Schroders Annual Report 2021

← All annual reports

FY2021 Annual Report · Schroders

Loading PDF…

Annual Report and Accounts 2021

STRATEGIC REPORT

Our business at a glance

Chairman’s statement

Group Chief Executive’s statement

Our milestones

Market review

Strategy

Business model

Key performance indicators

Business and financial review

Tackling climate change

Task Force on Climate-related Financial Disclosures

People and society

Our stakeholders

Section 172 statement

Non-financial reporting directive

Risk management

Viability statement

GOVERNANCE

Board of Directors and Company Secretary

Corporate Governance report

Nominations Committee report

Audit and Risk Committee report

Remuneration report

Directors’ report

Statement of Directors’ responsibilities

FINANCIAL STATEMENTS

Consolidated financial statements

Schroders plc financial statements

Independent auditor’s report

100

103

105

159

177

SHAREHOLDER INFORMATION

Shareholder information

Five-year consolidated financial summary

Glossary

184

185

186

Our Annual General Meeting (AGM) will be held as a hybrid meeting at 1 London Wall Place, London, EC2Y 5AU
and electronically via a live broadcast on 28 April 2022 at 11:30am.
A glossary of terms used throughout the Annual Report and Accounts, including details of Alternative Performance Measures,
can be found from page 186.

AS AN ACTIVE INVESTMENT MANAGER
WE MAKE DECISIONS EVERY DAY ON
BEHALF OF SAVERS AND INVESTORS
AROUND THE WORLD.

We make these choices carefully and deliberately – because they affect the
financial future of our clients and they impact the wider world.

Our clients include individuals who invest directly and those who invest
through businesses or financial advisers. We also serve the investment
needs of institutions like insurance companies, pension funds and charities.

They depend on our broad investment expertise across public and private
markets to manage their wealth or investments and achieve long-term
financial goals. The diversity of our business across important growth areas
helps us stand apart from traditional asset managers.

We employ 5,750 people across 37 locations globally. Our success depends
on the decisions they make every day.

Schroders Annual Report and Accounts 2021

Our business at a glance

ACCELERATING
POSITIVE CHANGE

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.

The heart of our strategy is simple – grow our business and deliver long-term
value for all our stakeholders. We have three strategic priorities:

Build closer
relationships
with end clients

Grow Asset
Management

Expand Private
Assets and
Alternatives

Build client longevity and sustainable
margins through trusted adviser
relationships in Wealth Management

Focus on developing distinctive
capabilities that enable us to deliver
excellent investment performance

Meet increasing client demand for
additional portfolio building blocks
and alternative sources of return

Read more about our strategy on page 18 and how we track our progress on page 22.

Schroders Annual Report and Accounts 2021

Clients are the focus of our business. When we deliver for them,
it benefits all our stakeholders:

CLIENTS

SHAREHOLDERS

OUR PEOPLE

WIDER SOCIETY

EXTERNAL SUPPLIERS

REGULATORS

Read more about our stakeholders on page 46.

We translate our purpose and strategy into action for all stakeholders by:

BUILDING
lasting client
relationships
through our
increasingly
diverse and
expanding
global
distribution
network

DEVELOPING
our investment
products
continuously to
ensure that they
continue helping
clients meet
their long-term
financial goals

EVOLVING
our business
model in
response to
market
disruption with
new capabilities
in key growth
areas

ADDRESSING
climate change
impacts by
using science-
based targets to
decarbonise our
investments and
operations

EMPOWERING
our people
and supporting
wider society
by creating
opportunities
to share in our
growth and
success

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsOur business at a glance (continued)

HOW WE HAVE DELIVERED IN 2021

Over the last five years we have made bold investments in the high
growth areas of private assets, wealth management and sustainable
investment. These investments have allowed us to deliver strong
performance for our stakeholders.

Financial highlights

Net income before
exceptional items

Profit after tax

Total dividend per share

£2,568.8M

(2020: £2,179.2m)

£623.8M

(2020: £486.0m)

Profit before tax and
exceptional items

£836.2M

(2020: £702.3m)

Basic earnings per share
before exceptional items

244.8P

(2020: 200.8p)

122P

(2020: 114p)

Total equity

£4.4BN

(2020: £4.1bn)

Profit before tax

Basic earnings per share

Total capital ratio

£764.1M

(2020: £610.5m)

220.8P

(2020: 172.4p)

27.7%

(2020: 26.2%)

Schroders Annual Report and Accounts 2021

Investment highlights

Assets under management

Net new business

Over three years

£731.6BN

(2020: £663.0bn)

£35.3BN

(2020: £54.9bn)

79%

of clients assets outperformed their
respective benchmarks1

Assets under management

By business area2

By asset class

By region

Private Assets and Alternatives
Private Assets and Alternatives
Solutions
Solutions
Mutual Funds
Mutual Funds
Institutional
Institutional
Wealth Management
Wealth Management
Joint Ventures and Associates
Joint Ventures and Associates

7%
7%
27%
27%
16%
16%
23%
23%
11%
11%
16%
16%

Equities
Multi-asset
Fixed Income
Private Assets and Alternatives
Wealth Management

35%
26%
21%
7%
11%

UK
Asia Pacific
Europe, Middle East and Africa
Americas

40%
30%
16%
14%

1. Read more about client investment performance in our glossary on page 186.
2. Read more about our business areas in our glossary on page 186.

Non-financial highlights3

Sustainalytics ESG rating

Low risk

low risk rating for two
years in a row

95%

MSCI ESG Rating

AAA

of employees proud to be
associated with Schroders

putting us in the top 3% of our
sector

33%

female representation in
senior management

94%

retention of highly
rated employees

SBTi targets validated

1.5oC

-aligned

£60.5BN

of AUM in SISF funds
classified as Article 8 or 9

84%

renewably sourced
electricity

CDP climate score

A-

leadership level rating for
the second year running

3. Find out more about these non-financial measures in our glossary on page 186.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsChairman’s statement

DELIVERING ON OUR
GROWTH STRATEGY

2021 was another strong year for Schroders both in terms of our
financial results and in extending our opportunities for future
growth.

Net operating revenue was up 17% at £2,403.1 million
(2020: £2,059.6 million), profit before tax and exceptional items
was up 19% at £836.2 million (2020: £702.3 million) and profit after
tax was up 28% at £623.8 million (2020: £486.0 million). Net new
business was £35.3 billion (2020: £54.9 billion) and assets under
management ended the year at £731.6 billion (2020: £663.0 billion).

Investment performance for clients was generally strong across
the board with 79% of assets under management outperforming
their benchmark over three years and 78% over five years.

This led to good growth in our traditional asset management
businesses and in wealth management, and high levels of new
business in Schroders Capital, our private assets business, which
has been a strategic priority for us in recent years.

Our strategic partnerships with major financial institutions in
China, India, Japan, the US and the UK are performing well and are
an increasingly important source of assets under management
and revenue, representing a significant long term growth
opportunity.

We agreed three acquisitions in 2021, River and Mercantile’s
solutions business, Cairn, a Dutch real estate investor, and
Greencoat Capital, a leader in European renewables. These meet
our strategic goals of getting closer to end clients, extending our
capabilities in private assets and building out our range of thematic
and sustainability funds.

Schroders Annual Report and Accounts 2021

I will step down from the Board at the conclusion of the Annual
General Meeting in April. It has been a privilege to have been at
Schroders for 21 years, first as Chief Executive and, for the last six
years, Chairman. Although the Company is much larger than the
one I joined in 2001, our culture has not changed in that we
continue to put our clients first and think long term in everything
we do. The consistent support of the Principal Shareholder Group
has been an important part of this.

It is a pleasure to see Schroders in this position of strength with so
many growth opportunities ahead. I extend my best wishes to
Elizabeth Corley, Peter Harrison and all the talented people who
have created this success.

Michael Dobson
Chairman

2 March 2022

Dividend
Our policy is to provide shareholders with a progressive and
sustainable dividend, targeting a pay out ratio of around 50%.
The Board increased the interim dividend to 37 pence per share
(2020: 35 pence), and will recommend to shareholders at the
Annual General Meeting a final dividend of 85 pence per share
(2020: 79 pence), taking the full year dividend to 122 pence per
share (2020: 114 pence), an increase of 7%. The final dividend
will be paid on 5 May 2022 to shareholders on the register on
25 March 2022.

The Board
Elizabeth Corley joined the Board on 1 September as an
independent non-executive Director and will succeed me as Chair
at the conclusion of the Annual General Meeting on 28 April 2022,
subject to shareholder approval. Ian King, the Senior Independent
Director, led the search and his report on the process is included
in the Nominations Committee report on page 69.

Matthew Westerman will succeed Damon Buffini as Chairman of
the Remuneration Committee after the Annual General Meeting.
I would like to thank Damon for his contribution in this important
role and we will continue to benefit from his experience in this
regard as he will remain a member of the Committee.

We are very pleased that Paul Edgecliffe-Johnson, Chief Financial
Officer of InterContinental Hotels Group plc, has agreed to join the
Board as a non-executive Director, effective 1 July 2022.

Looking forward
As Schroders continues to grow we become increasingly aware of
the positive role we can play to the benefit of all our stakeholders.
We assist a very broad range of clients meet their financial goals;
we channel capital to companies to support them in investing for
growth and engage with them on their path to sustainability; we
offer employees a rewarding and challenging career path; and we
work constructively with counterparties and suppliers – all
fundamental aspects of creating long-term value for shareholders
and a long term future for the Company.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsGroup Chief Executive’s statement

LOOKING AHEAD

FROM A POSITION

OF STRENGTH

Delivering strong investment performance
We have always strived to provide excellent investment returns for
our clients and generate value for our shareholders.

Client investment performance*

2019

2020

2021

70%

75%

74%

70%

72%

79%

72%

81%

78%

1 year

3 years

5 years

* For more information about how we calculate client investment

performance see the glossary on page 186.

Our three years investment performance is a key performance
indicator for the Group and I am pleased to see that it continues to
improve, as 79% of our AUM outperformed their respective
benchmarks. This is helped by our culture at Schroders where ideas
and decisions are challenged and tested openly. Each desk is also
supported by the science of the Data Insights Unit and the in-depth
knowledge of our ESG specialists. Taken together it gives us a petri
dish for bold decision-making.

Our industry has been disrupted over recent years, and a
polarisation between the winners and losers has emerged. A major
influence has been the increasing importance of sustainability. In
the past our industry was focused on just two outputs: investment
performance and the risk taken to achieve this performance. The
owners of assets, our clients, are rightly now demanding a new
perspective, a third factor – impact. The impact on society of the
companies we invest in is of material importance. We are focused on
delivering excellent risk-adjusted investment performance and are
doing this in a manner which aims to improve the world in which we
live. The progress on many fronts is pleasing but we are a restless
and forward-looking organisation. Whilst today’s successes are
celebrated, we also use them to set the bar for tomorrow.

Today, our 20-year outlook is dominated by the challenge of
decarbonisation. We have published detailed plans explaining how
we, as a corporate entity, will reach net zero. Of perhaps greater
significance, given the sheer scale of investments that we manage, is
our plan to influence the companies in which we invest to reduce
their impact on the planet. We hold sway with thousands of
companies around the world.

We apply our influence every day; we apply it as bond and stock
market investors but also as investors in infrastructure projects, of
real estate, and as major private equity investors.

When reviewing 2021, we can be particularly proud with what we
have achieved. The Group has generated record profits of
£836.2 million (2020: £702.3 million) which represents a 19%
increase versus the previous year.

Schroders Annual Report and Accounts 2021

Tilting our business towards the fast-flowing
waters of the industry
The foundations for our position today were laid a number of years
ago, when we sought to anticipate the challenges faced by
traditional asset managers and set out plans to accelerate our
investment to drive future growth. This included developing new
Private Asset capabilities, expanding our wealth business and
materially overhauling the product offering in our Asset
Management business. We have invested heavily in expanding our
geographic footprint, particularly in China and other emerging
markets, and set about building new partnerships such as that
with Lloyds Banking Group. We recognise that to be competitive
we require a strong technology platform, a deep ability to gather
and analyse data and a passionate desire to deliver investment
performance for our clients.

Over the last five years, our AUM has grown from £453.6 billion to
£731.6 billion, which represents an impressive compound annual
growth rate of 10%. Once again, our organic growth has been
strong. Indeed, almost every channel and region showed good
organic growth, despite the disruption that is evident in many
parts of the industry. We attracted net new business of
£35.3 billion, with strong contributions from our range of mutual
funds, private asset products, wealth management offering and
our various partnerships, predominantly in China and India.

AUM growth year-on-year

10%

This progress has been made in the grip of the Covid-19
pandemic. I would like to pay a very sincere tribute to our
employees who have contributed so much during such a disrupted
period. Our strong corporate culture is a sustaining competitive
advantage, and its strength has been hugely evident over the past
two years. In the same spirit of partnership, we have been able to
share the success of the firm with our employees globally through
the widespread award of shares. At the end of the year, a
staggering 84% of employees were shareholders in the firm,
ensuring that the alignment of interest across all stakeholders is
embedded in our structure.

Reaping the rewards from our organic
investments
2021 was a year when several growth drivers came together.
Developed equity markets posted another year of strong returns,
whilst the bond markets weakened and concerns about inflation
rose. We came into the year with strong investment performance
and managed to sustain this for another year. Our new products
saw good client demand, and the investments we had made in
increasing our geographic footprint also paid off.

Schroders has found success in developing close partnerships with
local champions around the world, and many of our strong country
positions owe much to these relationships. We celebrated 50 years
of business operations in Hong Kong, having started there in
partnership with the Kadoorie family and Standard Chartered.
Today we have important strategic partnerships in several
countries: with Bank of Communications in China, Axis Bank in
India, Nippon Life in Japan, Hartford Funds in the US and Lloyds
Banking Group in the UK. We deeply value these strategic
partnerships which have all contributed to our progress.

“As a UK PLC and a global
investor, we have a
fundamental role to play in
decarbonising the economy.”

Last year, we saw good growth across all regions. We have been
reaping the rewards from relatively new areas of strategic focus,
such as Latin America, Israel and our US institutional businesses.

In our EMEA markets, we saw strong contributions from clients
based in Central and Emerging Europe, the Middle East and Israel.
These are some of our newer client relationships and they have
contributed a combined net new business of over £1.0 billion. We
also saw good contributions from our wholly-owned China
business, India, Thailand and Malaysia, reaching nearly £1.0 billion
of net new business. In the US, our net sales continue to benefit
from our long-standing relationship with Hartford, which provides
a diverse set of actively managed mutual funds to advisers and
clients. Net new business from North American clients reached a
total of £3.2 billion, which contributed to AUM reaching nearly
£90 billion. Latin America, another region where we foresee key
geographic expansion, has also performed strongly, with
£2.1 billion of net new business. In addition, our Asset
Management partnerships contributed £20.2 billion of net new
business in 2021.

Over the past three years, we have invested heavily in our Global
Transformation product range. We have been amongst the most
active of all asset managers in revitalising our product range to
make it appropriate for our clients’ demands. We now have a
broad offering of thematic and sustainability funds which attracted
high levels of net new business last year as they delivered
competitive investment performance. Our thematic range achieved
net new business of £4.4 billion in 2021. This is a great result and
an example of how the organic investments we have made in our
business over the last few years are now bearing fruit.

We have also revamped our European fund range to comply with
new regulation. I sincerely believe that in several years’ time, every
product will be ESG compliant by default, as this is where client
sentiment is turning. We have reclassified a number of funds in our
European fund range as either Article 8 or Article 9 under the EU’s
Sustainable Finance Disclosure Regulation (SFDR). These products
have attracted good client demand of £5.7 billion and have grown
their AUM to £60.5 billion at the end of 2021.

We set out to broaden our investment capabilities towards private
assets several years ago and have made a number of bolt-on
acquisitions. Having spent much time and effort integrating these
businesses, I am delighted at the contribution Schroders Capital is
making. Net new business flows were over £7.4 billion in 2021,
mainly driven by high demand for securitised credit, private equity
and real estate.

Our Wealth Management business also contributed meaningfully,
as net new business exceeded 5% at £4.1 billion. Our AUM
reached £81.2 billion, as all franchises generated positive net new
business. We have several strategic initiatives underway, such as
building our presence outside of London and South-East England
as well as growing Schroders Personal Wealth, our partnership
with Lloyds Banking Group.

It is important to note that none of these numbers would have
been achieved had we not made the decision to invest in our
business to generate future growth.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsGroup Chief Executive’s statement (continued)

The virtuous cycle of investing for growth
We defined our strategic growth areas in 2016, as we recognised
that there were some key changes we had to make to address the
challenges our traditional asset management business was facing.
Firstly, we set out to grow our Wealth Management segment due
to its high client longevity and proximity. We have grown the
business from £31.6 billion at the end of 2015 to £81.2 billion now.
We have made a number of acquisitions over the last few years in
this area and I believe there is considerable room for further
growth. At our capital markets day in October, we stated that our
ambition was to achieve net new business growth of at least 5%
per annum from 2022. This will be an important driver of future
growth. We foresee our Wealth Management AUM reaching
£115 billion by 2025, which will also be supported by market
growth and acquisitions. We made a good start by generating net
new business of £4.1 billion in 2021 or put another way, 5.7% of
opening AUM.

Secondly, we set out to grow our private markets capabilities,
which we built through a series of acquisitions. These businesses
are now unified under one brand called Schroders Capital, which
we launched in mid-2021. Given the high quality of the underlying
businesses which are backed by Schroders’ global brand, our
operational strength and global distribution footprint, the net new
business opportunities are quite remarkable. We have grown twice
as fast as the market since 2016 through acquisitions and organic
investments with the ambition to double our AUM again by 2025.
To achieve that, Schroders Capital is aiming to generate strong net
new business flows over the coming years.

Our focus on sustainability has been relentless – we believe this will
be a defining attribute of success over the next 20 years. Our
analytical capabilities have contributed to us becoming leaders in
ESG measurement through our proprietary tools. Recognising that
social impacts are becoming financial costs, we developed
SustainEx™, a tool that scores every company based on the
impacts that company is having on society and the environment.

This information influences the decision we make on which
companies we invest in. It also puts us in a strong position to
engage effectively with them. Furthermore, we can demonstrate
the sustainability profile and impacts of the portfolios we manage.

After a year in which we achieved strong net new business flows,
we are looking to the future from a position of strength. It is hugely
encouraging that this growth was delivered across all areas of
strategic importance to us, such as thematic investing, private
assets, wealth management and, of course, ESG. Apart from our
Wealth Management business, these are areas which made limited
contributions to our results three years ago. These areas are now
having a significant impact on our flows. Looking internationally,
I have been pleased by the performance of our joint ventures and
associates such as Bank of Communications in China and Axis in
India. Despite some macroeconomic challenges, both businesses
have performed strongly.

Net new business

£35.3bn

Schroders Annual Report and Accounts 2021

Investing for future growth
We are pleased that many of our initiatives over past years are
bearing fruit. But we are not just harvesting; we are still planting
and planning for a brighter future for us, our clients, investors and
our planet. I truly believe that using positive cashflow generated by
the Group to invest in further growth gets the business into a
virtuous circle of strong performance. Hence, we have taken this
opportunity to reinvest into our business for further growth
initiatives.

Assets under management

£731.6bn

This includes our investments in China, where we are on track to
build our wholly-owned fund management company and our
wealth management company venture with Bank of
Communications. Our wealth management company venture
with Bank of Communications, received regulatory approval
to commence business operations in January 2022. Through
our engagement, we can contribute to the process of rapid
modernisation of China’s investment markets, helping Chinese
families and savers to achieve more financial security and assisting
Chinese businesses in factoring sustainability increasingly into
their business models, in line with Chinese and global climate
policy goals.

Having a dedicated ESG team in-house enables us to put ESG at
the heart of all our investment decisions. Aside from our dedicated
ESG team, we have also increased the number of people across
the firm who have a clear focus on sustainability, specifically in our
product and sales teams. We continue to build upon our success
and launched a further 14 sustainable funds in Europe last year
with more to come in 2022.

Elsewhere, we have also announced the acquisition of three
businesses, which are all an excellent cultural fit and provide
strong follow-on growth potential.

We announced the acquisition of River and Mercantile’s UK
Solutions business, which is a leader in UK fiduciary management
and completed the acquisition on 31 January 2022. It was one of
the first businesses to set up in this space in the UK market and is
a specialist in solving difficult problems for pension trustees. The
business comes with highly talented people who have generated
strong growth over the past few years. We believe that the
Schroders brand, our position in the pensions market in the UK
and our technology will create an even stronger business
proposition. It fits our strategy of growing solutions and getting
closer to end clients. Upon completion, the acquisition will add
£43.1 billion to our existing Solutions business.

In order to further strengthen our Private Asset capabilities, we
also announced the acquisition of Cairn Real Estate, a Dutch real
estate specialist with €1.3 billion of AUM. The acquisition, which
completed on 31 January 2022, will expand Schroders Capital in a
key European growth market.

“I truly believe that using positive cash flow
generated by the Group to invest in further
growth gets the business into a virtuous circle
of strong performance”

The successes of today enable the investments required to create
the capabilities for the long term. But those investments will also
shape our future 20 years down the line.

I would like to thank Mike Dobson for his enormous contribution to
the firm for more than 20 years. The firm was transformed under
his leadership, and I am personally hugely grateful for his
mentorship over the years as Chairman of the Board. I wish him
every success for the future. I am also pleased to welcome Dame
Elizabeth Corley who has already joined the Board as Chair
designate. Elizabeth brings a wealth of industry experience,
especially in sustainability and I am truly looking forward to
working with her in the future to build on Schroders’ success and
create sustainable value for all stakeholders.

Peter Harrison
Group Chief Executive

2 March 2022

We also announced that we reached agreement to acquire a 75%
interest in Greencoat Capital, a leader in European renewables. As
at the end of 2021, the business had £6.8 billion of AUM and was
growing rapidly in one of the most relevant markets of the future,
supplying the world with assets which are critical to achieve net
zero and global climate goals.

We are excited about the inorganic investments we were able to
announce in 2021 and are looking forward to working with our
new colleagues from River and Mercantile, Cairn Real Estate and
Greencoat Capital.

We will also continue to lead on climate change solutions with the
crucial aim of helping clients to decarbonise their portfolios. We
have entered into a pioneering investment partnership with
Conservation International that will channel capital into
conservation projects. Clients will be able to offset carbon
emissions, protect biodiversity and support indigenous
communities whilst making a return.

Leading the transition to a sustainable world
On a broader note, 2021 has left me optimistic. The investment
industry has a purpose beyond profit and investment returns. It is
no longer just about securing our clients’ financial futures; it is also
about securing a better future for all stakeholders.

In climate change, the world faces an enormous existential
challenge. Rather than being part of the problem, the financial
services industry is becoming part of the solution. As an industry,
we must step up and seize the opportunity. Where and how capital
is deployed will be crucial in determining the pace at which the
world fights climate change. Too often capitalism is the object of
climate debate criticism, when its raw power could be targeted on
the aim of capping temperature increases at 1.5°C above
pre-industrial levels.

In 2020, we became a founding member of the Net Zero Asset
Manager (NZAM) initiative. We believe we have a fundamental role
to play in supporting companies in their transition to net zero
greenhouse gas emissions. We have published our own path to
net zero, and I feel strongly that we must do this for both our
business and our investments (see pages 32-34). In February 2022
our science-based targets were validated and provide a defined
pathway to net-zero by 2050.

The next two decades will be crucial for climate change. It will also
be a period of immense change for our industry. Savers will
increasingly want to know the impact of their investments and will
want portfolios that reflect, in detail, their world view.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsA TIME TO REFLECT
ON OUR MILESTONES

Mike joined Schroders as a non-executive Director in 2001 going on to serve as CEO
and subsequently Chairman from 2016. In the years under his leadership and
influence, the firm has undergone a significant journey of transformation, growth
and diversification. Today, the strength and long-term direction of the business
stands as testament to Mike’s contribution.

Michael Dobson
appointed as
Chief Executive

Launch of the GAIA platform
Bringing liquid hedge fund strategies to a
wider audience and giving our clients
access to a curated selection of third-party
managers, this platform launch makes a
major step towards the democratisation
of private assets and alternatives – a trend
which continues to gather pace. The
platform has now grown to more than
£2.7 billion of AUM.

Partnership with Bank of
Communications in China
Building on our existing foundations in
China, this deal enables us to invest
directly in its onshore markets for the
first time, with the help of a strong local
player. Schroders was an early entrant
in this important market and China
remains one of our main areas of
strategic focus.

2001

2004

2005

2008

£110.0bn

£122.5bn

2010

2009

£148.4bn

Schroders celebrates
its 200th anniversary

We look back at our history as a trusted
partner to our clients, successfully
navigating markets in all conditions and
adapting continually through periods of
profound change.

Navigating the
financial crisis
During a period of extreme
market turbulence and
uncertainty, we successfully
guide our clients and their
investments through the
storm. At the same time, we
keep an eye on the future by
focusing on our employees and
retaining key talent.

Broadening our global outlook
We sign an important joint
venture agreement with the asset
management arm of Nippon Life
to create Nissay Schroders Asset
Management Europe Limited. This
partnership with a local champion in
the important Japanese market
gives their clients access to our
investment expertise. Their strategic
stake in our business also
strengthens the relationship.

Schroders Annual Report and Accounts 2021

£212.0bn

2012

Asset management
partnership with Axis
in India
Taking a step into India, one of
the most exciting high-growth
markets in the world. Our
partnership with Axis has been
highly successful, making an
important contribution to the
Group’s AUM and profits.

PROFITS BACK UP
TO PRE FINANCIAL
CRISIS LEVEL

£360m

2001

2011

2021

Profit before tax and
exceptional items

Employees

£36.1m

2,890

£407.3m

2,900

£836.2m

5,750

A year of significant progress
and diversification
Strengthening our North American
and Wealth Management businesses.
The strategic acquisition of Cazenove
Capital brought a leading UK wealth
brand on board in a big step to
diversify our capabilities. Wealth
Management has since grown its
assets under management from
£16.9 billion to £81.2 billion at
31 December 2021.

£313.5bn

2015

2013

£262.9bn

Peter Harrison joins as
Global Head of Equities

£435.7bn

2017

Expanding private assets
The acquisition of Adveq supports our
key strategic aim of building a leading
private markets offering. Schroder
Adveq has since grown from £6 billion
to £10 billion of AUM today and is a
key pillar of Schroders Capital, our
unified private assets brand.

TRIPLED AUM
IN TIME AS CEO

CEO of the Decade Award for
Excellence in Asset
Management – Financial News
Achievement for ‘his transformation
of Schroders’ after steadily rebuilding
profits since 2001.

2021

£731.6bn1

£500.2bn

2019

UK’s largest asset
management mandate win

£80bn

Winning a competitive tender
process to manage Scottish
Widows and Lloyds insurance and
wealth-related assets. The win
cements our position as a
significant investment solutions
provider and provides the
platform for a strategic joint
venture with Lloyds Banking
Group.

Investing for long-
term growth
Expanding our capabilities
in key growth areas by
agreeing to acquire River
and Mercantile, leaders in
UK fiduciary management;
Cairn, a Dutch real estate
specialist; and Greencoat
Capital, a leader in
European renewables.

RECORD AUM
AND PROFITS

SHARE PRICE
QUADRUPLED
SINCE 2001

AUM

1. 2021 AUM includes joint ventures and associates.

Schroders Annual Report and Accounts 2021

WE LOOK BEYOND
SHORT-TERM
PERFORMANCE

Schroders Annual Report and Accounts 2021

Our strategy for growth is built on the
long-term interests of our stakeholders.

We continuously evolve our business in response to the
market but we always take the long view.

Schroders Annual Report and Accounts 2021

Market review

AN EVENTFUL YEAR FOR MARKETS

The global economy and financial markets entered uncharted
territory in 2021 as the pandemic persisted into its second year.

Asset purchases by central banks, known as quantitative easing,
continued apace. Having such a huge buyer of bonds meant yields
sank to historic lows, while pushing the prices of assets such as
equities ever higher as investors sought returns elsewhere.

Equities rise and bond yields fall against the
backdrop of quantitative easing

600

500

400

300

200

100

It was something of a different story in emerging markets. The
MSCI Emerging Markets Index fell 2.5% (in US dollar terms) over
the year. One of the worst performers was China amid a
combination of unexpected government intervention in various
sectors and a crisis in the property sector.

Over the year investor interest in several growth areas across the
industry gathered pace. This tied in with some of our areas of
focus, such as thematics. Net flows into thematic equity mutual
funds globally (both active and passive) totalled £189 billion over
2021, up from £149 billion in 2020 and £22 billion in 2019.

Sustainability, another strategic priority for Schroders, continued to
be the area of growing investor interest that trumped all others in
2021. The pandemic intensified focus on ESG issues as many
investors saw it as an opportunity to build a more socially
responsible form of capitalism, particularly in relation to climate
change.

According to analysis by Bloomberg, ESG assets soared to an
unprecedented $37.8 trillion by the end of 2021 and are predicted
to grow to $53 trillion by 2025, which would be a third of all global
assets under management.

2006

2009

2012

2015

2018

2021

ESG labeled debt, $bn

US Federal Reserve asset purchases, $tn right hand side
US 10yr Treasury yield, % right hand side
S&P500 total return index, January 2006 = 100 left hand side

Inflation rose as economies opened up and energy prices soared.
Meanwhile, monetary policy around the world grew less
accommodative. The Federal Reserve set out its plan to wind down
its asset purchase programme and indicated rate hikes would start
in March 2022. In the UK, the Bank of England responded to the
threat of inflation by raising rates in December, providing a boost
to the financial sector.

Inflation rises in major economies in 2021

8
7
6
5
4
3
2
1
0
-1

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Euro zone

Consumer price index (%)
UK
China

Japan

The rollout of Covid-19 vaccines was remarkably successful in
many parts of the world. It added impetus to financial markets and
led to a recovery in global growth as economies re-opened.
Nevertheless, there were bouts of Covid-induced volatility,
especially in November when the new Omicron variant was
discovered. Markets recovered quickly as investors focused on the
economic rebound.

The result was a solid year for global stock markets overall, with
the MSCI World index returning a healthy 21.8% in US dollar terms.
The main driver was a seemingly endless supply of monetary and
fiscal support.

Schroders Annual Report and Accounts 2021

2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

500

1,000

Green

Social

Sustainability

Sustainability-linked

Source: Bloomberg, Morgan Stanley Research

The chart below shows the explosion in the number of Google
searches for the term “ESG” in recent years.

Searches for “ESG” globally

100

2005

2007

2010

2013

2016

2019

2021

The y-axis shows popularity of ESG searches; 100 represents peak
popularity, and all other numbers are relative to this.

Historical fundraising

2016

2017

2018

2019

2020

2021

500

1,000

1,500

Aggregate capital raised ($bn)

The chart represents capital raised in private equity, real estate,
infrastructure and private debt taken from Preqin data. The numbers are for
illustration purposes and do not capture all private markets.

Looking ahead
At the time of writing, the tragic events in Ukraine are bringing
turbulence and uncertainty to markets and society. We hope for a
peaceful de-escalation of the conflict.

The global economy is at an inflection point where the future of
inflation is of critical importance. High energy prices, tight supply
chains and labour shortages are all conspiring to drive inflation up.
How central banks respond with higher interest rates and
reductions in quantitative easing will have important implications.

We believe it will fall on the shoulders of the private sector to
create sustainable economic growth as governments remain
under pressure. Financing the transition to net zero will be an
important part of this and offer many opportunities for investors.
As ever, the outlook is uncertain, but real opportunities do exist.

Bond issuance was especially strong. More than $1 trillion worth of
ESG-labelled debt was issued in 2021, a 95% increase on 2020.

The interest in sustainability in 2021 is perhaps unsurprising given
the publicity surrounding COP26, the United Nations climate
summit, held in November.

It underlined the growing expectations on the private sector to
pick up the mantle of action on climate change. So, it is now
companies, rather than governments, making commitments
around sustainability issues such as carbon emissions,
deforestation and methane.

For example, a growing number of companies, more than 2,000,
including Schroders, have adopted climate action targets through
the Science Based Targets initiative (SBTi). This is in line with the
Paris Agreement goals to limit global warming to well below 2°,
preferably to 1.5°C, compared to pre-industrial levels.

