrument risk
6
Information security and technology
7
Investment performance risk
8
Market returns
9
Operational process risk
10
People and employment practices
11
Product strategy and management
12
Reputational risk
13
Sustainability including climate change
Schroders Annual Report and Accounts 2023
40
Principal risks
Description How we manage this
1
Business model disruption
Our business model could be disrupted by a range of external factors including
technology advancements such as AI, product evolution and market participants.
Geopolitical turmoil, including sanctions and conflict, could impact our domestic
business activities. For example, heightened tension between China and the
West may result in us losing our license to operate in China, and could affect the
value of Chinese assets in which we invest on behalf of our clients.
The rise of AI and the threat to the asset management industry means that this
risk has increased in 2023.
We continue to invest in our technology platform to support
our business and embrace new technologies such as AI.
We regularly monitor developments in countries subject
to geopolitical risk and take steps to protect our people
and assets where necessary. This includes monitoring
and reviewing portfolio exposures, potential single name
and/or sector vulnerability, and possible outcomes under
different scenarios.
2
Changing investor requirements
Client requirements are evolving rapidly. Failing to adapt or evolve our business
model and product range to reflect these changes could lead to a decrease in
AUM. Sustainability is a significant part of many of our clients’ considerations
and we expect climate risks to feature more heavily in future investment
requirements and offerings.
The advice gap means demand for many wealth management products
continues to persist. There is a risk we do not grow and evolve to respond to
this demand and retain and attract the right people to serve our wealth
management clients.
The integration of the River and Mercantile solutions
business and Greencoat Capital have allowed us to evolve
our products to meet a wider range of client needs.
We continue to focus on developing our investment
capabilities, expanding into new investment types and
specific areas of expertise, and commit seed capital to
support product innovation for future growth.
We focus our attention where we believe we are able to
make a more significant difference to our clients through
current or planned future capabilities; for example, closing
the UK private client advice gap through SPW and
Benchmark Capital.
3
Conduct and regulatory risk
The risks of client detriment arising from inappropriate conduct of our staff or
those of counterparties, suppliers and other third parties we engage, including
failure to meet regulatory requirements (including those with respect to conflicts
and financial crime), poor behaviour, or failing to meet appropriately our clients’
expectations. Regulators continue to take varying approaches to sustainability,
making implementation more difficult and scrutiny of greenwashing risk
remains high.
This risk has stabilised at the elevated level reported last year as our compliance
framework remains effective and enables us to manage our business in line with
regulatory expectations.
We promote a strong compliance culture and seek to
maintain good relationships with our regulators. We also
encourage appropriate conduct and regulatory compliance
via our conduct risk framework, supported by training and
compliance assurance programmes. Our Group Regulatory
Oversight Committee and Sustainability Regulatory Steering
Committee provide oversight and challenge of the
implementation of regulatory change.
4
Fee attrition
Fee attrition caused by clients allocating more of their assets to passive
products, and less to active managers, coupled with a lower allocation to
public markets, and a greater allocation to private markets (where we have
a lower market share). This has resulted in increased competition on price
in the traditional active management market and remains at the elevated level
reported in prior years. We are also exposed to the risk of intermediaries taking
a greater share of revenue streams.
We have continued to focus on solutions and outcome-
orientated strategies, thematic products and growing
our market share within private markets, to diversify our
fee income. Our fiduciary business within solutions
continued to be successful during 2023. We are also
increasingly diversifying our product offering, supporting
long-term profitability.
We are moving to vertical integration and getting closer to
clients allowing us to better understand their needs. This
has also given us opportunities to access a greater share
of available revenue.
5
Financial instrument risk
We face market, credit, liquidity and capital risks from movements in the financial
markets in which we operate, arising from holding investments as principal. Due
to ongoing geopolitical events generating market fluctuations and contributing
towards inflation, movements in interest rates and commodity prices, we have
seen continued higher volatility in several asset classes. There have also been
shifts in correlations between asset classes.
Failure to manage market, credit and liquidity risks arising from managing AUM
on behalf of clients would be considered an Operational Process risk.
While volatility remains elevated in several asset classes, this risk has stabilised
at the heightened level reported last year, and some asset classes have seen a
gradual decline in risk levels. This is supported by recent falls in global inflation
rates and the current outlook for declining interest rates.
We manage capital, liquidity and the Group’s own
investments through Board-set limits and through the
Group Capital Committee. Equity market and credit
spread risks in seed capital are hedged where it is
economic and practicable to do so and foreign currency
Group investments are hedged back to sterling. We monitor
our credit and counterparty exposure in the Group balance
sheet, bank lending portfolios and in our client assets.
Schroders Annual Report and Accounts 2023
Shareholder informationFinancial statements
41
GovernanceStrategic report
Prioritising performance
How we are performing: Risk management continued
Description How we manage this
6
Information security and technology
Information security risk relates to the confidentiality, integrity or availability
of services being negatively impacted by the activities of a malicious insider
or external party. Technology risk relates to the failure in delivering scalability,
privacy, security, integrity and availability of systems that leads to a negative
impact on the Schroders business and our client experience. Advances in AI
and deep fake technology creates opportunities for more advanced social
engineering techniques to be used in cyber attacks. These advances and other
information identified through our threat intelligence and active cyber testing
progress continue to provide insight on the areas we should focus on to
enhance our cyber defence capabilities.
While the overall risk trend remains consistent with the level reported last year,
there have been changes in the risk trends of individual components. Our
technology risk has decreased, owing to the substantial completion of our
migration to the Cloud, which has bolstered our resilience. Cyber threats,
stemming from highly capable criminal organisations and state-sponsored
entities, persist, and are amplified by advances in AI and deep fake technologies
but we continually adapt and advance in response to these threats.
We have a dedicated Information Security function
responsible for the design and operation of our information
security risk framework, which includes oversight of critical
third parties’ cyber capabilities. Information security risk is
overseen by specialists within both the second and third
lines of defence and is monitored by the Information
Security Risk Oversight Committee. We operate a Global
Technology Risk Committee to oversee operational risk
associated with IT services across the organisation.
7
Investment performance risk
There is a risk that portfolios may not meet their investment objectives or that
there is a failure to deliver consistent and above-average performance. There is
a risk that clients will move their assets elsewhere if we are unable to outperform
competitors or unable to deliver the investment objectives. The higher interest
rate environment can impact clients’ performance expectations and our ability
to meet them and may require adjustments within strategies. Strong investment
performance is critical to the success of Schroders.
We have clearly defined investment processes designed to
meet investment targets within stated parameters, which
are subject to independent review and challenge.
Oversight of both risk and performance is embedded in our
business processes and governance. In 2023, 60% of client
assets outperformed benchmarks over three years and
77% outperformed benchmarks over five years.
8
Market returns
Our income is mainly derived from the value of the assets we manage. Falling
markets reduce our AUM and therefore impact revenues. Market falls may be
exacerbated by geopolitical risks, for example in response to the situation
in Ukraine and the Middle East which remains heightened. Foreign exchange
rates are a key factor in our financial performance as we are sterling
denominated with earnings in other currencies.
In addition, economic uncertainty and geopolitical developments presented
a risk in 2023. The impact of higher inflation on interest rates, wages and
economic growth could impact asset prices and markets, as could an
acceleration of climate risk, leading to a fall in AUM.
Throughout 2023 market conditions continued to be challenging so this risk
remains at the same level reported in previous years.
We have diversified income streams across a range of
markets to mitigate a considerable fall in any one area.
Excluding associates and joint ventures, AUM from Private
Markets, Solutions, and Wealth Management increased
from £372 billion in 2022 to £405 billion in 2023, further
increasing our diversification.
Our focus on growing our Schroders Capital product range
and investment capabilities, including the launch of the first
Schroders Greencoat products, allows us to have a broader
range of income streams which are less directly linked
to markets.
9
Operational process risk
The risk of failure of significant business processes, such as compliance with
fund or mandate restrictions, fund pricing, trade execution for investment
portfolios and client suitability checks, whether these occur within Schroders
or appointed third parties. It includes operational integration of acquisitions as
there may be some risks while newly acquired firms are operating on different
platforms, and before they are fully aligned to Schroders’ policies. It also includes
the ineffective management of joint ventures and associates.
Our key business processes are reviewed regularly and the
risks assessed through the RCA process. Operational risk
events are reviewed to identify root causes and implement
control improvements. When we undertake change, such
as acquisitions, we assess new processes that may arise.
We work with acquired firms to move them onto our
platforms (where appropriate) and to align our policies.
We have a well-established process to assess the risks
within our supply chain. We review suppliers throughout
the supplier life cycle to identify potential risks which may
impact the quality or continuity of service.
10
People and employment practices
People and employment practices risk may arise from an inability to attract
or retain key employees to support business activities or strategic initiatives;
non-compliance with legislation; or failure to manage employee performance.
Inclusion and diversity remain a key focus for the company. The morale of
the workforce remains good overall which is evidenced with our latest pulse
survey results.
This risk has stabilised at the lower level reported last year as turnover remains
low and within tolerance.
We have a competitive remuneration and employee value
proposition, with appropriate deferred compensation
targeted at key employees. Sustainable succession and
development plans are in place. We also have policies and
procedures to encourage inclusion and diversity and to
manage employment issues appropriately, handling them
consistently, fairly and in compliance with local legislation.
Schroders Annual Report and Accounts 2023
42
Description How we manage this
11
Product strategy and management
There is a risk that our product or service offering is not suitably diversified or
viable or does not provide access to strategies that will help investors to meet
their objectives. There is also the risk that products are not accurately described,
do not perform in alignment with their investment objectives for a sustained
period, or that product liquidity is not consistent with the product description or
the redemption requirements of investors.
Risks are managed within our Product Frameworks,
which include the Product Strategy Committee, Product
Development Committee, Product Governance Committee
and Capacity Committee.
We have a liquidity risk management framework and
monitor the liquidity of our products on an ongoing basis.
We have a process to raise awareness of funds identified
as having more challenging liquidity profiles so that any
changes to client sentiment (or potential redemptions)
would be notified to relevant teams rapidly, to reduce
potential liquidity risk issues.
12
Reputational risk
This may arise from poor conduct, judgement or risk events due to weaknesses
in systems and controls and may lead to loss of assets or inability to win new
business. In recent years we have extended our business through a number of
acquisitions. Reputational issues in joint ventures and associates where we have
limited control of the outcome could adversely impact the Group.
Issues relating to senior management and directors have been experienced
in a variety of organisations including financial services, corporations and
industry bodies, which have damaged the reputation of these organisations.
This is therefore a heightened risk for all firms. Failing to meet stakeholders’
expectations (for example, clients, regulators or the wider community) could
also give rise to reputational risk.
The rise of AI provides opportunities for efficiency but also gives rise to potential
reputational risk. Social media exacerbates reputational risk due to the pace at
which information or disinformation can be spread, and how the information
may be perceived by different stakeholders. As a result of these points, and the
reputational issues observed in other organisations, this risk is heightened.
We consider reputational risk when initiating changes to
our strategy or operating model and focus on maintaining
high standards of conduct. We have a number of controls
and frameworks to address other risks that could affect
our reputation, including: financial crime, investment risk,
client take-on, client communications, conduct risk,
whistleblowing and product development. Our Schroders
appointed board members oversee the activities of joint
ventures and associates, supported where necessary by
oversight committees.
In 2023, we undertook an analysis of the potential causes
of reputational risk. This led to a deeper awareness of
reputational risk across the Group, and at the GMC,
enabling us to be better equipped to respond to
reputational risk issues as and when they occur.
Potential reputational risk arising from our use of AI is
being managed through our AI framework (see page 39
for more details).
13
Sustainability risk including climate change
Failure to understand, accurately assess and manage investment risk associated
with sustainability factors within assets and portfolios, and to appropriately
articulate the risks, and our commitments in relation to them, to clients and
stakeholders. This may lead to poor investment decisions, and a failure to offer
appropriate sustainable products or to meet our clients’ expectations, impacting
our performance, brand and reputation. A failure to meet corporate climate
change targets may have a similar impact. The risk associated with regulators
implementing different approaches to sustainability, and their heightened
scrutiny on the topic, is captured within Conduct and regulatory risk above. The
impact of climate on each of our principal risks is set out on page 51 of TCFD.
We have developed a range of proprietary tools to better
understand the potential effects of sustainability risks
including climate change on the portfolios we manage.
We use ESG risk toolkits to support day-to-day risk
oversight and formal review and challenge of investment
risk at Asset Class Risk and Performance Committees. We
have an Integration Accreditation Framework which we use
to assess the integration of ESG factors into our investment
desks’ processes and re-accredit them on an annual basis.
Regarding climate specifically, we have developed a Net
Zero Dashboard which enables our investment teams and
central risk function to monitor the temperature alignment
of portfolios and track our progress against our business-
wide net zero commitment.
Schroders Annual Report and Accounts 2023
Shareholder informationFinancial statements
43
GovernanceStrategic report
Prioritising performance
Stakeholder engagement
Our stakeholders
An overview of our stakeholder engagement approach and
notable achievements throughout the year.
Clients Shareholders Our people
Actively helping our clients achieve
their long-term financial goals
We pride ourselves on our commitment to
clients. Our purpose is to provide excellent
investment performance to clients through
active management. Our success is built on
understanding and anticipating their
evolving needs.
Rewarding our shareholders through
the sustained success of our business
The engagement and support of our
shareholders is vital to achieving our strategic
objectives and driving business growth. Our
shareholder base plays a crucial role in
endorsing our long-term approach to
business management.
Fostering a purpose-led, inclusive
andhigh-performing culture
Our people are crucial in delivering our
purpose of providing excellent investment
performance and driving positive change in
the world. We attract and develop individuals
who have the skills and passion to help us
achieve our goals. By focusing on what
matters and preserving our unique culture,
we create an inclusive, purpose-led, high-
performing environment that celebrates
diversity of thought and offers growth
opportunities and support to our employees.
How do we engage with them
and consider their interests?
Our client service teams, adept at
anticipating client needs, foster lasting
relationships, gaining insights into client
objectives and future expectations. In 2023,
we created the Client Group, bringing
together key client-facing functions across
the firm globally, including sales, client
servicing, product and marketing, to help
us further enhance our client relationships,
and build closer, longer-lasting relationships.
Specialists across our businesses work with
regional country heads and client-facing
teams who have deep knowledge of client
needs in each market. Our Client Insights
Unit uses internal and external data to
enhance our understanding of clients’
needs. Globally, we conduct independent
and bespoke client surveys to gather direct
feedback. These include surveys for strategic
clients, key senior individual client contacts
and a new Client Service Survey which was
piloted this year targeting more than 500
clients. These activities are designed with
the purpose of enhancing the client
experience and to inform our product,
solutions and advice offerings.
How do we engage with them
and consider their interests?
The Board actively engages with shareholders
throughout the year, using various channels
to facilitate communication. Our AGM serves
as a key platform for engagement, offering
both in-person and virtual participation.
For our Schroders in Focus event in 2023,
we hosted a deep dive on our wealth
management business. It provided investors
with updates on our growth plans and was
an opportunity to engage directly with the
Wealth Management leadership team.
Further, on a bi-annual basis we engage our
shareholders via roadshows that follow our
results announcements. We updated
shareholders on progress throughout the
year and engaged them about their views
on the business strategy and outlook.
We had ad-hoc meetings with shareholders,
hosted by either the investor relations team
or senior management.
How do we engage with them
and consider their interests?
We engage our people through various
channels, including briefings, videos, an
internal magazine, updates from the Group
Chief Executive, and a global broadcast
series called the “sofa series” with GMC
members. At the start of each year, employees
join strategy sessions and can ask questions to
senior management.
To understand our employees’ needs, we
conduct pulse surveys and have Ian King,
our Senior Independent Director, gather
feedback. Ian chairs the Global Employee
Forum, providing a platform for employee
concerns, with regular reporting to the Board.
Town Halls serve as a vital communication
platform, conducted regionally by senior
management and locally by business units,
fostering dialogue on key information,
business progress, and providing a
valuable connection to employees’ needs
and perspectives.
Outcomes
Engagement with clients drives our strategy.
Our Global Trusted Adviser Survey results
show that over 85% of our clients are
satisfied or very satisfied with Schroders
compared to other asset managers
1
. This
year, we established the Client Group based
on our deep understanding of our clients
and their needs. This has influenced the
expansion of our product range and our
offerings in public and private markets.
Outcomes
By allocating capital to higher-growth areas
we are able to generate stable returns for our
shareholders. During 2023, we delivered basic
operating earnings per share of 32.5 pence
and the Board recommended a final dividend
of 15.0 pence. This brings the total dividend
to 21.5 pence per share. Our Climate Report
2023 aims to give shareholders, clients and
stakeholders a better understanding of our
climate transition plan, including managing
climate-related risks and opportunities.
Outcomes
In our pulse survey, 87% of our employees
expressed pride in working for Schroders,
outperforming external benchmarks and
indicating strong employee engagement.
Our commitment to being transparent to
our stakeholders, including our employees,
encompasses publishing our inaugural
ethnicity pay gap report and consulting with
our employee-led networks when setting
our ambitious 2030 Inclusion and Diversity
aspirations, including metrics on inclusion,
transparency and diversity.
1. The Global Trusted Adviser Survey was completed in
December 2022 and was issued to our top 100 clients by revenue generation.
Schroders Annual Report and Accounts 2023
44
The Board is committed to promoting the Company’s success while
considering the interests of other stakeholders. Stakeholder
engagement is vital for our long-term sustainable success.
Examples of how the Board has considered the interests of the
Group’s stakeholders appear throughout this Annual Report. Specific
examples of how the Board considered their interests in relation to its
principal decisions made during the year is set out on page 61 in the
Corporate Governance Report.
For further information please refer to our KPIs on pages 2 to 3,
acting with purpose on pages 18 to 19, investing sustainably on
pages 28 to 29 and our climate related disclosures on pages 30 to 37.
Society and environment External suppliers Regulators
Supporting the wider
society and environment
Schroders is a values-led business,
and as a responsible steward of assets
we actively target investments that
make a measurable positive contribution
to society and/or the environment
and are expected to deliver positive
financial returns to investors. Further
we believe that demanding high levels
of corporate responsibility is not only
the right thing to do but supports our
corporate purpose.
Working with trusted partners
Our global network of external service
partners is essential to delivering our
corporate strategy. They supplement
our infrastructure, provide expertise
and specialised skills, giving us a
competitive advantage.
Building respectful relationships
As a global business, we are committed to
collaborating and engaging with key regulatory
stakeholders, including local and regional
regulators, exchanges, non-governmental
organisations, and trade associations. Through
our participation, we share insights, support
policy development, share best practices, and
advocate for better functioning markets.
How do we engage with them
and consider their interests?
Our Sustainable Investment team actively
supports investee companies in transitioning
to more sustainable business practices.
Our Engagement Blueprint outlines our
principles for engaging with these
companies. This includes setting targets,
focusing on material sustainable risks and
opportunities, monitoring progress, voting
in line with our active ownership principles,
and escalating issues when necessary.
We are dedicated to supporting
communities worldwide through fundraising
and volunteering. Our Schroders Giving
partnerships enhance our impact on society,
and our employees actively participate in
selecting causes to support.
Respecting human rights and preventing
human rights violations, including modern
slavery, is a top priority. We raise awareness
and educate our staff about the scale
and complexity of these issues. Additionally,
the Board reviews and approves the
annual Modern Slavery Statement and
Climate Report.
How do we engage with them
and consider their interests?
Our third-party risk management framework
governs sourcing, selection, onboarding,
management, oversight, and reporting of
suppliers. It outlines roles and responsibilities
in supplier stakeholder relationships. We
encourage strong relationships with key
suppliers to monitor performance, manage
risks, and foster mutual benefits. We
prioritise critical providers, allocate resources
effectively, and actively develop and monitor
important partnerships.
Our Supplier Code of Conduct sets high
standards for ourselves and our suppliers
regarding human rights, ethical sourcing,
anti-bribery and anti-corruption, diversity and
inclusion, health and safety, and the
environment. We look to enhance the code
each year, which includes our whistleblowing
hotline, as best practice evolves. In 2023, we
reviewed the modern slavery risk in our
supply chain with external support.
How do we engage with them
and consider their interests?
In addition to our compliance and risk teams
who directly liaise with regulators, we have a
dedicated public policy presence in the UK and
Brussels for the EU. This team works closely
with colleagues globally, leveraging their
knowledge and market expertise.
Our Public Policy team engages regularly with
officials, covering topics such as sustainability,
digitisation, retail investment, and primary
market reform. Senior management maintains
regular meetings with regulators, fostering
strong relationships. The Audit and Risk
Committee receives reports on regulatory
engagement and the potential impact of
regulatory changes on our business.
Through our engagements, we aim to comply
with current requirements, shape future ones,
and ultimately provide better service to our
clients, while contributing to a competitive and
resilient financial system.
Outcomes
In 2023, we engaged with 4,443 investee
companies. Our 2023 CDP climate change
questionnaire responses achieved a
leadership level score of A for the second
consecutive year. We committed £5.4 million
to charitable causes around the world, and
implemented a Global Volunteer Recognition
Scheme. We also provided modern slavery
training, including a session for our UK
Procurement team.
Outcomes
Schroders is dedicated to ensuring fair
treatment of suppliers, recognising them as
essential stakeholders. We establish and
maintain a sustainable supply chain aligned
with our values and objectives. We work
exclusively with aligned suppliers, who
reciprocate our expectations within their
supply chain, fostering a virtuous cycle of
improvement. The Board approved our
Modern Slavery Statement, detailing risk
assessment and due diligence processes for
suppliers regarding modern slavery.
Outcomes
We engaged with the Financial Conduct
Authority to align the implementation of
Consumer Duty with our business and clients’
needs. Our input on UK Sustainable Disclosure
Requirements influenced the policy framework.
Ongoing engagement with supervisory teams
covered various topics including operational
resilience, sustainability, liquidity risk, and
cyber security. We actively participate in the
Bank of England’s System-wide Exploratory
Scenario (SWES) to enhance understanding
of firm behaviour in stressed financial
market conditions.
Schroders Annual Report and Accounts 2023
Governance Shareholder informationFinancial statements
45
Strategic report
Prioritising performance
Governing our non-financial information
Description of business model
Pages 20 to 21
Description of principal risks, impacts
on the business and risk mitigation Pages 38 to 43
Non-financial key
performance indicators Page 3
Investing sustainably
Pages 28 to 29
In accordance with sections 414CA and 414CB of the Companies
Act 2006 which outline requirements for non-financial reporting, the
table below is intended to provide our stakeholders with the content
they need to understand our development, performance, position
and the impact of our activities with regards to non-financial and
sustainability matters. Further information on these matters can
be found on our website.
Description of policies and policy outcomes
1
Climate and
environment
Further information
on pages 30 to 37.
We have made a number of climate and nature-related commitments to support achieving net zero by 2050, or sooner. Our
Group Climate Change Position Statement and Group Nature and Biodiversity Position Statement outline our position
in relation to environmental management, and on nature and biodiversity, for the investments we manage and our operations.
Employees
Further information
on pages 18 to 19, 65,
74 to 93.
We seek to cultivate a purpose-led, high-performing culture that is inclusive, celebrates diversity and empowers all to have
the opportunities to grow. Our Guiding principles and values, and policy on Board Diversity serve to achieve this outcome.
Our Directors’ Remuneration policy outlines our approach for setting Directors’ remuneration.
Our Group Personal Data policy summarises the obligations imposed upon the Schroders Group and employees by data
protection laws and covers the rights of individual employees with respect to their personal data.
Furthermore, our Group Whistleblowing policy outlines the process for staff and third parties to report any concerns
in confidence.
We have a number of internal policies and standards that are not published externally. These policies cover our commitment
to providing equal opportunities in employment and to prevent all forms of discrimination as well as to encourage appropriate
conduct and regulatory compliance.
Social matters
Further information
on pages 19 and 44 to 45.
Community investment is a core part of our culture. We have an internal policy that provides a framework for volunteering
at Schroders.
Human rights
Further information
on pages 44 to 45.
Schroders is committed to upholding human rights. Our Group Human Rights Position Statement outlines our stance
on respecting human rights.
Our Modern Slavery Statement includes details of the policies, processes and measures we have in place to assess and
manage modern slavery risks across our business.
Anti-bribery
and
anti-corruption
Further information
on pages 40 to 41,
44 to 45 and 66 to 73.
We maintain a strict policy of zero tolerance towards acts of bribery and corruption. Our utmost priority is to safeguard
the interests of our clients, shareholders, employees, third-party vendors and the wider community from any form of
financial crime.
To reinforce this commitment, we have implemented a comprehensive set of internal policies, covering aspects such as
financial crime (including bribery and corruption, money laundering, terrorist financing, tax evasion, proliferation financing,
fraud and sanctions), inducements, gifts and entertainment, and conflicts of interest, all of which unequivocally prohibit any
individual associated with our organisation from engaging in activities that promote, endorse or facilitate financial crime.
Group tax strategy: We aim to comply with both the spirit and letter of the law and are committed to conducting our tax
affairs in an open and transparent way. Our tax strategy, available at www.schroders.com/tax-strategy, sets out our approach
to tax matters across the Group more generally. This strategy is reviewed and approved annually by the Audit and Risk
Committee. We disclose our total tax contribution, which shows the total amount of tax we pay and collect each year at
www.schroders.com/tax-contribution.
The following policies and statements apply to multiple categories noted above:
Our ESG Policy for Listed Assets, ESG and Stewardship policy and Schroders Capital Sustainability and Impact policy detail our principles
and practices regarding sustainable investing across our different business areas, covering themes such as climate and environment (including
nature and biodiversity), human rights, society, and anti-bribery and anti-corruption.
Our Engagement Blueprint outlines our principles towards engaging with investee companies. It includes measures relating to climate and
environment (including nature and biodiversity), human rights and employees.
Our Supplier Code of Conduct outlines the standards and behaviours we expect from our suppliers, including on climate and environment,
employees, human rights and anti-bribery and anti-corruption.
Our Statement of Compliance with the UN Principles of Responsible Investment further demonstrates our commitment to environmental,
social and governance factors.
1. Across Schroders, policies and statements of intent are in place to foster consistent governance on a range of issues. For the purposes of the non-financial information
statement, these include, but are not limited to, the policies and statements detailed in this report.
Non-financial and sustainability information statement
Schroders Annual Report and Accounts 2023
46
In accordance with the UK Corporate Governance Code, the
Directors have carried out a robust assessment of the key
risks facing the Group and expect that Schroders plc will
continue to be viable for at least the next five years.
Assessment of prospects
The five-year period to December 2028 is consistent with the
Group’s strategic business planning and forecasting period. The
Group’s strategic and financial planning process includes a detailed
review of the business model and key assumptions. It is led by the
Group Chief Executive and Chief Financial Officer in conjunction with
management teams. The outlook was most recently updated in
February 2024. The business planning process considers the risks
that may materially impact the Group, and assesses the need for
business model changes. The business plan reflects the Group’s
strategy and diversified business model, which is summarised on
pages 14 to 17 and 20 to 21 respectively.
Key assumptions underpinning the financial planning process
include AUM growth from both markets and net new business;
changes to net operating revenue margins owing to changes in
business mix, planned business activity and industry-wide margin
pressures; and additional costs including those arising from
continued investment in the development of the business.
Progress against financial budgets and key objectives are
reviewed throughout the year by both the Board and the GMC,
along with periodic reviews of the capital and dividend policies.
Assessment of viability
The assessment of the Group’s viability requires the Directors to
consider the principal risks that could affect the Group, which are
outlined on pages 40 to 43. The Directors review the key risks
regularly and consider the options available to the Group to mitigate
these risks so as to ensure the ongoing viability of the Group.
Stress testing is performed on the Group’s business plan and
considers the impact of a number of the Group’s key risks
crystallising over the assessment period. This includes consideration
of new and emerging risks, identified through the business planning
process, that could have a material impact over the five-year
planning period.
The severe but plausible stress scenarios applied to the business
plan include consideration of the following factors:
• A deterioration in the value of our AUM, for example as a result
of a severe period of market stress, the return of significant
inflationary pressures combined with a marked slowdown in
global growth, or the early crystallisation of certain climate
change risks.
• A significant decline in net operating revenue margins
reducing projected revenues.
• The impact of a material operational risk event or poor
performance which could lead to reputational damage and
significant outflows of our AUM.
• An increase in the ratio of total operating expenses to net
operating income.
The Group also assesses the impact of regulatory stress
scenarios published by the Prudential Regulation Authority.
The stress scenarios are consistent with those used in the Group’s
consolidated Internal Capital Adequacy Assessment Process and
Internal Liquidity Adequacy Assessment Process.
Having reviewed the results of the stress tests, including a scenario
that combines a number of the factors set out above, the Directors
have concluded that the Group would have sufficient capital and
liquid resources and that the Group’s ongoing viability would be
sustained. In drawing this conclusion, the Directors assessed the
management actions that are available to the Group and were
comfortable that they are sufficient in order to maintain adequate
capital and liquidity surpluses. The Directors also have regard to
business model changes that may be required given the new
environment in which the Group would be operating.
It is possible that a stress event could be more severe and have
a greater impact than we have determined plausible. In this
context, we conduct reverse stress tests, which demonstrate the
unlikely and very extreme conditions required to make our business
model non-viable.
The Directors’ current, reasonable expectation is that Schroders plc
will be able to continue in operation, meeting its liabilities as they
fall due, over a viability horizon of at least five years. The Board’s
five-year viability and longer-term assessment is based on
information known today.
Pages 1 to 47 constitute the Strategic report, which was approved
by the Board on 28 February 2024 and signed on its behalf by:
Peter Harrison
Group Chief Executive
28 February 2024
Viability and going concern statement
Going concern
The Group’s business activities, together with the factors
likely to affect its future development, performance and
position, are set out in this Strategic report. In addition, the
financial statements include information on the Group’s
approach to managing its capital and financial risk; details
of its financial instruments and hedging activities; and its
exposures to credit and liquidity risk.
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 12 months from
the date the Annual Report and Accounts is approved.
They therefore continue to adopt the going concern basis
in preparing the Annual Report and Accounts.
Schroders Annual Report and Accounts 2023
Shareholder informationFinancial statements
47
Strategic report Governance
48
Schroders Annual Report and Accounts 2023
GOVERNANCE
Board of Directors
and Company Secretary 50
Corporate governance report 54
Nominations Committee report 64
Audit and Risk Committee report 66
Remuneration report 74
Directors’ report 94
Statement of Directors’ responsibilities 99
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
49
Governance
Schroders Annual Report and Accounts 2023
Board of Directors and Company Secretary
Leading a world
class business
Skills, experience and contribution Current external appointments
Dame Elizabeth Corley
Chair
N
Elizabeth was appointed as an independent non-executive Director
in September 2021 and became Chair at the conclusion of the 2022
Annual General Meeting.
Elizabeth is a non-executive Director of BAE Systems plc, Chair of
the Impact Investing Institute and a Trustee of the British Museum.
She was previously the CEO of Allianz Global Investors and a
non-executive Director of Morgan Stanley Inc. and Pearson plc.
Elizabeth is a leading figure in financial services with over 45 years’
experience. Elizabeth is active in representing the investment industry
and developing standards. Elizabeth has significant expertise in asset
management, impact investing and sustainability and brings a wealth
of investor, governance and boardroom experience to the Board.
• Non-executive Director of BAE
Systems plc
• Chair of the Impact Investing
Institute
• Trustee of the British Museum
Peter Harrison
Group Chief Executive
Peter was appointed as Group Chief Executive in April 2016. He was
an executive Director and Head of Investment from May 2014.
Peter began his career at Schroders and subsequently held roles
at Newton Investment Management, J.P. Morgan Asset Management
as Head of Global Equities and Multi-Asset, and at Deutsche Asset
Management as Global Chief Investment Officer. He was Chairman
and Chief Executive of RWC Partners before re-joining Schroders
as Global Head of Equities in March 2013.
Having spent his whole career in the asset management industry,
Peter brings a long and successful track record in asset management
and extensive industry and leadership experience to the Board.
• Chair of Business in the
Community
• Member of the UK Capital
Markets Industry Taskforce
• Director of the Investment
Association
• Member of the Advisory Board
of Antler Global
• Director of FCLT Global
Richard Oldfield
Chief Financial Officer
Richard was appointed as an executive Director and Chief Financial
Officer on 2 October 2023.
Richard is a chartered accountant and was Network Vice Chairman and
Global Markets Leader at PricewaterhouseCoopers (PwC) until October
2023 where he led market-facing activities, initiatives and strategy.
Prior to this, he was a member of PwC’s UK Executive Board for five
years, during which time he was Head of Clients and Markets and Head
of Strategy and Communications. He also led the UK firm’s Banking
and Capital Markets Assurance practice and was part of the Assurance
Leadership team. His experience includes time spent working across
Africa, Europe, Asia and North America.
Richard brings a deep capability in leading an international business,
combined with technical and strategic capabilities. His global
perspective and his experience in advising large multinational financial
services organisations will help us to continue to deliver our strategy.
• Trustee and Audit Committee
Chair of The Duke of
Edinburgh’s International
Award Foundation
N
Nominations Committee
R
Remuneration Committee
AR
Audit and Risk Committee
 Chair
Schroders Annual Report and Accounts 2023
50
Skills, experience and contribution Current external appointments
Ian King
Senior Independent Director
N
R
Ian was appointed to the Board as an independent non-executive
Director in January 2017, and was appointed as Senior Independent
Director in April 2018.
Ian was Chief Executive of BAE Systems plc from 2008 to 2017, having
been originally appointed to the BAE board as Chief Operating Officer,
UK and Rest of the World. Prior to this, he was Chief Executive of
Alenia Marconi Systems. Ian also served as a non-executive Director
and Senior Independent Director of Rotork plc until June 2014.
Having held a number of leadership positions in major multinational
companies, and having capital markets experience both as an
executive and non-executive director, Ian brings strong global
leadership experience, which is of great value to the Group as we
continue to grow our business internationally.
• Senior Adviser to the board
of Gleacher Shacklock LLP
• Chairman of Senior plc
• Director of High Speed
Two (HS2) Limited and lead
non-executive Director for
the Department for Transport
Rhian Davies
Independent non-executive
Director
N
AR
R
Rhian was appointed as an independent non-executive Director in July
2015, and was appointed as Chair of the Audit and Risk Committee
in 2016.
Rhian is a chartered accountant and was a partner at Electra Partners,
an independent private equity fund manager, until June 2015, and
then a Senior Adviser until March 2017. Rhian previously worked in
PwC’s audit and insolvency practice before joining Electra in 1992.
Rhian’s background as a qualified accountant is a specific strength
given her role as Chair of the Audit and Risk Committee. With
extensive experience as a partner of a private equity fund manager,
Rhian brings financial and industry knowledge to the Board,
particularly in the area of private markets.
• Director of Alexander
Square Partners
Claire Fitzalan Howard
Non-executive Director
N
Claire was appointed as a non-executive Director in April 2020.
Claire is a non-executive Director of Caledonia Investments plc,
Director and Trustee of the Schroder Charity Trust and a Trustee
of a number of charitable foundations. She was previously a
non-executive Director of Gauntlet Insurance Services.
Claire brings experience of family-owned businesses in financial
services and from her non-executive roles. Claire is a descendant of
John Henry Schroder, co-founder of the Schroders business in 1804.
Claire’s appointment reflects the commitment to Schroders of the
Principal Shareholder Group, which has been an important part of
Schroders’ success over the long term.
• Director and Trustee of the
Schroder Charity Trust
• Trustee of a number of
charitable foundations
• Non-executive Director of
Caledonia Investments plc
Rakhi Goss-Custard
Independent non-executive
Director
N
AR
Rakhi was appointed as an independent non-executive Director
in January 2017.
Rakhi is an experienced executive in digital retailing, having spent
12 years at Amazon where she was Director of UK Media. Prior to
joining Amazon, she held roles at TomTom and in management
consultancy in the US. She was previously a non-executive Director
of Intu plc and Rightmove plc.
Rakhi’s experience in the digital world through her work at Amazon,
and more recently through her experience as a non-executive
director on other boards, is highly valuable to the Group as digital has
an increasingly important impact on the asset management industry.
• Non-executive Director
of Trainline plc
• Non-executive Director
of Kingfisher plc
• Non-executive Director
of Nisbets plc (unlisted)
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
51
Governance
Board of Directors and Company Secretary continued
Skills, experience and contribution Current external appointments
Iain Mackay
Independent non-executive
Director
N
AR
Iain was appointed as an independent non-executive Director
on 1 January 2024.
Iain is a chartered accountant and was Chief Financial Officer at
GSK plc until 2023. He was a member of the GSK leadership team
and was responsible for Global Finance and several of GSK’s key
global functions, including Investor Relations, Digital & Tech and
Global Procurement. Prior to joining GSK, Iain was Group Finance
Director at HSBC Holdings plc, a position he held for eight years. Iain
has lived and worked in Asia, the US and Europe and, before HSBC,
was at General Electric, Schlumberger Dowell and Price Waterhouse.
In addition to his experience as Chief Financial Officer of FTSE 100
companies, Iain brings considerable knowledge of global
organisations operating in many of the international markets
where we operate.
• Non-executive Director and
Chair of the Audit and Risk
Committee of National Grid plc
• Member of the Court of the
University of Aberdeen and
Chair of its Remuneration
Committee
• Non-executive Director of UK
Government Investments
Leonie Schroder
Non-executive Director
N
Leonie was appointed as a non-executive Director in March 2019.
Leonie is currently a Director and Trustee of the Schroder Charity
Trust and has held a number of roles in the charity sector.
Leonie is a descendant of John Henry Schroder, co-founder of the
Schroders business in 1804. Leonie’s appointment reflects the
commitment to Schroders of the Principal Shareholder Group which
has been an important part of Schroders’ success over the long term.
• Director and Trustee of
the Schroder Charity Trust
• Director of a number of
private limited companies
Annette Thomas
Independent non-executive
Director
N
R
Annette was appointed as an independent non-executive Director
on 1 September 2023.
Annette has 25 years’ experience in leading global publishing
and data analytics businesses, across academic, educational and
consumer media verticals. Most recently, she served as CEO of
Guardian Media Group, a position she held until June 2021. Prior to
this, Annette was CEO of the Web of Science Group at Clarivate PLC, a
data, analytics and software business focused on research and higher
education. She has also served as CEO of Macmillan Publishers and
led the digital and global transformation of Nature Publishing Group.
Annette brings her experience in leading global publishing and data
analytics businesses with her digital, data and analytics expertise,
which is of great benefit to the Group as we continue to invest
in these important areas.
• Non-executive Director
of Pearson plc
• Non-executive Director
of EcoVadis
• Non-executive Director
of OpenClassrooms
• Senior Advisor to
General Atlantic
Frederic Wakeman
Independent non-executive
Director
N
AR
Fred was appointed as an independent non-executive Director
on 1 January 2024.
Fred was Managing Partner and Head of TMT at Advent International,
a leading global private equity investor. During his 23-year career, Fred
managed Advent’s London and New York offices and served on both
their European and North American Investment Advisory Committees.
Fred brings insights into the sustainability and conservation sectors.
He also brings experience of private equity and private markets more
generally, which is of great benefit as we continue to build Schroders
Capital, our private markets business.
• Founder of Blue Endeavor
Ventures
• Co-Founder of Scale-Up Fund
Schroders Annual Report and Accounts 2023
52
Skills, experience and contribution Current external appointments
Deborah Waterhouse
Independent non-executive
Director
N
AR
R
Deborah was appointed as an independent non-executive Director
in March 2019.
Deborah is the CEO of ViiV Healthcare. ViiV Healthcare is a leading
global company, majority owned by GSK and focused on advancing
science into HIV treatment, prevention and care. Deborah is also
a member of the GSK Corporate Executive Team.
Deborah brings her experience as Chief Executive of a major
international business operating in many of the markets we are
active in, which is of great benefit as we continue to grow our
business internationally.
• CEO of ViiV Healthcare
• Member of the GSK Corporate
Executive Team
Matthew Westerman
Independent non-executive
Director
N
AR
R
Matthew was appointed as an independent non-executive Director
in March 2020 and was appointed as Chair of the Remuneration
Committee in April 2022.
Matthew started his career in 1986 at Credit Suisse First Boston.
He subsequently worked at Rothschild & Co where he became
Managing Director and Joint Chief Executive of ABN AMRO Rothschild.
He joined Goldman Sachs in 2000 and became a partner in 2002.
During his tenure, he led substantial businesses within the
Investment Banking Division. He left Goldman Sachs in 2016 to
become Co-Head of Global Banking at HSBC.
Matthew brings significant experience of global financial markets
after a distinguished career in investment banking.
• Director of MW&L
Capital Partners
• Chairman of the Board
of Trustees of the Imperial
War Museum
• Foundation Fellow of
Balliol College, Oxford
• Trustee of the UK Holocaust
Memorial Foundation
Graham Staples
Group Company Secretary
Graham was appointed Group Company Secretary in 2004. He
previously held senior company secretarial, compliance and business
development roles at NatWest, Barclays, TSB and Computershare.
Graham is responsible for the Group’s Governance framework and
is the principal adviser on all governance matters. He is also Chair of
Schroder Investment Management (Europe) S.A., the Group’s main
operating company in the EU.
Graham brings great experience in corporate governance and
company law.
• Director and Trustee of
Sherborne Girls School
Charitable Foundation
Composition of the Board at 28 February 2024
Board composition Non-executive
Directors’ tenure
Board gender diversity Board ethnic diversity
Executive Directors 15%
Non-independent
non-executive Directors 15%
Independent
non-executive Directors 70%
0–3 years 36%
3–6 years 36%
6–9 years 28%
Male 46%
Female 54%
White 85%
Ethnically diverse 15%
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
53
Governance
Corporate governance report
Developing
strategy for
the long term
I am pleased to present our governance report for 2023,
my first full year as Chair. The following pages discuss our
governance arrangements, the operation of the Board and its
Committees and how we discharged our responsibilities during
the year.
In my last report I said the Board was focusing on strategy, talent
and culture. This continued during 2023. As I mentioned in my
statement earlier, the Company has been implementing a successful
diversification strategy for our business for several years. This
positioned us in areas of higher growth, with improved longevity of
client relationships, whilst continuing to focus on delivering good
investment performance. This strategy has helped the Group to
withstand forces of long term change in our sector, which have grown
steadily more powerful.
Nevertheless, as the Board has a long term orientation, we continued
to place strategy – both execution and evolution – at the heart of our
discussions in 2023, reflecting on trends in the asset management
industry. The Board has dedicated additional time to analysing industry
developments, in order to remain well informed in a period of
increased pace of change, alongside our oversight of business
performance, our people strategy, and maintaining a healthy culture.
Building on prior strategic diversification, both organic and inorganic,
we have dedicated time, with management, to a rigorous assessment
of our performance and delivery, with the aim of making the Company
the best that it can be.
In most years the Board will undertake a formal strategic review each
November at our strategy offsite. This is in addition to regular business
area-specific reviews through the year. Given the deterioration in the
external environment in 2023, heightened by increased geopolitical
tensions and the economic consequences of inflation and higher
interest rates, we increased our focus on strategy in the second half of
the year. We also supplemented formal Board meetings with periodic
Board calls so that the whole Board could be kept up to date on our
agreed actions. This approach has worked well according to feedback
from our end-of-year Board performance evaluation, and has enabled
management to keep the Board informed in a more dynamic and
volatile environment. Additional time with the Board has demanded
more from the management team and I am grateful to them for
consistently delivering what the Board has required, while at the same
time maintaining an intense focus on running the business in more
demanding circumstances. Strategy will rightly remain one of our major
priorities for 2024.
Ensuring we attract, develop and retain high quality talent is central
to our ability to deliver for our clients and shareholders. In 2023, in
addition to reviewing our people and diversity and inclusion strategy,
the Board focused attention on the continuous development of our
current and next generation senior leaders. Members of the Group
Strategy Committee (GSC) now regularly attend sections of our Board
meetings. We have all benefitted from this, with richer discussions as a
result of their attendance. For example, the Board obtained valuable
insights from the GSC members on all aspects of our strategy. With the
establishment of the Client Group in 2023, having the heads of our
client-facing functions at our meetings has enabled the Board to
deepen our understanding of client needs and market developments.
In 2022, the Board re-started visits to overseas offices following the
Covid pandemic. Unfortunately, we had to defer the planned visit to
our Paris office due to industrial action just as we were about to depart.
We are looking forward to being there in May 2024. We see these visits
as important opportunities to understand better how well the culture
we see clearly in London has travelled in our global business.
We have had further change on the Board this year at both executive
and non-executive level. The details of, and background to, these
changes are set out in the Nominations Committee report. My
intention now is for relationships within the Board to have the
opportunity to develop and settle into a new equilibrium. I am
confident we have a Board that can continue to evolve our strategy
to deliver for the long-term benefit of clients, shareholders and all
our stakeholders.
It is clear to the Board that the industry is facing unusually high levels of
change. No matter how resilient our strategy, or good our company,
we know we must remain alert to opportunities and the unexpected.
Continuing to be relevant and close to clients during volatile times is
vital, so the performance of our Client Group will be on our agenda
alongside reviews of growth business areas: Wealth Management,
Solutions and Private Markets. In addition, our commitment to active
management and sustainability means that the Board is always keen to
understand how we are delivering investment performance and service
to our clients. These will be priorities in 2024, as will the continued
development of our talent, which we see as the bedrock on which the
business is built.
I would like to finish with a comment on governance in the UK. There
has been much comment on whether the UK has become too rigid in
applying the letter of the governance code, with suggestions that our
regulatory approach has stifled entrepreneurship and discouraged
companies from listing in London. We have seen steps of late to allow
companies more freedom in which to operate. Schroders broadly
welcomes these initiatives, both as a listed company and as a major
investor in UK companies. Comply or explain has been a foundation
of UK corporate governance and, taken seriously, with transparency,
should provide a framework for strong governance. For this to work,
companies must have the right culture. I have no doubt that we have
the right culture and our robust governance framework will enable us
to continue to focus on doing what is right for all our stakeholders over
the long term.
Dame Elizabeth Corley
Chair
28 February 2024
Dame Elizabeth Corley
Chair
54
Schroders Annual Report and Accounts 2023
2023 Board and Committee attendance
Directors are expected to attend all meetings of the Board and Committees on which they serve. Details of Board and Committee attendance
are included in the table below. Iain Mackay and Frederic Wakeman were appointed to the Board on 1 January 2024, and therefore do not
feature in the table.
Where a Director is unable to attend a meeting, their views are sought in advance and shared with the Board.
Board
1
Nominations
Committee
Audit and Risk
Committee
Remuneration
Committee
Chair
Dame Elizabeth Corley 7/7 6/6
Executive Directors
Peter Harrison 7/7
Richard Keers
2
5/5
Richard Oldfield
2
2/2
Non-executive Directors
Ian King 7/7 6/6 5/5
Sir Damon Buffini
3
2/2 2/2 2/2
Rhian Davies
4
6/7 5/6 5/5 5/5
Paul Edgecliffe-Johnson
5
4/4 4/4 3/3
Claire Fitzalan Howard 7/7 6/6
Rakhi Goss-Custard 7/7 6/6 5/5
Leonie Schroder
6
6/7 5/6
Annette Thomas
7
3/3 2/2 2/2
Deborah Waterhouse 7/7 6/6 5/5 5/5
Matthew Westerman 7/7 6/6 5/5 5/5
1. There were six scheduled Board meetings held during the year and one additional meeting to consider strategy.
2. Richard Keers stepped down from the Board on 2 October 2023 and was succeeded as Chief Financial Officer by Richard Oldfield from that date.
3. Damon Buffini stepped down from the Board at the conclusion of the 2023 AGM on 27 April 2023.
4. Rhian Davies was unable to attend one meeting of the Board and one meeting of the Nominations Committee, which occurred on the same day, due to a family commitment.
5. Paul Edgecliffe-Johnson stepped down from the Board on 31 August 2023.
6. Leonie Schroder was unable to attend one meeting of the Board and one meeting of the Nominations Committee, which occurred on the same day, due to her honeymoon.
7. Annette Thomas was appointed to the Board and as a member of the Nominations Committee and Remuneration Committee on 1 September 2023.
The Board and its Committees
The Board has collective responsibility for the management,
direction and performance of the Company. It is accountable to
shareholders for the creation and delivery of strong, sustainable
financial performance and long-term shareholder value. In
discharging its responsibilities, the Board takes appropriate account
of the interests of our wider stakeholders, including clients,
employees, external service providers, regulators and wider society.
Certain decisions can only be taken by the Board, including on the
Group’s overall strategy, significant new business activities, and the
strategy for management of the Group’s investment capital. These
are contained in the Schedule of Matters Reserved to the Board,
which can be found on the Company’s website
1
and are summarised
on page 56.
The Board has delegated specific responsibilities to Board
Committees, notably the Nominations Committee, the Audit and
Risk Committee and the Remuneration Committee. The papers for
and minutes of Committee meetings are made available to all
Directors. At each Board meeting, the Chair of each Committee
provides the Board with an update of the work currently being
carried out by the Committee they chair. Membership of the
Committees is detailed in each Committee’s report. The Committees’
terms of reference can be found on the Company’s website
2
.
The Chair also has regular meetings with the non-executive
Directors without the executive Directors being present.
These meetings are for informal discussions and do not have
fixed agendas. At least once a year the Chair also meets with just
the independent non-executive Directors.
Board calls are used as an additional avenue for communication
to supplement the formal Board meeting programme; these are
held between the scheduled meetings. At each call, the Group
Chief Executive and Chief Financial Officer provide updates on key
business issues.
1. www.schroders.com/board-matters
2. www.schroders.com/board-committees
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
55
Governance
Corporate governance report continued
CONTENT FROM DESIGN (WORD FILE WAS PICTURE)
TO BE ARTWORKED IN A TABLE
Governance framework
Board
The Board is collectively responsible for the management, direction and performance of the Company.
Matters reserved to the Board
The Group’s overall strategy
The Company’s capital strategy
and changes to the capital or
corporate structure
Significant new
businessactivities
Remuneration strategy
Annual Report and
financialandregulatory
announcements
Annual budgets and financial
commitments and strategic
or key acquisitions
Risk management framework,
risk appetite and tolerance limits
Board and Committee
composition, succession
planning and Committee terms
of reference
Corporate governance
arrangements, including
Board conflicts of interest
Maintenance of an effective
system of internal control and
risk management
Dividend policy
The full Schedule of Matters Reserved to the Board can be found on the Company’s website, www.schroders.com/board-matters
Chair
The Chair is responsible for the
leadership of the Board, ensuring
its effectiveness and setting its
agenda. She is responsible for
creating an environment for open,
robust and effective debate and
challenge. The Chair is also
responsible for ensuring effective
communication with shareholders
and other stakeholders.
Group Chief Executive
The Group Chief Executive is
responsible for the executive
management of the Company and
its subsidiaries. He is responsible
for proposing the strategy for the
Group and for its execution. He is
assisted by members of the GSC,
GMC and GSI.
Chief Financial Officer
The Chief Financial Officer is
responsible for firm-wide operations
along with direct responsibility
for financial management, risk
management, technology, capital
and treasury. He is assisted by
members of the GRC and Group
Capital Committee.
Senior Independent
Director (SID)
The SID acts as a sounding board
for the Chair, oversees the Chair’s
evaluation, and serves as an
intermediary for other Directors
if needed. He is also available as
an alternative point of contact for
shareholders and stakeholders
if needed. He is the designated
non-executive Director responsible
for engagement with the workforce.
Non-executive Directors
N
on-executive Directors are expected
to provide independent oversight
and constructive challenge and help
develop proposals on strategy,
performance and resources,
including key appointments
and standards of conduct.
Nominations
Committee
Responsible for reviewing
and recommending changes
to the composition of the
Board and its Committees.
Audit and Risk
Committee
Responsible for overseeing
financial reporting, risk
management and internal
controls, internal and
external audit.
Remuneration
Committee
Responsible for the
remuneration strategy for
the Group, the remuneration
policy for Directors and
overseeing remuneration
business-wide.
Chair: Dame Elizabeth Corley Chair: Rhian Davies Chair: Matthew Westerman
See page 64 for
more information.
See page 66 for
more information.
See page 74 for
more information.
Group Strategy
Committee (GSC)
The GSC comprises the
senior management
team, who have primary
responsibility for the
development and delivery
of the Group’s strategy. It is
an advisory committee to
the Group Chief Executive.
Group
Management
Committee (GMC)
The GMC comprises the
wider senior management
team and is an advisory
committee to the Group
Chief Executive on the
day-to-day running of the
Group’s business.
Group Sustainability
and Impact
Committee (GSI)
The GSI comprises senior
management across the
Group and provides advice
to the Group Chief Executive
to assist him in discharging
his responsibilities regarding
sustainability and impact.
Group Capital
Committee
Assists the Chief
Financial Officer in the
deployment of operating,
seed, co-investment and
investment capital.
Group Risk
Committee (GRC)
Assists the Chief Financial
Officer in discharging his
responsibilities in respect
of risk and controls. The
GRC has a number of
sub-committees, which
look at specific areas of risk.
Schroders Annual Report and Accounts 2023
56
Independence
The Board remains committed to its stated policy regarding the
benefits of an absolute majority of independent Directors. All the
non-executive Directors are independent in terms of character
and judgement.
Claire Fitzalan Howard and Leonie Schroder are not considered
independent as they are both members of the Principal Shareholder
Group. The Nominations Committee believes the judgement
and experience of Claire Fitzalan Howard and Leonie Schroder
continues to add value to the Board and the Group. The Board will
therefore recommend their re-election at the 2024 Annual General
Meeting (AGM).
Director appointments and time commitment
The rules providing for the appointment, election, re-election
and removal of Directors are contained in the Company’s Articles
of Association. The Company may only amend its Articles of
Association by special resolution of the shareholders.
In accordance with the Articles of Association, Iain Mackay, Richard
Oldfield, Annette Thomas and Frederic Wakeman will resign and
offer themselves for election at the AGM on 25 April 2024. All other
Directors are required to seek re-election on an annual basis unless
they are retiring from the Board. Rhian Davies will not be seeking
re-election as a Director and will stand down at the conclusion of
the 2024 AGM. Details of the Directors’ length of tenure are set out
on page 53.
Non-executive Directors’ letters of appointment stipulate that they
are expected to commit sufficient time to discharge their duties.
The Board has adopted a policy that allows executive Directors
to take up one external non-executive directorship. Non-executive
Directors are required to consult the Chair before taking on any
additional appointments. The Board is satisfied that all Directors
continue to be effective and demonstrate commitment to their
respective roles.
For details of executive Directors’ service contracts, termination
arrangements and non-executive Directors’ letters of appointment,
please refer to the Remuneration report from page 74.
Board training
The Board believes that the ongoing development and briefing
of Directors is an important part of the Board’s agenda. The Board
receives regular briefings throughout the year to provide them
with a deeper understanding of the Group. The Chair and Group
Company Secretary discuss briefing topics annually and agree what
these should cover.
During 2023, a briefing was provided by our Chief Economist on
the challenging macroeconomic environment and how it affects
Schroders. Our Global Head of Sustainable Investment and Global
Head of Corporate Sustainability provided a briefing session which
covered how sustainability trends are shaping our industry, as well
as our progress on key issues including climate change, biodiversity,
human rights and community investment. The Board also received
briefings on our private markets strategy, on our strategy in Asia
and on the benefits, risks and use of artificial intelligence (AI)
at Schroders.
Members of the Board Committees also receive regular updates on
technical developments at scheduled committee meetings. Other
training includes external professional events and industry updates.
Board induction
The Group Company Secretary supports the Chair and Group
Chief
Executive in providing a personalised induction programme
for
all new Directors. This helps to familiarise newly appointed
Directors with their duties and the Group’s culture and values,
strategy, business model, businesses, operations, risks and
governance arrangements.
The induction process is reviewed regularly and is updated and
tailored to ensure that it remains appropriate. Induction and
briefing meetings are generally open to any Director to attend if
they wish to.
Committee-specific inductions are also arranged when committee
membership changes, and these induction processes are tailored
to the skills and knowledge of the individual and the forthcoming
committee agenda items.
Following the appointments of Annette Thomas in September 2023,
Richard Oldfield in October 2023 and Iain Mackay and Frederic
Wakeman in January 2024, comprehensive and tailored induction
programmes were provided and are ongoing. The induction
processes involve:
• meeting all members of the GMC and their teams to gain an
insight into, and an understanding of, the opportunities and
challenges facing their area of responsibility; and
• one-to-one meetings with other senior management across
the Group, including first, second and third lines of defence,
to understand the Group’s internal control and risk
management framework.
