Schroders H1 2025 Earnings Report

Schroders EPS Results

• Actual EPS: GBX 9.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Schroders Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Schroders Announcement Details

• Quarter: H1 2025
• Date: 7/31/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 3:00AM ET

Schroders (LON:SDR) is a publicly owned investment manager. The firm also provides advisory and consultancy services. It provides its services to financial institutions, high net worth clients, large corporate, local authority, charitable entities, individuals, pension plans, government funds, insurance companies, and endowments. The firm launches and manages equity mutual funds and manages fixed income mutual funds for its clients. It also manages hedge for its clients. The firm invests in the public equity, fixed income, and alternative investment markets across the globe. The firm's alternative investments include real estate markets, emerging market debt, commodities and agriculture funds, funds of hedge funds and private equity funds of funds. It conducts an in-house research to make its investments. Schroders plc was founded on 1804 and is headquartered in London, United Kingdom.

Schroders H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Adjusted operating profit rose 7% to £316 million in H1, supported by 2% net operating revenue growth, just a 1% rise in adjusted OpEx, £21 million of net cost savings and an upgraded in-year benefit of £50 million, driving the cost-to-income ratio down to 74%.
• Positive Sentiment: Sales momentum accelerated with £68 billion of gross inflows (+8% YoY), including £6.9 billion in global equities, £2.3 billion net new business in Schroders Capital and £6.4 billion of Q2 net flows in Wealth Management.
• Negative Sentiment: Profit before tax fell 29% after incurring £45 million of transformation costs and £56 million of non-cash portfolio restructuring charges as the firm exits non-core businesses and reduces headcount by 7%.
• Neutral Sentiment: The group’s capital surplus stands at £896 million, with approvals for an additional £70 million of co-investment in Schroders Capital and £200 million of new public markets seed funding, as it targets £150 million of annualized net cost savings by 2027 and a sub-70% cost-to-income ratio.
• Neutral Sentiment: New “Active Edge” campaign underscores the firm’s focus on active management amid market uncertainty, with client engagement up 20% and 65% of funds outperforming their benchmarks over three years.

Presentation

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Good morning, everyone. I know it's a super busy morning for you, so I really appreciate you taking the time. And I'm sorry if you sat waiting for it to join us. Now it's really hard for any video, but following that is quite hard because, it's a short excerpt from our new Active Edge campaign. You're gonna progressively see this over the next six months.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

As you know, Schroders were unashamedly active, and that's the basis of this campaign. We're now in a world where changing economic and geopolitical events are creating perpetual uncertainty, and some people are understandably worried. But within all that lies great opportunity for Schroders and our clients. I believe we're at a turning point with the focus returning to active man management. Diversification isn't only back in favor, but it's a real requirement.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Portfolio concentration is being challenged in a way we haven't seen for some time. Our 2025 global investor insight survey underscores this. More than half of the respondents want more resilience in their portfolios, and 8% of global investors expect to increase their allocation to active management and further diversify over the next year. In this context, our active stance is a clear competitive advantage. So let's reflect on the half.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

I'm pleased with what we've got done. There is good early signs of momentum. We're ahead of where I'd hoped Megan we would be when Megan and I spoke to you back in March, and we're presenting some really solid results. Against the backdrop of uncertainty, we've remained focused on what we can control delivery of our three year transformation program. It's been an incredibly busy and challenging few months.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

We've made some difficult choices about where we invest our time and resources. We're focusing on the areas where we can see real competitive edge. We're focused on rightsizing our business, but with a keen eye on making sure that we'll be more efficient and effective in meeting our clients' needs. So in summary, we've been undaunted by taking difficult decisions and we've been moving at pace. But before I get into the strategy progress, Megan, why don't you actually take us through the results?

[Meagen Burnett, CFO & Executive Director at Schroders]

Yes. Thanks, Richard. You will have all seen our results this morning, so I'll just pick up on a few key points. When I spoke to you in March, I said that although our AUM had grown in 2024, our operating profit had fallen. We said that this was not good enough.

[Meagen Burnett, CFO & Executive Director at Schroders]

And I'm pleased to say that for the first half, while our AUM has been stable, our operating profit was up, which I hope gives you a sense of our strong focus on profitability. In terms of our results, our adjusted operating profit was up seven percent to GBP $316,000,000. That was because of good revenue growth, cost discipline and a strong progress on our transformation. Our net operating revenue increased 2%, driven by good growth in Schroders Capital and Wealth, both up 9%, and our Public Markets was resilient. We contained the increase in our adjusted OpEx to just 1%, with our transformation programme delivering reduction in costs of GBP 21,000,000 in the first half of the year.

[Meagen Burnett, CFO & Executive Director at Schroders]

This is net of a reinvestment. For the full year, we now expect our in year benefit to the P and L of GBP 50,000,000 compared to the 40,000,000 annualised savings we communicated in March. We achieved an adjusted cost to income ratio of 74%, which is down from the 75% at the end of last year. Profit before tax was down 29, reflecting both the costs of our transformation and portfolio restructuring charges, which are non cash items. These actions have simplified our business and allow us to focus our resources on our core strengths.

[Meagen Burnett, CFO & Executive Director at Schroders]

I'll take you through the underlying drivers of our financial performance after Richard spends some time on how we're progressing on our strategy.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Great. Thanks, Megan. So I thought it was worth reminding us of the three financial targets we set out in March because that's our anchor. In Public Markets, our focus is on stabilizing revenues. In shareholders' capital, pounds 20,000,000,000 of cumulative net new business.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

And in Wealth Management, we'll continue to generate net new business of 5% to 7% of AUM. We'll also achieve GBP 150,000,000 of annualized net cost savings by the 2027, while continuing to invest in the business. As a result, we expect our adjusted cost to income ratio to fall from 75% last year to below 70% for 2027, subject, of course, to normal market conditions. Taken together, these actions put us on a clear path to returning Schroders to profitable growth, while creating a more focused and resilient business for the future. Over the last few months, we've achieved a great deal.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Firstly, on our cost savings target. As Megan just pointed out, we've reduced our operating expenses by £21,000,000 on a net basis so far and reinvested about £8,000,000 back into our talent. Now it's easy to say that quickly, but achieving this involves fundamental changes to how we run our business. We're focused on operating model efficiencies and leveraging our operating partnerships, which Megan will cover a little bit more in a second. But the consequence is that almost 7% of roles have been made redundant in the past three months.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