Number of countries with net zero ambitions and
companies with science-based targets

2500

2000

1500

1000

500

2,256

156
6

2015

2016

2017

2018

2019

2020

2021

Companies with
SBTi commitments

Countries with
net zero targets

Elsewhere, private assets continued to pique investors’ interest
in 2021, as their relatively attractive yields and low correlations to
public markets became ever more enticing. Over 40% of
institutional manager searches conducted by a consulting firm,
bfinance over the 12 months to the end of September 2021
related to private assets. The burgeoning growth in this area is
expected to continue, with some forecasting a near doubling of
AUM by the end of 2025.

While access to private assets is largely limited to sophisticated
clients, there has been a clear ‘democratisation’ of the asset class
in the past few years, enabling a different class of investor to gain
access. 2021 saw this trend continue as more liquid and semi-liquid
structures came to market. These included those with monthly or
quarterly subscriptions and redemptions. As well as listed vehicles,
including investment trusts, where investor decisions to buy or sell
their holdings do not require the trust to sell portfolio investments.
Both structures mean it is easier for retail investors to invest in
private equity. Alongside this, regulators are aiding this evolution
and recognising the potential private markets’ assets have to
bolster returns. The US regulator, the SEC, for example, has
opened the door for limited exposure to private equity in 401k
pension plans.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsStrategy

OUR STRATEGY IS FOCUSED
ON KEY GROWTH OPPORTUNITIES

BUILD CLOSER RELATIONSHIPS
WITH END CLIENTS

OUR FOCUS

Read more about our business
model on pages 20-21.

Build client longevity and sustainable margins through
trusted adviser relationships in Wealth Management

We continue to build our leading Wealth Management business, in
which clients can benefit from the breadth of our expanding
investment capabilities.

OUR PROGRESS
IN 2021

Read more about how we
track our strategic progress on
pages 22-23.

Our achievements in establishing a leading position in wealth
management is sustained by our long history of family ownership,
international institutional investment expertise, private assets
capabilities and our leadership in sustainability.

Accelerating our UK wealth management growth: We have
expanded our presence in the high-net-worth segment, by setting
up four additional hubs outside of London and the South East. The
acquisition of Sandaire in 2020 was part of a strategic plan to
expand our family office capabilities and gain share of this growing
market.

Building relationships with financial advisers: We have
attracted new financial advisers to our technology-driven wealth
management business, Benchmark Capital and have taken
advantage of opportunities to expand our service offering across
the network.

Generating client referrals via Schroders Personal Wealth:
Referrals have increased and net new business has turned positive
in our joint venture with Lloyds Banking Group, Schroders Personal
Wealth. Opportunities in the UK advice market remain strong and
through Schroders Personal Wealth we focus on accelerating
future growth.

GROWTH
OPPORTUNITIES

Page 51 provides details of the
risks that are mitigated by our
strategy.

• Positioning for accelerated growth in the affluent sector through

Schroders Personal Wealth and Benchmark Capital.

• Increasing client longevity from family office services in Europe
and Asia by building on our acquisition of Thirdrock in Asia and
Sandaire in the UK, as well as our existing Swiss and Channel
Islands businesses.

• Increasing market share through our UK regional wealth

expansion plans outside of London and South East.

Schroders Annual Report and Accounts 2021

At the heart of our strategy is our desire to build long-term value for our
clients, shareholders and other stakeholders. This thinking drives the
decisions we take to invest in the future, further diversify our business
and take advantage of new and emerging opportunities.

GROW ASSET MANAGEMENT

EXPAND PRIVATE ASSETS
AND ALTERNATIVES

Focus on developing distinctive capabilities that enable us
to deliver excellent investment performance

Meet increasing client demand for additional portfolio
building blocks and alternative sources of return

Product innovation – with a focus on sustainability – allows us to be
distinctive, while expanding geographically enables us to deliver
our investment capabilities to new clients. We invest seed capital to
support these initiatives.

We are increasing our focus on complete investment solutions,
ensuring we remain relevant and centred on our clients’ needs.
We aim to increase client longevity and use our data and digital
capabilities as a competitive advantage.

Building our sustainability ambitions: We have broadened our
sustainability offering with a number of funds in our European
fund range now classified as either Article 8 or Article 9 under the
EU’s Sustainable Finance Disclosure Regulation (SFDR), and we
expect to launch more funds in 2022 globally.

Evolving our Solutions capabilities: We announced the
acquisition of River and Mercantile’s UK solutions business, which
will enhance our ability to meet the increasingly complex needs of
our pension fund clients.

Innovating and renewing our Mutual Fund product set: We
launched a number of thematic funds and aim to maintain
relevance to the needs of our clients through innovation in our
Mutual Fund product set.

Growing our business in North America: We reached nearly
£90 billion of AUM in North America, driven by strong inflows from
institutional clients and our relationship with Hartford, totalling
£3.2 billion of net new business.

Progressing our presence in China: We continued to progress
the set up of our wholly-owned fund management company
business and new wealth management company venture with
Bank of Communications. The latter gained regulatory approval to
commence operations in January 2022.

Our Private Assets and Alternatives business area consists of
our private markets business (Schroders Capital) and our liquid
alternatives business. Schroders Capital gives investors access to an
additional range of portfolio building blocks and customised private
asset strategies whilst our alternatives business offers clients access
to liquid third-party hedge funds and other investments.

Our Private Assets and Alternatives teams have a track record of
delivering good investment performance for our clients. We now have
a presence in all private market asset classes, including private equity,
real estate, private debt and infrastructure. The GAIA (Global
Alternative Investor Access) platform gives clients access to alternative
investments via Schroders and third-party funds.

Strengthening the range of our capabilities: Our range of asset
classes now includes private equity, impact investing, insurance linked
securities, securitised credit, infrastructure and real estate, across
which we have experienced strong organic growth, contributing
positively to the Group.

Launching Schroders Capital: We unified the way we present our
private assets capabilities, gathering all of our existing private assets
businesses under a single brand. The brand was created to deliver an
enhanced service for our clients.

Expanding our capabilities with strategic acquisitions: We
reached an agreement to acquire Cairn Real Estate, which will provide
us with Dutch real estate expertise.

We also announced the acquisition of a leading European renewable
infrastructure specialist, Greencoat Capital. Channelling private capital
for the energy transition required to achieve a net zero future will
become increasingly important as governments around the world
look to accelerate towards this goal.

Growing organically across the platform: Public-private
strategies, Australian private debt, real estate debt, securitised credit
and impact investing have all continued to contribute to our organic
expansion across the platform.

• Further product innovation to build and maintain a distinctive

• Scope to scale the comprehensive product set we have built by

offering in sustainable investing.

leveraging our global distribution strength.

• Position our capabilities as a strong solutions provider globally.
• Continue to diversify our global footprint with opportunities in

the Americas and Asia, particularly China.

• Material opportunities to benefit from widening accessibility of

private markets in the future.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsBusiness model

OUR BUSINESS MODEL IS DESIGNED
TO DELIVER FOR OUR STAKEHOLDERS

To provide excellent
investment
performance
Our purpose is to provide
excellent investment
performance to our clients
through active decision-
making.

To channel capital to
support businesses

To help accelerate
positive change

We actively invest in
companies with sustainable
and durable business models;
those that are evolving to
survive and thrive in the
challenges of the decades
ahead.

We actively invest in forward-
thinking companies, but we
also support them in their
journey to a fully sustainable
future.

WHY WE
DO WHAT
WE DO

By designing innovative
products and services

By active and intelligent
use of technology

By motivating and
nurturing employees

We strive to understand what
clients want and apply this to
the funds we offer and the
bespoke solutions we develop.
Our approach is underpinned
by our capabilities, which
opens up our expertise to
every client.

Technology and data are at
the heart of our ceaseless
push for investment
excellence. Our award-winning
SustainEx™ impact
measurement tool is one
example.

The success of our business
model relies on our people.
We nurture a culture that
allows the individual and the
company to make the most of
their skills.

HOW WE
DELIVER
FOR CLIENTS

Deep expertise in all
asset classes

Actively driving the
growth of our business

Our global expertise

WHAT
DIFFERENTIATES
US

For more than two centuries
we have evolved our
understanding of markets and
the offering we take to clients.
The products we offer span
private assets and alternatives,
fixed income, equities and
multi-asset.

We have expanded into areas
of exceptional growth
potential. We can offer access
to private markets as equally
as public markets. We are a
leading specialist in impact
investing.

Our investment capabilities
span the globe. Our extensive
distribution infrastructure
brings the best of the
Schroders proposition to our
clients wherever they are.

Delivering returns for
clients and shareholders

Taking decisions to
benefit society

Taking decisions to
benefit our people

CREATING
VALUE
FOR OUR
STAKEHOLDERS

With a long-term shareholder
base we can take a long-term
view, in our careful decision-
making for the company and
for clients.

We know that as stewards of
more than £700 billion of
assets, we can channel money
to benefit society. The decisions
we make as both a corporate
and an investor are mindful of
the impact and implication for
the world beyond Schroders.

We champion inclusion and
diversity and make health and
wellbeing a priority. That
creates the conditions for our
people to thrive. Our culture is
the cornerstone of our
business.

Schroders Annual Report and Accounts 2021

i
i

S
S
t
t
r
r
a
a
t
t
e
e
g
g
c
c
r
r
e
e
p
p
o
o
r
r
t
t

Our business structure is designed to help every client access our expertise

ASSET MANAGEMENT
Our investment teams manage investments for
institutions and private investors throughout the client
lifecycle. We manage private assets, institutional
portfolios, mutual funds and client solutions.

Our distribution teams service clients including insurance
companies, pension schemes, sovereign wealth funds,
distributors, financial advisers and fund platforms.

WEALTH MANAGEMENT
We provide a wide range of wealth management
services, which focus on preserving and growing our
clients’ wealth. Our strategic ambition is to provide
wealth management services across the wealth
spectrum in the UK and for high net worth clients in
the Channel Islands, Switzerland and Asia.

Net income (before exceptional items)

£2,138.0m

£433.7m

INFRASTRUCTURE
Our infrastructure teams provide critical services that support the business and include capabilities across Technology,
Operations, Finance, Risk, Human Resources, Compliance, Legal, Governance, Internal Audit and Tax.

GROUP
The overall governance and corporate management of the Group is driven by the Chairman, Group Chief Executive and
Chief Financial Officer, as well as employees involved in treasury, corporate development, governance and strategy.

Global network of partnerships
We have a number of strategic partnerships with key investment clients around the world, coupling our investment expertise with our clients’
distribution networks, to meet the needs of their customers. Our partnership strategy gives us access to new distribution opportunities around
the world, including some of the world’s highest growth markets.

Our fund management
company venture with Bank
of Communications in China
continues to deliver strong
performance and AUM
growth. Our wealth
management company
venture with the bank will
commence business
activities in the first half of
2022.

Our venture with Axis in
India has been growing
its market share
steadily to 6.7%,
ranking 7th in India in
terms of AUM.

Our relationship with
Hartford in the US
comprises ten
sub-advised strategies
tailored for the US retail
customer. In 2021, the
funds achieved
£2.2 billion of net
inflows with AUM
reaching over
£11 billion.

Our joint venture with
Nissay, the asset
management arm of
Nippon Life, delivered
good performance for
clients in 2021. Our
business with Nippon
Life continues to grow.

Our joint venture
with Lloyds Banking
Group, Schroders
Personal Wealth, now
employs over 300
financial advisers and
reached £14.7 billion
of AUM at the end of
2021.

Schroders Annual Report and Accounts 2021

GovernanceShareholder informationFinancial statements

Key performance indicators

TRACKING OUR STRATEGIC PROGRESS

To ensure that we are delivering against our strategy, we track progress
against a number of key performance indicators.

Client investment performance (%)

Net new business1 (£bn)

79%

£35.3bn

We target at least 60% of our AUM outperforming its stated
comparator over rolling three-year periods.

We seek to generate positive net new business across the Group.

2017

2018

2019

2020

2021

2017

2018

2019*

2020*

3.3

(10.9)

2021

35.3

52.8

54.9

Investment performance over a three-year period remained strong
in 2021, with 79% of assets outperforming their stated
comparator. We have been above our target for the past five years.

The five-year investment outperformance was 78% and it was 74%
over one-year.

More details on our performance reporting can be found on page 186.

Overall, total net inflows reached £35.3 billion for the year, of which
our joint ventures and associates contributed £20.2 billion.

In 2021, our Mutual Fund business area contributed most strongly
generating £8.1 billion of net new business.

Wealth Management contributed £4.1 billion of net flows, while our
Private Assets and Alternatives business contributed £6.9 billion.

*2019 and 2020 net new business included £44.6 and £28.2 billion
from the transfer of the Scottish Widows mandate.

Assets under management1 (£bn)

Dividend per share (p)

£731.6bn

122p

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.

Our policy is to provide shareholders with a progressive and
sustainable dividend, targeting a payout ratio of around 50%. For
more information see page 29.

2017

2018

2019

2020

2021

497.2

467.2

569.4

663.0

731.6

2017

2018

2019

2020

2021

113

114

122

AUM increased by 10% in 2021 to £731.6 billion.

Investment performance and currency movements increased AUM
by £33.2 billion and net new business added a further £35.3 billion.

The Board recommends a final dividend of 85 pence per share,
bringing the total dividend for the year to 122 pence per share.
This represents a payout ratio of 50%.

1. These KPIs were amended to include joint ventures and associates. Prior year numbers have been restated.

Schroders Annual Report and Accounts 2021

Basic earnings per share* (p)

Ratio of total costs to net income* (%)

244.8p

67%

We aim to grow earnings per share consistently, recognising the
potential impact of market volatility on results in the short term.

We target a 65% ratio of total costs to net income through the
market cycle, recognising that in weaker markets the ratio may be
higher than our long-term target.

2017

2018

2019

2020

2021

226.9

215.8

201.6

200.8

244.8

2017

2018

2019

2020

2021

In 2021, basic earnings per share before exceptional items was
244.8 pence.

In 2021, our ratio of total costs to net income was 67%. This
represents an improvement of 1% compared to the previous year
despite our strategical investments in the future growth of the
business.

Net income* (£m)

£2,568.8m

Retention of key talent (%)

94%

Net income comprises net operating revenue, which is primarily
revenues generated from AUM excluding cost of sales, net gains
on financial instruments, share of profit of joint ventures and
associates, and other income. We aim to grow net income over
time.

Developing and retaining talented people is key to our ongoing
success. We actively monitor the retention of our employees with
an emphasis on those who have received an exceptional rating in
their annual performance review.

2017

2018

2019

2020

2021

2,068.9

2,123.9

2,124.8

2,179.2

2,568.8

2017

2018

2019

2020

2021

Net income before exceptional items increased £389.6 million
from 2020 to £2,568.8 million.

Client demand for equity products drove net operating revenue
increasing from £2,059.6 million in 2020 to £2,403.1 million in
2021. Net income was supported by an increased contribution
from joint ventures and associates and positive net gains on
financial instruments.

* Before exceptional items.

Our retention of highly rated employees has consistently been at
94%. This represents a committed and engaged workforce, which
is aligned with Schroders’ values.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsBusiness and financial review

DELIVERING
PERFORMANCE AND
SUSTAINABLE GROWTH

The Group has enjoyed a successful year that has seen us
deliver a very strong set of results.

Our strategic areas of focus, namely Private Assets and Wealth
Management, continued to grow strongly. Alongside this, the
return of risk appetite at the start of the year benefited our
traditional equities offerings, which were in high demand.

We achieved a pre-exceptional profit before tax of
£836.2 million, an increase of 19% on 2020 (2020: £702.3 million).
Profit after tax and exceptional items was £623.8 million, 28%
higher than the previous year (2020: £486.0 million).

In view of this growth, the Board recommends increasing the
final dividend by 6 pence to 85 pence per share (2020: 79 pence
per share). This means a total dividend for the year of 122 pence
per share (2020: 114 pence per share), an increase of 8 pence,
and a payout ratio of 50% (2020: 57%).

Growing our strategic areas of focus
As set out earlier in the Annual Report, a large part of our
strategy is focused on the growth of both Private Assets and
Wealth Management. These are higher margin businesses with
greater longevity where we expect demand to remain strong.
We have continued to make good progress in these areas.

During the year, we unified our specialist private assets offerings
under the newly launched Schroders Capital brand. This
showcases our entire private assets capability and underscores
our ambition as a leading private markets business. The
business continued to perform well, with particularly good
growth in private equity, real estate and securitised credit,
helping increase our Private Assets and Alternatives AUM by
16% to £53.7 billion (2020: £46.1 billion).

Schroders Annual Report and Accounts 2021

The more traditional parts of our Asset Management segment also
delivered significant growth. Notably, we experienced high levels of
demand in our Mutual Funds business area as a result of both
strong investment performance and increased investor risk
appetite at the start of the year. Overall, across our Asset
Management segment, we generated £11.0 billion of net new
business, which together with investment returns, enabled us to
grow our Asset Management AUM to £534.0 billion
(2020: £502.4 billion).

In Wealth Management, we continued to build out the regional
presence of our UK high net worth brand Cazenove Capital
through strategic hires and a focus on successful business owners.
We also successfully integrated Sandaire which we acquired at the
end of 2020, and expanded our Global Family Office Service. Our
joint venture with Lloyds Banking Group, Schroders Personal
Wealth (SPW), showed good progress, helped by the easing of
Covid-19 related restrictions which enabled an increase in the
number of referrals received from the Lloyds banking network.
Overall, these factors contributed to net new business of
£4.1 billion which, along with strong investment returns, drove an
increase in AUM of 13%. AUM for the Wealth Management
segment therefore closed at £81.2 billion (2020: £72.0 billion).

Developing our strategic global partnerships remains an important
way for us to execute the Group’s strategy. Our joint ventures and
associates have again shown high growth, with AUM increasing by
31% to £116.4 billion (2020: £88.6 billion). Our long-standing
venture with Bank of Communications in China contributed
significantly to this thanks to strong flows into higher-margin
equity products.

Overall, these developments, combined with strong investment
returns, helped us increase our Group AUM by 10% to a record
high of £731.6 billion (2020: £663.0 billion).

Delivering strong financial results
Our closing AUM figure is important in showing the scale and
growth of the Group. Just as important is our average AUM, as this
is key in understanding the development of our management fees
through the year. As a result of the strategic developments set out
above, our average AUM excluding joint ventures and associates
increased by 15% to £597.0 billion (2020: £520.8 billion). This
helped us generate £2,201.1 million of management fees, 16%
higher than 2020 (2020: £1,889.7 million).

Performance fees and net carried interest grew to £126.3 million
(2020: £95.7 million). This was not only due to the strong
investment performance we generated for our clients, but also
reflects the increasing scale of Schroders Capital. Overall, net
operating revenue increased 17% to £2,403.1 million
(2020: £2,059.6 million).

As set out earlier, our joint ventures and associates again showed
strong growth. They delivered income, before exceptional items, of
£88.2 million, an increase of 38% (2020: £64.1 million). We had net
gains on financial instruments and other income of £77.5 million
(2020: £55.5 million). This was largely due to strong returns from
our proprietary investments. These principally comprise seed
capital, co-investments and our investment capital portfolio. These
gains contributed to net income before exceptional items
increasing 18% to £2,568.8 million (2020: £2,179.2 million).

This increase in net income was partly offset by higher operating
expenses, reflecting the growth in the overall size of the business.
Despite the organic investment we have made in strategic growth
areas such as Wealth Management and China, we were able to
keep our compensation ratio stable at 45%. This includes the cost
of our Share in Success award made at the end of the year. This
was a one-off grant of Schroders shares to all our employees
which enables them to share in the future success of the business.
The award recognises the fantastic effort our people have put into
driving our strategy forward.

Our non-compensation costs before exceptional items were higher
at £564.5 million (2020: £502.2 million). This was principally due to
higher marketing expenses following the easing in Covid-19
related restrictions in the second half of the year, and increased IT
costs. The increased IT costs reflect both higher depreciation due
to the investment in our technology infrastructure we have made
in recent years, and expenses incurred in the commencement of
our cloud migration programme, the costs of which are not
capitalised. Once implemented, the transition to the cloud is
expected to result in increased operational agility as well as cost
savings.

Given the nature of our business, understanding non-
compensation costs as a percentage of our AUM provides a good
indicator for our operational leverage. As shown in the chart below,
this has fallen in recent years and continued to reduce slightly in
2021, despite the investment we are making in our transition to
the cloud. This operational leverage is further illustrated in the
reduction of our total cost to income ratio which fell from 68% to
67%.

Overall, these movements resulted in a total profit before tax and
exceptional items of £836.2 million (2020: £702.3 million).
Exceptional items mainly relate to acquisition-related costs,
including the amortisation of intangible assets. In 2021, the total
cost of exceptional items was £72.1 million (2020: £91.8 million),
which meant a profit before tax of £764.1 million, up 25% on 2020.
Profit after tax was £623.8 million (2020: £486.0 million).

Non-compensation costs as basis points of
Non-compensation costs as percentage of AUM
average AUM (excluding joint ventures and
[to be updated for FY21]
associates)

600

500

400

300

n
b
£

200

100

597.0

441.8

520.8

410.8

433.1

b
p
s

2017

2018

2019

2020

2021

Average AUM excluding
joint ventures and associates

Non-compensation costs as
basis points (bps) of average AUM

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsBusiness and financial review (continued)

Leveraging our strong capital position
The sustainability of our business model has helped us build a
strong capital position in recent years, with a capital surplus of
£1,454 million as at 31 December 2021 (2020: £1,231 million). This
enables us to invest in both organic and inorganic opportunities. In
2021 we announced three strategic acquisitions, namely River and
Mercantile’s solutions business; Cairn Real Estate; and Greencoat
Capital (subject to regulatory approval). As further explained in the
Group Chief Executive’s statement, these acquisitions support our
strategy of growing our capabilities in Solutions and Private Assets.
The impact of these acquisitions is not reflected in the year-end
capital position as the transactions were yet to complete at that
date.

Leading by example on climate change
Underpinning these strong results is our commitment to
sustainability. The Group Chief Executive’s statement sets out the
progress we have made in bringing sustainability into the heart of
the way we invest on behalf of our clients. We joined the Net Zero
Asset Managers initiative in 2020, which has now grown to over
200 signatories representing more than $57 trillion of assets,
underlining the important role that we as active asset managers
can play in tackling the impact of climate change to align to limit
global warming to 1.5°C. It is just as important that we lead by
example in the way we approach our own operations.

Further demonstrating our commitment regarding climate change,
we have become one of the first asset managers to have our
emissions targets approved by the Science Based Targets initiative.
These targets define our longer-term roadmap towards achieving
the goal of net zero emissions by 2050 or sooner. Further
information on this can be found on pages 32-34.

The year has demonstrated the importance of remaining focused
on our long-term goals. We have delivered growth in the
strategically important areas of private assets and wealth, while
continuing to build a resilient global operating platform and
advancing our work in sustainability. This has enabled us to deliver
a strong set of results and ultimately, deliver strong investment
performance for our clients as we accelerate positive change for all
of our stakeholders.

Our approach to tax

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.

This means that we comply with our tax filing, reporting and
payment obligations globally. We also seek to maintain good
relationships with the tax authorities in the jurisdictions in which
we operate. This may take the form of discussing key
developments in our business and the potential impact of those
developments on the amount of tax we pay. From time to time,
our views on the appropriate tax treatment in any given
situation may differ from those of the tax authorities. Where this
occurs, we work constructively and proactively to achieve an
early resolution. We comply with the UK’s Code of Practice on
Taxation for Banks and are treated as ‘low risk’ by HM Revenue
& Customs.

We believe it is important that businesses behave responsibly
and build trust within society regarding their role and
contribution on tax. With this in mind, we support initiatives to
improve international transparency on taxation matters,
including the Organisation for Economic Co-operation and
Development measures on country-by-country reporting and
automatic exchange of information.

Our tax strategy, available at www.schroders.com/taxstrategy,
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.

Taxes borne by the Group include corporate income tax on the
profits arising in each country, indirect taxes such as value
added tax on our expenses and payroll taxes on our employees’
remuneration. The total tax borne by the Group in 2021 was
£308.9 million (2020: £245.9 million).

Companies also have an important role to play in collecting and
administering taxes on behalf of governments, where the cost
of tax is borne by others. This includes income tax and social
security payments deducted from our employees’ remuneration
and indirect taxes charged to our clients. These are taxes paid
in addition to the taxes we bear as a business, which are
referred to above. The total tax collected in 2021 was
£268.8 million (2020: £240.7 million). The combined taxes borne
by us as a business and the amounts collected by us on behalf
of tax authorities in 2021 was £577.7 million
(2020: £486.6 million).

Further information on taxes borne and collected can be found at
www.schroders.com/en/about-us/corporate-responsibility/our-economic-contribution

Schroders Annual Report and Accounts 2021

Movements in AUM

£bn

Opening AUM

Gross inflows

Gross outflows

Net new business

Acquisitions
Investment returns1
Closing AUM

Private Assets
and
Alternatives

46.1

13.1

(6.2)

6.9

–

0.7

53.7

Solutions

192.3

19.7

(21.2)

(1.5)

–

7.3

Mutual
Funds

104.2

48.3

(40.2)

8.1

–

3.7

159.8

25.3

(27.8)

(2.5)

–

8.9

198.1

116.0

166.2

Institutional

Asset
Management

Wealth
Management

Total
(excluding
joint
ventures and
associates)

Joint ventures
and

associates Group Total

502.4

106.4

(95.4)

11.0

–

20.6

534.0

72.0

11.0

(6.9)

4.1

–

5.1

81.2

574.4

117.4

88.6

199.1

663.0

316.5

(102.3)

(178.9)

(281.2)

15.1

–

25.7

615.2

20.2

0.1

7.5

35.3

0.1

33.2

116.4

731.6

We experienced net outflows of £2.5 billion in our Institutional
business, although this was more than offset by £8.9 billion of
investment returns we generated for our clients, net of
currency movements.

Our Mutual Funds business performed very strongly, with a high
level of demand on the back of good investment performance and
increased risk appetite at the start of the year. We achieved net
new business of £8.1 billion largely into equity products, and
generated £3.7 billion of investment returns for our clients.

Our Wealth Management segment also had strong growth in
AUM. We generated £4.1 billion of net new business in 2021,
with £3.1 billion from our Schroder Wealth business, and good
growth in both Benchmark and SPW. Growth in AUM was further
enhanced by the £5.1 billion investment returns we generated in
this segment.

Our joint ventures and associates also continued their positive
growth trajectory of recent years. Our existing ventures with Axis
Bank in India and Bank of Communications in China generated
combined net flows of £19.5 billion, with particularly strong growth
in higher-margin equity products.

The chart below shows how these movements drove the evolution
of our AUM (excluding joint ventures and associates) through the
year, resulting in a 15% increase in average AUM, the key driver of
our management fees.

1. Includes currency movements which decreased AUM by around £3.6 billion.

The following commentary provides a more detailed review of our
financial results and the development of our AUM, which is a key
driver of our performance.

Assets under management
Our AUM increased by £68.6 billion, or 10%, to close 2021 at a
record high of £731.6 billion (2020: £663.0 billion). We achieved
£35.3 billion of net inflows and generated investment returns, after
foreign exchange, of £33.2 billion for our clients.

In the Asset Management segment, AUM increased by
£31.6 billion, or 6%, to £534.0 billion at 31 December 2021
(2020: £502.4 billion). We generated £11.0 billion of net
new business.

Within Private Assets and Alternatives, we generated strong demand
in Schroders Capital which had net inflows of £7.4 billion, with
particularly strong growth across our securitised credit, private
equity and real estate capabilities. This excludes £2.5 billion of client
commitments in private debt funds where we only earn fees once
the capital is invested. These commitments will be recognised as net
new business as we deploy the capital.

We had net outflows of £1.5 billion in our Solutions business. This
principally reflects expected attrition of the Scottish Widows
mandate. Solutions remains a core part of our growth strategy as
underlined by the acquisition of River and Mercantile’s UK solutions
business, which will supplement our growth ambitions for this
business area.

Average AUM excluding joint ventures
and associates

Average AUM up 15%

2021 average
AUM £597.0bn

2020 average
AUM £520.8bn

650

600

n
b
£

550

500

450

H1 2020

AUM

H2 2020

H1 2021

H2 2021

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsOperating expenses before exceptional items increased to
£1,424.8 million (2020: £1,213.6 million). This reflects the increase
in the scale of the business. As a result, profit before tax and
exceptional items increased by 24% to £713.2 million
(2020: £573.3 million).

Exceptional items of £40.2 million increased by 35%, principally
due to higher acquisition related costs. After exceptional items,
profit before tax increased to £673.0 million (2020: £543.5 million).

Wealth Management results1
Wealth Management net income increased by 13% to
£433.7 million (2020: £382.7 million), as we generated good overall
growth in Schroder Wealth, Benchmark and SPW. Management
fees grew by £64.0 million to £373.1 million (2020: £309.1 million),
which more than offset a small reduction in net banking interest as
a result of the low interest environment. The net operating
revenue margin excluding performance fees reduced to 55 basis
points (2020: 56 basis points). This was principally due to lower net
banking interest and transaction fees.

Operating expenses before exceptional items were £305.1 million,
up 12% (2020: £272.2 million), in part reflecting the investment in
this strategic growth area including through the build-out of our
UK regional presence during the year. Profit before tax and
exceptional items increased 16% to £128.6 million
(2020: £110.5 million).

Exceptional items within Wealth Management decreased by
£13.9 million to £31.8 million mainly due to the acquired Cazenove
intangible assets becoming fully amortised in June 2021. The
remaining exceptional items mainly comprise costs incurred in
relation to acquisitions, including amortisation of other acquired
intangible assets. After exceptional items, profit before tax
increased to £96.8 million (2020: £64.8 million).

Group segment results
The Group segment comprises central management costs and
returns on investment and seed capital. Net income for the Group
segment decreased by £9.5 million to £48.6 million
(2020: £58.1 million). Costs in the Group segment increased to
£53.6 million (2020: £39.6 million) including charitable
contributions of £4.9 million (2020: £4.9 million). This resulted in a
loss before tax of £5.0 million (2020: profit of £18.5 million).

Business and financial review (continued)

Asset Management results
Asset Management net income before exceptional items was
significantly higher than the prior year at £2,138.0 million
(2020: £1,786.9 million), with net operating revenue increasing
17% to £2,043.1 million (2020: £1,747.2 million). This increase was
principally due to higher average AUM as a result of both robust
net new business and the investment returns we generated on
behalf of our clients.

Performance fees increased to £94.2 million (2020: £85.8 million)
as a result of our strong investment performance. Of these,
£12.1 million (2020: £0.7 million) were earned in Private Assets and
Alternatives, where strong investment performance also enabled
us to generate £31.9 million of net carried interest
(2020: £8.8 million). Real estate transaction fees grew significantly
to £11.1 million (2020: £3.4 million) as the number of property
transactions returned to more normalised levels following the
onset of the global pandemic. As a result, Private Assets and
Alternatives net operating revenue increased by 20% to
£350.7 million (2020: £293.3 million). The net operating revenue
margin excluding performance fees and carried interest was flat at
62 basis points (2020: 62 basis points).

Net operating revenue in our Solutions business grew 9% to
£276.4 million (2020: £253.0 million) as a result of higher
management fees due to higher average AUM. The net operating
revenue margin reduced in line with our expectations to 14 basis
points (2020: 15 basis points).

The growth in AUM in the Mutual Funds business area resulted in
management fees increasing by 20% to £811.6 million
(2020: £675.5 million). Net operating revenue therefore increased
to £815.0 million (2020: £686.4 million). Excluding performance
fees, the net operating revenue margin increased to 72 basis
points as a result of the change in mix of AUM towards higher
margin equity products (2020: 71 basis points).

In our Institutional business, management fees increased by 19%
due to higher average AUM and performance fees remained
robust at £78.7 million (2020: £74.2 million). This resulted in net
operating revenue of £601.0 million (2020: £514.5 million), an
increase of 17% on the previous year. The net operating revenue
margin excluding performance fees was stable at 31 basis points
(2020: 31 basis points).

The growth in overall Asset Management net operating revenue
was further buoyed by an increase in our share of profits from joint
ventures and associates, which grew by 49% to £73.9 million
(2020: £49.5 million), with continued strong returns from our
long-standing venture with Bank of Communications in China.

Performance fees and carried interest

140

120

100

m
£

126

2017

2018

2019

2020

2021

Performance fees and net carried interest
3 year average performance fees and carried interest

1. The Wealth Management segment includes our proportional share of the income and expenses of SPW on an individual account line basis. The Consolidated
income statement includes our share of the post-tax profits of SPW within Share of profit of joint ventures and associates. A reconciliation between the two
different presentations is shown in the segmental note on page 109.