Chief Financial Officer induction
During 2023, I had the privilege of being appointed to the
Schroders Board. A comprehensive and tailored induction
programme was provided to me, which began even before my
formal appointment, reflecting the organisation’s commitment
to ensuring a smooth transition for new Board members.
The induction process was immersive and included
meeting all members of the GSC, the GMC and members of
their teams. This provided me with valuable insight into the
opportunities and challenges within their respective areas of
responsibility. Additionally, one-to-one meetings with other
senior management across the Group, including those in the
first, second, and third lines of defence, including Risk and
Compliance, Legal, Governance and Internal Audit, helped me
understand Schroders’ internal control and risk management
framework. I also had the opportunity to meet with external
advisers, auditors and regulators, as appropriate.
I am grateful to my colleagues on the Board for their
unwavering support. I have had the pleasure of meeting
people from various areas of the business, both before and
after my appointment, and have been impressed by the
depth of Schroders’ culture that runs throughout the
organisation. These interactions have accelerated my
understanding of the business and its operations.
Overall, the induction has been a comprehensive and
enriching experience, equipping me for my role at Schroders.
Richard Oldfield
Chief Financial Officer
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
57
Governance
Corporate governance report continued
Compliance with the 2018 UK Corporate Governance Code (Code)
1
During 2023, the Board complied with the Code and applied all its principles and provisions.
The following table sets out examples of how the Board has applied each principle, assisting our shareholders to evaluate our Code compliance.
Code principle
Board leadership and company purpose
A Role of the Board The Company is led by an effective Board which is collectively responsible for the long-term sustainable success
of the Company, ensuring that due regard is paid to the interests of our stakeholders, who include our clients,
shareholders, employees, external service providers, regulators and wider society.
See the Key areas of focus during the year on page 60.
B Our purpose,
values and
strategy
The Board has collective responsibility for the management, direction and performance of the Company. Certain
decisions can only be taken by the Board, including decisions on the Group’s overall strategy, significant new
business activities and the strategy for management of the Group’s investment capital.
See Stakeholder interests and engagement on page 61.
C Resources
and controls
The Board reviews the financial performance of the Group at each scheduled meeting and is ultimately
responsible for the Group’s control framework. The Audit and Risk Committee carries out an annual assessment
of the effectiveness of the system of internal control on behalf of the Board.
See the Audit and Risk Committee report on pages 66 to 73.
D Engagement The Board recognises that engaging with and taking account of the views of the Group’s stakeholders is key
to delivering the strategy and long-term objectives of the Group.
See page 61.
E Workforce
engagement
The Board receives updates on our people and inclusion and diversity strategy during the year. Ian King is our
designated non-executive Director responsible for gathering workforce feedback and he chairs the Global
Employee Forum.
See pages 60 to 61.
Division of responsibilities
F The role of
the Chair
The roles of the Chair and Chief Executive are separate. The Chair has overall responsibility for the leadership of
the Board and for its effectiveness in all aspects of its operation. Elizabeth Corley became Chair at the conclusion
of the 2022 AGM and was considered independent on appointment.
Job descriptions for the Chair and Chief Executive can be found at www.schroders.com/board-matters
G Board composition The Board is committed to its stated policy of having an absolute majority of independent Directors. The Board
believes that it operates most effectively with an appropriate balance of executive Directors, independent
non-executive Directors and Directors who have a connection with the Company’s Principal Shareholder Group.
No individual or group of individuals is in a position to dominate the Board’s decision-making.
See page 53.
H Role of the
non-executive
Directors
Non-executive Directors are expected to provide independent oversight and constructive challenge and
help develop proposals on strategy, performance and resources, including key appointments and standards
of conduct.
I Group Company
Secretary
All Directors have access to the advice and support of the Group Company Secretary and their team.
Through them, Directors can arrange to receive additional briefings on the business, external development
and professional advice, independent of the Company, at the Company’s expense.
1. The Code is available at www.frc.org.uk
Schroders Annual Report and Accounts 2023
58
Code principle
Composition, succession and evaluation
J Appointments
to the Board
The process for Board appointments is led by the Nominations Committee, which makes recommendations
to the Board.
See the Nominations Committee report on pages 64 to 65.
K Skills, experience
and knowledge
of the Board
In 2021, the Nominations Committee carried out a full analysis of the Board to identify the skills and experience
required by future appointments. This analysis has been updated, and the results formed part of role profiles used
in the appointments of Annette Thomas and Richard Oldfield in 2023 and Iain Mackay and Frederic Wakeman in
2024. We will continue to update and use this analysis to help identify future candidates for the Board.
See the Nominations Committee report on pages 64 to 65.
L Board evaluation The 2023 Board evaluation was undertaken internally by the Chair. Independent Board Evaluation (IBE) facilitated
an external Board evaluation in 2022 in accordance with the Code requirement. IBE conducted the previous
externally facilitated Board evaluation in 2019, while the evaluations in 2020 and 2021 were conducted internally
by the Chair.
See page 63.
Audit, risk and internal control
M Internal and
external audit
The Audit and Risk Committee oversees the relationship with the external auditor, Ernst & Young. The Group Head
of Internal Audit reports directly to the Chair of the Audit and Risk Committee.
See the Audit and Risk Committee report on pages 66 to 73.
N Fair, balanced and
understandable
assessment
The Audit and Risk Committee reviews the Company’s financial reporting in detail and can recommend to the
Board that the Annual Report and Accounts, when taken as a whole, is fair, balanced and understandable.
See the Audit and Risk Committee report on pages 66 to 73.
O Risk management
and internal
control framework
The Audit and Risk Committee carries out an annual assessment of the effectiveness of the system of internal
control and considers the adequacy of risk management arrangements in the context of the business and
strategy. The Committee also considers the principal risks, alongside emerging and thematic risks, that may have
an impact on the Group.
See the Audit and Risk Committee report on pages 66 to 73.
Remuneration
P Policies and
practices
Executive remuneration is designed to align to our purpose. Our remuneration policy was approved at the 2023
AGM, following engagement with shareholders, and is expected to apply for three years.
See the Remuneration report on pages 74 to 93.
A summary of our remuneration policy can be found at www.schroders.com/rp
Q Remuneration
Policy
The Remuneration Committee provides independent oversight of the Group’s remuneration policy and
determines the remuneration of the Chair and the executive Directors within the policy approved by shareholders.
No Director is involved in discussions relating to their own remuneration.
See the Remuneration report on pages 74 to 93.
A summary of our remuneration policy can be found at www.schroders.com/rp
R Exercising
independent
judgement
and discretion
We pay for performance in a simple and transparent way, clearly aligned to shareholder and client interests,
to the financial performance of the Group, and the progress made towards our strategic goals.
See the Remuneration report on pages 74 to 93.
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59
Governance
Corporate governance report continued
Key areas of focus during the year
At each scheduled Board meeting, the Board discusses reports from: the Group Chief Executive on the performance of the business;
the Chief Financial Officer on financial performance; the Group Company Secretary on governance developments; and, where relevant,
a report from each of the Board Committees.
Set out below are the key topics considered by the Board during 2023, taking into account the views of key stakeholders while continuing
to promote the Group’s long-term success. Throughout the year, the Board has considered workforce welfare, external markets, our clients,
the Group’s capital position, business operations, and the need to keep the market updated on key developments.
Strategy
• The Board continued to focus on the development and delivery
of our overall strategy. Throughout the year, the Board reviewed
the Group’s strategy, progress against our strategic initiatives,
and received an update on the Group’s five-year forecast.
• An ad hoc meeting was held in October to supplement the
discussions on strategy. The Board’s November 2023 meeting
was held over two days and was primarily devoted to discussing
the strategy for 2024 and beyond.
• At each scheduled meeting, the Board received a strategic update
from the business. During 2023, these included Fixed Income,
Multi-Asset, Product, Equities, Technology, the Client Group,
Asia Pacific and the Group’s operating platform.
Financial performance and risk management
• The Board reviews the Group’s financial performance at each
scheduled Board meeting. In February, the Board reviewed the
2022 Annual Report and Accounts and final dividend proposal.
In July, the Board reviewed the 2023 half-year results and
approved an interim dividend of 6.5 pence per share.
• The five-year forecast was discussed by the Board in September
and November to support the Board’s strategy review.
• During the year, the Board approved the Group’s operational
resilience self-assessment, ICAAP, ILAAP, recovery plan, resolution
process and wind-down plan following their review by the Audit
and Risk Committee.
• The Board also approved the Group’s Climate Report 2022 to
provide our shareholders, clients and other stakeholders with a
better understanding of our exposure to climate-related risks.
People and culture
• The Board considers our people to be central to delivering the
Group’s strategic priorities and considers our culture to be one
of our assets. In July, the Board received an update on our people
strategy, including our approach to succession and how we are
strengthening our long-term talent development processes.
• Attracting diverse talent and having an inclusive environment
brings diversity of thought which allows for richer discussions,
better decision-making, more innovation and better risk
management for our clients. In June, the Board received an
update on our inclusion and diversity strategy, including progress
made to date, focus areas for 2023 and our long-term aspirations.
The Board approved our 2030 inclusion and diversity goals.
• Ian King, our designated non-executive Director responsible for
gathering workforce feedback and chair of the Global Employee
Forum (GEF), provided updates to the Board from GEF meetings.
The Board welcomes the additional feedback from employees
through the GEF, and will continue to engage with the forum
during 2024.
Shareholder engagement
• The Board engaged with shareholders throughout the year.
The primary means of communicating with shareholders
is through the AGM, the Annual Report and Accounts,
full year and half year results and related presentations.
• The Investor Relations programme has continued our
engagement with our major shareholders.
• We organised a Schroders in Focus event specifically tailored
for our wealth management business. The event provided
investors with updates on our growth plans in the sector and
insights into our Cazenove Capital, Benchmark Capital and
Schroders Wealth Management brands, as well as Schroders
Personal Wealth, our joint venture with Lloyds Banking Group.
It also offered an opportunity for investors to engage directly
with and pose questions to our executive Directors and the
Wealth Management leadership team. A recording of the event
is available on our website
1
.
Clients
Shareholders
External suppliers
Regulators
People
Wider society
1. www.schroders.com/results-and-presentations-archive
For more detail on our stakeholders, see pages 44 to 45.
Schroders Annual Report and Accounts 2023
60
Stakeholder interests and engagement
In discharging their section 172 duties, the Directors have regard to the factors set out on page 45 and any other factors considered relevant
to the decision being made, such as the interests of employees and the views of regulators. The Directors acknowledge that every decision
made will not necessarily result in a positive outcome for all stakeholders. By considering the Company’s purpose, vision and values together
with its strategic priorities, and having a process for decision-making, the Board does, however, aim to make sure that its approach to decision-
making and consideration of stakeholder interests is consistent.
The examples provided below show how the Board considered the matters set out in section 172 in respect of some of the key decisions made
during 2023.
Client Group
In line with our strategic objective of building closer
relationships with clients, the Board discussed and agreed
a shift in our business approach to a ‘client care’ model via
our newly restructured Client Group. The aim is to enhance
our client-centric focus, working collaboratively across
departments to deliver a seamless experience for our clients,
whilst deepening our relationships. To facilitate this transition,
our plan is to invest in our platforms, technology and global
operating model; grow our investment capabilities so that we
have the services our clients want and need and focus on
wider engagement with clients across the whole organisation.
In July, we announced a series of internal promotions aimed
at enhancing our client-first culture and commitment to our
people. This included the appointment of two Co-Heads of
Client Group, responsible for leading the Client Group and
collaborating across the business so that we can bring the
whole firm to our clients. In addition, a number of internal
promotions were made to the senior leadership of the Client
Group, increasing our specialist expertise in key focus areas
for our clients.
The Board received regular updates on the transition
throughout the year and considered the interests of all
stakeholders when agreeing the new model. This included
considering the benefits to our clients of a more client-
focused approach, as well as the new opportunities it would
present for our people, allowing them to continue to develop.
Our people
Our people are central to the ongoing success of the
business, and the interests of employees have formed an
important part of many Board discussions and engagements
throughout the year.
Inclusion and Diversity
Attracting diverse talent and having an inclusive
environment where all can thrive brings diversity of thought
which allows for richer discussions, better decision-making,
more innovation and enhanced risk management for our
clients. In June, the Board reviewed our Inclusion and
Diversity strategy and approved our 2030 goals, including
representation targets for gender, ethnicity, socio-economic
background, disability and LGBTQ+, as well as inclusion and
data disclosure targets. The Chair and Group Chief Executive
launched these goals internally via a global webcast, giving
employees worldwide the opportunity to ask their questions
and provide valuable feedback. During the year, we also
gained industry recognition for our work in this area: we
won an award for ‘Best overall Board and Exco’ at the
INSEAD Alumni Balance in Business Awards 2023, celebrating
our work to close the gender diversity gap at senior levels
of the business, including achieving a 50/50 gender split
on our Board. We also won Gold for ‘Best Diversity and
Inclusion Reporting’ at Communicate magazine’s Corporate
& Financial Awards.
Talent and succession
In line with the Board’s objectives, in July the Board discussed
how we are strengthening our long-term talent development
processes and our approach to succession. This included
identifying succession plans for critical roles that are key to
the delivery of our strategy, as well as reviewing and providing
feedback on our talent development offering.
Employee engagement
The Board engaged with employees throughout the year
through regular pulse surveys. In addition, Ian King, our
Senior Independent Director, chairs the GEF to hear directly
from employees on issues that concern them. Ian met with
the GEF twice in 2023 and provided feedback to the Board on
the key issues raised at forum meetings. The Group Chief
Executive also met with the GEF, where an update on the
Group’s strategy was provided.
A key theme arising out of the GEF discussions was
the importance the Company places on allowing our
employee resource groups to have a voice and feel heard
as part of building an inclusive culture. In June, the Board
held a breakfast with key representatives of these employee-
led networks, allowing them the opportunity to raise
awareness of the challenges that are faced by under-
represented groups.
The Board welcomes opportunities to engage with our
people and will continue to do so in 2024 and beyond.
Schroders Annual Report and Accounts 2023
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61
Corporate governance report continued
2023 Board objectives
The 2022 evaluation of the Board, its principal Committees and individual Directors was undertaken externally by Independent Board
Evaluation (IBE). IBE has undertaken previous evaluations but has no other connection with the Company. In light of the findings of that
evaluation and the conclusions of the Chair’s Committee, the Board set the following high-level objectives for 2023.
Objective Progress made during 2023
Strategy
• Develop strategic scenarios and options
for five years plus
• Review strategy implementation and
value creation
Strategy was a key focus for the Board during 2023. Given the deterioration in the external
environment, we increased our focus on strategy in the second half of the year. In September,
the Board reviewed the Group’s strategy and progress against our strategic initiatives and
received an update on the Group’s five-year forecast. The Board’s November meeting was
a two-day meeting dedicated to discussing the Group’s strategy for 2024 and beyond,
allowing for a deep dive into different strategic options for the longer term. Recognising the
importance of developing these strategic scenarios, an additional ad hoc Board meeting was
held to supplement the strategic review. Value creation and the implementation of strategy
formed an important part of the Board’s discussions throughout the year.
Talent
• Continue to encourage diversity, equality
and inclusion across the business
• Complete succession reviews
• Increase Board exposure to talent
The Board placed considerable focus on the areas of inclusion and diversity, talent, and
succession during the year. The June meeting included an in-depth review of our Inclusion
and Diversity strategy and the Board approved new goals for 2030. These goals were
launched via a company-wide webcast hosted by the Chair and Group Chief Executive,
and progress against these targets will be reviewed annually by the Board.
In July, the Board focused on people, talent, and succession planning, recognising the
significance of developing and retaining talent within the business. This included the
consideration of a new concept of Group critical roles to increase Board focus on those
positions that are key to the delivery of our strategy. Succession plans for each of these
Group critical roles were reviewed by the Board.
To increase Board exposure to talent, members of the GSC attended Board meetings held
during 2023. In addition, the Board had lunches with the GMC, providing an opportunity for
open dialogue and greater collaboration with members of the senior management team.
Board effectiveness
• Explore new ways of Board and
Committee working; embracing a
hybrid working environment
• In a continuing period of rapid change,
ensure that the Board maintains
knowledge and currency
• Appoint new non-executive Directors
with focus on priority skills areas
The Board recognises the importance of regularly reviewing its ways of working and
has focused on embracing a hybrid working environment throughout the year. Various
methods have been utilised to facilitate board discussions, including in-person meetings,
board calls, briefings, the use of pre-recorded videos and remote attendance. This diverse
approach has allowed for effective communication and collaboration at board and committee
meetings, irrespective of geographical location, which is of great benefit to us given our
international footprint.
To enhance the knowledge and expertise of our Board, we carried out a thorough briefing
programme during 2023. This programme included briefings on a range of topics, such as
generative AI, sustainability, the macroeconomic environment, our private markets strategy
and our strategy in Asia. These briefings have provided our Board with valuable insights into
emerging technologies, industry trends, and strategic considerations, enabling them to make
informed decisions.
A key priority for 2023 was to appoint new non-executive Directors with a focus on priority
skills areas. We have announced three new non-executive Director appointments during
the year, each with experience in different areas, including: sustainability, private equity and
private markets; digital, data and analytics; and finance, audit and international markets.
Each new appointment is expected to bring diversity of skills, experience and background to
the Board. Comprehensive and tailored induction programmes were provided to each new
Director, further details of which can be found on page 57.
Governance
• Maintain current high standards of
governance and oversight
• Maintain/enhance our brand and
reputation with all stakeholders
• Explore options for Board oversight
of reputation
Throughout the year, the Group has maintained good standards of governance and oversight
and has continued to focus on enhancing our brand and reputation with all stakeholders.
The Board has actively explored options for Board oversight of reputation, recognising
the importance of proactive reputation management. As a result of this review, we have
designated an individual within the business to head up reputational risk, dedicating a portion
of their role to this critical area. This appointment will allow for reputation to be given the
necessary attention and oversight, helping us to identify, assess, and mitigate reputational
risks effectively.
Schroders Annual Report and Accounts 2023
62
2023 Board evaluation
The 2023 Board evaluation was undertaken internally by the Chair. As part of this process, the Chair interviewed each
Director, together with the Group Company Secretary, and the discussions focused on:
• the extent to which the Board has delivered on its priorities in 2023;
• how the Board and the management team performed over the year;
• whether the Committees have discharged their responsibilities effectively, and the quality of the reporting to the Board;
• the process for selecting the new Chief Financial Officer and new non-executive Directors;
• the induction process for the new Chief Financial Officer and new non-executive Directors; and
• the business areas that the Board should focus on in 2024.
The overall conclusion was that the Board had broadly delivered on its 2023 objectives, although the objectives had shifted more
towards strategy through the course of the year in light of the deteriorating external environment. Wealth was one area the Board
felt we could have spent more time on, although this was discussed at our meeting in January 2024.
The focus on strategy was felt to be comprehensive and thorough. This focus was tilted towards the second half of the year and we
may look to spread that out in future. Directors were keen to continue with our more informal channels of communications, such as
Board dinners and Board calls between meetings. These are seen as helpful in building the relationship between the executive and
non-executive teams. The attendance at the Board meetings of members of the Group Strategy Committee is seen as a very positive
step and the Board has seen their contribution increase over the year.
The feedback on our key Committees was positive. The Audit and Risk Committee and the Remuneration Committee have both
performed their duties with rigour and reporting from those Committees to the Board is effective. The Nominations Committee has
performed well in a busy year with the appointment of three new non-executives and a new Chief Financial Officer. We may look to
increase the Nomination Committee’s remit to include more on talent development and succession below Board level.
2024 Board objectives
Using the findings of the internal evaluation process as context, the Board agreed a number of objectives under three major
themes, strategy, people and Board effectiveness, while continuing to focus on operational priorities.
Strategy
• Strategic alliances and partnerships.
• Client relationships and competitive
positioning.
• AI and Blockchain: the implications
for our business model.
People
• Senior leadership development
and succession plans.
• Employee value proposition.
Board effectiveness
• Integrate new Directors and
build cross-Board relationships.
• Increased Board exposure to
high potential talent.
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63
Governance
Nominations Committee report
Delivering
change
Committee membership
Dame Elizabeth Corley (Chair)
Sir Damon Buffini (until 27 April 2023)
Rhian Davies
Paul Edgecliffe-Johnson (until 31 August 2023)
Claire Fitzalan Howard
Rakhi Goss-Custard
Ian King
Iain Mackay (from 1 January 2024)
Leonie Schroder
Annette Thomas (from 1 September 2023)
Frederic Wakeman (from 1 January 2024)
Deborah Waterhouse
Matthew Westerman
See page 55 for meeting attendance
In my report last year, I set out the priorities for the
Committee in 2024, which were to focus on executive
succession and to continue to evolve the Board to ensure
it has the right skills to support the delivery of our strategy.
I also commented that succession planning was something
we intended to think about constantly to ensure we were
well placed for both foreseen and unforeseen changes to
the Board and its Committees.
This point was well illustrated in 2023 when Paul Edgecliffe-Johnson
had to step down from the Board to focus on his new executive role.
We were sorry to see Paul go, but fully understood his reasons and
he left with our best wishes.
We had anticipated that Paul would succeed Rhian Davies as
Chair of the Audit and Risk Committee as she was nearing the end
of her term on the Board. We were able to overcome this as we had
been having ongoing discussions with Iain Mackay, someone we
had identified as having key skills we were looking for, in particular
knowledge of complex global organisations operating in many
of the international markets in which we operate. His experience
as Chief Financial Officer of two major FTSE 100 companies, also
addressed one of our identified skills needs. In April we announced
that Iain would join the Board in January 2024, once he had
retired from GSK. Iain has joined the Audit and Risk Committee
and will become Chair of the Committee when Rhian steps down
at the AGM.
We made two other non-executive appointments in the year. Both of
these were as a result of our analysis of the skills we need to ensure
the Board can support the delivery of our strategy. As we went into
2023, we had already identified one gap: that we needed to have
more private markets experience on the Board. We continued to
use the services of Russell Reynolds for our non-executive searches.
We have benefitted from this continuity as they fully understand our
needs on an holistic basis. Other than for advice on Board positions,
they do not have any other relationship with the Company.
The search for someone with the right private markets experience
who would fit our culture and add wider value to the Board was a
challenging brief. We considered many highly credible candidates.
As is usual with us, all Directors meet with all short-listed candidates
to ensure we have full support from the Board for any appointment.
Frederic Wakeman emerged as our preferred candidate. His
experience in private equity spans over 20 years in both the US
and UK and will be invaluable as we continue to grow our private
markets business.
Given the specific nature of this search, we also involved the head of
our private markets business in the process. We were delighted to
announce Fred’s appointment to the Board from 1 January this year.
Our other non-executive search followed the same process. Our
focus was on another key skill, digital disruption. Annette Thomas
was identified early in the process as an outstanding candidate. Her
data driven mindset and her experience will contribute significantly
in a number of areas including sustainability, data, diversity, family
or foundation owned companies and disrupted industries. She also
had recent experience of being a Chief Executive. Given all the
attributes Annette would bring, the Committee was clear we had
found an ideal candidate and unanimously recommended the
appointment of Annette to the Board. Annette joined us in
September 2023.
Extensive references on all three non-executives were excellent.
The Committee’s focus has not just been on non-executive
succession. Richard Keers let us know in 2022 that he would like
us to plan for his retirement once a successor had been identified.
To ensure a comprehensive and unbiased evaluation of potential
candidates, both internal and external, we collaborated with
Spencer Stuart, the executive search firm. In addition to this
assignment, Spencer Stuart provide executive search and
assessment services to us, including coaching services.
Dame Elizabeth Corley
Chair of the Nominations Committee
Schroders Annual Report and Accounts 2023
64
The detailed candidate specification was centred on our overall
strategic objectives and the integral role the Chief Financial Officer
would play in achieving these. This was pivotal in defining the
required competencies and experiences for the prospective Chief
Financial Officer.
Spencer Stuart employed their proprietary executive intelligence
evaluation tool to assess the competencies of both internal and
external candidates, in order to assess all candidates on an equal
footing and to ensure that the selection process was objective
and fair.
Following a rigorous assessment and selection process in which
we interviewed five short listed candidates, we were delighted to
announce the appointment of Richard Oldfield as our new Chief
Financial Officer. Richard’s extensive experience, including his tenure
as a partner at PwC, combined with his alignment with Schroders’
strategic direction and values, made him the standout candidate for
this critical role. Richard joined us on 2 October 2023.
Directors standing for election and re-election
Rhian Davies will stand down at the conclusion of the AGM in April
and is therefore not offering herself for re-election. At our February
2024 meeting the Committee reviewed all Directors standing for
election or re-election and concluded that each makes a valuable
contribution to the Board’s deliberations and recommends their
election and re-election. This recommendation includes Ian King
and Rakhi Goss-Custard, both of whom have served on the Board
for more than six years. In making this recommendation, the
Committee took into account feedback from the evaluation
interviews undertaken by me and our Company Secretary.
As required by the UK Listing Rules, the appointment of independent
Directors must be approved by a simple majority of all shareholders
and by a simple majority of the independent shareholders. Further
details are set out in the 2024 Notice of AGM.
Evaluating the performance of the Committee
The internal evaluation process for 2023 is set out in detail on page
63. The overall conclusions for the Committee were that we had
delivered well on our core succession challenges. The process we
follow is thorough and can be quite lengthy given our policy of having
all Directors meet shortlisted candidates. Committee members are
aware that this process can lead to delays in reaching conclusions,
but felt that we benefit from having everyone involved and not
delegating to a smaller group to make these important decisions.
We will therefore continue with this approach for future appointments.
Responsibilities of the
Nominations Committee
The Committee is responsible for keeping under review the
composition of the Board and its Committees and for ensuring
appropriate executive and non-executive Director succession
plans are in place.
The Committee’s terms of reference are available on the
Company’s website at www.schroders.com/board-committees.
Biographical details and experience of the Committee
members are set out on pages 50 to 53.
Priorities for 2024
We have seen considerable change on the Board in the recent past.
Four of the Board have been appointed in the last year and only
three Directors have served more than five years. Our focus will be
on integrating the new members of the Board and establishing an
effective dynamic across the whole Group.
We will also continue to focus on executive succession, building on
the work undertaken in 2022 and 2023. The key members of the
executive team now attend Board meetings so that the Board can
benefit from their input but also to help develop the team by involving
them in the Board’s discussions.
Dame Elizabeth Corley
Chair of the Nominations Committee
28 February 2024
Policy on Board Diversity
The Board recognises the importance of diversity and
that it is a wider issue than gender and ethnicity.
We look for diversity of skills, thought, experience and
background, which is important for the effectiveness of
our Board, its Committees and the management team.
This will continue to be the primary criterion by which
we select candidates. Diversity across our whole
workforce is discussed by the full Board. The specific
diversity targets for the Group are set by the Board, on
recommendation from management, as part of our
annual review of people strategy.
The Board understands the importance of increasing
gender and ethnic diversity and is committed to have
a minimum of 40% of Board positions held by women and
to meet the Parker Review’s recommendations of at least
one director from an ethnic minority on the Board.
Currently we meet both these gender and ethnicity
recommendations as, following the AGM, women will
comprise 50% of the Board and we have two ethnic
minority Directors. We intend only to use the services
of executive search firms which have signed up to the
Voluntary Code of Conduct on Gender Diversity.
There is a full description of our approach to diversity and
inclusion on pages 18 to 19 and 96. Our gender diversity
statistics for both the Board and senior management can
be found on page 96.
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65
Governance
Audit and Risk Committee report
Strengthening
ourcontrols to
respond to new
challenges
Rhian Davies
Chair of the Audit and Risk Committee
Committee membership
Rhian Davies (Chair)
Paul Edgecliffe-Johnson (until 31 August 2023)
Rakhi Goss-Custard
Iain Mackay (from 1 January 2024)
Frederic Wakeman (from 1 January 2024)
Deborah Waterhouse
Matthew Westerman
See page 55 for meeting attendance
I am pleased to present the Committee’s report for the
year ended 31 December 2023. The Committee plays a key
role in overseeing the integrity of the Company’s financial
statements and the robustness of the Group’s system of
internal control and financial and risk management.
We are grateful for the support of management and the assurance
and challenge provided by Group Internal Audit and Ernst & Young
(EY) as external auditor. During the year, the Committee considered
the proposed legislative and regulatory changes following the
UK Government’s review of corporate reporting and corporate
governance and remains actively engaged with assessing the
implications. The Committee also continued to focus on its
responsibility for monitoring and oversight of the Group’s control
environment and system of internal control and the Group’s
management of risk and compliance-related activities.
Operational resilience remains a key focus for the Committee, and
in line with the Financial Conduct Authority’s and the Prudential
Regulation Authority’s operational resilience regulations, the
Group’s operational resilience self-assessment was considered by
the Committee and recommended to the Board for approval. The
self-assessment identifies our important business services, provides
information on oversight of critical third parties, sets out impact
tolerances to avoid intolerable harm to our clients, and identifies
areas where we should enhance our operational resilience. The
Committee also considered various operational stress scenarios
to support the Board’s conclusions on the viability statement and
going concern set out on page 47.
The Committee continues to play an important role in reviewing
conduct and culture risk in the Group and in overseeing the
evolution of Schroders’ conduct risk framework, which is designed to
identify emerging trends and heightened areas of risk. Conduct and
culture risk is informed by a number of elements, including conduct
risk appetite statements, employee opinion surveys and oversight
by the second and third line of defence functions. We believe that
Schroders’ conduct risk framework aligns with regulatory standards.
A large part of our agenda during the year was devoted to
considering regulatory change. We received a briefing in May and
a report in November that covered topics such as sustainability
regulations, Consumer Duty, prudential regulatory change and
corporate reporting. We also received briefings on business and
thematic topics during the year, including on the private markets
business and global standards for client-facing materials.
In the face of escalating cyber attack threats, the Committee
continues to prioritise cyber security and data privacy whilst
considering metrics, challenging progress and evaluating the
necessary technology and operational models to assess the
Group’s readiness for evolving threats. Additionally, the Committee
considered the impact of AI, understanding how it can strengthen
the Group’s defences whilst also recognising its potential risks
when exploited by adversaries.
Climate-related risks remain an important topic for the Committee
and are considered in our quarterly reports. In addition, the
Board received a briefing which covered how sustainability
trends are shaping our industry, as well as our progress on key
issues, including climate change, biodiversity, human rights and
community investment.
I would like to welcome Richard Oldfield as our new Chief
Financial Officer, alongside Iain Mackay and Frederic Wakeman,
who joined the Committee on 1 January 2024. I would like to thank
Richard Keers for his contribution over ten years and also thank
Paul Edgecliffe-Johnson for his time on the Committee.
I am grateful to all members of the Committee for their support
in 2023.
Rhian Davies
Chair of the Audit and Risk Committee
28 February 2024
Schroders Annual Report and Accounts 2023
66
The Committee’s primary responsibilities are the oversight of:
Financial reporting, financial controls and audit
• The content and integrity of financial and Pillar 3 reporting.
• The appropriateness of accounting estimates and judgements.
• The effectiveness of the financial control framework.
• The effectiveness and independence of the external auditor.
• The recommendation to the Board of the appointment of the external auditor.
Risk and internal controls
• The Group’s risk and control framework, whistleblowing procedures and the financial crime framework.
• The Group’s ICAAP, ILAAP, wind-down plan, risk appetite, recovery plan and resolution process and operational resilience self-assessment.
• The Group’s regulatory compliance and conduct processes and procedures, and its relationships with regulators and compliance monitoring.
• The Group’s Internal Audit function.
• The Group’s legal risk profile and disputes.
• Emerging and thematic risks that may have a material impact on the Group’s operations.
• Information and cyber security, technology risk and resilience, and the emerging risk of AI.
Role of the Audit and Risk Committee
The principal role of the Committee is to assist the Board in
fulfilling its oversight responsibilities in relation to financial
reporting, financial controls and audit, risk and internal controls.
All members of the Committee are independent non-executive
Directors. Biographical details and the experience of Committee
members are set out on pages 50 to 53.
The Board has determined that, by virtue of their previous
experience gained in other organisations, members collectively
have the competence relevant to the sector in which the Group
operates. In addition, the Board considers that Rhian Davies,
a chartered accountant, has the recent and relevant financial
experience required to chair the Committee. Invitations to attend
all Committee meetings are extended to the Chair, Group Chief
Executive and Chief Financial Officer and Directors who are not
members attend on an ad hoc basis. Other regular attendees who
advised the Committee were the Global Head of Finance, the
Chief Risk Officer, the Head of Group Internal Audit and the
Group General Counsel. Other members of senior management
were also invited to attend as appropriate. The Chair of the Wealth
Management Audit and Risk Committee (WMARC), who is an
independent non-executive Director of Schroder & Co. Limited,
attended one meeting of the Committee and provided an update
to each meeting on matters related to the wealth management
business. Representatives from EY, including James Beszant,
Lead Audit Partner for the 2023 financial year, attended all of
the Committee’s scheduled meetings.
Private meetings are held with the external auditor without
management present. Private meetings were also held with the
Chief Financial Officer, Chief Risk Officer, and Head of Group
Internal Audit. These meetings provide an opportunity for any
matters to be raised confidentially.
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Governance
Audit and Risk Committee report continued
Key areas of focus during 2023
The key areas that the Committee considered are set out below. In addition, at each quarterly meeting, the Committee received updates from
Internal Audit, Compliance, Risk, Legal and external audit, covering ongoing projects and the key issues that had arisen since the last meeting,
and reviewed a dashboard of metrics to monitor key risks. The dashboard also includes metrics covering Internal Audit and the status of
relevant change projects and sustainability targets.
Financial reporting and financial controls
• As part of the Group’s annual reporting cycle, the Committee
considered the 2022 Annual Report and Accounts and 2023
half-year results, including financial estimates and judgements
and governance considerations. Ahead of preparing the 2023
Annual Report and Accounts, updates were provided on the
effectiveness of our internal controls, and on the Group
accounting policies. The going concern and viability statements,
Pillar 3 regulatory disclosures and climate-related disclosures
were also considered.
• The Group Head of Tax updated the Committee on the Group’s
tax strategy, our approach to tax risk, the key tax risks facing
the Group and how the Group’s effective tax rate is expected
to evolve in the coming years.
External audit
• When considering the 2022 Annual Report and Accounts,
the Committee assessed the oversight and independence
of the external auditor and audit effectiveness.
• In relation to audit quality and effectiveness, the Committee
discussed the results of the external auditor feedback
questionnaire and noted the areas of improvement that had
been identified. EY presented plans to respond to the feedback,
and these were discussed by the Committee. The Committee
reviewed EY’s audit plan for 2023, including key audit matters
and focus areas. Fees for non-audit services were reviewed
and approved by the Committee.
• Policies for safeguarding the independence of the external
auditor were considered and re-approved.
Internal Audit
• As part of the governance considerations for the 2022 Annual
Report and Accounts, the Committee considered the annual
assessment of the Group’s governance and risk and control
framework, conducted by Group Internal Audit.
• The Committee approved the appointment of a new Head of
Group Internal Audit.
• The Internal Audit Charter was reviewed and re-approved
with minor amendments.
• Looking ahead to 2024, the Committee considered and
approved the 2024 Internal Audit and Compliance Testing plan,
which is based on an assessment of the risks the business faces.
Risk and internal controls
• When reviewing the 2022 Annual Report and Pillar 3 disclosures
and 2023 half-year results, the Committee considered the Group’s
key risks and risk management framework. The Chair of the
WMARC provided an update on the activities of the WMARC and
its oversight of the financial reporting, risk management and
internal controls of the entities within Wealth Management.
• The Committee considered the ICAAP, ILAAP, Group wind-down
plan, Group recovery plan and operational resilience self-
assessment for recommendation to the Board. The approach
taken for the Group’s resolution process was also considered.
The Committee approved the stress scenarios for use in the
Internal Capital and Risk Assessment required for Schroder
Investment Management Limited under the Investment Firms
Prudential Regime.
• The Group Head of Financial Crime Compliance provided a
review of financial crime risk, including updates on the regulatory
landscape and effectiveness of the Group Financial Crime
framework, and on the Group’s Financial Crime control systems.
• Thematic issues were considered throughout the year, including
operational resilience, whistleblowing, and our conduct and
culture risk oversight.
• The findings of the auditor’s assessment of our cyber security
capabilities in light of the cyber risks posed to the Group were
presented to the Committee.
• The Committee reviewed climate-related disclosures in line with
the TCFD framework and recommended the Group’s Climate
Report 2022 to the Board for approval. Sustainability risks were
also considered as part of the Committee’s review of key risks.
The Financial Reporting Council (FRC) performed a limited scope
review of our TCFD disclosures of metrics and targets in our
2022 Annual Report and Accounts as part of a thematic review
and raised no issues.
• The Global Head of Finance provided an update on the proposed
legislative and regulatory changes following the UK Government’s
review of corporate reporting and corporate governance.
Schroders Annual Report and Accounts 2023
68
Significant accounting estimates and judgements
The preparation of the financial statements requires the application of certain estimates and judgements. The material areas of either
estimation or judgement are set out in the note on the presentation of the financial statements on pages 152 and 153. Each of these areas
is considered by the Committee based on reports prepared by management. EY presents to the Committee the audit procedures performed,
challenges raised to management, and conclusions reached on areas of judgement and estimation. Further information on how EY challenged
management is included within the independent auditor’s report on pages 175 to 181. The significant estimates and judgements considered in
respect of the 2023 financial statements and the Committee’s agreed actions are summarised below.
Significant estimates and judgements Action and conclusion
Pension schemes
The Group’s principal defined benefit pension scheme (Scheme)
is in respect of certain UK employees and former employees.
The Scheme was closed to future accrual on 30 April 2011 and, as at
31 December 2023, had a funding surplus. The pension obligation,
which was valued as £575.1 million at the year end, is estimated
based on a number of assumptions, including mortality rates, future
investment returns, interest rates and inflation. The Scheme’s assets
are invested in a portfolio designed to generate returns that closely
align with known cash flow requirements and to hedge the interest
rate and inflation risks.
Group Finance provided the Committee with a report that included
the key financial assumptions, which had been applied by the
independent qualified actuaries, Aon Solutions UK Limited, to
determine the Scheme surplus. EY’s report to the Committee set
out its audit procedures and conclusions on the pension assets and
liabilities, including those procedures completed by EY’s specialists.
The Committee considered and challenged the proposed
assumptions and was satisfied that the estimates were appropriate.
Please refer to note 23 for more information on the estimates and judgements made in respect of the Scheme.
Carried interest
The Group recognises carried interest from its private markets
business. This revenue stream is dependent on the future value
of certain investments that may not crystallise until an uncertain
date in the future. The Group is contractually committed to make
payments based on a relevant proportion of carried interest
received to various parties, including as part of deferred
consideration arrangements.
For financial reporting purposes, the Group is required to estimate
the value of carried interest receivable, in accordance with the
requirements of IFRS 15 Revenue from Contracts with Customers;
and the fair value of related amounts payable based on the
requirements of IFRS 9 Financial Instruments.
The key inputs used in determining carried interest comprised
the fair value of the relevant assets on which carried interest may
be earned, future growth rates, the expected realisation dates
and the discount rates.
The Committee received a report from Group Finance, which
reviewed the assumptions and inputs for estimating the amounts
receivable and payable in respect of carried interest. The Committee
also received a presentation from the Schroders Capital senior
management team on the framework for the valuation of relevant
assets, which is an important input into the calculation of carried
interest. The Committee challenged management and considered
the judgement applied in determining the principal assumptions,
and the sensitivity of the relevant balances to those assumptions.
The Committee discussed the accounting for carried
interest with EY and considered the findings from its audit
work. Once the Committee was satisfied with the estimates and
judgements applied, the estimated carrying values were approved.
The Committee considered the disclosures presented in respect
of 2023 and concluded that they were appropriate.
Please refer to note 2 for the estimates and judgements made in respect of carried interest receivable and amounts payable in respect of carried interest.
Restructuring costs
The consolidated income statement separately presents items that
are restructuring in nature. This presentation is permitted by
accounting rules for specific items of income or expense that are
considered material. The presentation involves judgement by the
Group to identify the items that warrant specific disclosure in
accordance with accounting standards.
The Committee considered, and was satisfied with, the
presentation of restructuring costs within a separate line item
on the consolidated income statement. Restructuring costs are
one-off in nature and have been incurred in reorganising parts
of the Group to drive cost efficiencies and allow reinvestment in
building the skills needed to support the future growth of the
business. They principally comprise compensation-related costs
and project expenditure.
This presentation is considered appropriate as it provides a
transparent view of the restructuring activity undertaken. In forming
their conclusions, the Committee considered the audit work
completed by EY and their conclusions.
Please refer to note 3 for more information.
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Governance
Audit and Risk Committee report continued
Financial reporting and financial controls
The Committee reviews whether suitable accounting policies have
been adopted and whether management has made appropriate
estimates and judgements, including those summarised on
page 69. The Committee is also required to report to shareholders
on the process it followed in its review of significant estimates
and judgements that it considered during the year, as set out
on page 153.
Financial reporting is reliant on there being an appropriate financial
control environment. The Committee receives reports on the
existing control environment as well as plans to enhance controls
in the future, along with progress made against previous planned
changes. These reports provide a detailed summary of the controls
that exist across the Finance function globally and support the
Group’s risk and control assessments. For more details, see pages
38 to 43. In 2023, the reports focused on the risks involved in
integrating acquired businesses with our finance operating
platforms and key operational changes, including the transfer
of our transfer agency platform to HSBC and migration of our
principal banking relationship from Citibank to HSBC.
The Committee considers other controls that might have an impact
on financial reporting. During 2023, the Committee considered EY’s
assessment of the cyber risks posed to the Group. The Committee
also reviews the Group’s tax strategy annually, which is discussed
with the external auditors.
The financial control environment, including our information
technology environment, is also subject to audit procedures by
the Group’s internal and external auditors. After considering
reports from Group Finance, Internal Audit and EY, the Committee
considered that an effective system of internal control had been
in place during the course of 2023.
The Committee conducted an in-depth review of the Group’s
financial projections and the application of appropriate stress
scenarios. The Committee took into account the impact of risks,
including climate change and prevailing macroeconomic factors,
so that it can recommend that the Board can make the viability
statement, as set out on page 47, and to support the going concern
basis of preparation of the financial statements.
Legal
Legal reports provide the Committee with information about
emerging legal risks and notable developments in new law and
regulation. The reports also provide detail on any material ongoing
disputes and litigation in which the Group is interested or may have
exposure. During the year, notable topics on which the Committee
was briefed included global developments on sustainable finance
regulation, UK regulatory reform proposals and data privacy.
Risk and internal controls
The Board has overall responsibility for the Company’s system of
internal control, the ongoing monitoring of risk and internal control
systems and for reporting on any significant failings or weaknesses.
The system of controls is designed to manage rather than eliminate
the risk of failure to achieve the Group’s strategic objectives and can
only provide reasonable assurance against material misstatement
or loss. The Board has delegated to the Committee responsibility for
monitoring and reviewing the effectiveness of the risk and internal
control framework.
The Committee carried out the annual assessment of the
effectiveness of internal controls during 2023, including those
related to the financial reporting process. The Committee also
considered the adequacy of the Group’s risk management
arrangements in the context of the Group’s business and strategy.
In carrying out this assessment, the Committee reviews the results
of the annual risk and control assessments, any significant risk
events, and actions taken to remediate these. The Committee also
considered reports from the Global Head of Finance, Group General
Counsel, Chief Risk Officer, Head of Group Internal Audit and EY.
This enabled an evaluation of the effectiveness of the Group’s
internal control framework. As part of the internal controls process,
each member of the GMC has attested to the appropriateness
and adequacy of risk management arrangements in their area,
and has confirmed that appropriate controls are in place. The
Group continually works to enhance systems to support and
improve the control environment.
Fair, balanced and understandable
A key focus for the Committee is its work in assisting the Board
in confirming that the Annual Report and Accounts, when taken
as a whole, is fair, balanced and understandable and assessing
whether it provides the information necessary for shareholders
to assess the Group’s position and performance, business model
and strategy. In assessing this, the Committee considered the
key messages communicated in the 2023 Annual Report and
Accounts, as well as the information provided to the Committee
and the Board as a whole during the year.
The Committee, having completed its review, recommended to
the Board that, when taken as a whole, the 2023 Annual Report
and Accounts is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
Schroders Annual Report and Accounts 2023
70
Risk and Compliance
Risk and Compliance reports set out changes in the level or nature
of the key risks faced by the Group. They also cover developments
in the approach to managing these risks, and provide information
on operational risk events.
The reports outlined the Group’s management of key regulatory
engagements and change programmes throughout the year
and the planning and execution of the compliance assurance
programme covering testing, monitoring and automated
surveillance. Additional specific reports allowed the Committee
to consider a range of factors when determining the key emerging
and thematic risks and uncertainties faced by the Group. These
included assessments of risk tolerance and stress testing of the
Group’s capital position, as well as the production of the Group’s
operational resilience self-assessment, recovery plan, resolution
process and wind-down plan.
The Committee reviewed the Group’s arrangements in relation
to conflicts of interest, financial crime, operational resilience,
information and technology risk, and conduct and culture risk.
The Committee also considered regulatory change and the
supervisory horizon, engagement with regulators, cyber resilience,
office physical security, oversight of third-party suppliers, and the
Group’s whistleblowing arrangements. The programme of work for
2024 will include assessing the UK’s Economic Crime and Corporate
Transparency Act 2023.
Further information can be found in the Risk management section
of the Strategic report set out on pages 38 to 43.
Internal Audit
The Committee has authority to appoint or remove the Head of
Group Internal Audit, who reports directly to the Chair of the
Committee. During 2023, the Committee approved the appointment
of a new Head of Group Internal Audit, the Internal Audit Charter
and the Internal Audit strategy.
The Committee also has responsibility for approving the Internal
Audit budget and being satisfied that the function has appropriate
resources and skills and continues to be an effective and valued
assurance function within the Group. The function monitors
developments in internal audit practices and undertakes quality
and assurance activities. In satisfying itself as to the quality and
expertise of the function, the Committee reviews reports on
progress against a rolling plan of audits approved annually by
the Committee. These reports include any significant findings
from audits performed, including any observations on culture
and recommendations to improve the control environment, and
their subsequent remediation. In addition, the Committee had
regular interaction with the Head of Group Internal Audit, both
at Committee meetings and also through other regular meetings
outside the formal schedule.
The Committee also reviewed progress against the 2022
independent external audit quality assessment of the Internal Audit
function and was pleased to note the introduction of internal audit
KPIs to enhance transparency. The function also made good
progress in its development of a data analytics capability to deliver
additional insights and efficiencies, and these will continue in 2024.
During 2023, a broad range of audits were conducted across the
business, both in the UK and overseas. The 2023 Internal Audit plan
was continually reassessed by the Committee and Internal Audit to
allow for the appropriate allocation of resources and to remain in
line with the risk profile of the business. The annual compliance
testing and Internal Audit plans are developed using a risk-based
approach to provide proportionate assurance over the Group’s
controls for the key risks set out on pages 38 to 43. For example,
as in previous years, in 2024 a range of audits will be undertaken
by IT auditors to test the adequacy of aspects of the Group’s cyber
security and other technology risks. Planned audits also include:
investment teams across business segments; sustainability-related
processes; Schroders Capital; key back-office activities; a broad
range of business activities in Asia Pacific; infrastructure functions
and Wealth Management. As well as undertaking internal audit
projects, senior Group Internal Audit staff attend relevant oversight
and management committees and regulated entity board meetings
to provide input and challenge on the topics discussed.
Oversight of the external auditor
Auditor oversight conclusion
The Committee is satisfied with EY’s work and that it is objective
and independent. Accordingly, the Committee has recommended
to the Board that a resolution be put to the 2024 AGM for the
reappointment of EY as external auditor, and the Board has
accepted this recommendation.
The Committee places great importance on the quality,
effectiveness and independence of the external audit process.
The Committee oversees the relationship with EY, including
safeguarding independence, approving non-audit fees,
recommending the auditor’s appointment at the AGM and
determining the auditor’s remuneration.
The external audit was last put out to tender in 2016, with
EY replacing PwC as the Group’s auditor for the financial year
commencing 1 January 2018. The next external audit tender will
take place within ten years of EY’s appointment, and by 2027 at
the latest. We periodically perform an assessment to maintain the
highest possible audit quality and will conduct a competitive tender
process in advance of this date if it is considered to be in the best
interests of the Company. In line with requirements, the lead audit
partner has been rotated after five years and James Beszant has
taken over as Lead Audit Partner for the 2023 audit. The Committee
confirms that the Company has complied with, throughout the year
under review and as at the date of this report, the provisions of the
Competition and Markets Authority (Penalties) Order 2014 relating
to the UK audit market for large companies.
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Governance
Audit and Risk Committee report continued
During the 2023 financial year, the Committee commissioned EY
to perform “agreed upon procedures” over climate and financial
metrics included within the executive Directors’ scorecard. There
were no other changes requested, as the Committee considered
the scope of the audit and concluded that it was sufficient.
Assessment of audit quality and effectiveness
The Committee is responsible for evaluating the performance of
the external auditor. In February 2023, ahead of the consideration
of the 2022 Annual Report and Accounts, the Committee received
initial feedback on the conduct of the 2022 audit, which identified no
significant areas of concern. A full assessment of the external auditor
was carried out by way of a questionnaire prepared in accordance
with the FRC’s guidance and completed by key stakeholders.
Interviews with senior managers and Group Finance were also held.
The findings of the questionnaire were presented to the Committee
in May 2023. EY generally scored highly in the auditor effectiveness
questionnaire and was assessed to have further improved in the
fifth year of its audit. Areas of improvement were identified and
discussed with EY to allow for enhancements to be made ahead
of the 2023 audit.
The Committee reviewed the 2023 external audit plan presented
to the Committee in May 2023, and the amendments required to that
plan as a result of the findings of the FRC Audit Quality Review (AQR)
of the 2022 audit, and additional work undertaken. The plan included
considering the impact of continued market volatility as a result of
global macroeconomic and political factors. Updates were received
from the external auditor throughout the year, demonstrating that
professional scepticism had been applied through challenge of
judgements, estimates and disclosures. Matters arising from the
audit were communicated to the Committee on an ongoing basis.
The Committee reviewed EY’s transparency report and discussed
the findings from the EY audit quality inspection report published
by the FRC. The Committee discussed the impact on the Schroders
audit plan, how EY maintains and monitors a high-quality
audit generally through its UK Sustainable Audit Quality Programme.
EY undertakes a range of processes that are designed to promote,
embed and monitor audit quality. The structure of the audit team has
been designed by the Lead Audit Partner to deliver and maintain a
high-quality audit. EY continues to assess the structure, experience
and knowledge of the team, with a view to maintaining and enhancing
audit quality. In making this assessment, the Committee and EY have
discussed and considered several Audit Quality Indicators (AQIs).
These include: audit planning milestones; hours spent; internal and
external reviews and results; training undertaken and experience
of the team; senior team members’ responsibilities and their time
commitments; and the extent to which specialists are involved in
the audit.
The FRC AQR team, responsible for monitoring the quality of UK
audits, reviewed the EY audit file for the Group’s 31 December
2022 year end as part of its regular cycle of audit inspections.
The Committee have reviewed the FRC’s report on the audit and the
AQR’s areas for improvement with respect to revenue and general
ledger journal entry testing. In the February meeting, the Committee
discussed with EY the amendments made to their approach in the
2023 audit, including additional testing, and were satisfied with the
changes made.
In February 2024, ahead of the consideration of the 2023 Annual
Report and Accounts, the Committee received initial feedback on
the conduct of EY’s 2023 audit, including how the AQR findings
were addressed. The detailed assessment of EY’s 2023 audit will
be considered by the Committee at its May 2024 meeting and
any findings will be implemented for the 2024 audit.
Independence and non-audit services
The Committee has responsibility for monitoring the independence
and objectivity of the external auditor. Since its appointment, EY has
continued to confirm its independence and this remained the case
during 2023 and prior to issuing its opinion on the Annual Report
and Accounts. In addition to the annual review of effectiveness,
the Committee considered EY’s independence and objectivity
throughout the year. No Committee member has a connection
with the external auditor.
A key factor in ensuring auditor independence is the Committee’s
consideration of the provision of certain non-audit services by EY.
The Committee maintains a policy on the engagement of the
auditor for the provision of non-audit services to safeguard its
independence and objectivity. This policy is reviewed annually and
takes account of relevant regulatory restrictions and guidance in
the jurisdictions in which the Group operates, including those in the
UK. The policy prohibits the provision of certain non-audit services
and contains rules regarding the Committee approving permitted
non-audit services.
Details of the total fees paid to EY are set out in note 3c to the
accounts. The policy on non-audit services restricts the appointment
of EY to the provision of services that are closely related to the
audit. Other services, where they are not prohibited, may also
be considered, but these will not normally be approved by the
Committee. Certain services that are provided to the Group are
closely related to the audit but are not required by regulation.
The Committee considers that these services are most appropriately
performed by the Group’s external auditor as they support the
statutory audit and provide the external auditor with relevant insights
on aspects of the business, although they are not necessarily directly
related to the financial statements.
Non-audit fees, excluding audit-related assurance services required
under regulation, equated to 19% of audit fees (2022:15%).
During 2023, non-audit services mainly comprised assurance services
in respect of controls reports and regulatory reporting normally
conducted by the Group’s external auditor. These services are
assurance in nature and are not considered to present a risk
to independence.
Schroders Annual Report and Accounts 2023
72
Audit Committees and the External Audit:
Minimum Standard
In May 2023, the FRC published the Audit Committees and the External
Audit: Minimum Standard, which took effect immediately for FTSE 350
companies on a comply or explain basis. This report describes how
the Committee has complied with each relevant provision of the
Minimum Standard during the year.
Evaluating the performance of the Committee
The annual evaluation of the Committee’s effectiveness was
undertaken as part of the overall Board evaluation process.
The findings relating to the Committee were discussed with
the Committee Chair, who is considered diligent with an inclusive
style. The Committee operates efficiently and management are
well prepared and collaborative.
Committee’s assessment of internal control
and risk management arrangements
The Committee was content with the effectiveness of the
Group’s processes governing financial and regulatory reporting
and controls, its culture, its ethical standards and its relationships
with regulators. The Committee was also satisfied with the
appropriateness and adequacy of the Group’s risk management
arrangements and supporting risk management systems, including:
the risk monitoring processes, internal controls framework and
the three lines of defence model.
Priorities for 2024
As well as considering the standing items of business, the Committee
will also focus on the following areas in 2024:
• Cyber and technology risk.
• Thematic risks, including climate.
• Operational resilience.
• Regulatory change.
By order of the Board.
Rhian Davies
Chair of the Audit and Risk Committee
28 February 2024
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73
Governance
Paying for
performance in
a sustainable and
transparent way
Structure of the remuneration report
Report from the Committee Chair 74
Notes to the report on remuneration 84
Committee membership
Matthew Westerman (Chair)
Sir Damon Buffini (until 27 April 2023)
Rhian Davies
Ian King
Annette Thomas (from 1 September 2023)
Deborah Waterhouse
See page 55 for meeting attendance and page 56
for a summary of the responsibilities of the Committee.
Changes made to the
implementation of our policy…
served to reinforce our
commitments to sustainability.
On behalf of the Remuneration Committee, I am pleased
to provide an overview of both executive Director and
wider workforce remuneration for the 2023 financial year.
As a Committee, the year was focused on implementing the
remuneration policy which was well received by shareholders
at the 2023 AGM. Last year, we engaged in discussions with
investors regarding the changes made to the implementation
of our policy, which served to reinforce our commitments to
sustainability within our executive reward framework. A summary
of our shareholder-approved executive Director remuneration
policy is shown on page 77.
Appointing a new Chief Financial Officer
In April 2023, we announced that, after a long and distinguished
career, Richard Keers had decided to retire. He stepped down as
Chief Financial Officer on 2 October 2023 and continued as an
employee of Schroders until 31 December 2023. Richard Keers was
eligible for a bonus for the year worked, based on his performance
and contribution during this period. After completing ten years with
Schroders, he will retain the deferred portions of bonuses earned
in previous years. His outstanding LTIP awards will be pro-rated to
reflect the time elapsed through his departure date. He will not
receive an LTIP grant in 2024 and shareholding requirements will
continue to apply for two years after stepping down.
Richard Oldfield succeeded Richard Keers as Chief Financial Officer
and executive Director on 2 October 2023. Given Richard Oldfield’s
extensive experience, qualifications and appointment to the
same role, the Committee decided to maintain the same salary
and maximum total compensation levels for the role. Executive
Director salary levels have remained unchanged since 2014;
total compensation caps have remained unchanged since their
introduction in 2020. No buyout or guaranteed bonus awards
were offered to Richard Oldfield. He was eligible for and received
a bonus for the portion of 2023 he worked.