This exercise has been precise so that we don't damage our core business with only a handful of redundant roles affecting our investors. We're committed to remaining the home for exceptional investors. So our focus here is on promoting internal talent from an extraordinary bench to ensure that we're developing careers, supplemented by selective external hires, and we've already hired more than 25 people into our investment team so far this year. This is how we secure continued outperformance for our clients in the future. We've always had strong employee retention and that continues.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Our current voluntary turnover rate remains at less than 4%. In delivering these cost savings, we've incurred transformation costs that we told you about of £45,000,000 That's in line with the guidance we gave. On cost, we told you in March we expected to exit 2025 with £40,000,000 of annualized cost savings. And I'm repeating this because I think it's really important, Megan, that we land this because now we're expecting to achieve net in year cost savings close to £50,000,000 during 2025. We also told you in March that we're going to simplify the business and focus on where we can scale and have an edge.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So we've started. And as a result, we've closed our alternative risk premia capability. We've sold Schroders RF, a private credit business in Australia. We've closed our real estate business in Munich. And we've written off our investment in a U.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

S.-based credit originator. We've also restructured our Chinese wholly owned fund management company and our South Korean business by transferring the retail business to a local distributor. This allows us to focus on what we're really good at, in China allocating more capital deliberately across the individual business that we have and in South Korea focusing exclusively on private markets. The consequence of this portfolio restructuring is that we've taken a charge of £56,000,000 While it's impacted our profits, I really want to stress that these restructuring charges relate to balance sheet items. They're noncash, and they've got very limited impact on capital.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

I want us to be relentlessly focused on clients. I hope I'm landing that message. That's why we've simplified the structure of our client group and enhanced the effectiveness of our global sales effort. We've set up dedicated teams for sales activation and delivery, and we've reshaped our marketing function. We've also made strides to simplify our product range, and we're working to close or merge 14.5% of that fund range with minimal impact on revenues.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

We're in the process of working through that rationalization exercise, so there is more to come. And by the way, even though we've driven a busy agenda, that has not come at the expense of client focus. Client engagement is actually up 20 year on year. That makes me feel pretty confident as we head into the second half. We're also investing in our talent and hiring people into key strategic growth areas.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

We're continuing to build out dedicated specialty sales team for Schroders Capital. We've got six new hires onboarded in the last few months, and we expect to have the full 40 strong team by the end of the year, helping us to accelerate our growth in private markets. We've also made changes to build strength and capacity in our leadership team. Our new CEO of Wealth Management, Oliver Gregson, joined us from JPMorgan a little under two months ago. He's already brought tremendous energy and has a real ambition for what our Wealth Management business can achieve in its next phase of growth.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

We have another key hire starting on Monday in Matt Uman, who will lead our client group. His significant experience leading global sales teams is going to bring fresh ideas and add momentum to the actions we took in the last few months. And I'm delighted that Corine Sembagy is changing roles to assume responsibility for strategic partnerships, including our ventures with BoCom and Axis. And this role underscores just how vital partnerships have become to the group's strategy. There's real momentum across the business, which is positioning us strongly for future growth.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

But let me turn now to new business and what we've written in the first half. So I'm really pleased to see the momentum that we're building alongside some strong client successes. We generated gross sales of £68,000,000,000 in the first six months, which is up 8% year on year. So going through this slide, left to right. Public Markets had a tougher Q1 but rebounded in Q2.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

This was driven by the GBP 4,000,000,000 SJP mandate we told you about previously and a GBP 3,300,000,000.0 sustainability mandate from a European pension scheme. So I'm going to take a little detour here in a moment to talk about our global equities capability, which delivered GBP 6,900,000,000.0 of net new business for us. Our global equities strategies remain top quartile over one, three five years. Our focus on active management, the dedication to high quality research and our desire to be the home to exceptional investment teams has enabled the Schroders Global Equity Retail Fund to outperform its benchmark by nearly 200 basis points per annum since 2014. 200 basis points per annum since 2014.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

And just as a reminder, that's net of fees. Our recent global equities marketing campaign has resulted in a doubling of sales meetings compared to last year, and this showcases what we can really do when we focus our efforts. The nine leading market capabilities in public markets we spoke to you about have collectively delivered positive net flows in the first half. Schroders Capital generated net new business of £2,300,000,000 so far this year and that's £6,000,000,000 of fundraising, up 17%. Our fundraising reinforces where we think we have a competitive edge.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

We've closed a €2,000,000,000 junior infrastructure debt fund, the fourth vintage of this successful series confirming Schroders Capital's ability to originate differentiated transactions. Our focus in the second half is to take this offering into the wealth market. And we also completed the first £500,000,000 close of the UK Innovation LTAF, the first investment structure of its kind for UK venture capital. It joins a growing suite of LTACHs offered by Schroders Capital and the joint venture Future Growth Capital designed to enable UK pension scheme investors to support the Mansion House Accordum, taking advantage of the robust returns and diversification benefits Schroders Capital provides. As previously indicated to you, our net new business target in Private Markets is weighted towards the outer years of our financial forecast, so we're on target.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Turning to Wealth. You can see that flows accelerated in the second quarter when we hit our 5% net new business target. The slower growth in Q1 reflected the usual impact of tax payments on client portfolios. Then on JVs, we've seen a bit of a rebound in Q2 driven by our Bokon venture, which recorded inflows of GBP 1,600,000,000.0, mainly as the demand for money market funds surged. In total, we generated positive net flows of GBP 6,400,000,000.0 in Q2.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So we're off to a good start, but there's lots more for us to do. We remain absolutely focused on execution. We're ready to launch our European active ETFs and want to continue to invest in those parts of our business where we can drive growth. For twenty twenty six, one thing to highlight is that although we're setting out in more detail our strategy for Wealth Management. And finally, of course, our investment performance.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

As you can see, we continue to deliver strong long term results for our clients. Our three year number rebounded since the 2024 and now stands at 65%. While the one year figure has dipped largely due to moves in the dollar on mandates with a sterling biased benchmark, our longer term track record remains robust with 76% outperforming over five years. The medium and longer term outperformance is testament to the strength and consistency of our investment teams and approach. So everyone now really wants all the detail on the numbers, Megan. So back to you.

[Meagen Burnett, CFO & Executive Director at Schroders]

Thanks, Richard. In March, I said there were three things that we were focused on to deliver our strategic growth objective: one, cost savings to embed operating leverage as we grow profitably two, discipline in the allocation of our resources to ensure that we drive shareholder value through transformation and three, injecting leadership, energy and focus to inspire the cultural change that we need to allow us to deliver at pace and retain our top talent. Over the past four months, we've mobilized an extraordinary group wide focused effort on these three objectives. We've had to make some very tough decisions and I recognise that we are only at the start of our three year transformation journey and there's a lot of hard work to do. But I'm pleased to say that as I talk you through the detail of the results today, you will see some of these benefits starting to come through in our numbers.