Schroders Annual Report and Accounts 2021

Financial strength and liquidity
The Group’s net assets increased by £339.8 million during 2021 to
£4,425.7 million (2020: £4,085.9 million).

The different forms of business that we conduct affect our total
assets and liquidity. Certain assets managed on behalf of investors
are recognised in the Consolidated statement of financial position,
while others are not. The following table sets out how these assets
are broken down between on-balance sheet assets and others that
form part of our total AUM.

Total
£bn

13.5

520.5

534.0

81.2

116.4

731.6

Not recorded
in the
Statement of
financial
position
£bn

Statement of
financial
position
£bn

–

520.5

77.5

116.4

714.4

13.5

–

13.5

3.7

–

17.2

0.8

0.7

5.6

7.1

24.3

Life Company

Other Asset Management

Total Asset Management

Wealth Management

Joint Ventures and
Associates

Total AUM

Investment capital

Seed and co-investment
capital

Other assets

Total Group assets
excluding clients’
investments

Total Group assets

Within Asset Management, assets that are managed for clients are
not generally owned by the Group and are not recorded in the
Consolidated statement of financial position. However, certain
clients invest through life insurance policies that are managed by
the Life Company. The assets backing these policies are owned by
the Life Company and are included in the Consolidated statement
of financial position along with a matching policyholder liability.

Wealth Management principally provides investment management,
wealth planning and financial advice, platform services and
banking services. Those 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
with consideration of the liquidity demands that may arise from
clients.

Reflecting these structures, the Group’s total assets increased to
£24.3 billion at 31 December 2021 (2020: £21.7 billion). Excluding
those assets that form part of AUM, the Group’s total assets
increased to £7.1 billion (2020: £6.0 billion), principally due to both
the impact of a greater number of funds requiring consolidation,
and retained profits being held to meet increased working capital
requirements.

Investment capital represents surplus assets held in excess of
operating requirements. It is managed in accordance with limits
set by the Board, with the aim of making a low volatility return.

As at 31 December 2021, investment capital is mainly comprised of
cash, cash-like funds and other funds managed by the Group.
During 2021, investment capital increased by £421 million to
£838 million (2020: £417 million) and our seed and co-investment
capital increased to £666 million (2020: £612 million).

Other assets support our ongoing operating activities in the form
of working capital, including assets that are inadmissible for
regulatory purposes.

The Group’s liquidity and regulatory capital position remains
strong. Further information on this is set out in note 20 of the
financial statements.

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 pre-exceptional basic
earnings per share. In line with this policy, and due to the strong
growth in profits for the year, the Board recommends a final
dividend of 85 pence per share (2020: 79 pence per share), an
increase of 6 pence per share. It means a total dividend for the
year of 122 pence per share (2020: 114 pence per share), up 8
pence per share representing a payout ratio of 50% (2020: 57%).

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
(2020: £2.9 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.

There are certain circumstances that could adversely impact the
Group’s ability to pay dividends in line with the policy. These
include a combination of significantly increased costs and a
prolonged deterioration in markets or performance leading to
reduced revenues and a consequential increase in the ratio of total
costs to net income.

Overall, I am pleased with these results which demonstrate
significant progress against our strategic priorities. We believe that
our focus on long-term goals and strong investment performance
continues to provide a sound platform for future growth.

Richard Keers
Chief Financial Officer

2 March 2022

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsWE LOOK
BEYOND
TOMORROW

Schroders Annual Report and Accounts 2021

The climate emergency demands action,
and as an active investment manager we
are a catalyst for change.

We have a responsibility to manage the capital our clients
entrust to us and to protect it from the risks that climate
change poses.

Working with our portfolio companies, we can accelerate
positive change to a low-carbon world.

The values and standards that we ask of the companies in
which we invest also apply to our own business.

Schroders Annual Report and Accounts 2021

Tackling climate change

OUR ROLE IN TACKLING CLIMATE CHANGE

We have set science-based targets for our investment activities and
operations to lead the transition to a low-carbon economy.

Addressing the risks posed by climate change will require huge
structural shifts in societies and economies, a source of both value
creation and destruction across industries, companies and
investment portfolios.

We have a responsibility to set out our path to net zero and deliver
investment performance for our clients over the longer term by
contributing to a sustainable future.

The scale of the challenge
Since the industrial revolution, greenhouse gas emissions have
risen with the growth of the global economy and there is
widespread scientific and political consensus that, unchecked, the
impact on our climate will be severe. Limiting global warming to
well below 2°C compared to pre-industrial levels will demand a
reversal of the carbonising impact of our economic journey in
under a generation. It is increasingly clear that investment
managers can be a catalyst for change.

Analysis by our economists of the implications of a climate
transition for potential economic growth in major economies and
financial markets has concluded that long run returns will be
materially different with climate impact taken into account. Every
economy, industry and company will need to plot a net zero path
to remain competitive.

Our carbon exposure and role in the transition
As an investment manager, our greenhouse gas emissions are the
result of two factors: our operations and the investments we
manage. The environmental impact of our own business
operations accounts for under 1% of the Group’s total greenhouse
gas emissions. Our operations principally generate emissions from
energy consumption in our buildings, our car fleet, business travel
and our supply chain.

The remaining over 99% arise from financed emissions, which are
the Scope 1 and Scope 2 emissions generated by our investee
companies in their own operations. Currently, our financed
emissions principally include listed common stock, preferred stock
and corporate bonds (more than 60% of AUM), however we will
increase the scope of assets included in our financed emissions as
new methodologies are released.

We believe that as a Group committed to sustainability, we should
reduce our operational footprint and lead by example by setting
ambitious targets and actions. It is in our financed emissions,
however, where we have the opportunity to make the greatest
difference. Our role as an active investment manager gives us the
potential to drive significant change across multiple industries.

Our clients expect us to manage their capital in a way that
supports long-term investment performance, while protecting it
from climate risks. We seek value in the potential opportunities
created and aim to develop investment strategies that will help
clients meet their own investment and climate goals. By doing so,
we can deliver value for all our stakeholders and play a critical role
in influencing and accelerating decarbonisation in the real
economy.

Science Based Targets initiative (SBTi)
We have built on years of climate research, risk analysis and action
to establish a robust view of our current emissions. We are one of
the largest investment managers by AUM to have their targets
validated by SBTi. This will put us on a 1.5°C emissions reduction
pathway and help us reach net zero across our value chain by
2050, or sooner. Our Corporate Responsibility Committee, chaired
by our Group Chief Executive, recommends our climate change
strategy and monitors progress towards our science-based
near-term targets and net zero.

1.5°C

Net zero

science-based pathway

by 2050 or sooner

Transitioning our clients’ investments
to deliver value over the longer term

Transitioning our operations
to lead the way and have impact

Measure exposure
and realign our
clients’ investment
portfolios

Track and hold
investee
companies
to account

Take a solutions
approach to
net zero

Apply
site-specific
actions and
electrify
car fleet

Install, buy
or influence
renewables

Promote online
collaboration
and challenge
travel

Encourage
and support
suppliers to
set targets

Align portfolios to a 2.2ºC pathway by
2030 and 1.5ºC by 2040

Reduce Scope 1
and 2 emissions
by 46% by
2030*

Achieve 100%
renewable
electricity by
2025

Reduce
business travel
emissions by
50% by 2030*

67% of
suppliers**
to set SBTs
by 2026

For more information on our climate transition action plan,
see www.schroders.com/ctap

Schroders Annual Report and Accounts 2021

* From a 2019 base year ** by emissions

Our clients’ investments
The largest part of our exposure to carbon emissions comes from
the investments we manage for our clients, equating to
35.4 million tCO2e. In 2021 our total Scope 1 and Scope 2 carbon
emissions associated with our investments decreased by 4.6%
year-on-year, and our exposure to carbon-intensive companies,
Weighted Average Carbon Intensity (WACI), fell 7.4% year-on-year
to 163.61 tCO2e/$m of investee company revenue. Moreover, we
have seen an upward trend in data quality during the year.

However, we continue to look forward and during 2021 we
established our long-term strategy to work in partnership with our
clients to transition the assets we manage to net zero by 2050 or
sooner, focusing on three elements: prioritising active
engagement; holding companies to account; and continuing to
develop climate products and solutions.

Prioritising active engagement
We can use our voice and influence to propel companies to
establish detailed transition plans and require them to
demonstrate near-term delivery of goals. An engagement strategy
is more challenging than simply reallocating investments to
low-carbon sectors, but we have a responsibility to engage with
the companies facing the most pressure to decarbonise, and by
doing so we believe we can create more value for our clients.

Holding companies to account
In the past few years, we have seen an increase in the number of
climate-related shareholder resolutions submitted to companies’
AGMs. There is increased scrutiny over the way in which we vote in
these resolutions. We have adopted a ‘support or explain’
approach to environmental shareholder resolutions aiming to vote
for where they align with our sustainability agenda. Our voting
records, along with our rationale, are available via our website1.

Developing climate products and solutions
We recognise a growing awareness and demand from our clients
for climate-focused products. We have responded to this demand
for many years by offering products which contribute to the
reduction of carbon emissions, or those which actively commit to
rapid decarbonisation. We continue to expand the options for
clients, benefitting from the growth in those markets.

This year we launched a number of new strategies targeted on
climate action, including our first fixed income climate-focused
solutions. These latest additions to our climate-focused products
identify companies that are leading the way in reducing carbon
emissions, both in the scale of their future commitments and
timeframes to achieve them. We seek to identify the companies
that will obtain a competitive advantage from their climate
transition.

During 2021, climate was one of the key topics that we engaged
with companies on. Across our business, we had more than 450
engagements on this subject. This included the letter our Group
Chief Executive wrote to FTSE 350 companies, urging them to
publish detailed plans for how they intend to transition their
business towards net zero emissions by 2050.

We understand that our clients are all at different stages of their
net zero transition journey. This is why we are building out our
climate solutions approach by expanding the options available to
our clients and ensuring we provide products that not only look to
reduce carbon emissions but also products that contribute to
environmental or nature-based solutions.

1. www.schroders.com/ao

Reducing GHG emissions

Contributing to environmental solutions

Our solutions

Area of future innovation

Designed for clients that want to
support the transition to net zero.
These solutions invest in companies who
are actively transitioning to a lower-
carbon business model and are reducing
their exposure to greenhouse
gas emissions.

Designed for clients who want to
contribute to environmental solutions.
We do this by investing in companies that
have products and services that actively
contribute to specific climate-related
outcomes through technological
development and innovation.

Designed for clients who want to
invest in our nature based solutions.
We recognise the important role they will
play in mitigating climate risk. We focus
on analysing natural capital assets and
identify the best way to maximise carbon
capture and sequestration.

Comprises our Sustainable solutions
(Article 8 under SFDR) and includes
strategies such as Global Climate Change
and Global Climate Leaders

Comprises our Impact Goals solutions
(Article 9 under SFDR) and includes
strategies such as the Global Energy
Transition, Global Cities and BlueOrchard
Emerging Market Climate Bond

Comprises our investment in Natural
Capital Research where our aim is to
provide access to conservation projects
through high quality carbon credits that
benefit local communities.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsTackling climate change (continued)

Our operations
Reducing energy consumption in our properties
and fleet
In 2021, our operational emissions (Scope 1 and 2) decreased by
14% compared to 2019, but did however increase by 10% from
2020. The increase this year is primarily due to a one-off accidental
release of two fire suppression units. Excluding this incident, our
emissions have decreased by 4%. Reduced occupancy of our
offices continued through 2021 due to the ongoing pandemic
leading to lower energy consumption. Additionally, we achieved
improved energy efficiency across our larger properties as part of
the measures we implemented following ISO 14001 certification,
the international standard for effective environmental
management systems.

We have increased the percentage of renewable electricity
used across our global offices from 50% in 2019 to 84% in 2021.
We are a member of RE100 and have committed to sourcing 100%
renewable electricity for all of our owned and leased properties
by 2025.

With new emissions reduction targets to meet, we are drawing up
site-specific action plans. These will include further energy
efficiency measures, building on known and emerging good
practice, and will take advantage of emerging technologies. As we
look to electrify our buildings to reduce the use of fuel sources,
including gas, our renewable electricity plan will become more
important. We will look at opportunities to install onsite renewables
and continue our progress in sourcing 100% renewable electricity.

In 2021, our homeworking emissions decreased from 1,838 tCO2e
in 2020 to 480 tCO2e. This is due to an improvement in our
methodology as we captured the number of employee homes that
use gas or cooling energy. Our data shows that fewer of our
employees’ homes used gas than estimated in 2020. The decrease
in emissions has also been driven by a reduction in average time
working from home per week. We will continue to develop
and monitor this emerging category of greenhouse gas
emissions reporting.

We have also set ourselves a new target to transition our car fleet
to fully electric by 2030.

“For us and our industry, the
disruption from climate
change is creating new risks
and new opportunities.
Understanding the data on
both is key.”

PETER HARRISON, GROUP CHIEF EXECUTIVE

Reducing our footprint from business travel and
suppliers
Our corporate value chain emissions (Scope 3 categories 1-14) are
almost 40 times larger than our energy-related emissions (Scope 1
and Scope 2). As 98% of our operational Scope 3 emissions arise
from our business travel and supply chain spend, we have
therefore chosen to set additional targets for these areas. We will
engage and support our people and suppliers in joining the net
zero journey with us.

Our business travel emissions have decreased by 92% compared
to 2019 and by 54% compared to 2020 due to the impact of the
pandemic on global travel. We do anticipate these will bounce back
to a certain extent once travel restrictions are lifted.

Our target is a 50% reduction in business travel by 2030, from a
2019 base year. Our Travel policy requires justification for business
travel and we will continue to invest in communication
technologies so that our employees can meet and collaborate
effectively online.

In 2021, 45 of our suppliers have set science-based targets,
compared to five in 2019. This increase reflects the current
momentum in the market of companies making climate
commitments.

Starting this year, we will engage with our suppliers to understand
their existing sustainability targets and commitments and support
them in setting science-based targets through information
sharing, guidance and collaboration.

Climate neutral operations and the role of carbon
offsetting
Our primary focus is on our decarbonisation plan, leveraging our
own actions and influence to reduce greenhouse gas emissions.
However, we believe that as we go through our transition process,
there is a role for carbon offsetting both to compensate for
emissions that will still be released on our transition pathway and
to neutralise residual emissions for net zero. As such, we continue
to operate our business on a climate neutral basis, buying carbon
credits equivalent to our greenhouse gas emissions (except
supplier and financed emissions where we have engagement
targets).

Transparency and accountability
We believe in the power of corporate transparency and
accountability to help drive action across the economy. On behalf
of our clients, we hold the companies we invest in to account. We
also believe in leading by example and seek to report and disclose
our own progress as transparently as possible.

We align our reporting to the Task Force on Climate-related
Financial Disclosures (TCFD) and submit the annual CDP climate
change questionnaire, in which we achieved a leadership level score
of A- for our most recent (2021) response. Our science-based
targets have been validated by the SBTi. Schroders is proud to be
one of the first three asset managers to have their targets validated.

Schroders Annual Report and Accounts 2021

The below information outlines our metrics related to the greenhouse gas emissions generated from both our
operations and investments.

Our operations

Greenhouse gas emissions (tCO2e)
Building-related gas and fuel

Cars (company-owned or leased)

Fugitive emissions

Total Scope 1 emissions

Electricity (location-based)

Purchased heat (location-based)

Total Scope 2 emissions (location-based)

Electricity (market-based)

Purchased heat (market-based)

Total Scope 2 emissions (market-based)

Business travel

2021

533

419

1,028

1,980

3,438

470

3,908

593

470

1,063

1,722

2020*

2019*

382

366

240

988

3,863

493

4,356

1,114

493

1,607

488

326

296

1,110

5,034

684

5,718

2,571

684

3,255

3,713

21,852

Supply chain (categories 1, 2 and 4)

231,004

225,941

229,632

Other

3,954

3,097

5,106

Total Scope 3 operational emissions

236,680

232,751

256,590

Total operational emissions (location-based)

242,568

238,095

263,418

Metrics

Scope 1 and 2 emissions (tCO2e) per employee
Renewable electricity consumption (RE100)

1.04

84%

0.96

75%

1.27

50%

Our investments

Greenhouse gas emissions (tCO2e)
Financed emissions (Scope 1 and 2)

Metrics**

Financed emissions (tCO2e) per £m of AUM
WACI (tCO2e per $m of investee
company revenue)
Portfolio temperature score (oC)

35,448,064 37,171,418 39,056,268

94.68

106.43

126.51

163.61

176.72

2.82

2.85

N/A

2.92

* Prior year numbers have been re-presented.
** Relate to Scope 1 and 2 financed emissions, for more information, see our TCFD report

Energy consumption (kWh)

63%

37%

20,952,475

65%

35%

21,254,118

2021

2020

2019

70%

30%

26,265,797

Scope 1 and 2 emissions (tCO2e)

d
e
s
a
b
-
t
e
k
r
a
M

d
e
s
a
b
-
n
o
i
t
a
c
o
L

2021

57%

43% 3,043

2020

35%

65% 2,595

2019

55%

45%

4,365

65%

35%

5,888

62%

38%

5,344

2021

2020

2019

68%

32%

6,828

UK operations

Outside UK operations

(www.schroders.com/tcfd).

Additional information

Reporting period

Baseline year

Reporting boundary

Emission factors

Reporting
methodology

Metrics

Average employees

Financed emissions

Data restatements

The reporting period is 1 January to 31 December inclusive.

We have chosen 2019 as our baseline year as it is a reasonable representation for our business.

The financial control boundary approach has been applied to our greenhouse gas inventory, which follows our accounting
consolidation approach. No category of emissions has been excluded from this boundary. Scope 3 Categories 9, 10, 11, 12 and 14
have been assessed and are not relevant to our business. Scope 3 Category 15 has been defined below under financed
emissions.

We have used a variety of greenhouse gas conversion factors for calculating our emissions. Emissions factors are determined by
the emissions source and the emissions location so that the most accurate factor is applied. Sources of emissions factors used
are: Defra, IEA, EPA, EPA eGRID, CGGI, NGA, Green-e.

We have reported on the emissions sources required under the Companies Act 2006 Strategic Report and Directors’ Report
Regulations 2013. We followed the requirements of the Streamlined Energy and Carbon Reporting (SECR). We comply with the
requirements of the Task Force on Climate-related Financial Disclosures. We report our global emissions inventory using the GHG
Protocol Corporate Standard, the GHG Protocol Scope 3 Calculation guidance, the GHG Protocol Corporate Value Chain (Scope 3)
Standard and the Global GHG Accounting and Reporting Standard for the Financial Services Industry.

We have used these metrics as they are common business metrics for our industry sector.

The average number of employees for our reporting period are: 2021: 5,650, 2020: 5,556, and 2019: 5,359.

Financed emissions represent the Group’s emissions from common stock, preferred stock, corporate bonds, REITs and ETF exposure,
which makes up over 60% of our AUM excluding associates and joint ventures. This is due to the lack of available greenhouse gas
accounting methodologies.

As part of our SBTi submission, the Group undertook an inventory review of its greenhouse gas emissions in 2021. The reported
emissions for 2019 and 2020 have been restated following this review taking into account hotels and taxis in business travel,
fugitive emissions and a number of data improvements.

Base year
recalculation policy

We have used 2019 as the base year for our greenhouse gas emissions calculations. In order to accurately track progress
towards our greenhouse gas targets, we will adjust the base year to account for significant changes such as structural changes,
calculation methodology changes, or data errors.

Independent
assurance

Incendium Consulting Ltd provided assurance over all of our operational emissions. This assurance was provided in accordance with
AA1000AS (2008) Type 2 assessment.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsTackling climate change (continued)

Task Force on Climate-related Financial Disclosures
Summary disclosures
The following summary read together with our detailed report, which can be found on our website1, is our response to, and is consistent
with, the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). These disclosures set how the Group
incorporates climate-related risks and opportunities into governance, strategy, risk management, metrics and targets and how we are
responding to the expectations of our stakeholders.

We have produced a supplemental detailed TCFD report to provide a more comprehensive and tailored view for our stakeholders.
The summary disclosure below should therefore be read in conjunction with our TCFD report.

Governance

Disclose the
organisation’s
governance around
climate-related risks
and opportunities.
Read more on
pages 5–10 of our
TCFD report.

Strategy

Disclose the actual
and potential impacts
of climate-related
risks and
opportunities on the
organisation’s
businesses, strategy,
and financial
planning where
such information
is material.
Read more on
pages 11–33 of our
TCFD report.

The Board of Schroders plc has collective responsibility for the management, direction and performance of the
Group, and is accountable for our business strategy. We embed climate-related risks and opportunities into our
strategy. In discharging their Directors’ duties, the Board is therefore ultimately accountable for the oversight of
climate-related risks and opportunities that could impact our business.

The Group has a well-defined governance framework based on delegated authority. The Board has reserved
certain matters to itself and has also delegated specific responsibilities to Board committees, notably the
Nominations Committee, the Audit and Risk Committee and the Remuneration Committee and also to the Group
Chief Executive. The Group Chief Executive is responsible for proposing the strategy for the Group and for its
execution. Through this framework the Board receives regular briefings on sustainability matters including
climate-related issues.

Our Corporate Responsibility Committee advises and assists the Group Chief Executive, who chairs the
Committee, in discharging his responsibilities regarding corporate responsibility which includes climate-related
issues. Our climate targets are managed in this forum with progress reported to the Board.

For a number of years, our executive Directors have had sustainability-related measures included within their
annual bonus scorecard. The measures are reviewed each year by the Remuneration Committee to align with
our key priorities.

The climate-related risks to our investee companies include the physical risks from climate change affecting their
operations, and transition risks from the move to a net zero economy affecting their business proposition. These
outcomes could negatively impact security valuations, which in turn would put our investment performance at risk.
Fortunately, opportunities arise in sectors that stand to benefit from the transition to a net zero economy, such as
those focused on energy efficiency, renewable energy infrastructure, or climate change resilience/adaptation.

We identify these climate risks through our proprietary Climate Risk Toolkit and act to respond to those risks, in
particular through company engagement and voting activities. By using five different transition and physical risk
scenarios to assess the impact of climate on our client’s assets (including under a 1.5°C, 2°C and Nationally
Determined Contributions scenarios) we can direct our climate-related engagement efforts to where they will be
most effective.

Our climate change strategy is to continuously develop our Climate Risk Toolkit to effectively measure risk
exposure and identify opportunities, to track and hold companies to account through engagement activities, and
to offer client solutions aligned to a net zero pathway. The primary focus of our climate-related engagement
strategy will be to drive adoption of and adherence to science-based targets by our investee companies. By
doing so, we can use our position as a global investment manager to drive positive change across multiple
industries. We know that there is demand from many clients for opportunities to invest in climate solutions and
we continue to expand the options available. Our climate solutions framework is designed to help our clients
tackle the climate challenge, whether by reducing greenhouse gas emissions or by actively contributing to
environmental solutions.

For our own operations, we measure the physical risks on our owned and leased offices against multiple risk
indicators, which review both acute risks (e.g. wildfire hazard) and chronic stresses (e.g. air quality). Outputs from
our assessments will then inform the prioritisation of site-specific target setting which are managed by business
functions. Transition risks include increased costs to implementing low-carbon technology, increased regulatory
requirements, and reputational risks associated with not responding to climate change appropriately. Transition
opportunities include increases in energy efficiency and renewable electricity for our owned and leased offices and
the subsequent decrease in greenhouse gas emissions.

We have set science-based targets for our operations and will continue to be climate neutral as we transition to
net zero. We will look to align with the SBTi’s net zero standard. We will also encourage and support our supply
chain to join the net zero journey with us.

1. www.schroders.com/tcfd

Schroders Annual Report and Accounts 2021

Strategy continued

Risk Management

Disclose how the
organisation
identifies, assesses,
and manages
climate-related risks.
Read more on
pages 34–39 of our
TCFD report.

The Group’s strategic and financial planning process includes a detailed review of the business model and key
planning assumptions. It is led by the Group Chief Executive and Chief Financial Officer in conjunction with
management teams with the outlook most recently updated in March 2022. The business planning process
considers the longer-term headwinds that may materially impact the Group and assesses the need for business
model changes. This includes consideration of the potential impact of climate change on the Group.

Our revenue assumptions consider the expected impact of product development activity, changes in client
behaviour and other movements in AUM and pricing due to climate change or other factors. Our expense and
funding assumptions consider the potential impact of planned investment and other changes in the business.

The Group also conducts an assessment of the key risks facing its business. As a core element of this
assessment, stress testing is performed on the Group’s five-year business plan. The stress scenarios include
consideration of climate change risks, incorporating deterioration in the value of our AUM (e.g. due to transition
and physical risks crystallising earlier than expected) and the impact that reputational damage could have on net
new business. For 2021, we incorporated the output from our investment scenario analysis to determine the
potential impact of climate change on our AUM over the forecast period. In the short-term, the most significant
stressed impact relates to transition risk as a result of early policy action by governments. The conclusions from
these assessments form the basis of our Viability Statement which can be found on page 55.

The Risk Assessment section on page 51 sets out how we identify, assess and manage risk. Climate change risk
management has been embedded into our existing risk management processes across the Group. The Board is
responsible for the management, direction and performance of the Group, and is accountable for our business
strategy. Climate-related risks are embedded within our strategy and therefore, in discharging its responsibilities,
the Board is ultimately accountable for the oversight of climate-related risks that could impact the business.

We use both a ‘top down’ and ‘bottom up’ approach to identifying and assessing the key risks across the Group.
Given the importance of climate-related risks to our business, ‘ESG risk including climate change’ has been
identified as one of our key risks. This means it has been assigned to a Group Management Committee (GMC)
member who is responsible for ensuring it is mitigated effectively or actions are underway to address it. It also
means it has a risk appetite statement, approved by the Board, which enables us to provide an assessment of
risk position against risk appetite on an annual basis, and monitor performance of this risk throughout the year.
Our risk appetite focuses on the commitment to running our global operations on a climate neutral basis;
ongoing development of investment tools to help fund managers to better measure and manage climate-related
risks within their investments; development of climate-friendly products; and engagement with clients on their
requirements and with investee companies and policymakers.

Climate risks are managed in accordance with our three lines of defence model. The heads of each business
area take the lead role in identifying, assessing and managing risks, including those relating to climate, with
independent monitoring carried out by the second line of defence (for example, through the review and challenge
of climate risk by our second line Investment Risk team), and Internal Audit provides independent assurance over
the operation of controls, which includes those implemented to manage climate change. We recognise that
climate change is a pervasive risk across many of our key risk types (for example, Conduct and Regulatory risk,
where any failure to meet the range of climate-related regulatory requirements being implemented globally
may result in regulatory sanction). At a more granular level, heads of business areas across the Group are
responsible for identifying these climate-related risks and assessing their impact on their business areas and
functional responsibilities.

We analyse potential climate risks through the lens of both physical and transition risks over the short, medium
and long-term and via a range of proprietary tools and metrics we have developed. Many of our key processes
have been adapted to incorporate climate change risk including our approach to investment research and
decision-making, product development process, active ownership and engagement with our investee companies,
and ongoing assessment and monitoring of our own operations.

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.

See our metrics, progress to date and an outline of our strategy in achieving those targets on pages 32-35.
In line with SECR requirements, we have also listed out our Scope 1, 2 and 3 greenhouse gas emissions on the
same pages.

Disclose the metrics
and targets used to
assess and manage
relevant climate-
related risks and
opportunities where
such information
is material.
Read more on
pages 40–50 of our
TCFD report.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsWE LOOK
BEYOND
EXPECTATIONS

We see potential and act on our ambition
to accelerate positive change.

Change for the better is embedded in our purpose. With every
decision, we consider the impact on people. We continue in our
ambition to build an inclusive workplace for our employees and
create opportunity across society.

Schroders Annual Report and Accounts 2021

People and society

FOSTERING AN INCLUSIVE
WORKPLACE CULTURE

We aim to help clients meet their long-term financial goals.
Succeeding is driven by our people.

Our focus on people and culture
Achieving excellent investment performance for our clients
depends on the active management decisions that our employees
make every day. That is why our success is built on the strength of
our culture and our ability to attract and retain outstanding people.
We prize our reputation as an employer of choice and our focus is
on empowerment and inclusion. We allow all individuals to have a
voice in shaping our culture and believe that it is essential for our
employees to be able to thrive every day.

We announced a number of new acquisitions during the year and
expanded our existing capabilities in some key growth areas. While
the scale and structure of our business has grown, we made it a
priority to protect our distinctive culture and values, which are a
source of strength.

Inclusion and diversity are priorities for all of our stakeholders and
they are increasingly becoming themes that run through all of our
people initiatives.

A number of social justice movements that have intensified moral
concerns about the overall impact of businesses in society, lent
urgency to engaging more deeply and directly with our employees.

Our people around the world

57%

17%

19%

UK
Europe, Middle East and Africa
Americas
Asia

OUR VALUES

IN 2021:

We strive for excellence
Being good at what we do is a powerful way
to create value for all our stakeholders and
secure a long-term future for our business.

We promote innovation and
teamwork
We challenge how things are done,
anticipate future opportunities and
understand that to deliver value takes
collaboration and a healthy respect for
individual skills.

We have passion and integrity
We are realistic about what we can achieve,
but are ambitious too, approaching
everything we do with energy and drive.
This sits alongside an openness and
responsibility to deliver on our promises.

• We won Large Employer of the Year at
the FTAdviser Diversity in Finance Awards.

• Peter Harrison was voted a Top 50 CEO
with 96% approval rating on Glassdoor.

• Amy Cho and Garth Taljard were recognised
for the second year as executive sponsors in
the top 100 LGBT Executive Allies list.

• We signed the Black Talent Charter,

a pledge to help solve the endemic under-
representation of black professionals in
finance.

• We are recognised for being among the
Top 75 Employers in the Social
Mobility Employer Index.

• We retained our spot in the Bloomberg

Gender Equality Index
for the fourth consecutive year.

Schroders Annual Report and Accounts 2021

Leading with inclusion
We are committed to providing equal employment opportunities
and combatting all forms of discrimination. In keeping with our
Equal Opportunities policy, we give fair consideration to all
employment applications, including those from disabled people,
considering their particular aptitudes, skills, behaviours and
abilities. If employees become disabled, we continue to employ
them wherever possible, with re-training if necessary.

At every stage of the employee lifecycle, we assess our approach
and make changes to build an inclusive organisation. This happens
from the very first touchpoint with an individual, from recruitment
through to development, progression, employee engagement and
reward.

Driving accountability
We strive to make well-informed, data-driven decisions when it
comes to inclusion and diversity and believe that transparency
around our progress is essential.

Our data shows us the progress we have made and allows us to
set ambitious but realistic targets. Senior managers have
responsibility for closing the gaps in representation.

Given the growing expectations of many of our stakeholders and
to meet our pledges, we are now aiming for 35% female
representation in senior management by the end of 2023.

We have a focus on training, career development and progression,
and all employees are given opportunities to build their skills and
experiences with us as part of our pledge to make Schroders an
inclusive organisation. We have broadened our focus beyond
gender inclusion and where possible, with the permission of our
employees, we collect data on age, disability, ethnicity, faith,
gender, sexual orientation and socio-economic background to
better understand the make-up of our workforce and those
applying for jobs. Our strategy and actions are guided by the data
we collect from our employees and the benchmarking initiatives
we are involved in.

Gender diversity

Schroders plc Directors

Senior management1

Subsidiary directors2

2021

2020

2021

2020

2021

2020

Female

Male

Female

Male

Female

Male

Female

Male

Female

Male

Female

Male

6 (50%)

5 (45%)

6 (55%)

331 (33%)

662 (67%)

327 (33%)

674 (67%)

36 (28%)

93 (72%)

31 (24%)

97 (76%)

Total senior management

All employees3

2021

2020

2021

2020

Female

Male

Female

Male

Female

Male

Female

Male

367 (33%)

755 (67%)

358 (31%)

781 (69%)

2,403 (42%)

3,347 (58%)

2,283 (41%)

3,288 (59%)

1. 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 people who are also subsidiary directors.

2. Other subsidiary directors comprises directors of subsidiaries who are not classified as senior management.
3. All employees includes permanent and temporary staff.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsPeople and society (continued)

Workforce Diversity
We are proud to have published our Workforce Diversity Report1 in
2021. This is an important step in sharing an update on our
progress towards a more diverse workforce.