2024 remuneration approach
No changes are proposed to our remuneration policy, which
received strong support from shareholders at the 2023 AGM.
The implementation of that policy will also remain unchanged in
2024. This means executive Director salaries will stay the same
and the performance measures applying to the 2024 annual
bonus and LTIP scorecards will be consistent with prior years.
By contrast, the overall increase in salary budget for 2024 for the
wider workforce was 4.5%. Seeking to balance the cost implications
with the inflationary pressures faced by our employees in different
regions, our budget and allocation approach were designed to
protect lower-paid staff based on their geographic location and
larger increases were targeted towards individuals with significant
increases in role or responsibilities.
2023 remuneration outcomes
In 2023, our financial performance remained resilient, showcasing
the benefits of our client-led strategy in the face of what continue
to be challenging market conditions. The investments made in our
strategic growth areas of Wealth Management, Private Markets and
Solutions in recent years, alongside our know-how in public markets,
have positioned us with the complete platform to achieve growth.
Performance against predetermined financial targets makes up
70% of the executive Director annual bonus scorecard. For 2023,
the financial portion paid out at 55%, reflecting our financial results
given industry headwinds, favourable investment performance
for clients and progress against our sustainability objectives.
A comprehensive review of performance against non-financial
targets gave rise to an ‘on-target’ outcome for the Group Chief
Executive and former Chief Financial Officer, and 80% of maximum
for the new Chief Financial Officer.
Remuneration report
Matthew Westerman
Chair of the Remuneration Committee
Schroders Annual Report and Accounts 2023
74
Role of the Remuneration Committee
The principal role of the Committee is to
assist the Board in fulfilling its oversight
of executive and wider workforce
remuneration. All members of the
Committee are independent non-executive
Directors. Biographical details and the
experience of members are set out on
pages 50 to 53.
The Board has determined that, by virtue
of their previous experience gained in
other organisations, members collectively
have the competence relevant to the
sector in which the Group operates.
The Committee’s primary responsibilities
include:
• Reviewing the Group’s remuneration
strategy and recommending the
Directors’ remuneration policy to
the Board
• Determining the remuneration of
the Group Chair and the executive
Directors within the policy approved
by shareholders
• Determining the level and structure
of remuneration for other senior
executives and the Group Company
Secretary; reviewing the remuneration
of the Chief Risk Officer and Head of
Group Internal Audit; monitoring the
level and structure of remuneration
for other Material Risk Takers; and
overseeing remuneration more
broadly across the Group
• Recommending to the Board
the annual spend on fixed and
variable remuneration
• Reviewing the design and operation
of share-based remuneration, other
deferred remuneration plans and
employee carried interest-sharing
arrangements
• Overseeing any major change in
the employee benefits structure
throughout the Group
• Reviewing remuneration disclosures
and compliance with relevant
requirements
• Receiving and considering feedback
from shareholders and representative
shareholder bodies
The Committee’s terms of reference
are available on our website at
www.schroders.com/board-committees
Key areas considered by the Committee in 2023
• Overall fixed and variable compensation spend for the year
• Review of compensation outcomes, including control function input, sustainability of earnings, diversity and competitiveness
• Review of Gender and Ethnicity Pay Gaps
• Review of remuneration disclosures
• Executive Director remuneration, including scorecard measure and target setting, review and approval of outcomes
• Terms of the Chief Financial Officer appointment and departure
• Regulatory matters, including Material Risk Takers framework, annual internal audit of remuneration and Group Risk Adjustment framework
• Shareholder and voting agency feedback on remuneration
• Annual reviews of terms of reference, advisers and GMC shareholding levels
Mindful of the challenging market conditions and wider stakeholder
experience, the Group Chief Executive requested the Committee
consider a downwards adjustment to his bonus. In considering
whether to make an adjustment, the Committee noted the
year-on-year outcome versus all employees looked favourable.
However it also recognised that in 2022, the executive Directors
experienced a decline in bonus of approximately (50)%, a significant
disconnect versus the median employee experience of (17)%.
While the Committee ultimately decided against utilising positive
discretion to improve alignment last year, it makes the year-on-year
comparison for 2023 misleading. The overall stakeholder experience
over multiple years was therefore particularly relevant this year.
The Committee determined that a £250,000 downwards
discretionary adjustment to the Group Chief Executive’s bonus
would be appropriate, resulting in a bonus outcome of 72% of
maximum. This bonus outcome is (26)% on 2021, which is in line
with the median employee bonus experience over the same period.
Normally, the 2020 LTIP granted to executive Directors would also
be vesting this year. However, in 2020, the Group Chief Executive
and former Chief Financial Officer chose to waive voluntarily their
LTIP awards in response to the societal challenges of the Covid-19
pandemic. These LTIP awards with total grant date face value of
£1 million have therefore already been forfeited in full. This further
lowers the total compensation received by the executive Directors.
Comparing executive Director outcomes to the change in total
compensation for employees shows a more favourable experience
for employees. This reflects the executive Director LTIP waiver
and the absence of salary increases since 2014. Over this time,
employees have received regular increases, including significant
increases where relevant for cost of living considerations. The
resulting median change in UK employee total compensation since
2020 is +13% versus the CEO single figure movement over the same
period of (2)%.
Change in median UK
employee total comp.
since 2020
+13%
CEO total compensation
over same period: -2%
Mean annual salary
increase for employees
in 2023
+8%
Executive Director salaries
frozen since 2014
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
75
Governance
Remuneration report continued
Our key
stakeholders
Our remuneration
principles
Our executive Director
remuneration approach
Clients
Aligned with clients
A proportion of variable remuneration for
higher-earning employees and material risk takers
is granted as fund awards, which are notional
investments in funds managed by the Group. This
aligns the interests of employees and clients.
Three-year and five-year client
investment performance included
in the annual bonus scorecard
Circa 35% of bonus paid
in fund awards
Shareholders
Aligned with shareholders
A proportion of variable remuneration for
higher-earning employees and material risk takers
is granted in the form of deferred awards over
Schroders shares. This aligns the interests of
employees and shareholders. Executive Directors
and other members of the GMC are required, over
time, to acquire and retain a significant holding
of Schroders shares or rights to shares. Vested
share-based awards from bonuses are unable to
be exercised until the requirement has been met.
Circa 45% of bonus paid in shares
Stretching shareholding requirements
Requirement to maintain a level
of shareholding for two years on
stepping down
Aligned with financial performance
Our ratio of operating compensation costs to
net operating income guides the total spend
on remuneration each year. This is recommended
by the Committee to the Board.
Financial metrics comprise
70% of annual bonus scorecard
70% of LTIP awards based on
long-term financial performance
Society and
environment
Designed to promote the long-term,
sustainable success of the Group
Sustainable leadership is key to our business and
flows from our long-term outlook. Performance
against sustainability goals is considered in the
annual compensation review for individuals who
have the ability to influence our investment and
business operations, ensuring alignment with our
commitment to responsible practices.
Annual bonus scorecard includes
sustainability-aligned metrics in
both the financial and non-financial
scorecard elements
LTIP includes 30% weighting
on an investment-focused climate-
related metric, linked to our long-term
commitment to protecting our planet
Our people
Competitive
Employees receive a competitive remuneration
package, which is reviewed annually and
benchmarked by reference to the external market.
This allows us to attract, retain and motivate highly
talented people, regardless of gender, age, race,
sexual orientation, disability, religion, socio-
economic background or other diversity facet.
Competitiveness considered by
reference to total compensation
for comparable roles at other large
international asset management firms
Benchmarking forms a point of
reference, not a primary factor in
remuneration decisions
Designed to encourage retention
Deferred variable remuneration does not give
rise to any immediate entitlement. Awards
normally require the participant to be employed
continuously by the Group until at least the third
anniversary of grant in order to vest in full.
Circa 60% of variable pay deferred
over a three-year to three-and-a-half-
year period
LTIP subject to four-year deferral
and one-year holding period
Our remuneration philosophy
Our purpose is to provide excellent investment performance to clients through active management. By serving clients, we serve wider society.
Channelling capital into sustainable and durable businesses accelerates positive change in the world. Paying our people based on the value
we create for our stakeholders will secure our ability to deliver our purpose. This is why the remuneration principles underpinning how all our
people are paid is centred on creating alignment with our key stakeholder groups.
How our approach to remuneration creates alignment with our key stakeholders
Schroders Annual Report and Accounts 2023
76
Alignment over the longer term: Illustration of timescales for 2023 performance year
Cash
bonus
6-month
holding period
1-year
deferral
1.5-year
deferral
2-year
deferral
2.5-year
deferral
3-year
deferral
3.5-year
deferral
4-year
deferral
Feb
2024
Sep
2024
Cash
Funds
§
Mar
2025
Sep
2025
Mar
2026
Sep
2026
Mar
2027
Sep
2027
Mar
2028
Sep
2028
Holding
period
Mar
2029
Sep
2029
Mar
2030
Sep
2030
Mar
2031
Sep
2031
Illustration of our executive Directors remuneration policy
Pay
elements
Total annual maximum compensation: £9 million for the Group Chief Executive and£4.5 million for the Chief Financial Officer
Fixed
pay
Upfront annual bonus
(circa 40% of bonus)
Deferred annual bonus
(circa 60% of bonus)
LTIP
Award
mechanics
Delivered in cash
(circa 20% of bonus)
Delivered in fund awards
(circa 20% of bonus)
Delivered in share awards
(circa 45% of bonus)
Delivered in fund awards
(circa 15% of bonus)
Delivered
in shares
Funds
Funds
Shares
Shares
Shares
Funds
Upfront annual bonus half paid in
cash in February after the end of the
performance year and half granted as
an upfront fund award, subject to a
six-month holding period.
Deferred annual bonus granted 75% as a deferred share
award, available to exercise in equal instalments after
1, 2 and 3 years from grant, and 25% as a deferred fund
award, available to exercise in equal instalments after
1.5, 2.5 and 3.5 years from grant.
Malus may be applied
from the date on which
the award is granted/
established until
settlement.
Clawback may be
applied for a period
of up to seven years
from the date of grant
unless the Committee
decides to extend it
in the event of an
investigation that could
lead to the application
of clawback were it not
for the expiry of the
clawback period.
Shares
Our key
stakeholders
Our remuneration
principles
Our executive Director
remuneration approach
Clients
Aligned with clients
A proportion of variable remuneration for
higher-earning employees and material risk takers
is granted as fund awards, which are notional
investments in funds managed by the Group. This
aligns the interests of employees and clients.
Three-year and five-year client
investment performance included
in the annual bonus scorecard
Circa 35% of bonus paid
in fund awards
Shareholders
Aligned with shareholders
A proportion of variable remuneration for
higher-earning employees and material risk takers
is granted in the form of deferred awards over
Schroders shares. This aligns the interests of
employees and shareholders. Executive Directors
and other members of the GMC are required, over
time, to acquire and retain a significant holding
of Schroders shares or rights to shares. Vested
share-based awards from bonuses are unable to
be exercised until the requirement has been met.
Circa 45% of bonus paid in shares
Stretching shareholding requirements
Requirement to maintain a level
of shareholding for two years on
stepping down
Aligned with financial performance
Our ratio of operating compensation costs to
net operating income guides the total spend
on remuneration each year. This is recommended
by the Committee to the Board.
Financial metrics comprise
70% of annual bonus scorecard
70% of LTIP awards based on
long-term financial performance
Society and
environment
Designed to promote the long-term,
sustainable success of the Group
Sustainable leadership is key to our business and
flows from our long-term outlook. Performance
against sustainability goals is considered in the
annual compensation review for individuals who
have the ability to influence our investment and
business operations, ensuring alignment with our
commitment to responsible practices.
Annual bonus scorecard includes
sustainability-aligned metrics in
both the financial and non-financial
scorecard elements
LTIP includes 30% weighting
on an investment-focused climate-
related metric, linked to our long-term
commitment to protecting our planet
Our people
Competitive
Employees receive a competitive remuneration
package, which is reviewed annually and
benchmarked by reference to the external market.
This allows us to attract, retain and motivate highly
talented people, regardless of gender, age, race,
sexual orientation, disability, religion, socio-
economic background or other diversity facet.
Competitiveness considered by
reference to total compensation
for comparable roles at other large
international asset management firms
Benchmarking forms a point of
reference, not a primary factor in
remuneration decisions
Designed to encourage retention
Deferred variable remuneration does not give
rise to any immediate entitlement. Awards
normally require the participant to be employed
continuously by the Group until at least the third
anniversary of grant in order to vest in full.
Circa 60% of variable pay deferred
over a three-year to three-and-a-half-
year period
LTIP subject to four-year deferral
and one-year holding period
The remuneration principles underpinning how we pay all our employees also apply to our executive Directors. The graphic below summarises
the key pay elements that apply to our executive Directors, along with the timescales over which the remuneration is released. Full details of
our remuneration policy approved by shareholders at the 27 April 2023 Annual General Meeting can be found on our website at
www.schroders.com/rempolicy
Shareholding requirement: CEO:500% base salary CFO: 300% base salary
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
77
Governance
Remuneration report continued
2023 outcomes
Performance context
In 2023, we generated growth through positive net inflows of
£9.7 billion (excluding joint ventures and associates). Our financial
performance remained resilient, showcasing the benefits of our
client-led strategy in the face of continued challenging market
conditions. We reported an operating profit of £661.0 million
(2022: £723.0 million) and profit before tax of £487.6 million
(2022: £586.9 million). The Board has recommended a final dividend
of 15.0 pence per share. This results in a total dividend for the year
of 21.5 pence per share (2022: 21.5 pence per share).
The investment we have made in our strategic growth areas of
Wealth Management, Private Markets and Solutions in recent
years, alongside our know-how in public markets, have positioned
us with the complete platform to deliver growth. The value of this
is highlighted by the positive net new business we generated
across these strategic growth areas, and the net operating revenue
generated by them now accounts for 48% of our total net operating
revenue (2022: 46%). This year we made progress in increasing the
scalability of our operating platform to enable us to focus more
resources on adding value to our clients. For more information on
our strategic and financial performance, please see the Group Chief
Executive’s and Chief Financial Officer’s statements, beginning on
page 10 and page 24, respectively.
Group-wide remuneration outcomes
The balance between strong cost management and the need
to support our talent and continue to invest in strategic growth
areas was front of mind as the Committee discussed remuneration
outcomes for the year. Increased headcount from our continued
investment in strategic priority areas was largely offset by our
targeted streamlining of our operations. Our people are paramount
to the successful delivery of our strategy and we are proud that 96%
of our key talent was retained in 2023.
The Committee considered both financial and non-financial
performance when setting the bonus pool, as well as an assessment
of overall market conditions and wider stakeholder experience. The
Committee and Board concluded that a bonus pool of £293 million
struck the right balance across relevant stakeholders, including
shareholders, clients and employees. When combined with salary
increases made earlier in 2023, the total compensation experience
for employees was generally between (-1)% and +8%.
Individual bonus and salary amounts were determined according
to our Fair Pay for Performance framework, summarised to the
right. In reviewing outcomes, the Committee evaluated analytics
on differentiation, diversity and competitiveness and were satisfied
that the year-end process was rigorous and that outcomes reflected
financial and non-financial performance, including conduct.
The salary increase budget for 2024 was set mindful of the
implications for our cost base as well as the cost pressures faced
by our people in many parts of the world. Allocation of the resulting
4.5% salary increase budget was designed to protect lower-paid
employees and larger increases were targeted towards individuals
with significant increases in role or responsibilities.
2023 Bonus Pool 2023 2022
Operating compensation ratio 46% 45%
Bonus-eligible employees 6,014 5,999
Bonus pool £293m £351m
Employee experience:
% change bonus (median) -15% -17%
% change total compensation (median) +3% +1%
Fair pay for performance
Remuneration outcomes for our employees are
governed by our Fair Pay for Performance framework.
This framework, available to all employees on our intranet,
describes the variety of factors considered in making pay
decisions at Schroders, including:
• Annual performance – including individual
performance/contribution, behaviours and conduct,
business and sub-business line performance as well
as Group-wide performance and affordability.
• Individual achievement – including an individual’s
skills/experience, progression, succession and future
potential as well as consideration of multi-year
performance context.
• Market context – consideration of market pay levels
for a given role/geography and review of relevant
competitor insights, local market conditions and general
market outlook.
• Relativities and diversity – ensuring fairness of
outcomes versus peers and market.
Annual
performance
Relativities
and diversity
Market
context
Fair pay for
performance
Individual
context
Key performance and remuneration metrics
Net operating income
2023
2022
-2%
-2%
Operating earnings per share
2023
2022
-13%
-13%
Net operating profit
2023
2022
-9%
-14%
Dividend per share
2023
2022
0%
0%
Headcount
2023
2022
0%
12%
Annual bonus pool
2023
2022
-16%
-16%
Fixed remuneration costs
2023
2022
3%
16%
Total remuneration costs
2023
2022
-1%
-2%
Schroders Annual Report and Accounts 2023
78
Executive Director remuneration outcomes
2023 annual bonus
Executive Director bonuses are determined by the Committee
through a balanced scorecard approach. At the start of 2023, the
Committee established and disclosed metrics consisting of 70%
financial factors and 30% non-financial factors. These were selected
to align to the Group’s long-term strategy. At the end of the year, the
Committee assessed the level of performance against the financial
target ranges. Meeting the threshold leads to a 25% payout,
achieving the target results in a 65% payout, and reaching the
maximum leads to a 100% payout.
In 2022, executive bonuses were misaligned with the experiences of
employees and shareholders, as explained in the box to the right.
Although the Committee ultimately decided not to exercise positive
discretion to improve alignment, the insights gained around the
impact of evolving market conditions on bonus outcomes were
considered in establishing a broader profit range for 2023. Similar
to 2022, the profit target range was asymmetrical, requiring greater
upside performance to attain the maximum payout. The table
below provides details of the target ranges and the corresponding
payouts. The overall financial scorecard outcome was 55% out of the
maximum 70%.
The bonus scorecard includes non-financial performance,
which the Committee evaluates based on the strategic objectives
established at the beginning of the year. This is combined with
an assessment of each individual’s personal performance. The
Committee acknowledged the achievements detailed on the next
page, which include: successful net new business growth in our
wealth management business; the launch of an LTAF in Schroders
Capital, which expanded investor access to private markets;
improved operational efficiencies and risk management through
integrating the acquired River and Mercantile solutions business
into our front office service platform; and external recognition
for our sustainability integration and inclusion and diversity efforts
in 2023.
Based on the non-financial performance achieved in the Group
scorecard and individual personal performance, the Committee
confirmed non-financial scorecard outcomes of 20% for Peter
Harrison, 24% for Richard Oldfield and 20% for Richard Keers,
out of the maximum 30%.
2020 LTIP
In addition to annual bonuses, executive Directors are also eligible
to receive long-term incentive plan (LTIP) awards. These awards are
granted on an annual basis and are based on performance in the
previous year and subject to stretching performance conditions
over a four-year performance period. In 2020, in response to the
societal challenges posed by the Covid-19 pandemic, the executive
Directors voluntarily waived their LTIP awards, which had a total
grant date face value of £1 million. Consequently, these awards,
which would have vested based on performance to 31 December
2023, have already been forfeited. Therefore, no LTIP payments
will be released to the executive Directors for the year to 2023.
Assessment of the financial metrics of the executive Directors’ 2023 annual bonusscorecard
2023
scorecard
metric Weighting
Targets
Outcome
Metric payout
% of max
for metric
Bonus payout
% of max
bonus
Threshold
25%
Target
65%
Maximum
100%
Operating profit (£m)
30% 494
581 723 661
85% 25%
Investment
performance
3-year
20%
50%
60% 70% 60%
65%
17%
5-year
55%
65% 75% 77%
100%
Net new business (£bn)
(excluding JVs and associates)
10% 0.0
10.0 20.0 9.7
64% 6%
Proportion of Article 8 and 9 funds
1
10%
63%
68% 73% 69%
72% 7%
55%
Target setting: learning from 2022
Target ranges are set with reference to the Board
approved budget, market expectations, prior year
outcomes, strategic priorities and the wider market
outlook. When setting target ranges, the Committee is
mindful of the potential significant impact that evolving
market conditions could have on bonus outcomes. In
2022, additional stretch was introduced to the upside
profit and net new business targets to help manage this
potential impact.
Unfortunately, the story of 2022 was not one of recovery.
Unfavourable market conditions that emerged after
setting the scorecard targets led to a misalignment
between the outcomes of executive Directors and the
broader employee population, as well as the shareholder
experience. The executive Directors experienced a decline
of approximately 50% compared with the previous year,
while the median employee experience reflected a
decrease of 17%. While the Committee ultimately decided
against utilising positive discretion to improve alignment,
the insights gained were considered in establishing a
broader profit target range for 2023.
1. Proportion of Article 8 and 9 funds is assessed as the proportion of the Company’s funds which are in scope of the Sustainable Finance Disclosure Regulation (SFDR). Under
SFDR, asset managers have to disclose how sustainability risks are considered in their investment processes and which of their products meet the disclosure requirements of
‘Article 6’, ‘Article 8’ and ‘Article 9’. ‘Article 8’ products promote environmental or social characteristics amongst others, but do not necessarily have them as their overarching
objective. ‘Article 9’ products must have sustainable investment as their objective. ‘Article 6’ products are those products that are in-scope of SFDR, but do not meet the
requirements for Article 8 or Article 9.
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
79
Governance
Non-financial assessment for executive Director annual bonus scorecard
Criteria Performance in 2023
Strategic progress (see pages 2 to 27 for more information)
Continued growth of
Wealth Management
• Comfortably met Wealth Management net new business growth target of 5-7% per annum, achieving 6.7%.
• Record high AUM, with 2023 year end under Advised at £68.7 billion, Managed at £22.6 billion and Platform at
£18.9 billion.
• A gold award given to Cazenove Capital for “Best Impact/ESG Manager” at the Magic Circle Awards 2023, reflecting
our client-centric approach, innovative strategies and effective risk management.
Continued growth
of Schroders Capital
• Delivered resilient fundraising against challenging market backdrop, including £9.3bn gross inflows.
• Secured regulatory approval for pioneering the Long-Term Asset Fund (LTAF), broadening investor access to illiquid
and private markets, including DC and eligible investors.
• Launched our unified Global Debt and Credit business through the creation of a Private Debt and Credit Alternatives
(PDCA) pillar with over $30bn in assets under management.
Continued
integration of
recent acquisitions
• Successfully migrated the acquired River and Mercantile solutions business to the front office service platform,
enhancing operational efficiencies and risk management in the ongoing integration of Schroders Solutions.
• Successful integration of Schroders Greencoat onto Schroders IT, Cloud services and Finance systems. Progress
towards migration of wider platforms.
Defining of the
organisational
design related to
the Client Group
• Completed a strategic review of organisational design to unlock a client-centric approach to client management,
replacing the previous concept of “distribution”.
• Implemented new Client Group structure with leadership change, revised KPIs, and expanded segmentation across
Pensions and Retirement, Wealth, Insurance, and Long-term Asset Owners segments.
APAC strategic
objectives
• Obtained regulatory approval for a wholly owned foreign public fund management company in China,
demonstrating commitment to onshore investors and a significant milestone in regional business expansion.
Cost discipline • Cloud migration programme yielded financial benefits, avoiding £100 million in server update costs, mitigating IT
cost inflation and reducing internal headcount needs.
• Progressed relocation of Wealth Management service centre from Zurich to the Schroders campus in Horsham, UK,
yielding property and compensation cost savings.
Sustainability (see pages 28 to 37 for more information)
Climate engagement • Achieved a notable milestone by doubling our engagement with companies on sustainability matters, conducting
1,500 engagements, which significantly exceeded our long-standing targets.
• Won “Best Global Equity Fund” by Morningstar for Schroder Global Sustainable Growth fund, recognising its
investing excellence and the successful integration of sustainability and investment returns.
Progress versus
the Group’s own
multi-year climate-
related targets
• Good progress made against our multi-year target of reducing our Scope 1 and 2 emissions by 46% from 2019 to
2030, achieving 40% and 34% reductions in Scope 1 and 2, respectively, in 2023, for a combined 35% reduction.
• Achieved a 39% reduction in Scope 3 business travel emissions from a 2019 baseline versus a 50% target decrease
by 2030.
Sustainability and
Impact Framework
• Successful launch of Global Sustainability and Impact Product framework prioritising sustainability integration in
investment decisions, delivering long-term returns for clients across public and private markets.
Our people (see pages 18 to 19 for more information)
Retention and
engagement
• Retention of key talent and top performers significantly above target at 96%, versus a target of 90%.
• Schroders employees express high pride, with 87% reporting in our pulse survey, surpassing global benchmarks.
Inclusion and
diversity
• Exceeded 80% completion rate for UK ethnicity diversity profile, enabling release of first ethnicity pay gap report.
• Successfully increased disclosure rates and diverse representation of employees across all facets of our 2030
aspirations, including ethnic minority representation in the UK at 18% (previously 16%) and representation from non-
professional socio-economic backgrounds in the UK at 19% (previously 16%).
• Won multiple awards for our approach to inclusion and diversity, including three awards at Citywire Gender Diversity
Awards, Best Board and Exco representation at the INSEAD Balance in Business Awards and a gold award from the
Financial Times for Championing Religious Inclusivity.
Risk and conduct (see pages 38 to 43 for more information)
Governance and
risk management
• Successful implementation of the new Consumer Duty rules ahead of the regulatory deadline.
• Favourable reports from control function heads indicate positive risk profile assessment. Operational and business
risks align with risk appetite or have corresponding action plans for effective mitigation.
Schroders Annual Report and Accounts 2023
80
Personal performance assessment
for the Group Chief Executive
Peter Harrison’s high energy and relentless work ethic have been in
evidence throughout what has been a challenging year faced with
strong industry headwinds. His leadership in reshaping our client
proposition and driving growth in strategic areas is testament to
his impact.
Peter Harrison continues to be very highly regarded by a complex
set of stakeholders, having great impact across all areas of our
business. His work with the Capital Markets Industry Taskforce, HM
Treasury and the Investment Association this year are all examples
of the positive and important influence and impact he has, not only
within Schroders but also the UK investment management industry
more widely.
People and culture remains an area of strength. Described in his
feedback as “inspiring, engaging; a genuine role model for DE&I”,
his contribution to upholding the Schroders culture is key.
As a result of the non-financial performance achieved in the
Group scorecard and Peter Harrison’s personal performance,
the Committee confirmed a non-financial bonus scorecard payout
of 20% of the maximum 30%.
Personal performance assessment
for the Chief Financial Officer
Richard Oldfield’s tenure with the Group has been marked by a
strong start since joining the Company and Board on 2 October
2023. He has developed positive relationships with senior
management and the Board, demonstrating open communication
and collaboration. His active contributions towards year-end
reporting and in investor relations discussions have been highly
valuable, as have his steps towards enhancing our internal financial
transparency. The Board has provided highly positive feedback,
acknowledging his meaningful contribution towards key strategic
initiatives notwithstanding his short tenure.
As a result of the performance against the non-financial
performance measures in the scorecard as well as Richard Oldfield’s
personal performance since joining, the Committee confirmed a
non-financial bonus scorecard payout of 24% of the maximum 30%,
prorated for his tenure.
Personal performance assessment
for the former Chief Financial Officer
Richard Keers continued to support the Group’s strategy and
outcomes until his stepping down as executive Director from
2 October 2023. Through this period, he:
• engaged effectively with investors and analysts to
communicate our strategic direction and key objectives
• delivered successful Capital Markets Day for our wealth
management business, conveying our vision and opportunities
to investors, analysts and key industry stakeholders
• demonstrated strong leadership in driving efficiency measures
• facilitated a successful handover to the current Chief
Financial Officer, ensuring a smooth transition of financial
leadership, knowledge transfer and continuity in financial
management practices
As a result of the performance against the non-financial
performance measures in the scorecard as well as Richard Keers’
personal performance, the Committee confirmed a non-financial
bonus scorecard payout of 20% of the maximum 30% for the period
as Chief Financial Officer.
As confirmed in the Company’s announcement on 27 April 2023,
Richard Keers remained eligible to be considered for a bonus for
the period between stepping down as an executive Director and
his departure date of 31 December 2023. This eligibility was based
on his continued role in advancing the firm’s strategic priorities
and a successful handover of responsibilities. The Committee
conducted an assessment of Richard Keers’ performance during
this period, taking into account his role in supporting the design
and implementation of the 2024 Board strategy, the delivery
of high-priority projects and his overall contribution to the
Group’s financial and non-financial performance. Recognising his
performance, the Committee determined to award Richard Keers
a discretionary bonus of £367,000.
Single figure outcomes for 2023
The graphs illustrate the resulting single figure outcomes for the executive Directors, and how the outcomes compare to the policy maximum
that applied in 2023.
Executive Director Single total remuneration figure (£’000)
Group Chief Executive
Peter Harrison
2023
actual
2023
maximum
6,190
9,000
9% 20% 20% 38% 13%
6% 19% 19% 37%
12%
7%
Chief Financial Officer
Richard Oldfield
Former Chief Financial Officer
Richard Keers
Total Richard Oldfield
& Richard Keers
2023
actual
2023
actual
2023
actual
2023
maximum
836
2,386
3,222
4,500
13%
6% 19% 19% 36% 12% 9%
20% 20% 35% 12%
17% 17% 39% 13%
27% 25%27%
8%
13%
13%
Fixed pay
Upfront bonus – cash
Upfront bonus – fund award
Deferred bonus – share award
Deferred bonus – fund award
LTIP vesting
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
81
Governance
Stakeholder experience and executive Director pay
The Committee actively takes into account the perspectives of various stakeholders when discussing and determining policies, practices
and outcomes related to executive Director compensation. It has the discretion to make adjustments to compensation outcomes if
considered appropriate.
The graphic below provides a summary of key stakeholder indicators that were reviewed by the Committee as part of its decision-making
this year. This includes data over multi-year periods, reflecting the long-term nature of decision-making. More information on many of
these indicators can be found in the “Notes to the report on remuneration” section of this report beginning on page 84.
In addition to the indicators mapped out below, the Committee also closely monitors risk, compliance and regulatory matters in its
decision-making. This includes regular reports from control function heads and the Conduct Assessment Group.
Monitoring how we performed
Aggregate value of share
awards held by CEO
Aggregate value of fund
awards held by CEO
Change in median UK
employee total comp.
since 2020
Proportion of
Article 8 and 9 funds
£6.7m £1.5m +13% 69%
Reflecting alignment created
through share award deferral
See page 89 for
more information.
Reflecting alignment created
through fund award deferral
See page 89 for
more information.
CEO total compensation
over same period: -2%
See page 87 for
more information.
A key sustainability-focused
metric in the bonus scorecard
See page 79 for
more information.
Total shareholder
return over 5 years
AUM outperforming
stated comparator (5 years)
Mean annual salary
increase for employees
in 2023
Portfolio
temperature score
+27% 77% +8% 2.5
C
CEO total comp. change
over the same period: -4%
See page 91 for
more information.
A key metric in the
bonus scorecard
See page 79 for
more information.
Executive Director salaries
frozen since 2014
See page 87 for
more information.
A key sustainability-focused
metric in the LTIP scorecard
See page 3 for
more information.
Votes in favour of 2023 AGM
remuneration resolutions
AUM outperforming
stated comparator (3 years)
CEO bonus as a proportion
of total bonus pool
Reduction in mean global
gender fixed pay gap
96% Policy 60% 1.9% 6%
99%
ARR
A key metric in the
bonus scorecard
Bonus pool funded through
total cost to net income ratio
Since first voluntary
publication in 2017
See page 92 for
more information.
See page 79 for
more information.
See pages 78 and 84 for
more information.
See page 18 for
more information.
Our shareholders
Compensation outcomes
reflect key financial and
non-financial performance
delivered in the year.
A significant portion of
compensation is paid in
shares and shareholding
requirements apply.
Our clients
Compensation outcomes
reflect investment
performance delivered.
A portion of compensation
is paid in fund awards.
Our people
Executive outcomes are
evaluated in the context of
broader workforce metrics,
both within the year and
over a multi-year horizon.
Wider society
Compensation outcomes
take into account
performance against
sustainability objectives.
The Committee tracks
diversity pay gaps and
the actions being taken
to close the gaps.
Schroders Annual Report and Accounts 2023
82
2024 implementation
Following strong support received by shareholders at the 2023 AGM, no changes are proposed to the policy in 2024. The implementation of
the policy will also remain unchanged, allowing time for the changes made in 2023 to embed, most notably the new sustainability-aligned
performance measures “proportion of Article 8 and 9 funds” in the bonus scorecard and “portfolio temperature score” in the LTIP.
In 2024, the Committee will be monitoring the effectiveness of remuneration arrangements in supporting our long-term strategy amidst
the challenges posed by the current market environment. We value ongoing dialogue with our shareholders and welcome their input
and feedback.
Element Approach 2024 implementation
Salaries • Reviewed annually. For the executive
Directors, salaries are adjusted
infrequently.
• Neither executive Director will receive an increase in 2024. This means the most recent increase for
executive Directors was in 2014.
• Current salaries remain low versus peer data.
2024
annual
bonus
• The Committee determines executive
Director bonuses based on a
scorecard across a range of metrics.
• Financial performance factors make
up 70% of the scorecard and the
remaining 30% is based on a
combination of non-financial factors.
• In setting the metrics and target
ranges, the Committee takes into
account the Board-approved budget,
market expectations, prior year
achievement, strategic priorities and
the wider economic landscape.
• The Committee may apply discretion
to adjust annual bonus awards to the
extent it deems it appropriate to align
to the results achieved, with overall
stakeholder experience, and/or
in light of unexpected or
unforeseen circumstances.
• Upfront fund awards and deferred
share and fund awards are granted
under the DAP, which shareholders
approved at the 2020 AGM.
• Overall performance measures and weightings will be consistent with 2023:
Measure Link to strategy
Financial (70%)
Operating profit (30%) The Group’s primary measure of financial performance as
reported to stakeholders.
Client investment performance over
three years (10%) and five years (10%)
Helping our clients achieve their long-term financial goals
is central to our purpose and represents a core output of
our business.
Annual net new business (10%)
(excluding joint ventures and
associates)
Net new business is essential to our success and a key
driver of both AUM and revenues.
Proportion of Article 8 and 9 funds
(10%)
Client-focused, financial metric reflective of our
commitment to our sustainable offering and establishing
and maintaining our position as a sustainability leader.
Non-financial (30%)
Strategic progress; sustainability;
people and talent; risk and
governance; personal goals
All fundamental to the Group’s long-term success, the
Committee sets targets to robustly assess each of these
measures.
2024 LTIP
award
• Awards are granted annually,
based on performance in the
preceding year.
• Awards vest subject to a four-year
performance period, plus an
additional one-year holding period
post vesting.
• The Committee may apply discretion
to adjust vesting to the extent it
judges appropriate to align the results
to the overall stakeholder experience.
• Awards are granted under LTIP rules
approved by shareholders in 2020.
• The Committee has approved LTIP awards for the Group Chief Executive and Chief Financial Officer,
amounting to £600,000 and £400,000 respectively. These awards reflect their performance in 2023
and are in line with amounts granted in prior years.
• Awards will be granted in March 2024, with performance conditions consistent with 2023:
Link to strategy Threshold
(25% vesting)
Maximum
(100% vesting)
Operating earnings
per share (EPS) (35%)
Group KPI measuring our
objective to grow earnings per
share consistently, recognising the
potential impact of market volatility
on results in the short term.
4% per annum 10% per annum
Cumulative net new
business (NNB)
(including joint ventures
and associates) (35%)
Group KPI measuring our ability
to generate positive net new
business across the Group.
£25bn £50bn
Portfolio temperature
score (30%)
Group KPI measuring
our ambition to align portfolios
to a 2.2°C pathway by 2030 and
1.5°C by 2040.
5% decrease 10% decrease
Leadership CDP rating on climate
change for all four years.
Navigation of this report and shareholder voting
This report from the Chair of the Remuneration Committee, together with the notes on pages 84 to 93, constitutes the annual report on
remuneration, which will be presented for an advisory vote by shareholders at the upcoming AGM. We value the feedback from our
shareholders and are grateful for their participation.
Where required and indicated, this information has been audited by EY.
Matthew Westerman
Chair of the Remuneration Committee
28 February 2024
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
83
Governance
Remuneration report continued
Notes to the report on remuneration
The notes set out on pages 84 to 93 supplement the information on pages 74 to 83, combining both statutory and voluntary disclosures.
You can also find more information about our current global workforce, along with details of our voluntary global and UK ethnicity pay gaps, by
visiting our website www.schroders.com/inclusion-and-diversity
Additional detail on 2023 executive Director pay outcomes
Single total remuneration figure for each executive Director (audited)
The total remuneration of each executive Director for the years ended 31 December 2021 through 31 December 2023 is set out in the table
below. As noted earlier in this report, the Group Chief Executive requested the Committee consider a downwards adjustment to his bonus this
year. Reflecting on the overall stakeholder experience over multiple years, the Committee determined that a £250,000 downwards discretionary
adjustment to the Group Chief Executive’s bonus would be appropriate, as shown in the table below.
For Richard Oldfield and Richard Keers, the 2023 amounts shown represent amounts paid in respect of their roles as executive Directors,
being circa three months and nine months respectively. Richard Keers also received remuneration for the circa three-month period he was
an employee before stepping down, as detailed in the next section. Normally, the 2020 LTIP granted to executive Directors would also be
vesting this year. However, in 2020, the Group Chief Executive and former Chief Financial Officer chose to waive voluntarily their LTIP awards
in response to the societal challenges of the Covid-19 pandemic. These LTIP awards with total grant date face value of £1 million have
therefore already been forfeited in full. This further lowers the total compensation received by the executive Directors.
(£’000)
Base
salary
1
Benefits
and
allowances
2
Retirement
benefits
3
Total
fixed pay
Initial bonus
outcome
Discretionary
bonus
reduction
Annual
bonus
award
4
LTIP
vested
5
Total
variable
pay
Total
remuneration
2023 Peter Harrison 500 16 45 561 5,879 (250) 5,629 waived 5,629 6,190
Richard Oldfield 94 1 10 105 731 – 731 – 731 836
Richard Keers 281 5 34 320 2,066 – 2,066 waived 2,066 2,386
2022 Peter Harrison 500 14 45 559 3,842 – 3,842 341 4,183 4,742
Richard Keers 375 7 45 427 1,726 – 1,726 227 1,953 2,380
2021 Peter Harrison 500 10 43 553 7,612 – 7,612 269 7,881 8,434
Richard Keers 375 10 45 430 3,395 – 3,395 180 3,575 4,005
1. Represents the value of salary earned and paid during the financial year.
2. Includes one or more of: private healthcare, life assurance, permanent total disability insurance, Share Incentive Plan matching shares and private use of a company car
and driver.
3. Represents the aggregate of contributions to defined contribution (DC) pension arrangements and cash in lieu of pension for Peter Harrison, and cash in lieu of pension
for Richard Oldfield and Richard Keers. The table below shows how the retirement benefits figures above are comprised for each Director.
4. Pages 79 to 81 set out the basis on which annual bonus awards for 2023 were determined. The table below breaks down the annual bonus awards for 2023 into cash paid
through the payroll in February 2024 and the upfront fund awards, deferred fund awards and deferred share awards that will be granted in March 2024.
5. As noted on page 79, the executive Directors waived entitlement to the 2020 LTIP whose performance period would have concluded on 31 December 2023. No amount will
therefore vest in respect of this award for 2023. The comparative value for 2022 represents the actual value that vested on 6 March 2023 from LTIP awards granted on 11 March
2019. The LTIP vested values disclosed last year were estimates, as the Annual Report and Accounts was finalised prior to the vesting date. Page 88 sets out information on
LTIP awards granted to the executive Directors during 2023. Page 83 sets out information on LTIP awards to be granted to the executive Directors in March 2024.
Retirement arrangements for the former Chief Financial Officer (audited)
Richard Keers stepped down as Chief Financial Officer and executive Director on 2 October 2023, and continued to be employed by Schroders
to facilitate an effective transition to Richard Oldfield through 31 December 2023, when he retired from the Company.
For the period of 2 October to 31 December 2023, Richard Keers continued to receive his salary, which amounted to £93,750, retirement
benefits as cash in lieu of pension of £11,242 and £2,368 in other benefits per the provisions outlined in footnote 2 in the table above. In
accordance with the Directors’ remuneration policy, certain benefits (such as medical or life insurance) will continue until the end of the normal
cover period. Any payments related to such will be disclosed in the report for the financial year to which they pertain, subject to relevant
minimum disclosure requirements.
Mr Keers was eligible to receive an annual incentive award for the period after he stepped down as an executive Director, the value of which is
not included in the table above. The Committee determined to award Richard Keers a bonus of £367,000 as detailed on page 81. His award will
be deferred in line with the treatment for his executive Director period, as detailed on the following page. Richard Keers is not eligible to receive
a bonus in respect of 2024.
Following 10 years of service with the Company, the Committee agreed that Richard Keers’ deferred bonus awards previously granted to him will
continue to vest based on the terms and conditions under which they were granted. Richard Keers will not be eligible for the grant of the 2024
long-term incentive award, and his 2022 and 2023 LTIP awards will be pro-rated for the time elapsed with the Company during the performance
period. Final vesting of the LTIP awards will be determined by the Committee at the conclusion of the performance period upon assessment of the
achievement of the conditions set out in each award’s scorecard. Richard Keers waived his entitlement to his 2021 LTIP award, the performance
period for which would have concluded on 31 December 2024. On stepping down as an executive Director, Richard Keers remains subject to the
shareholding requirement which requires that he maintain for a period of two years a holding of shares or interests in shares equal in number to
that which applied under the personal shareholding policy while he was an executive Director. Richard Keers has signed a commitment to adhere
to this requirement as part of stepping down.
No other payments for loss of office or to former Directors were made during 2023.
Schroders Annual Report and Accounts 2023
84
Key takeaways from section
• At the request of the Group Chief Executive, the Committee determined a downwards discretionary adjustment of £250,000
to his bonus in the context of the overall stakeholder experience over multiple years.
• The LTIP awards that would otherwise be vesting this year were waived by the executive Directors in 2020 in response to the
societal challenges of the Covid-19 pandemic.
• Resulting total compensation for the Group Chief Executive was 69% of the policy maximum and 72% of maximum for the
Chief Financial Officers (being the total delivered to the two individuals who served as Chief Financial Officer in the year).
Retirement benefits – additional detail (audited)
The following table shows details of retirement benefits provided to executive Directors for the years ended 31 December 2023 and
31 December 2022. For the executive Directors, the sum of employer contributions and cash in lieu each year is reflected in the single total
remuneration figures above. Employer contributions represent contributions paid into DC pension arrangements during the year and exclude
any contributions made by the Directors. There has been no defined benefit (DB) pension accrual since 30 April 2011.
£’000
2023
employer
contributions
2023
cash in lieu
of pension
1
2023
retirement
benefits total
2022
employer
contributions
2022
cash in lieu
of pension
1
2022
retirement
benefits total
Accrued DB
pension at
31 December2023
Normal
retirement
age
2
Peter Harrison 8 37 45 3 42 45 – 60
Richard Oldfield – 10 10 – – – – 60
Richard Keers – 34 34 – 45 45 – 60
1. Peter Harrison received a combination of employer contributions to the Group’s DC pension arrangement and cash in lieu of pension contributions, and Richard Oldfield and
Richard Keers received cash in lieu of pension contributions.
2. Normal retirement age is the earliest age at which a Director can elect to draw their pension under the rules of the Schroders Retirement Benefits Scheme without the need
to seek the consent of the Company or the pension scheme trustee.
Variable pay awards – additional detail (audited)
The table below sets out details of how the 2023 annual bonus award for each executive Director was structured, along with the face value
of the LTIP award granted during 2024 (see page 83).
2023 (£’000)
DAP award
Total annual
bonus award
Percentage
deferred
LTIP award
Percentage of total
variable pay deferred
Upfront cash
bonus award
Upfront
fund award
Deferred
share award
Deferred
fund award
Total
DAP award
LTIP granted
during 2024
Peter Harrison 1,246 1,246 2,353 784 4,383 5,629 56% 600 60%
Richard Oldfield 226 226 209 70 505 731 38% 400 60%
Richard Keers 413 413 930 310 1,653 2,066 60% – 60%
Upfront fund awards normally cannot be exercised for six months from grant, but are not at risk of forfeiture if the holder resigns and leaves
the Group. Deferred share awards are conditional rights to receive Schroders shares, granted as nil-cost options. They normally require the
holder to remain in employment for three years following grant to vest in full and are available to exercise in three equal instalments 1, 2 and 3
years from grant. Deferred fund awards are conditional rights to receive a cash sum with an initial value equal to the value of bonus being
deferred, granted as nil-cost options. That value is notionally invested in a range of Schroders funds and so the actual amount paid when the
award is exercised is the initial amount plus or minus returns on those notional investments. They normally require the holder to remain in
employment for 3.5 years following grant to vest in full and are available to exercise in three equal instalments 1.5, 2.5 and 3.5 years from grant.
Key takeaways from section
• In 2023, 60% of executive Director variable pay was deferred, providing long-term alignment and retention.
• Delivering a significant portion of the bonus in share and fund awards creates alignment with investors and clients.
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
85
Governance
Non-executive Directors’ remuneration (audited)
Non-executive Directors receive fixed fees to reflect their Board and Committee responsibilities. They are not eligible to participate
in any variable pay arrangements. This section provides an overview of the fees and resulting total remuneration received by each
non-executive Director.
The fees for the non-executive Directors were not changed in 2023, having last been reviewed during 2022. The structure of non-executive
Directors’ fees is shown below. Fees are usually reviewed biennially.
£
Chair 625,000
Board member 80,000
Senior Independent Director 25,000
Audit and Risk Committee Chair
1
25,000
Audit and Risk Committee member 20,000
Nominations Committee Chair –
Nominations Committee member –
Remuneration Committee Chair
1
25,000
Remuneration Committee member 20,000
1. In addition to the Committee membership fee.
The total remuneration of each of the non-executive Directors for the years ended 31 December 2023 and 31 December 2022 is set out in the
table below:
£’000
2023 2022
Basic fee
Committee
Chair
Committee
member SID
Taxable
benefits Total Basic fee
Committee
Chair
Committee
member SID
Taxable
benefits Total
Dame Elizabeth
Corley 625 – – – 3 628 448 – – – 1 449
Sir Damon Buffini 26 – 6 – – 32 80 8 20 – – 108
Rhian Davies 80 25 40 – 1 146 80 25 40 – 1 146
Paul Edgecliffe-
Johnson 53 – 13 – 2 68 40 – 10 – 1 51
Claire Fitzalan
Howard 80 – – – 2 82 80 – – – 1 81
Rakhi Goss-
Custard 80 – 20 – 2 102 80 – 20 – 1 101
Ian King 80 – 20 25 1 126 80 – 20 22 1 123
Leonie Schroder 80 – – – – 80 80 – – – – 80
Annette Thomas 27 – 7 – – 34 – – – – – –
Deborah
Waterhouse 80 – 40 – 3 123 80 – 28 – 1 109
Matthew
Westerman 80 25 40 – – 145 80 17 40 – – 137
The fees shown in each Director’s case reflect the portion of 2023 and 2022 that they each served in their respective roles.
• Sir Damon Buffini stepped down from the Board at the conclusion of the 2023 AGM on 27 April 2023.
• Paul Edgecliffe-Johnson stepped down from the Board from 31 August 2023.
• Annette Thomas was appointed to the Board and Remuneration Committee with effect from 1 September 2023, with fees set at the same
level as for other non-executive Directors.
• Iain Mackay and Frederic Wakeman were appointed on 1 January 2024, and therefore do not feature in the table.
Benefits listed comprised travel expenses.
Key takeaways from section
• Non-executive Director remuneration comprised fixed pay only.
• There have been no changes to the structure or levels of non-executive Director fees in 2023.
• Year-on-year changes in total remuneration paid to non-executive Directors reflect changes in Committee responsibilities and/or
the timing of their appointments.
Schroders Annual Report and Accounts 2023
86
Workforce and Director pay outcomes
The statutory disclosures presented in this section offer insights into the relationship between employee and executive pay
outcomes. The higher proportion of total compensation that is variable for executives can sometimes make year-on-year
comparisons challenging. Looking at multiple years of data can help identify overarching trends.
UK pay ratios
The table below compares the Group Chief Executive’s single total remuneration figure for 2023 to the remuneration of the Group’s UK workforce
as at 31 December 2023, along with the comparative figures for the previous year. As noted on page 79, the 2022 bonus scorecard outcome for
the Group Chief Executive was misaligned with the employee bonus experience and the Committee determined not to exercise positive discretion
to improve alignment. As a result, the CEO pay ratio has increased this year. This also reflects a difference in the structure of the Group Chief
Executive’s overall pay versus typical employees, with a larger proportion variable based on business performance each year. The Group is
committed to ensuring pay fairness throughout its workforce, and the principle of providing greater certainty in remuneration through
proportionally higher fixed pay for junior and lower-paid employees aligns with the Group’s pay and reward policies for the global workforce.
Method
Pay ratio to
lower
quartile UK
employee
Pay ratio to
median UK
employee
Pay ratio to
upper
quartile UK
employee
Lower quartile UK employee Median UK employee Upper quartile UK employee
Total pay and
benefits
Total
salary
Total pay and
benefits
Total
salary
Total pay and
benefits
Total
salary
2023 Option A 93:1 59:1 37:1 66,536 52,938 105,779 78,000 169,250 115,000
2022 Option A 74:1 46:1 28:1 63,067 49,702 101,409 75,000 167,622 110,000
2021 Option A 134:1 84:1 49:1 63,093 47,000 100,761 69,433 173,941 100,000
2020 Option A 110:1 70:1 42:1 57,205 45,000 89,541 58,000 150,310 122,500
2019 Option A 117:1 72:1 42:1 55,400 50,000 89,743 68,000 154,667 85,000
The rules that require this disclosure set out three methodologies that companies can adopt, termed Options A, B and C. The Group has
adopted Option A as this is the most robust methodology, requiring the Group to calculate the pay and benefits of all its UK employees in order
to identify the total remuneration at the upper quartile, median and lower quartile. We have based the calculation of these total remuneration
quartiles on salaries as at 31 December 2023 plus any annual bonus award in respect of 2023 and any other incentive awards granted during
2023. In calculating these ratios, salary and any annual bonus award or other incentive awards for employees who work part-time have been
pro-rated up to a full-time equivalent. We have not included taxable travel benefits such as the reimbursement of occasional travel home from
work that was covered by the Group’s travel and expenses policy. No other assumptions or statistical modelling was required.
Comparing Director and wider workforce pay
The Committee considers executive Director pay structures and outcomes in the context of wider workforce pay. The table below compares
percentage change in base salary/fees, benefits and annual bonus awards for the Directors with the average change across employees of the
Group as a whole for the past three performance years. The outcome for employees of Schroders plc is also included to satisfy the statutory
requirement but is shown as not applicable given the legal entity does not itself have any employees. The values shown for the executive
Directors are based on those shown in the single total remuneration figure table on page 84 and those for non-executive Directors are based
on the table on page 86. The employee mean and median figures in this table represent the change experienced for individual employees who
were employed by Schroders in both years.
2023 2022 2021 2020
Base
salary/
fee Benefits Bonus
Total
compen-
sation
Base
salary/
fee Benefits Bonus
Total
compen-
sation
Base
salary/
fee Benefits Bonus
Total
compen-
sation
Base
salary/
fee Benefits Bonus
Total
compen-
sation
Executive Directors
Peter Harrison 0% +3% +47% +31% 0% +38% -50% -44% +0% +16% +40% +33% +0% -45% -4% -2%
Richard Oldfield n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Richard Keers -25% -25% +20% 0% 0% -26% -49% -41% +0% +49% +41% +31% +0% -3% +2% +4%
Non-executive
Directors
Dame Elizabeth
Corley
1
+40% +180% n/a +40% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Sir Damon Buffini -70% n/a n/a -71% -13% n/a n/a -13% 0% n/a n/a 0% +20% n/a n/a +20%
Rhian Davies
1
0% +180% n/a +1% 0% 0% n/a 0% 0% 0% n/a 0% +13% n/a n/a +14%
Paul
Edgecliffe-Johnson
1
+33% +209% n/a +36% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Claire
Fitzalan Howard
1
0% +260% n/a +2% 0% 0% n/a 0% +51% 0% n/a +49% n/a n/a n/a n/a
Rakhi Goss-Custard
1
0% +108% n/a +1% 0% -50% n/a -1% 0% 0% n/a 0% 0% n/a n/a +2%
Ian King
1
+2% +54% n/a +3% +2% 0% n/a +2% 0% 0% n/a 0% 0% n/a n/a +1%
Leonie Schroder 0% n/a n/a 0% 0% n/a n/a 0% 0% -100% n/a -1% +24% n/a n/a +25%
Annette Thomas n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Deborah Waterhouse
1
+11% +157% n/a +13% +8% 0% n/a +8% 0% 0% n/a 0% +47% n/a n/a 49%
Matthew Westerman +6% n/a n/a +6% +14% n/a n/a +14% +43% n/a n/a +43% n/a n/a n/a n/a
Employees
Employees of
Schroders plc
n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Employees of
the Group
2, 3, 4
Mean +8% +10% -4% +5% +10% +8% -10%
5
-22%
6
3% +9% +5% +49%
5
+78%
6
17% +4% +2% +7% 4%
Median +6% +7% -15% +3% +5% +6% -17%
5
-28%
6
1% +2% +3% +34%
5
+62%
6
12% +2% +3% +0% 2%
Footnotes are provided on the following page.
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
87
Governance
1. The fee increases shown reflect the timing of appointment to the Board and/or roles on Board Committees as set out on page 86. Increases in benefits reflect travel
expenses which vary in each year based on actual usage, with amounts listed on page 86.
2. For base salary, employees of the Group are those who were in employment between 31 December 2022 and 31 December 2023 and represents the salary increase over
this period. Salary adjustments agreed as part of the 2023 compensation review will be effective in 2024.
3. For benefits, the mean percentage change for employees of the Group is a per capita figure for those who were in employment for all of the two years under review and
represents the average change in benefits value during the year, while the median is the median percentage change of individual employees within the same population.
4. For bonus, the mean and median percentage change for employees of the Group is the mean and the median respectively of the individual year-on-year percentage change
in bonus for employees who were in employment and bonus-eligible for all of 2022 and 2023. More commentary on the annual bonus award for each executive Director
can be found on pages 79 to 81.
5. Excluding Share in Success Award, an award granted in December 2021 to c.4,600 employees valued at the equivalent of 5% of annual salary.
6. Including Share in Success Award.
Key takeaways from section
• The annual bonus change for executive Directors differs from employees due to their pay structure, which includes a higher
proportion in bonus based on business performance. This contrasts with a desire to provide greater certainty through higher
fixed pay for junior and lower-paid employees.
• Looking over multiple years, total compensation outcomes for employees have generally been more favourable than outcomes
for executive Directors. This is reflected in the decrease in pay ratio from 72:1 in 2019 when UK pay ratios were first reported, to
59:1 this year.
• The fees for the non-executive Directors were not changed in 2023 and any changes in fees are reflective of their change in role.
Non-executive Directors are not eligible to receive a bonus, which reinforces their independence.
Alignment with shareholders and clients
By delivering a substantial portion of variable pay in shares and funds, we foster meaningful alignment among our executive
Directors, shareholders and clients. The tables below provide details of awards granted, movements in share and fund awards
held by the executive Directors in the year and the total share interests for all our Directors.
Directors’ rights under fund and share awards
DAP and LTIP granted during 2023 (audited)
The following awards were granted under the DAP on 6 March 2023 in respect of deferred bonuses for performance during 2022. No further
performance conditions need to be met for awards to vest. The terms of the awards are the same as those that apply to the 2024 deferred
bonus awards, as described on page 83. These awards were included in the 2022 single total remuneration figures disclosed last year and form
part of the prior year value shown in this year’s single total remuneration figures on page 84. They are also shown in the tables of rights under
fund and share awards on page 89.
Individual Basis of DAP award granted
Face value at grant (£’000)
Share
price
at grant
Number
of
shares Performance conditions
Upfront
fund
awards
Deferred
share
awards
Deferred
fund
awards
Total DAP
award
Peter Harrison Deferral of bonus
awarded for
performance in 2022
888 1,549 516 2,953 4.904 315,844 Awarded for performance in 2022.