[Meagen Burnett, CFO & Executive Director at Schroders]

So starting with our average AUM, which is a key driver of our revenues. Overall, our average AUM, excluding our associates and JVs, increased by 3% year on year to GBP $662,000,000,000. The growth was constrained by our currency movements. Without that impact, average AUM would have been GBP 14,000,000,000 higher on a constant currency basis. Around two thirds of our AUM, and therefore our revenue, is non sterling.

[Meagen Burnett, CFO & Executive Director at Schroders]

So FX volatility, which is outside of our control, can materially change the performance of this business from one period to the next. Moving on to the movements in our net operating income between the half year 2024 and the half year to date. A combination of Markets, mix and investment performance added GBP 42,000,000 to our revenue. And I've already mentioned the impact of our FX on our results. A headwind from the prior year net outflows reduced the revenue by GBP 5,000,000.

[Meagen Burnett, CFO & Executive Director at Schroders]

However, given that the 2025 has had positive flows, excluding our JVs, this should reduce the impact in the second half. Performance Fees and Carry were up GBP 6,000,000. This is largely driven due to the higher carried interest income from our private equity business. As ever, performance fees and carry are very hard to predict in any one period, so my best guide is that GBP 25,000,000 will be in line with GBP 24,000,000. The returns for our JVs and associates increased by £5,000,000 This was mainly due to the profitability of SPW following their focused restructuring on their business, which resulted in net revenue efficiencies but also lower third party costs.

[Meagen Burnett, CFO & Executive Director at Schroders]

This has been partially offset by the weaker performance of our BoCom FMC venture. So overall, as a result of these movements, our adjusted net operating income was up 3%. I'll now take you through the segmental reporting, starting with Asset Management. In Public Markets, we showed resilient performance overall. Our revenue reduced by 2% because of the FX headwinds that I mentioned earlier and as well as a mix effect.

[Meagen Burnett, CFO & Executive Director at Schroders]

Overall, as Richard and I mentioned, I'm pleased to see our nine leading capabilities were in net inflow. In Equities, our net flows returned to positive territory, reflecting significant wins in the first half. Pleasingly, two of the largest inflows we've had are a direct result of our sustainability credentials. The table on the right presents our net operating revenue margins. As we told you at the year end, we have included exit margins on this table to give you a clear view of where we're ending the period.

[Meagen Burnett, CFO & Executive Director at Schroders]

As you can see, the equity margin remained resilient. There's a slight softening to an exit rate of 44 basis points. This is due largely to the large institutional mandates and the mix from our clients' appetite, which continues to be a move to global equity products, which are typically at a lower margin. In Fixed Income, our revenues were up 11% and the average net operating margin improved to 33 basis points. This is principally due to outflows from our lower margin U.

[Meagen Burnett, CFO & Executive Director at Schroders]

S. Fixed Income products and the demand from our clients of our higher margin euro credit products. In Multi Assets, revenues reduced by 8%, principally driven by net outflows. The net operating revenue margin remained stable at 24 basis points. And in Core Solutions, our revenues increased 5%.

[Meagen Burnett, CFO & Executive Director at Schroders]

This is due to the positive flows we generated over the past twelve months. The margin decreased to six basis points for the first half, again largely driven due to the mix effect of our net new business. Moving on to Schroders Capital. This business continues to demonstrate good growth, with revenues up 9% year on year, driven by a higher average AUM as well as an increased carried interest, which I mentioned earlier. As you can see in the table on the left, fundraising was GBP 6,000,000,000.

[Meagen Burnett, CFO & Executive Director at Schroders]

That's an annualized rate of 17% on our opening AUM, with good contributions across all four asset class pillars. After taking into account deployment, fund maturities and outflows, the funding converted to net new business of GBP 2,300,000,000.0. And as of the June 30, our non fee earning dry powder remained broadly flat at GBP 4,000,000,000. The table on the right shows our net operating revenue margin at 56 basis points, flat on the first half of the year but one basis point lower than our 2024 exit. Next, Wealth Management.

[Meagen Burnett, CFO & Executive Director at Schroders]

Wealth Management performed well and the net operating revenue was up 9%. Revenue in Casanova Capital and Other Wealth increased by 8%, reflecting the continued strong performance in the first half. As shown in the table on the right, the net operating revenue margin was 47 basis points it reduced to 47 basis points, sorry, principally driven by lower transaction fees. Benchmark revenues were up 18% as the business continues to grow its adviser footprint and make selective acquisitions. The net operating revenue margin was 21 basis points, up one basis point from the prior year.

[Meagen Burnett, CFO & Executive Director at Schroders]

So that covers revenue. And now let me talk you through expenses. We limited the increase in our operating expenses to 1%. The benefit of our transformation actions, along with FX movements, helped us offset the impact of inflation. And as you can see from the bridge, we delivered net savings of GBP 21,000,000 and those have already dropped to the bottom line in H1.

[Meagen Burnett, CFO & Executive Director at Schroders]

And importantly, that is after taking into account GBP 8,000,000 that we've reinvested into our talent and into hiring. For the full year, I anticipate us being able to deliver net in year P and L benefit of around £50,000,000 We remain committed to our target of £150,000,000 annualized net savings to be delivered by the 2027. Continuing along the bridge, our currency movements resulted in a benefit to our expenses of 6,000,000 We had GBP 5,000,000 additional compensation payaways as a result of the GBP 9,000,000 additional carried interest we earned. And we had 4,000,000 increase in costs linked to our higher average AUM. And finally, the impact of inflation was GBP 30,000,000, in line with our expectations of around 3% of our total cost base.

[Meagen Burnett, CFO & Executive Director at Schroders]

So overall, good progress on costs, which has led to our adjusted cost to income ratio improving to 74, in line with our full year guidance, and we expect to remain at that level for the full year assuming stable markets. Now let's talk about our transformation programme in a bit more detail. From a personal perspective, I'm really encouraged by the outcomes we have achieved. We've had to make difficult decisions affecting our people, our portfolio and our resource prioritization. But we've moved at pace to ensure the right size our cost base as we progress.