We have an equal split of male and female representation at Board
level and 17% of our Board is from an ethnic minority and we
comply with the recommendations of the Parker Review. This year
we also introduced Board-approved ethnicity targets, including a
16% target for employees in the UK by the end of 2023. For
representation of ethnicity and for our gender and ethnicity
targets globally see our Workforce Diversity Report. Our Board sets
and reviews these targets on an annual basis, as well as reviewing
the succession plans for all our critical roles globally. These are also
reviewed from a gender and ethnicity perspective.

“With the publication of
the Workforce Diversity Report,
I am determined that Schroders
will take a lead in being
transparent about where we are
doing well and where we need
to do better.”

PETER HARRISON, GROUP CHIEF EXECUTIVE
Workforce Diversity Report 2021

Promoting allyship
We believe that inclusion matters for all employees, not only for
people in under-represented groups. Throughout October, we ran
a series of globally accessible events and activities focused on the
theme ‘allyship’, educating employees on how to actively call out
inequality and build equity. We track employee take-up of our
inclusion-related e-learning topics and have seen an increase in
engagement.

Equipping managers to support employees
through change
We recognise the critical role our managers play in building an
inclusive culture and coaching their teams to deliver great
performance. Previous pulse surveys have indicated that there are
opportunities for us to increase manager capabilities and to create
a more consistent employee experience.

The key skills managers need today continue to evolve, however
they include building resilience and demonstrating empathy and
vulnerability. A new programme, Lead to Win, introduced essential
skills in this context. The experience equipped managers with the
critical skills to spot possible burnout early and to create a team
culture in which everyone will feel included.

The voice of our employees
Collecting comprehensive feedback helps us to drive strong
employee engagement and improve communication and
collaboration. We have put emphasis on developing the ways that
we listen, engage and collaborate.

1. www.schroders.com/wdr

Schroders Annual Report and Accounts 2021

95%

of employees are proud to be associated with
Schroders

In 2021, we ran three global pulse surveys to identify key trends in
the experiences of our employees. We also continue to collect
feedback from employees when they join the organisation and
when they leave, via an external provider. This, along with input
from external organisations like Glassdoor, helped to inform our
people strategy.

The Global Employee Forum (GEF) allows us to further gather the
views of our people across the firm. The Forum provides a better
understanding of important issues such as training and
development, performance appraisals and employee opinion
surveys. Ian King, as Senior Independent Director, chairs the GEF
to provide a direct link between our employees and the Board. The
GEF has played an important part in changes to our performance
management framework. As part of the design work, we shared
the new ratings descriptions with the GEF before launching them
more widely. We were able to get a sense of how they would be
received and understood by employees and if we had missed
anything in creating them.

88%

of employees agree that people are treated with
fairness and respect

A number of different initiatives have supported our employee
engagement. We created a video about flexible working aimed at
all employees globally. Roundtables were set up by the Gender
Equality Network and hosted by Emma Holden, Global Head of
Human Resources, to understand first-hand the experiences of
mothers returning to work during or just before the pandemic.
Themes explored included some of the challenges of becoming a
parent and opportunities to better support our people.

Awareness and understanding of company
performance
Keeping our employees informed about factors that affect the
strategy and performance of the company is a priority. Our Group
Chief Executive has continued to give regular podcasts to update
employees on organisational change, such as acquisitions. He also
shares accessible updates on company performance coinciding
with the release of annual and half year results. Employee
feedback indicates that the updates have continued to engage and
motivate employees globally. Annual, town hall meetings about
performance and strategy are accessible to all employees globally
in multiple formats.

“The uncertainty and
disruptions of the last
two years reinforced
the importance of mental
wellbeing and it is at the
forefront of what we do.”
Rewarding our people
To better align our rewards to our values, we made changes to our
performance ratings. Employees receive ratings on business and
behavioural excellence (focusing on Schroders’ values) and for
managers, how well they meet our expectations of their
contribution as a manager. A conduct rating is also included.

Competitive benefits and remuneration that reflect each
employee’s individual performance as well as that of the business,
are critically important to develop and retain our people and
maintain our ongoing success. Our approach is explained in the
Remuneration report on pages 77-99.

84%

of our people believe Schroders recognises and values
diversity among its employees

Opportunities for our people to develop and grow
Creating a truly inclusive culture at Schroders is at the centre of
our people strategy. We believe that attracting and retaining
talented people and offering an environment where they can
thrive, is integral to growing a sustainable and successful business.
In 2021, 73% (2020: 66%) of all employees at Schroders accessed
an online course.

Promoting allyship

Over 1,000

employees completed the digital workout ‘Building
Bridges’ to help employees recognise and combat all
types of exclusion (up 42% from 2020).

Learnfest
In June, our annual Learnfest brought together internal and
external speakers to host interactive sessions over several weeks,
designed to increase business knowledge and build new skills to
help us respond innovatively to challenges. We combined
Learnfest with #CollectiveAction, to launch a global ‘Better You,
Better World’ campaign, bridging volunteering, career and learning
experiences. Our aim is to embed volunteering into our culture,
and provide opportunities for employees to make a social
contribution, whilst also learning and developing their careers.
From Thriving Under Pressure, to Career Resilience and Creating
your Growth Mindset, a total of 47 sessions were attended by 685
employees worldwide.

Data Academy
Data Academy is a structured learning experience designed to
upskill people in data analytic techniques and gain an
apprenticeship qualification in the process.

Supported by instructors throughout, this helped trainees resolve
issues from the course and has helped to challenge them to find
practical applications for their skills within their roles.

This is one of a number of initiatives to equip our employees with
critical skills for the future.

Mental health and wellbeing
The uncertainty and disruptions of the last two years reinforced
the importance of mental wellbeing and it is at the forefront of
what we do. We believe in the importance of having the
appropriate skills within the organisation to support those
experiencing mental health problems. A number of initiatives, led
by employees, supported this priority, including Mental Health
Awareness Week and the continued roll-out of our Mental Health
First Aiders programme.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsPeople and society (continued)

WORKING IN PARTNERSHIP
TOWARDS A FAIRER SOCIETY

We have both the responsibility and the influence to accelerate
positive change for our stakeholders.

Accelerating positive change
We recognise that the scale of the investments we make on behalf
of our clients gives us an important position of influence in society.
As an employer and a prominent FTSE 100 company, we take our
commitments and responsibilities seriously to direct that influence
with care and purpose.

We apply the same high standards we set in our business to the
companies we invest in. A number of our programmes and
initiatives, driven by the ‘People’ pillar of our Corporate
Responsibility strategy, are aimed at promoting equality by
focusing on inclusion, wellbeing and social mobility. We use our
influence as an active investment manager to drive positive social
change and prioritise corporate programmes that engage
employees in improving outcomes for the communities around us.

Our commitments and responsibilities
As a signatory to the United Nations Global Compact (UNGC) we
are aligned with its ten principles, under four key areas of human
rights, labour, environment and anti-corruption. By acting on these
issues, we advance broader global priorities, including those set
out in the UN Sustainable Development Goals (SDGs). For example,
our focus on inclusion within the workplace and wider society (SDG
10 Reduced Inequalities) and our role in tackling climate change
(SDG 13 Climate Action). We have also produced a Sustainability
Accounting Standards Board (SASB) aligned disclosure.

We take our responsibility to respect human rights seriously, as an
employer, a buyer of goods and services and as an investment
manager. Our Modern Slavery and Human Trafficking Statement
assesses and manages the risks of modern slavery practices in our
operations, supply chain and investments1.

93%

of employees agree that Schroders supports and
values its corporate responsibility role in society
(global employee pulse survey)

Society and our role as an active investment
manager
The contribution to society of the companies and assets we invest
in is critical to their licence to operate and long-term sustainability.
By using tools such as SustainExTM to analyse companies’
exposures and engagement on topics such as human rights,
diversity or access to basic services, we aim to use our influence to
strengthen their business models.

We have a record of engaging with companies on diversity
because we believe it’s important for their long-term strategy and
success. Our focus has often been on gender diversity, but as we
look forward this will shift to include workforce and board-level
ethnic diversity. For example, in 2021 our Group Chief Executive
wrote to FTSE 100 chairs regarding the actions they have taken
following the recommendations of the 2016 Parker Review.

We carried out over 400 engagements with companies on social
issues, including several auto companies to understand how they are
preparing their workforce for rapid electrification and digitisation.

Products targeting social priorities
By developing funds and investment strategies to target social
outcomes, we help our clients to align their social priorities and
investment goals.

We launched several funds targeting social outcomes, such as
improving economic conditions, employment with training, access to
finance, quality housing, clean energy, education and healthcare.

Our corporate programmes
Our community investment programme is centred on improving
the futures of the people and communities around us, with a
particular emphasis on promoting equality.

We donated £4.9 million in total to charitable causes around the
world (2020: £4.9 million), £0.7 million of which was outside the UK
(2020: £0.8 million).

Schroders Giving partnerships
We provide grants to charity partners on the topics of inclusion,
disability, social mobility and mental health. Our priorities are
providing opportunities for students from low-income
backgrounds and supporting those with a disability, mental health
challenges or those at risk of going to prison.

Each partnership offers our employees opportunities to donate,
fundraise or volunteer because we want our people to apply their
knowledge and develop new skills, while building greater social
awareness.

We have established new partnerships across the world including
the UK, Asia and the US.

• UK – Social Business Trust works with social enterprises which
address social challenges, such as education disadvantage,
employability and elderly care.

• Hong Kong – Ocean Recovery Alliance aims to educate, build
awareness and provide solutions to the challenge of plastic
pollution.

• US – Harlem Lacrosse provides academic support, mentoring,
leadership training, college readiness, career exploration and
lacrosse instruction to students who are most at risk of
academic decline and dropout.

1. http://www.schroders.com/human-rights

Schroders Annual Report and Accounts 2021

Employee-led giving
We offer donation-matching schemes for employee fundraising
across the UK, Asia and US. We were awarded the Platinum Payroll
Giving award by the Charities Aid Foundation: 24% of our UK
employees used the Give As You Earn scheme (2020: 28%), which
saw £1.3 million donated by employees (2020: £1.1 million) before
the contributions were matched by Schroders, to over 1,300
charities across the globe.

In addition to financial donations, we have provided gifts in-kind
(for example, computer equipment) and organised charitable
collections such as the London Poppy Appeal. We also support
employee-led collections, such as the ‘Mumbai Sling’ for people
in India affected by Covid-19 and a collection for victims of the
volcano eruption in La Palma, Spain. Separately, our Group Chief
Executive notified the Remuneration Committee of his intention to
donate £0.5 million of his 2021 bonus to a social enterprise fund
he recently established, which aims to create employment and
encourage environmental progress in Cornwall, one of the poorest
parts of the country.

A focus on volunteering and employee engagement
We support our employees in giving back to the community by
offering up to 15 hours of paid volunteer leave per year, and in the

UK for employees volunteering outside office hours, we donate
£20 per hour towards their charity with an annual cap. This year,
employees around the world contributed over 4,000 hours
(2020: 1,675) of volunteer work, inside and outside office hours.

Alongside our Schroders Giving partnerships, we continue to run a
number of charitable schemes that enable our employees to
donate their time or make monetary contributions.

Improving access to employment opportunities
We have continued to embed the work placements we run
through our Schroders Giving partnerships into our early careers
programmes in the UK, enabling access for a diverse and talented
pool of students through different channels. We ran 25 work
placements with three of our partners including: Snowdon Trust,
who offer grants to physically disabled and sensory impaired
students studying in the UK; Amos Bursary, who support young
people of African and Caribbean descent; and the Social Mobility
Foundation, who support high-achieving students from low-
income backgrounds across the UK.

GLOBAL CHARITY
COMPETITION
Our people can nominate charities of their choice in our
annual global charity competition. This year the winners,
voted by colleagues and Schroders’ Board member judges,
were:

• £65,000 to Goodwill Caravan
• £40,000 to Home from Home
• £30,000 to The Talent Tap
• £15,000 to Max Foundation

DELIVERING
#100000VACCINES
Building on the success of our award-winning
#CollectiveAction campaign in 2020 which supported those
most affected by the pandemic, we launched our second
global #CollectiveAction fundraising appeal,
#100000Vaccines. We called on our people and their friends
and loved ones around the world to twin their own
vaccinations and donate towards our fundraising campaign
to help end vaccine inequalities. We raised and donated
£125,000 (with Schroders matching), to UNICEF’s Covid-19
Vaccine Appeal, which could support the delivery of vaccines
in more than 133 low and middle-income countries.

“…These generous
contributions are helping
ensure rapid and equitable
access of Covid-19 vaccines,
irrespective of a country’s
wealth.”

STEVE WAUGH,

INTERIM CHIEF EXECUTIVE OFFICER AT THE UK
COMMITTEE FOR UNICEF (UNICEF UK)

BETTER YOU, BETTER WORLD
CAMPAIGN
In June, we ran a global volunteer campaign, ‘Better You,
Better World’, as part of our employee learning and
development programme. The campaign aimed to help
our people develop their skills while having a positive
impact in our local communities. Opportunities were run
across ten of our office locations worldwide, from solving
challenges posed by social enterprises in the UK; to
hosting insight sessions with college and high school
students in the US; and making teaching aids in China.

700+ hours

of volunteering leave logged by over 200 people
worldwide over eight weeks

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsOur stakeholders

OUR STAKEHOLDERS

CLIENTS

SHAREHOLDERS

OUR PEOPLE

Actively helping our clients achieve
their long-term financial goals

Clients are the central focus of our business.
The Group’s resilience and ongoing success are
built upon our ability to understand clients’
needs and respond to them. We work to
anticipate how these will evolve and to
construct products that meet their investment
needs and build future prosperity.

How do we engage with them and
consider their interests?
Our client service teams are the first point of
contact for clients. They build lasting

relationships with current and potential clients
to develop a clear view of client objectives and
how these are likely to evolve.

Outcomes
Engagement with clients drives our strategy, in
particular our desire to get closer to the end
client investing in our products, which was a
key consideration for the acquisition of River and
Mercantile’s UK solutions business. In addition,
client demand has driven our strategic goal of
expanding our capabilities in Private Assets and
Alternatives, which was a consideration for the
acquisition of Cairn Real Estate and our
investment in Greencoat Capital.

Rewarding our shareholders through
the sustained success of our business

We rely on the support and engagement of our
shareholders to deliver our strategic objectives
and grow the business. Our shareholder base
supports the long-term approach we take in
the management of our business.

shareholders to join remotely via an electronic
facility that enabled any shareholder to join and
ask questions of the Board.

During 2021, we continued to operate an
investor relations programme, adapting to the
external environment by holding meetings in
person and virtually.

How do we engage with them and
consider their interests?
The Board engages with shareholders at the
AGM, which gives shareholders the opportunity
to ask questions and engage with the Board. In
2021, due to the ongoing pandemic, we were
unable to invite our shareholders to attend our
AGM in person, so we made arrangements for

Outcomes
The interests of our shareholders are very
closely aligned with those of our clients, which
means that in doing the right thing for our
clients, we are also able to deliver value to
those who have invested in our business.
Engagement with our shareholders drives our
strategy.

Offering fulfilling work and shared
values to our people

Our people are central to the ongoing success of
the business. We are proud of our reputation as
an employer of choice.

Our people strategy aims to develop an agile and
diverse workforce as we continue to attract, retain,
develop and motivate the right people for our
current and future business needs.

How do we engage with them and
consider their interests?
We engage with our people through a variety
of channels including management briefings,
videos, an internal magazine and updates from
the Group Chief Executive. We have dedicated
teams and activities in every region that ensure
everyone is connected to the key priorities,
corporate developments and support
networks. At the start of the year, all employees
are invited to join sessions on business strategy
and have the opportunity to ask questions of
senior management.

We also conduct pulse surveys and have
invested in our internal communications to
help employees understand and deliver our
strategic objectives.

Ian King, our Senior Independent Director, is
our designated non-executive Director
responsible for gathering workforce feedback.
Ian chairs the Global Employee Forum to hear
directly from employees on issues that concern
them, and reports back to the Board. See
pages 42 and 66 for more details.

Outcomes
In response to feedback we have up skilled our
managers with resilience and inclusion tools to
better support our people. In recognition of the
remarkable job that our people have done in
driving Schroders’ success and long-term
growth, our employees were invited to become
partners in the business with a one-off award
of Schroders shares.

Schroders Annual Report and Accounts 2021

Section 172 Statement
In accordance with their duty to do so under section 172 of the
Companies Act 2006, the Company’s Directors, individually and
collectively, have acted in a way that they consider, in good
faith, is most likely to promote the success of the Company for
the benefit of its members as a whole. In doing this the
Directors have had regard, amongst other matters, to:

• the likely consequences of any decisions in the long term;
• the interests of the Company’s employees;
• the need to foster the Company’s business relationships with

suppliers, customers and others;

• the impact of the Company’s operations on the community

and environment;

• the desirability of the Company maintaining a reputation for

high standards of business conduct; and

• the need to act fairly as between members of the Company.

Examples of how they have done so, including having regard
for the factors above, appear throughout this Annual Report.
Further specific examples of how the Board of Directors has
had regard, in its principal decisions made during the year, to
these factors and their impact are set out on pages 66 of the
Corporate Governance Report. These are incorporated by
reference into this section 172 statement.

WIDER SOCIETY

EXTERNAL
SUPPLIERS

REGULATORS

Directing our decisions and actions
towards supporting wider society

We recognise the responsibility we have to
wider society. Schroders is a principles-led
business and we believe that demanding high
levels of corporate responsibility is the right
thing to do.

How do we engage with them and
consider their interests?
We are committed to helping communities
around the world, by raising funds for specific
causes and volunteering. Our employees are

widely engaged with the selection of causes
that we support and the Board receives an
annual update on the Group’s corporate
responsibility activities, including risks and
opportunities.

Outcomes
The Board recognises that we must remain
credible, therefore external commitments to
environmental and social causes are regularly
reviewed. During the year the executive
Directors waived their 2021 LTIP awards to
Covid-19 relief efforts.

Working with trusted partners

We have established a global network of
external service partners to supplement our
own infrastructure, benefiting from the
expertise and specialised skills they provide.

How do we engage with them and
consider their interests?
We engage proactively with our external
service providers through regular
communication from employees and have an
established framework that governs our
approach to selection, on-boarding,
management, oversight and reporting across
our supply chain.

Our Supplier Code of Conduct sets out the high
standards and behaviours we expect from our

Building respectful relationships

As a global business, we build positive
relationships with our regulators around the
world. Regulators provide key oversight as to
how we run our business and our licences to
operate. Our clients’ best interests are served
by us working constructively with regulators.

How do we engage with them and
consider their interests?
We regularly engage with regulators and
policymakers so that our business understands
and contributes to evolving regulatory
requirements. Senior management hold
regular meetings with our regulators to foster
good working relationships. The frequency of
these meetings and communication has
increased since the start of the pandemic.

suppliers, covering human rights, ethical
sourcing, bribery and corruption, living wages,
diversity and inclusion, health and safety and
the environment.

The Audit and Risk Committee reviews the
Group’s material outsource providers annually
to ensure that the strategy for their use
remains consistent with our strategy to use
service partners to add value to our
infrastructure.

Outcomes
Schroders is committed to the fair treatment of
suppliers, who are viewed as key stakeholders.

The Audit and Risk Committee receives regular
reports on engagement with regulators and
how changes in regulatory regimes may impact
our business.

Outcomes
We have agreed to adapt our governance
framework following engagement with
regulators to include the creation of a separate
Nomination Committee for Schroder
Investment Management Limited, our UK asset
management entity. Following engagement
with the regulator in China, we will be able to
launch our wealth management company
venture with the Bank of Communications in
the first half of 2022.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statements

Non-financial reporting directive

NON-FINANCIAL REPORTING DIRECTIVE

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 matters. Further information on these matters can be found on our website.

Non-financial matters Policies and standards that govern our approach

Environment

• ESG policy for listed assets: our principles and practices regarding sustainable

investing.

• Statement of compliance with UN Principles for Responsible Investment.
• Group Environment Statement: our Group position in relation to the

environmental management of our operations.

Employees

• Guiding principles and values: our stance on a healthy working environment

and flexible working.

• Directors’ remuneration policy: our approach for setting Directors’

remuneration.

• Policy on Board diversity: our approach to Board diversity.

We have a number of internal policies and standards governing our employees
that are not published externally. These policies outline our approach to equal
opportunities, parental and family leave, mental health and wellbeing, remote
working, diversity and inclusion and conduct and culture.

Social matters

• Supplier Code of Conduct: our standards and behaviours we expect from our

suppliers.

• ESG policy for listed assets: our principles and practices regarding sustainable

investing.

• Statement of compliance with UN Principles for Responsible Investment.

Human rights

• Modern slavery and human trafficking statement: assessing and

managing the risks of modern slavery practices in our operations, supply chain
and investments.

• Supplier Code of Conduct: the standards and behaviours we expect from our

suppliers.

• ESG policy for listed assets: our principles and practices regarding sustainable

investing.

• Group Human Rights Statement: our Group position in relation to the

respect of human rights.

We have an internal policy that covers the rights of individuals with respect to
their personal data which is not published externally.

Anti-corruption
and anti-bribery

• Group Tax Strategy: our approach to tax matters across the Group.
• Supplier Code of Conduct: the standards and behaviours we expect from

our suppliers.

We have a number of internal policies and standards relating to anti-corruption
and anti-bribery matters that are not published externally. These policies outline
our approach to financial crime (including anti-money laundering, counter-
terrorist financing, anti-bribery, sanctions and tax evasion), inducements, gifts
and entertainment, whistleblowing and conflicts of interest.

Due diligence,
outcomes and
additional
information

Tackling climate
change on pages
30–37.

People and society on
pages 38–45,
Corporate
Governance report
on pages 59–66,
Nominations
Committee report
on pages 68–69 and
Audit and Risk
Committee report
on pages 70–76.

People and society on
pages 38–45 and Our
stakeholders on
pages 46–47.

Business and financial
review on pages
24-29, Our
stakeholders on
pages 46-47 and
Audit and Risk
Committee report on
pages 70-76.

Business model

Principal risks and
impact of business
activity

Non-financial key
performance
measures

Our purpose is to provide excellent investment performance to our clients
through active management.

Business model on
pages 20–21.

We review our internal and external environment to identify the principal and
emerging risks that are most likely to impact our strategy, business model,
reputation and performance.

Risk management on
pages 49–54.

In addition to our financial performance metrics, we have a number of non-
financial measures.

Our Business at a
glance on pages 2–5.

Schroders Annual Report and Accounts 2021

Risk management

OUR RISK MANAGEMENT FRAMEWORK

IS INTEGRAL TO ACHIEVING

OUR BUSINESS OBJECTIVES

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 is
underpinned by a strong control culture with clear oversight
responsibilities. The framework is integral to achieving our
business objectives and delivering excellent investment
performance for our clients.

Managing risks
The Board is accountable for the maintenance of a sound 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, more details of which are on pages 70–76. We embed
risk management within all areas of the business at a Group and
legal entity level. The Group Chief Executive and Group
Management Committee (GMC), as the principal advisory
committee to the Group Chief Executive, have responsibility for
regularly reviewing the key risks we face. They are also responsible
for monitoring that individual behaviours reflect the culture and
core values of the business.

The executive oversight of risk is delegated by the Group Chief
Executive to the Chief Financial Officer. The Chief Financial Officer
has responsibility for the risk and control framework of the Group.
The Chief Financial Officer chairs the Group Risk Committee (GRC),
which normally meets ten times a year. The GRC supports the Chief
Financial Officer and GMC in discharging their 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 our existing risks. The GRC is supported by a
number of sub-committees, including the Group Conflicts of
Interest Committee and the Group Regulatory Oversight
Committee, which review and challenge risks and report significant
risk matters to the GRC.

Lines of defence
The first line of defence against undesirable outcomes is the
business functions themselves and the line managers across the
Group. Heads of each business area take the lead role with respect
to identifying potential risks and implementing and maintaining
appropriate controls to manage these risks, by applying our Risk
and Control Assessment (RCA) process.

Line management is supplemented by oversight functions,
including Group Risk, Compliance, Legal, Governance, Finance, Tax
and HR, which 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, supplemented by external assurance from the
Group’s auditor.

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.

Lines of defence overview

External independent assurance

Three lines of defence

3rd line
Internal independent
assurance

2nd line
Oversight functions

1st line
Business operations

e
e
t
t
i

m
m
o
C
k
s
i
R
p
u
o
r
G

e
e
t
t
i

m
m
o
C
t
n
e
m
e
g
a
n
a
M
p
u
o
r
G

e
e
t
t
i

m
m
o
C
k
s
i
R
d
n
a
t
i
d
u
A

Risk appetite
Risk appetite statements are set by the Board and cover all our key
risks (excluding strategic risk as this risk type mainly comprises
factors that are external to our operating model). They cover Asset
Management, Wealth Management and the Group itself. Tailored
versions of the risk appetite statements have been created for
some of our legal entities and the coverage of these was expanded
in 2021.

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. This is then formally assessed on an
annual basis and is reviewed and challenged by the GRC, GMC and
the Audit and Risk Committee prior to the Board.

Group policies
Our control framework is underpinned by a set of Group policies,
which are reviewed regularly to ensure they remain relevant. Our
approach is to have simple, principles-based policies that are
adopted across the Group. This means our employees are
supported with clear guidance on what they should and should not
do. The Group policy framework helps our newly acquired
businesses understand the culture of the Group and the
parameters within which we expect them to operate.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statements

Risk management (continued)

2021 developments
In 2021 a number of initiatives were undertaken to progress our
management of risk. Some of these are summarised below:

• ESG has been embedded and integrated into our investment

risk oversight processes, supported by our continued
investment in a range of proprietary tools to enable us to
monitor our portfolios in the transition to sustainability. ESG Risk
Dashboards have been enhanced to provide quick access to
proprietary internal measures and external ESG ratings. Our
compliance monitoring systems and processes have been
enhanced to provide alerts based on ESG criteria. Day-to-day
dialogue, review and challenge of ESG risk, that occurs within the
first and second line of defence, have been complemented by
more formal discussions at quarterly Asset Class Risk and
Performance Committees.

• Following the establishment of Schroders Capital, and to reflect
growth in private assets and alternatives, we have strengthened
the governance structure to enable greater focus on identifying
and managing the risks that are most pertinent to this business.
We have documented the key components of our risk and
controls framework in a Private Assets Organisational
Handbook. We have also added a dedicated Asset Class Risk and
Performance Committee in addition to the existing
Management, Pricing and Product Development Committees,
focusing on private assets.

• The Information Security Risk Oversight Committee sponsored
an independent information security review to benchmark the
Group’s cyber security capabilities against our peers and
industry best practice. The review showed an increase in the
maturity of Schroders’ cyber security framework and good
progress over the last two years. Attacks by organised crime
groups (for example targeted ransomware) remain a risk for
financial services and Schroders is no exception.

• The UK Investment Firm’s Prudential Regulation (IFPR) sets new
capital and liquidity requirements, revised remuneration and
governance standards and requires investment firms to
complete an Internal Capital Adequacy and Risk Assessment
(ICARA) on a solo-firm basis for relevant UK entities. We are now
identifying, assessing and managing risk of harm to clients,
markets and the firm itself under the ICARA requirements.

• We have launched the first phase of a new integrated credit risk
dashboard which has improved our ability to manage credit risk
within client portfolios. It provides better data insights,
enhanced reporting and a reduction in operational risk, resulting
from better integration to other Schroders systems, all of which
allow us to spend more time focusing on the credit-worthiness
of counterparties.

• Within operational risk:

– Our operational risk system has been upgraded to improve
the workflow for risk events which has made the process of
entering a risk event and raising actions more efficient.
– Our RCAs are a core part of our operational risk framework
and help us to manage operational risk across the Group.
They are used to identify inherent risks in business processes
and document the controls in place to mitigate risks enabling
us to maintain ongoing oversight of our risk profile. RCAs are
in place for all areas of the business and we work with
acquired firms to develop these over time. We further
developed our RCA methodology by implementing a
top-down view of broader risks to consider.

– An interactive dashboard has been developed to provide

operational risk data to GMC members.

• To prepare for the launch of our China-based wholly-owned
fund management company and our wealth management
company venture with Bank of Communications, we established
a programme of work to define the organisational structure,
target operating model, governance framework, recruitment,
policies and key risk management processes so that our control
standards and culture are reflected in both firms.

• We made significant developments to our operational resilience

framework and flexible working approach which are
summarised below.

Embracing a flexible working approach
The pandemic has shown us that we can be flexible about
when and where we work, and that we can meet the needs
of our clients and maintain strong business performance
in a flexible working environment. Flexible working has
resulted in benefits from an individual and a business
perspective and we continue to adapt and evolve this new
way of working, ensuring that meeting the needs of our
clients is at the centre of our decision-making.

To ensure our control environment reflects our new way of
working, we re-wrote our Remote Working policy to adapt
our controls to the flexible working model. Wide scale
adoption of secure collaborative technology allowed us to
optimise productivity whether staff chose to work from
their home or our offices.

Spotlight on operational resilience
The three core components to our operational resilience
(business continuity, technology resilience and vendor resilience)
operated well during 2021 and allowed us to continue to
demonstrate a robust response to the Covid-19 pandemic. Our
business continuity framework remained key to helping us
co-ordinate activities across the firm throughout the pandemic.

The operational resilience programme, which has been a
material focus in 2021, has resulted in us gaining a better view
of our important business services. This enables us to focus our
resources and priorities on ensuring our business services are
robust. We are on track to meet the regulatory deadline of
31 March 2022 for completion of our self-assessment
document. We are continuing to challenge ourselves to enhance
resilience by developing a broad range of severe but plausible
scenarios. We test ourselves against these scenarios to ensure
comprehensive recovery and response plans are in place. A core
element of operational resilience is cyber resilience. Geo-political

unrest can result in state-sponsored cyber attacks and we
continue to enhance cyber controls in response.

The technology infrastructure supporting our business
processes has remained resilient and systems coped well in our
new hybrid working model. We have continued to increase the
stability of remote working and now have access to Office 365
(corporate email, tools and resources).

We are undertaking a strategic initiative to migrate IT systems
and services to the cloud. This has many business benefits, one
of which is to increase our technology resilience.

Vendor resilience remains an important area given our business
model relies on a number of key processes being delivered by
third parties. The depth and breadth of oversight of the
resilience of our critical third parties has increased this year and
we have continued to maintain ongoing dialogue with critical
third parties to ensure we are informed of any potential
significant risks at the earliest opportunity.

Schroders Annual Report and Accounts 2021

RISK ASSESSMENT

Emerging risks, and changes to our existing risks, are identified
throughout the year, during the normal course of business,
and are reviewed and discussed at relevant risk committees.
In addition, on a periodic basis we 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 Group Risk and
discussion with GMC members and subject matter experts around
the Group. Emerging risks and trends in existing risks are reviewed
in light of the current internal and external environment, geo-
political factors, market conditions, changing client demand and
regulatory sentiment. The objectives of regulators 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 Risk Control
Assessments, trends in risk events and high-impact issues logged
in our operational risk database, Archer.

The results of these assessments are used to inform our internal
key risks which are presented to the Group Risk Committee prior
to the GMC, Audit and Risk Committee and Board.

We have reviewed the list of internal key risks and identified a
sub-set that are the most material to the firm. These are set out
below and on pages 52–54. These pages are not designed to be
an exhaustive list of all risks, but instead capture the principal and
emerging risks that are most likely to impact our strategy, business
model, external reputation and future performance. They are split
into two sections:

• Material risks: those that were at the forefront of our minds

in 2021.

• Other significant risks: those that are inherent in our business

model and strategy.

We have also included trend arrows showing movement during
the year and a diagram to show the risks that are mitigated by our
strategy. Commentary to explain why risks have increased since
the prior year, can be found on pages 52–54.

Our strategy mitigates our strategic risks

Material risks

2021 2020

Build closer relationships
with end clients

Expand Private
Assets and

Alternatives

Grow asset

management

1 Business model disruption

2 Changing investor requirements

3 Fee attrition

Investment performance risk

5 Reputational risk

Other significant risks

2021 2020

6 Conduct and regulatory risk

7 ESG including climate change

8 Financial instrument risk

Information security and technology

10 Market returns

11 Operational process risk

12 People and employment practices

13 Product strategy and management

Movement during the year

Categories of risk

Increased

Decreased

Remained the same

Increased in 2021

Strategic risk

Business risk

Operational risk

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRisk management (continued)

Material risks
Our material risks are those that were at the forefront of our
minds during 2021. They are risks that: have had a significant
change to the way they presented compared to last year; or a
material change to the way we managed them; or no changes
but they remain significant risks to the firm.