No further performance
conditions applyRichard Keers 425 657 219 1,301 4.904 133,911
The following awards under the LTIP were granted on 6 March 2023 as nil-cost options. They are also reflected in the table of rights under
share awards on page 89. Vesting of LTIP awards granted during 2023 are subject to the same performance conditions for the 2024 LTIP
award as detailed on page 83.
Individual Basis of LTIP award granted
Face
value at
grant
(£’000)
Vesting
maximum as
% of face
value
% of
face value
that would
vest at
threshold
1
Share
price
at grant
Number
of shares End of performance period
Peter Harrison A specified face value
of shares on the date
of grant
600 100 25 4.904 122,349 31 December 2026
Richard Keers 400 100 25 4.904 81,566 31 December 2026
1. Percentage of face value that would vest if performance measures were at the threshold level to achieve non-zero vesting.
All DAP share awards and LTIP awards were granted over ordinary shares. The number of shares under each DAP share award and LTIP award
is determined by dividing the grant date face value by the mid-market closing share price on the last trading day prior to the date of grant.
Annual bonus and LTIP awards (including bonus awards delivered via the DAP) are subject to the Group malus and clawback policy.
Schroders Annual Report and Accounts 2023
88
Directors’ rights under fund awards (audited)
Directors had the following fund award rights under the Group’s incentive plans, based on the award values at grant:
Unvested fund
awards £’000
Vested fund
awards £’000 Total £’000
Peter Harrison At 31 December 2022 2,209 – 2,209
Granted 516 888 1,404
Vested (1,195) 1,195 –
Exercised – (2,083) (2,083)
At 31 December 2023 1,530 – 1,530
Richard Keers At 31 December 2022 955 227 1,182
Granted 219 425 644
Vested (508) 508 –
Exercised – (1,160) (1,160)
At 31 December 2023 666 – 666
Directors’ rights under share awards (audited)
Directors had the following share rights under the Group’s incentive plans. These are in the form of nil-cost options shown based on the
number of shares in each case.
Unvested LTIP
awards
1
Other unvested
share awards
2
Vested but
unexercised
share awards Total
Peter Harrison
(Ordinary shares)
At 31 December 2022 261,523 1,174,033 52,723 1,488,279
Granted 122,349 315,844 – 438,193
Dividend-equivalent accrual – 45,338 21,200 66,538
Vested (69,447) (544,952) 614,399 –
Lapsed where LTIP conditions were not met (69,447) – – (69,447)
Exercised – – (367,903) (367,903)
At 31 December 2023 244,978 990,263 320,419 1,555,660
Richard Keers
(Ordinary shares)
At 31 December 2022 174,346 512,504 236,339 923,189
Granted 81,566 133,911 – 215,477
Dividend-equivalent accrual – 19,739 15,018 34,757
Vested (46,297) (234,976) 281,273 –
Lapsed where LTIP conditions were not met (148,347) – – (148,347)
Exercised – – (412,144) (412,144)
At 31 December 2023 61,268 431,178 120,486 612,932
1. These awards will only vest to the extent that the relevant performance conditions are met.
2. No performance conditions apply for these awards.
During 2023, the aggregate gain on nil-cost options, which were settled in shares, was as follows:
• Peter Harrison received £1,711,445 from exercising nil-cost options over 367,903 ordinary shares, in part granted as an element of his
annual bonus awards for performance in 2020 and 2021 and in part being the vested element of the LTIP award granted to him in 2018.
• Richard Keers received £1,778,189 from exercising nil-cost options over 279,907 ordinary shares, in part granted as an element of his annual
bonus awards for performance in 2020, 2021 and 2022 and in part being the vested element of the LTIP award granted to him in 2018.
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
89
Governance
Executive
Director alignment to shareholders (audited)
To align the interests of senior management with those of shareholders, the executive Directors and the other members of the GMC are
required, over time, to acquire and retain a holding of Schroders shares or rights to shares. The required shareholdings are 500% of base
salary for the Group Chief Executive and 300% of base salary for the Chief Financial Officer. Shares that count towards this policy include the
estimated after-tax value of unvested deferred bonus share awards under the DAP (shown as “Other unvested share awards” on page 89) and
vested DAP or LTIP awards (shown as “Vested but unexercised share awards” on page 89). Unvested LTIP awards are not included as these
rights to shares are subject to performance conditions. Peter Harrison’s shareholdings are well in excess of the level required under our
personal shareholding policy. Richard Oldfield, who was appointed as an executive Director on 2 October 2023, is unable to exercise any vested
deferred awards until he has met the policy. Richard Keers remains subject to the shareholding policy for two years post his stepping down as
an executive Director on 2 October 2023.
Group Chief Executive
Peter Harrison
Policy
Actual
Policy
Actual
Policy
Actual
Former Chief Financial Officer
Richard Keers
500%
848%
168%
Chief Financial Officer
Richard Oldfield
110% 57%
300%
300%
704%
35%
Policy Shareholding LTIP shares subject to performance conditions
Value of shareholding vs. shareholding policy (% of salary)
The illustration above includes DAP deferred share awards to be granted in respect of performance in 2023 (see page 85). It does not include
the value of any LTIP awards that would have vested in March following the performance year as the executive Directors waived entitlement at
the time of grant (see page 79).
Directors’ share interests (audited)
The Directors and their connected persons had the following interests in shares in the Company. Iain Mackay and Frederic Wakeman were
appointed on 1 January 2024 and therefore do not feature in the table.
Number of sharesat 31 December 2023
Ordinary shares of 20 pence each
Executive Directors
Peter Harrison 61,555
Richard Oldfield 74,927
Richard Keers
1
7,230
Non-executive Directors
Dame Elizabeth Corley 65,294
Sir Damon Buffini
2
25,000
Rhian Davies 7,500
Paul Edgecliffe-Johnson
3
9,559
Claire Fitzalan Howard
4
640,322,307
Rakhi Goss-Custard 8,301
Ian King 13,205
Leonie Schroder
4
687,302,227
Annette Thomas –
Deborah Waterhouse 4,190
Matthew Westerman 11,764
Between 31 December 2023 and 28 February 2024, the only movements in the Directors’ share interests were the acquisition under the
Share Incentive Plan of 120 ordinary shares by Peter Harrison and 123 ordinary shares by Richard Oldfield.
1. The interests of Richard Keers refer to the position as at 2 October 2023, the date he stepped down as a Director of the Company.
2. The interests of Sir Damon Buffini refer to the position as at 27 April 2023, the date he stepped down as a Director of the Company.
3. The interests of Paul Edgecliffe-Johnson refer to the position as at 31 August 2023, the date he stepped down as a Director of the Company.
4. The interests of Claire Fitzalan Howard and Leonie Schroder include their personal holdings and the beneficial interests held by them and their
connected persons in their capacity as members of a class of potential beneficiaries under certain settlements made by members of the Schroder family.
Key takeaways from section
• Alignment to shareholders is a key pillar of our remuneration approach, with senior leadership required to hold a meaningful
number of shares.
• Peter Harrison’s shareholdings are well in excess of the required level. Richard Oldfield, who was appointed as an executive
Director on 2 October 2023, will not be able to exercise any share awards until he meets the required level.
• Richard Keers remains subject to the shareholding policy for two years post his stepping down as an executive Director on
2 October 2023.
Schroders Annual Report and Accounts 2023
90
Contextualising pay outcomes with overall performance
The disclosures that follow provide further details of the relationship between pay outcomes and performance delivered for shareholders.
Relative spend on pay
The charts below illustrate the relative spend on pay for 2023 compared with 2022. The values are taken from the financial statements and
show how remuneration costs compare with shareholder distributions, taxes arising and earnings retained, to illustrate how net operating
income is utilised.
Fixed remuneration
£735.2m +5%
Variable remuneration – upfront
£209.1m -17%
Variable remuneration – deferred
£93.6m -12%
Other operating expenses
£633.3m +2%
Other income/expenses
£155.4m +27%
Corporate tax and social security
£189.8m +1%
Retained earnings
£68.7m -55%
Interim dividend paid and final
dividend recommended
£333.9m 0%
Fixed remuneration
£703.1m
Variable remuneration – upfront
£250.9m
Variable remuneration – deferred
£106.0m
Other operating expenses
£618.9m
Other income/expenses
£122.0m
Corporate tax and social security
£188.2m
Retained earnings
£152.8m
Interim dividend paid and final
dividend recommended
£333.4m
2023
30%
9%
4%
26%
6%
8%
3%
14%
2022
10%
25%
29%
5%
8%
13%
6%
4%
The Group Chief Executive’s total remuneration over the past ten years
The chart below illustrates the Group Chief Executive’s single total remuneration figure over the past ten years and compares it with the total
shareholder return of Schroders shares and the FTSE 100 over this period. Further detail on the single total remuneration figure outcomes
and how variable pay plans have paid out each year is shown in the table below.
£300
£250
£200
£150
£100
£50
£0
10
8
6
4
2
0
Michael Dobson Peter Harrison
2013 2014 2015 2016 2016 2017 2018 2019 2020 2021 2022 2023
Group Chief Executive‘s single total
remuneration figure (£m)
Value of £100 invested on 31 December 2013
Group Chief Executive’s
total remuneration
Schroders ordinary shares
FTSE 100 Index
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Single total remuneration figure (£’000) 8,155 8,905 2,451 6,311 7,059 6,735 6,453 6,321 8,434 4,696 6,190
Annual bonus award (outcome as a % of maximum,
or actual award as a % of ten-year highest bonus)
1, 2, 3
87% 100% 25% 70% 82% 78% 72% 69% 97% 49% 75%
LTIP (vesting as a % of maximum)
4
50% 50% 50% 50% n/a 0% 50% 50% 50% 50% n/a
1. From performance year 2020, this represents the Group Chief Executive’s actual annual bonus award as a percentage of the maximum annual bonus award for the year.
For performance years prior to 2020, each annual bonus award is shown as a percentage of the highest bonus award over the past ten years, as no maximum annual
bonus opportunity was in place.
2. The 2016 remuneration for Michael Dobson reflects the actual remuneration that he received for the portion of 2016 that he served as Chief Executive.
3. Peter Harrison was appointed Group Chief Executive on 3 April 2016. The 2016 remuneration value above reflects his full-year single total remuneration figure.
4. The first LTIP award vested on 5 March 2014 based on the four-year performance period ended on 31 December 2013 and so is shown under 2013 in the table.
2017 shows as ‘n/a’ as Peter Harrison did not receive an LTIP award in 2014 and so had no LTIP due to vest based on performance to the end of 2017.
Key takeaways from section
• The relative spend on pay has remained largely consistent from prior years, demonstrating the close linkage between pay and
financial performance.
• Schroders plc total shareholder return is c.+40% over the past ten years. The single total figure of remuneration paid to the
Schroders Group Chief Executive has decreased over this same period.
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
91
Governance
Shareholder voting on remuneration
Each year, shareholders are invited to vote on our remuneration report. Last year, we also put our Directors’ remuneration
policy to vote as it had been three years since it was last voted on. The graphs below summarise the voting outcomes received
on these resolutions.
The following votes were cast in respect of the Directors’ remuneration report and Directors’ remuneration policy at our 2023 AGM.
Key performance and remuneration metrics
Votes for 1,383,574,693
Votes against 20,657,093
Votes withheld 187,551
To approve the Directors remuneration policy at the 2023 AGM
Votes for 1,347,696,221
Votes against 56,519,151
Votes withheld 56,519,151
Votes for Votes against
2023 AGM 99% 1%
Votes for Votes against
2023 AGM 96% 4%
Key takeaways from section
• We continued to receive strong support from our shareholders in respect of both our remuneration policy and report.
• We value the feedback from our shareholders and their continued participation at the 2024 AGM.
Other statutory disclosures
Committee advisers
After a competitive bidding process, the Committee appointed Deloitte as advisers from September 2023 after receiving advice from
PricewaterhouseCoopers LLP (PwC) from January until Deloitte’s appointment. In its annual review of advisers, the Committee elected to retain
McLagan (Aon) Limited (McLagan) to provide advice on executive Director pay during the year. The Committee assesses the performance of
its advisers, the associated fees and the quality of advice provided annually to ensure that the advice is independent of any support provided
to management.
PwC attended three meetings as independent Remuneration Committee advisers, with Deloitte attending two. A fixed fee structure operated
for both advisers upon appointment to cover standard services, with any additional items charged on a time/cost basis. The total fees paid for
advice to the Committee during 2023 on executive Director pay totalled £42,000 for PwC and £47,417 for Deloitte.
PwC and Deloitte also provide professional services in the ordinary course of business, including HR consulting services and advice to
management on remuneration design and its regulatory implications, tax, social security, governance, operational and technical issues, as well
as other professional services to the Group, including tax, consulting, regulatory and fund audit and support for corporate acquisitions. The
Committee monitors its adviser independence, noting advice received is predominantly based on objective data trends/facts. Where relevant,
advisers were asked to leave discussions when sensitive strategic context was being discussed, in recognition of the advisory roles they may
have for competitors.
The Committee utilised McLagan data on market conditions and competitive rates of pay, as McLagan provides remuneration benchmarking
data covering a wide cross section of the Group’s competitors, including firms that are not publicly listed and so are not required to publish the
remuneration of their directors. The total fees paid for advice to the Committee during 2023 on executive Director pay totalled £3,410. The
Committee is satisfied that the advice received from McLagan was independent and objective, as it was factual and not judgemental. McLagan
is part of Aon plc, which also provides advice and services to the Group in relation to pension benefit valuations and pension actuarial advice.
McLagan’s fees were charged on the basis of a fixed fee for the preparation of reports setting out the information requested. Neither Deloitte,
PwC nor McLagan has a connection to the Company or any individual Director, save as outlined above.
At the invitation of the Committee Chair, the Group Chair and Group Chief Executive attended six meetings, the former Chief Financial Officer
attended four meetings and the current Chief Financial Officer attended two meetings. The executive Directors left the meetings where/when
relevant to avoid any conflicts of interest. The Chief Risk Officer, Group General Counsel and Head of Group Internal Audit advised the
Committee on matters that could influence remuneration decisions and were available to attend meetings if required. The Global Head of
Human Resources and Head of Reward, Wellbeing and Inclusion attended meetings to provide advice and support to the Committee and the
Head of Executive Compensation and Regulatory Reward acted as secretary to the Committee. The Global Head of Sustainable Investment also
attended meetings to provide expert input on the topic of sustainability measurement. The Committee also received regular updates from the
Conduct Assessment Group, which comprised the Control Function Heads to ensure the Group is taking account of compliance and conduct
risk considerations as part of the firm’s compensation processes. To avoid conflicts of interest, no Director or employee participates in decisions
determining their own remuneration.
Schroders Annual Report and Accounts 2023
92
Compliance with the 2018 UK Corporate Governance Code (“the Code”)
Code requirements How the Committee has addressed the requirement
Clarity – remuneration arrangements
should be transparent and promote
effective engagement with shareholders
and the workforce
• Prospective disclosure of bonus and LTIP metrics (page 83)
• Full retrospective disclosure of financial targets and non-financial factors (pages 79 to 81)
• Review of shareholder feedback and guidance and engagement with shareholders
(pages 74, 83)
Simplicity – remuneration structures should
avoid complexity and their rationale and
operation should be easy to understand
• Executive Directors incentivised via annual bonus with deferral and LTIP (page 77)
• Clear disclosure of rationale and operation of each element (see pages 77, 83)
Risk – remuneration arrangements should
ensure reputational and other risks from
excessive rewards, and behavioural risks that
can arise from target-based incentive plans,
are identified and mitigated
• Defined maximum limit for annual total remuneration (page 77)
• Significant deferral, providing alignment to clients and shareholders (page 77)
• Committee discretion to adjust formulaic bonus or LTIP outcomes (page 83)
• Extensive malus and clawback provisions (page 77)
Predictability – the range of possible values
of rewards to individual Directors and any other
limits or discretions should be identified and
explained at the time of approving the policy
• Regular Committee review of likely bonus scorecard outcomes (page 75)
Proportionality – the link between individual
awards, the delivery of strategy and the
long-term performance of the Company
should be clear. Outcomes should not reward
poor performance
• Annual bonus and LTIP performance measures reviewed annually against strategic
priorities (page 75)
• Significant deferral, providing alignment to clients and shareholders (page 77)
• Extensive malus and clawback provisions (page 77)
Alignment to culture – incentive schemes
should drive behaviours consistent with
Company purpose, values and strategy
• Remuneration principles aligned with our key stakeholders (page 76)
• Executive Director remuneration considered in the context of employee outcomes
(page 82)
• Commitment to fair pay for performance across the workforce (page 78)
• Inclusion of non-financial metrics in both executive Director annual bonus and LTIP
scorecards (pages 80 to 81, 83)
Fees from external appointments
The executive Directors are permitted to retain for their own benefit fees they receive from any external non-executive directorships, provided
the directorships do not relate to any interest held by the Group. Peter Harrison, Richard Oldfield and Richard Keers did not receive any fees in
respect of external non-executive roles during the course of their appointment to the Company in 2023.
Directors’ service contracts and letters of appointment
Each of the executive Directors has a rolling service contract with a mutual notice period of six months. Each of the non-executive Directors has
a letter of appointment with a mutual notice period of six months. Shareholders may review letters of appointment and service contracts at the
Company’s registered office from the date of dispatch of the Notice of AGM on business days between 9am and 5pm. Additionally, these
documents are available for viewing at each AGM.
Further remuneration disclosures
The remuneration disclosures required under the Capital Requirements Directive are incorporated into the Group’s Pillar 3 disclosures and are
available at www.schroders.com/pillar3. Other regulatory remuneration disclosures can be found at www.schroders.com/rem-disclosures/
Evaluating the performance of the Committee
The annual evaluation of the Committee’s effectiveness was undertaken as part of the overall Board evaluation process which is described in
the Governance Report on page 63. The findings relating to the Committee were discussed with the Committee Chair. The overall conclusion of
the evaluation was that the Remuneration Committee was functioning effectively and had performed its duties diligently. The reporting to the
Board on the Committee’s discussions by the Chair of the Committee was felt to be comprehensive.
By order of the Board
Matthew Westerman
Chair of the Remuneration Committee
28 February 2024
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
93
Governance
The information in the following sections of this Annual Report
and Accounts forms part of this Directors’ report:
• Strategic report
• Board of Directors and Company Secretary
• Corporate governance report, including the Nominations
Committee report and the Audit and Risk Committee report
• The Statement of Directors’ responsibilities
Share capital
Schroders has developed under stable ownership for 220 years and
has been a public company whose ordinary shares have been listed
on the London Stock Exchange since 1959.
The Company’s share capital comprises 1,612,071,525 ordinary
shares of 20 pence each, which have a premium listing on the
London Stock Exchange. No shares are held in treasury.
Under the terms of the Schroders Employee Benefit Trust and the
Schroder US Holdings Inc. Grantor Trust, ordinary shares are held
in trust on behalf of employee share plan participants. The trustees
may exercise their voting rights in any way they think appropriate.
In doing so, they may consider the financial and non-financial
interests of the beneficiaries and their dependants. As at 27 February
2024, being the latest practicable date before the publication of this
Annual Report and Accounts, the Schroders Employee Benefit Trust
and the Schroder US Holdings Inc. Grantor Trust together held
57,853,690 ordinary shares.
Under the terms of the Share Incentive Plan, as at 27 February 2024,
6,745,692 ordinary shares were held in trust on behalf of plan
participants. At the participants’ direction, the trustees can exercise
their voting rights over ordinary shares in respect of participant
share entitlements.
There are no restrictions on the transfer of the Company’s shares,
except for:
• Restrictions imposed by laws and regulations.
• Restrictions on the transfer of shares imposed under the
Company’s Articles of Association or under Part 22 of the UK
Companies Act 2006, in either case after a failure to supply
information required to be disclosed following service of a
request under section 793 of the UK Companies Act 2006.
• Restrictions on the transfer of shares held under certain
employee share plans while they remain subject to the plan.
The Company is not aware of any agreement between shareholders
that may restrict the transfer of securities or voting rights.
Principal Shareholder Group
The history of Schroders began in 1804 when JH Schröder became
a partner in J.F. Schröder & Co, a London-based firm founded by
his brother JF Schröder. It has evolved since then into the company
today known as Schroders plc. Throughout that time, the Schroder
family have maintained a significant interest in the business, which
the Company believes has been a significant benefit to it. Today,
the interests of some members of the Schroder family (being certain
descendants of the late Helmut Schroder and, in some cases, their
spouse or former spouse) are spread across a number of parties,
who are collectively known as the Principal Shareholder Group.
The Principal Shareholder Group is comprised of a number of
private trustee companies (and investment companies controlled
by those trustee companies), a number of Schroder family
individuals, and a Schroder family charity which, directly or indirectly,
are shareholders in the Company.
The Principal Shareholder Group currently holds 711,068,586
ordinary shares (44.11% of the issued ordinary shares) in the
Company. This is comprised as follows:
A. 662,474,955 of the ordinary shares (41.09%) are owned directly
or indirectly by four private trustee companies which act as
the trustees of various trusts settled by the Schroder family
and investment companies wholly owned by the private trust
companies. The trustee companies are Vincitas Limited,
Veritas Limited, Alster Limited and Treva Limited. Flavida Limited
and Fervida Limited are protector companies which act as
protectors of certain of those trusts, and therefore also form
part of the Principal Shareholder Group.
B. 29,364,559 of the ordinary shares (1.82%) are owned directly
or indirectly by certain trustee and investment companies
following the execution of the estate of Bruno Lionel Schroder
(deceased). The trustee companies are Lionel Trustees I Limited
and Lionel Trustees II Limited. The investment companies
are MEB Investments Limited, CRH Investments Limited
and JMF Investments Limited, which are controlled by those
trustee companies.
C. 16,877,633 of the ordinary shares (1.05%) are personally held,
directly or indirectly, by certain Schroder family individuals (who
are direct descendants of the late Helmut Schroder or, in some
cases, a former spouse of such direct descendants).
D. 2,351,439 of the ordinary shares (0.15%) are owned by the
Schroder Charity Trust, a family charity.
Relationship Agreement
As the Principal Shareholder Group is presumed to be acting in
concert, it is required to enter into a binding agreement with the
Company to comply with certain independence provisions as set out
under the Listing Rules. On 14 November 2014, the Company
entered into such an agreement (Relationship Agreement) with
members of the Principal Shareholder Group holding ordinary
shares at that time. Additional persons who have since become
members of the Principal Shareholder Group holding ordinary
shares have adhered to the Relationship Agreement.
The Company’s Group provides private banking and wealth
management services to certain members of the Principal
Shareholder Group. These arrangements are conducted at arm’s
length and on normal commercial terms.
In accordance with Listing Rule 9.8.4(14), the Board confirms that,
for the year ended 31 December 2023:
• the Company has complied with the independence provisions
included in the Relationship Agreement
• so far as the Company is aware, the independence provisions
included in the Relationship Agreement have been complied
with by the other parties to the Relationship Agreement and
their associates.
Directors’ report
Schroders Annual Report and Accounts 2023
94
Substantial shareholdings
The table below shows the notifiable holdings of major shareholders
in the voting rights of the Company, as at 31 December 2023, as
disclosed to the Company in accordance with the Disclosure
Guidance and Transparency Rules.
Shareholder
% of voting
rights held
Vincitas Limited
1
24.18
Veritas Limited
1
15.22
Flavida Limited
1
24.27
Fervida Limited
1
16.27
Harris Associates
2
5.02
Lindsell Train
2
4.99
HSBC Holdings Limited
2, 3
3.45
Sir Michael Kadoorie
2, 4
3.44
1. Vincitas Limited, Veritas Limited, Flavida Limited and Fervida Limited are party to
the Relationship Agreement. Flavida Limited and Fervida Limited are protector
companies and have made notifications as protectors of certain settlements,
which include the holdings of Vincitas Limited and Veritas Limited.
2. Lindsell Train Limited, Harris Associates L.P., HSBC Holdings Limited, and Sir
Michael Kadoorie are not parties to the Relationship Agreement.
3. HSBC Holdings Limited is acting as a Corporate Director for the underlying client.
4. Shares are held through Orchid Equity Limited.
On 11 January 2024, Silchester International Investors LLP notified
the Company that their holding had increased to 5.01% of voting
rights held. They are not a party to the Relationship Agreement.
There have been no other changes to these notifications or
additional notifications as at the date of the report.
Dividends
It is our policy to provide shareholders with a progressive and
sustainable dividend, targeting a payout ratio of around 50%.
The payout ratio is determined as the total dividend per share in
respect of the year, divided by the Group’s basic operating earnings
per share. In line with this policy, the Board recommends a final
dividend of 15.0 pence per share (2022: 15.0 pence per share)
which, if approved by shareholders at the AGM, will be paid on
2 May 2024 to shareholders on the register of members at close of
business on 22 March 2024. It means a total dividend for the year of
21.5 pence per share (2022: 21.5 pence per share), representing a
payout ratio of 66% (2022: 57%).
2023 2022
pence £m pence £m
Interim 6.5 100.8 6.5 100.6
Final* 15.0 233.1 15.0 232.2
Total 21.5 333.9 21.5 332.8
* Subject to approval by shareholders at the 2024 AGM.
In setting the dividend, the Board has regard to overall Group
strategy, capital requirements, liquidity and profitability. This
approach enables the Group to maintain sufficient surplus capital to
take advantage of future investment opportunities, while providing
financial security to withstand possible risk scenarios and periods of
economic downturn.
The distributable profits of Schroders plc are £2.8 billion (2022:
£2.7 billion). The Group’s ability to pay dividends is, however,
restricted by the need to hold regulatory capital and to maintain
sufficient operating capital to support its ongoing business activities.
Operating capital requirements include co-investments with clients
and seed capital investments in our funds to support new
investment strategies.
Certain circumstances could adversely impact the Group’s ability to
pay dividends in line with the policy. This includes a significant
increase in the ratio of total costs to net income. After deducting the
regulatory capital requirement and the regulatory capital buffer,
there continues to be sufficient capital to maintain our current
dividend level for at least three years before taking account of any
future profits.
The Schroders Employee Benefit Trust and the Schroder US
Holdings Inc. Grantor Trust have waived their rights to dividends
paid on the ordinary shares in respect of 2023 and future periods.
See notes 6 and 20 to the financial statements.
2024 Annual General Meeting
The 2024 AGM will be held on Thursday 25 April 2024 at 11.30am.
All resolutions are voted on separately and the final voting
results will be published as soon as practicable after the meeting.
Together with the rest of the Board, the Chairs of the Nominations,
Audit and Risk, and Remuneration Committees will be present to
answer questions.
Rule 9 Waiver and authority to purchase own shares
The Company simplified its dual share class structure on
20 September 2022. As a result, the aggregate holding of the
Principal Shareholder Group decreased from 47.93% to 43.11%
of ordinary shares. Prior to 20 September 2023, the Principal
Shareholder Group was permitted to acquire up to 1% of ordinary
shares without being required to make a mandatory cash offer
for the whole Company under the Takeover Code. The Principal
Shareholder Group used this permission during 2023 and increased
their holding to 44.11% of the Company’s ordinary shares.
At the 2023 AGM, the Company was authorised by shareholders to
purchase up to 161,207,153 ordinary shares. At the 2024 AGM, the
Board will seek authority to purchase up to 128,515,118 ordinary
shares so that, if such repurchases were exclusively from persons
other than the Principal Shareholder Group, this would not result in
the Principal Shareholder Group holding more than 47.93% of the
Company’s voting ordinary shares, which is the level it held prior to
the simplification of the Company’s dual share class structure in
September 2022. Exercise of this authority would be subject to prior
consent of the Prudential Regulation Authority.
If the Company were to buy back shares, it is likely that the Principal
Shareholder Group’s overall ownership in the Company would
passively increase from the current level of 44.11%. If this were to
happen, under the Takeover Code, the Principal Shareholder Group
would be required to make a mandatory cash offer for the whole
Company. However, the Company has obtained a waiver from the
Takeover Panel that exempts the Principal Shareholder Group from
this obligation as a result of any buyback of shares. This waiver is
conditional on the independent shareholders approving the Waiver
Resolution at the 2024 AGM.
Importantly, the waiver will not permit the Principal Shareholder
Group’s holding of ordinary shares to increase above the 47.93%
holding of voting ordinary shares held prior to the simplification of
the Company’s dual share class structure without triggering a
mandatory cash offer for the whole Company.
Members of the Principal Shareholder Group are supportive
long-term shareholders and intend to retain a substantial
shareholding in the Company over the long term. The Board
expects to seek renewal of the Buyback Authority (and the
associated Waiver Resolution) annually until such time as the
Principal Shareholder Group’s holding of ordinary shares has
returned to the level of 47.93%.
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
95
Governance
Directors’ report continued
Employment practices
Details of the Company’s employment practices, including diversity
and employee engagement, can be found in the Strategic report
on pages 18 and 19.
Workforce diversity
We are proud of our award-winning Inclusion at Schroders report,
which was awarded Gold at the Communicate magazine’s Corporate
& Financial Awards. We have voluntarily published our UK ethnicity
pay gap for the first time, which provides us with an additional
quantitative metric to assess our progress on inclusion and diversity
at Schroders. This continues to demonstrate our commitment to
transparency and allowing our stakeholders to hold us to account.
Our Board representation meets the FTSE Women Leaders targets
and we comply with the recommendations of the Parker Review.
Our Board approved our new 2030 inclusion and diversity
aspirations, including increasing ethnic minority representation
amongst our UK employee population to 25% and that in UK senior
management to 20%. The Board also reviewed the succession plans
for all our critical roles globally, including from a gender and
ethnicity perspective.
As at 31 December 2023, the Company has met the following FCA
Diversity Targets (as required by Listing Rule 9.8.6):
• at least 40% of the Board being women (2023: 64%);
• at least one of the senior Board positions being held by a woman
(2023: Chair); and
• at least one member of the Board being from an ethnic minority
background (2023: two).
The data required by Listing Rule 9.8.6 for the Board of Directors
and executive management is set out in the table below. The data is
based on information collected via self-reporting by employees and
Board members and existing information held by the Company’s HR
and Governance teams.
Gender diversity
Schroders plc Board members
64%
7 4
6 6
36%
50%
2023
2022
50%
Senior Positions on Board
(CEO, CFO, SID and Chair)
25%
1 3
1 3
75%
25%
2023
2022
75%
Executive Management
1
38%
10 16
6 15
62%
29%
2023
2022
71%
Senior Managers
2
35%
357 659
366 664
65%
36%
2023
2022
64%
Subsidiary
Board Members
3
30%
53 125
34 110
70%
24%
2023
2022
76%
Total Senior Management
4
34%
410 784
400 774
66%
34%
2023
2022
66%
1. Executive Management refers to the Group
Management Committee (GMC) and the Group
Company Secretary.
2. Senior Managers includes members of the GMC,
the direct reports of the GMC and the direct reports
one level below that, in each case excluding
administrative and other ancillary roles. The data
excludes Board members of Schroders plc and
includes some employees who are also Subsidiary
Board Members.
3. Subsidiary Board Members comprises board
members of subsidiaries who are not classified as
Senior Managers.
4. Total Senior Management refers to the total of
Senior Managers and Subsidiary Board Members.
Gender diversity representation
2023
Number of
Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
1
Percentage
of executive
management
Men 4 36% 3 16 62%
Women 7 64% 1 10 38%
Not specified/prefer not to say – – – – –
Ethnicity diversity representation
2023
Number of
Board
members
Percentage
of the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
1
Percentage
of executive
management
White British or other White (including minority-white groups) 9 82% 4 23 88%
Mixed/Multiple Ethnic Groups 1 9% – – –
Asian/Asian British 1 9% – – –
Black/African/Caribbean/Black British – – – – –
Other ethnic group, including Arab – – – – –
Not specified/prefer not to say – – – 3 12%
All Employees
43%
2,795 3,643
2,740 3,694
57%
43%
2023
2022
57%
Female Male
Schroders Annual Report and Accounts 2023
96
Indemnities and insurance
Shareholders have authorised the Company to provide indemnities
to, and to fund defence costs for, Directors in certain circumstances.
On appointment, all Directors are granted an indemnity as defined
in the Companies Act 2006 in respect of any third-party liabilities
that they may incur as a result of their service on the Board.
All Directors’ indemnities were in place during the financial year
and remain in force.
Directors’ and Officers’ Liability Insurance is maintained by the
Company for all Directors.
Under the Trust Deed and Rules of the Schroders Retirement
Benefit Scheme (Scheme), the Company provides a qualifying
pension scheme indemnity in line with the Companies Act 2006.
The indemnity covers each director of the trustee company that acts
as trustee of the Scheme. The provisions have been in force during
the financial year.
As part of the integration of Cazenove Capital, the Cazenove
Capital Management Limited Pension Scheme was merged with
the Schroders Retirement Benefits Scheme, with effect from
31 December 2014. Pursuant to that merger, a qualifying pension
scheme indemnity in line with the Companies Act 2006 is provided
by Schroders plc for the benefit of the directors of Cazenove
Capital Management Pension Trustee Limited, a subsidiary of the
Company at that time, was put in place at that time and remains in
force. This indemnity covers, to the extent permitted by law, certain
losses or liabilities incurred by the directors of Cazenove Capital
Management Pension Trustee Limited in connection with that
company’s activities as trustee of the Cazenove Capital Management
Limited Pension Scheme.
Directors’ Conflicts of Interest and Recusal Policy
The Company has procedures to identify, authorise and manage
conflicts of interest, including of Directors of the Company.
They have operated effectively during the year. In circumstances
where a potential conflict arises, the Board (excluding the Director
concerned) will consider the situation and either authorise the
arrangement in accordance with the Companies Act 2006 and the
Company’s Articles of Association, or take other appropriate action.
All potential conflicts authorised by the Board are recorded in
a conflicts register, which is maintained by the Group Company
Secretary and reviewed by the Board annually. Directors have a
continuing duty to update the Board with any changes to their
conflicts of interest.
Change of control
The Company does not consider that it has any significant
agreements to which the Company is a party that take effect,
alter or terminate upon a change of control of the Company
following a takeover bid that are required to be disclosed pursuant
to paragraph 13(2) (j) of Schedule 7 of the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008
(as amended), other than as disclosed below.
Under the Group’s Revolving Credit Facility Agreement, if a change
of control of the Company occurs, the lenders are not obliged to
provide further funding under the facility. The Company and lenders
have up to 30 days to agree the continued use of the facility. If there
is no agreement, repayment of the facility and accrued interest may
be requested by the lenders with not less than ten days’ notice.
Under the Amended and Restated Framework Agreement
(Framework Agreement) with Lloyds Banking Group plc (LBG),
signed on 3 October 2019 in relation to the strategic partnership
announced on 23 October 2018, on a change of control of the
Company to: (1) either a material competitor of an LBG business;
or (2) an entity or person on, or controlled by an entity or person
on, a recognised sanctions list, or located in a specified jurisdiction,
LBG may terminate the Framework Agreement. Such termination
provisions provide for LBG and the Company to return to the status
quo prior to establishing the strategic partnership in relation to
shareholdings in subsidiary entities, with any implementing
transactions conducted at specified valuations.
The Company entered into an amended Shareholders Agreement
with Greencoat management shareholders on 10 April 2022,
with respect to their respective shareholdings in Greencoat Capital
Holdings Limited. On a change of control of the Company to a
person who does not form part of the Principal Shareholder Group,
the management shareholders have the right to sell their shares
to Schroder International Holdings Limited, a subsidiary of
the Company.
Directors’ and employees’ employment contracts do not normally
provide for compensation for loss of office or employment as
a result of a change of control. However, the provisions of the
Company’s employee share schemes may cause awards granted
to employees under such schemes to vest on a change of control.
Political donations
No political donations or contributions were made or expenditure
incurred by the Company or its subsidiaries during the year
(2022: nil) and there is no intention to make or incur any in the
current year.
.
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
97
Governance
UK Listing Authority Listing Rules (LR) –
compliance with LR 9.8.4C
The majority of the disclosures required under LR 9.8.4C are not
applicable to Schroders. The table below sets out the location of the
disclosures for those requirements that are applicable.
Applicable sub-paragraph
within LR 9.8.4C
Disclosure
provided
(5) Details of any arrangements under which
a director of the company has waived or
agreed to waive any emoluments from the
company or any subsidiary undertaking.
See pages 79, 84,
85 and 90
(12) Details of any arrangements under which
a shareholder has waived or agreed to waive
any dividends.
See pages 95, 114
and 139
(13) Where a shareholder has agreed to
waive future dividends, details of such waiver
together with those relating to dividends
which are payable during the period
under review.
See pages 95, 114
and 139
(14) A statement made by the Board that
the Company has entered into an agreement
under LR 9.2.2A, that the Company has,
and, as far as it is aware, the other parties
to the agreement have, complied with the
provisions in the agreement.
See page 94
By order of the Board.
Graham Staples
Company Secretary
28 February 2024
Directors’ report continued
Schroders Annual Report and Accounts 2023
98
The Directors are responsible for preparing the Annual Report and
the consolidated financial statements in accordance with applicable
law and regulations.
The Companies Act 2006, being the applicable law in the UK,
requires the Directors to prepare financial statements for each
financial year. The Directors have prepared the financial statements
in accordance with UK-adopted international accounting standards
and in conformity with the requirements of the Companies Act 2006.
Under the Companies Act 2006, the Directors must not approve the
financial statements unless they are satisfied that the statements
give a true and fair view of the state of affairs of the Company and
the Group, and of the profit or loss of the Group for that period.
In preparing those financial statements, the Directors are required to:
• select suitable accounting policies in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
and then apply them consistently;
• make estimates and judgements that are reasonable and prudent;
• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
• provide additional disclosure where compliance with the specific
requirements of UK-adopted international accounting standards
is insufficient to enable users to understand the impact of a
particular transaction, other events or conditions on the Company
or Group’s financial position or financial performance;
• state whether the financial statements comply with UK-adopted
international accounting standards, subject to any material
departure disclosed, and explained in the financial statements;
and
• prepare the financial statements on a going concern basis, unless
it is inappropriate to presume that the Company or Group will
continue in business, in which case there should be supporting
assumptions or qualifications as necessary.
The Directors are also required by the Disclosure and Transparency
Rules of the Financial Conduct Authority (FCA) to include a
management report containing a fair review of the business and
a description of the principal risks and uncertainties facing the
Company and the Group.
The Directors are responsible for keeping proper books of
accounting records that are sufficient to show and explain the
Company’s transactions, and disclose with reasonable accuracy
at any time, the Company’s and the Group’s financial position,
and to enable them to ensure that the financial statements and the
Remuneration report comply with the Companies Act 2006. They are
also responsible for safeguarding the Company’s and the Group’s
assets, and for taking reasonable steps to prevent and detect fraud
and other irregularities.
Directors’ statement
Each of the Directors, whose name and functions are listed in the
Board of Directors and Company Secretary section of this Annual
Report and Accounts, confirms that, to the best of each person’s
knowledge and belief:
• The consolidated financial statements, prepared in accordance
with UK-adopted international accounting standards, give a true
and fair view of the assets, liabilities, financial position and profit
of the Company and the Group.
• The Directors’ report contained in this Annual Report and
Accounts, which comprises the sections described on page 94,
includes a fair review of the business development and
performance and the Company’s and Group’s position, and a
description of the principal risks and uncertainties that they face.
• So far as the Directors are aware, there is no relevant audit
information which the Company’s auditors are unaware of.
• The Directors have taken all the steps that ought to have been
taken as a Director to make himself or herself aware of any
relevant audit information, and to establish that the Company’s
auditors are aware of that information.
In addition, each of the Directors considers that this Annual Report
and Accounts, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Company’s performance, business model and strategy.
The Directors are responsible for the maintenance and integrity of
the audited financial information on the website at
www.schroders.com.
Legislation in the UK governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
Forward-looking statements
This Annual Report and Accounts 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 Company and the Group. Such statements
and forecasts involve risk and uncertainty because they are based
on current expectations and assumptions but relate to events and
depend on 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 ‘foresee’, ‘targets’, ‘plans’,
‘believes’, ‘expects’, ‘confident’, ‘aims’, ‘will have’, ‘will be’, ‘will ensure’,
‘estimates’ 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
Annual Report and Accounts. 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 Annual Report and Accounts should be construed
as a forecast, estimate or projection of future financial performance.
Schroders Annual Report and Accounts 2023
Strategic report Shareholder informationFinancial statements
99
Governance
Statement of Directors’ responsibilities
FINANCIAL
STATEMENTS
Consolidated financial statements 103
Schroders plc financial statements 154
Independent auditor’s report 175
100
Schroders Annual Report and Accounts 2023
Shareholder informationGovernanceStrategic report
101
Financial statements
Schroders Annual Report and Accounts 2023
Consolidated financial statements
Consolidated income statement 103
Consolidated statement of comprehensive income 103
Consolidated statement of financial position 104
Consolidated statement of changes in equity 105
Consolidated cash flow statement 106
Notes to the accounts
1. Segmental reporting 107
2. Net operating revenue 108
3. Total expenses 111
4. Tax expense 112
5. Earnings per share 113
6. Dividends 114
7. Trade and other receivables 114
8. Financial assets and liabilities 115
9. Associates and joint ventures 119
10. Property, plant and equipment 121
11. Leases 122
12. Goodwill and intangible assets 123
13. Deferred tax 124
14. Unit-linked liabilities and assets backing unit-linked liabilities 125
15. Trade and other payables 127
16. Provisions and contingent liabilities 128
17. Derivative contracts 129
18. Financial instrument risk management 131
19. Share capital and share premium 138
20. Own shares 139
21. Reconciliation of net cash from operating activities 140
22. Commitments 141
23. Retirement benefit obligations 142
24. Share-based payments 146
25. Related party transactions 149
26. Interests in structured entities 150
Presentation of the financial statements 152
Schroders plc financial statements
Schroders plc – Statement of financial position 154
Schroders plc – Statement of changes in equity 155
Schroders plc – Cash flow statement 156
Schroders plc – Notes to the accounts
27. Significant accounting policies 157
28. Expenses and other disclosures 157
29. Trade and other receivables 157
30. Trade and other payables 157
31. Deferred tax 158
32. Financial instrument risk management 158
33. Own shares 159
34. Related party transactions 159
35. Subsidiaries and other related undertakings 160
Independent auditor’s report 175
Schroders Annual Report and Accounts 2023
102
Notes
20232022
£m£m
Revenue
2,936.7
2,891.7
Cost of sales
(602.3)
(530.3)
Net operating revenue
2
2,334.4
2,361.4
Of which: Performance fees
37.3
43.0
Of which: Net carried interest income
46.9
16.5
Net operating revenue excluding performance-based revenues
2,250.2
2,301.9
Share of profit of associates and joint ventures
9
51.1
77.6
Other operating income
33.5
36.5
Net operating income
2,419.0
2,475.5
Operating expenses
3
(1,758.0)
(1,752.5)
Operating profit
661.0
723.0
Central costs
3
(52.9)
(48.8)
Net gain/(loss) on financial instruments and other income
32.1
(6.7)
Interest income
23.6
5.8
Acquisition costs and related items
3
(90.0)
(86.4)
Restructuring costs
3
(86.2)
–
Profit before tax
487.6
586.9
Tax
4(a)
(85.0)
(100.7)
Profit after tax
402.6
486.2
Earnings per share
Basic
5
24.6p
30.4p
Diluted
5
24.2p
29.9p
Operating earnings per share
Basic
5
32.5p
37.4p
Diluted
5
31.9p
36.7p
1
Consolidated statement of comprehensive income
for the year ended 31 December 2023
Notes
20232022
£m£m
Profit after tax
402.6
486.2
Items that may be reclassified to the income statement:
Net exchange differences on translation of foreign operations after hedging
(52.0)
148.6
Net gain/(loss) on financial assets at fair value through other comprehensive income
0.3
(1.6)
Tax on items taken directly to other comprehensive income
4(b)
–
(0.2)
(51.7)
146.8
Items that have been reclassified to the income statement:
(4.2)
0.1
Items that will not be reclassified to the income statement:
Net actuarial loss on defined benefit pension schemes
23
(4.2)
(66.0)
Tax on items taken directly to other comprehensive income
4(b)
1.0
16.5
(3.2)
(49.5)
Other comprehensive income for the year, net of tax
(59.1)
97.4
Total comprehensive income for the year
343.5
583.6
1
1
1
1. Non-controlling interest is presented in the statement of changes in equity.
Consolidated financial statements
Consolidated income statement
for the year ended 31 December 2023
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
103
Financial statements
Notes
20232022
£m£m
Assets
Cash and cash equivalents
3,649.9
4,440.3
Trade and other receivables
7
920.4
896.5
Financial assets
8
2,827.1
2,670.3
Associates and joint ventures
9
531.7
497.7
Property, plant and equipment
10, 11
464.3
524.1
Goodwill and intangible assets
12
1,885.2
1,929.5
Deferred tax
13
203.9
185.8
Retirement benefit scheme surplus
23
138.3
136.3
10,620.8
11,280.5
Assets backing unit-linked liabilities
Cash and cash equivalents
453.1
605.0
Financial assets
9,555.0
9,449.1
14
10,008.1
10,054.1
Total assets
20,628.9
21,334.6
Liabilities
Trade and other payables
15
1,087.5
1,049.5
Financial liabilities
8
4,578.2
5,140.1
Current tax
12.6
73.1
Lease liabilities
11
318.7
361.0
Provisions
16
23.0
25.4
Deferred tax
13
128.3
138.9
Retirement benefit scheme deficits
8.8
12.8
6,157.1
6,800.8
Unit-linked liabilities
14
10,008.1
10,054.1
Total liabilities
16,165.2
16,854.9
Net assets
4,463.7
4,479.7
Total equity
4,463.7
4,479.7
1
1. Non-controlling interest is presented in the statement of changes in equity.
The financial statements were approved by the Board of Directors on 28 February 2024 and signed on its behalf by:
Richard Oldfield
Director
Consolidated financial statements continued
Consolidated statement of financial position
at 31 December 2023
Schroders Annual Report and Accounts 2023
104
Notes
Attributable to owners of the parent
NetAssociates
exchangeand jointProfit Non-
ShareShareOwn differencesventuresand loss controllingTotal
capitalpremiumshares reservereservereserveTotal interestequity
£m£m£m£m£m£m£m£m£m
At 1 January 2023
322.4
84.3
(185.1)
291.2
203.6
3,639.5
4,355.9
123.8
4,479.7
Profit for the year
–
–
–
–
40.5
347.7
388.2
14.4
402.6
Other comprehensive income
–
–
–
(56.3)
–
(2.8)
(59.1)
–
(59.1)
Total comprehensive income
forthe year
–
–
–
(56.3)
40.5
344.9
329.1
14.4
343.5
Own shares purchased
20
–
–
(66.6)
–
–
–
(66.6)
–
(66.6)
Share-based payments
24
–
–
–
–
–
62.8
62.8
–
62.8
Tax in respect of share schemes
4(c)
–
–
–
–
–
1.4
1.4
–
1.4
Other movements
–
–
–
–
–
41.0
41.0
(49.6)
(8.6)
Dividends
6
–
–
–
–
–
(333.0)
(333.0)
(15.5)
(348.5)
Transactions with shareholders
–
–
(66.6)
–
–
(227.8)
(294.4)
(65.1)
(359.5)
Transfers
–
–
79.6
–
(28.9)
(50.7)
–
–
–
At 31 December 2023
322.4
84.3
(172.1)
234.9
215.2
3,705.9
4,390.6
73.1
4,463.7
1
2
Notes
Attributable to owners of the parent
NetAssociates
exchangeand jointProfit Non-
ShareShareOwn differencesventuresand loss controllingTotal
capitalpremiumshares reservereservereserveTotal interestequity
£m£m£m£m£m£m£m£m£m
At 1 January 2022
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 income
–
–
–
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
20
–
–
(120.2)
–
–
–
(120.2)
–
(120.2)
Share-based payments
24
–
–
–
–
–
68.2
68.2
–
68.2
Tax in respect of share schemes
4(c)
–
–
–
–
–
(3.4)
(3.4)
–
(3.4)
Other movements
–
–
–
–
–
(113.3)
(113.3)
(15.2)
(128.5)
Bonus issue
19
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 31 December 2022
322.4
84.3
(185.1)
291.2
203.6
3,639.5
4,355.9
123.8
4,479.7
1
2
1. Other comprehensive income reported in the net exchange differences reserve comprises the net foreign exchange (loss)/gain on the translation of foreign operations net of
hedging and any recycling on realisations. 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.
2. Other movements in the profit and loss reserve principally comprise amounts relating to financial liabilities in respect of options to purchase the remaining non-controlling
interest in certain subsidiaries (see note 8). In 2023, other movements in the non-controlling interest reserve principally comprise the derecognition of BOCOM Wealth
Management Company Limited on reclassification from a subsidiary to an associate (see note 9a).
Consolidated statement of changes in equity
for the year ended 31 December 2023
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
105
Financial statements
Notes
20232022
£m£m
Net cash (used in)/from operating activities
1
21
(238.1)
972.8
Cash flows from investing activities
Net disposal/acquisition of businesses, associates and joint ventures
2
(125.1)
(607.5)
Net acquisition of property, plant and equipment and software
(79.9)
(104.3)
Acquisition of financial assets
(1,882.1)
(1,734.7)
Disposal of financial assets
1,787.8
1,820.4
Non-banking interest received
24.7
7.3
Distributions received from associates and joint ventures
49.6
15.0
Net cash used in investing activities
(225.0)
(603.8)
Cash flows from financing activities
Purchase of subsidiary shares from non-controlling interest holders
(10.5)
(13.6)
Lease payments
11
(52.3)
(51.3)
Acquisition of own shares
20
(66.6)
(120.2)
Dividends paid
6
(348.5)
(341.4)
Other
(1.6)
(6.8)
Net cash used in financing activities
(479.5)
(533.3)
Net decrease in cash and cash equivalents
(942.6)
(164.3)
Opening cash and cash equivalents
5,045.3
5,119.0
Net decrease in cash and cash equivalents
(942.6)
(164.3)
Effect of exchange rate changes
0.3
90.6
Closing cash and cash equivalents
4,103.0
5,045.3
Closing cash and cash equivalents consist of:
Cash and cash equivalents available for use by the Group
3,644.2
4,409.8
Cash held in consolidated pooled investment vehicles
5.7
30.5
Cash and cash equivalents presented within assets
3,649.9
4,440.3
Cash and cash equivalents presented within assets backing unit-linked liabilities
14
453.1
605.0
Closing cash and cash equivalents
4,103.0
5,045.3
1. Includes Wealth Management interest income received of £191.6 million (2022: £75.3 million) and interest paid of £151.6 million (2022: £38.4 million).
2. Includes the derecognition of cash on reclassification of BOCOM Wealth Management Company Limited from a subsidiary to an associate (see note 9a).
Consolidated financial statements continued
Consolidated cash flow statement
for the year ended 31 December 2023
Schroders Annual Report and Accounts 2023
106
Notes to the accounts
1. Segmental reporting
(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.
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, central management
activities and certain restructuring costs (see note 3). The reconciliation of operating profit to profit before tax is included on the
income statement.
Asset Wealth
Management Management Total
Year ended 31 December 2023 £m £m £m
Revenue
2,349.3
587.4
2,936.7
Cost of sales
(438.1)
(164.2)
(602.3)
Net operating revenue
1,911.2
423.2
2,334.4
Of which: Performance fees
36.7
0.6
37.3
Of which: Net carried interest income
46.9
– 46.9
Net operating revenue excluding performance-based revenues
1,827.6
422.6
2,250.2
Share of profit of associates and joint ventures
48.7
2.4
51.1
Other operating income
22.3
11.2
33.5
Net operating income
1,982.2
436.8
2,419.0
Operating expenses
(1,471.7)
(286.3)
(1,758.0)
Operating profit
510.5
150.5
661.0
Asset Wealth
Management Management 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
Of which: 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
Segment assets and liabilities are not presented as such information is not presented on a regular basis to the Group’s chief operating
decision maker.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
107
Financial statements
1. Segmental reporting continued
(b) Geographical information
The Group’s non-current assets
1
are located in the following countries:
2023 2022
£m £m
United Kingdom
2,054.1
2,115.9
China
270.8
244.8
Switzerland
203.6
205.3
United States
98.7
116.6
France
74.5
79.4
India
54.8
45.3
Singapore
28.9
37.8
Other
100.0
111.1
Total
2,885.4
2,956.2
1. Comprises the following non-current assets: property, plant and equipment, goodwill and intangible assets, associates and joint ventures and prepayments.
2. Net operating revenue
Revenue
The Group’s primary source of revenue is fee income from investment management activities performed within both the Asset Management
and Wealth Management segments. Fee income includes management fees, performance fees, carried interest and other fees. Revenue
also includes interest income earned within the Wealth Management segment.
Management fees are generated through investment management agreements and are generally based on an agreed percentage
of the valuation of AUM. Management fees are recognised as the service is provided and it is probable that the fee will be collected.
Performance fees and carried interest are earned from certain arrangements when contractually agreed performance levels are exceeded
within specified performance measurement periods. They are only recognised where it is highly probable that a significant reversal will
not occur in future periods. Performance fees are typically earned over one year and are recognised at the end of the performance period.
Carried interest is earned over a longer time frame and is recognised over the period for which the service is provided and when certain
performance hurdles are expected to be met. This may result in the recognition of revenue before the contractual crystallisation date.
Other fees principally comprise revenues for other services, which typically vary according to the volume of transactions. Other fees
are recognised as the relevant service is provided and it is probable that the fee will be collected.
Within Wealth Management, earning a net interest margin is a core activity and interest is therefore recognised within revenue. Interest
income is earned as a result of placing loans and deposits with other financial institutions, advancing loans and overdrafts to clients, and
holding debt and other fixed income securities. Interest income is recognised as it is earned using the effective interest method, which
allocates interest at a constant rate of return over the expected life of the financial instrument based on the estimated future cash flows.
Cost of sales
Fee expenses incurred by the Group that relate directly to revenue are presented as cost of sales. These expenses include commissions,
external fund manager fees and distribution fees payable to financial institutions, investment platform providers and financial advisers
that distribute the Group’s products.
Fee expense is generally based on an agreed percentage of the valuation of AUM and is recognised in the income statement as the
service is received.
Cost of sales also includes the cost of financial obligations arising from carried interest. Amounts payable in respect of carried interest
are determined based on the proportion of carried interest income that is payable to third parties.
Wealth Management pays interest to clients on deposits taken. Within Wealth Management, earning a net interest margin is a core activity.
Interest payable in respect of these activities is therefore recorded separately from finance costs arising elsewhere in the business and is
reported as part of cost of sales. Interest is recognised using the effective interest method (see above).
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
108
2. Net operating revenue continued
(a) Net operating revenue by segment
Asset Wealth
Management Management Total
Year ended 31 December 2023 £m £m £m
Management fees
2,230.6
340.6
2,571.2
Performance fees
36.7
0.6
37.3
Carried interest
64.8
–
64.8
Other fees
17.2
31.8
49.0
Wealth Management interest income
–
214.4
214.4
Revenue
2,349.3
587.4
2,936.7
Fee expense
(420.2)
(13.1)
(433.3)
Cost of financial obligations in respect of carried interest
(17.9)
–
(17.9)
Wealth Management interest expense
–
(151.1)
(151.1)
Cost of sales
(438.1)
(164.2)
(602.3)
Net operating revenue
1,911.2
423.2
2,334.4
Asset Wealth
Management Management 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
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
109
Financial statements
2. Net operating revenue continued
(b) Net operating revenue by region based on the location of clients
Continental
Europe &
UK Middle East Asia Pacific Americas Total
Year ended 31 December 2023 £m £m £m £m £m
Management fees
870.6
785.4
560.9
354.3
2,571.2
Performance fees
6.6
14.0
5.4
11.3
37.3
Carried interest
–
64.8
–
–
64.8
Other fees
29.6
13.4
6.0
–
49.0
Wealth Management interest income
191.2
19.9
3.3
–
214.4
Revenue
1,098.0
897.5
575.6
365.6
2,936.7
Fee expense
(54.3)
(181.5)
(149.9)
(47.6)
(433.3)
Cost of financial obligations in respect of carried interest
–
(17.9)
–
–
(17.9)
Wealth Management interest expense
(149.1)
(1.2)
(0.8)
–
(151.1)
Cost of sales
(203.4)
(200.6)
(150.7)
(47.6)
(602.3)
Net operating revenue
894.6
696.9
424.9
318.0
2,334.4
Continental
Europe &
UK 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
Estimates and judgements – revenue
The 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 133 private asset investment vehicles (2022: 122 vehicles), if certain performance hurdles are met. It is recognised as
the services are 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 nature and maturity of the respective investment vehicles. 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.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
110
2. Net operating revenue continued
Estimates and judgements – cost of sales
The 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, see note 8) 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 £3.9 million
(2022: £3.1 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 £3.3 million/£3.2 million (2022: £2.1 million/£2.0 million) and
this amount would be lower than the corresponding increase/reduction in revenue.