[Meagen Burnett, CFO & Executive Director at Schroders]

I would place our transformation delivery into three categories. Firstly, operating model efficiencies. Whilst our transformation activity is a group wide, the structure change is particularly evident across our group technology, operations and client group, specifically our marketing functions. These changes are designed to optimize our internal operating model to drive efficiency, prioritize our client experience and reduce duplication. Secondly, operating partnerships.

[Meagen Burnett, CFO & Executive Director at Schroders]

In March, I spoke about leveraging our buying power and working more closely with our key operating partners. In the second quarter, we announced that we will be moving our technology and global operations activities to a strategic third party, UST, who we've worked with for the past fourteen years. This will enable us to leverage UST's scale, their technology innovation and their global location strategy. And in turn, it will increase our operating leverage over our business. This transition will happen in phases running through to the 2026.

[Meagen Burnett, CFO & Executive Director at Schroders]

Thirdly, portfolio restructuring. Identifying and executing on opportunities to simplify our global portfolio of businesses has been an important step that we focused on our strengths. Richard provided you with the specific examples that we've elected to sell, exit and reshape our business where we've lacked scale or competitive advantage. As we move into 2026, the focus will be on those actions to drive long term value and growth. We will continue to enhance the efficiency of our operating model, drive cost discipline and accelerate our AI capabilities.

[Meagen Burnett, CFO & Executive Director at Schroders]

We're confident that we can continue to deliver against our strategic ambitions, but as I mentioned, we've only just started. Both Richard and I, together with the executive team, know that there is a lot of hard work ahead. But what energises me is the knowledge that the work we're doing will drive better outcomes for our clients, our shareholders and our people going forward. Now moving on to capital. Our capital surplus increased to GBP $896,000,000 at the end of the first half.

[Meagen Burnett, CFO & Executive Director at Schroders]

We set out a very clear framework for capital allocation in March. That framework remains unchanged. And as you know, there are a number of items that will draw on our capital resources over the next few years. As we deliver our transformation programme, we expect net cash generation to be lower due to the associated costs incurred. However, it is crucial that we continue to allocate our capital to areas where we see the greatest opportunity for the future.

[Meagen Burnett, CFO & Executive Director at Schroders]

In 2025, so far, we've approved an additional £70,000,000 for co investment and seed into Schroders Capital. We've also approved an additional £200,000,000 to seed funding the launches in our public markets of some of our innovative product strategies. We continue to invest in acquisitions in adviser networks and Benchmark and to assess selective inorganic opportunities within wealth more broadly. From a regulatory perspective, we have Basel 3.1 coming into effect on the 01/01/2027. We're reviewing the Leeds reforms and continue to work closely with the PRA to understand the potential impact this will have.

[Meagen Burnett, CFO & Executive Director at Schroders]

Finally, let me take you through the rest of our financials. Adjusted operating profit was up 7%, resulted in adjusted operating earnings per share for the first half of 14.8p, up 8%. Profit before tax, however, was down 29%. That reflects the transformation costs of GBP 45,000,000, in line with our expectations, and portfolio restructuring charges of GBP 56,000,000. As Richard said, these are restructuring charges, are non cash and have limited impact on our capital.

[Meagen Burnett, CFO & Executive Director at Schroders]

Overall, in light of these results and in line with our dividend policy, we've maintained an interim dividend of 6.5p per share. So before I hand back to Richard to conclude, I just wanted to leave you with my three key takeaways for the first half of the year. Firstly, we are progressing well against our cost targets. We've upgraded our expectations for the full year to around GBP 50,000,000 in year net savings. Importantly, these are not just a cost out story.

[Meagen Burnett, CFO & Executive Director at Schroders]

We are also investing for growth. Secondly, good sales momentum. The first half of the year, we saw GBP 68,000,000,000 of gross inflows, our highest gross inflows in three years. And finally, focus on profitable growth. We have taken decisive action to simplify our portfolio of businesses so that we can continue to channel our resources and our capital into the opportunities where we will drive future profitable growth. Richard, back to you.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Great. Thanks. Great summary. As we look through the remainder of the year, I remain pretty confident in our strategy and the delivery of our transformation program, which as you can see is already gaining great momentum. The progress we're seeing, in particular, the encouraging gross flows in the first half and the quality of our current pipeline reinforces my confidence that we're heading in the right direction.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

It is of course impossible to ignore the turbulence in world events and the continuing uncertainty in market conditions. That said, we are focused on what we can control. Through disciplined execution and a clear eye on our objectives, we're determined to return this business to profitable growth as we have done in the first half. We are firmly committed to maintaining our position as a leading international active manager as a top UK wealth franchise. I genuinely believe there is significant opportunity on the horizon and both strategically and operationally, we're well positioned to capture it.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Above all, our focus is delivering for our clients. We do this by leaning into what we do best, active management, providing guidance and clarity for our clients during these uncertain times. So one thing to mention before we go to Q and A. We're planning to hold a capital markets event for Schroders Capital in the fourth quarter. We're really keen that you hear from the team to showcase our unique capabilities and how we compete in the private market space.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Course, we're going to provide more details in due course, but I really hope you're able to join us. Now let's turn it over to you. We've got Katie from IR, which many of you will know with us here in the studio. So she's manning the microphone and moderating. But please raise your hand. And over to you, Katie.

[Katie Wagstaff, Investor Relations Manager at Schroders]

Thanks, Richard. So our first question is from Isabel Hetrich. Isabel, if you could please come off mute, restate your name and your company for the record. And if you could clarify who your question is directed to.

[Isobel Hettrick, Vice President - Equity Research at Autonomous Research]

Good morning. It's Isabelle Hetrich from Autonomous Research. I have two questions, please. I guess, both for Richard. So first, you've had a couple of ESG mandate wins in the first half, and we are seeing some of your peers talk up the opportunity to increasingly win mandates given the pullback in ESG from some of your US peers.