We have spent time understanding the nature of these risks
and developing strategies to manage them effectively.

Description

How we manage this

Material risks impacting the Group

1 Business model disruption

Our business model could be disrupted by a range of external
factors including technology advancements, product evolution
and market participants. Geo-political turmoil, including
sanctions and conflict, could also impact our business and this
risk has increased in 2021. For example a significant
escalation of disputes between China and the West could lead
to impacts on our China-based businesses or where we invest
in their markets.

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. An example of
where we need to respond to this is to win business that has
transferred from defined benefit to defined contribution
pension plans. ESG is a material part of our client
considerations and we expect climate risks to feature more
heavily in future investment requirements and offerings.

Demand for wealth management products continues to be
high. 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. This is particularly important
in Schroders Personal Wealth (SPW) and Benchmark Capital.

3 Fee attrition

Fee attrition caused by clients allocating more of their assets
to passive products and a lower allocation to public markets,
and a smaller pool of capital allocated to active fund
managers resulting in increased competition on price.

Investment firms that move towards vertical integration are
winning revenue from those who fail to adapt.

4 Investment performance risk

There is a risk that portfolios may not meet their investment
objectives including, where applicable, a sustainability
outcome, 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 our investment objectives.
Strong investment performance is critical to the success of
Schroders.

5 Reputational risk

This may arise from poor conduct, judgement or risk events
due to weaknesses in systems and controls. In recent years
we have extended our brand to joint ventures (including SPW)
and associates. Reputational issues in joint ventures and
associates where we do not have full control of the outcome
could adversely impact the Group.

Schroders Annual Report and Accounts 2021

We continue to deliver efficiencies and insights through
technology. Digital initiatives are in progress to improve client
experience, engagement and servicing. We continue to invest
in our technology platform to support scalability, agility in our
product offering and our expanding Private Assets and
Alternatives business. A key focus on leveraging data by our
Data Insights Unit has supported this.

We regularly monitor developments in countries subject to
geo-political risk and take steps to protect our people and
assets where necessary.

We continue to focus on developing our investment capabilities,
expanding into new investment types and specific areas of
expertise, and commit seed capital (in line with recently set ESG
targets leveraging our Sustainex™ tool) to support product
innovation for future growth.

We deliver our value proposition using an approach based on
our strategic capabilities, focusing attention where we believe
we are able to make a significant difference for our clients or
where we have current or planned future capabilities.

We have continued to focus on Solutions and outcome-oriented
strategies, thematic products and Private Assets and
Alternatives, which diversify our fee income. We are also
increasingly diversifying our product offering, supporting
long-term profitability.

Our strategic investment into Benchmark Capital and our
joint venture with Lloyds Banking Group (SPW) provides the
opportunity to engage in business along different parts of
the value chain in the UK.

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 2021, 79% of client
assets outperformed benchmarks over three years and 78%
outperformed benchmarks over five years.

We consider reputational risk when initiating changes to our
strategy or operating model and maintain 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 and product
development. Our Schroders-appointed board members
oversee the activities of joint ventures and associates, supported
where necessary by oversight committees.

Other significant risks
In addition to our material risks there are a number of
other significant risks inherent in our business model and
strategy. Some are operational risks which could occur in all
business processes and activities, others are business risks
which could impact our ability to attract and retain clients.

Description

Other significant risks

6 Conduct and regulatory risk

The risks of client detriment or reputational harm 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.

7 Environmental, social and governance (ESG)

risk including climate change

Every year we develop further strategies to manage our
inherent risks and bring them within risk appetite.

How we manage this

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.

Failure to understand, accurately assess and manage ESG risk
within assets and portfolios and to appropriately represent
these to clients and stakeholders. This may lead to poor
investment decisions, and a failure to offer ESG products,
impacting our performance, brand and reputation. A failure to
meet corporate climate change targets may have a similar
impact. This risk increased in 2021 due to the higher demands
and greater expectations of external stakeholders.

We have developed a range of proprietary tools to better
understand the impacts of ESG risk including climate change on
the portfolios we manage. In 2021 we further enhanced our
framework and tools to respond to current and future
regulatory change. 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.

8 Financial instrument risk

We face market, credit, liquidity and capital risks from the
instruments we use when managing AUM, as well as those
arising from holding investments where we act as principal.

9 Information security and technology risk

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 lead to a
negative impact on the Schroders business and our client
experience.

Cyber threats have increased due to highly capable criminal
organisations and state-sponsored threats. This is reflected in
the increased risk rating.

10 Market returns

Our income is derived from the value of the assets we
manage. Falling markets reduce our AUM and therefore
impact revenues. Market falls may be exacerbated by
geo-political risks for example in response to deteriorating
relations with Russia. Foreign exchange rates are a key factor
in our financial performance as we are sterling denominated
with earnings in other currencies.

Economic uncertainty driven by Covid-19 and the UK/EU
relationship remained a risk in 2021. The impact of rising
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. Capital investment may
be targeted at domestic growth rather than being allocated to
cross-border initiatives.

This risk has increased due to a material weakening in market
outlook.

We manage capital, liquidity and the Group’s own investments
through Board-set limits and in 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.

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 benchmark our cyber security capabilities
against best practice and in 2021 commissioned an external
independent review (further details on page 50). We operate a
Global Technology Risk Committee to oversee operational risk
associated with IT services across the organisation.

We have diversified income streams across a range of markets
to mitigate a considerable fall in any one area. Our AUM from
Solutions, Private Assets and Alternatives and Wealth
Management increased from £310 billion in 2020 to £333 billion
in 2021 further increasing our diversification.

Our focus on growing our Private Assets and Alternatives
product range and investment capabilities allows us to have a
broader range of income streams which are less directly linked
to markets. The creation of Schroders Capital in 2021 is a key
reflection of this ongoing work.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRisk management (continued)

Description

Other significant risks

11 Operational process risk

How we manage this

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
and the ineffective management of joint ventures and
associates.

Our key business processes are regularly reviewed and the
risks assessed through the Risk and Control Assessment
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 have a well-established process to
assess the risks within our supply chain. We review suppliers
throughout the supplier lifecycle to identify potential risks which
may impact the quality or continuity of service.

12 People and employment practices risk

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. We
consider this risk has increased in the industry in the post
Covid-19 working environment as people are re-evaluating
their relationship with work.

We have competitive remuneration and retention plans, with
appropriate deferred compensation targeted at key employees.
We have sustainable succession and development plans. We
have policies and procedures in place to encourage inclusion,
diversity and to manage employment issues appropriately,
handling them consistently, fairly and in compliance with local
legislation.

13 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
objective(s) 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 the formal Product Governance
Framework, which includes 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. In 2021 one
of the key developments to our framework was the introduction
of a process to raise awareness of funds identified as having
more challenging liquidity profiles so that any changes to client
sentiment (or potential redemptions) could be notified to
relevant teams rapidly, to reduce liquidity risk issues.

Schroders Annual Report and Accounts 2021

Viability statement

VIABILITY STATEMENT

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 2026 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, with the outlook most
recently updated in March 2022. The business planning process
considers the longer-term headwinds 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 18–21.

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 comprising the
expected total compensation cost ratio and non-compensation
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 Directors 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 49–54. 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 as a result of a severe

period of market stress, similar in severity to the global
financial crisis;

• the impact of a material operational risk event or poor

investment performance which could lead to reputational
damage and significant outflows of our AUM;

• a significant decline in net operating revenue margins

reducing projected revenues, together with an increase in
the ratio of total costs to net income;

• the early crystallisation of certain climate change risks;
• prevailing macroeconomic and environmental factors such as

the potential for a sustained period of high inflation and
ongoing risks connected to Covid-19.

The Group also assesses the impact of the regulatory stress
scenario 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 55 constitute the Strategic report, which was approved by the Board on 2 March 2022 and signed on its behalf by:

Peter Harrison
Group Chief Executive

2 March 2022

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsBoard of Directors and Company Secretary

LEADING A WORLD CLASS BUSINESS

Michael Dobson
Chairman

Dame Elizabeth Corley
Independent non-executive
Director and Chair designate

Peter Harrison
Group Chief Executive

Richard Keers
Chief Financial Officer

N R

Ian King
Senior Independent Director

Contribution

Key external appointments and experience

Appointed to the Board in April 2001 and
as Chairman in April 2016.

Current
• Member of the President’s

Past
• Chief Executive of Morgan

In addition to the usual function of the
Chairman, Michael’s role includes his
involvement in supporting the firm’s
relationships with its major clients,
shareholders, strategic and commercial
partners and regulators.

Appointed 1 September 2021.

Elizabeth is a leading figure in financial
services with over 45 years’ experience.
Elizabeth is active in representing the
investment industry and developing
standards. She brings a wealth of investor,
governance and boardroom experience to
the Board.

Committee of the CBI
• Chairman of Instinct

Limited

• Chairman of LandyTech

Limited

Grenfell Group

• Member of the Board of
Managing Directors of
Deutsche Bank AG

Current
• Non-executive Director of

Past
• CEO of Allianz Global

BAE Systems plc

Investors

• Non-executive Director of

Morgan Stanley Inc.*

Pearson plc

• Chair of the Impact
Investing Institute
• Trustee of the British

Museum

* Elizabeth will stand down from this position ahead of

becoming Chair.

Appointed Group Chief Executive in April
2016. He was an executive Director and
Head of Investment from May 2014.

Current
• Member of the Investment

Past
• Chairman and Chief

Association Board

Executive of RWC Partners

Having spent his whole career in the asset
management industry, beginning at
Schroders in 1988, Peter brings a long and
successful track record in asset
management and extensive industry and
leadership experience.

• Member of the Impact-
Weighted Accounts
Initiative Leadership
Council

• Director of FCLT Global
• Member of the Advisory
Board of Antler Global

• Global Chief Investment

Officer of Deutsche Asset
Management

• Head of Global Equities
and Multi-Asset at J.P.
Morgan Asset Management

Appointed a Director and Chief Financial
Officer in May 2013.

Current
• None

Past
• Non-executive member of
Lloyd’s Franchise Board
and Chairman of its Audit
Committee

With over 25 years’ experience in the
audits of global financial services groups,
and having spent time as a Senior Audit
Partner at PricewaterhouseCoopers LLP,
Richard brings his extensive accounting
and financial management expertise to
the Board.

Appointed Senior Independent Director in
April 2018 having been a non-executive
Director since January 2017.

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.

Current
• 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 of Transport

Past
• Chief Executive of BAE

Systems plc

• Chief Executive of Alenia

Marconi Systems

• Non-executive Director

and Senior Independent
Director of Rotork plc

Schroders Annual Report and Accounts 2021

N Nominations Committee

AR Audit and Risk Committee

R Remuneration Committee

Committee Chair

Contribution

Key external appointments and experience

Appointed February 2018.

Damon has over 25 years’ experience in
private equity. He brings his broad and
highly successful business experience in
relation to the Group’s overall range of
strategic opportunities, particularly in the
area of private assets which is one of the
Group’s growth priorities.

Sir Damon Buffini
Independent non-executive
Director

Appointed July 2015.

Rhian’s background as a qualified
accountant is a specific strength given her
role as Chairman 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 assets.

Rhian Davies
Independent non-executive
Director

Appointed April 2020.

Claire brings experience of family-owned
businesses in financial services and from
her non-executive roles. She 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.

Claire Fitzalan Howard
Non-executive Director

N AR

Appointed January 2017.

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.

Rakhi Goss-Custard
Independent non-executive
Director

Past
• Managing Partner of

Permira

Current
• Chair of the National

Theatre

• Chair of Royal Anniversary

Trust UK

• Non-executive Director of

the BBC

• Chair of the Culture
Recovery Board

Current
• None

Past
• Partner and Senior Adviser

at Electra Partners

Current
• Non-executive Director of
Caledonia Investments plc

• Schroder Charity Trust
• Trustee of a number of
charitable foundations

Past
• Non-executive Director of

Gauntlet Insurance
Services

Current
• Non-executive Director of

Past
• Non-executive Director of

Kingfisher plc

Intu plc

• Non-executive Director of

Rightmove plc

Appointed March 2019.

Leonie has held a number of roles in the
charity sector. She 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.

Current
• Schroder Charity Trust
• Director of a number of

private limited companies

Leonie Schroder
Non-executive Director

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsBoard of Directors and Company Secretary (continued)

N Nominations Committee

AR Audit and Risk Committee

R Remuneration Committee

Committee Chair

Contribution

Key external appointments and experience

Appointed March 2019.

Deborah brings her experience as Chief
Executive of a major international business
operating in many of the markets in which
we are active, which is of great benefit as
we continue to grow our business
internationally.

Deborah Waterhouse
Independent non-executive
Director

Appointed March 2020.

Matthew brings significant experience of
global financial markets after a
distinguished career in investment
banking.

Matthew Westerman
Independent non-executive
Director

Graham Staples
Group Company Secretary

Appointed May 2004.

Graham brings vast experience in
corporate governance and company law.
He is responsible for the Group’s
governance framework and advises the
Board and Group Management
Committee on all governance matters.

Current
• CEO of ViiV Healthcare
• Member of the GSK

Corporate Executive Team

Current
• 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

Current
• Member of the advisory

Board of Leeds University
Business School

• Director and Trustee of
Sherborne Girls School
Charitable Foundation

Past
• Managing Director and
Joint Chief Executive of
ABN AMRO Rothschild
• Partner at Goldman Sachs
• Co-Head of Global
Banking at HSBC

Board composition at 31 December 2021

Board gender diversity at 31 December 2021

17%

Executive Directors
Non-independent
non-executive Directors
Independent
non-executive Directors

Male
Female

58%

25%

50%

Length of tenure at 31 December 2021

25%

42%

0-3 years
3-6 years
6-9 years
9+ years

25%

Schroders Annual Report and Accounts 2021

Corporate Governance report

S
t
r
a
t
e
g
c
r
e
p
o
r
t

F
n
a
n
c
a

s
t
a
t
e
m
e
n
t
s

S
h
a
r
e
h
o
d
e
r

n
f
o
r
m
a
t
i
o
n

FOCUSING ON STRATEGY

I am pleased to introduce our corporate governance report for 2021, in
which we describe our governance arrangements, the operation of the
Board and its Committees and how the Board discharged its
responsibilities during the year.

We welcomed Elizabeth Corley to the Board in September 2021.
An in-depth induction programme was structured for Elizabeth
in preparation for her succeeding me as Chair. There are more
details on the programme in this report.

In 2021 Directors again committed substantially more time than
usual to our deliberations and I would like to thank them for
their great engagement and commitment. I would also pay
tribute to the hard work of management and employees in
delivering strong results at a challenging time.

Michael Dobson
Chairman

2 March 2022

As in 2020, the Board met more frequently than usual with
14 meetings during the year, seven in person and seven
virtually. In 2021, this had less to do with the continuing
Covid-19 crisis but was related to the unusual range of growth
opportunities we saw during the year.

Due to continuing Government restrictions, we were
unfortunately not able to welcome shareholders in person to
our Annual General Meeting in 2021. However, we enhanced the
opportunities for shareholders to join remotely, by transmitting
the meeting live via video and by telephone. Shareholders were
again able to ask questions of the Board and all presentation
materials and shareholder questions were shown on our
website. We very much hope that we will be able to have
shareholders join the 2022 meeting in person, but in any event
we will continue to enable shareholders to join remotely in
future.

The principle focus of the Board’s discussions during the year
continued to be on strategic, long term growth opportunities,
both organic and inorganic. In addition to regular reviews of our
core businesses, clients, investment performance, global
partnerships and senior talent, we also spent significant time
evaluating potential acquisitions and agreed three during the
year.

Schroders Annual Report and Accounts 2021
Schroders Annual Report and Accounts 2021

59
59

Governance

Corporate Governance report (continued)

2021 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. Where a Director is unable to attend a meeting their views are sought in advance and shared
with the Board.

Board1

Nominations Committee

Audit and Risk Committee

Remuneration Committee2

Michael Dobson3
Executive Directors

Peter Harrison

Richard Keers
Non-executive Directors

Ian King4

Sir Damon Buffini
Dame Elizabeth Corley5

Rhian Davies

Claire Fitzalan Howard

Rakhi Goss-Custard

Leonie Schroder

Deborah Waterhouse
Matthew Westerman6

14/14

4/4

14/14

5/6

6/6

2/2

6/6

6/7

7/7

6/7

5/5

1. There were five scheduled Board meetings held during the year and nine additional meetings to consider potential acquisitions and strategy.
2. There were six scheduled Remuneration Committee meetings held during the year and one additional meeting to discuss the Share in Success award

outlined on page 88.

3. Michael Dobson did not attend the Nominations Committee meeting that discussed the Chairman’s succession.
4. Ian King was unable to attend one meeting of the Remuneration Committee because he was on jury service.
5. Elizabeth Corley was appointed to the Board and as a member of the Nominations Committee on 1 September 2021.
6. Matthew Westerman was unable to attend one meeting of the Remuneration Committee, which was scheduled at short notice, due to a prior commitment.

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 Investor Relations website1.

The Board has delegated specific responsibilities to Board committees, notably the Nominations Committee, the Audit and Risk Committee,
and the Remuneration Committee. The minutes of committee meetings are made available to all Directors. At each Board meeting, the
Chairman 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
Investor Relations website2.

There is also a Chairman’s Committee whose membership comprises the non-executive Directors. The Chairman’s Committee is not a
committee of the Board and serves as an informal forum for the discussion of such matters as the Chairman considers appropriate. In
2021, the Chairman’s Committee discussed the results of the external Board evaluation, the performance of the Group Chief Executive,
acquisition opportunities and talent and succession planning.

Board calls are used as an additional avenue for communication to supplement the formal Board meeting programme. At each call, the
Group Chief Executive and Chief Financial Officer provide updates on the Group’s financial performance, and an update on business issues.
Due to the frequency of Board meetings during 2021, there were no additional Board calls required during the year as updates were being
provided on key issues regularly through the formal meetings.

1. www.schroders.com/board-matters
2. www.schroders.com/tor

Schroders Annual Report and Accounts 2021

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 Investor Relations website, www.schroders.com/board-matters

Chairman
The Chairman is responsible
for the leadership of the
Board, ensuring its
effectiveness and setting its
agenda. He is responsible for
creating an environment for
open, robust and effective
debate and challenge. The
Chairman 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 GMC in the
delivery of his and the
Board’s objectives for the
business.

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.

Senior Independent
Director (SID)
The SID’s role is to act as a
sounding board for the
Chairman, oversee the
evaluation of the Chairman’s
performance and serve as an
intermediary for the other
Directors if necessary. He is
also available as an additional
point of contact for
shareholders and other
stakeholders should they
wish to raise matters with
him rather than the
Chairman or Group Chief
Executive. He is the
designated non-executive
Director responsible for
engagement with the
workforce as key
stakeholders in the Company.

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 firm-wide.

Chairman: Michael Dobson

Chairman: Rhian Davies

Chairman: Sir Damon Buffini

See page 68 for the Committee
report

See page 70 for the Committee
report

See page 77 for the Committee
report

Group Management Committee (GMC)
The GMC comprises the senior management team and is the principal advisory committee to the Group Chief Executive.

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
including conflicts of interest.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsCorporate Governance report (continued)

Compliance with the 2018 UK Corporate Governance Code (Code)
During 2021, the Board has complied with the Code and applied its Principles and Provisions with the exception of Provisions 9 and 19.
Michael Dobson was not independent on appointment as Chairman in April 2016, and has served on the Board for more than nine years
since he was first appointed. Michael Dobson will retire from the Board at the conclusion of the AGM in 2022.

The table below and on the next page 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 65

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 66

C. Resources and

controls

D. Engagement

E. Workforce

engagement

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 70 to 76

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 66

The Board receives updates on people strategy during the year. Ian King is our designated non-
executive Director responsible for gathering workforce feedback and he chairs the Global Employee
Forum.

Division of Responsibilities

See page 65

F. The role of the
Chairman

G. Board composition

H. Role of the non-

executive Directors

I. Group Company

Secretary

The roles of the Chairman and Chief Executive are separate. Their job descriptions can be found on our
investor relations website. The Chairman has overall responsibility for the leadership of the Board and
for its effectiveness in all aspects of its operation. Elizabeth Corley will become Chair at the conclusion of
the 2022 AGM, subject to shareholder approval. She will be independent upon appointment.

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 68

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.

All Directors have access to the advice and support of the Group Company Secretary and his team.
Through him Directors can arrange to receive additional briefings on the business, external
development and professional advice independent of the Company, at the Company’s expense.

Schroders Annual Report and Accounts 2021

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 68 to 69

K. Skills experience

and knowledge of
the Board

In 2021, the Nominations Committee carried out a full skills analysis of the current Board to identify the
necessary experience required by future appointments to the Board. In 2022, the Nominations
Committee will continue this work in order to identify future candidates.

See Nominations Committee report on pages 68 to 69

L. Board evaluation

Independent Board Evaluation facilitated the last external Board evaluation in 2019. In 2021, the Board
evaluation was conducted internally by the Chairman. An externally facilitated Board evaluation will be
conducted in 2022 in accordance with the Code requirement.

Audit, Risk and Internal Control

See page 67

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 Chairman of the Audit and Risk Committee.

See the Audit and Risk Committee report on pages 70 to 76

N. Fair, balanced and
understandable
assessment

The Audit and Risk Committee reviews the Company’s financial reporting in detail and is able to
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 70 to 76

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 70 to 76

Remuneration

P. Policies and
practices

Q. Remuneration

policy

R. Exercising

independent
judgement and
discretion

Our remuneration policy was approved at the 2020 AGM following engagement with shareholders.
Executive remuneration is designed to align to our purpose, as outlined on page 79.

See the Remuneration Committee report on pages 77 to 99
A summary of our remuneration policy can be found at www.schroders.com/rp

The Remuneration Committee provides independent oversight of the Group’s remuneration policy and
determines the remuneration of the Chairman and the executive Directors within the policy approved by
shareholders. No Director is involved in discussions relating to their own remuneration.

See the Remuneration Committee report on pages 77 to 99
A summary of our remuneration policy can be found at www.schroders.com/rp

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 Committee report on pages 77 to 99

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsCorporate Governance report (continued)

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.

Michael Dobson, as former Chief Executive and having served
more than nine years since his first appointment, is not considered
independent under the Code. Michael Dobson will retire from the
Board at the conclusion of the 2022 AGM.

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 2022 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, Elizabeth Corley will
resign and offer herself for election at the AGM on 28 April 2022.
All other Directors are required to seek re-election on an annual
basis unless they are retiring from the Board. Details of the
Directors’ length of tenure are set out on page 58.

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 notify the Chairman 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 77.

Board training
The Board receives regular briefings throughout the year in order
to provide them with a deeper understanding of the Group. During
2021, these included sessions on the Global Operations strategy,
sustainability, the Group’s client management systems, Benchmark
Capital and China. Members of the Board committees also receive
regular updates on technical developments at scheduled
committee meetings. Other training comprises external
professional events and industry updates.

At the two-day strategy offsite meeting held in November 2021, a
presentation was provided to the Board that outlined trends in the
industry.

Schroders Annual Report and Accounts 2021

Board induction
The Group Company Secretary supports the Chairman and Group
Chief Executive in providing a personalised induction programme
to 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 on a regular basis and is
updated and tailored to ensure 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. There were no changes to Committee
membership during 2021. Elizabeth Corley was the only new
appointment to the Board during 2021. As Chair designate, a more
comprehensive induction programme was developed following her
appointment in September 2021 in order to provide her with an
holistic view of the business.

Chair induction
I am grateful to my colleagues on the Board for their support
and have already enjoyed meeting people from many areas
of our business since my appointment.

As Chair designate, I embarked on a comprehensive
induction programme to provide me with a thorough
understanding of the Schroders Group and its business. I
have met with members of the Group Management
Committee and their teams to gain insight into the
opportunities and challenges facing their area of
responsibility. This has included full-day briefing sessions
with key business areas, including Investment, Product,
Solutions, and Schroders Capital.

I have also had in-depth briefings from senior management
across the second and third lines of defence, including Risk,
Compliance, Legal and Internal Audit, to understand the
internal control and risk management framework.

My induction process will continue throughout 2022, and will
include a full-day session with the Distribution team and
visiting the Group’s EMEA Operations Hub in Horsham. I am
very much looking forward to visiting as many of our
overseas offices as is feasible to gain a better understanding
of these important parts of the business.

Elizabeth Corley

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, 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 of our overall

strategy and the need to keep the market updated on key
developments. In November 2021, the Board held a two-day
off-site meeting to discuss strategy for 2022 and beyond. This
included the Group’s strategy with respect to sustainability and
climate change.

• At each scheduled meeting, the Board received strategic

updates from the business including Asia Pacific, Fixed Income,
Equities, Wealth Management and Schroders Capital. It also
carried out a deep dive of investment performance.

• Acquisitions have been an important part of our strategy to

position our business for future growth. In May 2021, the Board
reviewed key investments and acquisitions made since 2016 to
assess the value they have delivered to the Group and explore
the lessons learned from the acquisition, integration and growth
of those businesses.

• During 2021, the Board considered a number of potential
acquisition opportunities. In October, we announced the
acquisition of River and Mercantile’s UK solutions business, in
November, the acquisition of Cairn Real Estate, and in December,
the acquisition of a majority interest in Greencoat Capital.

Financial performance and risk management
• The Board reviews the financial performance of the Group at
each scheduled Board meeting. At its March 2021 meeting it
reviewed the 2020 Annual Report and Accounts and final
dividend proposal. In July 2021, the Board reviewed the 2021
half-year results and recommended an increased interim
dividend of 37 pence per share.

• The 2022 budget was discussed by the Board at the two-day

offsite meeting.

• During the year the Board approved the ICAAP, ILAAP, recovery
plan and wind-down plan following their review by the Audit and
Risk Committee.

• The Board also approved the Slavery and Human Trafficking

Statement for the Group in March 2021. This can be found on
our corporate website at www.schroders.com

People and culture
• The Board considers our people to be central to the ongoing

success of the business and considers our culture as one of our
greatest assets. In September 2021, the Board received an
update on people strategy which included a benchmarking
exercise on executive talent and outlined the challenges and
opportunities that have arisen partly due to the global
pandemic.

• Ian King, our Senior Independent Director, is our designated
non-executive Director responsible for gathering workforce
feedback and he chairs the Global Employee Forum to hear

directly from employees on issues that concern them. Ian
reported back to the Board in May following the Global
Employee Forum meeting in April 2021 which covered an
update on strategy and financial results, the employee survey
results and the plans for a return to work. At the time there was
a clear feeling that people were challenged by the pandemic,
therefore they were encouraged to take regular breaks. At their
October 2021 meeting the Forum provided their views on the
Group’s strategy. Their feedback was discussed by the Board at
the two-day offsite meeting in November 2021. The Board has
found this additional feedback from our employees to be
valuable and will continue to engage via the Forum in 2022.
• The Board also received an update on corporate sustainability
which continues to rise in prominence amongst all stakeholder
groups. As part of this discussion, the Board approved an
increased budget for charitable giving.

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.

• In 2021, due to the ongoing pandemic, we were unable to invite
our shareholders to attend our AGM in person, so we made
arrangements for shareholders to join remotely via an electronic
facility that enabled any shareholder to join and ask questions of
the Board. For shareholders who wished to ask a question but
were unable to join us on the day, we offered the option to send
questions in advance. After the meeting the website was
updated with a summary of the presentations and the question
and answer session.

• In 2022, we hope to hold an in-person AGM. Following changes

to the Company’s Articles of Association approved by
shareholders at the 2021 AGM we will be offering a hybrid
meeting to enable more shareholders to attend.

• The Investor Relations programme was able to resume face to
face meetings with a number of our major shareholders to
discuss results and the strategy for driving future growth.
During 2021 we held two Schroders in Focus days that provided
investors with a deep-dive on the Schroders Capital and the
Wealth Management businesses. The feedback from investors
following these events was reported to the Board.

Key

Clients

Wider society

Shareholders

Regulators

Our people

External suppliers

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statements

Corporate Governance report (continued)

Stakeholder interests and engagement
In discharging their section 172 duties the Directors have regard to the factors set out on page 47 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 not every decision made will 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 in place 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 2021.

Strategic acquisitions
The Board believes that, in line with the Group’s strategy, investing
for growth is in the best interests of all stakeholders and has
continued to examine potential acquisitions as one avenue in
pursuit of this goal.

Acquisition of River and Mercantile’s UK solutions
business
The Board considered the acquisition of River and Mercantile’s UK
solutions business. The Board agreed that there was a strong
strategic rationale for the acquisition which was to drive growth
within the Group’s Solutions business.

When deciding to proceed with the acquisition the Board
considered the interests of a number of key stakeholders including
River and Mercantile’s senior management team, the employees
who would join Schroders upon the completion of the acquisition
and the clients served by that business. The review by the Board
confirmed that there was both a good cultural fit for the employees
who would transition across as part of the acquisition and
promotion of the Group’s strategy by enabling the business to get
closer to the end client. The impact on clients served by that
business was a key consideration as the success of the acquisition
will depend on their retention.

The acquisition was approved subject to approval from the FCA,
therefore engagement with them and consideration of their
interests was paramount. FCA approval was received on 25 January
2022 and the acquisition was completed on 31 January 2022.

Agreement to acquire a majority interest in
Greencoat Capital
In December 2021, we announced an agreement to acquire a 75%
interest in Greencoat Capital, a leader in European renewables.
We expect to complete the acquisition later in 2022, subject to
regulatory approval.

The Board is aware of the appetite of our clients for Private Assets
and Alternatives products, and therefore expanding our capability
in this area was a key consideration for the Board in approving this
acquisition. The Board recognises that tackling climate change will
create structural shifts across the global economy and has
witnessed growing institutional client demand for environmentally-
positive products in order to meet their sustainability
commitments, and this acquisition will enhance our capabilities in
this area.

Stakeholder engagement was carried out by senior management
and included discussions with Greencoat’s founders and senior
managers. This engagement confirmed that Greencoat shares our
values of forming strong partnerships and investing for positive
change. The acquisition was structured to retain Greencoat’s
management team and to incentivise the growth of the business.
Upon completion, Greencoat will benefit from Schroders’
distribution reach and existing sustainability capabilities.

Schroders Annual Report and Accounts 2021

Increase of dividend
In July 2021, the Board approved an interim dividend of 37 pence
per share which represented a 2 pence per share increase from
2020. The increased dividend was consistent with our stated
dividend policy on page 29. This was the first increase in our
dividend since 2018.

Prior to approving the increase in dividend, the Board had regard
to its dividend policy which considers overall Group strategy, capital
requirements, liquidity and profitability. That 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 Board considered the interests of stakeholders ahead of this
decision, including investors. These included shareholders and
pension funds who saw their incomes fall in the external
environment of approximately one third of FTSE 100 companies
announcing that they would defer, cut or cancel their dividends at
the height of the pandemic.

Employee engagement
The Board engages with employees throughout the year through
regular pulse surveys and Ian King, our Senior Independent
Director, chairs the Global Employee Forum. The Board considered
the impact on people when considering the acquisition of River and
Mercantile’s UK solutions business, the acquisition of Cairn Real
Estate and the acquisition of a majority interest in Greencoat
Capital. In December 2021, in recognition of the remarkable job
our people have done in driving Schroders’ success and long-term
growth strategy, we invited our employees to become partners in
the business with a one-off award of Schroders shares.

Corporate sustainability and charitable giving
Our approach to corporate sustainability is based on the issues that
matter most to our stakeholders, including employees, clients and
wider society. Due to their diverse interests our strategy needs to be
broadly based, however through our focus on reducing inequalities
and combatting climate change we can deliver across this base
whilst still having an impact.

In September 2021, the Board received an update on the Group’s
corporate sustainability strategy which focuses on sustainable
investment activities, particularly in light of climate change. The
Board regularly reviews the external commitments to environmental
and social causes to measure progress against these. The Board
approved an increased budget for charitable giving. When making
this decision, the Board considered the impact of partnerships with
charities that supported our broader aims around climate change
and reducing inequalities, how those funds would be allocated and
the impact measured.

BOARD EVALUATION

The last externally facilitated Board evaluation took place in 2019. It was facilitated by Independent Board Evaluation (IBE). They have
no other connection with the Company. The 2020 Board evaluation was undertaken internally. In light of the findings of the 2020
evaluation and the conclusions of a Chairman’s Committee discussion, the Board set the following high-level objectives for 2021.