3. Total expenses
Total expenses represent the Group’s administrative expenses including compensation costs. They are generally recognised as the services
are received. Certain costs, such as depreciation of property, plant and equipment and amortisation of intangible assets, are expensed
evenly over the useful life of the asset or relevant contract.
Expenses comprise operating expenses, central costs, acquisition costs and related items and restructuring costs. 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.
The restructuring costs are one-off in nature and have been incurred in reorganising parts of the group to drive cost efficiencies and allow
reinvestment in building the skills needed to support the future growth of the business. They principally comprise compensation-related
costs and project expenditure.
The biggest component of the Group’s total expenses is the cost of employee benefits, as shown below. Other costs primarily consist
of accommodation, information technology, marketing and outsourcing costs. Compensation costs are managed to a target operating
compensation ratio of between 45% and 49%. Targeting a compensation ratio range provides some flexibility to manage the overall
cost base in response to market conditions.
Employee benefits expense includes salaries and wages, together with the cost of other benefits provided to employees such as pension
and bonuses. The Group makes some performance awards to employees that are deferred over a specified vesting period. Such awards
are expensed to the income statement over the performance and vesting periods. The Group holds investments that are linked to these
performance awards in order to hedge the related exposure. Gains and losses on these investments are netted against the relevant costs
in the income statement but are presented separately below.
Further detail on other employee benefits can be found elsewhere within these financial statements. See note 23 for pension costs and note
24 for compensation that is awarded in Schroders plc shares.
(a) Group cost components
2023 2022
Year ended 31 December £m £m
Operating expenses
1,758.0
1,752.5
Central costs
52.9
48.8
Acquisition costs and related items
90.0
86.4
Restructuring costs
86.2
–
Total expenses
1,987.1
1,887.7
(b) Employee benefits expense and number of employees
2023 2022
Year ended 31 December £m £m
Salaries, wages and other remuneration
1,058.7
1,001.1
Social security costs
104.9
88.2
Pension costs
72.0
66.1
Employee benefits expense
1,235.6
1,155.4
Net (gain)/loss on financial instruments held to hedge deferred cash awards
(13.7)
11.7
Employee benefits expense – net of hedging
1,221.9
1,167.1
The employee benefits expense net of hedging includes £27.9 million (2022: £26.1 million) that is presented within central costs, £19.7 million
(2022: £19.7 million) presented within acquisition costs and related items and £61.9 million (2022: nil) presented within restructuring costs.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
111
Financial statements
3. Total expenses continued
(b) Employee benefits expense and number of employees continued
Information about the compensation of key management personnel can be found in note 25. Details of the amounts payable to Directors
along with the number of Directors who exercised share options in the year is provided in the Remuneration report on pages 74 to 93.
The monthly average number of employees of the Company and its subsidiary undertakings during the year was:
2023 2022
Number Number
Full-time employees
6,191
5,934
Contract and temporary employees
199
262
6,390
6,196
Employed as follows:
Asset Management
5,045
4,909
Wealth Management
1,313
1,258
Central
32
29
6,390
6,196
(c) Audit and other services
2023 2022
Year ended 31 December £m £m
Fees payable to the auditor for the audit of the Company and Consolidated financial statements
0.7
0.7
Fees payable to the auditor and its associates for other services:
Audit of the Company’s subsidiaries
5.0
4.7
Audit-related assurance services
1.5
1.3
Other assurance services
0.8
0.7
8.0
7.4
4. Tax expense
The Group is headquartered in the UK and pays taxes according to the rates applicable in the countries and states in which it operates.
Most taxes are recorded in the income statement (see part (a)) and relate to taxes payable for the reporting period (current tax).
The charge also includes benefits and charges relating to when income or expenses are recognised in a different period for tax and
accounting purposes or when there are specific treatments applicable relating to items such as acquisitions (deferred tax – see note 13).
Some current and deferred taxes are recorded through other comprehensive income (see part (b)) or directly to equity where the tax arises
from changes in the value of remuneration settled as shares (see part (c)).
(a) Analysis of tax charge reported in the income statement
2023 2022
Year ended 31 December £m £m
UK current year charge
59.2
71.6
Rest of the world current year charge
64.5
74.7
Prior year adjustments
(6.2)
1.8
Total current tax
117.5
148.1
Origination and reversal of temporary differences
(30.9)
(29.8)
Prior year adjustments
2.1
(3.0)
Effect of changes in corporation tax rates
(3.7)
(14.6)
Total deferred tax
(32.5)
(47.4)
Tax charge reported in the income statement
85.0
100.7
(b) Analysis of tax credit reported in other comprehensive income
2023 2022
Year ended 31 December £m £m
Deferred tax credit on actuarial gains and losses on defined benefit pension schemes
(1.0)
(12.6)
Deferred tax charge on other movements through other comprehensive income
–
0.1
Deferred tax – effect of changes in corporation tax rates
–
(3.8)
Tax credit reported in other comprehensive income
(1.0)
(16.3)
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
112
4. Tax expense continued
(c) Analysis of tax (credit)/charge reported in equity
2023 2022
Year ended 31 December £m £m
Current tax credit on Deferred Award Plan and other share-based remuneration
(2.1)
(1.5)
Deferred tax charge on Deferred Award Plan and other share-based remuneration
0.7
5.7
Deferred tax – effect of changes in corporation tax rates
–
(0.8)
Tax (credit)/charge reported in equity
(1.4)
3.4
(d) Factors affecting tax charge for the year
The UK rate of corporation tax applicable for 2023 is a blended rate of 23.5% (2022: standard rate of 19%). The tax charge for the year is lower
(2022: higher) than a charge based on the UK blended rate. The differences are explained below:
2023 2022
Year ended 31 December £m £m
Profit before tax
487.6
586.9
Less share of profit of associates and joint ventures after amortisation
(40.5)
(71.5)
Profit before tax of Group entities
447.1
515.4
Profit before tax of consolidated Group entities multiplied by corporation tax at the UK blended rate
105.1
97.9
Effects of:
Different statutory tax rates of overseas jurisdictions
(17.3)
(0.4)
Permanent differences including non-taxable income and non-deductible expenses
3.4
7.7
Net movement in temporary differences for which no deferred tax is recognised
1.6
11.3
Deferred tax adjustments in respect of changes in corporation tax rates
(3.7)
(14.6)
Prior year adjustments
(4.1)
(1.2)
Tax charge reported in the income statement
85.0
100.7
Estimates and judgements
The 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 (2022: none).
5. Earnings per share
This key performance indicator shows the portion of the Group’s profit after tax that is attributable to each share issued by the Company,
excluding own shares held by the Group. The calculation is based on the weighted average number of shares in issue during the year.
The diluted figure recalculates that number as if all share options that would be expected to be exercised, as they have value to the option
holder, had been exercised in the year. Shares that may be issued are not taken into account if the impact does not reduce earnings
per share.
Reconciliation of the figures used in calculating basic and diluted earnings per share:
2023 2022
Number Number
Year ended 31 December Millions Millions
Weighted average number of shares used in the calculation of basic earnings per share
1,575.9
1,576.6
Effect of dilutive potential shares – share options
28.0
27.4
Effect of dilutive potential shares – contingently issuable shares
0.3
0.4
Weighted average number of shares used in the calculation of diluted earnings per share
1,604.2
1,604.4
Earnings per share calculations are based on profit after tax of £402.6 million (2022: £486.2 million) less non-controlling interest earnings of
£14.4 million (2022: £6.5 million).
Operating earnings per share calculations are based on operating profit after tax of £533.0 million (2022: £599.4 million) less non-controlling
interest operating earnings of £21.3 million (2022: £10.4 million).
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
113
Financial statements
6. Dividends
Dividends are distributions of profit to holders of the Group’s share capital, usually announced with the Group’s half-year and annual results.
Dividends are recognised only when they are paid to or approved by shareholders. The reduction in equity in the year therefore comprises
the prior year final dividend and the current year interim dividend.
2024
2023
2022
Pence per Pence per Pence per
£m
share
£m
share
£m
 share
Prior year final dividend paid
232.2
15.0
231.5
14.9
Interim dividend paid
100.8
6.5
100.6
6.5
Total dividends paid
333.0
21.5
332.1
21.4
Current year final dividend
recommended
233.1
15.0
1
1. Dividends per share have been restated following the simplification of the Company’s dual share class structure (see note 19).
Dividends of £13.6 million (2022: £12.6 million) on shares held by employee benefit trusts have been waived. The Board has recommended a
2023 final dividend of 15.0 pence per share (2022: 15.0 pence), amounting to £233.1 million (2022 final dividend: £232.2 million). The dividend
will be paid on 2 May 2024 to shareholders on the register at 22 March 2024 and will be accounted for in 2024.
The Group paid £15.5 million of dividends to holders of non-controlling interests in subsidiaries of the Group during 2023 (2022: £9.3 million),
resulting in total dividends paid of £348.5 million (2022: £341.4 million).
7. Trade and other receivables
Trade and other receivables include prepayments and deposits with banks in the form of bullion as well as amounts the Group is due
to receive from third parties in the normal course of business. Trade and other receivables, other than deposits with banks in the form of
bullion, are recorded initially at fair value and subsequently at amortised cost (see note 8). Prepayments arise where the Group pays cash
in advance for services. As the service is provided, the prepayment is reduced and the operating expense is recognised in the income
statement. Accrued income, other than amounts relating to carried interest, represents unbilled revenue and is not dependent on future
performance. Amounts due from third parties also include settlement accounts for transactions undertaken on behalf of funds and
investors. Deposits with banks in the form of bullion are recorded at fair value.
2023
2022
Non-current Current Total Non-current Current Total
£m £m £m £m £m £m
Trade and other receivables held
at amortised cost:
Fee debtors
–
97.1
97.1
–
91.2
91.2
Settlement accounts
–
142.8
142.8
–
103.9
103.9
Accrued income
118.9
405.5
524.4
95.4
395.4
490.8
Prepayments
4.2
61.2
65.4
4.9
71.7
76.6
Other receivables
3.6
49.6
53.2
5.8
112.7
118.5
Current tax
–
35.3
35.3
–
12.9
12.9
126.7
791.5
918.2
106.1
787.8
893.9
Trade and other receivables held
at fair value:
Deposits with banks in the form of bullion
–
2.2
2.2
–
2.6
2.6
Total trade and other receivables
126.7
793.7
920.4
106.1
790.4
896.5
The fair value of trade and other receivables held at amortised cost approximates their carrying value. Deposits with banks in the form
of bullion are categorised as level 1 in the fair value hierarchy. Refer to note 8 for details on the fair value hierarchy.
Estimates and judgements – carried interest receivable
Accrued income includes £140.2 million of receivables in respect of carried interest (2022: £110.9 million). This income is due over a number
of years and only when contractually agreed performance levels are exceeded. The income received may vary as a result of the actual
experience, including future investment returns, differing from that assumed. Further information regarding the estimates and judgements
applied is set out in note 2.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
114
8. Financial assets and liabilities
Financial assets
The Group holds financial assets including loans and advances to clients and banks, equities, debt securities, pooled investment vehicles
and derivatives to support its Group capital strategies, activities within the Wealth Management banking book and client facilitation
(see note 17).
The Group initially recognises all financial assets at fair value. The Group subsequently measures each financial asset at fair value through
profit or loss (FVTPL), fair value through other comprehensive income (FVOCI) or amortised cost. Fair value is the price that would be
received to sell an asset or paid to transfer a liability between market participants. Amortised cost is the amount determined based on
moving the initial fair value to the maturity value on a systematic basis using the effective interest rate, taking account of repayment dates
and initial expected premiums or discounts.
Financial assets at amortised cost
Financial assets are measured at amortised cost when their contractual cash flows represent solely payments of principal and interest and
they are held within a business model designed to collect cash flows. This classification typically applies to the Group’s loans and advances,
trade receivables and some debt securities held by the Group’s Wealth Management entities. The carrying value of amortised cost financial
assets is adjusted for impairment under the expected credit loss (ECL) model. Movements in the ECL provision are recognised in other
operating income in the income statement (see note 18).
Financial assets at FVOCI
Financial assets are measured at FVOCI when their contractual cash flows represent solely payments of principal and interest and they are
held within a business model designed to collect cash flows and to sell assets. This classification applies to certain debt securities, principally
within the Group’s Wealth Management entities. Impairment is recognised for debt securities classified as FVOCI under the ECL model.
Movements in the ECL provision are recognised in other operating income in the income statement (see note 18). Unrealised gains and
losses on debt securities classified as financial assets at FVOCI are recorded in other comprehensive income. Cumulative gains and losses
are transferred to the income statement if the asset is sold or otherwise realised. Interest earned on FVOCI assets is recognised using the
effective interest method and recorded as interest in the income statement.
Financial assets at FVTPL
All other financial assets are measured at FVTPL. Net gains and losses are presented in the income statement based on the substance of
the transaction. Net gains and losses on co-investments are presented within other operating income; net gains and losses on the Group’s
investment and seed capital are presented within net gain/(loss) on financial instruments and other income; and net gains and losses on
investments that are held to hedge deferred employee cash awards are presented within operating expenses (see note 3). This separate
presentation provides more relevant information about the applicable components of the Group’s income statement.
Financial liabilities
The Group’s financial liabilities principally comprise deposits by Wealth Management clients and banking counterparties. They also include
derivatives to support its Group capital strategies, activities within the Wealth Management banking book and client facilitation (see note
17). Financial liabilities also arise from obligations in respect of carried interest, contingent consideration and other liabilities arising from
acquisitions completed by the Group, and third party interests in consolidated funds.
The Group initially recognises all financial liabilities at fair value. These are subsequently measured at amortised cost or fair value.
Financial liabilities at amortised cost
The majority of the Group’s financial liabilities are measured at amortised cost and this typically applies to the Group’s Wealth Management
client accounts, banking deposits and trade payables.
Financial liabilities at FVTPL
Financial liabilities are measured at FVTPL when this reduces an accounting mismatch or when otherwise required by the accounting
standards. This classification typically applies to financial obligations in respect of carried interest, third party interests in consolidated funds
(see Basis of preparation on page 152) and contingent consideration.
Net gains and losses are presented in the income statement based on the substance of the instrument. Net gains and losses on
financial obligations in respect of carried interest are presented within cost of sales; and net gains and losses on contingent consideration
are presented within acquisition costs and related items. This separate presentation provides more relevant information about the
applicable components of the Group’s income statement.
Liabilities to purchase subsidiary shares
Financial liabilities in relation to equity transactions arise on certain acquisitions where the Group has a liability to purchase the remaining
interest in a subsidiary that is not wholly owned by the Group (see Basis of preparation on page 152).
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
115
Financial statements
8. Financial assets and liabilities continued
2023
Not at
Level 1 Level 2 Level 3 fair value Total
£m £m £m £m £m
Financial assets at amortised cost:
Loans and advances to banks
–
–
–
397.9
397.9
Loans and advances to clients
–
–
–
446.0
446.0
Debt securities
–
–
–
356.7
356.7
–
–
–
1,200.6
1,200.6
Financial assets at FVOCI:
Debt securities
697.6
3.2
10.6
–
711.4
697.6
3.2
10.6
–
711.4
Financial assets at FVTPL:
Debt securities
13.6
64.7
–
–
78.3
Pooled investment vehicles
420.2
10.3
200.6
–
631.1
Equities
153.3
9.9
27.5
–
190.7
Derivative contracts
–
15.0
–
–
15.0
587.1
99.9
228.1
–
915.1
Total financial assets
1,284.7
103.1
238.7
1,200.6
2,827.1
Financial liabilities at amortised cost:
Client accounts
–
–
–
4,135.0
4,135.0
Deposits by banks
–
–
–
64.4
64.4
–
–
–
4,199.4
4,199.4
Financial liabilities at FVTPL:
Derivative contracts
1.5
10.7
–
–
12.2
Other financial liabilities
92.1
–
96.9
–
189.0
93.6
10.7
96.9
–
201.2
Liabilities to purchase subsidiary shares
–
–
177.6
–
177.6
Total financial liabilities
93.6
10.7
274.5
4,199.4
4,578.2
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
116
8. Financial assets and liabilities continued
2022
Not at
Level 1 Level 2 Level 3 fair value Total
£m £m £m £m £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 FVOCI:
Debt securities
588.4
3.5
–
–
591.9
588.4
3.5
–
–
591.9
Financial assets at FVTPL:
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
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 FVTPL:
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
The Group has recognised a net gain on financial instruments at fair value through profit or loss of £19.9 million (2022: loss of £10.9 million). A
net loss on financial instruments at fair value through other comprehensive income of £0.1 million (2022: loss of £0.1 million) has been
transferred to the income statement.
For the maturity profiles of client accounts, deposits by banks and derivative contracts, see notes 17 and 18.
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 2023 (2022: none).
2023
2022
Financial Financial Financial Financial
assets liabilities assets liabilities
£m £m £m £m
Current
2,052.5
4,316.6
1,928.5
4,827.7
Non-current
774.6
261.6
741.8
312.4
2,827.1
4,578.2
2,670.3
5,140.1
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
117
Financial statements
8. Financial assets and liabilities continued
Movements in financial assets and liabilities categorised as level 3 during the year were:
2023
2022
Liabilities to Liabilities to
Financial Financial purchase Financial Financial purchase
assets liabilities subsidiary assets liabilities subsidiary
at FVTPL at FVTPL shares at FVTPL at FVTPL shares
£m £m £m £m £m £m
At 1 January
191.2
91.4
218.7
147.3
88.9
60.8
Exchange translation adjustments
(6.2)
(3.5)
(1.1)
13.2
8.1
7.5
Net gain/(loss) recognised in the
income statement
21.6
20.5
–
(0.8)
18.1
–
Remeasurements
–
–
(37.9)
–
–
(1.2)
Additions
34.8
2.7
–
48.2
2.2
173.0
Disposals and settlements
(13.3)
(14.2)
(2.1)
(16.7)
(25.9)
(21.4)
At 31 December
228.1
96.9
177.6
191.2
91.4
218.7
Estimates and judgements
The 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 that 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 2022 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, the market multiple applied to the earnings and the rate applied to discount the
liability back to present value. The future earnings of the applicable subsidiaries are estimated based on cash flow forecasts specific to the
individual business and consequently there is no one assumption that is individually material to the valuation. Market multiples are applied
to the forecast earnings to estimate the fair value of the business. Market multiples reflect the nature of the business and take into account
observable market transactions where appropriate. Market multiples range from 10 to 15 times earnings. An increase/decrease in market
multiples of one would increase/decrease the financial liability by £10 million/£10 million (2022: £12 million/£12 million). Discount rates
between 12% and 14% have been used to discount these liabilities. An increase/decrease in the discount rate of 1% would decrease/
increase the financial liability by £5 million/£5 million (2022: £9 million/£9 million). The remaining level 3 liabilities are measured using
different valuation methodologies and assumptions, and there are no significant assumptions or reasonably possible alternatives that
would lead to a material change in fair value.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
118
9. Associates and joint ventures
Associates are entities in which the Group has an investment and over which it has significant influence, but not control, through
participation in the financial and operating policy decisions. Joint ventures are entities in which the Group has an investment where it, along
with one or more other shareholders, has contractually agreed to share control of the business and where the major decisions require
the unanimous consent of the joint partners. In both cases, the Group initially records the investment at the fair value of the purchase
consideration, including purchase-related costs. The Group’s income statement reflects its share of the entity’s profit or loss after tax and
amortisation of intangible assets. The Group’s statement of other comprehensive income records the Group’s share of gains and losses
arising from the entity’s financial assets at FVOCI (see note 8). The statement of financial position subsequently records the Group’s share of
the net assets of the entity plus any goodwill and intangible assets that arose on purchase, less subsequent amortisation. The statement of
changes in equity records the Group’s share of other equity movements of the entity. At each reporting date, the Group applies judgement
to determine whether there is any indication that the carrying value of associates and joint ventures may be impaired.
The associates and joint ventures reserve in the statement of changes in equity represents the Group’s share of profits in its investments yet
to be received (for example, in the form of dividends or distributions), less any amortisation of intangible assets. Certain associates are held
within financial assets at fair value through profit or loss where permitted by the accounting standards (see note 8). Information about the
Group’s principal associates measured at fair value is disclosed within this note.
(a) Investments in associates and joint ventures accounted for using the equity method
2023
2022
Associates Joint ventures Total Associates Joint ventures Total
£m £m £m £m £m £m
At 1 January
304.8
192.9
497.7
260.6
206.1
466.7
Exchange translation adjustments
(25.9)
(0.3)
(26.2)
7.4
0.4
7.8
Additions
51.9
2.0
53.9
1.7
1.6
3.3
Disposals
(1.1)
(3.3)
(4.4)
(0.3)
–
(0.3)
Profit/(loss) for the year after tax
47.4
(6.9)
40.5
72.7
(1.2)
71.5
Distributions of profit
(28.9)
(0.9)
(29.8)
(37.3)
(14.0)
(51.3)
At 31 December
348.2
183.5
531.7
304.8
192.9
497.7
1
2
1. The 51% holding in Schroder BOCOM Wealth Management Company Limited has been reclassified from a subsidiary to an associate. Total assets of £118.6 million, including
cash and cash equivalents of £99.7 million, have accordingly been derecognised from the statement of financial position. £51.8 million has subsequently been recognised as
an addition to investments in associates and joint ventures.
2. Share of profit of associates and joint ventures as presented on the income statement excludes acquisition costs and related items of £5.9 million (2022: £6.1 million) and
restructuring costs of £4.7 million (2022: nil), net of tax.
Information about the significant associates and joint ventures held by the Group at 31 December 2023 is shown below. The companies
are unlisted.
Percentage
Nature of its Principal place owned by the
Name of associate or joint venture business
of business
Class of share
Group
Scottish Widows Schroder Wealth Holdings Limited
(SPW) Wealth management
England
Ordinary shares
49.9%
Bank of Communications Schroder Fund Management
Company Limited (BoCom FMC)
Investment management
China
Ordinary shares
30.0%
Axis Asset Management Company Limited (Axis)
Investment management
India
Ordinary shares
25.0%
Schroder BOCOM Wealth Management Company Limited
(BoCom WMC)
Wealth management
China
Ordinary shares
51.0%
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
119
Financial statements
9. Associates and joint ventures continued
(a) Investments in associates and joint ventures accounted for using the equity method continued
2023
2022
BoCom BoCom BoCom
SPW FMC Axis WMC Other Total SPW FMC Axis Other Total
£m £m £m £m £m £m £m £m £m £m £m
Non-current assets
199.9
48.0
51.9
8.7
1,123.0
1,431.5
207.2
61.9
46.4
1,251.7
1,567.2
Current assets
112.2
812.9
150.8
81.7
161.4
1,319.0
119.1
885.9
109.1
245.1
1,359.2
Non-current liabilities
(18.7)
–
–
(1.3)
(1,066.3)
(1,086.3)
(22.5)
(0.4)
–
(1,248.0)
(1,270.9)
Current liabilities
(41.3)
(119.2)
(22.7)
(7.9)
(124.1)
(315.2)
(41.6)
(193.4)
(16.4)
(146.2)
(397.6)
Total equity
252.1
741.7
180.0
81.2
94.0
1,349.0
262.2
754.0
139.1
102.6
1,257.9
Group’s share of net assets
125.8
222.5
45.0
41.4
20.9
455.6
130.8
226.2
34.8
23.8
415.6
Goodwill and intangible assets
52.4
–
9.8
–
15.8
78.0
55.2
–
10.5
18.8
84.5
Deferred tax liability
(1.9)
–
–
–
–
(1.9)
(2.4)
–
–
–
(2.4)
Carrying value held
by the Group
176.3
222.5
54.8
41.4
36.7
531.7
183.6
226.2
45.3
42.6
497.7
Net income
128.4
275.0
111.4
4.1
58.4
577.3
125.8
359.2
98.9
92.0
675.9
Profit/(loss) for the year
(9.6)
136.7
50.4
(12.7)
7.5
172.3
1.8
191.0
43.2
28.8
264.8
Total comprehensive income
(9.6)
136.7
50.4
(12.7)
7.5
172.3
1.8
191.0
43.2
28.8
264.8
Group’s share of operating
profit/(loss)
2.1
41.0
12.6
(6.5)
1.9
51.1
3.1
57.3
10.8
6.4
77.6
Acquisition costs and related
items
(4.6)
–
–
–
(1.3)
(5.9)
(4.6)
–
–
(1.5)
(6.1)
Restructuring costs
(4.7)
–
–
–
–
(4.7)
–
–
–
–
–
Group’s share of total
comprehensive income
(7.2)
41.0
12.6
(6.5)
0.6
40.5
(1.5)
57.3
10.8
4.9
71.5
1
1
2
1. SPW is a joint venture and has £82.9 million of cash and cash equivalents (2022: £81.6 million) within its current assets.
2. Includes a £3.7 million (2022: £3.9 million) amortisation charge on intangible assets recognised on acquisition.
(b) Investments in associates measured at fair value
Where the Group holds units in pooled investment vehicles that give the Group significant influence, but not control, through participation
in the financial and operating policy decisions, the Group records such investments at fair value. Information about the Group’s principal
associates measured at fair value is shown below. The investments are recorded as financial assets within the statement of financial position.
2023
Schroders Schroder
Capital Schroder Schroder Schroder Global Schroder ISF
Schroder ISF Semi-Liquid BlueOrchard QEP Global Long Dated Global Sovereign Emerging
Schroder Sustainable Global Real Impact Active Corporate Equity Bond Tracker Markets
Best Ideas Future Estate Total Credit Value Bond Component Component Equity
FIA Trends Return Fund Fund Fund Fund Fund Impact
£m £m £m £m £m £m £m £m £m
Current assets
23.1
33.9
18.8
15.4
338.5
162.0
126.5
420.1
45.5
Current liabilities
(0.2)
(16.9)
(0.1)
(0.1)
(2.8)
(0.5)
(0.1)
(1.3)
–
Total equity
22.9
17.0
18.7
15.3
335.7
161.5
126.4
418.8
45.5
Net income
0.6
0.6
0.4
(0.1)
14.0
13.6
5.0
13.8
2.0
Profit for the year
0.6
0.6
0.4
(0.1)
14.0
13.6
5.0
14.8
2.0
Total
comprehensive
income
0.6
0.6
0.4
(0.1)
14.0
13.6
5.0
14.8
2.0
Country of
incorporation
BR
LU
LU
LU
UK
UK
UK
UK
LU
Percentage owned
by the Group
31%
28%
22%
26%
25%
25%
22%
33%
24%
3
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
120
9. Associates and joint ventures continued
(b) Investments in associates measured at fair value continued
2022
Schroder Schroder Schroder
Global Schroder Schroder ISF Global Global Schroder
Sustainable Indian Nordic Emerging Equity Long Dated
ICBC (Europe) Growth Fund Equity Smaller Markets Component Corporate
ECITS SICAV (Canada) Fund Companies Fund Fund Bond
£m £m £m £m £m £m £m
Current assets
22.0
16.2
28.0
30.4
628.8
107.8
180.7
Current liabilities
–
–
–
–
(1.9)
(0.2)
(0.9)
Total equity
22.0
16.2
28.0
30.4
626.9
107.6
179.8
Net income
–
0.7
0.1
0.2
8.1
0.4
7.0
Profit for the year
–
0.7
0.1
0.2
8.1
0.4
7.0
Total comprehensive income
–
0.7
0.1
0.2
8.1
0.4
7.0
Country of incorporation
UK
US
UK
LU
UK
UK
UK
Percentage owned by the Group
33%
29%
27%
23%
29%
29%
21%
3
3. Country abbreviations: Brazil (BR), Luxembourg (LU), United Kingdom (UK) and United States (US).
10. Property, plant and equipment
The Group’s property, plant and equipment provides the infrastructure to enable the Group to operate and principally comprise leasehold
improvements, freehold land and buildings, fixtures and fittings and computer equipment. Right-of-use assets in the form of leases are
also included within property, plant and equipment (further detail is found in note 11). Assets are initially stated at cost, which includes
expenditure associated with the acquisition. The cost of the asset is recognised in the income statement as a depreciation charge on a
straight-line basis over the estimated useful life, with the exception of land which is assumed to have an indefinite useful life.
2023
2022
Leasehold Land and Other Leasehold Land and Other
improvements buildings assets Total improvements buildings assets Total
£m £m £m £m £m £m £m £m
Cost
At 1 January
207.0
19.7
169.0
395.7
194.6
19.7
165.8
380.1
Exchange translation adjustments
(2.1)
–
(2.5)
(4.6)
5.1
–
4.6
9.7
Additions
7.6
–
4.9
12.5
7.6
–
12.1
19.7
Disposals
(1.8)
–
(5.0)
(6.8)
(0.3)
–
(13.5)
(13.8)
At 31 December
210.7
19.7
166.4
396.8
207.0
19.7
169.0
395.7
Accumulated depreciation
At 1 January
(75.7)
(2.2)
(112.0)
(189.9)
(59.2)
(1.8)
(89.2)
(150.2)
Exchange translation adjustments
1.3
–
1.8
3.1
(2.5)
–
(3.0)
(5.5)
Depreciation charge
(15.7)
(0.4)
(10.9)
(27.0)
(14.3)
(0.4)
(21.3)
(36.0)
Disposals
0.8
–
2.4
3.2
0.3
–
1.5
1.8
At 31 December
(89.3)
(2.6)
(118.7)
(210.6)
(75.7)
(2.2)
(112.0)
(189.9)
Net book value at 31 December
121.4
17.1
47.7
186.2
131.3
17.5
57.0
205.8
Right-of-use assets (see note 11)
278.1
318.3
Property, plant and equipment net book
value at 31 December
464.3
524.1
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
121
Financial statements
11. Leases
The Group’s lease arrangements primarily consist of operating leases relating to office space.
The Group initially records a lease liability in the statement of financial position reflecting the present value of the future contractual cash
flows to be made over the lease term, discounted using the Group’s incremental borrowing rate. This is the rate that the Group would have
to pay for a loan of a similar term and with similar security to obtain an asset of similar value. A right-of-use (ROU) asset is recorded at the
value of the lease liability plus any directly related costs and estimated future dilapidation expense and is presented within property, plant
and equipment (see note 10) on the balance sheet. Interest is accrued on the lease liability using the effective interest method to give a
constant rate of return over the life of the lease while the balance is reduced as lease payments are made. The ROU asset is depreciated
from commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term as the benefit of the
asset is consumed. Increases or decreases that occur at contractually agreed market rent review dates are included in the lease liability
once revised market rents have been agreed.
The Group considers whether the lease term should reflect options to extend or reduce the life of the lease. Relevant factors that could
create an economic incentive to exercise the option are considered and the extension/termination is included if it is reasonably certain to be
exercised. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that
is within its control and affects the likelihood that it will exercise (or not exercise) the option. Should this occur, the Group modifies the lease
liability and associated ROU asset to reflect the revised remaining expected cash flows.
2023
2022
Right-of-use Lease Right-of-use Lease
assets liabilities assets liabilities
£m £m £m £m
At 1 January
318.3
361.0
330.1
373.8
Exchange translation adjustments
(4.3)
(6.5)
9.8
12.3
Additions and remeasurements of lease obligations
7.7
7.2
18.0
15.6
Lease payments
–
(52.3)
–
(51.3)
Depreciation charge
(43.6)
–
(39.6)
–
Interest expense
–
9.3
–
10.6
At 31 December
278.1
318.7
318.3
361.0
The depreciation charge and interest expense relating to leases are recorded within operating expenses (see note 3).
2023 2022
£m £m
Lease liabilities – current
35.3
39.2
Lease liabilities – non-current
283.4
321.8
318.7
361.0
The Group’s lease liabilities contractually mature in the following time periods:
2023 2022
£m £m
Less than 1 year
43.0
48.9
1 – 2 years
38.2
47.3
2 – 5 years
92.1
106.7
More than 5 years
201.8
235.2
332.1
389.2
375.1
438.1
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
122
12. Goodwill and intangible assets
Intangible assets (other than software) arise when the Group acquires a business and the fair value paid exceeds the fair value of the net
tangible assets acquired. This premium reflects additional value that the Group determines to be attached to the business. Identifiable
acquired intangible assets relating to business combinations include technology and contractual agreements to manage client assets and
gain additional access to new or existing clients and geographies. Where such assets can be identified, they are classified as acquired
intangible assets and amortised to the income statement within acquisition costs and related items on a straight-line basis, primarily over
seven years.
Consideration paid to acquire a business in excess of the acquisition date fair value of net tangible and identifiable intangible assets
is known as goodwill. Goodwill is not charged to the income statement unless its value has diminished. The assessment of whether goodwill
has become impaired is based on the expected future returns of the relevant cash-generating unit (CGU) as a whole.
Software purchased and developed for use in the business is also classified as an intangible asset. The cost of purchasing and developing
software is taken to the income statement over time as an amortisation charge within operating expenses. The treatment is similar to that
for property, plant and equipment, and the asset is normally amortised on a straight-line basis over three to five years, but can have an
estimated useful life of up to ten years.
2023
2022
Acquired Acquired
intangible intangible
Goodwill assets Software Total Goodwill assets Software Total
£m £m £m £m £m £m £m £m
Cost
At 1 January
1,239.7
710.0
573.0
2,522.7
803.4
361.9
470.7
1,636.0
Exchange translation adjustments
2.1
0.6
(0.9)
1.8
36.1
15.7
4.7
56.5
Additions
13.2
20.0
67.4
100.6
400.2
332.4
97.6
830.2
Disposals
–
–
(6.8)
(6.8)
–
–
–
–
At 31 December
1,255.0
730.6
632.7
2,618.3
1,239.7
710.0
573.0
2,522.7
Accumulated amortisation
At 1 January
–
(308.8)
(284.4)
(593.2)
–
(252.8)
(214.7)
(467.5)
Exchange translation adjustments
–
(0.4)
0.2
(0.2)
–
(8.9)
(3.5)
(12.4)
Amortisation charge
–
(58.5)
(83.1)
(141.6)
–
(47.1)
(66.2)
(113.3)
Disposals
–
–
1.9
1.9
–
–
–
–
At 31 December
–
(367.7)
(365.4)
(733.1)
–
(308.8)
(284.4)
(593.2)
Carrying amount at 31 December
1,255.0
362.9
267.3
1,885.2
1,239.7
401.2
288.6
1,929.5
The Group completed three business combinations during the year ended 31 December 2023 for a total consideration of £18.5 million,
resulting in £10.7 million of identifiable intangible assets and £13.2 million of Wealth Management goodwill. The Group acquired £9.3 million of
customer contracts through Benchmark Capital that were not considered to be business combinations. £7.0 million of Wealth Management
goodwill relates to the acquisition of Unique Financial Planning Limited. Due to the timing of this acquisition, the determination of the final
amounts is ongoing and subject to review.
Estimates and judgements
The 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 that 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, £1,012.3 million (2022: £1,009.6 million) is allocated to Asset Management and £242.7 million (2022:
£230.1 million) is allocated to Wealth Management, of which £81.4 million (2022: £68.2 million) relates to Benchmark Capital.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
123
Financial statements
12. Goodwill and intangible assets continued
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 (2022: 2%), a pre-tax discount rate of 13% (2022: 12%), 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 (2022: 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.
13. Deferred tax
Deferred tax assets and liabilities represent amounts of tax that will become recoverable and payable in future accounting periods.
They arise as a result of temporary differences, where the time at which profits and losses are recognised for tax purposes differs from the
time at which the relevant transaction is recorded. A deferred tax asset represents a tax reduction that is expected to arise in a future period
based on past transactions. A deferred tax liability represents taxes that will become payable in a future period as a result of current or
prior year transactions.
Deferred tax liabilities also arise on certain acquisitions where the amortisation of the acquired intangible asset does not result in a tax
deduction. The deferred tax liability is established on acquisition and is released to the income statement to match the intangible asset
amortisation. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the year-end date.
2023
Accelerated Deferred Intangible Other net
capital employee Pension Tax assets on temporary
allowances awards schemes losses acquisition differences Total
£m £m £m £m £m £m £m
At 1 January
15.9
110.9
(33.1)
68.3
(98.5)
(16.6)
46.9
Income statement credit/(charge)
7.1
(6.1)
(1.8)
16.4
11.3
1.9
28.8
Income statement credit/(charge) due to changes
in tax rates
0.3
2.6
(0.1)
3.7
1.7
(4.5)
3.7
Credit to other comprehensive income
–
–
0.9
–
–
–
0.9
Credit to statement of other comprehensive
income due to changes in tax rates
–
–
–
–
–
0.1
0.1
Charge to equity
–
(0.2)
–
–
–
(0.5)
(0.7)
Business combinations
–
–
–
–
(2.7)
–
(2.7)
Exchange translation adjustments
–
(1.3)
0.1
(0.1)
0.1
(0.2)
(1.4)
At 31 December
23.3
105.9
(34.0)
88.3
(88.1)
(19.8)
75.6
2022
Accelerated Deferred Intangible Other net
capital employee Pension Tax assets on temporary
allowances awards schemes losses acquisition differences Total
£m £m £m £m £m £m £m
At 1 January
11.8
101.3
(48.7)
48.2
(25.5)
(22.5)
64.6
Income statement credit/(charge)
4.2
(1.5)
(0.7)
14.8
8.4
7.6
32.8
Income statement credit/(charge) due to changes
in tax rates
0.1
10.1
(0.2)
5.0
(0.6)
0.2
14.6
Credit/(charge) to other comprehensive income
–
–
12.6
–
–
(0.1)
12.5
Credit/(charge) to statement of other comprehensive
income due to changes in tax rates
–
–
3.9
–
–
(0.1)
3.8
Charge to equity
–
(5.7)
–
–
–
–
(5.7)
Credit to equity due to changes in tax rates
–
0.8
–
–
–
–
0.8
Business combinations
–
1.8
–
–
(79.9)
–
(78.1)
Exchange translation adjustments
(0.2)
4.1
–
0.3
(0.9)
(1.7)
1.6
At 31 December
15.9
110.9
(33.1)
68.3
(98.5)
(16.6)
46.9
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
124
13. Deferred tax continued
Following the 2021 Budget, the UK tax rate increased to 25% from April 2023. This results in a blended tax rate applicable to the UK Group
for 2023 of 23.5%.
Included in the deferred tax asset is an asset relating to UK tax deductions for share-based remuneration which is dependent on the prices
of the Company’s ordinary shares at the time the awards are exercised.
A deferred tax asset of £9.9 million (2022: £9.7 million) relating to £39.9 million of realised capital losses has not been recognised as there
is insufficient evidence that there will be sufficient taxable gains in the future against which the deferred tax asset could be utilised.
A deferred tax asset of £28.0 million (2022: £26.5 million) relating to £117.2 million of losses, including unrealised capital losses, and other
temporary differences has not been recognised as there is insufficient evidence that there will be sufficient taxable profits against which these
losses and temporary differences can be utilised.
The mandatory IAS 12 temporary exception from the recognition and disclosure of deferred taxes arising from implementation of the OECD’s
Pillar Two model rules has been applied. The OECD’s Pillar Two model rules, which establish a global minimum tax regime, will apply from 2024.
This is not expected to have a significant impact on the Group’s tax expense.
After offsetting deferred tax assets and liabilities where appropriate within territories, the net deferred tax asset comprises:
2023 2022
£m £m
Deferred tax assets
203.9
185.8
Deferred tax liabilities
(128.3)
(138.9)
75.6
46.9
14. Unit-linked liabilities and assets backing unit-linked liabilities
The Group operates a unit-linked life assurance business through the wholly owned subsidiary Schroder Pension Management Limited
(the Life Company). The Life Company provides unit-linked investment products through a life assurance wrapper. The investment products
do not provide cover for insurance risk and are therefore recognised and accounted for as financial instruments and presented as financial
liabilities due to Life Company investors (policyholders) within unit-linked liabilities. The financial risks of these products are largely borne by
the third-party investors, consistent with other investment products managed by the Group. However, since the Life Company, which is a
subsidiary, issues the investment instrument and holds the relevant financial assets, both the investments and the third-party obligations
are recorded in the statement of financial position.
The investment product is almost identical to a unit trust. As it is a life assurance product, the contractual rights and obligations of the
investments remain with the Group and the AUM is therefore included on the statement of financial position, together with the liability
to investors. The Group earns fee income from managing the investment, which is included in revenue.
Financial assets held by the Life Company are measured at FVTPL. Other balances include cash and receivables, which are measured at
amortised cost (see note 8). The unit-linked liabilities are measured at FVTPL to avoid an accounting mismatch. The Life Company’s assets
are regarded as current assets as they represent the amount available to Life Company investors (or third party investors in consolidated
funds) who are able to withdraw their funds on call, subject to certain restrictions in the case of illiquidity. Gains and losses from assets held
to cover investor obligations are attributable to investors in the Life Company or to third party investors in the funds. As a result, any gain or
loss is offset by a change in the obligation to investors.
2023 2022
£m £m
Financial liabilities due to Life Company investors
7,744.0
8,174.1
Financial liabilities due to third parties
2,264.1
1,880.0
10,008.1
10,054.1
1
1. In accordance with the accounting standards, the Group is deemed to hold a controlling interest in certain funds as a result of the investments held by the Life Company.
This results in all of the assets and liabilities of those funds being consolidated within the statement of financial position and the third party interest in the fund being
recorded as a financial liability due to third party investors.
The Group has no primary exposure to market risk, credit risk or liquidity risk in relation to the investments due to Life Company investors. The
risks and rewards associated with its investments are borne by the investors in the Life Company’s investment products or third party investors
in the funds and not by the Life Company itself. Consequently, no further financial instrument risk disclosures are included.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
125
Financial statements
14. Unit-linked liabilities and assets backing unit-linked liabilities continued
Fair value measurements of Life Company financial assets and liabilities
Each of the Life Company’s financial assets and liabilities has been categorised using a fair value hierarchy as shown below. These levels
are based on the degree to which the fair value is observable and are defined in note 8.
2023
Not at
Level 1 Level 2 Level 3 fair value Total
£m £m £m £m £m
Assets backing unit-linked liabilities
Financial assets at fair value through profit or loss:
Debt securities
1,490.4
1,793.4
–
–
3,283.8
Pooled investment vehicles
3,070.1
–
18.3
–
3,088.4
Equities
3,032.8
3.0
–
–
3,035.8
Derivative contracts
28.7
69.9
–
–
98.6
7,622.0
1,866.3
18.3
–
9,506.6
Financial assets at amortised cost:
Cash and cash equivalents
–
–
–
453.1
453.1
Trade and other receivables
–
–
–
48.4
48.4
–
–
–
501.5
501.5
Total assets backing unit-linked liabilities
7,622.0
1,866.3
18.3
501.5
10,008.1
Unit-linked liabilities
9,960.4
32.8
–
14.9
10,008.1
2022
Not at
Level 1 Level 2 Level 3 fair value Total
£m £m £m £m £m
Assets backing unit-linked liabilities
Financial assets at fair value through profit or loss:
Debt securities
2,385.3
1,731.3
–
–
4,116.6
Pooled investment vehicles
2,478.6
–
22.8
–
2,501.4
Equities
2,639.3
29.8
–
–
2,669.1
Derivative contracts
12.4
51.5
–
–
63.9
7,515.6
1,812.6
22.8
–
9,351.0
Financial assets at amortised cost:
Cash and cash equivalents
–
–
–
605.0
605.0
Trade and other receivables
–
–
–
98.1
98.1
–
–
–
703.1
703.1
Total assets backing unit-linked liabilities
7,515.6
1,812.6
22.8
703.1
10,054.1
Unit-linked liabilities
9,996.1
48.7
–
9.3
10,054.1
The fair value of financial instruments not held at fair value approximates their carrying value. No financial assets were transferred between
levels during the year (2022: none).
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
126
14. Unit-linked liabilities and assets backing unit-linked liabilities continued
Estimates and judgements – fair value measurements
Each instrument has been categorised within one of three levels using a fair value hierarchy (see note 8). Level 1 investments principally
comprise quoted equities, investments in pooled investment vehicles, government debt and exchange-traded derivatives. Level 2
investments principally comprise debt securities such as commercial paper and certificates of deposit. Level 3 investments principally
comprise investments in private equity funds. There are no assumptions that are individually significant or reasonably possible alternatives
that would lead to a material change in the fair value of these assets.
Movements in financial assets categorised as level 3 during the year were:
2023 2022
£m £m
At 1 January
22.8
22.9
Exchange translation adjustments
(0.4)
0.6
Net (loss)/gain recognised in the income statement
(0.3)
5.6
Disposals
(3.8)
(6.3)
At 31 December
18.3
22.8
15. Trade and other payables
Trade and other payables include amounts the Group is due to pay in the normal course of business, accruals and deferred income
(being fees received in advance of services provided as well as deferred cash awards), and bullion deposits by customers. Trade and other
payables, other than deferred cash awards and bullion deposits, are recorded initially at fair value and subsequently at amortised cost (see
note 8). Amounts due to be paid by the Group in the normal course of business are made up of creditors and accruals. Accruals represent
costs, including remuneration, that are not yet billed or due for payment, but for which the goods or services have been received. Deferred
cash awards (being deferred employee remuneration payable in cash) and bullion deposits by customers are recorded at fair value.
2023
2022
Non-current Current Total Non-current Current Total
£m £m £m £m £m £m
Trade and other payables at amortised cost:
Settlement accounts
–
128.2
128.2
–
96.6
96.6
Trade creditors
–
15.7
15.7
–
14.7
14.7
Social security
25.6
81.5
107.1
19.5
88.6
108.1
Accruals and deferred income
36.7
514.7
551.4
22.3
568.6
590.9
Other payables
3.6
69.7
73.3
–
24.3
24.3
65.9
809.8
875.7
41.8
792.8
834.6
Trade and other payables at fair value:
Deferred cash awards
87.8
121.8
209.6
52.8
159.5
212.3
Bullion deposits by customers
–
2.2
2.2
–
2.6
2.6
87.8
124.0
211.8
52.8
162.1
214.9
Total trade and other payables
153.7
933.8
1,087.5
94.6
954.9
1,049.5
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
127
Financial statements
15. Trade and other payables continued
The fair value of trade and other payables held at amortised cost approximates their carrying value. The fair value of bullion deposits by
customers is derived from level 1 inputs (see note 8). The fair value of deferred cash awards is derived from level 1 inputs, being equal to the
fair value of the units in funds to which the employee award is linked.
The Group’s trade and other payables contractually mature in the following time periods:
2023 2022
£m £m
Less than 1 year
933.8
954.9
1 – 2 years
45.1
46.8
2 – 5 years
104.9
45.8
More than 5 years
3.7
2.0
153.7
94.6
1,087.5
1,049.5
1
1. Settlement accounts are generally settled within four working days (2022: four working days) and trade creditors have an average settlement period of 18 working days
(2022: 24 working days).
16. Provisions and contingent liabilities
Provisions are liabilities where there is uncertainty over the timing or amount of settlement and therefore they usually require the use of
estimates. They are recognised when three conditions are fulfilled: when the Group has a present obligation (legal or constructive) as
a result of a past event; when it is probable that the Group will incur a loss in order to settle the obligation; and when a reliable estimate
can be made of the amount of the obligation. They are recorded at the Group’s best estimate of the cost of settling the obligation. Any
differences between those estimates and the amounts for which the Group actually becomes liable are taken to the income statement
as additional charges where the Group has underestimated and credits where the Group has overestimated. Where the estimated timing
and settlement are longer term, the amount is discounted using a rate reflecting specific risks associated with the provision.
Contingent liabilities are potential liabilities, which could include a dependency on events not within the Group’s control, but where there is a
possible obligation. Contingent liabilities are disclosed only where significant and are not included within the statement of financial position.
Legal,
regulatory
Dilapidations and other Total
£m £m £m
At 1 January 2023
18.2
7.2
25.4
Exchange translation adjustments
(0.2)
–
(0.2)
Utilised
–
(1.1)
(1.1)
Charged
0.4
0.4
0.8
Released
–
(2.4)
(2.4)
Additions
0.5
–
0.5
At 31 December 2023
18.9
4.1
23.0
Legal,
regulatory
Dilapidations and other Total
£m £m £m
Current – 2023
1.2
1.0
2.2
Non-current – 2023
17.7
3.1
20.8
18.9
4.1
23.0
Current – 2022
1.0
2.5
3.5
Non-current – 2022
17.2
4.7
21.9
18.2
7.2
25.4
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
128
16. Provisions and contingent liabilities continued
The Group’s provisions are expected to mature in the following time periods:
2023 2022
£m £m
Less than 1 year
2.2
3.5
1 – 2 years
5.4
5.7
2 – 5 years
0.8
2.7
More than 5 years
14.6
13.5
20.8
21.9
23.0
25.4
Dilapidation provisions associated with the Group’s office leases have a weighted average maturity of 12 years (2022: 13 years).
Legal and regulatory obligations associated with the Group’s business arise from past events that are estimated to crystallise mainly within
two years (2022: two years). These matters are ongoing.
Estimates and judgements
The timing and amount of settlement of each legal claim or potential claim, regulatory matter and constructive obligation are uncertain.
The Group applies judgement to determine whether a provision is required. The Group performs an assessment of the timing and
amount of each event and reviews this assessment periodically. For some provisions there is greater certainty as the cash flows have largely
been determined. Potential legal claims, regulatory related costs and other obligations to third parties arise as a consequence of normal
business activity. They can arise from actual or alleged breaches of obligations and may be covered by the Group’s insurance arrangements,
but subject to insurance excess. In certain circumstances, legal and regulatory claims can arise despite there being no error or breach. The
Group’s risk management and compliance procedures are designed to mitigate, but are not able to eliminate, the risk of losses occurring.
Where such claims and costs arise there is often uncertainty over whether a payment will be required and estimation is required in
determining the quantum and timing of that payment. As a result, there is also uncertainty over the timing and amount of any insurance
recovery, although this does not change the likelihood of insurance cover being available, where applicable. The Group makes periodic
assessments of all cash flows, including taking external advice where appropriate, to determine an appropriate provision. Some matters
may be settled through commercial negotiation as well as being covered in whole or in part by the Group’s insurance arrangements. The
Group has made provisions based on the reasonable expectation of likely outflows. The inherent uncertainty in such matters and the results
of negotiations and insurance cover may result in different outcomes.
There are no key judgements or estimates that would result in any additional material provisions being recognised or any material
contingent liabilities being disclosed in the financial statements (2022: none). The provisions included in the financial statements at
31 December 2023 are based on estimates of reasonable ranges of likely outcomes, applying assumptions regarding the probability
of payments being due and the settlement value. The aggregate reasonable ranges have been assessed as not materially different
to the carrying values.
17. Derivative contracts
(a) The Group’s use of derivatives
The Group holds derivatives for risk management, client facilitation and within its consolidated structured entities to provide exposure to
market returns. The Group most commonly uses forward foreign exchange contracts, where it agrees to buy or sell specified amounts of
a named currency at a future date, allowing the Group to effectively fix exchange rates so that it can avoid unpredictable gains and losses
on financial instruments in foreign currency assets and liabilities. The Group uses futures, total return swaps and credit default swaps to
hedge market-related gains and losses on its seed capital investments where the purpose of investing is to help establish a new product
rather than gain additional market exposure. Interest rate contracts are used to hedge exposures to fixed or floating rates of interest.
The Group designates certain derivatives as hedges of a net investment in a foreign operation. In these scenarios, and where relevant
conditions are met, hedge accounting is applied and the Group formally documents the relationship between the derivative and any
hedged item, its risk management objectives and its strategy for undertaking the various hedging transactions. It also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in the fair value of hedged items. In respect of hedges of a net investment in a foreign operation,
the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in other
comprehensive income. The Group’s net investment hedges are generally fully effective, but any ineffective portion that may arise
is recognised in the income statement. On disposal of the foreign operation, together with the hedged gain or loss, the cumulative
gain or loss on the hedging instrument is transferred to the income statement .
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
129
Financial statements
17. Derivative contracts continued
(a) The Group’s use of derivatives continued
Risk management: The Group actively seeks to limit and manage its exposures to risk where those exposures are not desired by the Group.
This may take the form of unwanted exposures to a particular currency, type of interest rate or other price risk. By entering into derivative
contracts, the Group is able to mitigate or eliminate such exposures. The principal risks that the Group faces through such use of derivative
contracts are credit risk and liquidity risk.
Client facilitation: The Group’s Wealth Management entities are involved in providing portfolio management, banking and investment
advisory services, primarily to private clients. In carrying out this business, they transact as agent or as principal in financial assets and liabilities
(including derivatives) in order to facilitate client portfolio requirements. Wealth Management’s policy is to hedge, as appropriate, market risk
on its client facilitation positions. This does not eliminate credit risk.
For details of how the Group manages its exposure to credit risk, see below and note 18.
(b) Derivatives used by the Group
Forwards are contractual obligations to buy or sell foreign currency on a future date at a specified exchange rate. The maximum exposure
to credit risk is represented by the fair value of the contracts.
Currency, interest rate, total return and credit default swaps are commitments to exchange one set of cash flows for another. Swaps result
in an economic exchange of currencies, interest rates or total returns (for example, fixed rate for floating rate) or a combination of these
(i.e. cross-currency interest rate swaps). No exchange of principal takes place, except in the case of certain currency swaps. The Group’s credit
risk represents the potential cost of replacing the swap contracts if counterparties fail to perform their obligations. This risk is monitored on an
ongoing basis with reference to the current fair value, the proportion of the notional amount of the contracts, and the liquidity of the market.
To control the level of credit risk taken, the Group assesses counterparties in accordance with its internal policies and procedures.
Futures contracts are standardised contracts to buy or sell specified assets for an agreed price at a specified future date. Contracts are
negotiated at a futures exchange, which acts as an intermediary between the two parties. For futures contracts, the maximum exposure
to credit risk is represented by the fair value of the contracts.
The fair value of derivative instruments becomes favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market interest
rates, indices, foreign exchange rates and other relevant variables relative to their terms. The aggregate contractual amount of derivative
financial instruments held, the extent to which instruments are favourable or unfavourable, and thus the aggregate fair values of derivative
financial assets and liabilities can fluctuate significantly from time to time. The fair values and contractual maturities are set out below:
2023
2022
Assets Liabilities Assets Liabilities
£m £m £m £m
Equity contracts
0.1
(3.8)
6.4
(4.7)
Forward foreign exchange contracts
14.9
(8.3)
16.5
(23.6)
15.0
(12.1)
22.9
(28.3)
2023
2022
Assets Liabilities Assets Liabilities
£m £m £m £m
Net-settled derivative contracts
1
maturing/repricing
2
in:
Less than 1 year
0.1
(3.8)
6.4
(4.7)
0.1
(3.8)
6.4
(4.7)
Gross-settled derivatives
3
maturing/repricing
2
in less than 1 year:
Gross inflows
1,086.3
530.8
983.5
874.1
Gross outflows
(1,071.7)
(538.8)
(967.6)
(897.2)
Difference between future contractual cash flows and fair value
0.3
(0.3)
0.6
(0.5)
14.9
(8.3)
16.5
(23.6)
15.0
(12.1)
22.9
(28.3)
1. Equity contracts.
2. Whichever is earlier.
3. Forward foreign exchange contracts .
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
130
18. Financial instrument risk management
The Group Capital Committee is responsible for the management of the Group’s capital and sets objectives for how it is deployed. This note
explains how the Group manages its capital, setting out the nature of the risks the Group faces as a result of its operations, and how these
risks are quantified and managed.
The Group is exposed to different forms of financial instrument risk including: (i) the risk that money owed to the Group will not be received
(credit risk); (ii) the risk that the Group may not have sufficient cash available to pay its creditors as they fall due (liquidity risk); and (iii) the risk
that the value of assets will fluctuate as a result of movements in factors such as market prices, interest rates and foreign exchange rates
(market risk). The management of such risks is embedded in managerial responsibilities fundamental to the wellbeing of the Group.
The Group’s primary exposure to financial instrument risk is derived from the financial instruments that it holds as principal. In addition,
due to the nature of the business, the Group’s exposure extends to the impact on investment management and other fees that are
determined on the basis of a percentage of AUM and are therefore impacted by the financial instrument risk exposure of our clients – the
secondary exposure. This note deals only with the direct or primary exposure of the risks from the Group’s holding of financial instruments.
Disclosures relating to unit-linked liabilities and assets backing unit-linked liabilities are included in note 14.