[Isobel Hettrick, Vice President - Equity Research at Autonomous Research]

So if you could just provide some color about how you think traders is set up to compete in this area and any color on future pipelines would be appreciated. And then my second question is on the LTAF business and the JV with Phoenix. So could you give us some color, please, on how you expect this business to evolve over time and the increasing contribution it could make to Schroders Capital's net new business? Thank you.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Thanks, Isabelle, and thanks for joining us this morning. So, on the ESG mandate, yes, we were we were very pleased. Both that SJP mandate and the pension fund mandate that we talked about were our sustainability credentials were central to that. We are undaunted in our support for ESG. And importantly, ESG is built into what we do at Schroders.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Every investor has information on their desktops to enable them to think about ESG items and how that may not be factored into market prices as they do research and make investment decisions. So, actually showing our capabilities, showing the depth of data that our analysts have and our teams have is central to winning those mandates. Of course, we offer products which are specifically badged as ESG products, but actually, it's built into what we do. It's part of active management. So it's why we exist as active managers.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So I would concur with those who say that actually we have an opportunity. And I think we're really well positioned in that opportunity because of the investment that we've made in sustainability over a prolonged period of time as well. This isn't something you can switch on if it comes back into vogue. It requires an awful lot of dedication and investment. On the LTAPH, it's a great question.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

The joint venture with Phoenix, Future Growth Capital, When we set it up, the aim was to have flow coming from Phoenix, as you know, we were expecting several billion to arrive into Schroders Capital over the next couple of years from Phoenix. But we're also starting to see really good momentum and pipeline for clients more broadly. The one thing I'd note is the only product in the marketplace, the only UK only LTAPH, there are lots of owners in that, but, is offered by FGC and that's what people who want to take advantage of their mansion house accord are going to have to use. So, we've got the right product in the market at the right time. So we hope we get to see some increasing flows from third parties and not just Phoenix in the coming years.

[Katie Wagstaff, Investor Relations Manager at Schroders]

Very much, Isabel. Our next question is from Angeliki. Angeliki, if you could please come off mute, restate your name and company and who your question is directed to.

[Angeliki Bairaktari, Senior Equity Research Analyst & Executive Director at JP Morgan]

Yes. Hi, good morning. It's Angeliki Berakthari from JPMorgan. Thank you so much for taking my questions. So a couple of questions from me as well for Richard.

[Angeliki Bairaktari, Senior Equity Research Analyst & Executive Director at JP Morgan]

In terms of the wealth business, we saw that the wealth flows have been much lower in the first half relative to last year as a percentage of AUM, but also in absolute terms. And I was wondering if you have been at all impacted by the changes in the non dom regime? And also, what are you currently seeing in terms of client reaction ahead of the autumn budget, especially given all of the discussion around sort of, you know, higher taxes, etcetera? And then second question on wealth. We saw earlier this year the announcement of the acquisition of CCLA by Jupiter.

[Angeliki Bairaktari, Senior Equity Research Analyst & Executive Director at JP Morgan]

And I was just wondering whether that increases competition for you at all within the charity space, given that this has been a key growth area of the wealth business in the past? And perhaps, one last question with regards to LTAS. We heard in the LEADS reforms that LTAS will now be included in stock and share ISIS from April 2026. What will be the impact for you? Thank you very much.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Thanks, Angeliki. I really appreciate you joining us. So let's go through them in order. So I think we're to look at quarter on quarter in Wealth and what really happened. So what we saw is a lower flow rate in the first quarter for Casanova in particular, as we saw the impact of tax payments that occurred in January.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So we had a slower start to the year than we had expected as a result of those tax payments. And pleasingly coming into the second quarter, we saw the fundraising rate get back into the 5% to 7% target of AUM that we've set for you. We feel pretty good about the pipeline in wealth today. So as we look forward, we think we'll be okay. Now secondly, in, you asked about the non dom and whether that had an impact.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Of course, we've seen some clients, as everyone has, leave The UK, but very fortunately, we've not the money has not moved with them. So it hasn't really had a significant impact on Kazanov. When we look at the, autumn statements and what might be coming up, look, of course, I think there are people who are concerned about what may be in that statement. And there's definitely, people talking about how that may impact their portfolios, but we've not really seen any significant change in behaviors or people preempting those changes at the moment. On CCLA, too many Cs in there Angeliki, sorry.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Obviously, what we're doing in Casanova is position ourselves for the larger, charities. We have an astonishing, as you know, success rate in winning RFPs in charities. I think the CCA, whilst clearly it does appeal to some large charities, an offering that goes right the way through the size spectrum, therefore, in parts of the market where we are less focused. So we're not anticipating a huge impact on Casanova because of Jupiter's acquisition. On LTAS ISAs, you would have seen we're really supportive of that because I think the important thing is investors should be able to put a, tax free wrapper around any investment that they make, particularly if it's into The UK.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

We're all we're very supportive of the government's efforts to drive more and more investment into both public and private markets here in The UK. So, we're expecting I think we're already expecting to be listed on one platform very shortly. And we're expecting to see some flow from certain aspects of our client base. It's obviously a product that's not suitable for everybody, but it's definitely suitable for those, for some people. And we're delighted that it can now go into those wrappers.

[Katie Wagstaff, Investor Relations Manager at Schroders]

Thanks, Angeliki. Our next question is from Arnaud. Arnaud, if you could please come off mute, restate your name and your company and clarify who your question is directed to. Thank you.

[Arnaud Giblat, MD & Research Analyst at BNP Paribas]

Yes. Good morning. Arnaud Geblak here from Exane BNP Paribas. I've got three questions, please. If I could come back again to LTIF and widen the question maybe to LTIFs.

[Arnaud Giblat, MD & Research Analyst at BNP Paribas]

I'm just wondering how you're thinking about market sizing and whether or you've got the right products to address the opportunity. Particularly, I'm thinking about hybrid products, publicprivate. My second question is on private markets generally. Could you talk about the pipeline you've got ahead? What launches should we be thinking about, particularly larger fund launches?

[Arnaud Giblat, MD & Research Analyst at BNP Paribas]

And my third and final question is on wealth. Clearly, the aging of financial advisers continues. I think we're at 58 years old. I'm just wondering how you're thinking there about adding capacity to a market that is needing in terms of that has a certain need for financial advisers. Thank you.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So let's start with the I think the question broke up a little bit, Arno, was around the LTAPHs and market sizing. And of course, in addition to the LTACHs, we have the LTIFFs that we've actually also launched in Europe. So it's not just a UK question, it's much broader than that. Particularly when we think in The UK about pension reforms, by definition, that's opening up an enormous market for LTASHs as well as obviously as I talked about for within wealth, for a population of wealth, they will fit nicely into portfolios and into ISAs. But have we got the right product?