Area of focus for 2021

Progress made on Board priorities during 2021

Establishing clear metrics for the most
important financial and strategic
measures of performance and
reviewing them regularly against
budget and five-year plans.

In 2021, reporting to the Board was revised and a new set of metrics was included in the
Chief Financial Officers’ report to the Board. At each meeting the Board considers the
Group’s performance against clear key performance indicators to oversee the delivery of
strategy. These are contained on pages 22 to 23.

Agreeing a five-year strategic plan with
a particular focus on organic growth
opportunities and a detailed review of
inorganic opportunities.

The Board held a two-day offsite meeting in November 2021 to agree the strategy for 2022
and beyond. This reaffirmed the Board’s strategy for growing the business by expanding in
private assets and alternatives, growing asset management and building closer relationships
with end clients.

Focusing on senior management
talent and succession planning.

Reviewing all key business areas.

Reviewing investment performance in
key asset classes.

Senior management had more exposure to the Board with presentations on key business
areas at each scheduled meeting. The Board also reviewed a benchmarking exercise of the
GMC against top quartile talent in the industry during the year. Two members of the GMC
attend the majority of Board discussions.

The Board reviewed the majority of key business areas during 2021 over the course of its
scheduled meetings with the remaining areas to be reviewed in 2022. Future Board agendas
provide for the review of key business areas to occur on an ongoing basis.

The Board reviews investment performance at each scheduled meeting. In July 2021, there
was a comprehensive review focusing on performance in key asset classes and areas of
improvement in order to help the Group demonstrate the value of an active approach to
asset management.

Reviewing all acquisitions made in the
past five years.

The Board reviewed all key investments and acquisitions made since 2016 by the Group at
its May 2021 meeting.

2021 Board evaluation
The 2021 Board evaluation was undertaken internally by
the Chairman. As part of this process, the Chairman
interviewed each Director, together with the Group
Company Secretary, and the discussions focused on the
following key areas.
• The extent to which the Board has delivered on its

priorities in 2021

Priorities for 2022
In light of the findings of the 2021 Board evaluation and
the conclusions of a Chairman’s Committee discussion on
priorities, the Board agreed a set of high level objectives for
2022 and these include:
• Reviewing the integration of the major acquisitions

agreed in 2021 and the progress of follow-on growth
plans for those businesses.

• How the Board and the management team performed

• Monitoring progress against the five-year plan agreed in

over the year

November 2021.

• Whether the Committees have discharged their

• Reviewing the development of senior management

responsibilities effectively and the quality of the reporting
to the Board

• The process for selecting the new Chair
• The induction process for Elizabeth Corley
• The areas of the business that the Board should focus on

in 2022

The overall conclusion was that the Board and its
committees performed very well across the course of the
year. We delivered on most of the priorities set for the year.
The focus on strategy, talent development and the
discussions around acquisitions were seen very positively.
The relationship between the executives and non-
executives was also seen as being particularly strong over
the year.

talent.

• Reviewing core business areas, including key areas of
strategic growth, particularly Schroders Capital and
China, and strategic partnerships.

• Reviewing our clients, their needs and their perceptions

of Schroders.

• Carrying out regular in-depth reviews of investment

performance.

• Undertaking an in-depth review of the actions the Group
could take in the event of a significant downturn in the
business environment.

• Reviewing the adequacy of the Group’s cyber security

arrangements.

• Continuing to review our corporate purpose, what it

means in practice and its articulation.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsNominations Committee report

EVOLVING THE BOARD

I am pleased to present the Nominations Committee report
for 2021.

As I set out in the 2020 report, the priority for 2021 was the search
for my successor as Chairman. This was concluded in July when we
announced the appointment of Elizabeth Corley as Chair
designate. Ian King, the Senior Independent Director, led the
process and his report is included on page 69.

Although the average tenure of our non-executive Directors is
relatively low and there is no immediate need for any further
appointments at this time, we remain focussed on Board
composition and at our meeting in May 2021 we undertook a skills
analysis of the non-executives and matched this against future
needs. The key gaps we identified were more experience of the
asset management industry following my departure and a
successor for Rhian Davies as Chairman of the Audit and Risk
Committee when she retires from the Board.

The appointment of Elizabeth Corley addressed the asset
management requirement given her long experience in the
industry. The Committee felt that there was no internal successor
for Rhian and that, in view of the importance of the role, we should
commence a search for an external successor. We used the
services of Russell Reynolds Associates to facilitate the search,
which was started in July. We have previously used Russell
Reynolds for Board level appointments, but there are no other
business relationships with Schroders or individual directors. A
detailed role description was agreed by the Committee and Russell
Reynolds put forward a number of candidates. I, together with the
Company Secretary, met with eight candidates following which I
recommended five should go forward to meet the full Board.

Paul Edgecliffe-Johnson will join the Board, effective 1 July 2022.
Paul is currently Chief Financial Officer of InterContinental Hotels
Group plc and was previously at HSBC and PricewaterhouseCoopers.
In addition to his current experience as CFO of a FTSE 100
company, Paul brings considerable experience of international
markets and we look forward to his joining the Board. On his
appointment he will join the Audit and Risk Committee and we
anticipate that he will succeed Rhian Davies as Chairman of that
Committee in due course.

Schroders Annual Report and Accounts 2021

Committee membership
• Michael Dobson (Chairman)
• Sir Damon Buffini
• Dame Elizabeth Corley (from 1 September 2021)
• Rhian Davies
• Claire Fitzalan Howard
• Rakhi Goss-Custard
• Ian King
• Leonie Schroder
• Deborah Waterhouse
• Matthew Westerman

See page 60 for meeting attendance.

Role 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 Investor Relations website at
www.schroders.com/tor

Biographical details and the experience of the
Committee members are set out on pages 56 to 58.

In February 2022 Damon Buffini indicated that he would like to
stand down as Chairman of the Remuneration Committee because
of the time commitment required. The Nominations Committee
asked Matthew Westerman, who joined the Committee in
November 2020 and has experienced a full remuneration cycle, to
succeed Damon as Chairman at the conclusion of the 2022 Annual
General Meeting. Matthew will lead the review of our remuneration
policy which will be put to shareholders in 2023. I would like to
thank Damon for his work as Chairman and we are pleased that he
will continue to be a member of the Committee.

Directors standing for election or re-election
The Committee agreed that all Directors standing for election
continue to make a valuable contribution to the Board’s
deliberations and recommends to shareholders their election. The
Committee considered in particular the re-election of Rhian Davies
as she has served on the Board for more than six years. In
undertaking the 2021 Board evaluation I sought feedback from
Directors and there was unanimous agreement that Rhian’s
contribution as a Director, and as Chairman of the Audit and Risk
Committee, was of a very high quality and that her re-election
should be supported.

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 2022 Notice of
AGM.

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, experience and
background, which is important for an effective Board
and management team, and 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 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 women 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 41 to 43. Our gender diversity
statistics for both the Board and senior management
can be found on page 41.

The process of succession to the
Chairman
I explained in last year’s report why we had extended
the process for finding Mike’s successor into 2021 and
that Mike had kindly agreed to defer his retirement
from the Board to conclude the search and enable an
orderly handover. I was delighted we could announce
in July 2021 the appointment of Elizabeth Corley as
Chair designate. Elizabeth joined the Board in
September and will succeed Mike at the conclusion of
the 2022 Annual General Meeting, subject to
shareholder approval.

We identified Elizabeth as a high quality candidate in
the early phase of the search and I interviewed her as
part of the process along with a number of other
potential candidates. Elizabeth met all members of the
Board at least twice over the course of the first half of
2021. The Board felt that in-person meetings were
essential. Following these meetings the Committee
concluded that Elizabeth was an outstanding candidate
for the Chair role and that she was the unanimous
choice of the Nominations Committee. Her proposed
appointment was warmly endorsed by the entire Board.

The Board felt that Elizabeth had many of the key skills
identified as being essential to the role. Her
background in asset management, her broader
business experience and her expertise in sustainability
were all significant factors. Most importantly, the Board
felt that there was a strong cultural fit and that
Elizabeth’s style would resonate well with the Board and
the wider Group. The Board did consider the time
commitment necessary for the role and felt that it
needed to be the principal role for any appointee.

Evaluating the performance of the Committee
The internal evaluation process for 2021 is set out on page 67.
There were no specific findings which would influence the
composition of the Board.

Priorities for 2022
The Committee will continue to review the composition of the
Board and its Committees while the Board as a whole will focus on
Executive succession.

Elizabeth Corley will succeed me as Chair of the Committee at the
conclusion of the 2022 Annual General Meeting.

Michael Dobson
Chairman of the Nominations Committee

2 March 2022

Elizabeth agreed and as a result will have stood down from
two significant roles by the time she becomes Chair.

Elizabeth joined the Board on 1 September 2021 and this has
allowed her to undertake a broad and deep induction into
the Schroders businesses. More on her induction is included
in the Governance report. Joining the Board well in advance
of becoming Chair has also given time for an effective
handover from Mike and to build relations with the executive
and non-executive Directors.

I would like to finish by thanking Mike for his support
throughout this whole process and in particular for delaying
his own retirement plans to enable us to achieve a successful
outcome.

Ian King
Senior Independent Director

2 March 2022

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsAudit and Risk Committee report

DEVELOPING OUR CONTROLS TO SUPPORT FUTURE GROWTH

Committee membership

• Rhian Davies (Chairman)
• Rakhi Goss-Custard

• Deborah Waterhouse
• Matthew Westerman

See page 60 for meeting attendance.

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
56 to 58. 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.

The Group Chief Executive and Chief Financial Officer
attended all meetings at the invitation of the Chairman of
the Committee. Elizabeth Corley attended meetings
following her appointment to the Board in September
2021. Other regular attendees who advised the
Committee were the Group Financial Controller, the Chief
Risk Officer, the heads of Compliance and Internal Audit
and the General Counsel. Other members of senior
management were also invited to attend as appropriate.
The Chairman 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 Julian Young, lead audit
partner for the 2021 financial year, attended all of the
Committee’s scheduled meetings. During 2021, two
private meetings were held with the external auditor
without management present. Private meetings were also
held with the Chief Financial Officer, the Chief Risk Officer
and the heads of the Compliance and Internal Audit
functions. These meetings provided an opportunity for any
matters to be raised confidentially.

The Committee’s primary responsibilities are detailed on
the following page.

The Committee received briefings on business and thematic topics
during the year including on our financial reporting capabilities and
our carbon emissions reporting. An external review of the Group’s
information and cyber security was also conducted, which is
discussed further on page 75.

I am grateful to all members of the Committee for their support in
2021 and I look forward to continuing our work in 2022.

Rhian Davies
Chairman of the Audit and Risk Committee

2 March 2022

I am pleased to present the Committee’s report for the year ended
31 December 2021. 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.

The Committee is thankful for the role management and Ernst &
Young (EY) as external auditor played in the integrity of the Group’s
financial results and high-quality reporting. We welcomed the
opportunity to respond to the Government’s Consultation on
Restoring Trust in Audit and Corporate Governance within the year,
which takes forward recommendations from the Kingman Review,
the Competition and Markets Authority study and the Brydon
Review. We are supportive of the core aims and principles of the
consultation and we look forward to engaging further on the
reforms in due course.

During 2021, the Committee continued to focus on its responsibility
for the 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. As part of this work, the
Committee considered the Group’s business services resilience and
Risk and Control Assessments, as well as the ICAAP, ILAAP, wind-
down, recovery and resolution plans and various operational stress
scenarios to support the Board’s conclusions on the viability
statement set out on page 55.

The Committee plays an important role in reviewing conduct and
culture risk in the Group and continues to oversee the evolution of
Schroders’ conduct risk framework, designed to identify emerging
trends and heightened areas of risk. Conduct and culture risk is
informed by a number of metrics, including conduct risk reports,
employee opinion surveys and oversight by the second and third
line of defence functions. We believe that the Group’s arrangements
remain well positioned against regulatory expectations.

An important part of our role is to provide non-executive oversight
so as to ensure management has an appropriate focus on high
quality corporate reporting. In November 2021, the Corporate
Reporting Review department of the Financial Reporting Council
(FRC) advised that our Annual Report for the year ended
31 December 2020 had been subject to their review and
explanations were requested on certain accounting and disclosure
matters. Our responses were accepted by the FRC and their review
was closed in January 2022. This review resulted in some minor
enhancements to our disclosures which are reflected within this
Annual Report. The FRC’s role is to consider compliance with the
reporting requirements, rather than to verify the information
provided. As a result, the review process does not provide assurance
that the 2020 Annual Report and Accounts are correct in all material
respects.

Schroders Annual Report and Accounts 2021

The Committee’s primary responsibilities are the oversight of:
Financial reporting, financial
controls and audit

Risk and internal controls

• The content and integrity of financial and Pillar 3

• The Group’s risk and control framework and whistleblowing procedures and

reporting

the financial crime framework

• The appropriateness of accounting estimates and

• The Group’s ICAAP, ILAAP, wind-down plan, risk appetite and the recovery plan

judgements

and resolution process

• The effectiveness of the financial control framework
• The effectiveness of the external auditor
• The independence of the external auditor
• The recommendation to the Board of the

appointment of the external auditor

• 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 in the future

Key areas of focus during the year
The key issues that the Committee considered during 2021 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, the key
issues that had arisen since the prior meeting and reviewed a dashboard of metrics in place for monitoring key risks.

Financial reporting and financial controls
• As part of the Group’s annual reporting cycle, the Committee
considered the 2020 Annual Report and Accounts and 2021
half-year results including financial estimates and judgements
and governance considerations. Updates were provided on the
effectiveness of our internal controls and Group accounting
policies. The going concern and viability statements, Pillar 3
regulatory disclosures and ESG disclosures were also
considered.

• The Group Head of Tax updated the Committee on the Group’s
tax strategy, our approach to tax risk and the key tax risks facing
the Group, along with the tax priorities for 2022.

External audit
• When considering the 2020 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. The Committee reviewed EY’s audit plan for
2021, including key audit matters. Fees for non-audit services
were reviewed and approved.

• Policies for safeguarding the independence of the external
auditor were considered for recommendation to the Board.

Internal Audit
• In 2021, as part of the governance considerations for the 2020
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 Internal Audit Charter was reviewed and approved during

2021.

• Looking ahead to 2022, the Committee considered and

approved the 2022 Internal Audit and Compliance Testing plan,
which is based on an assessment of the main risks the business
faces.

Risk and internal controls
• When reviewing the 2020 Annual Report and Pillar 3 disclosures,

and 2021 half-year results, the Committee considered the
Group’s key risks and risk management framework. The
Committee continued to consider the impact of Covid-19 on the
risk and control environment and financial results. The Chairman

of the Wealth Management Audit and Risk Committee (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 the Wealth Management
division.

• The Committee considered the ICAAP, ILAAP and Group

wind-down plan for recommendation to the Board. An update
was received on third-party service provider oversight, the
approach to monitoring and maintenance of a resilient supply
chain, changes to the procurement framework during 2020 and
the developments planned for 2021. The Committee reviewed
changes to the Group’s conflicts framework including planned
enhancements, the role of the Group Conflicts Committee and
how conflicts are identified and managed within the business.

• The Committee reviewed the Group Recovery Plan for

recommendation to the Board and considered the approach
taken under the Group’s Resolution Process. The Group Head of
Financial Crime Compliance provided the Committee with a
review of financial crime risk, including updates on the
regulatory landscape and progress made in respect of our
financial crime framework. A review of Group Insurances was
conducted.

• Thematic issues were considered throughout the year including

business services resilience, whistleblowing, compliance
assurance and conduct and culture risk oversight.

• The results of an independent review of the Group’s information
and cyber security undertaken by PwC were presented to the
Committee, together with updates from the Chief Information
Security Officer on information and cyber security and
technology risk.

• An update was provided to the Committee on the current state
of the LIBOR programme, the management of key risks within
the programme, and the remaining activity to complete the
LIBOR, and other inter-bank offered rates, transition in 2022
and 2023.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsAudit and Risk Committee report (continued)

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 157 and 158. Each of these areas
is considered by the Committee based on reports prepared by management. The external auditor, EY, presents to the Committee the audit
procedures performed, challenges raised to management and conclusions reached on areas of judgement.

The significant estimates and judgements considered in respect of the 2021 financial statements and the agreed actions by the Committee
are summarised below.

Significant estimates and judgements

Action and conclusion

Carried interest

The Group recognises carried interest from its Private Assets and
Alternatives business area. 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 Finance, which reviewed
the inputs for estimating the amounts receivable and payable in
respect 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 2021 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

Pension schemes

The Group’s principal defined benefit pension scheme is in respect of
certain UK employees and former employees (the Scheme). The
Scheme was closed to future accrual on 30 April 2011 and, as at
31 December 2021, had a funding surplus. The pension obligation,
which was valued as £872.7 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 cashflow requirements and to hedge the interest
rate and inflation risks.

Finance provided the Committee with a report that included the
key financial assumptions, which had been applied by the
independent qualified actuaries, Aon Hewitt 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. The Committee considered and challenged the
proposed assumptions and was satisfied that the estimates
were appropriate.

Please refer to note 25 for more information on the estimates and judgements made in respect of the Scheme

Presentation of profits

The consolidated income statement separately presents exceptional
items. This presentation is permitted by accounting rules for specific
items of income or expense that are considered material. This
presentation involves judgement to identify the items that warrant
specific disclosure in accordance with accounting standards.

Please refer to note 1b for more information on exceptional items

The Committee considered, and was satisfied with, the
continued presentation of exceptional items within a separate
column in the consolidated income statement. This presentation
is considered appropriate as it provides a transparent view of
certain items and the underlying performance of the business.
EY’s report set out its conclusions on the presentation of profits.
For 2021, exceptional items principally comprised costs
associated with acquisitions including amortisation of acquired
intangible assets.

Schroders Annual Report and Accounts 2021

Financial reporting and financial controls
The Committee reviews whether suitable accounting policies have
been adopted and whether management have made appropriate
estimates and judgements, including those summarised on page
72. The Committee is also required to report to shareholders on
the process it followed in its review of significant estimates and
judgemental issues that it considered during the year, as set out
on pages 157 and 158.

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. The 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
page 49. In 2021, the reports focused on developments made to
the financial control environment through strategic change
programmes across the Group, as well as the continued
integration of acquired businesses.

The Committee considers other controls that might have an impact
on financial reporting. During 2021, the Committee received an
independent report on the Group’s information and cyber security
arrangements from PwC. In addition, the Committee reviews the
Group’s tax strategy annually, which is discussed with the external
auditors. For more details see page 26.

The financial control environment is also subject to audit
procedures by both the Group’s internal and external auditors.
The Committee considered that an effective system of internal
control had been in place during the course of 2021.

The Committee conducted an in-depth review of the Group’s
financial projections and the application of appropriate stress
scenarios with consideration of the impact of the ongoing Covid-19
pandemic and other risks, including climate change, so that the
Board can make the viability statement, as set out on page 55,
and to support the going concern basis of preparation of the
financial statements.

A key focus of 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. The Committee considered the key messages
communicated in the 2021 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 2021 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.

Oversight of the external auditor
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 and
recommending its appointment at the AGM.

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. Julian Young is the lead audit partner
and has held this position since EY’s appointment in 2018. The next
external audit tender will take place within ten years of EY’s
appointment and the lead audit partner will be rotated within five
years in line with requirements. The external auditor attends all the
Committee’s scheduled meetings and the Committee holds private

meetings with the external auditor without management present.
The Committee confirms that the Company has complied with the
provisions of the Competition and Markets Authority Order 2014
relating to the UK audit market for large companies throughout
the year under review and as at the date of this report.

During the 2021 financial year the Committee had no additional
areas for review that were not already being considered as part of
the audit plan.

Assessment of audit quality and effectiveness
The Committee is responsible for evaluating the performance of
the external auditor. In March 2021, ahead of the consideration of
the 2020 Annual Report and Accounts, the Committee received
initial feedback on the conduct of the 2020 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 2021. EY generally scored highly in the
auditor effectiveness questionnaire and was assessed to have
improved in the third year of its audit despite the challenges of
increased remote working as a result of the Covid-19 pandemic.
Areas of improvement were identified and discussed with EY in
advance of the 2021 audit.

The Committee reviewed the 2021 external audit plan presented
to the Committee in May 2021. The Committee concluded that it
was well-planned, with sufficient resources in place for the plan to
be conducted effectively. The plan included a risk-based
assessment and the use of analytical tools. Updates were received
from the external auditor throughout the year demonstrating that
professional scepticism had been applied through challenge of
judgments, 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 impact on the Schroders audit plan, and how EY
maintains and monitors a high-quality audit for Schroders. 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 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’), including the responsibilities and time
commitments of senior team members and the extent to which
specialists are involved in the audit.

In February 2022, ahead of the consideration of the 2021 Annual
Report and Accounts, the Committee received initial feedback on
the conduct of EY’s 2021 audit, which identified no significant areas
of concern. The detailed assessment of EY’s 2021 audit will be
considered by the Committee at its May 2022 meeting with any
findings implemented for the 2022 audit.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsAudit and Risk Committee report (continued)

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 2021 and prior to issuing its opinion
on the Annual Report and Accounts. In addition to the annual
review of effectiveness, the Committee considered the
independence and objectivity of EY 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 4b 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 as well as providing 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 16% of audit fees
(2020: 15%).

During 2021, 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.

Auditor oversight conclusion
The Committee is satisfied with the work of EY and that it is
objective and independent. Accordingly, the Committee has
recommended to the Board that a resolution be put to the 2022
AGM for the reappointment of EY as external auditor, and the
Board has accepted this recommendation.

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.

On behalf of the Board, the Committee carried out the annual
assessment of the effectiveness of internal controls during 2021,
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 its assessment, the Committee
considered reports from the Group Financial Controller, the Chief
Risk Officer, the heads of Compliance and Internal Audit, and EY.
This enabled an evaluation of the effectiveness of the Group’s
internal control framework. The Group continually works to
enhance systems to support and improve the control environment.

Risk
Risk reports set out changes in the level or nature of the risks
faced by the Group, developments in risk management, and
operational risk events, including significant errors and omissions.
Separate reports allowed the Committee to consider a range of
factors when determining the key 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 ICAAP, ILAAP, the wind-down plan and
the Group’s recovery plan and resolution process.

The Committee also considered emerging and thematic risks that
may have a material impact on the Group. In 2021, the Committee
continued to consider the risks arising from the Covid-19
pandemic including the impact on business services resilience,
financial crime, information security and technology and conduct
and culture risks. The Committee considered the key risks to the
business, one of which is Environmental, Social and Governance
(ESG) risk including climate change. The Committee reviewed the
Group’s arrangements in relation to outsourced providers and the
risks associated with the transition from LIBOR. The Committee
regularly reviews the Group’s approach to the management of
legal risks and risk events.

Further information can be found in the key risks and mitigations
section of the Strategic report set out on pages 49 to 54.

Set out on the following page are summaries of the Committee’s
activity in three areas where members of the first line of defence
attended and presented to the Committee in relation to emerging
and thematic risks.

Schroders Annual Report and Accounts 2021

Information and cyber security
Information and cyber security has been a key area of
focus for the Committee for a number of years as a result
of increasingly sophisticated cyber threats. The risk posed
by ransomware has grown further throughout 2021 with a
number of high-profile incidents occurring across the
external business landscape. A primary focus of the year
has therefore been improving our defences against
ransomware attacks as well as across areas such as cloud
security, data security and our network perimeter.

In November 2021, the results of an independent review
of the Group’s information and cyber security undertaken
by PwC were presented to the Committee. The
recommendations made by PwC align to our information
security strategy and also to our broader technology strategy
of transitioning to the cloud, which we believe will be the
fastest and most effective path to achieve our target state.

Business services and operational resilience
The Committee continued to monitor the Group’s business
services and operational resilience during 2021. Increased
remote working as a result of the Covid-19 pandemic, our
new flexible working pattern, and the operational resilience
regulations issued by the FCA and PRA all have implications
for our approach to our business continuity, which we
continue to review and adapt on an ongoing basis.
Technology resilience saw developments within the year as
the stability of our remote working environment was
enhanced, and an initiative was launched to review and
modify our use of cloud providers. The implementation of
the European Banking Authority guidelines on outsourcing
arrangements has also been driving developments in the
depth and breadth of oversight over the resilience of our
critical third parties.

The Committee will continue to closely monitor the Group’s
business services resilience throughout 2022 as the FCA
and PRA operational resilience regulations begin to be
implemented.

Compliance
Compliance and legal reports address new and developing
material issues and global regulatory, legal and compliance risks
and themes. The reports also outline the planning and execution
of the compliance assurance programme, including testing,
monitoring and automated surveillance. Assurance is carried out
globally to assess the Group’s compliance with local regulatory
standards and requirements.

During 2021, the Committee also received reports on the ongoing
development of the Schroders Group Conflicts of Interest and
Conduct Risk Frameworks. The Committee received updates on the
status of our relationships and our engagement with our principal
regulators, and of material regulatory initiatives and changes in the
regulatory environment, including ESG matters, in particular the
implementation of the EU Sustainable Finance Disclosure
Regulation. Throughout the year, the Group continued to engage
frequently and proactively with regulators across the globe.

Financial crime
Financial crime risk mitigation continues to be an
important focus for the Committee and is a priority for all
of our key regulators globally. Wider regulatory
requirements have been introduced in some jurisdictions
and the Financial Crime Team has been working to assess
the implications of these changes for the business in
conjunction with industry body guidance.

Our financial crime framework was further enhanced
during 2021 including the introduction of a target
operating model setting out governance and oversight
arrangements to improve consistency across the Group in
respect of financial crime risk mitigation. Developments
have also been made in the areas of transaction
monitoring, payment screening and the oversight of
distributors and suppliers. Cyber-related fraud activity
continued to be a key focus as a result of the ongoing
Covid-19 pandemic.

The Committee receives regular reports and recognises
the importance of having a strong and proportionate
framework for managing financial crime risk. The
Committee will continue to monitor the Group’s strategic
initiatives in this area during 2022 and beyond.

Internal Audit
The Committee has authority to appoint or remove the Group
Head of Internal Audit, who reports directly to the Chairman of the
Committee. The Chairman of the Committee is accountable for
setting the objectives of the Group Head of Internal Audit,
appraising his performance against those objectives and for
recommending his remuneration to the Remuneration Committee,
with advice from the Group Chief Executive. During the year, the
Committee assessed and confirmed the ongoing objectivity and
independence of the Group Head of Internal Audit and reviewed
and approved the Internal Audit Charter.

The Committee also has responsibility for approving the Internal
Audit budget and being satisfied that the Internal Audit function
has appropriate resources and continues to be an effective and
valued assurance function within the Group. The Internal Audit
function monitors developments in internal audit practices,
undertakes quality and assurance activities and in 2022 will invest
in developing its data analysis capability. The Committee satisfies
itself as to the quality, experience and expertise of the function
through regular interaction with the Group Head of Internal Audit,
both when the Committee meets and also through other regular
meetings outside the formal meetings schedule. In addition there
is an external review of the Internal Audit function every five years,
which provides further assurance. The next review will take place
in 2022.

The Committee reviews Internal Audit reports on progress against
a rolling plan of audits approved by the Committee on an annual
basis. 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.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsAudit and Risk Committee report (continued)

During 2021, a broad range of audits was conducted across the
business, both in the UK and overseas. The Covid-19 pandemic
continued to impact the length of time taken to conduct audits
with the team unable to travel to all offices, however some on-site
overseas audits were able to re-start towards the end of the year.
The 2021 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 2022 Internal Audit plan has been developed in
line with the Group’s key risks and includes the assessment of the
Group’s response to key industry challenges.

The annual compliance testing and Internal Audit plans are
developed using a risk-based approach to provide proportionate
assurance together over the Group’s controls for the key risks set
out on pages 49 to 54.

“The Group continually works
to enhance systems to
support and improve the
control environment.”

Priorities for 2022
As well as considering the standing items of business,
the Committee will also focus on the following areas
during 2022:

• Information and cyber security
• Thematic risks including climate
• Financial crime
• Business services and operational resilience
• Audit and regulatory changes
• Global operating strategy

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 Committee is seen as thorough and diligent, with the work
undertaken providing assurance to Directors who are not on the
Committee that the risks around the business are overseen
appropriately. The findings relating to the Committee were
discussed with the Committee Chairman, who is considered
very effective. The need for succession in this role is considered
a key priority for the Board. Overall, the Committee is considered
to be performing well and to be rigorous and effective in
discharging its responsibilities.

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, 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.

By order of the Board.

Rhian Davies
Chairman of the Audit and Risk Committee

2 March 2022

Schroders Annual Report and Accounts 2021

Remuneration report

PAYING FOR PERFORMANCE IN A
SIMPLE AND TRANSPARENT WAY

I am pleased to present our 2021 Remuneration report which
provides insight into the decisions the Committee has taken in
determining the pay approach and outcomes for our Directors and
wider workforce.

2021 has been a strategically important year for Schroders. Our
key financial metrics are very strong, we have continued to deliver
excellent investment performance for our clients and we are
seeing many of our initiatives from the last few years bearing fruit.
This strong performance and progressive strategic repositioning
has benefitted both shareholders and clients and is reflected in the
compensation outcomes for employees. Allowing employees
throughout the organisation to share in our success is key to
ensuring we continue to incentivise, reward and retain the high
calibre talent who have delivered this strong performance.

Our executive Director performance incentive outcomes have also
increased this year, albeit by a lower percentage than the average
employee. Executive Director bonuses are driven by a balanced
scorecard, with performance measures and targets set at the start
of each year. For 2021, the Committee increased the upper range
of the profit before tax target to +18% above budget in recognition
of the heightened uncertainty arising from the ongoing Covid-19
pandemic. The Committee assessed these targets in light of the
strong performance achieved and were satisfied that the targets
were appropriately stretching and the results represented true
outperformance. On the LTIP, 50% of 2018 awards are forecast to
vest in March 2022. As disclosed last year, the Committee made no
adjustments to LTIP targets notwithstanding the unforeseen
pandemic. In addition, the executive Directors voluntarily waived
the LTIP awards granted to them in March 2020 and 2021, thereby
avoiding potential concerns over windfall gains from recent
periods of market volatility. Pages 82-84 provide more detail on
executive Director outturns for the year.

Structure of the Remuneration report
Annual report on remuneration in 2021
Remuneration governance
Notes to the annual report on remuneration

77 to 87
88 to 89
90 to 99

Committee membership
• Sir Damon Buffini (Chairman)
• Rhian Davies
• Ian King
• Matthew Westerman

See page 60 for meeting attendance and page 88 for
a summary of the responsibilities of the Committee.

Remuneration actions taken

Performance
Ensuring alignment

• Increased profit before tax maximum under the 2021 bonus scorecard – resulting in an

asymmetrical range.

• No adjustments to LTIP targets.
• 2020 and 2021 LTIPs waived – mitigating the risk of windfall gains.

People
Better for everyone

• Schroders Share in Success Award – encouraged share ownership, partnership ethos and

financial inclusion through the launch of our first ever all-employee share award.

• Performance management – implemented a new approach, including specific ratings for
behaviours, conduct and business excellence; all key inputs when assessing compensation
outcomes.

• Enhanced transparency of pay decision-making – launch of our ‘Fair Pay for Performance’

framework for all employees.

Planet
Protecting our planet’s
resources

• ESG engagement targets – introduced in the executive Director bonus scorecard for 2022.
• Climate-related metric – introduced to the long-term incentive scorecard for 2022. 20% will be
based on achievement of 100% of Schroders’ global electricity being from renewable sources and
sustaining a ‘Leadership level’ in CDP’s climate change assessment.

• Increased focus on sustainability in our employee benefits – including carbon offsetting
initiatives, encouraging employees towards paperless benefits administration and reviewing
company car policies to increase alignment with our sustainability aspirations.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRemuneration report (continued)

Schroders’ purpose is not just about securing our clients’ financial
futures but also about securing a better future for all our
stakeholders. This clarity of purpose has been a part of the
Committee’s discussions in 2021 as we sought to further
strengthen the alignment between our remuneration structures
and Corporate Responsibility strategy. This resulted in a number of
new initiatives, as detailed in the table on the previous page. Of
particular note was the launch of our first ever all-employee share
award – the ‘Schroders Share in Success Award’ – encouraging a
partnership ethos and enhanced financial inclusion across all those
working for the Group. All employees except the Group Chief
Executive and Chief Financial Officer received a special award of 5%
of their salary in shares, significantly increasing the number of our
employees with interests in Schroders shares.

