Schroders plc (SDR) Vtg Shs Ordinary GBP1

Third quarter interim management statement: Notwithstanding the adverse impact of sterling, impacting on profits to the tune of £27 million, the fund house published a strong set of results that saw pre-tax profits rise 16% to £404.4 million. The company said that net inflows over the nine months to 30 September were £7 billion, taking its total assets under management to £276 billion, and added that inflows have continued since the third quarter ended, particularly into its income-generating products. Revenue rose to £1.1 billion from £1 billion. Schroders' asset management business reported net revenue for the three months to the end of September of £329.5 million, versus £315 million in the third quarter of last year. Chief Executive Michael Dobson added that Schroders continued to generate inflows across all channels in October, in spite of market volatility. For now, market consensus opinion points to a strong buy.

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Financial Highlights:

• The company reported a 16% rise in pre-tax profits to £404.4 million.
• Revenue rose to £1.1 billion from £1 billion a year earlier.
• Total assets under management amounted to £276 billion, up from £256.7 billion a year earlier.
• New business inflows over the nine month period were £7 billion, spread across all asset classes.

Negative Points:

• The Chief Executive highlighted the "adverse impact" on profit of £27 million due to sterling's strength.
• Schroders, like its peers is exposed to market risk arising from market movements which could cause a fall in investments and a decline in the value of assets under management.
• The group's overseas operations are subject to foreign exchange rate risk.
• At the heart of any asset manager is the investment team. As with any fund management business, there is a risk that if a "star" manager leaves, investors and assets under management may follow.

Positive Points:

• Assets under management climbed to £276.2 billion, up from £256.7 billion in September 2013.
• Schroders also said in a statement that it has a significant pipeline of new institutional business won which has not yet been funded.
• The fund manager could be well positioned to benefit from the government's plans to shake up the pensions and savings industry. 
• Headquartered in London with 27 offices worldwide, Schroders can trace its history back to 1804.

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