[Richard Oldfield, Group CEO & Executive Director at Schroders]

The LTAS haven't been around that long, right? And we're really pleased we had the first LTASH, the third LTASH. We've now effectively got the LTASH offered through future growth capital, specifically targeting The U. K. Market.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So I'm not going to give you exact numbers, but we're really quite hopeful that with the offering that we've got across the spectrum of asset classes that we're really well placed in that marketplace. On hybrid products, we're really focused on actually how we remain at the forefront of innovation. And I'm definitely talking to both Georg and Yohanna about how we think particularly in debt around the right sort of hybrid products. So hopefully more to come on that as we go into the second half and beyond. Private markets, the future pipeline, what we really want to see grow particularly in the second half is our private debt capability.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

For us, this is really about taking the existing products that we've got and scaling them as opposed to launching a particularly new product. But we also continue to see new fundraisings as we look at green coat and the repositioning of the green coat business to give products at a higher return rate. So more to come of what we've got rather than launching anything new. And I think that ties back Arnaud into the point we've been making of let's get really good at the things that we know we're good at and scale those rather than launching new things. And thirdly, on wealth.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

My wife always tells me age is a concept as opposed to a problem. So, look, we're very blessed here to have a wealth business that covers all aspects of advice and the wealth spectrum. In Kasanov, we've got a great team of financial advisers, and I hope not many of them are rushing off to retire anytime soon. But when we look at SPW, we've been working really hard to replenish and actually have the very best advisors we can find in that business. And we're not seeing any difficulty recruiting, new people.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Training and education is an important part of making sure we've got the right advisor base. And of course, we continue to see adviser numbers grow across Benchmark. We're now over 1,000 advisers on the Benchmark platform. So we're not really seeing an immediate problem from the seasoning of the adviser capabilities.

[Katie Wagstaff, Investor Relations Manager at Schroders]

Thanks very much. Arnaud, if you could lower your hand and go back on mute, please. Thank you. Our next question is from Nicholas at Citi. Nick, if you could please come off mute, restate your name and company and who your question is directed to. Thank you.

[Nicholas Herman, Director - Equity Research at Citigroup]

Thanks, Katie. Morning, both. It's Nicolas Simon from Citi. Just I had one follow-up on that last question, and then I have three questions myself. So just a quick follow-up on the private debt.

[Nicholas Herman, Director - Equity Research at Citigroup]

You you referenced scaling private debt. My impression here so this is Richard. Impression is that you were you were not well developed in in your private debt capabilities. So I guess that scaling, would would that include partnerships potentially with maybe even some of your some of your shareholders? And then and then the the the three questions that I had then, two for Richard and one for Megan.

[Nicholas Herman, Director - Equity Research at Citigroup]

So the first two for Richard. On your targets, I I know your revenue targets and especially that for your public markets are based on a certain set of assumptions, namely that the shift to to credits into global strategies will continue. I think it's fair to say that those strategies those those assumptions felt reasonable when you were formulating your plan last year. But I guess with what's happened this year, does that change your view of the world at all? Maybe not so much the shift from equity to credit, but maybe more relatively slower shift away from local towards global.

[Nicholas Herman, Director - Equity Research at Citigroup]

The second question for Richard on the impact of your transformation on clients. I think you said that client engagement is up about 20% of this year, and you've seen, I think, was 68,000,000,000 of gross inflows. I mean, that was obviously very strong despite all that change. So it doesn't seem that we have seen any hesitancy from consultants and clients of yours as a result of all these changes on the investment platform. Is that a fair conclusion?

[Nicholas Herman, Director - Equity Research at Citigroup]

And then the final question for for Megan, given that you are ahead of your transformation plan, and as you embed a culture a a culture of greater cost discipline, I appreciate you have reiterated the $1.50 cost saving target. But would you say that you are now incrementally more optimistic of potentially exceeding that 150,000,000 as it stands, given that you are ahead of target?

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Nick, thanks for those questions. And thanks for asking Megan a a question. It gives me a bit of a break, so I appreciate it. So let's take private debt because, again, I'm going to take us back a little bit to March. What we said was that we were well developed in bits of private debt and that's what we're going to focus on.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So particularly asset backed, securitized debt, we have a great team covering that, ILS, cat bonds. So we're doing certain things. And you're right, we don't have a capability that, for example, looks at direct lending. So where our growth is focused in our plans is on the things that we know we're good at. Now your broader question though is, are partnerships important to our business going forward as we think about filling in capability gaps?

[Richard Oldfield, Group CEO & Executive Director at Schroders]

And of course, they are. One of the reasons that we have asked Karim to step up into that role is to help us be front footed and deliberate in seeking out partners to help us be that across distribution, be that across product development. So we look not just in private debt but across the business at whether or not we can grow through different forms of collaboration. So on the targets, has our view changed on the assumptions? Not yet.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So I know there's an awful lot of talk about movement in appetite and flows. And we can definitely see when we look at retail flows some movement. I think just think about the institutional buying cycle. It takes quite a long time from flash to bang. We go through an RFP process that it takes a while to fund.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So we've seen an increase in RFPs, but we actually haven't seen funds moving. So I think for the moment, whilst there are early signs of retail flows, they're generally a little bit hotter those flows anyway. We haven't seen a broader movement. So we're sticking with the assumptions that we've got. But don't worry, you'll be the first person we'll tell when when we change them.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

And the client engagement, and what that really means from a consultant perspective. So whenever you go through change in a business, consultants rightly, by the way, it's their job, come and ask us lots of questions about, changes and what the impact will be on on the business. And there have been, as as we've moved through the last six months, some changes in in recommendations. But what's really astonishing about Schroders, and I probably didn't understand this, Nick, when I joined, was that we're not a hall of fame organization. This isn't about stars.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

It's about teams. And we've invested tremendously in this huge bent of capability. We have more than 1,000 investors, most of them sat in this building actually. And they're awesome. Right?

[Richard Oldfield, Group CEO & Executive Director at Schroders]

And so when we see movement in teams, when we see changes of the environment, the one thing we do, we've got a great bench of people keeping strategies going, making sure they're consistent with what they say on the tin. And that's why I think we managed to retain the recommendations and keep the business solid and keep those flows coming in through the year. So, one thing I'd really want to land with you, is that capability, that bench is really a protective defense for this business and a great asset for us.

[Meagen Burnett, CFO & Executive Director at Schroders]

And the final

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Hello, question for it's you, Megan.

[Meagen Burnett, CFO & Executive Director at Schroders]

Thanks for asking me a question, Nicholas. So on our transformation, we I I've mentioned it a few times, we're only three months in from when we went to market with that target. We've done exceptionally well relative to that target, but we're not restating it. We are aiming to hit that cost to income ratio exit of 70% at the 2027. Our target is still a net target and we remain at that number of 150%.

[Nicholas Herman, Director - Equity Research at Citigroup]

Very clear. Thank you both.

[Katie Wagstaff, Investor Relations Manager at Schroders]

Thank you, Nicolas. We have two more questions on the line. So coming to Hubert first. Hubert, if you could please come off mute to restate your name and company and clarify who your question is directed to. Thank you.