Our Corporate Responsibility strategy recognises the strategic
importance of protecting our planet. This has been reflected in our
executive Director remuneration arrangements for a number of
years through the inclusion of sustainability-related metrics in the
annual bonus scorecard. With the continued evolution of
environmental impact measurement and reporting, the Committee
determined that, from 2022, this strategic priority should also be
reflected in the executive Directors’ long-term incentive. From
2022, a portion of the LTIP will therefore be based on achievement
of climate-related environmental targets, as described in more
detail on page 84 of this report.

These new initiatives complement our long-standing remuneration
policies centred around inclusion and fairness. For example, our
employee benefits are typically generous versus local market
practice. In the UK, London-based employees receive the same
benefits as the executive Directors, including private healthcare,
life assurance, personal accident insurance and pensions. The
pension contributions (or cash in lieu) are based on pensionable
salary, which is capped at £250,000, resulting in the executive
Directors’ contribution rates as a percentage of their actual salary
being below most UK employees (8-9% for the Group Chief
Executive and 11-12% for the Chief Financial Officer, compared to
16-18% for most UK employees).

Remuneration approach for the executive
Directors
Our executive Director remuneration structure remained
unchanged in 2021 and continues to be governed by our
shareholder approved Directors’ remuneration policy. As noted in
last year’s report, the Committee believes this structure continues
to support long-term thinking and pay for performance whilst
allowing us to attract, motivate and reward the talented individuals
we need to maintain the Group’s success. The diagram below
illustrates the current remuneration policy.

Executive Directors’ remuneration policy illustration
The Directors’ remuneration policy was approved by shareholders at our 2020 AGM and can be found on our website at
www.schroders.com/directors-remuneration-policy.

The remuneration policy defines a maximum limit for the total remuneration of each executive Director each year, being £9 million for the
Group Chief Executive and £4.5 million for the Chief Financial Officer. The diagram below illustrates the structure of the executive Directors’
remuneration, including the timing of when they receive each component of remuneration, across the fixed components paid in the year
(salary, benefits and allowances, contributions to retirement benefits or cash in lieu), any annual bonus award in respect of the year and the
LTIP awards to be granted following the financial year end.

LTIP

4-year deferral, subject to performance conditions, followed by a 1-year holding period from vesting

Holding period

Deferred
bonus – fund
award (circa
15% of bonus)

Deferred
portion of any
annual bonus
(circa 60% of
bonus)

Deferred
bonus – share
award (circa
45% of bonus)

Granted
under the
Deferred
Award Plan
(DAP)

3.5-year deferral

2.5-year deferral

1.5-year deferral

3-year deferral

Funds

2-year deferral

1-year deferral

Upfront
portion of any
annual bonus
(circa 40% of
bonus)

Upfront bonus
– fund award
(circa 20% of
bonus)

6-month
holding
period

Funds

Upfront bonus
– cash (circa
20% of bonus)

Paid via
payroll

Cash

Deferred portion of any annual
bonus award granted 75% as a
deferred share award, available
to exercise in equal instalments
after 1, 2 and 3 years from
grant through to the 10th
anniversary of 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 through to
the 5th anniversary of grant.

Upfront portion of any annual
bonus award paid half in cash
in February after the end of the
performance year and half
granted as an upfront fund
award that is subject to a
6-month holding period,
available to exercise through to
the 5th anniversary of grant.

Fixed pay

Performance year
2021

Feb

Sep

Mar

Sep

Mar

Sep

Mar

Sep

Mar

Sep

2022

2023

2024

2025

2026

Mar
2027

Schroders Annual Report and Accounts 2021

HOW OUR REMUNERATION ALIGNS TO OUR PURPOSE

Our purpose: to provide excellent investment performance to clients through active management.

How we create value for our stakeholders

Delivering returns for
clients

Delivering returns for
shareholders

Taking decisions to
benefit our people

Taking decisions to
benefit society

Our remuneration principles

Aligned with clients
A significant 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,
thereby aligning the interests
of employees and clients. This
includes the executive
Directors, other members of
the GMC and other key
employees such as senior fund
managers.

Aligned with
shareholders
A significant proportion of
variable remuneration for
higher-earning employees and
material risk takers is granted
in the form of deferred awards
over Schroders shares, thereby
aligning 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.

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.

Designed to promote
the long-term,
sustainable success of
the Group
Performance against net
zero and sustainability goals
forms part of the annual
compensation review for
those with roles able to
influence our investment and
business operations,
including the executive
Directors, other members of
the GMC, all fund managers,
ESG investment team
members, facilities managers
and procurement staff.

Aligned with financial
performance
We target a 65% ratio of total
costs to net income through
the market cycle. Within that,
the total spend on
remuneration is managed as a
percentage of net income, the
total compensation ratio. This
ratio is recommended by the
Committee to the Board.

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.

Our executive Director remuneration approach

9 3- and 5-year client

9 Circa 45% of bonus paid in

9 Competitiveness considered

9 Annual bonus scorecard

investment performance
tested in the annual bonus
scorecard

9 Circa 35% of bonus paid in

fund awards

9 Stretching shareholding

requirements

9 Requirement to maintain a

level of shareholding for two
years on stepping down

9 Financial metrics comprise

70% of annual bonus
scorecard

9 80% of LTIP awards based
on long-term financial
performance (earnings per
share and net new business)*

includes 30% weighting on
non-financial metrics,
including sustainability

9 LTIP includes 20% weighting
on climate-related metrics,
linked to our long-term
commitment to protecting
our planet

by reference to total
compensation for
comparable roles at other
large international asset
management firms

9 Benchmarking forms a point
of reference, and is not a
primary factor in
remuneration decisions

9 Circa 60% of bonus deferred
over a 3- to 3.5-year period

9 LTIP subject to 4-year

deferral and 1-year holding
period

For more detail on our purpose see page 2 and on our business model and how we create value for our stakeholders see pages 20
and 46–47.

*For more detail on LTIP measures and definitions see pages 84, 87 and 95.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRemuneration report (continued)

Firm-wide context
2021 performance
2021 has been a strong and strategically important year for
Schroders. Our assets under management increased by 10%,
reaching a new high of £731.6 billion by year end. With the growth
driven by our higher-margin products, our net income before
exceptional items increased to £2,568.8 million and profit after tax
and exceptional items increased by 28% to £623.8 million. This
performance generated value for our shareholders with an
increase in EPS of 22% and total dividends per share of 122 pence.
Our investment performance was generally strong across the
board with 79% and 78% of assets outperforming their benchmark
over three and five years respectively.

From a strategic perspective, our initiatives from the last few years
are now bearing fruit, including the growth of our Wealth business,
a significant contribution from Schroders Capital and strong net
new business flows from our joint ventures and associates. We
announced the agreement to acquire three businesses, which are
an excellent cultural fit and provide strong follow-on growth
potential. Looking at the wider stakeholder experience, we have
made significant progress in our path to net zero, with the launch
of our climate transition action plan and submission and
verification of our science-based targets. From an employee
perspective, we are proud of our continued reputation as an
employer of choice, successfully retaining 94% of highly rated
employees and 95% of employees saying they are proud to be
associated with Schroders. The launch of our first Workforce
Diversity Report was an important step forward in sharing our
progress towards a more diverse workforce. Our continued focus
on supporting society is also visible in the charitable initiatives we
ran in the year, including embedding of volunteering opportunities
into our career and talent development offering, the launch of our
second #CollectiveAction campaign to help UNICEF deliver
vaccines around the world and Schroders donating £4.9 million to
charitable causes.

For more detail on Schroders’ performance, achievements and
strategy see the Group Chief Executive’s statement on pages 8-11,
our key performance indicators on pages 22-23, our business and
financial review on pages 24-29 and experience of other key
stakeholders on pages 46-47.

2021 firm-wide compensation outcomes
The Committee takes into consideration the firm’s financial and
non-financial performance, as well as overall market conditions
and wider stakeholder experience, when determining the total
compensation ratio used to inform the compensation spend for
the year. After careful consideration, the Committee and Board
concluded that a total compensation ratio of 45% struck the right
balance between sharing the firm’s strong financial achievements
with the employees who delivered the results, ensuring ongoing
prudent management of our cost base and delivering returns to
shareholders. The ratio remains at the lower end of the target
range of 45% to 49%. As a result, the aggregate annual bonus pool
is up 37% on last year. Across the firm, individual bonus and salary
allocations were determined by reference to our Fair Pay for
Performance philosophy, as summarised on the next page. The
Committee reviewed the proposed compensation outcomes using
analytics focused on differentiation, diversity and competitiveness,
and were satisfied that the year-end process was rigorous and the
allocation of pools and individual awards took account of both
financial and non-financial performance, including conduct.

As in prior years, the firm-wide salary budget was targeted towards
our lower earners, for whom fixed compensation generally
comprises a more significant portion of total compensation, as well
as those whose salaries were below market or who had taken on
more responsibilities.

Schroders Annual Report and Accounts 2021

Key performance and remuneration metrics

Net income*

+3%

Proﬁt before tax*

+0%

Proﬁt after tax and
exceptional items

(2%)

Earnings per share*

Dividend per share

Headcount

(2%)

Fixed remuneration costs*

Annual bonus pool

(0%)

+7%

+3%

+5%

+3%

+2%

Total remuneration costs*

+5%

+18%

+19%

+28%

+22%

+37%

+20%

* Before exceptional items.

2020 vs. 2019

2021 vs. 2020

Our employee voice and experience
The illustration on page 79 demonstrates the alignment between
our remuneration principles and purpose as well as the strong
alignment between executive Director remuneration and our wider
pay philosophy. This is a conscious choice and the Committee
explicitly considers executive Director remuneration, whether
structure or outcomes, in the context of our wider workforce
remuneration policies and outcomes. Our heightened focus on
workforce engagement also allows employee views to be heard by
the Committee. For example, employee representatives speak
directly to our Senior Independent Director, Ian King, who chairs
the Global Employee Forum and is also a Remuneration
Committee member. This direct feedback loop is complemented
by a number of wider communication channels where
remuneration matters are shared and feedback is sought from
employees. In 2021 this included holding a live Q&A session on our
Gender Pay Gap Report, our Group Chief Executive and Chief
Financial Officer answering questions on remuneration as part of
the annual results presentation to employees, the launch of a
video and supporting materials outlining our Fair Pay for
Performance philosophy with employees and the launch of a video
and dedicated intranet page focused on the Schroders Share in
Success Award. These communication channels all attracted
significant levels of engagement from employees.

OUR ALL-EMPLOYEE PAY FRAMEWORK

Every pay decision at Schroders takes into account a wide range of factors as set out in our Fair Pay
for Performance framework launched to employees in 2021 and summarised below. Carefully
balancing all these factors allows pay outcomes to be fair and reflective of performance.

Annual performance

Market context

Firm-wide performance
The aggregate bonus pool is calculated by reference to a total
compensation ratio, which funds all bonuses across the business.
All bonuses are therefore linked to firm-wide revenue performance,
less salary spend paid out during the year.

Sub-business/team performance
Performance at a team and sub-business level is a key factor when
allocating sub-business pools, including performance versus expectations,
market and prior year. Funding all team members’ bonuses from this pool
creates a strong link between compensation outcomes and collective team
performance.

Individual performance contribution
Managers assess individual performance throughout the year, culminating
in a ‘Business Excellence’ rating. This is a key consideration when assessing
individual pay outcomes.

Individual behaviours
Managers assess and rate individuals’ behaviours,
including alignment to Schroders’ values and
performance as a manager where relevant.
This ‘Behavioural’ rating is a key consideration
when assessing individual pay outcomes.

Conduct
Where an individual has not met
Schroders’ and regulatory expectations,
downwards pay adjustments and
malus and clawback may apply.

Relativities and diversity

Fairness versus peers
We undertake detailed analysis to
evaluate that pay outcomes are fair. The
multiple layers of review, calibration and
challenge include a cross-business peer
group calibration, an independent, HR-led
diversity review and detailed differentiation
analysis.

al perf o r m

u
n
n
A

n c e

Fair Pay for
Performance

R
e

d div

ersity

I n d i v i d

Compensation proposals and analysis are reviewed by
GMC members, executive Directors and the Group
Remuneration Committee to satisfy ourselves that gender, age, race, sexual
orientation, disability, socio-economic background or any other diversity
facets are irrelevant when it comes to pay outcomes.

Market pay based on role/geography
We purchase and review independent benchmarking data to give us an
informed understanding of what our competitors are paying for different
roles across the globe. This acts as an additional reference point
when considering the appropriate compensation levels and
adjustments for each role.

Competitor insights
We supplement benchmarking data with insights gained through wider
survey/event participation throughout the year, ensuring we have an
up-to-date awareness of developments amongst our competitors and in
the market for talent.

Local market conditions
We take into consideration current and expected inflation, as well as any
anticipated/current skill shortages in each labour market.

General market outlook
We also review mid- to long-term performance expectations
for the industry and seek to identify likely future shifts
in market compensation over the coming years to
ensure compensation outcomes also look
appropriate in that context.

ark

Individual context

u al context

Skills/experience
We recognise certain skills and
experience are critical to the current and
future priorities of the organisation.
Compensation outcomes for individuals
with these skills are reviewed in the context of
their strategic importance to the Company.

Progression/succession
Where an individual has changed or expanded
responsibilities in their role, this would typically be considered
in determining pay outcomes. In addition, pay outcomes for any
individuals identified as likely successors to a critical role would be
reviewed in that context.

Fairness versus market
We use independent benchmarking data and intel from trusted recruitment
agencies to assess how proposed compensation outcomes compare to
market. This includes analysis on an individual, team and aggregate level.

Future potential
Pay outcomes for individuals identified as having the underlying ability,
drive and engagement to take on more complex and senior roles in future
are considered in the context of potential future value to the business.

Multi-year performance context
Where individuals have been consistently high performing
this will also be considered.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statements
Remuneration report (continued)

Remuneration outcomes for executive Directors
2021 annual bonus awards

The Committee determines the annual bonus awards for the
executive Directors using a balanced scorecard. At the beginning
of 2021, metrics comprising 70% financial factors and 30%
non-financial factors were chosen, aligned to the Group’s strategy.
The Committee evaluates the level of actual financial performance
against the performance required under each metric to trigger
threshold (25%), target (65%) and maximum (100%) payout. These
ranges are set taking into account the recommendations of the
Group Chairman and the Group Chief Executive, the Board-
approved budget, market expectations, prior year outcomes,
strategic priorities and the wider economy. For 2021, the
Committee was mindful that the targets were being set at a time
when there was significant ongoing market uncertainty from the
Covid-19 pandemic. In recognition of the potential impact this
could have on profit before tax and exceptional items, the
Committee increased the stretch of the profit before tax and
exceptional items versus budget target at maximum from the
+10% above budget previously used to +18% above budget.

The strong financial performance delivered in 2021 beat our
budget and targets, benefitting shareholders and clients alike. This
strong performance was reflected when considering absolute
results, performance relative to peers and performance relative to
markets.

The Committee also considers non-financial performance. In doing
so, the Committee assesses progress against pre-determined
strategic goals, as well as achievement against sustainability,
people and talent, and risk and compliance matters. This is
supplemented by an assessment of each individual’s personal
performance, including business performance within each

individual’s responsibilities and the extent to which they have met
their annual performance objectives. To ensure a balanced overall
assessment, the scorecard does not have pre-determined
weightings for the non-financial factors, allowing the Committee to
apply its judgement to determine the overall outcome and ensure
it is appropriate in the overall circumstances. Where appropriate,
quantitative targets and objective measures are predefined to
ensure the assessment is robust. The table on the next page
summarises the Committee’s assessment of the 2021 non-financial
and personal performance for each executive Director, which
resulted in non-financial scorecard outcomes of 27.0% and 22.5%
for the Group Chief Executive and Chief Financial Officer
respectively.

Combining the financial and non-financial scorecard outcomes
gives a total bonus outcome of 97.0% and 92.5% of maximum for
the Group Chief Executive and Chief Financial Officer respectively.
Under our Directors’ remuneration policy, the Committee may
apply discretion to adjust annual bonus awards to the extent it
judges that the outcomes of the annual bonus scorecard do not
align with results achieved, or in light of unexpected or unforeseen
circumstances. In 2020, the Committee exercised its discretion to
lower annual bonus awards for the Group Chief Executive and
Chief Financial Officer by £250,000 and £100,000 respectively,
recognising the societal impact of Covid-19. In 2021, the
Committee determined the bonus scorecard outcomes
appropriately reflected the financial and strategic performance
delivered and no such adjustment was warranted.

Assessment of the executive Directors’ 2021 annual bonus scorecard (audited)
These charts illustrate the executive Directors’ annual bonus scorecards for 2021, the performance achieved and resulting bonus awards.
Performance
Resulting
measure
bonus payout

Maximum
100% payout

Threshold
25% payout

Target
65% payout

Weighting

Achievement
Payout for
this metric

Financial metrics

Proﬁt before tax
and exceptional
items (£m)

Investment
performance

Net new business (£bn)
(excluding joint ventures
and associates)

vs. budget

587

vs. prior year

632

3-year

50%

5-year

55%

35%

20%

15%

Total bonus payout for ﬁnancial metrics

Peter Harrison – Group Chief Executive

Strategic progress,
sustainability, people,
conduct and personal goals

30%

Overall scorecard outcome
for Peter Harrison

Annual bonus award for Peter Harrison (£’000)

Richard Keers – Chief Financial Oﬃcer

Strategic progress,
sustainability, people,
conduct and personal goals

30%

Overall scorecard outcome
for Richard Keers

Annual bonus award for Richard Keers (£’000)

Schroders Annual Report and Accounts 2021

652

702

60%

65%

7.4

772

836

100%

772

836

100%

70%

79%

100%

75%

78%

100%

35%

20%

14.8

15.1

100%

15%

100%

100%
out of 100%

70%
out of 70%

90%

90%
out of 100%

97%

75%

75%
out of 100%

92.5%

27.0%
out of 30%

97%
out of 100%

7,612

22.5%
out of 30%

92.5%
out of 100%

3,395

Non-financial assessment for executive Director annual bonus scorecard
Group-wide non-financial assessment
Performance in 2021
Criteria

Strategic progress (see pages 18-19 for more information)

Organic and
inorganic growth in
core business

Expansion of Private
Assets and
Alternatives

• Strong investment performance and organic growth with significant net inflows of £35.3 billion in almost every channel and region.
• Performance in our Mutual Funds and Wealth Management businesses was particularly strong, with net new business of

£8.1 billion in Mutual Funds and £4.1 billion in Wealth Management.

• The £237 million acquisition of River and Mercantile’s UK solutions business enhances our ability to meet the complex needs of

pension fund clients (see below).

• Schroders Capital has grown twice as fast as the market since 2016 and is now unified under one brand, with over £7.4 billion of

net new flows in 2021, mainly driven by securitised credit, private equity and real estate.

• Further expansion of our private markets capabilities through the announcement of two key acquisitions: Cairn Real Estate,

expanding our offering in a key European growth market and Greencoat Capital (see below).

Sustainability (see pages 32-37 for more information)

Science-based
emissions target set
by end of 2021

Embedding
sustainability across
Group

• Successfully became one of the first asset managers to have target commitments approved by the Science Based Targets initiative.
• Published our climate transition action plan towards operating as a net zero business and transitioning our clients’ investments to

deliver value and sustainability over the longer term.

• Development of a clear engagement plan to use our voice and influence companies to take action.
• Broadened our sustainability offering with the launch of a further 14 sustainable funds in Europe in 2021, with more planned in

2022. AUM for funds classified as Article 8 or 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR) reached
£60.5 billion at the end of 2021.

Our people (see pages 40-45 for more information)

Retain >90% of key
talent

Women in Finance
Charter target

Ethnicity targets

• Retention of key talent remains above target at 94% (2020: 94%).

• Continued progress against our target of 35% female representation in senior management by 2023, with over 33% of women in

senior management at the end of 2021.

• Increased diversity profile completion rate from 53% to 63%.
• A signatory of the Race at Work Charter, Black Talent Charter and one of the founding members of the CBI’s Change the Race Ratio

initiative, this year we also introduced Board-approved ethnicity targets, including a 16% target in the UK by the end of 2023.

Risk and conduct (see pages 49-54 for more information)

Governance and risk
management

• Robust oversight of the Group’s activities within an effective governance framework with no material issues this year.

Individual non-financial assessment
Criteria
Peter Harrison – Group Chief Executive
Growth and Business
Performance

Performance in 2021

• Strong results for annualised net new business, profit and revenues – with profit after tax and exceptional items of £623.8 million,
up 28%. Strong strategic leadership and vision, with 2021 growth coming from areas identified as strategically important, for
example China, thematic, global and sustainability focused products and Schroders Capital.

• Investment in our global product range delivered a broad offering of thematic and sustainability funds, which have attracted high

levels of net new business, with our thematic range achieving net inflows of £4.4 billion.

• Successful evaluation of different inorganic opportunities to accelerate the Group’s growth strategy. Exceptional and astute

leadership in securing key acquisitions through a competitive process that will benefit shareholders.

• In Asset Management, this has created ‘Schroders Solutions’, that aims to be the provider of choice for fiduciary management

schemes and derivatives, with a specific focus on sustainability, climate integration and reporting.

• In Schroders Capital, enhancing our leadership position in sustainability with a 75% shareholding in Greencoat Capital, a leader in

European renewables.

Talent and succession • In depth assessment of senior talent bench-strength delivering significant progress in succession planning, including refreshed

and simplified senior management team structure to support development of key talent.

Sustainability

• Exemplary leadership on sustainability, ensuring ESG is at the heart of Schroders and all our investment decisions.
• Significant investment in our ESG resources and capabilities, in order to remain market leading in ESG.

Board, purpose and
reputation

• Successful Board offsite and strategic review, including heightened focus on embedding our corporate purpose.
• Provided exceptional leadership in turbulent times, safeguarding Schroders’ reputation across all key stakeholder groups.

Richard Keers – Chief Financial Officer
Global operations and
technology strategy

transfer agency arrangements.

• Progress on remodelling of our operating platform, with completion of the Aladdin accounting implementation and changes to

• Expansion in role to also take on Technology and Group Change from March 2021; taking the lead in a significant change in

culture and shift in priorities towards digital and cloud, delivered successfully at pace.

Risk and control

• Delivered finance platform transformation and significant change in procurement processes to reflect regulatory change and best

practice, including clear alignment to the Group’s sustainability goals.
• Maintained strong risk and control environment throughout the year.

Financial reporting and
cost management

• Robust cost base management throughout the year.
• Delivered accurate, clear and timely reporting and oversight of the Group’s financial position.

The metrics and targets outlined above represent the most material criteria through which the Group’s non-financial performance and the
performance of the executive Directors were assessed. The Committee members and the Board as a whole also review performance across
a broad range of other metrics as part of the normal course of business throughout the year and during the year-end process, as disclosed
in this Annual Report and Accounts.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRemuneration report (continued)

Vesting of 2018 LTIP award (audited)
The LTIP performance conditions remain highly demanding. In
March 2022, we expect LTIP awards granted in 2018 to vest at
50%. This comprises 0% vesting on the portion based on earnings
per share1 and 100% vesting of the portion based on net new
business2, reflecting Schroders’ outperformance against the
maximum target, achieving £91.5 billion versus maximum target of
£25 billion, including the substantial £80 billion Scottish Widows
mandate in 2019/2020.

The EPS target requires 20% outperformance versus the growth in
a composite index, which equates to a threshold vesting of 41.5%
growth per annum compared to Schroders’ EPS growth of 8.6%
per annum. Under our Directors’ remuneration policy, the
Committee may apply discretion to adjust vesting outcomes. The
Committee reviewed the 50% vesting outcome and were
comfortable no such discretion was warranted. As noted last year,
no adjustments were made to LTIP performance targets in light of
the unforeseen pandemic. A 12-month holding period will apply to
the LTIP awards once vested.

LTIP awards to be granted in March 2022
Each year the executive Directors are considered for an LTIP
award. After considering the performance achieved in the year, the
Committee decided to grant share-based LTIP awards with the
following values to the executive Directors in March 2022:

Director

Peter Harrison

Richard Keers

Face value at grant

£600,000

£400,000

Introduction of a climate-related LTIP measure
The LTIP performance measures are reviewed annually to ensure
they remain aligned to Schroders’ long-term strategic priorities. A
focus on sustainability and protecting our planet is central to our
long-term strategy. This has been reflected through the inclusion
of sustainability-related metrics in the executive Director annual
bonus scorecard for a number of years. With the continued
evolution of environmental impact measurement and reporting,
the Committee determined that, from 2022, our commitment to
preserving our planet should also be reflected in the LTIP.

As an active manager, the Committee is conscious the primary
lever through which Schroders can drive positive change is
through influencing the behaviour of our investee companies, as
measured by our Scope 3 financed emissions. At this stage, the
quality of data reporting from our global investee companies is not
sufficiently robust to be able to set meaningful four-year, forward-
looking Scope 3 emissions targets. For the purposes of the 2022

LTIP, our focus will be on leading by example to our investee
companies and the wider market. This will be measured through
reducing our own emissions as a corporate and maintaining a
leadership position on climate change, as assessed independently
by CDP.

In 2021, 65% of Schroders’ energy consumption came from
purchased electricity, highlighting this as a key area where we can
drive meaningful change. The 2022 LTIP will include a measure
requiring us to achieve 100% of global electricity from renewable
sources by 2025. This measure was chosen as it provides a clear,
quantifiable measure of our success and is aligned to our external
commitment under RE100, allowing us to leverage an externally
defined measurement. We are currently at 84% of global electricity
from renewable sources, including all our largest jurisdictions. The
global reach of our business means achieving 100% will not be
straightforward: we estimate 8% of our global electricity usage is
from countries where we will face some complexities in sourcing
renewable electricity, for example due to limited availability of
renewable sources in the jurisdiction and/or tenancy agreements.
The threshold performance level of 92% reflects the Committee’s
desire to reward outperformance in this context.

In addition to meeting the renewable electricity targets, vesting of
the climate impact measure will also require Schroders to achieve
a leadership rating (A-/A) in each of the four years in the
performance period, as independently assessed by CDP. CDP is a
known and respected not-for-profit focused on reporting the
environmental impact of companies and countries. Its climate
change assessment considers a wide range of indicators including
governance, target setting, emissions reductions and value chain
engagement, ensuring we are looking at the breadth of our
climate impact when assessing this measure. The assessment is
constantly evolving to reflect emerging best practice, challenging
Schroders to continuously progress to remain a leader in this area.
For the purposes of the 2022 LTIP, there will be no payout against
the climate measure unless Schroders achieves a leadership rating
for all four years of the performance period.

The new climate measure carries a 20% weighting, with the
remaining 80% split equally between EPS1 and NNB2, for which the
methodology and targets remain unchanged from prior years. The
choice of environmental LTIP measures and associated weightings
will be reconsidered annually and we expect it to evolve over the
coming years to reflect our corporate responsibility priorities,
external commitments and ultimately a shift towards a more
complete measurement of Scope 3 financed emissions. Progress
against our climate transition action plan is included in the
executive Director annual bonus scorecard for 2022.

2022 LTIP performance scorecard
Performance measure

Weighting

Earnings per share (EPS)1

40%

Threshold (25% vesting*)

Maximum (100% vesting*)

20% higher than the growth in a
composite index

40% higher than the growth in a
composite index

Cumulative net new business
(NNB)2

Climate impact
(NEW FOR 2022)

* Straight line vesting between points.

40%

£15 billion

£25 billion

20%

92% of global electricity from
renewable sources; and

100% of global electricity from
renewable sources; and

Leadership CDP rating on climate change for all four years

1. Earnings per share (EPS) excluding revenue and costs relating to acquisitions classified as exceptionals but including any other exceptionals.
2. Net new business (NNB) excluding joint ventures and associates.

Schroders Annual Report and Accounts 2021

Executive Directors’ single total remuneration figures
The chart below summarises the 2021 single total remuneration figures for the executive Directors and how the outcome compares to last
year and the maximum under the Directors’ remuneration policy. The Committee considered these outcomes in the context of the wider
workforce outcomes. For the Group Chief Executive, the annual bonus was up 40% year-on-year (or 34% excluding last year’s discretionary
adjustment), whilst his single total remuneration figure increased 34% (or 29% excluding last year’s discretionary adjustment). For the Chief
Financial Officer, the 2021 annual bonus award was up 41% year-on-year (or 36% excluding last year’s discretionary adjustment) and his
single total remuneration figure increased 32% (or 28% excluding last year’s discretionary adjustment). The year-on-year changes in bonus
are below the average employee experience, especially when factoring in the Schroders Share in Success Award in which the executive
Directors were not eligible to participate.

The Group Chief Executive’s total remuneration is 49 times the mean full-time equivalent total remuneration for UK employees of the Group
(2020: 42 times) and 84 times the median (2020: 70 times), reflecting the fact that the Group Chief Executive’s package is more closely
aligned to financial performance so outperformance has a greater impact on total compensation. This is notwithstanding the greater
percentage increase for the mean and median employee annual bonus (including Share in Success Award) year-on-year.

Single total remuneration figures

Executive Director

Single total remuneration ﬁgure (£’000)

Group Chief Executive
Peter Harrison

Chief Financial Oﬃcer
Richard Keers

6,321

9,038

8,484

3,055

4,526

4,038

Fixed pay

Upfront bonus – cash

Upfront bonus – fund award

Deferred bonus – share award

Deferred bonus – fund award

LTIP vesting

1. The 2021 maximum above is based on the LTIP expected to vest in 2022, but assuming the performance conditions were met in full (i.e. 100% vesting rather
than the 50% vesting that is expected). The maximum total remuneration under the Directors’ remuneration policy is defined as £9 million and £4.5 million
for the Group Chief Executive and Chief Financial Officer respectively, based on the face value of LTIP to be granted in 2022 as shown on page 84.

Pay competitiveness for the executive Directors
We compete for talent in a global marketplace. Most of our key competitors are headquartered outside the UK, particularly in the US. Many
are not publicly listed so are not subject to the same disclosure requirements as Schroders. It is against this backdrop that the Committee
determines our pay structures and levels of pay, to ensure that we are able to attract, motivate, reward and retain the best talent. The charts
below illustrate the competitive positioning of pay for each executive Director, including commentary on the remuneration benchmarking
approach in each case. The market data used in benchmarking these roles was provided independently by external advisers and reflects
competitor pay for 2020, which is the most up-to-date data available, whereas the position shown for Schroders in each case reflects the
single total remuneration figure for 2021. We expect competitor outcomes for 2021 to be higher, so in practice our final market positioning
is expected to be lower than what is shown in the charts below.

Pay competitiveness for the executive Directors

Peter Harrison, Group Chief Executive

Richard Keers, Chief Financial Officer

Global asset
managers1

FTSE 1001

Global asset
managers: CFO1

Global asset
managers: COO1

FTSE 100: CFO1

Top quartile

2nd quartile

3rd quartile

Bottom
quartile

Total
comp.
Positioning of remuneration at Schroders relative to the market benchmarks

Total
comp.

Base
salary

Total
comp.

Base
salary

Total
comp.

Base
salary

Total
comp.

1. Shows 2021 Schroders outcomes compared to 2020 competitor outcomes.

Group Chief Executive benchmarking commentary
Approximately half of the global asset manager comparator roles are from
non-listed businesses, including firms owned by a bank or insurance group
and privately owned businesses, whereas Schroders is an independent
publicly listed company. Schroders differs from most of the global asset
managers as it also includes a wealth management business within the
Group Chief Executive’s remit, alongside asset management. As a result, the
Schroders Group Chief Executive role sits among the more complex of the
roles making up this competitive benchmark.

Chief Financial Officer benchmarking commentary
The Schroders Chief Financial Officer has wider responsibilities than the
market norm, with firm-wide operational oversight and co-ordination, direct
responsibility for a range of operations teams, as well as financial
management, risk management, human resources, technology, capital and
treasury. A comparison is also shown against the rates of pay for the Chief
Operating Officer (COO) role at other global asset management firms, as an
additional reference point to reflect these wider responsibilities. The wealth
management business adds complexity compared to most comparators.