(a) Capital
The Group’s approach to capital management is to maintain a strong capital position to enable it to invest in the future of the Group, in line
with its strategy, and to support the risks inherent in conducting its business. Capital management is an important part of the Group’s risk
management framework and is underpinned by the Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP considers the relevant
current and future risks to the business and the capital considered necessary to support these risks. The Group actively monitors its capital
base to ensure that it maintains sufficient and appropriate capital resources to cover the relevant risks to the business and to meet
consolidated and local regulatory and working capital requirements.
The Group’s lead regulator is the Prudential Regulation Authority as the Group includes an entity with a UK banking licence. The Group is
required to maintain adequate capital resources to meet its Total Capital Requirement (TCR) of £1,059 million (2022: £1,022 million). The TCR
incorporates the Group’s Pillar 1 regulatory capital requirement of £893 million (2022: £862 million). In addition to the TCR of the banking
group, the Group is required to hold additional capital of £384 million (2022: £323 million) in respect of its insurance companies and
regulatory buffers. The Group’s overall regulatory capital requirement was £1,443 million at 31 December 2023 (2022: £1,346 million).
In managing the Group’s capital position, the Group considers the composition of the capital base, which consists of: working capital deployed
to support the Group’s general operating activities and regulatory requirements; investment capital held in excess of these operating
requirements; and other items that are not investable or otherwise available to meet the Group’s operating or regulatory requirements.
The table below shows the components of our capital position:
2023 2022
£m £m
Working capital – regulatory and other
1,587
1,538
Working capital – seed and co-investment
462
512
Investment capital – liquid
180
127
Investment capital – illiquid
77
57
Other items
2,158
2,246
Total equity
4,464
4,480
(i) Working capital
The Group’s policy is for subsidiaries to hold sufficient working capital to meet their regulatory and other operating requirements. Operating
capital principally comprises cash and cash equivalents and other low-risk financial instruments, as well as financial instruments held to hedge
fair value movements on certain deferred fund awards. Local regulators oversee the activities of, and impose minimum capital and liquidity
requirements on, certain Group operating entities. The Group complied with all externally imposed regulatory capital requirements during
the year.
Working capital is also deployed through certain subsidiaries to support new investment strategies and growth opportunities and to co-invest
alongside the Group’s clients.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
131
Financial statements
18. Financial instrument risk management continued
(a) Capital continued
(ii) Investment capital
Available capital held in excess of working capital requirements is transferred to investment capital. Investment capital is managed with the aim
of achieving a low-volatility return. Liquid investments are available to support the organic development of existing and new business strategies
and to respond to other investment and growth opportunities, such as acquisitions, as they arise. Investment capital also includes certain
commercial private equity investments and illiquid legacy investments.
(iii) Other items
Other items comprise assets that are not investable or available to meet the Group’s general operating or regulatory requirements. It includes
assets that are actually or potentially inadmissible for regulatory capital purposes, principally goodwill, intangible assets, non-controlling
interest in certain subsidiaries and pension scheme surplus.
The tables below provide a detailed breakdown of the Group’s capital in accordance with IFRS 9:
2023
Financial assets Financial
at fair value Liabilities to instruments
Financial through other purchase at fair value
instruments at comprehensive subsidiary through Non-financial
amortised cost income shares profit or loss instruments Total
£m £m £m £m £m £m
Assets
Cash and cash equivalents
3,354.4
–
–
295.5
–
3,649.9
Trade and other receivables
817.5
–
–
–
102.9
920.4
Financial assets:
Loans and advances to banks
397.9
–
–
–
–
397.9
Loans and advances to clients
446.0
–
–
–
–
446.0
Debt securities
356.7
711.4
–
78.3
–
1,146.4
Pooled investment vehicles
–
–
–
631.1
–
631.1
Equities
–
–
–
190.7
–
190.7
Derivatives
–
–
–
15.0
–
15.0
Associates and joint ventures
–
–
–
–
531.7
531.7
Property, plant and equipment
–
–
–
–
464.3
464.3
Goodwill and intangible assets
–
–
–
–
1,885.2
1,885.2
Deferred tax
–
–
–
–
203.9
203.9
Retirement benefit scheme surplus
–
–
–
–
138.3
138.3
Assets backing unit-linked liabilities
501.5
–
–
9,506.6
–
10,008.1
Total assets
5,874.0
711.4
–
10,717.2
3,326.3
20,628.9
Liabilities
Trade and other payables
770.1
–
–
209.6
107.8
1,087.5
Financial liabilities
4,199.4
–
177.7
201.1
–
4,578.2
Current tax
–
–
–
–
12.6
12.6
Lease liabilities
318.7
–
–
–
–
318.7
Provisions
23.0
–
–
–
–
23.0
Deferred tax
–
–
–
–
128.3
128.3
Retirement benefit scheme deficits
–
–
–
–
8.8
8.8
Unit-linked liabilities
14.9
–
–
9,993.2
–
10,008.1
Total liabilities
5,326.1
–
177.7
10,403.9
257.5
16,165.2
Capital
4,463.7
1
1. Financial assets at fair value through profit or loss are mandatorily measured at fair value through profit or loss. Cash and cash equivalents at fair value through profit or loss
are interests in money market funds and are all level 1. Financial liabilities at fair value through profit or loss include £10,343.6 million of liabilities that are designated at fair
value through profit or loss and £60.3 million that are mandatorily measured at fair value through profit or loss.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
132
18. Financial instrument risk management continued
(a) Capital continued
(iii) Other items continued
2022
Financial assets Financial
at fair value Liabilities to instruments
Financial through other purchase at fair value
instruments at comprehensive subsidiary through Non-financial
amortised cost income shares profit or loss instruments Total
£m £m £m £m £m £m
Assets
Cash and cash equivalents
4,440.3
–
–
–
–
4,440.3
Trade and other receivables
804.4
–
–
–
92.1
896.5
Financial assets:
Loans and advances to banks
122.8
–
–
–
–
122.8
Loans and advances to clients
615.6
–
–
–
–
615.6
Debt securities
263.9
591.9
–
148.1
–
1,003.9
Pooled investment vehicles
–
–
–
702.2
–
702.2
Equities
–
–
–
202.9
–
202.9
Derivatives
–
–
–
22.9
–
22.9
Associates and joint ventures
–
–
–
–
497.7
497.7
Property, plant and equipment
–
–
–
–
524.1
524.1
Goodwill and intangible assets
–
–
–
–
1,929.5
1,929.5
Deferred tax
–
–
–
–
185.8
185.8
Retirement benefit scheme surplus
–
–
–
–
136.3
136.3
Assets backing unit-linked liabilities
703.1
–
–
9,351.0
–
10,054.1
Total assets
6,950.1
591.9
–
10,427.1
3,365.5
21,334.6
Liabilities
Trade and other payables
726.5
–
–
212.3
110.7
1,049.5
Financial liabilities
4,595.9
–
218.7
325.5
–
5,140.1
Current tax
–
–
–
–
73.1
73.1
Lease liabilities
361.0
–
–
–
–
361.0
Provisions
25.4
–
–
–
–
25.4
Deferred tax
–
–
–
–
138.9
138.9
Retirement benefit scheme deficits
–
–
–
–
12.8
12.8
Unit-linked liabilities
9.3
–
–
10,044.8
–
10,054.1
Total liabilities
5,718.1
–
218.7
10,582.6
335.5
16,854.9
Capital
4,479.7
1
1. Financial assets at fair value through profit or loss are mandatorily measured at fair value through profit or loss. Financial liabilities at fair value through profit or loss include
£10,508.8 million of liabilities that are designated at fair value through profit or loss and £83.1 million that are mandatorily measured at fair value through profit or loss.
(b) Credit risk, liquidity risk and market risk
The Group is exposed to credit, liquidity and market risk as a result of the financial instruments it holds. Settlement of financial instruments
(on both a principal and agency basis) also gives rise to operational risk. The Group’s risk management framework is critical to effective
management of these risks and considerable resources are dedicated to this area. Risk management is the direct responsibility of the
Board, with responsibility for oversight delegated to the Audit and Risk Committee. The Group applies the three lines of defence model to
risk management, which includes financial instrument risk. More details on the risk management framework and approach are set out in the
Risk Management report and the Audit and Risk Committee report on pages 38 and 66 respectively.
(i) Credit risk
Credit risk is the risk that a counterparty to a financial instrument, loan or commitment will cause the Group financial loss by failing to discharge
its obligations. For this purpose, the impact on fair value of a credit loss arising from credit spread price changes in a portfolio of investments is
excluded. This risk is addressed within pricing risk.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
133
Financial statements
18. Financial instrument risk management continued
(b) Credit risk, liquidity risk and market risk continued
(i) Credit risk continued
The Group has exposure to credit risk from its normal activities where it is exposed to the risk that a counterparty will be unable to pay
amounts when due. The Group carefully manages its exposure to credit risk by monitoring exposures to individual counterparties and sectors,
monitoring counterparties’ creditworthiness, taking collateral and reducing settlement risk where possible and approving lending policies that
specify the type of acceptable collateral and lending margins. The Group’s maximum exposure to credit risk is represented by the gross
carrying value of its financial assets.
Externally published credit ratings are indicators of the level of credit risk associated with a counterparty. A breakdown of the Group’s relevant
financial assets held with rated and unrated counterparties is set out below:
Cash and cash equivalents
Loans and advances to banks
Debt securities
2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m
Credit rating:
AAA
292.3
230.2
–
–
158.2
317.8
AA+
–
233.9
9.3
9.0
122.1
0.1
AA
178.6
135.9
18.6
–
10.6
11.7
AA-
2,136.8
2,576.7
49.7
41.6
443.9
331.5
A+
622.9
673.5
239.3
65.2
255.9
112.4
A
164.1
137.2
3.7
7.0
39.0
47.7
A-
250.1
430.5
77.3
–
38.5
47.4
BBB+ and lower
4.1
22.0
–
–
35.3
99.2
Not rated
1.0
0.4
–
–
42.9
36.1
3,649.9
4,440.3
397.9
122.8
1,146.4
1,003.9
Expected credit losses are calculated on all of the Group’s financial assets that are measured at amortised cost and all debt instruments that
are measured at fair value through other comprehensive income. Factors considered in determining whether a default has taken place include
how many days past the due date a payment is, deterioration in the credit quality of a counterparty, and knowledge of specific events that could
influence a counterparty’s ability to pay.
A three stage model is used for calculating expected credit losses, which requires financial assets to be assessed as:
• Performing (stage 1) – financial assets where there has been no significant increase in credit risk since original recognition;
• Under-performing (stage 2) – financial assets where there has been a significant increase in credit risk since initial recognition,
but no default; or,
• Non-performing (stage 3) – financial assets that are in default.
For financial assets in stage 1, expected credit losses are calculated based on the credit losses that are expected to be incurred over the
following 12-month period. For financial assets in stages 2 and 3, expected credit losses are calculated based on credit losses expected to
be incurred over the life of the instrument. The Group applies the simplified approach to calculate expected credit losses for trade and other
receivables. Under this approach, instruments are not categorised into three stages and expected credit losses are calculated based on the life
of the instrument.
Wealth Management activities
All client credit requests are presented to the relevant Wealth Management approval authorities and counterparty exposures are monitored
daily against limits. Loans, overdrafts and advances to clients, as well as certain derivative positions, are secured on a range of assets including
real estate (both residential and commercial), cash, client portfolios and investment bonds.
The Group does not usually provide loans, overdrafts or advances to clients on an unsecured basis. Where disposal of non-cash collateral is
required, in the event of default, the terms and conditions relevant to the specific contract and country will apply. Portfolios held as collateral
are marked to market daily and positions compared to clients’ exposures. Credit limits are set following an assessment of the market value and
lending value of each type of collateral, depending on the perceived risk associated with the collateral. Clients are contacted if these limits are
expected to be or are breached, or if collateral is not sufficient to cover the outstanding exposure.
The collateral accepted by the Group includes certain investment-grade securities that can be sold or repledged without default of the provider.
At 31 December 2023, the fair value of collateral that could be sold or repledged but had not been, relating solely to these arrangements, was
£1,107.6 million (2022: £813.4 million).
Policies covering various counterparty and market risk limits are set and monitored by the relevant Wealth Management asset and liability
management committees. All instruments held within the Wealth Management treasury book have an investment-grade credit rating.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
134
18. Financial instrument risk management continued
(b) Credit risk, liquidity risk and market risk continued
(i) Credit risk continued
Wealth Management takes a conservative approach to its treasury investments, placing them with, or purchasing debt securities issued by,
UK and overseas banks and corporates, central banks, supranational banks and sovereigns.
Expected credit losses on financial assets at amortised cost within the Wealth Management entities at 31 December 2023 were £1.0 million
(2022: £0.3 million). There were no (2022: none) under-performing (stage 2) loans and advances to clients. There was one (2022: none)
non-performing (stage 3) loan of £6.2 million giving rise to £0.5 million expected credit losses (2022: nil). All other financial assets at amortised
cost (excluding trade and other receivables to which the three stage model is not applied) were performing (stage 1) (2022: same).
Expected credit losses on financial assets at fair value through other comprehensive income within the Wealth Management entities
at 31 December 2023 were £0.2 million (2022: £0.1 million). All financial assets at fair value through other comprehensive income were
performing (stage 1) (2022: same).
Other activities
Fee debtors and other receivables arise as a result of the Group’s asset management activities and amounts are monitored regularly.
Historically, default levels have been insignificant and, unless a client has withdrawn its funds, there is an ongoing relationship between
the Group and the client.
Fee debtors past due but not in default as at 31 December 2023 were £50.8 million (2022: £70.0 million), the majority of which were less than
90 days past due (2022: less than 90 days).
The Group seeks to manage its exposure to credit risk arising from debt securities and derivatives within the investment portfolio by adopting
a conservative approach and through ongoing credit analysis, and it may hedge some of the credit risk with credit default swaps. Corporate
bond portfolios, when in place, have an investment-grade mandate, and exposure to sub-investment-grade debt is low.
Most derivative positions, other than forward foreign exchange contracts and total return swaps, are taken in exchange-traded securities where
there is minimal credit risk. Forward foreign exchange positions generally have a maturity between one and three months.
The Group’s cash and cash equivalents in the non-Wealth Management entities are held primarily in current accounts, on deposit with
well-rated banks, or invested in money market or similar funds.
Expected credit losses on financial assets at amortised cost within non-Wealth Management entities at 31 December 2023 were £0.6 million
(2022: £0.8 million). All financial assets at amortised cost (excluding trade and other receivables to which the three stage model is not applied)
were performing (stage 1) (2022: same).
(ii) Liquidity risk
Liquidity risk is the risk that the Group cannot meet its obligations as they fall due or can only do so at a cost. The Group has a clearly defined
liquidity risk management framework in place in the form of a Consolidated Group Internal Liquidity Adequacy Assessment Process (ILAAP).
The Group policy is that its subsidiaries should trade solvently, comply with regulatory liquidity requirements and have access to adequate
liquidity for all activities undertaken in the normal course of business. As part of its ILAAP, the Group performs stress testing to confirm that
sufficient liquidity is available to cover severe but plausible stress events.
Wealth Management activities
The principal liquidity risk in the Group’s Wealth Management business arises as a result of its banking activities, where the timing of cash flows
from liabilities relating to client accounts can be impacted by client action. The objective of the Group’s liquidity policy is to maintain sufficient
liquidity within the relevant entities to meet regulatory and prudential requirements, and to cover cash flow imbalances and fluctuations in
funding and the timely repayment of funds to depositors.
Liquidity positions are actively monitored against both regulatory and internal limits and cash flows are managed so that sufficient liquidity
is available to cover potential liquidity risks.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
135
Financial statements
18. Financial instrument risk management continued
(b) Credit risk, liquidity risk and market risk continued
(ii) Liquidity risk continued
The contractual maturity of Wealth Management financial assets and liabilities is set out below:
2023
Less than More than
1 year 1–2 years 2–5 years 5 years Total
£m £m £m £m £m
Assets
Cash and cash equivalents
2,811.3
–
–
–
2,811.3
Loans and advances to banks
391.0
–
–
–
391.0
Loans and advances to clients
168.4
70.9
205.1
0.3
444.7
Debt securities
719.0
312.1
–
–
1,031.1
Other financial assets
5.7
–
–
–
5.7
Total financial assets
4,095.4
383.0
205.1
0.3
4,683.8
Liabilities
Client accounts
4,135.0
–
–
–
4,135.0
Deposits by banks
64.4
–
–
–
64.4
Other financial liabilities
5.6
–
–
–
5.6
Total financial liabilities
4,205.0
–
–
–
4,205.0
Cumulative gap
(109.6)
273.4
478.5
478.8
478.8
2022
Less than More than
1 year 1–2 years 2–5 years 5 years Total
£m £m £m £m £m
Assets
Cash and cash equivalents
3,512.2
–
–
–
3,512.2
Loans and advances to banks
114.0
–
–
–
114.0
Loans and advances to clients
251.1
70.7
293.8
–
615.6
Debt securities
639.5
188.4
–
–
827.9
Other financial assets
8.2
–
–
–
8.2
Total financial assets
4,525.0
259.1
293.8
–
5,077.9
Liabilities
Client accounts
4,533.2
–
–
–
4,533.2
Deposits by banks
59.4
–
–
–
59.4
Other financial liabilities
10.9
–
–
–
10.9
Total financial liabilities
4,603.5
–
–
–
4,603.5
Cumulative gap
(78.5)
180.6
474.4
474.4
474.4
Other activities
The Group’s exposure to liquidity risk outside its Wealth Management activities is low. Excluding the Life Company and consolidated funds, the
Asset Management segment along with the Group’s investment capital and treasury management activities together hold cash and
cash equivalents of £832.9 million (2022: £897.6 million). Financial liabilities relating to other operating entities are £373.2 million (2022:
£536.6 million).
The Group has a committed revolving credit facility of £850.0 million (2022: £850.0 million), which expires on 7 November 2028. The maximum
amount drawn down under the facility was £180.0 million (2022: £225.0 million). The facility was undrawn at 31 December 2023 (2022: undrawn).
(iii) Market risk
Market risk is the risk that the value of assets will fluctuate as a result of movements in factors such as market prices, interest rates and foreign
exchange rates.
Pricing risk
Pricing risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market prices other
than those arising from interest rate risk or currency risk.
In respect of financial instrument risk, the Group’s exposure to pricing risk is principally through investments held in investment capital, seed
and co-investment capital and deferred employee compensation in the form of fund awards.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
136
18. Financial instrument risk management continued
(b) Credit risk, liquidity risk and market risk continued
(iii) Market risk continued
Pricing risk
continued
The Group does not hedge exposures to pricing risk except in relation to seed capital, where it is practical to do so, and in respect of deferred
employee compensation awards, where these can be matched by interests in funds managed by the Group. Where financial instruments are
held to hedge deferred compensation awards, movements in the fair value of the asset are normally offset by changes in the amounts payable
to employees (see note 3).
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market
interest rates.
Wealth Management activities
In Wealth Management, interest rate risk is monitored on a daily basis against policies and limits set by the relevant risk committee.
Interest rate risk is managed within set limits by matching asset and liability positions and through the use of interest rate swaps.
Sensitivity-based and stress-based models are used for monitoring interest rate risk. These models assess the impact of a prescribed shift
in interest rates and the potential impact of severe but plausible stress scenarios.
Other activities
Cash held by the other operating companies is not normally expected to be placed on deposit for longer than three months and is not exposed
to significant interest rate risk.
The Group’s capital can include investments in corporate investment-grade bonds managed by the Group’s fixed income fund managers.
The market risk (including interest rate risk) exposure of these investments is actively monitored against limits set by the Board.
Foreign exchange risk
Foreign exchange risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in foreign
exchange rates.
Wealth Management activities
In Wealth Management, foreign exchange risk is monitored each day against policies and limits set by the relevant risk committees.
Foreign exchange risk is managed within set limits by the treasury departments using spot, forward and foreign exchange swap contracts.
Other activities
The Group’s policy in relation to foreign exchange risks arising from revenue, expenditure and capital currency exposure from its Asset
Management activities is generally not to hedge. The Group’s revenue is earned and expenditure incurred in many currencies and the resulting
exposure is considered to be a normal part of the Group’s business activities.
The Group also has exposure to foreign currency on financial instruments not held in the functional currency of entities which resulted in a
£19.0 million gain in the income statement (2022: £37.7 million loss) and exposure arising from net investments in foreign operations which
resulted in a £58.3 million loss in other comprehensive income (2022: £148.6 million gain). The Group uses forward foreign exchange contracts
with third parties to mitigate some of these exposures. The gain or loss on these contracts is included in the income statement or statement of
other comprehensive income, as appropriate. The use of such instruments is subject to approval by the Group Capital Committee.
The sensitivities to market risk at 31 December are estimated as follows:
Variable
1
2023
2022
A reasonable change A reasonable change
in the variable within Increase/(decrease) in the variable within Increase/(decrease)
the next calendar year in post-tax profit the next calendar year in post-tax profit
% £m % £m
Interest rates
-increase
0.25
2
1.5
14
-decrease
(1.5)
(14)
(0.5)
(5)
US dollar against sterling
-strengthen
10
3
20
5
-weaken
10
(2)
(15)
(3)
Euro against sterling
-strengthen
8
1
15
2
-weaken
8
(1)
(10)
(1)
US dollar against Euro
-strengthen
10
3
10
3
-weaken
10
(3)
(10)
(3)
FTSE All-Share Index
-increase
20
46
20
48
-decrease
(20)
(46)
(20)
(48)
2
3
1. The underlying assumption is that there is one variable increase/decrease with all other variables held constant.
2. Assumes that the fair value of assets and liabilities will not be affected by a change in interest rates.
3. Assumes that changes in the FTSE All-Share Index correlate to changes in the fair value of the Group’s equity investments.
The reasonable changes in variables will have no impact on any other components of equity. These sensitivities concern only the direct
impact on financial instruments and exclude indirect impacts on fee income and certain costs that may be affected by changes in the variable.
The changes used in the sensitivity analysis were provided by the Group’s Global Economics team, which determines reasonable assumptions.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
137
Financial statements
19. Share capital and share premium
Share capital primarily comprises the number of issued ordinary shares in Schroders plc multiplied by their nominal value of 20 pence each
(2022: 20 pence each). Where the proceeds received on issue of the shares is greater than the nominal value the difference is recorded in
share premium. The Company has authority to buyback ordinary shares, restricted by minimum and maximum price caps and a maximum
number of shares. Any ordinary shares bought back may be cancelled or held in treasury. Unless renewed, authority will expire at the
Company’s next annual general meeting, or on 30 June 2024 if earlier.
Number of Total ordinary Share
shares shares premium
Millions £m £m
At 1 January 2023
1,612.1
322.4
84.3
At 31 December 2023
1,612.1
322.4
84.3
Number Ordinary Non-voting Total Share
of shares shares ordinary shares shares premium
Millions £m £m £m £m
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
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.
2023 2022
Number Number
of shares of shares
Millions Millions
Issued and fully paid:
Ordinary shares of 20p each (2022: 20p each)
1,612.1
1,612.1
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
138
20. Own shares
Own shares are recorded by the Group when ordinary shares are acquired by the Company or acquired through employee benefit trusts.
This enables the Group to hold some of its shares to settle option exercises or for other permitted purposes. Own shares are held at cost
and their purchase reduces the Group’s net assets by the amount spent. When shares vest unconditionally or are cancelled, they are
transferred from own shares to the profit and loss reserve at their weighted average cost.
Movements in own shares during the year were as follows:
2023 2022
£m £m
At 1 January
(185.1)
(150.2)
Own shares purchased
(66.6)
(120.2)
Awards vested
79.6
85.3
At 31 December
(172.1)
(185.1)
During the year, 14.4 million own shares (2022: 4.9 million own shares) were purchased and held for hedging share-based awards. 15.9 million
shares (2022: 3.7 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:
2023
2022
Number of Number of Number of Number of
vested unvested vested unvested
shares shares Total shares shares Total
Millions Millions Millions Millions Millions Millions
Total ordinary shares
23.0
35.8
58.8
23.5
37.2
60.7
2023
2022
Vested Unvested Vested Unvested
shares shares Total shares shares Total
£m £m £m £m £m £m
Total ordinary shares
Cost
106.8
172.1
278.9
107.4
185.1
292.5
Fair value
98.9
153.7
252.6
102.6
162.1
264.7
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
139
Financial statements
21. Reconciliation of net cash from operating activities
This note should be read in conjunction with the cash flow statement. It provides a reconciliation to show how profit before tax, which
is based on accounting rules, translates to cash flows.
2023 2022
£m £m
Profit before tax
487.6
586.9
Adjustments for income statement non-cash movements:
Depreciation of property, plant and equipment and amortisation of intangible assets
212.2
188.9
Net (gain)/loss on financial instruments
(19.1)
11.0
Share-based payments
62.8
68.2
Net release for provisions
(2.0)
(2.6)
Other non-cash movements
(26.8)
43.5
227.1
309.0
Adjustments for which the cash effects are investing activities:
Interest income
(23.6)
(5.8)
Interest expense on lease liabilities
9.3
10.6
Share of profit of associates and joint ventures after amortisation
(40.5)
(71.5)
(54.8)
(66.7)
Adjustments for statement of financial position movements:
(Increase)/decrease in loans and advances within Wealth Management
(100.8)
64.5
(Increase)/decrease in trade and other receivables
(40.7)
68.9
(Decrease)/increase in deposits and client accounts within Wealth Management
(413.0)
682.7
Increase/(decrease) in trade and other payables, other financial liabilities and provisions
27.9
(159.6)
(526.6)
656.5
Adjustments for Life Company and consolidated pooled investment vehicles movements:
Net (increase)/decrease in financial assets backing unit-linked liabilities
(105.9)
3,102.3
Net decrease in unit-linked liabilities
(46.0)
(3,409.0)
Net decrease in cash within consolidated pooled investment vehicles
(24.8)
(101.3)
(176.7)
(408.0)
Tax paid
(194.7)
(104.9)
Net cash (used in)/from operating activities
(238.1)
972.8
1
1. Other non-cash movements primarily consist of discount unwind within the net interest margin and exchange translation adjustments, before hedging activities.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
140
22. Commitments
Commitments represent amounts the Group has contractually committed to pay to third parties but do not yet represent a liability
or impact the Group’s financial results for the year.
The Group’s commitments primarily relate to investment call commitments, commitments for property, plant and equipment and future
leases not yet commenced.
The Group sublets a small number of its owned and leased properties where such properties, or parts of such properties, are not
required for use by the Group. The table below discloses the commitments sub-lessees have made in respect of such arrangements.
These commitments are not recorded on the statement of financial position in advance of the period to which they relate.
2023
Later than
1 year
No later than and no later Later than
1 year than 5 years 5 years Total
£m £m £m £m
Undrawn loan facilities
9.0
22.5
–
31.5
Investment call commitments
42.4
19.8
1.7
63.9
Commitments for property, plant and equipment and leases
3.4
20.1
41.6
65.1
Total commitments
54.8
62.4
43.3
160.5
Operating leases receivable as lessor
(1.4)
(2.1)
–
(3.5)
Net commitments payable
53.4
60.3
43.3
157.0
2022
Later than
1 year
No later than and no later Later than
1 year than 5 years 5 years Total
£m £m £m £m
Undrawn loan facilities
15.8
20.8
3.3
39.9
Investment call commitments
59.2
19.9
2.5
81.6
Commitments for property, plant and equipment and leases
4.5
16.8
46.1
67.4
Total commitments
79.5
57.5
51.9
188.9
Operating leases receivable as lessor
(1.0)
(2.4)
–
(3.4)
Net commitments payable
78.5
55.1
51.9
185.5
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
141
Financial statements
23. Retirement benefit obligations
The Group has two principal types of pension benefit for employees: defined benefit (DB), where the Group has an obligation to provide
participating employees with pension payments that represent a specified percentage of their final salary for each year of service, and
defined contribution (DC), where the Group’s contribution to an employee’s pension is measured as, and limited to, a specified percentage
of salary.
Accounting for DB schemes requires an assessment of the likely quantum of future pension payments to be made. If ring-fenced assets are
held specifically to meet this cost, the scheme is funded, and if not, it is unfunded. The Group periodically reviews its funded DB schemes
using actuarial specialists to assess whether it is on course to meet the expected pension payments that current and former employees are,
or will be, entitled to. In the case of a projected shortfall, a plan must be formulated to reverse the deficit.
The income statement charge or credit represents the sum of pension entitlements earned by employees in the period, plus a notional
net interest charge (if the scheme is in deficit) or income (if it is in surplus) based on the market yields on high quality corporate bonds.
Experience differences, principally the difference between actual investment returns and the notional interest amount, as well as actuarial
changes in estimating the present value of future liabilities, are recorded in other comprehensive income.
Assets or liabilities recognised in the statement of financial position represent the differences between the fair value of plan assets (if any)
and the actuarially determined estimates of the present value of future liabilities. The Group closed its largest DB scheme to future accrual
on 30 April 2011, although it still operates some small unfunded schemes overseas. This means that no future service will contribute to the
closed scheme member benefits but those members continue to have the benefits determined by the Scheme rules as at 30 April 2011.
The Group’s exposure to funding DC pension schemes is limited to the contributions it has agreed to make. These contributions generally
stop when employment ceases. The income statement charge represents the contributions the Group has agreed to make into employees’
pension schemes in that year.
The disclosures within this note are provided mainly in respect of the principal DB scheme, which is the DB section of the funded Schroders
Retirement Benefits Scheme (the Scheme).
The income statement charge for retirement benefit costs is as follows:
2023 2022
£m £m
Pension costs – defined contribution plans
77.2
68.4
Pension credit – defined benefit plans
(5.2)
(2.4)
Other post-employment benefits
0.1
0.1
72.1
66.1
(a) Profile of the Scheme
The Scheme is administered by a trustee company, Schroder Pension Trustee Limited (the Trustee). The board of the Trustee comprises
an independent chairman, three directors appointed by the employer and two directors elected by the Scheme members. The Trustee is
required by law to act in the interest of all relevant beneficiaries and is responsible for setting the investment strategy and for the day-to-day
administration of the benefits. The Trustee’s investment committee comprises five of the Trustee directors and two representatives of the
Group. This committee, which reports to the Trustee board, is responsible for making investment strategy recommendations to the board
of the Trustee and for monitoring the performance of the investment manager.
Under the Scheme, employees are entitled to annual pensions on retirement based on a specified percentage of their final pensionable salary
or, in the case of active members at 30 April 2011 (the date the DB section of the Scheme closed for future accrual), actual pensionable salaries
at that date, for each year of service. These benefits are adjusted for the effects of inflation, subject to a cap of 2.5% for pensions accrued after
12 August 2007 and 5.0% for pensions accrued before that date.
As at 31 December 2023, there were no active members in the DB section (2022: nil) and 2,605 active members in the DC section (2022: 2,572).
The weighted average duration of the Scheme’s DB obligation is 13 years (2022: 13 years). The Group expects that the plan liabilities will settle
gradually over time until all members have left the plan. On termination of the Scheme, any assets that remain after the Trustee has settled the
Scheme’s liabilities will be returned to the Group.
Membership details of the DB section of the Scheme as at 31 December are as follows:
2023
2022
Number of deferred members
977
1,032
Total deferred pensions (at date of leaving Scheme)
£6.8m per annum
£7.1m per annum
Average age (deferred)
56
56
Number of pensioners
1,064
1,029
Average age (pensioners)
71
70
Total pensions in payment
£24.2m per annum
£22.8m per annum
(b) Funding requirements
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.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
142
23. Retirement benefit obligations continued
(c) Risks of the Scheme
The Company and the Trustee have agreed a long-term strategy for reducing investment risk as and when appropriate. This includes an asset-
liability matching policy that aims to reduce the volatility of the funding level of the Scheme by investing in assets that perform in line with the
liabilities of the Scheme.
The most significant risks to which the Scheme exposes the Group are:
Asset volatility
The liabilities are calculated using a discount rate set with reference to corporate bond yields. If assets underperform this yield, this will reduce
the surplus or may create a deficit. The Group manages this risk by holding 67% (2022: 51%) of Scheme assets in a liability matching portfolio
and the remainder in growth assets such as the Schroder Life Diversified Growth Fund. This asset mix is designed to provide returns that match
or exceed the unwinding of the discount rate in the long term, but that can create volatility and risk in the short term. The allocation to growth
assets is monitored to ensure it remains appropriate given the Scheme’s long-term objectives.
Credit risk
The assets of the Scheme include liability driven investments (LDI) and other fixed income instruments that expose the Group to credit risk.
A significant amount of this exposure is to the UK Government as a result of holding gilts and bonds guaranteed by the UK Government.
Other instruments held include derivatives, which are collateralised daily to cover unrealised gains or losses. The minimum rating for any
derivatives counterparty is BBB.
Interest rate risk
A decrease in corporate bond yields will increase the value placed on the Scheme’s liabilities for accounting purposes, although this should be
partially offset by an increase in the value of the Scheme’s liability matching portfolio, which comprises gilts, corporate bonds and other LDI
instruments. The liability matching investments have been designed to mitigate interest rate exposures measured on a funding rather than
an accounting basis. One of the principal differences between these bases is that the liability under the funding basis is calculated using a
discount rate set with reference to gilt yields; the latter uses corporate bond yields. As a result, the liability matching portfolio hedges against
interest rate risk by purchasing instruments that seek to replicate movements in gilt yields rather than corporate bond yields. Movements in the
different types of instrument are not exactly correlated, and it is therefore likely that a tracking error can arise when assessing whether the
liability matching portfolio has provided an effective hedge against interest rate risk on an accounting basis. At 31 December 2023, the liability
matching portfolio was designed to mitigate 95% (2022: 90%) of the Scheme’s exposure to changes in gilt yields.
Inflation risk
A significant proportion of the Scheme’s benefit obligations are linked to inflation and higher inflation will lead to higher liabilities. However,
in most cases, caps on the level of inflationary increases are in place. The majority of the growth assets are either unaffected by or not closely
correlated with inflation, which means that an increase in inflation will also decrease any Scheme surplus. The liability matching portfolio
includes instruments such as index-linked gilts to provide protection against inflation risk. At 31 December 2023, the liability matching portfolio
was designed to mitigate 95% (2022: 90%) of the Scheme’s exposure to inflation risk.
Life expectancy
The majority of the Scheme’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an
increase in the liability.
(d) Reporting at 31 December
The principal financial assumptions used for the Scheme are:
2023 2022
% %
Discount rate
4.5
4.8
RPI inflation rate
3.0
3.2
CPI inflation rate
2.3
2.5
Future pension increases (for benefits earned before 13 August 2007)
2.9
3.0
Future pension increases (for benefits earned after 13 August 2007)
2.0
2.0
Average number of years a current pensioner is expected to live beyond age 60:
Years
Years
Men
27
28
Women
29
30
Average number of years future pensioners currently aged 45 are expected to live beyond age 60:
Years
Years
Men
28
29
Women
30
30
Net interest income is determined by applying the discount rate to the opening net surplus in the Scheme. The Group determines the
appropriate discount rate at the end of each year. This is the interest rate that is used to determine the present value of estimated future cash
outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the
interest rates of high quality, long dated corporate bonds that are denominated in the currency in which the benefits will be paid.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
143
Financial statements
23. Retirement benefit obligations continued
(d) Reporting at 31 December continued
Estimates and judgements
The Group estimates the carrying value of the Scheme by applying judgement to determine the assumptions as set out on page 145,
used to calculate 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% (2022: 1.0%) per annum.
An additional adjustment, an “A parameter” set to 0.25% (2022: 0.25%) per annum, allows for the typically higher rate of mortality
improvement among members of the Scheme compared with general population statistics. The latest base mortality tables have been
adopted with no scaling (2022: 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.
The financial impact of the Scheme on the Group has been determined by independent qualified actuaries, Aon Solutions UK Limited, and is
based on an assessment of the Scheme as at 31 December 2023.
The amounts recognised in the income statement are:
2023 2022
£m £m
Interest income on Scheme assets
(33.2)
(21.0)
Interest cost on Scheme liabilities
26.7
17.1
Net interest income recognised in the income statement in respect of the Scheme
(6.5)
(3.9)
Income statement charge in respect of other defined benefit schemes
1.3
1.5
Total defined benefit schemes income statement credit
(5.2)
(2.4)
The amounts recognised in the statement of comprehensive income are:
2023 2022
£m £m
(Gains)/losses on Scheme assets in excess of that recognised in interest income
(2.9)
345.2
Actuarial gains due to change in demographic assumptions
(11.1)
(0.2)
Actuarial losses/(gains) due to change in financial assumptions
12.7
(299.4)
Actuarial losses due to experience
4.1
18.5
Total other comprehensive loss in respect of the Scheme
2.8
64.1
Other comprehensive loss in respect of other defined benefit schemes
1.4
1.9
Total other comprehensive loss in respect of defined benefit schemes
4.2
66.0
The sensitivity of the Scheme pension liabilities to changes in assumptions are:
Assumption Assumption change
2023
2022
Estimated Estimated Estimated Estimated
(increase)/ (increase)/ (increase)/ (increase)/
decrease in decrease in decrease in decrease in
pension pension pension pension
liabilities liabilities liabilities liabilities
£m % £m %
Discount rate
Increase by 0.5% per annum
33.7
5.9
34.4
6.0
Discount rate
Decrease by 0.5% per annum
(38.5)
(6.7)
(39.7)
(7.0)
Expected rate of pension increases
Increase by 0.5% per annum
(25.8)
(4.5)
(26.2)
(4.6)
Expected rate of pension increases
Decrease by 0.5% per annum
25.4
4.4
25.6
4.5
Life expectancy
Increase by one year
(21.5)
(3.7)
(20.9)
(3.7)
Life expectancy
Decrease by one year
21.2
3.7
20.6
3.6
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
144
23. Retirement benefit obligations continued
(d) Reporting at 31 December continued
Movements in respect of the assets and liabilities of the Scheme are:
2023 2022
£m £m
At 1 January
706.5
1,070.6
Interest income
33.2
21.0
Remeasurement of assets
2.9
(345.2)
Benefits paid
(27.5)
(38.5)
Administrative expenses
(1.7)
(1.4)
Fair value of plan assets
713.4
706.5
At 1 January
(570.2)
(872.7)
Interest cost
(26.7)
(17.1)
Actuarial gains due to change in demographic assumptions
11.1
0.2
Actuarial (losses)/gains due to change in financial assumptions
(12.7)
299.4
Actuarial losses due to experience
(4.1)
(18.5)
Benefits paid
27.5
38.5
Present value of funded obligations
(575.1)
(570.2)
Net assets
138.3
136.3
1
1. Following 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.
On 16 June 2023, the High Court issued a ruling in respect of Virgin Media v NTL Pension Trustees II Limited (and others), which has the
potential to affect the Scheme’s liabilities. As the assessment of any potential impact is ongoing, no adjustment has been made to the Scheme’s
liability as at 31 December 2023.
The Group has not materially changed the basis of any of the principal financial assumptions underlying the calculation of the Scheme’s
net financial position during 2023, although such assumptions have been amended where applicable to reflect current market conditions
and expectations.
The fair values of the Scheme’s plan assets at the year end are:
2023
2022
Of which not Of which not
quoted in an quoted in an
Value active market Value active market
£m £m £m £m
Liability matching investments
436.6
–
358.0
–
Portfolio funds
242.2
93.2
313.1
92.2
Exchange-traded futures and over-the-counter derivatives
9.3
–
10.1
–
Cash
25.3
–
25.3
–
713.4
93.2
706.5
92.2
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
145
Financial statements
24. Share-based payments
Share-based payments are remuneration payments to selected employees that take the form of an award of shares in Schroders plc.
Employees are generally not able to exercise such awards in full until three years after the award has been made, although conditions vary
between different types of award. The accounting for share-based awards settled by transferring shares to the employees (equity-settled)
differs from the accounting for similar awards settled in cash (cash-settled). The charge for equity-settled share-based payments is
determined based on the fair value of the award on the grant date. Such awards can include share awards that may or may not have
performance criteria. The initial fair value of the award takes into account the current value of shares expected to be issued (i.e. estimates
of the likely levels of forfeiture and achievement of performance criteria), and the contribution, if required, by the employee. This initial fair
value is charged to the income statement reflecting benefits received from employment, where relevant, in the performance period and
over the vesting period. The income statement charge is offset by a credit to the statement of changes in equity, where the award is
expected to be settled through the issue of shares. Such awards constituted 5.9% (2022: 6.8%) of salaries, wages and other remuneration
(see note 3).
The Group may make share-based payments to employees through awards over or linked to the value of ordinary shares and by the grant
of market value share options over ordinary shares. These arrangements involve a maximum term of ten years.
It is the Group’s practice to hedge all awards to eliminate the impact of changes in the market value of shares between the grant date and
the exercise date.
Awards that lapse or are forfeited during the vesting period result in a credit to the income statement (reversing the previous charge) in the
year in which they lapse or are forfeited.
The Group recognised total expenses of £64.0 million (2022: £68.1 million) arising from share-based payment transactions during the year,
of which £62.8 million (2022: £68.2 million) were equity-settled share-based payment transactions. In 2023, there was £0.7 million of equity-
settled share-based payments included within acquisition costs and related items (2022: £1.1 million) and £5.0 million included within
restructuring costs (2022: nil).
The Group has the following share-based payment arrangements (further details of the current schemes may be found in the
Remuneration report):
(a) Deferred Award Plan
Awards over ordinary shares made under the Group’s Deferred Award Plan are charged at fair value as operating expenses in the income
statement. Fair value is determined at the date of grant and is equal to the market value of the shares at that time. The fair value charges,
adjusted to reflect actual levels of vesting, are spread over the performance period and the vesting periods of the awards. Awards are
structured as nil-cost options.
2023 2022
Number of Number of
ordinary ordinary
shares shares
Millions Millions
Rights outstanding at 1 January
41.7
5.2
Corporate transaction
–
35.0
Granted
13.7
4.5
Forfeited
(0.6)
(0.3)
Exercised
(9.4)
(2.7)
Rights outstanding at 31 December
45.4
41.7
Vested
12.6
11.7
Unvested
32.8
30.0
The weighted average exercise price per share is nil. A charge of £58.5 million (2022: £62.3 million) was recognised during the year.
The table below shows the expected charges for awards issued under the Deferred Award Plan to be expensed in future years:
£m
2024
18.7
2025
6.8
2026+
3.5
29.0
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
146
24. Share-based payments continued
(b) Equity Compensation Plan
Awards over ordinary shares made under the Group’s Equity Compensation Plan are charged at fair value as operating expenses in the
income statement. Fair value is determined at the date of grant and is equal to the market value of the shares at that time. The fair value
charges, adjusted to reflect actual levels of vesting, are spread over the performance period and the vesting periods of the awards.
Awards are structured as nil-cost options.
2023 2022
Number of Number of
ordinary ordinary
shares shares
Millions Millions
Rights outstanding at 1 January
12.3
2.7
Corporate transaction
–
10.8
Granted
0.5
0.1
Exercised
(4.9)
(1.3)
Rights outstanding at 31 December
7.9
12.3
Vested
7.8
8.8
Unvested
0.1
3.5
The weighted average exercise price per share is nil. There were no charges (2022: £1.0 million) recognised during the year.
(c) Equity Incentive Plan
Awards over ordinary shares made under the Group’s Equity Incentive Plan are charged at fair value as operating expenses to the income
statement, over a five-year vesting period. Fair value is determined at the date of grant and is equal to the market value of the shares at that
time. Awards are structured as nil-cost options.
2023 2022
Number of Number of
ordinary ordinary
shares shares
Millions Millions
Rights outstanding at 1 January
5.6
1.0
Corporate transaction
–
4.9
Exercised
(1.4)
(0.3)
Rights outstanding at 31 December
4.2
5.6
Vested
2.5
3.0
Unvested
1.7
2.6
The weighted average exercise price per share is nil. A charge of £1.6 million (2022: £2.3 million) was recognised during the year.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
147
Financial statements
24. Share-based payments continued
(c) Equity Incentive Plan continued
The table below shows the expected charges for awards issued under the Equity Incentive Plan to be expensed in future years:
£m
2024
1.4
2025
0.6
2.0
(d) Long Term Incentive Plan
Awards over ordinary shares made under the Group’s Long Term Incentive Plan are charged at fair value to the income statement over a
four-year vesting period. Fair value is calculated using the market value of the shares at the grant date, discounted for dividends forgone
over the vesting period of the award and adjusted based on an estimate at the year-end date of the extent to which the performance
conditions are expected to be met. Awards are structured as nil-cost options.
2023 2022
Number of Number of
ordinary ordinary
shares shares
Millions Millions
Rights outstanding at 1 January
0.5
0.1
Corporate transaction
–
0.4
Granted
0.2
–
Forfeited
(0.1)
–
Exercised
(0.1)
–
Rights outstanding at 31 December
0.5
0.5
Vested
0.1
0.1
Unvested
0.4
0.4
The weighted average exercise price per share is nil. A charge of £0.2 million (2022: £0.2 million) was recognised during the year.
The table below shows the expected charges for awards issued under the Long Term Incentive Plan to be expensed in future years:
£m
2024
0.2
2025
0.2
2026
0.1
0.5
(e) Share Incentive Plan
The employee monthly share purchase plan is open to UK permanent employees and provides free shares from the Group to match
the employee purchase of shares up to a maximum of £100 per month. The shares vest after one year.
Pursuant to this plan, the Group purchased 624,714 ordinary shares in 2023 (2022: 235,042). A charge of £2.5 million (2022: £2.4 million)
was recognised during the year.
(f) Cash-settled share-based awards
Certain employees have been awarded cash-settled equivalents to these share-based awards. The fair value of these awards is determined
using the same methods and models used to value the equivalent equity-settled awards. The fair value of the liability is remeasured at each
balance sheet date and at settlement date.
At 31 December 2023, the carrying value of liabilities arising from cash-settled share-based awards was £5.8 million (2022: £4.8 million).
The total intrinsic value at 31 December 2023 of liabilities for which the employee’s right to cash or other assets had vested by that date was
£3.1 million (2022: £2.7 million).
A charge of £1.2 million (2022: credit of £0.1 million) was recognised during the year. The liability was remeasured at the balance sheet date at
a share price of £4.30 (2022: £4.36).
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
148
25. Related party transactions
Transactions between the Group and parties related to the Group are required to be disclosed to the extent that they are necessary for an
understanding of the potential effect of the relationship on the financial statements. Other disclosures, such as key management personnel
compensation, are also required.
The Group is not deemed to be controlled or jointly controlled by a party directly or through intermediaries under the accounting standards.
As a result, the related parties of the Group are members of the Group, including associates and joint ventures, key management personnel,
close family members of key management personnel and any entity controlled by those parties.
Cash transactions with associates or joint ventures are reported in the cash flow statement and in note 9.
£18.7 million (2022: £24.5 million) was held in customer accounts in respect of amounts payable to key management personnel or their
related parties.
Included within loans and advances to clients are amounts due from related parties of £0.1 million (2022: £5.9 million). All related party loans
and advances were at commercial rates.
Some of the plan assets of the Schroders Retirement Benefit Scheme are invested in products managed by the Life Company (see note 14).
At 31 December 2023, the fair value of these assets was £50.2 million (2022: £94.4 million).
Transactions between the Group and its related parties were made at market rates. Any amounts outstanding are unsecured and will be settled
in cash. No guarantees have been given or received.
Key management personnel compensation
Key management personnel are defined as members of the Board or the Group Management Committee. The remuneration of key
management personnel during the year was as follows:
2023 2022
Type of remuneration
Typical composition of this type of benefit
£m £m
Short-term employee benefits
Salary and upfront bonus
23.2
23.0
Share-based payments
Deferred share awards
13.8
12.5
Other long-term benefits
Deferred cash awards
13.8
9.5
Termination benefits
Termination benefits
0.5
–
Post-employment benefits
Pension plans
0.2
0.2
51.5
45.2
The remuneration of key management personnel is based on individual performance and market rates. The remuneration policy (which applies
to Directors and management) is described in more detail at www.schroders.com/directors-remuneration-policy.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
149
Financial statements
26. Interests in structured entities
Structured entities are those entities that have been designed so that voting or similar rights are not the dominant factor in deciding who
has control, such as when any voting rights relate to administrative tasks only, or when the relevant activities are directed by means of
contractual arrangements. The Group’s interests in consolidated and unconsolidated structured entities are described below.
The Group has interests in structured entities as a result of contractual arrangements arising from its principal activity, the management
of assets on behalf of its clients. AUM, excluding deposits by Wealth Management clients and some segregated client portfolios held within
the Group’s Asset Management business, is managed within structured entities. These structured entities typically consist of investment
vehicles such as Open Ended Investment Companies, Authorised Unit Trusts, Limited Partnerships and Sociétés d’Investissement à Capital
Variable, which entitle investors to a percentage of the vehicle’s net asset value. The vehicles are financed by the purchase of units or shares
by investors. The Group also has interests in structured entities through proprietary investments. These are mainly into vehicles that help
facilitate the Group’s stated aim of generating a return on investment capital and when it deploys seed and co-investment capital in
developing new investment strategies or as it invests alongside its clients. Additionally, the Group holds interests in structured entities for
liquidity management purposes, for example via investments in money market funds.
The Group does not guarantee returns on the investments it manages or commit to financially support its structured entities. A small
proportion of the Group’s AUM, principally real estate funds, is permitted to raise finance through loans from banks and other financial
institutions. Where external finance is raised, the Group does not provide a guarantee for the repayment of any borrowings.
The business activity of all structured entities in which the Group has an interest, is the management of assets in order to generate
investment returns for investors from capital appreciation and/or investment income. The Group earns a management fee from its
structured entities, normally based on a percentage of the entity’s net asset value, committed capital value or gross asset value and,
where contractually agreed, a performance fee or carried interest, based on outperformance against predetermined benchmarks.
In addition, where the Group owns a proportion of the structured entity it is entitled to receive investment returns.
(a) Interests arising from managing assets
The Group’s interests in structured entities arising as a result of contractual relationships from its principal activity, the management of assets
on behalf of its clients, are reflected in the Group’s AUM excluding associates and joint ventures.
2023
AUM within AUM within
AUM outside consolidated unconsolidated
of structured structured structured
entities entities entities Total
£bn £bn £bn £bn
Asset Management
295.7
5.8
230.7
532.2
Wealth Management
98.1
–
12.1
110.2
393.8
5.8
242.8
642.4
2022
AUM within AUM within
AUM outside consolidated unconsolidated
of structured structured structured
entities entities entities Total
£bn £bn £bn £bn
Asset Management
281.8
8.0
228.6
518.4
Wealth Management
88.2
–
9.9
98.1
370.0
8.0
238.5
616.5
Certain AUM are managed outside of structured entities. Within Asset Management, this occurs either because it is formed of segregated
investment portfolios for institutional clients comprising directly held investments in individual financial instruments, or because the voting
structures of the vehicles themselves allow the investment manager to be removed without cause. Within Wealth Management, AUM is not
generally considered to be within structured entities as the contractual relationships exist directly with the client rather than with structured
entities, for example discretionary and advisory asset management and banking services. In addition, Wealth Management AUM in the form
of loans and advances to customers is conducted outside of structured entities.
Certain structured entities are deemed to be controlled by the Group and are accounted for as subsidiaries and consolidated in accordance
with the accounting standards. AUM within consolidated structured entities represents the net assets of the beneficial interest in the
consolidated structured entity owned by third parties.
AUM within unconsolidated structured entities constitutes the remaining balance, represented principally by the net asset value of pooled
vehicles managed for Intermediary clients, as well as some assets invested in pooled vehicles on behalf of Institutional and Wealth
Management clients. The Group’s beneficial interest in structured entities is not included within AUM and is described separately overleaf.
The Group has no direct exposure to losses in relation to the AUM reported above, as the investment risk is borne by clients. The main risk
the Group faces from its interest in AUM managed on behalf of clients is the loss of fee income as a result of the withdrawal of funds by clients.
Outflows from funds are dependent on market sentiment, asset performance and investor considerations.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
150
26. Interests in structured entities continued
(a) Interests arising from managing assets continued
Fee income includes £1,366.5 million (2022: £1,444.4 million) of fees from structured entities managed by the Group. The table below shows
the carrying value of the Group’s interests in structured entities as a result of its management of assets, where income is accrued over the
period for which assets are managed before being invoiced. The carrying value represents the Group’s maximum exposure to loss from
these interests.
2023 2022
£m £m
Fee debtors from structured entities
33.5
35.4
Accrued income from structured entities
306.0
272.4
Total exposure due to investment management activities
339.5
307.8
(b) Interest arising from the Group’s investment in unconsolidated structured entities
The table below shows the carrying values of the Group’s proprietary investments in unconsolidated structured entities, which resulted in a net
gain on financial instruments and other income of £43.9 million (2022: loss of £7.7 million). The carrying values represent the Group’s
maximum exposure to loss from these interests.
2023 2022
£m £m
Cash and cash equivalents
295.5
245.2
Financial assets
577.7
588.0
Total exposure due to the Group’s investments
873.2
833.2
The Group’s proprietary investments include interests in unconsolidated structured entities in the form of cash and cash equivalents and
financial assets. Cash and cash equivalents comprise investments in money market funds, none of which are managed by the Group (2022: nil).
Financial assets include seed and co-investment capital, legacy private equity investments and hedges of deferred cash awards. Of the financial
assets, £561.7 million (2022: £582.0 million) is invested in funds managed by the Group. The Group has no interest apart from its role as
investor in those funds for which it does not act as manager. The main risk the Group faces from its interests in unconsolidated structured
entities arising from proprietary investments is that the investments will decrease in value. Note 18 includes further information on the Group’s
exposure to market risk arising from proprietary investments.
The Group has contractual commitments to co-invest alongside its clients and provide a minimum level of capital for certain private assets
and alternative vehicles. The Group’s investment call commitments are set out in note 22.
The statement of financial position also includes the Life Company assets of £10,008.1 million (2022: £10,054.1 million), which are included in
AUM. The exposure to the risks and rewards associated with these assets is borne by unit-linked policyholders, or, where Life Company funds
are consolidated, third-party investors in those funds.
Financial support for consolidated structured entities where there is no contractual obligation to do so
The Group supports some of its funds through the injection of seed capital in order to enable the funds to establish a track record before they
are more widely marketed. During the year, the Group purchased units at a cost of £72.3 million (2022: £95.1 million) to provide seed capital
to investment funds managed by the Group, of which £28.4 million (2022: £41.8 million) resulted in the consolidation of those funds and
£43.9 million (2022: £53.3 million) did not.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
151
Financial statements
Presentation of the financial statements
(a) Basis of preparation
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.
The consolidated financial information presented within these
financial statements has been prepared on the going concern basis
under the historical cost convention, except for the measurement at
fair value of derivative financial instruments and financial assets and
liabilities that are held at fair value through profit or loss or at fair
value through other comprehensive income, liabilities to purchase
subsidiary shares, liabilities in respect of deferred cash awards and
deposits relating to bullion.
In making an assessment on going concern, the Directors have
considered a wide range of information relating to present and future
conditions, including future capital requirements, prediction of
profitability and cash flows. These assessments showed the Group
has sufficient capital and liquidity to support future business
requirements and adequate resources to continue as a going concern
for at least 12 months following approval of the financial statements.
The consolidated statement of financial position is shown in order
of liquidity. The classification between current and non-current is
set out in the notes. The Group’s Life Company business is reported
separately. If the assets and liabilities of the Group’s Life Company
business were to be included within existing captions on the
consolidated statement of financial position, the effect would be to
gross up a number of individual line items to a material extent. By not
doing this, the Group can provide a more transparent presentation
that shows the assets of the Life Company and the related unit-linked
liabilities as separate and distinct from the remainder of the
consolidated statement of financial position.
The Group’s principal accounting policies have been consistently
applied. Further information is provided below and highlighted in the
notes to the accounts.
(b) Future accounting developments
The Group did not implement the requirements of any standards or
interpretations that were in issue but were not required to be
adopted by the Group at the year end date. No standards or
interpretations have been issued that are expected to have a material
impact on the consolidated financial statements.
(c) Basis of consolidation
The consolidated financial information includes the total
comprehensive gains or losses, the financial position and the cash
flows of the Company and its subsidiaries, associates and joint
ventures. This includes share ownership trusts established for certain
share-based awards.
In the case of associates and joint ventures, those entities are
presented as single line items in the consolidated income statement
and consolidated statement of financial position (see note 9).
Intercompany transactions and balances are eliminated on
consolidation. Consistent accounting policies have been applied
across the Group in the preparation of the consolidated financial
statements. Details of the Company’s related undertakings are
presented in note 35.
The entities included in the consolidation may vary year on year
due both to the restructuring of the Group (including acquisitions and
disposals) and changes to the number of pooled investment vehicles
controlled by the Group.