[Hubert Lam, Equity Research Analyst at Bank of America Merrill Lynch]

Hi. It's Hubert Lam from Bank of America. Thank you for taking my questions. Sorry, joined the presentation light, so hopefully, you haven't addressed these issues already. I guess questions could be for either of you.

[Hubert Lam, Equity Research Analyst at Bank of America Merrill Lynch]

Firstly, on the flows, can you talk about the pipeline that you see? Obviously, you had some good wins recently. Any mandates you'd like to point out? I think previously, you mentioned, like, a possible pipeline in in q three and quant equities and core solutions. Just wanted to confirm if this is still the case.

[Hubert Lam, Equity Research Analyst at Bank of America Merrill Lynch]

Secondly, associates and profits, in wealth management, was stronger than expected due to SBW. How should we think about this going forward? It seems like a pretty big step change in the half. Any one offs there, or is this kind of the run rate and to think about going forward? And lastly, just wanted to think about your thoughts on the opportunity in wealth management in targeted support.

[Hubert Lam, Equity Research Analyst at Bank of America Merrill Lynch]

Just wondering what you think about that based on what the FCA has said. Thank you.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Thanks, Hsu. And thanks for joining us. We didn't cover any of those. I know we've been double parked, I appreciate you joining. So on the flows, where I really don't want to get into too much is actually telling you what's in the pipeline because it moves around quite a lot in terms of when it funds.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

But I can tell you, we sit here today feeling pretty good about what's won not funded and actually what we can see in terms of possible sales over the second half. The only one that we've announced coming up in the second half is a win that we've had with Scottish Friendly. So that's out in the marketplace, and we expect that to fund hopefully during Q3. On the associates, actually, is a really good story of actually the benefits coming through of the things that we've done in the past. So we talked, I think, at these presentations in '23 and '24 about the restructuring efforts that we've undertaken in SBW, the changing advisers, changing the investment proposition.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

And what you've actually seen in the first half is all of those benefits actually flowing through to that business. So you shouldn't really see that as a one off. So on targeted support, I think, first of all, the premise for targeted support is relatively limited, but we think it's a huge opportunity for the industry. First of all, moving people away from feeling they're forced to take advice, but actually to seeking advice and people's propensity to buy and pay is always higher when they actually opt into something and not forced to take it. But actually, in really focusing businesses on where they add most value to clients.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So I know we will be pursuing guidance and not just advice. We think they can sit nicely alongside each other, but it's a huge opportunity for the industry. And I think over time, Hubert, the real question is how far the perimeter goes on where we can provide targeted guidance.

[Hubert Lam, Equity Research Analyst at Bank of America Merrill Lynch]

Great. Thank you.

[Katie Wagstaff, Investor Relations Manager at Schroders]

Thanks, Hubert. We actually have a couple more questions. So Bruce, coming to you first. Please come off mute. Restate your name and company and who your question is directed to. Thank you.

[Bruce Hamilton, Managing Director at Morgan Stanley]

Hi, there. Morning. It's Bruce Hamilton from Morgan Stanley. Thank you for taking my questions. Thanks for the presentation.

[Bruce Hamilton, Managing Director at Morgan Stanley]

I've got two for Richard and one for Megan. So the first one, just on the sort of end client appetite for Europe. Obviously, was there's been a fair bit of debate around sort of potential for shifts amongst Asia, Australia, other clients to look more to Europe and a bit less to The US. But has that faded Or is that still real? So I'd be interested in color from sort of client conversations there.

[Bruce Hamilton, Managing Director at Morgan Stanley]

Secondly, on sort of pension reform. Obviously, you've talked a little bit about sort of LTAF opportunities in The UK. But looking a bit more broadly also Europe as well as The UK, what are you sort of advocating for? What do you think is most important? Is it around sort of auto enrolment?

[Bruce Hamilton, Managing Director at Morgan Stanley]

Do you know what or you know tax incentivization of you know ISA equivalents in Europe. What are the things that you think make the biggest difference and that we might get movement on? And then final question, sorry, it's a slightly straightforward one for you, Megan, but congratulations on the delivery. On the EUR 50,000,000 run so GBP 50,000,000 savings in the year, was the previous target GBP 40,000,000 in the run rate? So actually, it's quite a lot better, just to confirm. Thank you.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Thanks for the questions, Bruce. Good to hear from you. So on the credit appetite sorry, the client appetite for Europe and as it faded, I think the picture is a little bit more complicated than people try and gloss over it to me. As I said, what you can see is definitely retail funds moving, and they move more quickly in response to headlines. So you have seen that.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

We haven't seen that shift so much in institutional clients yet, but we've got a larger number of RFPs coming in. I think for me, if I take a stand back, by the way, our team running European equities has a phenomenal job, by the way, from a performance perspective. But the flows the flows are are still uncertain. That bit we've actually seen inflows into our large cap US, products as well. So we we can see the picture is very, very mixed depending on where you are in the world, what the appetite looks like.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Asia, definitely, we can see some orientation out of a US focus into a more global focus, including Europe, so not just to Europe. So I think we can see in clients a broader global orientation. You do have some wanting to take advantage of the rebound in The U. S. Markets.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

But it's kind of interesting, isn't it, Bruce? Going back to my point on diversification and the need for resilience, almost all of the increase in the S and P since Liberation Day has been back with the MAX seven. So the concentration that we saw coming into the year and we saw reduce a little bit, towards the March has come back full force as we get into, the second half of the half. So I think it really reinforces my point as clients look at resilience and that's what they started talking about when we did the survey. They're going to want to see some more rebalancing to try and mitigate the concentration we've got.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

On pension reform, look, I think it's really is different in different parts of Europe. So in The UK, we signed up to the Mansion House pledge. That's a really important thing that we've done. We encourage other people to do that because that's moving us away from seeing cost as the primary driver of where people put investment savings into actually what's the balance of value for money and the right return profile. So I think that's a really important step.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

And what we're advocating for is more and more employers to sign up to that pledge to make sure that we're giving the right return profile, frankly, to their employees and pensioners. Because at the end of the day, giving those people more money is what it's all about. I think tax incentivization is a really important point, certainly when we get into Europe. I think there's a broader debate to have on tax incentivization here in The UK. Across ISAs and pensions, we give a £70,000,000,000 tax rebate to people.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Now that's more than the welfare tax bill and it's more than the defense costs for The UK, and yet we see most of that invested overseas. So I think there's a really interesting angle for the Treasury to debate how tax incentives can sometimes increase saving but create perverse outcomes for economies. But in Europe, we definitely want to see better tax incentives in some countries. And actually allowing pension schemes, we're seeing this in France in particular, where we want to see more access to private markets into pension schemes and how do they open that access. So they're the sorts of things that we're advocating for. And Megan?