Where the Group controls a pooled investment vehicle, it is
consolidated and the third party interest is recorded as a financial
liability until the Group loses control. This consolidation has no net
effect on the Group’s consolidated income statement.
The consolidated cash flow statement separately presents
acquisitions and disposals of interests in consolidated pooled
vehicles. Cash movements within the pooled vehicles are shown
net within cash flows from operating activities as the cash held within
the underlying pooled investment vehicles is restricted and is not
available to the Group for corporate purposes. This presentation
provides more relevant information about the impact of the Group’s
investment in pooled vehicles on corporate cash resources than an
analysis of the underlying cash flows of the vehicles.
The Group records any non-controlling interest at the proportionate
share of the acquiree’s identifiable assets. Where an option exists to
acquire a further interest in the shares of a subsidiary a financial
liability is recognised. These liabilities are measured at the present
value of the expected amount payable on exercise. As the option
relates to a change in the ownership interest of a subsidiary, the
non-controlling interest is adjusted and changes in value are
recognised directly in equity. If these options expire unexercised,
the financial liability is derecognised with the corresponding credit
recognised directly in equity.
The most significant non-controlling interest relates to third party
interests of 19.1% in Schroders Wealth Holdings Limited (SWHL). The
consolidated profit after tax of SWHL was £57.9 million for the year
(2022: £61.4 million). The net assets of SWHL were £312.1 million at
31 December 2023 (2022: £324.2 million). Dividends of £12.4 million
were paid to SWHL’s non-controlling interest during the year (2022:
£6.7 million).
No other non-controlling interest is considered to be individually
material on the basis of the carrying value at 31 December 2023
(2022: same).
(d) Net gains and losses on foreign exchange
Many subsidiaries are denominated in currencies other than sterling.
The results of these subsidiaries are translated at the average rate
of exchange. At the year end, the assets and liabilities are translated
at the closing rate of exchange. Gains or losses on translation are
recorded in the consolidated statement of comprehensive income
and as a separate component of equity together with gains or losses
on any hedges of overseas operations. Such gains or losses are
transferred to the consolidated income statement on disposal or
liquidation of the relevant subsidiary. Transactions undertaken in
foreign currencies are translated into the functional currency of
the subsidiary at the exchange rate prevailing on the date of
the transaction.
Foreign currency assets and liabilities, other than those measured at
historical cost, are translated into the functional currency at the rates
of exchange ruling at the year end date. Any exchange differences
arising are included within the consolidated income statement.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank, short-term
deposits with contractual maturities of less than three months and
money market funds that are readily convertible to cash.
Consolidated financial statements continued
Notes to the accounts continued
Schroders Annual Report and Accounts 2023
152
Presentation of the financial statements
continued
(f) Estimates and judgements
The preparation of the consolidated financial statements in
conformity with UK-adopted international accounting standards
requires the use of certain significant accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group’s accounting policies and in determining whether
certain assets and liabilities should be recorded or an impairment
recognised. Any areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant
to the consolidated financial statements, are disclosed within the
notes and identified under the title estimates and judgements.
Estimates and judgements used in preparing the financial statements
are periodically evaluated and are based on historical experience and
other factors, including expectations of future events that are believed
to be reasonable. The resulting accounting estimates may not equal
the related actual results.
In applying IFRS 10 Consolidated Financial Statements, the Group
uses judgement to determine whether its interests in funds (and
other similar entities), including those held by the Life Company,
constitute controlling interests. The Group can have interests in funds
in the form of proprietary investments or through its role as fund
manager. The Group usually deems control to exist where the Group
is the fund manager and its share of total variable returns exceeds
40% (including from ownership interests and management and
performance-based revenues). The Group usually deems that control
does not exist where the Group’s share of total variable returns is
below 30%. The Group reviews all facts and circumstances to establish
whether the Group has control. This includes consideration of the
purpose and design of the investee as well as the rights held by other
parties to remove the Group as the fund manager.
The other estimates and judgements that could have a significant
effect on the carrying amounts of assets and liabilities are set out in
the following notes, including sensitivities where relevant or material:
Note 2 Net operating revenue
Note 4 Tax expense
Note 7 Trade and other receivables
Note 8 Financial assets and liabilities
Note 12 Goodwill and intangible assets
Note 14 Unit-linked liabilities and assets backing unit-linked liabilities
Note 16 Provisions and contingent liabilities
Note 23 Retirement benefit obligations
Climate risks have been considered in the preparation of these
consolidated financial statements, principally through the valuation
of financial assets and impairment assessments.
Financial assets measured at fair value are principally valued using
traded prices or market observable inputs that incorporate potential
climate risks where appropriate. The valuation of some financial
instruments involves a greater level of judgement or estimation.
In these scenarios climate risks are incorporated where relevant in
the relevant assumptions, such as cash flow forecasts. For financial
assets carried at amortised cost, credit risk assessments also include
climate risk considerations.
Impairment assessments relating to goodwill and other intangible
assets depend on value in use and discounted cash flow models.
These valuations include climate risks in the relevant assumptions
where appropriate.
The Group’s net operating revenues are typically earned as an
agreed percentage of the value of AUM or based on the performance
of the underlying AUM. The potential impact of climate change on
the Group’s AUM and future net operating revenue generation is
considered in the principal risks and uncertainties section of this
Annual Report and Accounts.
These considerations did not have a material impact on the financial
reporting judgements and estimates in the current year. This reflects
the conclusion that climate change is not expected to have a
significant impact on the Group’s short-term cash flows including
those considered in the going concern and viability assessments.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
153
Financial statements
Notes
2023
£m
2022
£m
Assets
Trade and other receivables 29 1,426.9 1,462.4
Retirement benefit scheme surplus 23 138.3 136.3
Deferred tax 31 38.2 37.5
Investments in subsidiaries 35 3,092.6 3,092.6
Total assets 4,696.0 4,728.8
Liabilities
Trade and other payables 30 18.4 175.9
Deferred tax 31 34.6 34.1
Total liabilities 53.0 210.0
Net assets 4,643.0 4,518.8
Equity at 1 January 4,518.8 4,676.4
Profit for the year 464.9 275.3
Dividends (333.0) (332.1)
Other changes in equity (7.7) (100.8)
Equity at 31 December 4,643.0 4,518.8
The financial statements were approved by the Board of Directors on 28 February 2024 and signed on its behalf by:
Richard Oldfield
Director
Schroders plc – Statement of financial position
at 31 December 2023
Schroders plc financial statements
Schroders Annual Report and Accounts 2023
154
Schroders plc – Statement of changes in equity
for the year ended 31 December 2023
Notes
Share
capital
£m
Share
premium
£m
Own
shares
£m
Profit and
loss
reserve
£m
Total
£m
At 1 January 2023 322.4 84.3 (167.8) 4,279.9 4,518.8
Profit for the year – – – 464.9 464.9
Items that will not be reclassified to the income statement:
Net actuarial loss on defined benefit pension scheme 23 – – – (4.6) (4.6)
Tax on items taken directly to other comprehensive income – – – 1.1 1.1
Other comprehensive income – – – (3.5) (3.5)
Total comprehensive income for the year – – – 461.4 461.4
Own shares purchased 33 – – (60.8) – (60.8)
Share-based payments – – – 56.5 56.5
Tax in respect of share schemes – – – 0.1 0.1
Dividends 6 – – – (333.0) (333.0)
Transactions with shareholders – – (60.8) (276.4) (337.2)
Transfers – – 70.4 (70.4) –
At 31 December 2023 322.4 84.3 (158.2) 4,394.5 4,643.0
Notes
Share
capital
£m
Share
premium
£m
Own
shares
£m
Profit and
loss
reserve
£m
Total
£m
At 1 January 2022 282.5 124.2 (134.2) 4,403.9 4,676.4
Profit for the year – – – 275.3 275.3
Items that will not be reclassified to the income statement:
Net actuarial loss on defined benefit pension scheme 23 – – – (65.5) (65.5)
Tax on items taken directly to other comprehensive income – – – 16.4 16.4
Other comprehensive income – – – (49.1) (49.1)
Total comprehensive income for the year – – – 226.2 226.2
Own shares purchased 33 – – (108.9) – (108.9)
Share-based payments – – – 61.7 61.7
Tax in respect of share schemes – – – (0.2) (0.2)
Bonus issue 39.9 (39.9) – (4.3) (4.3)
Dividends 6 – – – (332.1) (332.1)
Transactions with shareholders 39.9 (39.9) (108.9) (274.9) (383.8)
Transfers – – 75.3 (75.3) –
At 31 December 2022 322.4 84.3 (167.8) 4,279.9 4,518.8
The distributable profits of Schroders plc are £2.8 billion (2022: £2.7 billion) and comprise retained profits of £3.0 billion (2022: £2.8 billion),
included within the ‘Profit and loss reserve’, less amounts held within the own shares reserve.
The Group’s ability to pay dividends is however restricted by the need to hold regulatory capital and to maintain sufficient other operating
capital to support its ongoing business activities. In addition, the Group invests in its own funds as seed capital for the purposes of supporting
new investment strategies. An analysis of the Group’s capital position is provided in note 18.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
155
Financial statements
2023
£m
2022
£m
Profit before tax 467.9 272.3
Adjustments for:
Decrease/(increase) in trade and other receivables 34.2 (31.7)
(Decrease)/increase in trade and other payables (152.1) 145.6
Net credit taken in respect of the scheme (6.6) (3.9)
Share-based payments 56.5 61.7
Net finance income adjustment (1.1) (3.0)
Net cash from operating activities 398.8 441.0
Cash flows from financing activities:
Loan (repaid)/received from a Group company (5.0) 4.3
Acquisition of own shares (60.8) (108.9)
Dividends paid (333.0) (332.1)
Other flows – (4.3)
Net cash used in financing activities (398.8) (441.0)
Net decrease in cash and cash equivalents – –
Opening cash and cash equivalents – –
Net decrease in cash and cash equivalents – –
Closing cash and cash equivalents – –
Schroders plc – Cash flow statement
for the year ended 31 December 2023
Schroders plc financial statements continued
Schroders Annual Report and Accounts 2023
156
Schroders plc – Notes to the accounts
27. Significant accounting policies
The separate financial statements of Schroders plc (Company) have been prepared on a going concern basis in accordance with UK-
adopted international accounting standards and in conformity with the requirements of the Companies Act 2006. The Company has taken
advantage of the exemption in section 408 of the Act not to present its own income statement and statement of comprehensive income.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those
set out in the Group’s financial statement note disclosures, where applicable. In addition, note 35 sets out the accounting policy in respect
of investments in subsidiary undertakings.
28. Expenses and other disclosures
The auditor’s remuneration for audit services to the Company was £0.7 million (2022: £0.7 million). There was £0.2 million of other assurance
services in the year (2022: £0.1 million).
Key management personnel compensation
The remuneration policy is described in more detail at www.schroders.com/directors-remuneration-policy. The Company has no employees.
The key management personnel of the Company are defined as the Board of Directors. The remuneration of key management personnel,
borne by the Company, during the year was as follows:
Type of remuneration Typical composition of this type of benefit
2023
£m
2022
£m
Short-term employee benefits Salary and upfront bonus 6.8 5.8
Share-based payments Deferred share awards 4.6 3.6
Other long-term benefits Deferred cash awards 1.9 1.6
13.3 11.0
29. Trade and other receivables
2023
£m
2022
£m
Amounts due from subsidiaries 1,426.2 1,461.3
Prepayments and accrued income 0.2 0.1
Other receivables 0.5 1.0
1,426.9 1,462.4
Trade and other receivables are initially recorded at fair value and subsequently at amortised cost. All trade and other receivables are due
within one year or repayable on demand.
Expected credit losses on trade and other receivables at 31 December 2023 were £1.4 million (2022: £1.1 million). Note 18 sets out the details
of the expected credit loss calculation.
30. Trade and other payables
2023 2022
Non-current
£m
Current
£m
Total
£m
Non-current
£m
Current
£m
Total
£m
Trade and other payables held at amortised cost:
Social security 1.3 1.0 2.3 1.3 0.6 1.9
Accruals 1.6 8.0 9.6 1.0 4.8 5.8
Amounts owed to subsidiaries – 6.4 6.4 – 168.2 168.2
Other payables – 0.1 0.1 – – –
2.9 15.5 18.4 2.3 173.6 175.9
The Company’s trade and other payables mature in the following time periods:
2023
£m
2022
£m
Less than one year 15.5 173.6
1–2 years 1.1 0.9
2–5 years 1.8 1.4
2.9 2.3
18.4 175.9
Amounts owed to subsidiaries include an interest-bearing loan of £2.1 million (2022: £7.1 million) that is repayable on demand.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
157
Financial statements
31. Deferred tax
2023 2022
Deferred
employee
awards
£m
Losses
£m
Pension
surplus
£m
Total
£m
Deferred
employee
awards
£m
Losses
£m
Pension
surplus
£m
Total
£m
At 1 January (2.7) (34.8) 34.1 (3.4) (3.1) (30.4) 49.3 15.8
Income statement (credit)/charge (0.4) (0.1) 1.5 1.0 0.5 (3.4) 1.0 (1.9)
Income statement (credit)/charge due
to changes in tax rates (0.2) – – (0.2) (0.3) (1.0) 0.2 (1.1)
Credit to statement of other
comprehensive income – – (1.1) (1.1) – – (12.5) (12.5)
Charge/(credit) to statement of other
comprehensive income due to
changes in tax rates – – 0.1 0.1 0.2 – (3.9) (3.7)
At 31 December (3.3) (34.9) 34.6 (3.6) (2.7) (34.8) 34.1 (3.4)
A deferred asset of £3.6 million (2022: £3.4 million) relating to £14.3 million of realised capital losses has not been recognised as there is
insufficient evidence that there will be sufficient capital gains in the future against which the deferred tax asset could be utilised.
Net deferred tax at 31 December comprises a deferred tax asset of £38.2 million (2022: £37.5 million) and a deferred tax liability of
£34.6 million (2022: £34.1 million).
32. Financial instrument risk management
The Company’s policy is to have adequate capital for all activities undertaken in the normal course of business. In particular, it should have
adequate capital to maintain sufficient liquid funds to meet peak working capital requirements. Generally, surplus capital is loaned back to
the Group’s investment capital management entities.
The risk management processes of the Company are aligned with those of the Group as a whole. Details of the Group’s risk management
processes are outlined in the ‘Risk management’ section within the Strategic report and the ‘Risk and internal controls’ section within
the Audit and Risk Committee report as well as in note 18. The Company’s specific risk exposures are explained below.
Credit risk
The Company has exposure to credit risk from its normal activities where the risk is that a counterparty will be unable to pay in full amounts
when due. The Company’s counterparties are predominantly its subsidiaries and therefore there is minimal external credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Company cannot meet its obligations as they fall due or can only do so at a cost. The Group’s liquidity policy is
to maintain sufficient liquidity to cover any cash flow funding, meet all obligations as they fall due and maintain solvency. The Company holds
sufficient liquid funds to cover its needs in the normal course of business. The Company can recall intercompany loans to subsidiaries or utilise
the Group loan facility to maintain sufficient liquidity.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in market
interest rates.
At 31 December 2023, if interest rates had been 50 bps lower (2022: 150 bps higher) or 150 bps lower (2022: 50 bps lower) with all other
variables held constant, the Company estimates that profit after tax for the year would have decreased by £5.2 million (2022: increased by
£14.9 million) or decreased by £15.6 million (2022: decreased by £5.0 million) respectively. These changes are mainly as a result of net interest
income on the Company’s interest-bearing intercompany receivables and payables and cash. Other components of equity are not directly
affected by interest rate movements.
The model used to calculate the effect on post-tax profits does not take into account the indirect effect of interest rates on the fair value
of other assets and liabilities.
Foreign exchange and pricing risk
Foreign exchange risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in foreign
exchange rates. Pricing risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in
market prices. The Company is not directly exposed to foreign exchange or pricing risk. The Company’s investments in its directly held
subsidiaries are in sterling and are held at historic cost. It has indirect exposure to foreign exchange and pricing risk in the Group, which could
result in the impairment of these subsidiaries. There are currently sufficient resources in subsidiaries to absorb any normal market events.
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
158
33. Own shares
Movements in own shares during the year were as follows:
2023
£m
2022
£m
At 1 January (167.8) (134.2)
Own shares purchased (60.8) (108.9)
Awards vested 70.4 75.3
At 31 December (158.2) (167.8)
During the year, 13.1 million own shares (2022: 4.4 million) were purchased and held for hedging share-based awards.14.2 million shares
(2022: 3.3 million) awarded to employees vested in the year and were transferred out of own shares.
The total number of shares in the Company held within the Company’s employee benefit trusts comprise:
2023 2022
Number of
vested
shares
Millions
Number of
unvested
shares
Millions
Total
Millions
Number of
vested
shares
Millions
Number of
unvested
shares
Millions
Total
Millions
Total ordinary shares 23.0 32.0 55.0 23.5 33.0 56.5
2023 2022
Vested
shares
£m
Unvested
shares
£m
Total
£m
Vested
shares
£m
Unvested
shares
£m
Total
£m
Total ordinary shares:
Cost 106.9 158.2 265.1 107.4 167.8 275.2
Fair value 98.9 137.5 236.4 102.7 143.9 246.6
34. Related party transactions
The Company is not deemed to be controlled or jointly controlled by a party directly or through intermediaries under the accounting standards.
As a result, the related parties of the Company comprise principally subsidiaries, associates and joint ventures, key management personnel,
close family members of key management personnel and any entity controlled by those parties.
The Company has determined that key management personnel comprises only the Board of Directors.
Transactions between related parties
Details of transactions between the Company and its subsidiaries, which are related parties of the Company, and transactions between
the Company and other related parties, excluding compensation (which is set out in note 28), are disclosed below:
2023
Revenue
£m
Expenses
£m
Interest
receivable
£m
Interest
payable
£m
Amounts owed
by related
parties
£m
Amounts owed
to related
parties
£m
Subsidiaries of the Company 454.0 (24.3) 50.4 (1.4) 1,426.2 (6.4)
Key management personnel 0.6 – – (0.3) 0.1 (17.0)
2022
Revenue
£m
Expenses
£m
Interest
receivable
£m
Interest
payable
£m
Amounts owed
by related
parties
£m
Amounts owed
to related
parties
£m
Subsidiaries of the Company 284.8 (18.9) 21.2 (5.4) 1,461.3 (168.2)
Key management personnel 0.8 – – (0.1) 5.9 (15.0)
Transactions with related parties were made at market rates. The amounts outstanding are unsecured and will be settled in cash.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
159
Financial statements
35. Subsidiaries and other related undertakings
The Group operates globally, which results in the Company having a corporate structure consisting of a number of related undertakings,
comprising subsidiaries, joint ventures, associates and other qualifying undertakings. A full list of these undertakings, the country of
incorporation, registered office, classes of shares held and the effective percentage of equity owned at 31 December 2023 is disclosed below.
Additionally, related undertakings include entities where the Company has a significant holding of a share class or unit class of a pooled
vehicle. These holdings can arise through the Group’s investment management activities on behalf of clients or as part of the stated aim
of generating a return on investment capital. The seeding of structured entities in order to develop new investment strategies can give rise
to these holdings. A listing of related undertakings arising from the Company’s interest in structured entities along with registered offices
is included on pages 171 to 174.
(a) Related undertakings arising from the Company’s corporate structure
Principal subsidiaries
The principal subsidiaries listed below are those that, in the opinion of the Directors, principally affect the consolidated profits or net assets
of the Company. The principal subsidiary entities are wholly owned subsidiary undertakings of the Company, unless otherwise stated.
All undertakings operate in the countries where they are registered or incorporated and are stated at cost less, where appropriate, provision
for impairment.
Name Share class Footnote % Address
UK
Leadenhall Securities Corporation Limited OS 100% 1 London Wall Place, London, EC2Y 5AU, England
Schroder & Co. Limited OS a 80.9%
Schroder Administration Limited OS b 100%
Schroder Corporate Services Limited OS 100%
Schroder Financial Holdings Limited OS 100%
Schroder Financial Services Limited OS 100%
Schroder International Holdings Limited OS 100%
Schroder Investment Company Limited OS 100%
Schroder Investment Management Limited OS 100%
Schroder Private Assets Holdings Limited OS 100%
Schroder Real Estate Investment Management Limited OS 100%
Schroder Unit Trusts Limited OS 100%
Schroder Wealth Holdings Limited OS 80.9%
Schroder Wealth International Holdings Limited OS 100%
Australia
Schroder Investment Management Australia Limited OS, CPS 100% Level 20, Angel Place, 123 Pitt Street, Sydney, NSW 2000, Australia
Guernsey
Schroder Investment Company (Guernsey) Limited OS,
Redeemable
100% PO Box 334, Regency Court, Glategny Esplanade, St. Peter Port,
Guernsey, GY1 3UF, Channel Islands
Schroders (C.I.) Limited OS 100%
Hong Kong
Schroder Investment Management (Hong Kong) Limited OS 100% Level 33, Two Pacific Place, 88 Queensway, Hong Kong, Hong Kong
Luxembourg
Schroder Investment Management (Europe) S.A. OS 100% 5 rue Höhenhof, L-1736 Senningerberg, Luxembourg
Singapore
Schroder Investment Management (Singapore) Ltd. OS 100% 138 Market Street, #23-01, CapitaGreen, Singapore, 048946,
Singapore
Switzerland
Schroder & Co Bank AG OS 100% Central 2, 8021, Zurich, Switzerland
Schroder Investment Management (Switzerland) AG OS 100% Central 2, 8001, Zurich, Switzerland
Schroders Capital Management (Switzerland) AG OS 100% Affolternstrasse 56, 8050, Zurich, Switzerland
United States
Schroder Investment Management North America Inc. COS 100% 7 Bryant Park, New York, New York, 10018, USA
Schroder US Holdings Inc. COS 100% National Registered Agents, Inc., 160 Greentree Drive, Suite 101,
Dover, Delaware, 19904, USA
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
160
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries
Name Share class Footnote % Address
UK
Croydon Gateway Nominee 1 Limited OS 100% 1 London Wall Place, London, EC2Y 5AU, England
Croydon Gateway Nominee 2 Limited OS 100%
Gatwick Hotel Feeder GP LLP PI 100%
J. Henry Schroder Wagg & Co. Limited OS 100%
Schroders Capital Junior Infrastructure Debt United Kingdom GP LLP PI 100%
Schroder Investment Management North America Limited OS 100%
Schroder Nominees Limited OS c 100%
Schroder Pension Management Limited OS 100%
Schroder Pension Trustee Limited OS 100%
Schroders IS Limited OS 100%
UK PEM Partners Limited OS 100%
Schroders Capital Private Equity Founder Partner (GP) Limited OS 100% 50 Lothian Road, Festival Square, Edinburgh,
EH3 9WJ, Scotland
Schroders Capital Private Equity Founder Partner Limited OS 100%
Schroders Capital Private Equity GP LLP PI 100%
TransPennine GP (Scot) LLP PI 100%
Advison Limited OS h 100% Broadlands Business Campus, Langhurstwood Road,
Horsham, West Sussex, RH12 4QP, England
Benchmark Capital Limited OS 100%
Benchmark Financial Planning Limited OS 100%
Best Practice IFA Group Limited OS 100%
Bright Square Pensions Limited OS 100%
Champain Financial Services Limited OS n 100%
Creative Technologies Ltd OS 100%
Evolution Wealth Network Limited OS 100%
Fusion Wealth Limited OS 100%
Kingston Bishop Limited OS l 100%
PP Nominees Limited OS 100%
PP Trustees Limited OS 100%
RIA Pension Trustees Limited OS 100%
Schroders Sustainable Invest Limited OS 100%
The Workplace Benefits Company Limited OS f 100%
Unique Financial Planning Limited OS m 100%
Chilcomb Wealth Ltd (In Liquidation) OS 100% Begbies Traynor (Central) LLP, Town Wall House,
Balkerne Hill, Colchester, Essex, CO3 3AD, England
CT Connect Limited (In Liquidation) OS c 100%
McPhersons Walpole Harding (Financial Services) Limited (In Liquidation) OS 100%
Mitchell & Company (IFA) Limited (In Liquidation) OS 100%
Mitchell & Company Holdings (Reigate) Limited (In Liquidation) OS 100%
Redbourne Wealth Management Limited (In Liquidation) OS 100%
Regents Park Financial Solutions Limited (In Liquidation) OS f 100%
RJC Consultancy Limited (In Liquidation) OS 100%
Waterhouse Financial Planning Limited (In Liquidation) OS 100% Begbies Traynor Scottish Provident Building,
7 Donegall Square West, Belfast, BT1 6JH,
Northern Ireland
Cazenove Capital Management Limited (In Liquidation) OS 100% CVR Global LLP, Town Wall House, Balkerne Hill,
Colchester, Essex, CO3 3AD, England
Unique Corporate Solutions Limited OS 100% 1 Cricklade Court, Old Town Swindon, Wiltshire,
SN1 3EY, England
Wealth Planning Limited OS 100% Strawberry Fields Digital Hub, Euxton Lane, Chorley,
Lancashire, PR7 1PS, England
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
161
Financial statements
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued
Name Share class Footnote % Address
Australia
Schroder Australia Holdings Pty Limited OS 100% Level 20, Angel Place, 123 Pitt Street, Sydney, NSW 2000, Australia
Austria
Schroder Real Estate Asset Management Österreich GmbH OS 100% Zwerchäckerweg 2-10, 1220 Vienna, Austria
Belgium
Algonquin Management Partners S.A. OS 100% Avenue Louise, 523 – 1050, Bruxelles, Belgium
Bermuda
Schroder Venture Managers Limited COS 100% Wellesley House, 2nd Floor, 90 Pitts Bay Road, Pembroke HM 08,
Bermuda
Schroders (Bermuda) Limited OS 100%
SITCO Nominees Limited OS 100%
Brazil
Schroder Investment Management Brasil Ltda OS 100% Av Presidente Juscelino Kubitschek, 1327, 12º andar, sala 121,
São Paulo, SP, 04543-011, Brazil
Canada
Schroder Canada Investments Inc. COS 100% Cidel Financial Group, 60 Bloor Street West, 9th Floor, Toronto,
Ontario, M4W 3B8, Canada
Cayman Islands
AEROW SMA Management I L.P. PI 100% Maples & Calder, PO Box 309 GT, Ugland House, South Church
Street, George Town, Grand Cayman, Cayman Islands
AEROW SMA Management II L.P. PI 100%
PEM Partners Ltd OS 100%
Schroders Capital cPl Global Management III L.P. PI 100%
Chile
Schroders Chile SpA OS 100% Avenida Cerro El Plomo 5420 Oficina 1104, Les Condes, Santiago,
Chile
China
Schroder Fund Management (China) Company Limited OS 100% Unit 33T52A, 33F, 100 Century Avenue, FTZ, Shanghai, China
Schroder Investment Management (Shanghai) Co., Ltd. OS 100% Unit 33T72, 33F, 100 Century Avenue, FTZ, Shanghai, China
Schroders Capital Private Fund Management (Shanghai)
Co., Ltd.
OS 100% Unit 33T52B, 33F, Shanghai World Financial Centre, 100 Century
Avenue, FTZ, Shanghai, China
Schroders Capital Investment Management (Beijing) Co., Ltd. OS 100% Room 1929-1932, Winland International Finance Centre, 7
Finance Street, Xicheng District, Beijing, China
Schroders Capital GP Management (Shanghai) Co., Ltd. OS 100% Room E-F, No. 828-838 Zhangyang Road, Shanghai Free Trade
Zone, Shanghai, China
Curaçao
cPl Schroders Capital Investments Management B.V. OS 100% Johan van, Walbeeckplein 11, Willemstad, Curaçao
Schroder Adveq Investors B.V. OS 100%
Schroders Capital Management (Curaçao) N.V. OS 100%
France
Holdco LC Paris Blomet SAS OS 100% 1 rue Euler, 75008, Paris, France
Schroder Real Estate (France) OS 100%
Schroders Capital Management (France) OS 100%
Schroders Capital Mid Infra II UP OS 100%
Schroder Mid Infra UP OS 100%
Schroders IDF IV UP OS 100%
Germany
Blitz 06-953 GmbH OS 100% Taunustor 1, 60310, Frankfurt, Germany
Real Neunzehnte Verwaltungsgesellschaft mbH OS 100%
Schroder Eurologistik Fonds Verwaltungs GmbH OS 100%
Schroder Holdings (Deutschland) GmbH CS 100%
Schroder Italien Fonds Verwaltungs GmbH (In Liquidation) OS 100%
Schroder Real Estate Investment Management GmbH OS 100%
Schroder Real Estate Kapitalverwaltungsgesellschaft mbH OS 100%
Schroders Capital Management (Deutschland) GmbH OS 100%
SIMA 5 Verwaltungsgesellschaft mbH OS 100%
Schroder Real Estate Asset Management Austria GmbH OS 100% Geitnau 53, 83735, Bayerischzell, Bavaria, Germany
Schroder Real Estate Asset Management GmbH OS 100%
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
162
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued
Name Share class Footnote % Address
Guernsey
Burnaby Insurance (Guernsey) Limited OS 100% Heritage Hall, Le Marchant Street, St.
Peter Port, Guernsey, GY1 4JH, Channel
Islands
CC Private Assets Equity PCC Limited OS 100% Trafalgar Court, Les Banques, St. Peter
Port, Guernsey, GY1 3QL, Channel Islands
CC Private Assets Yield Limited OS 100%
CC Private Debt Feeder Company Limited OS 100%
CC Private Equity Feeder Company PCC Limited OS 100%
Schroder Venture Managers (Guernsey) Limited OS, NCRPS 100%
Schroders Wealth Private Assets PCC Limited OS 100%
Schroder Investment Management (Guernsey) Limited OS 100% PO Box 334, Regency Court, Glategny
Esplanade, St. Peter Port, Guernsey, GY1
3UF, Channel Islands
Schroder Investments (Guernsey) Limited OS, R 100%
Schroder Nominees (Guernsey) Limited OS 100%
Secquaero Re (Guernsey) ICC Ltd OS 100% PO Box 33, Dorey Court, Admiral Park, St.
Peter Port, Guernsey, GY1 4AT, Channel
Islands
Hong Kong
Schroder & Co. (Hong Kong) Limited OS 100% 5/F, Manulife Place, 348 Kwun Tong Road,
Kowloon, Hong Kong, Hong Kong
Ireland
Schroder Investment Management (Ireland) Limited OS 100% George’s Court, 54-62 Townsend Street,
Dublin 2, Ireland
Japan
Schroder Investment Management (Japan) Limited OS 100% 8-3, Marunouchi 1-chome, Chiyoda-ku,
Tokyo, 100-0005, Japan
Jersey
AAF Management II L.P. PI 100% 26 New Street, St. Helier, Jersey, JE2 3RA,
Channel Islands
AAF Management III L.P. PI 100%
BKMS Management L.P. PI 100%
BKMS Management II L.P. PI 100%
Confluentes Partners I L.P. PI 100%
Confluentes Partners II L.P. PI 100%
CPPEF Partners L.P. PI 100%
Cresta Management L.P. PI 100%
Cresta Management II L.P. PI 100%
Cresta Partners III L.P. PI 100%
EEM Management L.P. PI 100%
EEM Management II L.P. PI 100%
EEM Opportunities Management L.P. PI 100%
Gemini Management L.P. PI 100%
GPEP Management I L.P. PI 100%
GPEP Management IV L.P. PI 100%
GPEP Partners V L.P. PI 100%
IST3 Manesse PE Management L.P. PI 100%
IST3 Manesse PE2 Management L.P. PI 100%
Malatrex Partners L.P. PI 100%
Marmolata Partners L.P. PI 100%
Marmolata PE Impact Partners L.P. PI 100%
Milele Partners L.P. PI 100%
PSY Private Equity Partners L.P. PI 100%
PSY Private Equity Partners II L.P. PI 100%
SA Co-Investment Management 1 L.P. PI 100%
SA RP CO Management 1 L.P. PI 100%
SA TG Management L.P. PI 100%
SA VS Management L.P. PI 100%
SA-EL Asia Partners I L.P. PI 100%
SA-EL Partners II L.P. PI 100%
SC-SA Co-Invest Opportunities 2018 Management L.P. PI 100%
Salève 2017 Management L.P. PI 100%
Salève 2020 Management L.P. PI 100%
Salève 2022 Partners L.P. PI 100%
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
163
Financial statements
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued
Name Share class Footnote % Address
Jersey (continued)
SC Global Opportunities Management L.P. PI 100% 26 New Street, St. Helier, Jersey, JE2 3RA,
Channel Islands
Schroder Adveq Shanghai Private Equity Investment Management L.P. PI 100%
Schroders Capital cPl Global Management S.à r.l. OS 100%
Schroders Capital cPl Global Partners IV L.P. PI 100%
Schroders Capital cPl Global Partners V L.P. PI 100%
Schroders Capital Multi Private Credit Management L.P. PI 100%
Schroders Capital Private Equity Asia Partners V L.P. PI 100%
Schroders Capital Private Equity Asia Partners VI L.P. PI 100%
Schroders Capital Private Equity China Partners IV L.P. PI 100%
Schroders Capital Private Equity China Partners VI L.P. PI 100%
Schroders Capital Private Equity Europe Direct Partners II L.P. PI 100%
Schroders Capital Private Equity Europe Direct Partners III L.P. PI 100%
Schroders Capital Private Equity Europe Partners VII L.P. PI 100%
Schroders Capital Private Equity Europe Partners VIII L.P. PI 100%
Schroders Capital Private Equity Europe Partners IX L.P. PI 100%
Schroders Capital Private Equity Global Direct Partners III L.P. PI 100%
Schroders Capital Private Equity Global Direct Partners IV L.P. PI 100%
Schroders Capital Private Equity Global Innovation Partners IX L.P. PI 100%
Schroders Capital Private Equity Global Innovation Partners X L.P. PI 100%
Schroders Capital Private Equity Global Innovation Partner XI L.P. PI 100%
Schroders Capital Private Equity Global Partners II L.P. PI 100%
Schroders Capital Private Equity Global Partners III L.P. PI 100%
Schroders Capital Private Equity Healthcare Partners L.P. PI 100%
Schroders Capital Private Equity India Partners L.P. PI 100%
Schroders Capital Private Equity Mature Secondaries (Orthros) Management L.P. PI 100%
Schroders Capital Private Equity Mature Secondaries (Orthros) Management II L.P. PI 100%
Schroders Capital Private Equity Mature Secondaries (Orthros) Management III L.P. PI 100%
Schroders Capital Private Equity Mature Secondaries (Orthros) Management IV L.P. PI 100%
Schroders Capital Private Equity Secondaries Management III L.P. PI 100%
Schroders Capital Private Equity Secondaries Partners IV L.P. PI 100%
Schroders Capital Private Equity US Partners V L.P. PI 100%
Schroders Capital Private Equity US Partners VI L.P. PI 100%
Schroders Capital Taft-Hartley Ventures Partners L.P. PI 100%
Schroders Capital WPP Global Private Equity Management I L.P. PI 100%
TMC Management III L.P. PI 100%
TMC Management IV L.P. PI 100%
TMC Management V L.P. PI 100%
TMCO Management I L.P. PI 100%
Wilmersdorf Secondary Management II L.P. PI 100%
Cazenove Capital Holdings Limited (In Liquidation) OS 100% 44 Esplanade, St. Helier, Jersey, JE4 9WG,
Channel Islands
Schroders Capital Management (Jersey) Ltd OS 100% 40 Esplanade, St. Helier, Jersey, JE2 9WB,
Channel Islands
Schroders Capital Private Equity Wollstonecraft Management Ltd. OS 100%
Schroders Capital WPP Global Private Equity Management Ltd. OS 100%
Croydon Gateway GP Limited OS 100% 47 Esplanade, St. Helier, Jersey, JE1 0BD,
Channel Islands
Croydon Gateway Investments Limited OS 100%
Income Plus Real Estate Debt GP Limited OS 100%
Schroder Real Estate Managers (Jersey) Limited OS 100%
Schroder RECaP SSF Nominee 1 Limited OS h 100%
Schroder RECaP Nominee 2 Limited OS h 100%
SRECaP SSF GP Limited OS 100%
UK Retirement Living Fund (ReLF) GP Limited OS 100%
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
164
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued
Name Share class Footnote % Address
Luxembourg
Confluentes Management S.à r.l. OS 100% 17, boulevard F.W. Raiffeisen, L-2411,
Luxembourg
CPPEF Management S.à r.l. OS 100%
Cresta Management S.à r.l. OS 100%
GPEP Management S.à r.l. OS 100%
KVT PE Management S.à r.l. OS 100%
Manesse PE Management S.à r.l. OS 100%
Marmolata Management S.à r.l. OS 100%
PE III Management S.à r.l. OS 100%
PSY Private Equity Management S.à r.l. OS 100%
Salève Management S.à r.l. OS 100%
Schroders Capital Insurance-linked Opportunities GP S.à r.l. OS 100%
Schroders Capital Management (Luxembourg) S.à r.l. OS 100%
Schroders Capital Private Equity Asia Management V S.à r.l. OS 100%
Schroders Capital Private Equity Asia Management VI S.à r.l. OS 100%
Schroders Capital Private Equity China Management S.à r.l. OS 100%
Schroders Capital Private Equity Europe Direct Management III S.à r.l. OS 100%
Schroders Capital Private Equity Europe Management VIII S.à r.l. OS 100%
Schroders Capital Private Equity Europe Management IX S.à r.l. OS 100%
Schroders Capital Private Equity Global Direct Management III S.à r.l. OS 100%
Schroders Capital Private Equity Global Direct Management IV S.à r.l. OS 100%
Schroders Capital Private Equity Global Innovation Management X S.à r.l. OS 100%
Schroders Capital Private Equity Global Innovation Management XI S.à r.l. OS 100%
Schroders Capital Private Equity Global Management III S.à r.l. OS 100%
Schroders Capital Private Equity Healthcare Management S.à r.l. OS 100%
Schroders Capital Private Equity India Management S.à r.l. OS 100%
Schroders Capital Private Equity Secondaries Management IV S.à r.l. OS 100%
Schroders Capital Private Equity US Management V S.à r.l. OS 100%
Schroders Capital Private Equity US Management VI S.à r.l. OS 100%
Schroders Capital Semi-Liquid Global Private Equity Holding Management
S.à r.l.
OS 100%
Schroders Capital Solutions Management S.à r.l. OS 100%
Schroders Capital Junior Infrastructure Debt Europe II GP S.à r.l. OS 100% 46A Avenue J.F.Kennedy, L-1855, G.D.
Luxembourg
Schroders Capital Junior Infrastructure Debt Europe III GP S.à r.l. OS 100%
Schroders Capital Senior Infrastructure Debt Europe V GP S.à r.l. OS 100%
IED UK GP S.à r.l. OS 100% 15 boulevard F.W. Raiffeisen, L-2411,
Luxembourg
Schroders Capital European Operating Hotels GP S.à r.l. OS 100%
Schroders Capital Real Estate Debt GP S.à r.l. OS 100%
SNI Management S.à r.l. OS 100%
Schroder IFL S.à r.l. (In Liquidation) OS 100% 5 rue Höhenhof, L-1736 Senningerberg,
Luxembourg
Schroder Real Estate (CIP) GP S.à r.l. OS 100%
Schroder Real Estate Investment Management (Luxembourg) S.à r.l. OS 100%
Schroders Greencoat European Renewables GP S.à r.l. OS 100% 8, rue Lou Hemmer, L-1748 Senningerberg,
Grand Duchy of Luxembourg
Schroders Greencoat European Renewables SCSp PI 100%
Schroders Greencoat U.S. Renewable Energy Infrastructure GP, S.à r.l. OS 100%
Schroders Capital Real Estate Asia IV SCSp PI 100% 4 Rue du Fort Wallis, L-2714, Luxembourg
Schroders Capital Insurance-linked Opportunities SCSp PI 100% 7, rue Robert Stümper, L-2557 Luxembourg
Schroders Capital Hybrid Enhanced Return Infrastructure GP S.à r.l. OS 100% 60, avenue J.F. Kennedy, L-1855 Luxembourg
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
165
Financial statements
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued
Name Share class Footnote % Address
Netherlands
Schroders Capital Real Estate Netherlands B.V. OS 100% Strawinskylaan 1547, WTC, Level 14, 1077 XX
Amsterdam, Netherlands
Cairn KS Management Services B.V. OS 100% Strawinskylaan 1547, WTC, Level 15, 1077 XX
Amsterdam, Netherlands
Dutch REAM B.V. OS 100%
HCRE Beheerder B.V. OS 100%
Real Estate Fund Management B.V. OS 100%
Real Estate Management B.V. OS 100%
RES Participations B.V. OS 100%
Schroder International Finance B.V. OS 100% 1 London Wall Place, London, EC2Y 5AU, England
Singapore
Schroder & Co. (Asia) Limited OS 100% 138 Market Street, #23-02, CapitaGreen,
Singapore, 048946, Singapore
SWM Capital VCC OS 100%
Schroder Singapore Holdings Private Limited OS 100% 138 Market Street, #23-01, CapitaGreen,
Singapore, 048946, Singapore
South Korea
Schroders Korea Limited OS 100% 15th fl., Centropolis A, 26, Ujeongguk-ro,
Jongno-gu, Seoul, Republic of Korea
Switzerland
Schroder Real Estate Asset Management Switzerland GmbH OS 100% Lavaterstrasse 40, 8002, Zurich, Switzerland
Schroders Capital Holding (Switzerland) AG OS 100% Affolternstrasse 56, 8050, Zurich, Switzerland
Taiwan
Schroder Investment Management (Taiwan) Limited OS 100% 9/F, 108 Sec.5, Hsin-Yi Road, Hsin-Yi District,
Taipei 11047, Taiwan
United States
Schroder Canada Inc. OS 100% 7 Bryant Park, New York, New York, 10018, USA
Schroder Fund Advisors LLC COS 100%
Schroder Venture Managers Inc. COS 100%
Schroders Incorporated COS 100%
Schroder FOCUS II GP, LLC PI 100% Corporate Trust Center, 1209 Orange Street,
Wilmington, Delaware, 19801, USA
Schroder Flexible Secured Income GP, LLC PI 100%
Schroder Helix Investment Partner LLC OS 100%
Schroder Taft-Hartley Income GP, LLC PI 100%
Schroders Capital ERISA Flexible Secured Income GP, LLC PI 100%
Schroders Capital FOCUS III GP, LLC PI 100%
Schroders Capital Management (US) Inc. OS 100%
Schroders Capital PERLS GP, LLC PI 100%
Schroders Capital PILLARS GP, LLC PI 100%
Schroders Capital Securitized Hi-Grade Flexible Total Return GP, LLC PI 100%
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
166
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Subsidiaries where the ownership is less than 100%
Name Share class Footnote % Address
UK
Cazenove New Europe (CFM1) Limited OS a, c 80.9% 1 London Wall Place, London, EC2Y 5AU, England
Cazenove New Europe (PPI) Limited OS a, c 80.9%
Cazenove New Europe Staff Interest Limited OS a, c 80.9%
Residential Land Development (GP) LLP PI f 67%
Sand Aire Limited OS a 80.9%
Schroder & Co Nominees Limited OS a, c 80.9%
Schroder Wealth Management (US) Limited OS a 80.9%
The Lexicon Management Company Limited OS f 50%
Greencoat Buckingham GP Unlimited OS f, k 75% 4th Floor, The Peak, 5 Wilton Road, London,
SW1V 1AN, England
Greencoat Buckingham Investments LLP PI f, k 75%
Greencoat Capital Management Investment Limited OS f, k 75%
Greencoat Carlisle Place GP LLP PI k 75%
Greencoat Carlisle Place Investments Limited OS k 75%
Greencoat Cornwall Gardens GP LLP PI k 75%
Greencoat Cornwall Gardens Investments Limited OS k 75%
Greencoat Embankment GP LLP PI k 75%
Greencoat Embankment Investments Limited OS k 75%
Greencoat GRI Investments Limited OS k 75%
Greencoat Hudson GP LLP PI k 75%
Greencoat Hudson Investments Limited OS k 75%
Greencoat Sejong GP LLP PI k 75%
Greencoat Sejong Investments Limited OS k 75%
Greencoat Solar GP Unlimited OS k 75%
Greencoat Solar II GP Unlimited OS k 75%
Greencoat Solar II Investments LLP PI k 75%
Greencoat Solar Investments LLP PI k 75%
Greencoat Tachbrook GP LLP PI k 75%
Greencoat Tachbrook Investments Limited OS k 75%
Greencoat Tothill GP LLP PI k 75%
Greencoat Tothill Investments Limited OS k 75%
Greencoat Villiers GP LLP PI k 75%
Greencoat Villiers Investments Limited OS k 75%
Greencoat Wilton GP LLP PI k 75%
Greencoat Wilton Investments Limited OS k 75%
Greencoat York GP LLP PI k 75%
Greencoat York Investments Limited OS k 75%
Schroders Greencoat Holdings Limited OS f 75%
Schroders Greencoat Investment Limited OS k 75%
Schroders Greencoat LLP PI f, k 75%
Schroders Greencoat Glasgow Terrace GP LLP PI k 75% The Peak, 5 Wilton Road, London, SW1V 1AN,
England
Schroders Greencoat Wessex Gardens GP LLP PI k 75%
Schroders Greencoat Willow GP LLP PI k 75%
Schroders Greencoat Woodmont Renewables GP LLP PI k 75%
Greencoat GRI GP LLP PI k 75% 50 Lothian Road, Festival Square, Edinburgh,
EH3 9WJ, Scotland
Greencoat Sejong FP LP PI k 75%
Oculus Wealth Management Limited OS 51% Bridge House Main Street, Weeton, Leeds, LS17
0AY, England
Oculus (Holdings) Limited OS 51%
Tenacity Wealth Management Limited OS o 49% Haslemere House, Lower Street, Haslemere,
Surrey, GU27 2PE, England
Argentina
Schroder Investment Management S.A. OS 95% Ing.Enrique Butty 220, Piso 12, Buenos Aires,
C1001AFB, Argentina
Schroder S.A. Sociedad Gerente de Fondos Comunes de Inversion OS 95%
British Virgin Islands
Alpha Park Limited OS g 56.7% Vistra Corporate Services Centre, Wickhams Cay II,
Road Town, Tortola, VG1110, British Virgin Islands
Flete Holdings Limited OS g 56.7%
Pamfleet China Limited OS g 56.7%
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
167
Financial statements
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Subsidiaries where the ownership is less than 100% continued
Name Share class Footnote % Address
Cayman Islands
Pamfleet China Investment Management Limited OS g 56.7% Maples Corporate Services Limited, PO Box 309,
Ugland House, Grand Cayman, KY1-1104,
Cayman Islands
Pamfleet China Investment Management II Limited OS g 39.7%
Pamfleet International Limited OS g 56.7%
Schroders HKHS G.P. OS g 56.7%
Schroder Adveq Europe Management II L.P. PI 20% Maples & Calder, PO Box 309 GT, Ugland House,
South Church Street, George Town, Grand
Cayman, Cayman Islands
Schroder Adveq Technology Management V L.P. PI 89%
Schroder Adveq Technology Management VI L.P. PI 65%
Schroder Adveq US Management I L.P. PI 76%
Schroders Capital cPl Global Management L.P. PI 63%
Schroders Capital cPl Global Management II L.P. PI 88%
Schroders Capital Private Equity Asia Management L.P. PI 75%
Schroders Capital Private Equity Asia Management II L.P. PI 65%
Schroders Capital Private Equity Europe Management IV A L.P. PI 59%
Schroders Capital Private Equity Europe Management IV B L.P. PI 70%
Schroders Capital Private Equity US Management II L.P. PI 87%
China
Pamfleet (Shanghai) Enterprise Management Limited OS g 56.7% 302 Block 9 No 697 Weihai Road, Jing’An,
Shanghai, China
France
Terre et Mer Holding SAS OS 80% 1 rue Euler, 75008, Paris, France
Germany
CM Komplementr 06-379 GmbH & Co KG OS 95% Taunustor 1, 60310, Frankfurt, Germany
Schroders Greencoat (Deutschland) GmbH CS f, k 75%
Guernsey
SV (Nominees) Limited OS h 50% PO Box 255, Trafalgar Court, Les Banques,
St. Peter Port, Guernsey, GY1 3QL, Channel Islands
Hong Kong
Pamfleet Asset Management (China) Limited OS g 56.7% Level 33, 88 Queensway, Hong Kong, Hong Kong
Pamfleet Asset Management (HK) Limited OS g 56.7%
Pamfleet (HK) Limited OS g 56.7%
Pamfleet Holdings (Hong Kong) Limited OS 56.7%
Indonesia
PT Schroder Investment Management Indonesia OS 99% 30th Floor, Indonesia Stock Exchange Building,
Tower 1, Jl Jendral Sudirman Kav 52-53, Jakarta,
12190, Indonesia
Ireland
Schroders Greencoat (Ireland) Limited OS f, k 75% Riverside One, 37-42 Sir John Rogerson’s Quay,
Dublin 2, D02 X576, Ireland
Jersey
AAF Management I L.P. PI 48% 26 New Street, St. Helier, Jersey, JE2 3RA,
Channel Islands
GPEP Management II L.P. PI 70%
GPEP Management III L.P. PI 70%
Schroder Adveq Europe Management III L.P. PI 87.9%
Schroders Capital Private Equity Asia Management III L.P. PI 53%
Schroders Capital Private Equity Asia Management IV L.P. PI 70%
Schroders Capital Private Equity Europe Direct Management L.P. PI 73%
Schroders Capital Private Equity Europe Management V L.P. PI 73%
Schroders Capital Private Equity Europe Management VI L.P. PI 74%
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
168
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Subsidiaries where the ownership is less than 100% continued
Name Share class Footnote % Address
Jersey (continued)
Schroders Capital Private Equity Global Innovation Management VII L.P. PI 46% 26 New Street, St. Helier, Jersey, JE2 3RA,
Channel Islands
Schroders Capital Private Equity Global Innovation Management VIII L.P. PI 78%
Schroders Capital Private Equity Global Management L.P. PI 71%
Schroders Capital Private Equity Secondaries Management II L.P. PI 53%
Schroders Capital Private Equity US Management III L.P PI 51%
Schroders Capital Private Equity US Management IV L.P. PI 73%
TMC Management I L.P. PI 54%
TMC Management II L.P. PI 49%
Wilmersdorf Secondary Management L.P. PI 71%
Luxembourg
BlueOrchard Asset Management (Luxembourg) S.A. OS h, i 90% 5 rue Höhenhof, L-1736 Senningerberg,
Luxembourg
BlueOrchard Invest S.à r.l. OS h, i 90%
Schroder Property Services B.V. OS 70%
Schroders Capital Hotels (CIP) SCSp PI 73.8%
SEOHF (CIP) SCSp PI 99.9%
SEOHF AGGREGATOR (CIP) SCSp PI 78.6%
SRE ReLF (CIP) SCSp PI 67.5%
SRE SoHo (CIP) SCSp PI 65.5%
Schroders Capital Real Estate Asia IV GP S.à r.l. OS g 56.7% 4 rue du Fort Wallis, 2714 Luxembourg,
Grand Duchy of Luxembourg
SRE Invest SCSp PI 99.7% 15 boulevard F.W. Raiffeisen, L-2411, Luxembourg
Mexico
Consultora Schroders, S.A. de C.V. OS d, e 99% Montes Urales 760 Desp. 101, Col. Lomas de
Chapultepec, Mexico, DF, 11000, Mexico
Netherlands
Data Invest B.V. OS 21.9% Strawinskylaan 1547, WTC Level 15, 1077 XX
Amsterdam, Netherlands
Frame Offices B.V. OS 40%
ITC Invest B.V. OS 30.4%
RES Retail B.V. OS 51.5%
RES Transit II B.V. OS, PS d 58.7%
Schroders Greencoat (Nederland) B.V. OS f, k 75% World Trade Center, Tower C, Level 15,
Strawinskylaan 1547, 1077 XX, Amsterdam,
Netherlands
Peru
BlueOrchard America Latina S.A.C. OS i 90% Calle Dean, Valdivia 227, Office 501, San Isidro,
Lima, Peru
Singapore
BlueOrchard Investments Singapore Pte. Ltd OS i 90% 138 Market Street, #23-01, CapitaGreen, Singapore
048946, Singapore
Pamfleet Asset Management (Singapore) Pte. Limited OS g 56.7% 61 Club Street, Singapore 069436, Singapore
Switzerland
BlueOrchard Finance AG OS 90% Seefeldstrasse 233, 8008, Zurich, Switzerland
United States
Schroders Greencoat US LLC PI f, k 75% 251 Little Falls Drive, City of Wilmington, County of
New Castle, Delaware 19808, USA
Greencoat Columbus GP LLC PI k 75% Maples Fiduciary Services (Delaware) Inc., 4001
Kennett Pike, Suite 302, Wilmington, Delaware
19807, USA
Greencoat Columbus II GP LLC PI k 75%
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
169
Financial statements
35. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Associates and joint ventures
Name Share class Footnote % Address
UK
Chartered Independent Limited OS j 49% 6 Church Street, Wellington, Telford, TF1 1DG,
England
Clarke-Walker Financial Management Limited OS j 49% 125-135 Preston Road, Fifth Floor Telecom House,
Brighton, BN1 6AF, England
Finura Partners Limited OS 49% 15 Bowling Green Lane, London, EC1R 0BD,
England
James Harvey Associates Limited OS d, e 49%
Kellands (Bristol) Limited OS 30.8% Quays Office Park, Conference Avenue,
Portishead, Bristol, BS20 7LZ, England
Rayner Spencer Mills Research Limited OS 49% 20 Ryefield Business Park, Belton Road, Silsden,
Keighley, West Yorkshire, BD20 0EE, England
Retirement Planning Partnership Ltd OS e 52.4% Kestrel House, Alma Road, Romsey, Hampshire,
SO51 8ED, England
Nippon Life Schroders Asset Management Europe Limited OS d 33% 1 London Wall Place, London, EC2Y 5AU, England
Ruskin Square Phase One LLP PI 50%
Social Supported Housing CIP LLP PI 50%
Social Supported Housing GP LLP PI 50%
Robertson Baxter Limited OS 24% Beck House, Abbey Road, Shepley, Huddersfield,
HD8 8EP, England
Scottish Widows Schroder Wealth Holdings Limited OS 49.9% 25 Gresham Street, London, EC2V 7HN, England
Australia
Schroders RF Limited OS h 50.1% Level 20, Angel Place, 123 Pitt Street, Sydney, NSW
2000, Australia
Belgium
Algonquin Astrid PS 33% Avenue Louise, 523 – 1050 Bruxelles, Belgium
British Virgin Islands
Graceful Lane Limited OS 30% Vistra Corporate Services Centre, Wickhams Cay II,
Road Town, Tortola, VG1110, British Virgin Islands
China
Bank of Communications Schroder Fund Management Company Limited OS 30% 2nd Floor Bank of Communications Tower,
188 Middle Yincheng Road, Pudong New Area,
Shanghai, 200120, China
Schroder BOCOM Wealth Management Company Limited OS 51% Floor 59, Wheelock Square, No. 1717, West
Nanjing Road, Jingan District, Shanghai, China
France
JV Hotel Paris La Villette SAS OS 50% 1 rue Euler, 75008, Paris, France
Guernsey
Schroder Ventures Investments Limited OS, R, D, B
Preference
50% PO Box 255, Trafalgar Court Les Banques,
St. Peter Port, Guernsey, GY1 3QL, Channel Islands
India
Axis Asset Management Company Limited OS f 25% 1st Floor, Axis House C-2 Wadia International
Centre, Pandurang Budhkar Marg, Worli-Mumbai,
400025, India
Axis Mutual Fund Trustee Limited OS f 25%
Jersey
Bracknell General Partner Limited OS e 50% 47 Esplanade, St. Helier, Jersey, JE1 0BD,
Channel Islands
UK Retirement Living (CIP) GP Limited OS 50%
Singapore
Nippon Life Global Investors Singapore Limited OS 33% 138 Market Street, #34-02, CapitaGreen,
Singapore, 048946, Singapore
United States
A10 Capital Parent Company LLC COS 19.3% 1209 Orange Street, Wilmington, Delaware,
19801, USA
Share class abbreviations
CS Capital shares.
COS Common stock.
NCRPS Non-cumulative redeemable
preference shares.
CPS Convertible preference shares.
D Deferred shares.
OS Ordinary shares.
PI Partnership interest.
PS Promote shares.
R Redeemable preference shares.