[Meagen Burnett, CFO & Executive Director at Schroders]

Thanks, Bruce. Yes, and thank you for the focus on what we're delivering. It absolutely is GBP 50,000,000 out of our bottom line P and L this year. That's what our focus is on. We did guide in March to saying GBP 40,000,000 of annualized run rate savings, but this is GBP 50,000,000 out of the bottom line within the year.

[Meagen Burnett, CFO & Executive Director at Schroders]

The key thing Bruce is that we focused on our cost to income ratio and we guided to 74% for this year and getting down to 70% by the 2027.

[Katie Wagstaff, Investor Relations Manager at Schroders]

Thank you. Bruce, if you could lower your hand and go back on mute. Our next question is from Mike Werner. If you would come off mute, restate your name and company and who your question is directed to. Thank you.

[Michael Werner, Equity Research Analyst at UBS Group]

Thank you. Mike Werner here from UBS. Two questions, please. And again, apologies, I missed some of the beginning, so I hope I'm not covering something you already did. But first, I think this is for Meaghan.

[Michael Werner, Equity Research Analyst at UBS Group]

We saw, again, really good cost cutting. You guys are looking more positive there. Where do we where should we expect the cost cuts as we go through the second half of this year? Do you expect it more on the comp side? Do you expect it on the non comp side, whether it's operational or whether it's headcount?

[Michael Werner, Equity Research Analyst at UBS Group]

And then for Richard, I think the question I have is on the wealth management business. I think there was some discussion about potentially expanding that business geographically when you hosted your Strategy Day a couple of months ago. It's been three or four months since then, and I was just wondering if there's been any update on your thinking and any details would be helpful. Thank you.

[Meagen Burnett, CFO & Executive Director at Schroders]

Great. Thanks, Mike. So if we look at the second half of the year, as we've guided, we'll get to CHF 50,000,000. The cost savings there are really associated with the announcements we've made earlier this year of moving some of our technology and operations through to UST, so those start to flow through our operating model towards the second half of the year. We and importantly, we really are focused on cost to income ratio rather than comp and non comp.

[Meagen Burnett, CFO & Executive Director at Schroders]

For that exact reason, in some instances, we're moving comp to non comp as we move to external providers.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

It's really giving us the flexibility, isn't it, Mig?

[Meagen Burnett, CFO & Executive Director at Schroders]

Yeah.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

To run the business in a better way. Mike, thanks. Good to hear from you.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Yes, our thinking has evolved. As I said, Oliver has been literally in the building for less than two months. So what we're going do is let him get his thinking together, which he will be doing over the autumn. And so we'll back to you at some point after that with an update on what we're planning to do in wealth more broadly, not just geographically.

[Michael Werner, Equity Research Analyst at UBS Group]

Thank you.

[Katie Wagstaff, Investor Relations Manager at Schroders]

Thanks. We have one more question from Michael Sonson. Mike, if you could come off mute to restate your name and company and who your question is directed to. Thanks very much.

[Michael Sorensen, Relationship Director at Barclays]

Morning Richard, morning Megan. Just Michael Somersen, Barclays here. Just a couple of ones please. First of all, the portfolio restructuring and the charge you took there, I'd be interested to know what how far you are sort of through your view of what how much portfolio restructuring you require. I mean, obviously, you go hard early on and then assess from there.

[Michael Sorensen, Relationship Director at Barclays]

So interested to know stability for people once you've made decisions around this and how much more there is to come there. Second one, I guess, more Meaghan, once again, the cost piece. The $8,000,000 of investment versus the $21,000,000 of save, interesting dynamic, I suppose, if I'm thinking out to your GBP 150,000,000 of cost save, how you characterize sort of ratios of your reinvestment versus save? And so what your actual gross cost save might have been as you set out the plan? Color on those would be both interesting.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Thanks, Mike. So on portfolio restructuring, look, think take us back to what we said. We're going to do what we need to do to focus the business, put our resources, both time, effort and financial resources in the places where we can really drive growth. So these were things that we took action on in the second quarter. We're going to continue looking at the business, right?

[Richard Oldfield, Group CEO & Executive Director at Schroders]

So that isn't to say we've got a list of targets that we're going through, but we're going to be disciplined in thinking about the business over the next months and into 2026 to make sure that we've got the portfolio we can really drive forward and give you the EPS growth I know everyone on this call wants to see. Megan, on the costs?

[Meagen Burnett, CFO & Executive Director at Schroders]

Thanks, Mike. Yes, as I mentioned earlier on in the slides, we delivered a gross cost saving through transformation of £29,000,000 for the first half of the year. So that 21,000,000 is a net number. Obviously, we see the £8,000,000 rolling forward as we've invested in staff, as we mentioned, specifically in areas of growth, so in our Schroders Capital areas and in retention of top talent and investments. So in terms of our ratios, we focused on the total cost to income ratio and getting to the 70% by the 2027.

[Katie Wagstaff, Investor Relations Manager at Schroders]

That's it for questions on the line.

[Richard Oldfield, Group CEO & Executive Director at Schroders]

Look, I just want to say an enormous thanks for everybody for joining us. As said, I'm very conscious we were double parked this morning and I appreciate the time. And maybe final thing from both of us, we are certainly going on holiday towards the August for a well owned break. So I hope you all managed to check out and get a break. And we'll see you back in the saddle in September. Thanks a lot, guys.

[Meagen Burnett, CFO & Executive Director at Schroders]

Thank you.

Participants

Executives

• Richard Oldfield, Group CEO & Executive Director
• Meagen Burnett, CFO & Executive Director
• Katie Wagstaff, Investor Relations Manager

Analysts

• Isobel Hettrick, Vice President - Equity Research at Autonomous Research
• Angeliki Bairaktari, Senior Equity Research Analyst & Executive Director at JP Morgan
• Arnaud Giblat, MD & Research Analyst at BNP Paribas
• Nicholas Herman, Director - Equity Research at Citigroup
• Hubert Lam, Equity Research Analyst at Bank of America Merrill Lynch
• Bruce Hamilton, Managing Director at Morgan Stanley
• Michael Werner, Equity Research Analyst at UBS Group
• Michael Sorensen, Relationship Director at Barclays