Footnotes
a Owned through Schroder Wealth
Holdings Limited.
b Held directly by the Company.
c Dormant company.
d The Company holds ordinary B shares.
e The Company holds ordinary A shares.
f Financial year end 31 March.*
g Owned through Pamfleet Holdings
(Hong Kong) Limited.
h Financial year end 30 June.*
i Owned through BlueOrchard
Finance AG.
j Financial year end 31 May.*
k Owned through Schroders Greencoat
Holdings Limited.
l Financial year end 31 August.*
m Financial year end 30 April.*
n Financial year end 30 November.*
o Financial year end 28 February.*
* Entities where the year end is not coterminous
with the Group primarily relate to those which
were acquired in recent years.
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
170
35. Subsidiaries and other related undertakings continued
(b) Related undertakings arising from the Company’s interests in structured entities
The Company’s related undertakings also include funds in which it holds investments. These include fully and partially owned funds that are
classified as subsidiaries. Due to the number of share classes or unit classes that can exist in these vehicles, a significant holding in a single
share class or unit class is possible without that undertaking being classified as a subsidiary or associate.
Fully owned subsidiaries
Fund Name Share/unit class
Holding in
share/unit class
Total holding
in undertaking
via share/unit class
Brazil
Schroder Premium Diversified Credit FIC FIM CP Unspecified 100% 100%
Schroder Premium Diversified Credit Vintage A FIC FIM CP Unspecified 100% 100%
Luxembourg
Schroder ISF Carbon Neutral Credit 2040 I Accumulation 100% 100%
Schroder ISF Circular Economy I Accumulation 100% 100%
Schroder ISF Sustainable Emerging Markets ex China Synergy I Accumulation 100% 100%
Schroder ISF Sustainable Infrastructure I Accumulation 100% 100%
Subsidiaries where the ownership is less than 100%
Fund Name Share/unit class
Holding in
share/unit class
Total holding
in undertaking
via share/unit class
UK
Schroder Diversified Growth Fund I Accumulation 83% 83%
Schroder Flexible Retirement Fund X Accumulation 100% 89%
Schroder Global Sustainable Food and Water Fund X Accumulation 45% 40%
Schroder India Equity Fund X Accumulation 100% 79%
Schroder Life Global Emerging Markets Fund A Accumulation 57% 33%
Schroder Sustainable Future Multi-Asset Fund Z Accumulation 50% 45%
Schroder Sustainable Multi-Factor Equity Fund X Accumulation 90% 69%
Schroder UK Multi-Cap Income Fund Z Accumulation 100% 66%
Brazil
Schroder Best Ideas ESG A Accumulation 99% 99%
Schroder LATAM Bonds FIM CP Unspecified 99% 99%
Schroder Premium Master FIRF CP LP Unspecified 94% 94%
Schroder Premium Vintage A FIC FIRF CP LP Unspecified 95% 95%
Hong Kong
Schroder Global Multi-Asset Thematic Fund A Distribution MV2 HKD 37% 3%
Schroder Global Multi-Asset Thematic Fund A Distribution MV HKD 9% 2%
Schroder Global Multi-Asset Thematic Fund A Distribution MV2 CNY Hedged 74% 2%
Schroder Global Multi-Asset Thematic Fund A Distribution MV AUD Hedged 41% 2%
Schroder Global Multi-Asset Thematic Fund A Distribution MV2 AUD Hedged 90% 2%
Schroder Global Multi-Asset Thematic Fund A Distribution MV CNY Hedged 26% 2%
Schroder Global Multi-Asset Thematic Fund A Accumulation 97% 3%
Schroder Global Multi-Asset Thematic Fund A Distribution MV2 94% 3%
Schroder Global Multi-Asset Thematic Fund A Distribution MV 15% 2%
Schroder Global Multi-Asset Thematic Fund I Accumulation 99% 21%
Schroder Global Multi-Asset Thematic Fund C Accumulation 96% 3%
Japan
Schroder YEN Target (Annual) Unspecified 36% 36%
Schroder YEN Target (Semi-Annual) Unspecified 82% 82%
Luxembourg
Schroder ISF Asian Equity Impact IZ Accumulation 50% 49%
Schroder ISF BlueOrchard Emerging Markets Climate Bond I Accumulation 71% 56%
Schroder ISF Carbon Neutral Credit I Accumulation 32% 12%
Schroder ISF Carbon Neutral Credit I Accumulation GBP Hedged 42% 42%
Schroder ISF Changing Lifestyles I Accumulation 100% 65%
Schroder ISF China A All Cap I Accumulation 59% 40%
Schroder ISF Emerging Markets Local Currency Bond I Accumulation 45% 43%
Schroder ISF European Innovators C Accumulation 18% 2%
Schroder ISF European Innovators I Accumulation 100% 37%
Schroder ISF European Sustainable Equity I Accumulation 58% 39%
Schroder ISF Global Climate Leaders I Accumulation 42% 42%
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
171
Financial statements
35. Subsidiaries and other related undertakings continued
(b) Related undertakings arising from the Company’s interests in structured entities continued
Subsidiaries where the ownership is less than 100% continued
Fund Name Share/unit class
Holding in
share/unit class
Total holding
in undertaking
via share/unit class
Luxembourg (continued)
Schroder ISF Global Managed Growth I Accumulation 100% 87%
Schroder ISF Global Sustainable Convertible Bond I Accumulation 46% 37%
Schroder ISF Social Impact Credit I Accumulation 100% 96%
Schroder ISF Sustainable US Dollar Corporate Bond I Accumulation 100% 99%
Schroder ISF Sustainable US Dollar High Yield I Accumulation 60% 57%
Schroder ISF Sustainable US Dollar Short Duration Bond I Accumulation 47% 42%
Schroders Capital Semi-Liquid Circular Economy Private Plus I Accumulation 100% 97%
Schroders Capital Semi-Liquid Circular Economy Private Plus C Accumulation 95% 1%
Schroders Capital Semi-Liquid Global Innovation Private Plus C Accumulation 89% 3%
Schroders Capital Semi-Liquid Global Innovation Private Plus I Accumulation 100% 52%
SSSF Structured Income I Accumulation 100% 72%
SSSF Wealth Management USD Growth S Accumulation 70% 55%
Significant holdings in structured entities not classified as subsidiaries
Fund Name Share/unit class
Holding in
share/unit class
Total holding
in undertaking
via share/unit class
UK
Schroder All Maturities Corporate Bond Fund I Accumulation 100% 6%
Schroder European Fund I Income 22% 2%
Schroder Global Corporate Bond Managed Credit Component Fund X Accumulation 31% 4%
Schroder Global Corporate Bond Managed Credit Component Fund I Accumulation 31% 7%
Schroder Global Energy Transition Fund S Accumulation 30% 3%
Schroder Global Equity Component Fund* X Accumulation 38% 22%
Schroder Global Equity Fund I Accumulation 28% 0%
Schroder Global Sovereign Bond Tracker Component Fund* I Accumulation 47% 20%
Schroder Global Sovereign Bond Tracker Component Fund* X Accumulation 24% 13%
Schroder Institutional UK Smaller Companies I Accumulation 25% 1%
Schroder Institutional UK Smaller Companies X Accumulation 100% 8%
Schroder Life Matching Index Linked Gilt Fund (2038-47) I Accumulation 100% 3%
Schroder Life Matching Index Linked Gilt Fund (2048-57) I Accumulation 100% 4%
Schroder Life Matching Index Linked Gilt Fund (2058-77) I Accumulation 100% 5%
Schroder Life Matching Nominal Gilt Fund (2058-77) I Accumulation 100% 7%
Schroder Life UK Equity Portfolio I Accumulation 100% 38%
Schroder Long Dated Corporate Bond Fund* I Accumulation 100% 25%
Schroder QEP Global Core Fund I Accumulation 25% 5%
Schroder QEP Global Active Value Fund* I Accumulation 99% 25%
Schroder Sterling Broad Market Bond Fund I Accumulation 29% 3%
Schroder Sustainable Bond Fund X Income 32% 8%
Schroder UK-Listed Equity Income Maximiser Fund L Accumulation 22% 0%
Schroder US Equity Income Maximiser Fund L Accumulation GBP Hedged 87% 0%
Brazil
Schroder Best Ideas FIA* Unspecified 31% 31%
Australia
Schroder Equity Opportunities Fund I Accumulation 100% 1%
Cayman Islands
Musashi Smart Premia Fund (Exclusively for Qualified Institutional Investors
with Re-Sale Restriction for the Japanese Investors)
B 100% 0%
Musashi Smart Premia Fund (Exclusively for Qualified Institutional Investors
with Re-Sale Restriction for the Japanese Investors)
C 100% 1%
Guernsey
Schroder Institutional Developing Markets B Income 99% 4%
Hong Kong
Schroder Asian Asset Income Fund I Accumulation USD 100% 0%
Luxembourg
BlueOrchard Impact Credit Fund* BO Accumulation 100% 26%
BlueOrchard LAC GDI Unspecified 100% 3%
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
172
35. Subsidiaries and other related undertakings continued
(b) Related undertakings arising from the Company’s interests in structured entities continued
Significant holdings in structured entities not classified as subsidiaries or associates continued
Fund Name Share/unit class
Holding in
share/unit class
Total holding
in undertaking
via share/unit class
Luxembourg (continued)
BlueOrchard Sustainable Asset Fund Unspecified 25% 25%
Schroder Alternative Solutions Commodity Fund I Accumulation GBP Hedged 98% 0%
Schroder Alternative Solutions Commodity Total Return Fund I Accumulation EUR Hedged 96% 0%
Schroder Alternative Solutions Commodity Total Return Fund I Accumulation GBP Hedged 98% 1%
Schroder GAIA BlueTrend C Accumulation CHF Hedged 62% 0%
Schroder GAIA Helix C Accumulation GBP Hedged 25% 1%
Schroder GAIA Helix I Accumulation 39% 2%
Schroder GAIA Oaktree Credit I Accumulation 50% 15%
Schroder ISF Alternative Securitised Income IZ Accumulation 100% 0%
Schroder ISF BlueOrchard Emerging Markets Impact Bond I Accumulation 26% 4%
Schroder ISF Emerging Europe X9 Accumulation 51% 0%
Schroder ISF Emerging Markets Equity Impact* I Accumulation 24% 24%
Schroder ISF Emerging Markets Debt Total Return I Accumulation 100% 0%
Schroder ISF EURO Credit Conviction I Accumulation 100% 0%
Schroder ISF Global Bond I Accumulation 32% 0%
Schroder ISF Global Corporate Bond I Accumulation GBP Hedged 96% 0%
Schroder ISF Global Credit High Income I Accumulation 100% 1%
Schroder ISF Global Credit Income I Accumulation 100% 0%
Schroder ISF Global Equity Yield I Accumulation EUR 99% 0%
Schroder ISF Global Gold I Accumulation EUR Hedged 98% 0%
Schroder ISF Global High Yield I Accumulation GBP Hedged 100% 0%
Schroder ISF Global Inflation Linked Bond I Accumulation 100% 0%
Schroder ISF Global Multi-Asset Balanced I Accumulation CHF Hedged 93% 0%
Schroder ISF Global Multi-Asset Income I Accumulation 21% 0%
Schroder ISF Global Recovery I Accumulation 90% 1%
Schroder ISF Global Sustainable Growth I Accumulation GBP Hedged 45% 2%
Schroder ISF Inflation Plus I Accumulation 36% 5%
Schroder ISF Japanese Equity I Accumulation EUR Hedged 87% 0%
Schroder ISF Japanese Opportunities I Accumulation 21% 1%
Schroder ISF Nordic Micro Cap I Accumulation 100% 0%
Schroder ISF Nordic Smaller Companies I Accumulation 99% 0%
Schroder ISF Smart Manufacturing I Accumulation 57% 7%
Schroder ISF Strategic Bond I Accumulation EUR Hedged 100% 0%
Schroder ISF Sustainable Future Trends* I Accumulation 100% 28%
Schroder ISF Sustainable Global Credit Income Short Duration I Accumulation 99% 1%
Schroder ISF Sustainable Global Multi Credit I Accumulation EUR Hedged 99% 8%
Schroder ISF Sustainable Multi-Asset Income C Accumulation 100% 15%
Schroder ISF Sustainable Swiss Equity I Accumulation 100% 2%
Schroder ISF US Dollar Bond I Accumulation EUR Hedged 92% 0%
Schroder Property FCP - FIS - Schroder Property Eurologistics Fund No.1 (A) B 100% 1%
Schroder Property FCP - FIS - Schroder Property Eurologistics Fund No.1 (B) B 100% 3%
Schroders Capital Semi-Liquid European Loans I Accumulation 33% 12%
Schroders Capital Semi-Liquid Global Real Estate Total Return* I Accumulation 100% 22%
SIF Core Insurance Linked Securities I Accumulation 21% 13%
SSSF Diversified Alternative Assets S Accumulation 25% 0%
United States
Hartford Schroders China A Fund SD Accumulation 100% 10%
Hartford Schroders Commodity Strategy ETF Distribution 30% 30%
Hartford Schroders Diversified Emerging Markets Fund SD Accumulation 36% 26%
Hartford Schroders International Contrarian Value Fund Unspecified 100% 48%
Hartford Schroders Private Opportunities Fund SD Accumulation 29% 29%
Hartford Schroders Sustainable International Core Fund Unspecified 100% 47%
*Investments in funds recognised as associates.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
173
Financial statements
35. Subsidiaries and other related undertakings continued
(b) Related undertakings arising from the Company’s interests in structured entities continued
The registered offices for each of the related undertakings listed on pages 171 to 173 are reflected by country below:
UK
1 London Wall Place, London, EC2Y 5AU, England
Australia
Level 20, Angel Place, 123 Pitt Street, Sydney, NSW 2000, Australia
Brazil
The registered office for the Brazil related undertakings is
Av. Presidente Wilson, nº 231, 11º andar, Rio de Janeiro, Brazil,
except for the following:
The registered office for the following related undertakings is
Núcleo Cidade de Deus, Prédio Amarelo, 1o andar, Vila Yara, Osasco,
SP, Brazil
Schroder Best Ideas FIA
Cayman Islands
Maples Corporate Services Limited, Ugland House, PO Box 309,
Grand Cayman, KY11-1104, Cayman Islands
Guernsey
PO Box 255, Trafalgar Court, Les Banques, St Peter Port, Guernsey
Hong Kong
HBSC Institutional Trust Services (Asia) Limited, 1 Queen’s Road
Central, Hong Kong
Japan
1-1 Chuo-ku, Saitama City, Saitama Shintoshin Godo Choushya 1st
Building, Saitama Prefecture, 330-9716, Japan
Luxembourg
The registered office for the Luxembourg related undertakings is
5 rue Höhenhof, L-1736 Senningerberg, Luxembourg, except for the
following:
The registered office for the following related undertakings is 80,
route d’Esch, L-1470 Luxembourg
Schroder Property FCP-FIS – Schroder Property EuroLogistics Fund
No.1 (A)
Schroder Property FCP-FIS – Schroder Property EuroLogistics Fund
No.1 (B)
The registered office for the Luxembourg related undertakings
is 2 rue d’ Alsace, L-1122 Luxembourg
BlueOrchard LAC GDI
United States
The registered office for the United States related undertakings is 7
Bryant Park, New York, New York, 10018, USA, except for the following:
The registered office for the following related undertakings is 690 Lee
Road, Wayne, Pennsylvania, 19087, USA
Hartford Schroders China A Fund
Hartford Schroders Commodity Strategy ETF
Hartford Schroders Diversified Emerging Markets Fund
Hartford Schroders International Contrarian Value Fund
Hartford Schroders Sustainable International Core Fund
The registered office for the following related undertakings is 251
Little Falls Drive, Wilmington, DE 19808, USA.
Hartford Schroders Private Opportunity Fund
Schroders plc financial statements continued
Schroders plc – Notes to the accounts continued
Schroders Annual Report and Accounts 2023
174
Opinion
In our opinion:
• Schroders plc’s Group financial statements and Parent company
financial statements (the ‘financial statements’) give a true and fair
view of the state of the Group’s and of the Parent company’s affairs
as at 31 December 2023 and of the Group’s profit for the year then
ended;
• the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
• the Parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards as applied in accordance with section 408 of the
Companies Act 2006; and
• the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Schroders plc (the ‘Parent
company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2023 which comprise:
Group Parent company
Consolidated income
statement for the year
ended 31 December 2023
Schroders plc - Statement of
financial position at
31 December 2023
Consolidated statement of
comprehensive income for the
year ended 31 December 2023
Schroders plc - Statement of
changes in equity for the
year ended 31 December 2023
Consolidated statement of
financial position at
31 December 2023
Schroders plc - Cash flow
statement for the year ended
31 December 2023
Consolidated statement of
changes in equity for the
year ended 31 December 2023
Schroders plc – Notes to the
accounts - 27 to 35, including
material accounting policy
information
Consolidated cash flow
statement for the year ended
31 December 2023
Notes to the accounts 1 to 26
including material accounting
policy information and
Presentation of the financial
statements
The financial reporting framework that has been applied in
their preparation is applicable law and UK-adopted international
accounting standards and, as regards the Parent company financial
statements, as applied in accordance with section 408 of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities
under those standards are further described in the ‘Auditor’s
responsibilities for the audit of the financial statements’ section
of our report. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and Parent company in accordance
with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting
Council’s (‘FRC’) Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the Group or the Parent company and we remain
independent of the Group and the Parent company in conducting
the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. To evaluate
the Directors’ assessment of the Group and Parent company’s ability
to continue to adopt the going concern basis of accounting, we have:
• assessed the assumptions used in management’s five-year forecast
by comparing to internal management information and external
market sources. We also determined that the model is appropriate
to enable management to make an assessment of the going
concern status of the Group for a period of twelve months from
the date the financial statements are approved. We also performed
back-testing on prior year forecasts by comparing them to the
Group’s results over the same periods;
• evaluated the capital and liquidity position of the Group by
reviewing the Internal Capital Adequacy Assessment Process,
the Internal Liquidity Adequacy Assessment Process and the
Recovery Plan;
• assessed the appropriateness of the stress and reverse stress
test scenarios used by the Board in reaching their conclusions
by considering the key risks identified by management, our
understanding of the business and the external market
environment. We evaluated the assumptions used in the scenarios
by comparing them to internal management information and
external market sources, tested the clerical accuracy and assessed
the conclusions reached in the stress and reverse stress test
scenarios;
• assessed the plausibility of the available options identified
by management to mitigate the impact of the key risks by
comparing them to our understanding of the Group;
• performed enquiries of management and those charged with
governance to identify risks or events that may impact the Group’s
ability to continue as a going concern. We also reviewed the
management paper approved by the Board and minutes of
meetings of the Board and its committees; and
• assessed the appropriateness of the going concern disclosures
by comparing them to management’s assessment for consistency
and for compliance with the relevant reporting requirements.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group
and Parent company’s ability to continue as a going concern for
twelve months from the date the Annual Report and Accounts
are approved.
In relation to the Group and Parent company’s reporting on how they
have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’
statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis
of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of this
report. However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Group and
Parent company’s ability to continue as a going concern.
Independent auditor’s report to the members of Schroders plc
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
175
Financial statements
Overview of our audit approach
Audit scope • The Group is comprised of over 300 legal
entities domiciled in 27 countries.
• We performed an audit of the complete
financial information of six legal entities
and audit procedures on specific balances
for a further 27 legal entities.
• The legal entities where we performed full
or specific audit procedures accounted for
92% of profit before tax, 93% of revenue
and 97% of total assets.
• Certain of the Group’s processes over
financial reporting are centralised in the
finance operations hubs of London,
Luxembourg, Singapore, Zurich and
Horsham. Where appropriate, our testing
was performed in these locations.
Key audit matters • Improper recognition of revenue.
• Improper recognition of cost of sales.
Materiality • Overall Group materiality of £33 million,
which represents 5% of operating profit.
An overview of the scope of the Parent company
andGroup audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and
our allocation of performance materiality determine our audit scope
for each entity within the Group. Taken together, this enables us to
form an opinion on the consolidated financial statements. We take
into account size, risk profile, the organisation of the Group and
effectiveness of Group-wide controls, changes in the business
environment and other factors, such as recent internal audit results,
when assessing the level of work to be performed at each entity.
In assessing the risk of material misstatement to the Group financial
statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements, we selected 33 legal
entities within the following countries: United Kingdom, Luxembourg,
Switzerland, Singapore, Australia, China, Guernsey, Indonesia, Japan
and United States of America.
Of the 33 legal entities selected, we performed an audit of the
complete financial information of six legal entities (full scope entities)
which were selected based on their size or risk characteristics. For the
remaining 27 legal entities (specific scope entities), we performed
audit procedures on specific accounts within that legal entity that
we considered had the potential for the greatest impact on the
significant accounts in the Group financial statements, either
because of the size of these accounts or their risk profile.
For the remaining entities that together represent 8% of the
Group’s profit before tax, we performed other procedures, including:
analytical review; obtaining cash confirmations; and testing of
consolidation journals and intercompany eliminations, centralised
processes and controls, and foreign currency translation
recalculations, to respond to potential risks of material misstatement
of the Group financial statements.
The charts below illustrate the coverage obtained from the work
performed by our audit teams.
Profit before tax
Full scope entities 54% (2022: 73%)
Specific scope entities 39% (2022: 22%)
Other procedures 8% (2022: 5%)
Revenue
Full scope entities 62% (2022: 62%)
Specific scope entities 31% (2022: 31%)
Other procedures 7% (2022: 7%)
Assets
Full scope entities 25% (2022: 26%)
Specific scope entities 72% (2022: 71%)
Other procedures 3% (2022: 3%)
Changes from the prior year
Schroders International Holdings Limited, Benchmark Financial
Planning Limited, and Schroder Fund Management (China) Company
Limited are considered to be specific scope entities for the current
year audit. These entities were previously considered to be neither
specific nor full scope.
Schroder BOCOM Wealth Management Company Limited is no longer
considered a subsidiary and is now an equity accounted associate.
As a result this has fallen out of scope.
Involvement with overseas teams
In establishing our overall approach to the Group audit, we
determined the type of work that needed to be undertaken at each of
the legal entities by us, as the Group audit team, or by local auditors
from other EY global network firms operating under our instruction.
Schroders has centralised processes and controls over financial
reporting within the finance operations hubs of London, Luxembourg,
Singapore, Zurich, and Horsham. Our teams in these locations
performed centralised testing for certain accounts including revenue,
cost of sales, administrative expenses, variable compensation,
provisions and intercompany transactions.
For processes that are not centralised, the audit work was performed
by legal entity auditors. The Group audit team was responsible for the
scope and direction of the audit process in each entity, interacting
regularly with the local EY teams during each stage of the audit and
reviewing relevant working papers. This, together with the additional
procedures performed at Group level, and the centralised testing,
gave us appropriate evidence for our opinion on the Group
financial statements.
Independent auditor’s report to the members of Schroders plc continued
Schroders Annual Report and Accounts 2023
176
The Group team has maintained oversight of component teams
through use of remote collaboration platforms, in-person visits and
virtual meetings, in particular with the Luxembourg, Zurich and
Singapore audit teams. This allowed the Group team to gain a greater
understanding of the business issues faced in each location, discuss
the audit approach with the local team and any issues arising from
their work, review relevant audit working papers, and attend meetings
with local management.
Climate change
The Group has determined that the majority of its climate-related risk
lies in the assets it manages on behalf of its clients. This is primarily
explained on pages 30 to 37 in the Task Force for Climate related
Financial Disclosures and on pages 40 to 43 in the Risk Management
section of the Annual Report and Accounts. The Group has also
explained their climate-related commitments on pages 28 to 30. All of
these disclosures form part of the ‘Other information’. Our
procedures on these unaudited disclosures therefore consisted solely
of considering whether they are materially inconsistent with the
financial statements, or our knowledge obtained in the course of the
audit, or otherwise appear to be materially misstated, in line with our
responsibilities in relation to ‘Other information’.
In planning and performing our audit, we assessed the potential
impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.
As explained in the Estimates and Judgements section of the
Presentation of the financial statements on page 153, climate risks
have been considered in the preparation of the consolidated financial
statements where management consider it appropriate. The principal
areas of consideration by management include the measurement of
financial assets and impairment assessments.
Our audit effort in considering the impact of climate change on the
financial statements was focused on assessing whether the effects of
potential climate risks have been appropriately reflected by
management in reaching their judgments in relation to the
measurement of financial assets and their impairment assessments.
As part of this evaluation, we performed our own risk assessment, to
determine the risks of material misstatement in the financial
statements from climate change, which needed to be considered in
our audit.
We also challenged the Directors’ considerations of climate change
risks in their assessment of going concern and viability and associated
disclosures.
Based on our work, we have not identified the impact of climate
change on the financial statements to be a key audit matter or as a
factor that impacts a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified. These matters included those which had the
greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in our opinion thereon, and
we do not provide a separate opinion on these matters.
Risk Our response to the risk
Group only risk:
Improper recognition of revenue (£2,936.7 million, 2022:
£2,891.7 million)
Refer to the Audit and Risk Committee report (page 66) and Note 2 of
the Consolidated financial statements (pages 108 to 111)
Schroders manages funds in numerous domiciles, which consist of
many share classes. Schroders also manages segregated portfolios
for a range of institutions. In addition, Schroders provides wealth
management services. The inputs and calculation methodologies that
drive the fees vary significantly across this population. For example,
performance fees, fees related to segregated accounts and fees
generated from private assets, have a range of bespoke calculation
methodologies. For certain revenue streams, management must
apply judgment in accordance with IFRS 15 – Revenue from contracts
with customers (‘IFRS 15’) to determine whether it is highly probable
that a significant reversal will not occur in the future.
The following are identified as the key risks or subjective areas of
revenue recognition:
• Not all agreements in place have been identified and accounted
for;
• Fee terms have not been correctly interpreted or entered into the
fee calculation and billing systems;
• Assets under management (‘AUM’) has not been properly attributed
to fee agreements;
• Errors occur in manually calculated revenues, such as performance
fees, certain private assets fees and carried interest; and
• Inappropriate judgments are made by management in the
calculation and recognition of carried interest.
There is also the risk that management may influence the timing or
recognition of revenue in order to meet market expectations or net
operating income-based targets.
We have:
• Confirmed and updated our understanding of the procedures
and controls in place throughout the revenue process, both at
Schroders through walkthrough procedures, and at third party
administrators, through review of independent controls assurance
reports;
• IT systems: tested the controls over access to, and changes to,
the systems underpinning the revenue process, including testing
controls over the flow of data between systems for completeness
and accuracy;
• Fee agreements: tested the controls over new and amended fee
agreements. For a sample of fees, agreed the fee terms used in
the calculation to investment management agreements (‘IMAs’),
fee letters or fund prospectuses;
• Calculation: tested automated controls over the arithmetical
accuracy of a sample of fee calculations within the relevant systems;
• AUM: tested the controls in place for the calculation and existence
of AUM used in the fee calculations. For a sample of fees, tested the
completeness and accuracy of AUM included in the fee calculation
systems to administrator reports or Schroders’ investment
management systems;
• Segregated and unitised account billing and cash collection: tested
controls over the billing and cash management process. For a
sample of fees, compared the amounts recorded to the invoice
sent to the client and the cash received, checked whether the
revenue had been recorded in the correct period, and assessed the
recoverability of debtors through the testing of subsequent cash
receipts and inspection of the aged debtors report;
• Mutual fund billing: for a sample of gross fund fees billed directly by
third party administrators (‘TPA’), we have compared the revenue
recorded by Schroders to reports provided by the TPA;
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
177
Financial statements
Risk Our response to the risk
• Mutual fund cash collection: for a sample of gross fund fees billed
directly by the TPA we have assessed the recoverability of year end
debtors through testing to cash receipts and inspection of the
aged debtors report;
• Carried interest: challenged management over the judgments and
estimates used in the valuation of the carried interest receivable,
including the constraints applied under IFRS 15;
• For a sample of manually calculated revenues, such as performance
fees, certain private assets fees and carried interest, agreed the
inputs used in the relevant calculations to third party sources,
where applicable, and legal agreements; recalculated the value of
the relevant fee and compared the amount invoiced or carried
interest receivable forecast to the revenue recorded;
• Interest income: performed analytical procedures to assess
whether interest income recorded reflects the interest rates seen in
the year. For a sample of interest income transactions, traced the
revenue recorded to customer statements and third party
statements;
• Review of other information: inspected the global operational
incident log and complaints registers to identify any errors in
revenue or control deficiencies; and
• Management override: in order to address the residual risk of
management override we performed enquiries of management,
read minutes of board and committee meetings held throughout
the year and performed journal entry testing.
We performed full and specific scope audit procedures over this risk
area in six locations, which covered 93% of the total revenue. Due to
the centralised nature of the revenue process, the majority of our
testing was performed in London for Asset Management revenue,
and London and Zurich for Wealth Management revenue.
Key observations communicated to the Schroders Audit and Risk Committee
All transactions tested have been recognised in accordance with the underlying agreements or other supporting documentation. Revenue
has been recorded materially in accordance with IFRS 15.
Based on the procedures performed, we have no matters to report in respect of revenue recognition.
Independent auditor’s report to the members of Schroders plc continued
Schroders Annual Report and Accounts 2023
178
Risk Our response to the risk
Group only risk:
Improper recognition of cost of sales (£602.3 million, 2022:
£530.3 million)
Refer to the Audit and Risk Committee report (page 66) and Note 2 of
the Consolidated financial statements (pages 108 to 111)
Schroders has fee expense agreements in place with many parties.
These expenses include commissions, carried interest payable,
external fund manager fees, expenses paid on behalf of UK-managed
funds, and distribution fees payable to financial institutions,
investment platform providers and financial advisers. The expenses
are generally based on AUM.
The following are identified as the key risks or subjective areas in
correctly recognising fee expenses:
• Not all agreements in place have been identified and accounted
for;
• Fee expense terms have not been correctly interpreted;
• AUM has not been properly identified or attributed to clients or
third parties with fee expense arrangements; and
• Inappropriate judgments are made by management in the
calculation of carried interest payable.
There is also the risk that management may influence the recognition
of cost of sales in order to meet market expectations or net operating
income-based targets.
We have:
• Confirmed and updated our understanding of the procedures and
controls in place throughout the cost of sales process, both at
Schroders through walkthrough procedures, and at third party
administrators through review of independent controls assurance
reports;
• IT systems: tested the controls over access to, and changes to, the
systems underpinning the fee expense process, including testing
controls over the flow of data between systems to test
completeness and accuracy;
• Fee expense agreements: tested the controls over new agreements
and amended fee expense agreements. For a sample of fee
expenses calculated by Schroders and an additional sample
calculated by third parties, agreed the fee expense terms used in
the calculation to IMAs, fee letters or rebate agreements;
• Calculation: tested automated controls over the arithmetical
accuracy of a sample of fee expense calculations within the relevant
systems;
• AUM: tested the controls in place over the calculation and existence
of AUM used in the fee expense calculations. For a sample of fee
expenses, tested the completeness and accuracy of the AUM
included in the calculation to Schroders’ transfer agency or
investment management systems;
• Billing: tested controls over the cash management process. For a
sample of fee expenses, compared the amount recorded to the
rebate statement sent to the client and to the cash paid;
• Carried interest: challenged management over the judgments and
estimates used in the valuation of the carried interest liability. For a
sample of funds with carried interest arrangements: agreed the
inputs used in the carried interest calculations to accounting
records, third party sources and legal agreements; recalculated the
value of the carried interest liability; and compared the discounted
carried interest expense to the cost of sales recorded;
• Review of other information: inspected the global operational
incident log and complaints registers to identify any errors in fee
expenses or control deficiencies, and determined whether any fee
expense errors, have been appropriately addressed; and
• Management override: in order to address the residual risk of
management override we performed enquiries of management,
read minutes of board and committee meetings held throughout
the year and performed journal entry testing.
We performed full and specific scope audit procedures over this risk
area in London, which covered 99% of total cost of sales.
Key observations communicated to the Schroders Audit and Risk Committee
All transactions tested have been recognised in accordance with the underlying agreements or other supporting documentation. Cost of
sales has been recorded materially in accordance with IAS 1 – Presentation of Financial Statements (‘IAS 1’). Based on the procedures
performed, we have no matters to report in respect of cost of sales.
Prior year comparison
In the prior year, our auditor’s report included a key audit matter in relation to ‘Accounting for corporate activity’. In the current year, due to
there being no material acquisitions, we do not consider this to be a key audit matter. There have been no other significant changes to our
overall risk assessment from the 2022 audit.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
179
Financial statements
Our application of materiality
We apply the concept of materiality in planning and performing the
audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in
the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £33 million (2022:
£36 million), which is 5% of operating profit (2022: 5% of operating
profit). We believe that operating profit is the most relevant
performance measure to the stakeholders of the Group.
We determined materiality for the Parent company to be £47 million
(2022: £45 million), which is 1% (2022: 1%) of net assets. The Parent
company primarily holds investments in Group entities and, therefore,
net assets is considered to be the key focus for users of the financial
statements.
During the course of our audit, we reassessed initial materiality based
on 31 December 2023 financial statement amounts and adjusted our
audit procedures accordingly.
Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
theprobability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment
of the Group’s overall control environment, our judgment was that
performance materiality was 75% (2022: 75%) of our planning
materiality, namely £25 million (2022: £27 million). We have used a
threshold consistent with 2022 due to our prior experience as to the
low occurrence of material misstatements and our conclusions as to
the effectiveness of the control environment and accounting
processes.
Audit work at entity level, for the purpose of obtaining audit coverage
over significant financial statement accounts, is undertaken based
on a percentage of total performance materiality. The performance
materiality set for each entity is based on the relative scale and risk
of the entity to the Group as a whole and our assessment of the
risk of misstatement at that entity. In the current year, the range
of performance materiality allocated to individual entities was
£5.0 million to £13.6 million (2022: £5.4 million to £14.9 million).
Reporting threshold
An amount below which identified misstatements are considered
as being clearly trivial.
We agreed with the Audit and Risk Committee that we would report
to them all uncorrected audit differences in excess of £1.7 million
(2022: £1.8 million), which is set at 5% of planning materiality, as well
as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the
Annual Report set out on pages 1 to 99 and 183 to 189, including the
Strategic report, Governance, and Shareholder information sections,
other than the financial statements and our auditor’s report thereon.
The Directors are responsible for the other information in the
Annual Report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is
a material misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
CompaniesAct 2006
In our opinion, the part of the Directors’ Remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
• the information given in the Strategic report and the Directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report
byexception
In light of the knowledge and understanding of the Group and the
Parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic
report or the Directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been kept by the Parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the Parent company financial statements and the part of the
Directors’ Remuneration report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and Parent company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
• Director’s statement on whether it has a reasonable expectation
that the Group will be able to continue in operation and meets
its liabilities, as set out on page 47;
• Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified, as set out on page 47;
• Directors’ explanation as to its assessment of the Parent company’s
prospects, the period this assessment covers and why the period is
appropriate, as set out on page 47;
• Directors’ statement on fair, balanced and understandable, as set
out on page 99;
Independent auditor’s report to the members of Schroders plc continued
Schroders Annual Report and Accounts 2023
180
• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks, as set out on pages 40-43;
• the section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems,
as set out on page 40-43; and
• the section describing the work of the Audit and Risk Committee,
as set out on pages 66-73.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities
set out on page 99, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors determine
is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Group and Parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent company
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financialstatements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery
or intentional misrepresentations, or through collusion. The extent
to which our procedures are capable of detecting irregularities,
including fraud, is detailed below.
However, the primary responsibility for the prevention and detection
of fraud rests with both those charged with governance of the Parent
company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined
that the most significant are those that relate to the reporting
framework (UK-adopted international accounting standards, the
Companies Act 2006 and UK Corporate Governance Code) and
relevant tax compliance regulations. In addition, we concluded that
there are certain significant laws and regulations which may have
an effect on the determination of the amounts and disclosures in
the financial statements being the Listing Rules and relevant rules
and regulations of the Prudential Regulation Authority (‘PRA’),
Financial Conduct Authority (‘FCA’) and those of other applicable
regulators around the world.
• We understood how Schroders plc is complying with those
frameworks by making enquiries of senior management, including
the Chief Financial Officer, General Counsel, Company Secretary,
Chief Risk Officer, Head of Internal Audit and the Chairman of the
Audit and Risk Committee. We corroborated our understanding
through our review of board and committee meeting minutes,
papers provided to the Audit and Risk Committee, and
correspondence received from the PRA and FCA.
• We assessed the susceptibility of the Group’s financial statements
to material misstatement, including how fraud might occur, by
meeting with management to understand where they considered
there was susceptibility to fraud. We also considered performance
targets and their potential influence on efforts made by
management to manage or influence the perceptions of analysts.
We considered the controls that the Group has established to
address risks identified, or that otherwise prevent, deter and detect
fraud; and how senior management monitors these controls.
Where the risk was considered to be higher, we performed audit
procedures to address each identified fraud risk.
• Based on this understanding we designed our audit procedures to
identify non-compliance with such laws and regulations identified
in the paragraphs above. Our procedures involved: journal entry
testing, with a focus on manual journals and journals indicating
large or unusual transactions based on our understanding of the
business; enquiries of senior management, including those at full
and specific scope entities; and focused testing, as referred to in
the key audit matters section above.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the Audit and Risk Committee,
we were appointed by the Parent company on 9 March 2018 to
audit the financial statements for the year ending 31 December
2018 and subsequent financial periods. Our appointment as
auditor was approved by shareholders at the Annual General
Meeting on 26 April 2018.
• The period of total uninterrupted engagement including previous
renewals and reappointments is six years, covering the years ended
2018 to 2023.
• The audit opinion is consistent with the Audit Results Report to the
Audit and Risk Committee.
Use of our report
This report is made solely to the Parent company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state
to the Parent company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent company and the
Parent company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
James Beszant (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
28 February 2024
1. 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 financial statements since they were initially
presented on the website.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Schroders Annual Report and Accounts 2023
Strategic report Governance Shareholder information
181
Financial statements
182
Schroders Annual Report and Accounts 2023
SHAREHOLDER
INFORMATION
Shareholder information 184
Five-year consolidated
financial summary 185
Glossary 186
183
Financial statementsGovernanceStrategic report Shareholder information
Schroders Annual Report and Accounts 2023
Schroders plc
Registered in England and Wales Company No. 3909886
Registered office
1 London Wall Place, London, EC2Y 5AU
Tel: +44 (0) 207 658 6000
Email: companysecretary@schroders.com
Website: www.schroders.com
Share Registrar
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
UK Shareholder helpline:
Freephone (UK callers only): 0800 923 1530
International: +44 117 378 8170
Email: WebCorres@computershare.co.uk
Website: investorcentre.co.uk
Financial calendar
Ex-dividend date 21 March 2024
Record date 22 March 2024
DRIP election date deadline 11 April 2024
Annual General Meeting 25 April 2024
Final dividend payment date 2 May 2024
Half-year results announcement August 2024
Interim dividend paid* September 2024
* Date to be confirmed.
Annual General Meeting
Our AGM will be held at 1 London Wall Place, London, EC2Y 5AU and
electronically via a live broadcast on Thursday 25 April 2024 at 11.30am.
Investor Centre
Computershare is the Company’s share registrar. Investor Centre
is Computershare’s free, self-service website where shareholders
can manage their interests online.
The website enables shareholders to:
• view share balances
• change address details
• view payment and tax information
• update payment instructions
• update communication instructions.
Shareholders can register their email address at investorcentre.co.uk
to be notified electronically of events such as AGMs and can receive
shareholder communications such as the Annual Report and
Accounts and the Notice of Meeting online.
Enquiries and notifications concerning dividends, share certificates
or transfers and address changes should be sent to the Registrar.
Dividends
Paying dividends into a bank or building society account helps
reduce the risk of fraud and will provide you with quicker access to
your funds than payment by cheque. Applications for an electronic
mandate can be made by contacting the Registrar.
If your dividend is paid directly into your bank or building society
account, you will receive an annual consolidated dividend
confirmation, which will be sent to you in September each year
at the time the interim dividend is paid.
Dividend confirmations are available electronically at
investorcentre.co.uk to those shareholders who have their payments
mandated to their bank or building society accounts, and who have
expressed a preference for electronic communications.
The Company operates a Dividend Reinvestment Plan (DRIP), which
provides shareholders with a way of increasing their shareholding
in the Company by reinvesting their dividends. A copy of the DRIP
terms and conditions and application form can be obtained from
the Registrar.
Details of dividend payments can be found in the Directors’ report
on page 95.
Schroders offers a service to shareholders in participating countries
that enables dividends to be received in local currencies. You can
check your eligibility and/or request a mandate form by contacting
the Registrar.
Warning to shareholders
Companies are aware that their shareholders have received
unsolicited telephone calls or correspondence concerning investment
matters. These are typically from overseas-based ‘brokers’ who target
UK shareholders, offering to sell them what often turn out to be
worthless or high-risk shares or investments. These operations are
commonly known as ‘boiler rooms’. These ‘brokers’ can be very
persistent and extremely persuasive.
Shareholders are advised to be wary of any unsolicited advice,
offers to buy shares at a discount, or offers of free company reports.
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and organisation
• Check that they are properly authorised by the FCA before getting
involved by visiting register.fca.org.uk
• Report the matter to the FCA by calling 0800 111 6768 or visiting
fca.org.uk/consumers/report-scam-unauthorised-firm
• Do not deal with any firm that you are unsure about
If you deal with an unauthorised firm, you will not be eligible to
receive payment under the Financial Services Compensation Scheme.
The FCA provides a list of the unauthorised firms it is aware of,
which can be accessed at fca.org.uk/consumers/warning-list-
unauthorised-firms.
More detailed information on this or similar activity can be found
on the FCA website at fca.org.uk/consumers/protect-yourself-scams.
Capital gains tax implications of simplification
of the Schroders plc dual share class structure
Information on capital gains tax relating to the Enfranchisement,
Compensatory Bonus issue and Sub-Division of Schroders plc
shares that took place in September 2022 can be found on the
Company’s website.
Shareholder information
Schroders Annual Report and Accounts 2023
184
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
Operating profit before tax 661.0 723.0 841.0 698.5 709.7
Tax (128.0) (123.6) (147.4) (134.9) (144.2)
Operating profit after tax 533.0 599.4 693.6 563.6 565.5
2023
£m
2022
£m
2021
£m
2020
£m
2019
£m
Profit before tax 487.6 586.9 764.1 610.5 624.6
Tax (85.0) (100.7) (140.3) (124.5) (128.9)
Profit after tax 402.6 486.2 623.8 486.0 495.7
Operating earnings per share:
2023
Pence
2022
Pence
2021
Pence
2020
Pence
2019
Pence
Basic earnings per share
1
32.5 37.4 43.0 34.9 35.6
Diluted earnings per share
1
31.9 36.7 42.2 34.3 35.0
Earnings per share:
2023
Pence
2022
Pence
2021
Pence
2020
Pence
2019
Pence
Basic earnings per share
1
24.6 30.4 38.7 30.2 31.4
Diluted earnings per share
1
24.2 29.9 38.1 29.7 30.8
Dividends: 2023 2022 2021 2020 2019
Cost (£m) 333.0 332.1 318.6 311.7 312.3
Pence per share
2
21.5 21.4 20.4 20.0 20.0
Total equity (£m) 4,463.7 4,479.7 4,425.7 4,085.9 3,847.5
Net assets per share (pence)
3
277 278 275 253 239
Group employees at year end 31 December
2023
Number
2022
Number
2021
Number
2020
Number
2019
Number
United Kingdom 3,897 3,788 3,329 3,188 3,284
Europe, Middle East and Africa 1,016 1,031 940 938 964
Americas 1,089 427 388 379 376
Asia Pacific 436 1,188 1,093 1,066 1,049
6,438 6,434 5,750 5,571 5,673
1. See 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 19).
2. Dividends 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 19).
3. Net 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 19).
Exchange rates – closing 31 December 2023 2022 2021 2020 2019
Sterling:
Euro 1.15 1.13 1.19 1.12 1.18
US dollar 1.27 1.20 1.35 1.37 1.32
Swiss franc 1.07 1.11 1.23 1.21 1.28
Australian dollar 1.87 1.77 1.86 1.77 1.88
Hong Kong dollar 9.95 9.39 10.56 10.60 10.32
Japanese yen 179.72 158.72 155.97 141.13 143.97
Singaporean dollar 1.68 1.61 1.83 1.81 1.78
Chinese renminbi 9.04 8.36 8.63 8.89 9.23
Exchange rates – average 2023 2022 2021 2020 2019
Sterling:
Euro 1.15 1.17 1.16 1.13 1.14
US dollar 1.24 1.24 1.37 1.29 1.28
Swiss franc 1.12 1.18 1.25 1.21 1.27
Australian dollar 1.87 1.78 1.83 1.87 1.84
Hong Kong dollar 9.74 9.71 10.68 10.05 10.03
Japanese yen 175.10 161.25 151.02 137.89 139.63
Singaporean dollar 1.67 1.71 1.84 1.78 1.74
Chinese renminbi 8.81 8.32 8.86 8.86 8.83
Five-year consolidated financial summary
Schroders Annual Report and Accounts 2023
Strategic report Governance Financial statements
185
Shareholder information
About our business areas
Private markets
Gives investors access to opportunities in private markets, such as
real estate, private equity and infrastructure, as well as alternatives.
Solutions
Provides complete solutions and partnerships, including liability
offsets and risk mitigation.
Mutual Funds
Offers retail and institutional clients access to our investment
capabilities through intermediary networks.
Institutional
Makes investment components available directly to institutions
and includes sub-advisory mandates.
Wealth Management
Provides wealth management and financial planning for
ultra-high-net-worth, high-net-worth and affluent individuals
and charity clients as well as family offices and advisers.
Alternative Performance Measures
An Alternative Performance Measure (APM) is a financial measure
of historical or future financial performance, financial position,
or cashflows, other than a financial measure defined or specified
in the applicable financial reporting framework. The Group’s
APMs are defined below.
Operating compensation ratio
Operating compensation costs divided by net operating income.
By targeting an operating compensation ratio, we align the
interests of shareholders and employees.
Operating earnings per share
Operating profit after tax excluding non-controlling operating
earnings divided by the relevant weighted average number
of shares (see note 5). The presentation of operating earnings
per share provides transparency as to our operational activities
to aid understanding of the financial performance.
Payout ratio
The total dividend per share in respect of the year (see note 6)
divided by the operating basic earnings per share.
Active management
The management of investments based on active decision-making rather
than with the objective of replicating the return of an index.
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, OCIO,
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.
Basis point (bps)
One one-hundredth of a percentage point (0.01%).
Carried interest
Carried interest is similar to the performance fees we may earn
in our public markets business, but is part of our private markets
business fee structures.
CDP
CDP is a not-for-profit charity that runs the global disclosure system
for investors, companies, cities, states and regions to manage their
environmental impacts.
Client investment performance
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.
The calculation includes 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 £85.5 billion of assets, principally
comprising those managed by third parties or held on an execution-only
basis, the majority of 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 73% 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 13% 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 5% of assets in the calculation.
Clients
Within Asset Management we work with institutional clients, including
pensions funds, insurance companies and sovereign wealth funds,
as well as intermediaries, including financial advisers, private wealth
managers, distributors and online platforms. We also provide a range
of wealth management services to private clients, family offices
and charities.
At times, ‘client’ is used to refer to investors in our funds or strategies,
i.e. the end client.
We are increasingly focused on building closer relationships with the
end client, whose money is invested with us, often via an intermediary
or institution.
Glossary
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Defined benefit (DB) pension scheme
A pension benefit where the employer has an obligation to provide
participating employees with pension payments that represent
a specified percentage of their salary for each year of service.
Defined contribution (DC) pension scheme
A pension benefit where the employer’s contribution to an employee’s
pension is measured as, and limited to, a specified amount, usually
a percentage of salary. The value of the ‘pension pot’ can go up
or down depending on how the investments perform.
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.
Employee benefit trust
A type of discretionary trust established to hold cash or other assets
for the benefit of employees, such as to satisfy share awards.
EPS
Earnings per share.
ESG
Environmental, social and governance.
Fiduciary Management
A form of investing where pension scheme trustees delegate some
or all of the investment decisions to a third party ‘fiduciary manager’.
This reduces the day-to-day governance burden on trustees. Fiduciary
management offerings will often include investment advice and a
portfolio which consists of a growth solution and a liability-driven
investment (LDI) solution.
Financed emissions
Absolute carbon emissions that banks and investors finance through
their loans and investments. Schroders’ in scope financed emissions
include all mandatory asset classes required by the Science Based
Targets initiative, which consist of our listed equity, corporate bond,
real estate investment trust and exchange-traded fund exposure.
Fundraising
This is a term used in our private markets business comprising new
funds invested into our products and contractual commitments from
clients to invest their capital in the future.
GMC
Group Management Committee.
Greenhouse Gas (GHG)
A gas that absorbs and emits radiation in the atmosphere, contributing
to the greenhouse effect. The seven gases covered by the United
Nations Framework Convention on Climate Change (UNFCCC) – carbon
dioxide (CO
2
), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons
(HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen
trifluoride (NF3). These gases trap heat close to the surface of the earth
and are a key cause of climate change.
GRC
Group Risk Committee.
Highly-rated employees
Employees who have received an exceptional rating in their annual
performance review.
ICAAP
Internal Capital Adequacy Assessment Process.
IFRS
International Financial Reporting Standards.
ILAAP
Internal Liquidity Adequacy Assessment Process.
Investee companies
The companies we invest in on behalf of our clients.
Investment capital
Capital held in excess of operating requirements. It is managed with
the aim of achieving a low-volatility return. It is mainly held in cash,
government and government-guaranteed bonds, investment-grade
corporate bonds and Schroders funds. Investment capital is also
used to help support the organic development of existing and new
business strategies and to respond to other investment and growth
opportunities as they arise, such as acquisitions that will accelerate the
development of the business.
Investment returns
The increase in AUM attributable to investment performance,
market movements and foreign exchange.
In-scope assets
Current in-scope asset classes for SBTi include listed equities, corporate
bonds, real estate investment trusts and exchange-traded funds.
Liability-driven investment (LDI)
A form of investing where the main goal is to gain and maintain sufficient
assets to meet known liabilities, both current and future. This form of
investment is most prominent for defined benefit pension schemes.
Life Company
Schroder Pension Management Limited, a wholly owned
subsidiary, which provides investment products through a life
assurance wrapper.
Longevity
The indicative period, expressed in years, that a client invests their assets
with us. This is calculated annually as the average AUM divided by gross
outflows for the year. We typically present a three-year rolling average in
order to allow for short term fluctuations.
MSCI ESG rating
The Morgan Stanley Capital International ESG rating is designed
to measure a company’s resilience to long-term, industry material
ESG risks.
Net new business (NNB)
New funds from clients less funds withdrawn by clients. This is
also described as net inflows (when positive) or net outflows
(when negative).
Net operating income
A sub-total comprising net operating revenue, share of profit
of associates and joint ventures, and other operating income.
Net operating revenue
A sub-total consisting of revenue less cost of sales as defined in note 2
of the financial statements.
Net operating revenue margins
Net operating revenue excluding performance fees, net carried interest
and real estate transaction fees divided by the relevant average AUM.
Net zero
A state of balance between greenhouse gas emissions produced and
greenhouse gas emission removals. According to the SBTi, achieving
net zero refers to reducing emissions by a minimum of 90% by 2050
and neutralising any remaining emissions through carbon removals.
Operating profit
Operating profit represents the profit before tax generated by the
Group’s Asset Management and Wealth Management operating
segments. It excludes central costs, gains and losses from capital
management activities, as well as acquisition and restructuring
related costs.
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Strategic report Governance Financial statements
187
Shareholder information
Glossary continued
Other operating income
Other operating income primarily relates to gains and losses on
co-investments and foreign exchange.
Performance-based revenues
Includes fee types such as performance fees and net carried interest
income. Performance fees are earned when contractually agreed
performance levels are exceeded.
Physical risks
Reflect the risks associated with long-term changes in the climate and
with more extreme weather events which may impact on future business
activities. In particular: the impacts on the value of investments, held on
behalf of clients, caused by direct or indirect physical climate changes
and events; risk to our businesses and property assets; and risk to our
suppliers and other partners caused by climate events.
Pillar 1, 2 and 3
Pillar 1 sets rule-based minimum capital standards. Pillar 2 establishes
the approach to supervisory review and the setting of individual capital
requirements, taking into consideration the firm’s own assessment of
how much capital is required to support the business. Pillar 3 sets
disclosure requirements, which aim to promote market discipline
by enabling market participants to access information relating to
regulatory capital and risk exposures. See www.schroders.com/pillar3.
Platforms
Platforms in the UK savings market offer a range of investment products
such as unit trusts, Individual Saving Accounts (ISAs), unit-linked life and
pension bonds and Self-Invested Personal Pensions (SIPPs) to facilitate
investment in many funds from different managers through one portal.
Portfolio temperature score
The temperature score is calculated in accordance with the CDP-WWF
temperature rating methodology based on the carbon emissions
reduction targets set by the companies in our portfolios and is intended
to serve as an indication of our portfolio’s alignment to different levels of
global warming.
Principal Shareholder Group
A number of private trustee companies, a number of individuals and a
charity which, directly or indirectly, are shareholders in Schroders plc and
are parties to the Relationship Agreement. In aggregate these parties
own 44.11% of the ordinary shares of Schroders plc.
Renewable energy
Energy collected from resources that are naturally replenished, such as
sunlight, wind, water and geothermal heat.
Science Based Targets initiative (SBTi)
The Science Based Targets initiative defines and promotes best practice
in science-based target setting. Offering a range of target-setting
resources and guidance, the SBTi independently assesses and approves
companies’ targets in line with its criteria.
Science-based target
A science-based target provides a clearly-defined pathway for companies
to reduce their greenhouse gas emissions. The target is considered
‘science-based’ if it is in line with what the latest climate science deems
necessary to meet the goals of the Paris Agreement – limiting global
warming to well below 2°C above pre-industrial levels and pursuing
efforts to limit warming to 1.5°C.
Scope 1 / Scope 2 / Scope 3
See GHG. Scope 1 is direct greenhouse gas emissions from sources
owned or controlled by the company, such as emissions from gas, oil
and company vehicles. Scope 2 is indirect greenhouse gas emissions
from sources owned or controlled by the company, such as emissions
from consumption of purchased electricity, heat or steam. Scope 3
is indirect greenhouse gas emissions from sources not owned or
controlled by the company, such as emissions from business travel
or investments.
Seed and co-investment capital
Seed capital comprises an initial investment put into a fund or strategy
to allow it to develop a performance track record before it is marketed
to potential clients. Co-investment comprises an investment made
alongside our clients.
Senior management
Senior management includes members of the GMC, the direct
reports of the GMC and the direct reports one level below that,
in each case excluding administrative and other ancillary roles.
The data excludes executive Directors and includes some persons
who are also subsidiary Directors.
Sustainability engagement
Sustainability engagement is the process by which we gain insights into
our investee companies sustainability risks and opportunities and how
they are managed. We seek to influence our investee companies by
engaging with management teams to encourage and support them on
areas where improvement may be required to deliver long-term value.
SustainEx™
Schroders’ proprietary tool which estimates the notional net social
and environmental ‘costs’ or ‘benefits that an issuer may create’. It uses
certain metrics with respect to that issuer, and quantifies them positively
(for example, by paying ‘fair wages’) and negatively (for example, the
carbon an issuer emits) to produce an aggregate notional measure of
the issuer’s social and environmental ‘externalities’. The aim of the model
is to enable our investors to assess the investments they may make,
having regard to such measures, and the risks those issuers potentially
face if the social and environmental ‘costs’ they create were to be
reflected in their own financial costs.
tCO
2
e
Tonnes of carbon dioxide (CO
2
) equivalent. A unit of measurement that
is used to standardise the climate effects of various greenhouse gases
on the basis of their global warming potential.
Total capital requirement
The requirement to hold the sum of Pillar 1 and Pillar 2A capital
requirements. Pillar 2A capital requirements are supplementary
requirements for those risk categories not captured by Pillar 1,
depending on specific circumstances of a company, as set out
by the Prudential Regulation Authority.
Total dividend per share
Unless otherwise stated, this is the total dividend in respect of the year,
comprised of the interim dividend and the proposed final dividend. This
differs from the IFRS dividend, which is comprised of the prior year final
and current year interim dividends declared and paid during the year.
Transition risks
Reflect the risks stemming from changes in the economy that will be
required to limit human-induced climate change, including changes in
demand for goods and services, costs to companies, sectors or asset
classes. These may result from new or enhanced corporate climate
change laws and regulations, changes in demand for climate-focused
products, and more volatility in financial markets as asset prices adjust
to reflect the increasing regulation of carbon emissions.
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