Schroders Annual Report and Accounts 2021

2020 actual2021 maximum12020 actual2021 maximum12021 actual2021 actual6%9%9%7%18%18%40%13%18%18%38%13%18%18%38%13%4%9%14%17%17%36%12%12%17%17%37%12%17%17%34%11%7%5%4%Strategic reportGovernanceShareholder informationFinancial statementsRemuneration report (continued)

2022 implementation of the remuneration policy
As noted on page 79, Schroders has clearly articulated
remuneration principles which act as a reference point when
thinking how best to structure and determine remuneration for all
employees including the executive Directors. This assessment and
underlying framework is key to ensuring the Committee’s actions
support Schroders’ purpose, values and culture. In reviewing the
effectiveness of our current remuneration policies and practices,
the Committee considered our purpose and strategy, as well as
evolving market practice, latest regulatory requirements and
shareholder feedback. On the whole the Committee determined
that the policy was operating well and as intended.

As noted earlier in this report, this evaluation led to the
Committee’s decision to further strengthen the alignment between
remuneration and Schroders’ corporate responsibility
commitments, most notably through the introduction of a
climate-related measure in the LTIP from 2022. In refining this
proposal, the Committee considered the guidance issued from
several shareholders and proxy voting agencies.

In 2021, the Committee also spent time considering the
remuneration requirements arising from the Investment Firms
Prudential Regime (IFPR), which applies to certain Schroders
entities from 2022 onwards, as well as the ongoing engagement
with the PRA and FCA on the application of the fifth iteration of the
Capital Requirements Directive (CRD V) to Schroders as a
predominantly asset management group. With the executive
Director remuneration arrangements already aligned to regulatory
best practice, no changes were proposed at this time.

From a shareholder perspective, the Committee noted the
significant level of support for last year’s annual report on
remuneration (98.4% in favour) and reviewed shareholder feedback
gathered through written correspondence, virtual meetings where
relevant/requested, review of latest shareholder guidelines and
feedback from major proxy voting agencies. Overall the Committee
welcomed the positive feedback on actions taken last year, in
particular our Covid-19 response and annual bonus scorecard
disclosure. Taking all the above into consideration, the Committee
determined the Directors’ remuneration policy and executive
Directors’ salaries should remain unchanged for 2022, with wider
implementation as noted in the table below.

Element

Approach

Salaries

• Base salaries are reviewed annually but for the executive Directors, like other more highly paid employees, we
adjust them infrequently. Neither of the executive Directors will receive an increase in 2022. The most recent
increase for the executive Directors was in 2014.

Annual bonus

• The Committee will continue to determine executive Director bonuses based on an annual bonus scorecard across

a range of metrics. In setting the metrics and target ranges, the Committee takes into account the
recommendations of the Group Chairman and Group Chief Executive, the Board-approved budget, market
expectations, prior year achievement, strategic priorities and the wider economic landscape. In line with prior years,
financial performance factors make up 70% of the scorecard and the remaining 30% is based on a combination of
non-financial factors, as outlined in more detail below.

• The Committee may apply discretion to adjust annual bonus awards to the extent it judges appropriate to align to
the results achieved, overall stakeholder experience and/or in light of unexpected or unforeseen circumstances.

• Upfront fund awards and deferred share and fund awards will be granted under the DAP, which shareholders

approved at the 2020 AGM.

LTIP awards

• Page 84 sets out the LTIP awards that the Committee intends to grant to the executive Directors in March 2022.

These awards will be granted under the LTIP rules approved by shareholders in 2020.

• As noted on page 84, a new climate-related impact measure has been added to the LTIP scorecard from 2022,

reflecting the strategic importance of being a leader in sustainability to Schroders’ long-term strategy.

Choice of performance measures and linkage to strategy
Annual bonus

Rationale for inclusion

Link to strategy

Financial (70% weighting)1

Profit before tax and exceptional
items (35%)

A long-standing measure of the Group’s financial performance which is
recognised by our stakeholders. The Committee will consider the impact of
exceptional items during the period.

Client investment performance
over 3 and 5 years (20%)

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 (15%)
(excluding joint ventures and
associates)

Non-financial (30% weighting)

Strategic progress
Sustainability
People and talent
Risk and governance
Personal goals

Net new business is key to our success and a key driver of both AUM and
revenues.

All fundamental to the Group’s long-term success, the Committee has set
targets to robustly assess each of these measures.

1. Specific targets are commercially sensitive so the target range and actual performance achieved for each metric will be disclosed retrospectively, together

with commentary for the non-financial factors.

Schroders Annual Report and Accounts 2021

LTIP1

Rationale for inclusion

Link to strategy

Earnings per share2 growth (40%)

A key performance indicator that supports long-term financial sustainability.
We aim to grow EPS consistently, recognising the potential impact of market
volatility on results in the short term. For the LTIP to vest, adjusted EPS growth
over the four-year performance period needs to be 20-40% higher than the
growth in a composite index chosen by the Committee to be a reasonable
proxy for the market movement of Schroders assets under management3.

Cumulative net new business4
(40%)

A key driver of assets under management and in turn revenue and profit. We
seek to generate positive net new business across the Group each year.

Climate-related impact (20%)

A focus on responsibility and protecting our planet’s resources is central to
Schroders’ long-term strategy and ensuring we are seen as a steward for the
future and can help guide our clients and investee companies towards
sustainable investing. For the LTIP, the 2022 focus is on role modelling
through our own actions, with targets relating to minimising our own
emissions through achievement of 100% of global electricity from renewable
sources and maintaining a leadership position on climate change, as
independently assessed by the CDP. See page 84 for more detail on the
targets and rationale for selection.

1. See page 84 for full details of targets set.
2. Earnings per share (EPS) excluding revenue and costs relating to acquisitions classified as exceptionals but including any other exceptionals.
3. The Committee reviewed the make-up of Schroders assets under management at 31 December 2021 to determine the indices and weightings that will make
up the composite index against which to measure EPS growth, as a proxy for the market movement of Schroders assets under management. For awards to
be granted in March 2022 the weighted basket of indices will remain unchanged, as follows: Morgan Stanley Capital International (MSCI) All Countries Asia
Pacific (15%); MSCI All Countries World (15%); MSCI Emerging Markets (10%); MSCI Europe (5%); FTSE All Share (5%) and Bloomberg Barclays Global
Aggregate (50%).

4. Net new business excluding joint ventures and associates.

For more detail on our strategy, see pages 18 to 19.

Build closer relationships with end clients

Grow Asset Management

Expand Private Assets and
Alternatives

Remuneration Committee’s priorities for 2022
Our current Directors’ remuneration policy is due to expire at the 2023 AGM. The Committee will review our current policy in 2022 to ensure
it remains aligned with the firm’s strategy, stakeholders, emerging market practice, regulatory developments, expectations of the UK’s
Corporate Governance Code and our shareholders. In February 2022 I indicated that I would like to stand down as Chairman of the
Remuneration Committee because of the time commitment required. The Board asked Matthew Westerman, who joined the Committee in
November 2020 and has experienced a full remuneration cycle, to succeed me as Chairman at the conclusion of the 2022 Annual General
Meeting. The Committee looks forward to continuing to engage with our shareholders throughout the course of this year ahead of the
publication of our new policy in 2023.

Annual report on remuneration
This statement from the Remuneration Committee Chairman, together with the Remuneration governance section on pages 88-89 and the
notes on pages 90-99, constitute the annual report on remuneration, on which shareholders will have an advisory vote at the AGM. Where
required and indicated, this information has been audited by EY.

Sir Damon Buffini
Chairman of the Remuneration Committee

2 March 2022

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRemuneration report (continued)

REMUNERATION GOVERNANCE

Responsibilities of the Remuneration Committee
The responsibilities of the Committee include:

• Reviewing the Group’s remuneration strategy and recommending the Directors’ remuneration policy to the Board
• Determining the remuneration of the Group Chairman 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 Heads of Compliance, Risk and 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, of other deferred remuneration plans and of employee carried

interest-sharing arrangements

• Overseeing any major change in the employee benefits structure throughout the Group
• Reviewing remuneration disclosures and ensuring 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/tor

Remuneration Committee independence

All members of the Committee are independent non-executive Directors. Biographical details and the experience of Committee members
are set out on pages 56-58.

Key areas of focus during the year
The table below summarises the key issues that the Committee considered at each of its meetings during 2021. Remuneration
packages for new hires and severance arrangements for roles subject to the Committee’s oversight, and regulatory developments,
were reviewed at each meeting as required, as were updates from the Conduct Assessment Group.

Meeting date Key issues considered

January

February

March

May

October

• Compensation outcomes for 2020
• CRD V remuneration implementation

• Compensation outcomes for 2020
• Remuneration disclosures
• Provisional 2017 LTIP vesting
• Performance conditions for 2021 LTIP grants
• Executive Director bonus scorecard for 2021
• Review of delegated authorities under DAP and LTIP rules

• Executive Director bonus scorecard for 2021

• Shareholder and voting agency feedback on remuneration
• Update on latest trends and regulatory requirements, including alignment to Corporate Responsibility

commitments

• IFPR remuneration implications
• Committee terms of reference review
• Review advisers to the Committee

• Compensation review 2021
• Alignment of LTIP measures with Corporate Responsibility commitments
• IFPR remuneration implications
• Approval of deferred remuneration grants for sustained high performance and potential

November

• Schroders Share in Success Award

December

• Compensation review 2021, including pay and conditions for the wider workforce, control function input,

sustainability of earnings, diversity and competitiveness considerations
• Alignment of LTIP measures with Corporate Responsibility commitments
• IFPR remuneration implications
• Annual internal audit review on remuneration
• Draft 2018 LTIP vesting
• Group Risk Adjustment framework

Schroders Annual Report and Accounts 2021

Internal advisers
At the invitation of the Committee Chairman, the Group Chairman and the Group Chief Executive attended six meetings and the Chief
Financial Officer attended seven meetings. The executive Directors left the meetings where/when relevant to avoid any conflicts of interest.

The Group Head of Risk, the General Counsel, the Global Head of Compliance and the Group Head of 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 the Head of Reward and Wellbeing attended meetings to provide advice and support the Committee. To avoid conflicts of
interest, no Director or employee participates in decisions determining their own remuneration.

External advisers
The Committee appointed PricewaterhouseCoopers LLP (PwC) and McLagan (Aon) Limited (McLagan) to provide advice on executive
Director pay during 2021. Advisers were selected on the recommendation of the Global Head of Human Resources and the Head of Reward
and Wellbeing. 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 seven meetings as independent Remuneration Committee advisers. The Committee retained PwC in this role as its team is
among the market leaders in this area, with a good understanding of the Group. A fixed fee structure has operated since 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 2021
on executive Director pay totalled £102,700. PwC also provides 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 compliance and
support for corporate acquisitions. The Committee is satisfied the advice received is independent and objective, with regular meetings with
the Committee Chairman without management present and much of the advice received based on objective data trends/facts.

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 their directors’ remuneration. The total fees paid for advice to the Committee during 2021 on executive Director pay
totalled £2,590. 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 PwC nor McLagan has a connection to the Company or any individual Director, save as outlined above.

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 Chairman. The feedback on the Committee was positive: it is chaired
effectively, reports to the Board are seen as high quality and there was recognition that the shareholder and proxy voting agency responses
to the policy implementation in 2020 were positive.

Compliance with the 2018 UK Corporate Governance Code (the Code)
The Code requires a description of how the Remuneration Committee has addressed the following factors:

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 (pages 86-87)

• Full retrospective disclosure of financial targets and non-financial factors (pages 82-84)

• Review of shareholder feedback and guidance (page 86)

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 78)

• Clear disclosure of rationale and operation of each element (see Directors’ remuneration

policy)

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 78)

• Significant deferral, providing alignment to clients and shareholders (page 78)

• Committee discretion to adjust formulaic bonus or LTIP outcomes (pages 82 and 84)

• Extensive malus and clawback provisions (page 96)

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

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

• Scenario charts and key Committee discretions outlined (see Directors’ remuneration policy)

• Regular Committee review of likely bonus scorecard outcomes (page 88)

• Annual bonus and LTIP performance measures reviewed annually against strategic priorities

(pages 86-87)

• Significant deferral, providing alignment to clients and shareholders (page 78)

• Extensive malus and clawback provisions (page 96)

Alignment to culture – incentive schemes should drive
behaviours consistent with company purpose, values and
strategy

• Remuneration principles aligned to our purpose (page 79)

• Executive Director remuneration considered in the context of employee outcomes

(page 84)

• Commitment to fair pay for performance across the workforce (page 81)

• Inclusion of non-financial metrics in both executive Director annual bonus and LTIP

scorecards (pages 82-87)

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRemuneration report (continued)

NOTES TO THE ANNUAL REPORT ON
REMUNERATION

The notes set out on pages 90-99 supplement the information set out in the main narrative on pages 77-87, combining both statutory and
voluntary disclosures.

Annual bonus award allocations across the Group
The table below compares the annual bonus award allocations for performance years 2021 and 2020, split between portions paid in cash,
upfront fund awards and amounts deferred into share awards and fund awards. The amounts shown are on the basis of the amounts
awarded and communicated to employees as annual bonuses in respect of performance each year, rather than the costs charged to each
year’s income statement.

Total compensation ratio

Annual bonus awards:

• paid in cash

• granted in upfront fund awards

• deferred into share awards

• deferred into fund awards

Total annual bonus awards

Share in Success Award2

Proportion of total annual bonuses that are deferred

Number of bonus-eligible employees

Mean annual bonus award per bonus-eligible employee

Median annual bonus award per bonus-eligible employee

Group Chief Executive’s bonus as a % of total annual bonuses

Aggregate bonuses to executive Directors as a % of total annual bonuses

2021

45%

£m

234.8

38.9

73.7

64.9

412.3

23.6

34%

4,939

£83,470

£19,865

1.8%

2.7%

20201

45%

£m

176.8

28.8

51.1

44.5

301.2

n/a

32%

4,770

£63,141

£13,526

1.8%

2.6%

1. Restated to adjust to the same foreign exchange rates as those used for the 2021 figures and to include the subsidiaries of Benchmark Capital and BlueOrchard.
2. One-off, all-employee share award worth 5% of salary granted in December 2021; excluded from the mean and median bonus calculations shown above.

The employee mean and median figures represent the bonus value across all bonus-eligible employees each year. As such, part of the
difference in value year-on-year is due to differences in population, from new hires and leavers, as well as higher or lower bonus awards for
individual employees who were employed by Schroders both years.

You can find more information about our current global workforce, along with the publication of our voluntary global gender pay gap,
associated analysis and findings by visiting our website at www.schroders.com/wdr

Relative spend on pay
The charts below illustrate the relative spend on pay for 2021 compared with 2020. The values are taken from the financial statements and
show how remuneration costs before exceptional items compare with shareholder distributions, taxes arising and earnings retained, to
illustrate how net income is utilised.
2021

2020

13%

14%

10%

23%

12%

22%

Fixed
remuneration
Variable
remuneration –
upfront
Variable
remuneration
– deferred
Share in Success
Award
Other operating
expenses
Corporate tax and
social security1
Retained earnings

vs.
2020
£611.8m +4%

£297.5m +43%

£130.3m +38%

£23.6m n/a

£564.5m +12%

£248.0m +15%

£358.8m +40%

Interim dividend
paid and final
dividend recommended

£334.2m +7%

12%

10%

14%

27%

10%

23%

Fixed
remuneration
Variable
remuneration –
upfront
Variable
remuneration
– deferred
Other operating
expenses
Corporate tax and
social security1
Retained earnings

vs.
2019
£589.9m +5%

£207.8m +4%

£94.5m +15%

£502.2m +1%

£216.0m (3)%

£256.8m +3%

Interim dividend
paid and final
dividend recommended

£312.0m 0%

1. Corporate tax and social security includes employer’s social security costs, which for 2021 was equal to 4% of net income (2020: 4%).

Schroders Annual Report and Accounts 2021

UK pay ratios
The table below compares the Group Chief Executive’s single total remuneration figure for 2021 to the remuneration of the Group’s UK
workforce as at 31 December 2021, along with the comparative figures for the previous year. The CEO pay ratio has increased this year. This
reflects a difference in the structure of the Group Chief Executive’s overall pay versus typical employees, with a larger proportion based on
business performance each year. For 2021, the percentage increase in bonus for the Group Chief Executive is below the lower quartile,
median and average percentage change applying to all employees1. However the larger proportion of total compensation based on
financial results means the positive outcomes for this year have a greater absolute impact on the Group Chief Executive’s total
compensation, notwithstanding the lower percentage change on prior year. The Group is focused on pay fairness across the workforce, at
the same time our more senior staff have a generally higher weighting towards variable, as such the Group believes these outcomes to be
consistent with the pay and reward policies for the Group’s UK employees as a whole.

2021

2020

2019

Method2

Option A

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

134:1

110: 1

117: 1

84:1

70: 1

72: 1

49:1

42: 1

63,093

57,205

55,400

47,000

45,000

50,000

100,761

89,541

89,743

69,433

58,000

68,000

173,941

100,000

150,310

122,500

154,667

85,000

1. Inclusive of Share in Success Awards.
2. The rules that require this disclosure to be made set out three possible 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 for the relevant
financial year in order to identify the total remuneration at the upper quartile, at the median and at the lower quartile. We have based the calculation of these
total remuneration quartiles on salaries as at 31 December 2021 plus any annual bonus award in respect of 2021 and any other incentive awards granted
during 2021. 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 but did not qualify as tax-free under HMRC rules on taxable benefits. No other assumptions or statistical
modelling were 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 two 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 92 and those for non-executive
Directors are based on the table on page 98. The employee mean and median figures in this table represent the change experienced for
individual employees who were employed by Schroders both years.

Base salary/fee

Benefits

Bonus

Base salary/fee

Benefits

Bonus

2021

2020

Executive Directors

Peter Harrison

Richard Keers

Non-executive Directors

Michael Dobson

Sir Damon Buffini

Dame Elizabeth Corley

Rhian Davies
Claire Fitzalan Howard1

Rakhi Goss-Custard

Ian King

Leonie Schroder

Deborah Waterhouse
Matthew Westerman1
Employees

+0%

n/a

+0%

+51%

+0%

+43%

+16%

+49%

-9%

n/a

+0%

-100%

+0%

n/a

Employees of Schroders plc

n/a

+40%

+41%

n/a

+0%

+20%

n/a

+13%

n/a

+0%

+24%

+47%

n/a

–45%

–3%

–35%

n/a

–4%

+2%

n/a

Employees of the Group2,3,4

• Mean

• Median

Excluding
Share in
Success Award

Including
Share in
Success Award

+9%

+2%

+5%

+3%

+49%

+34%

+78%

+62%

+4%

+2%

+3%

+7%

+0%

1. The fee increases shown reflect the timing of their appointment to the Board and appointment to roles on Board Committees, as set out on page 98. The

fees for the non-executive Directors were not changed in 2021.

2. For base salary, employees of the Group are those who were in employment between 31 December 2020 and 31 December 2021 and represents the salary

increase over this period. Salary adjustments agreed as part of the 2021 compensation review will be effective in 2022.

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 2020 and 2021. More commentary on the annual bonus
award for each executive Director can be found on pages 82-83.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statements
Remuneration report (continued)

Single total remuneration figure for each executive Director (audited)
The total remuneration of each of the executive Directors for the years ended 31 December 2021 and 31 December 2020 is set out in the
table below.

2021 (£’000)

Base salary1

Benefits
and
allowances2

Retirement
benefits3

Total fixed
pay

Annual
bonus award4

LTIP vested5

Total
variable pay

Total
remuneration

Peter Harrison

Richard Keers

Total

2020 (£’000)

Peter Harrison

Richard Keers

Total

500

375

875

500

375

875

553

430

983

554

426

980

7,612

3,395

11,007

Initial
scorecard
outcome

Discretionary
annual bonus
reduction

5,678

2,503

8,181

(250)

(100)

(350)

5,428

2,403

7,831

319

213

532

339

226

565

7,931

3,608

8,484

4,038

11,539

12,522

5,767

2,629

8,396

6,321

3,055

9,376

The methodology for determining the single total remuneration figure is set out in the footnotes below. A chart illustrating the figures
above can be found on page 85.

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 Keers. Page 94 shows how the retirement benefits figures above are comprised for each Director.

4. Represents the total value of the annual bonus award for performance during the relevant financial year. The column headed ‘Discretionary annual bonus

reduction’ shows the Committee’s one-off reduction from the initial scorecard outcome for 2020, given the extraordinary circumstances of 2020, to reach the
actual annual bonus award for each executive Director.
Pages 82-83 set out the basis on which annual bonus awards for 2021 were determined. Page 94 breaks down the annual bonus awards for 2021 into cash
paid through the payroll in February 2022 and the upfront fund awards, deferred fund awards and deferred share awards that will be granted in March 2022.
5. Represents the estimated value that is expected to vest on 3 March 2022 from LTIP awards granted on 5 March 2018, using the average closing mid-market
share price over the three months ended 31 December 2021 and the percentage expected to vest. The comparative value for 2020 represents the actual
value that vested on 4 March 2021 from LTIP awards granted on 6 March 2017. The LTIP vested values disclosed last year were estimates, as the Annual
Report and Accounts was finalised prior to the vesting date.
Page 84 sets out the performance achieved and how vesting will be determined, with further detail on page 95, and page 95 shows how the value shown
above has been calculated, including how much of the value is attributable to share price movement during the period from grant to vesting. Page 96 sets
out information on LTIP awards granted to the executive Directors during 2021, which the Directors subsequently waived. Page 84 sets out information on
LTIP awards to be granted to the executive Directors in March 2022.

The Group Chief Executive’s total remuneration over the last 10 years

The chart to the right illustrates
the Group Chief Executive’s single
total remuneration figure over the
past 10 years and compares it to
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.

Group Chief Executive’s total remuneration

Schroders ordinary shares
Schroders non-voting ordinary shares
FTSE 100 Index

1
1
0
2
r
e
b
m
e
c
e
D
1
3
n
o
d
e
t
s
e
v
n

0
0
1
£
f
o
e
u
a
V

£400

£350

£300

£250

£200

£150

£100

£50

£0

2011

2012

2013

2014

2015

2016
Michael Dobson

2016
2017
Peter Harrison

2018

2019

2020

2021

Single total remuneration figure (£’000)

4,870 8,414

8,155 8,905 2,451 6,311 7,059 6,735 6,453 6,321 8,484

Annual bonus award (outcome as a % of maximum,
or actual award as a % of 10-year highest bonus)1, 2, 3

56% 81%

87% 100% 25% 70% 82% 78% 72% 69% 97%

a
t
o
t
e
g
n
i
s

’

s
e
v
i
t
u
c
e
x
E
f
e
h
C
p
u
o
r
G

)

m
£
(
e
r
u
g
ﬁ
n
o
i
t
a
r
e
n
u
m
e
r

LTIP (vesting as a % of maximum)4
1. For performance years 2020 and 2021, this represents the Group Chief Executive’s actual annual bonus award as a percentage of the maximum annual

50% 50% 50% 50%

0% 50% 50% 50%

n/a 100%

n/a

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 10 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. 2012 is shown as ‘n/a’ as the LTIP was introduced in May 2010 and so there was no LTIP vesting outcome in this year. 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.

Schroders Annual Report and Accounts 2021

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 shareholding for the Group Chief
Executive is 500% of base salary and 300% of base salary for the Chief Financial Officer. Shares that count for this policy include estimated
after-tax value of unvested deferred share awards under the DAP or previous incentive plans (shown as ‘Other unvested share awards’ on
page 97) and of vested DAP or LTIP awards (shown as ‘Vested but unexercised share awards’ on page 97) but do not include unvested LTIP
awards as these rights to shares are subject to performance conditions. Both executive Directors have shareholdings well in excess of the
level required under our personal shareholding policy.

Value of shareholding versus shareholding policy (% of salary)

Group Chief Executive
Peter Harrison

Policy

Actual

Chief Financial Oﬃcer
Richard Keers

500%

Policy

300%

1,131%

153%

Actual

574%

136%

Policy

Shareholding

LTIP shares subject to performance conditions

The above illustration includes LTIP awards expected to vest on 3 March 2022 (see page 95) and DAP deferred share awards to be granted
in respect of performance in 2021 (see page 94).

Each executive Director and GMC member undertakes not to sell any Schroders shares until their share ownership target has been
reached, subject to some limited exceptions. The executive Directors’ service contracts provide that, on stepping down as an executive
Director, the level of shareholding required while an executive Director, or the actual level of shareholding on stepping down if lower, must
be maintained for a further two years.

The table below shows the number of shares currently owned by each executive Director, the number of shares over which they have been
or will be granted rights under the Group’s incentive plans and the estimated after-tax value of those shares, on the same basis as outlined
above. A 10% share price movement would equate to a change in value of the shareholdings of Peter Harrison and Richard Keers of
£503,000 and £193,000 respectively.

As at 31 December 2021

Shares
owned

4,979

941

Rights to
shares

186,804

64,504

Individual

Peter Harrison

Richard Keers

SIP shares
acquired in
January and
February 2022

LTIP shares
expected to
vest 3 March
2022

Total share
exposure

Rights to shares
to be granted
under the DAP
in March 2022
(£’000)

At the 1 March
2021 share
price

8,963

200,761

5,976

71,436

3,369

1,490

5,604

2,135

Estimated after-tax value (£’000)

At the 1 March
2022 share

price Difference

5,034

1,934

(570)

(201)

Impact of a 10%
share price
movement

503

193

Conduct, compliance and risk management in remuneration
Schroders’ core values are excellence, innovation, teamwork, passion and integrity. We expand on these in our guiding principles and values
to more clearly articulate the behaviours that we expect from our employees. Performance management and remuneration are important
tools to reinforce expected standards of behaviour. During the annual performance appraisal, line managers assess each employee’s
behaviours, to identify those whose behaviour exemplifies our values as well as any employees whose behaviour falls short of the standards
that we expect. To drive positive change and reinforce those behavioural expectations, we also operate a global employee recognition
scheme, which provides an opportunity to recognise those who champion our values. The Group’s control functions independently review
potential conduct or cultural issues to identify any instances where performance or behaviours have fallen short of our expectations. Any
issues identified in this way are fed into the performance appraisal and compensation review processes. This provides a further opportunity
to reflect attitudes to risk and compliance and behaviours in line with our values in the determination or allocation of the bonus pool and in
individual employee performance ratings and remuneration outcomes.

We identify employees whose professional activities can have a particular risk impact on the Group, or on certain regulated subsidiaries.
Our approach to identifying these ‘material risk takers’ takes account of the different regulatory requirements and guidance that apply
across the Group. Our material risk takers are subject to enhanced scrutiny and oversight, including enhanced control function oversight of
their activities and direct oversight of their remuneration by the Committee. Some material risk takers, specifically those identified under the
UCITS Directive, AIFMD, and from 2022 certain IFPR entities, are subject to higher levels of bonus deferral and a higher proportion of
remuneration in fund awards, creating greater alignment with shareholders and clients. To ensure the Remuneration Committee is
adequately informed of risks facing the Group and the management of those risks, the Chairman of the Audit and Risk Committee serves on
the Remuneration Committee. The Remuneration Committee also receives reports from the Heads of Compliance, Legal, Risk and Internal
Audit as part of its consideration of remuneration proposals. The Committee reviewed the Group’s regulatory disclosures in the context of
the applicable FCA and PRA requirements. 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/en/investor-relations/shareholders-and-
governance/disclosures/pillar-3-disclosures. Other regulatory remuneration disclosures can be found at www.schroders.com/en/investor-
relations/shareholders-and-governance/disclosures/remuneration-disclosures.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statements2%

98%

Remuneration report (continued)

Shareholder voting on remuneration
The following votes were cast in respect of the Directors’ remuneration report at our 2021 AGM and the Directors’ remuneration policy at
our 2020 AGM.

To approve the Remuneration report
at the 2021 AGM

To approve the Directors’ remuneration policy
at the 2020 AGM

To approve the relevant
Remuneration report

2021 AGM

Votes
for

Votes
against

98%

To approve the relevant
Directors’ remuneration policy

Votes
for

Votes
against

2020 AGM

98%

2021 AGM voting

Votes for
Votes against

191,318,374
3,114,325

Votes withheld

4,135,801

98%

2020 AGM voting

Votes for
Votes against

192,427,541
4,157,537

Votes withheld

3,871,858

Executive Director arrangements - additional detail
Retirement benefits – additional detail (audited)
The following table shows details of retirement benefits provided to executive Directors for the years ended 31 December 2021 and
31 December 2020. For the executive Directors, the sum of employer contributions and cash in lieu each year is reflected in the single total
remuneration figures on page 92. 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

Peter Harrison

Richard Keers

2021 employer
contributions

2021 cash in lieu
of pension1

2021 retirement
benefits total

2020 employer
contributions

2020 cash in lieu
of pension1

2020 retirement
benefits total

–

Accrued DB
pension at
31 December
2021

–

Normal
retirement
age2

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 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 annual bonus award for each executive Director for performance during 2021 was structured
along with the face value of the LTIP award granted during 2021 (see page 96) and the resulting percentage of variable pay deferred across
annual bonus and LTIP combined.

2021 (£’000)

Peter Harrison

Richard Keers

Upfront cash
bonus award

Upfront fund
award

Deferred share
award

Deferred fund
award

Total DAP
award

Total annual
bonus award

Percentage
deferred1

LTIP granted
during 2021

DAP award

LTIP award

Percentage of
total variable
pay deferred1

1,560

704

1,560

704

3,369

1,490

1,123

497

6,052

2,691

7,612

3,395

59%

600

400

62%

63%

1. In calculating the value of each executive Director’s annual bonus award that is deferred, the amount of the bonus that is deferred is reduced to reflect the

LTIP award granted during the year, subject to a minimum 60% of total variable pay being deferred.

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 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 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.

Schroders Annual Report and Accounts 2021

LTIP award vesting – additional detail (audited)
The LTIP awards granted on 5 March 2018, covering the 2018 to 2021 performance period, are expected to vest on 3 March 2022. The
criteria for determining the extent of vesting are set out below.

Performance measure

EPS1
If the growth of adjusted EPS in the fourth year compared
with the year prior to grant exceeds the defined composite
index by:

• less than 20%
• equal to 20%
• between 20-40%
• 40% or greater

no vesting
12.5% vests
straight-line basis
50% vests

Maximum %
of award

50%

Performance achieved

Four-year growth in the composite index:
21.5% (see below)
Schroders four-year EPS growth: 8.6%
• Performance below the composite index;

no vesting of this part of the award

Vesting %

NNB2 cumulative over the four-year performance period:

50%

• less than £15 billion
• equal to £15 billion
• between £15-25 billion
• £25 billion or greater

no vesting
12.5% vests
straight-line basis
50% vests

Total expected to vest in relation to 2018 to 2021 performance

Four-year cumulative NNB: £91.5 billion
• Performance above maximum target; full

vesting of this part of the award

50%

1. EPS excluding revenue and costs relating to acquisitions classified as exceptionals but including any other exceptionals.
2. NNB excluding joint ventures and associates.

The Audit and Risk Committee independently reviews key estimates made by management that impact the financial statements to ensure
these are reasonable. This is reflected in the LTIP vesting calculations.

The composite index against which EPS performance was measured for these awards was set at the time they were granted. The table
below sets out the make-up of that composite index and its growth over the four-year performance period:

Index

MSCI All Countries Asia Pacific

MSCI All Countries World

MSCI Emerging Markets

MSCI Europe

FTSE All Share

Bloomberg Barclays Global Aggregate

Composite index (calculated as a weighted average)

Weighting

Growth over the four-year
performance period

15.0%

7.5%

5.0%

50.0%

21.6%

61.0%

16.5%

29.0%

15.1%

9.8%

21.5%

The estimated value expected to vest on 3 March 2022 from LTIP awards granted on 5 March 2018 is shown in the table below. This is
calculated based on the average closing mid-market share price over the three months ended 31 December 2021 and the expected vesting
percentage shown in the table above. Awards are over ordinary shares.

Individual

Peter Harrison

Richard Keers

Grant-date face
value of LTIP award
£’000

Proportion expected
to vest in relation to
2018-2021
performance

Face value at time
of grant

Impact of dividend
equivalents since
grant1

Impact of share
price movement
since grant

Total estimated
value vesting

Number of shares
expected to vest

Value of shares expected to vest (£’000)

600

400

50%

300

200

–

319

213

8,963

5,976

1. The LTIP rules under which these awards were granted do not allow for awards to accrue additional value equivalent to dividends on the underlying shares.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRemuneration report (continued)

Directors’ rights under fund and share awards
DAP and LTIP granted during 2021 (audited)
The following awards under the DAP were granted to Directors on 8 March 2021 in respect of deferred bonuses for performance during
2020. No further performance conditions need to be met for awards to vest. An upfront fund award cannot be exercised for six months
from the date of grant but is not normally subject to forfeiture if the holder leaves the Group. Deferred share awards normally require the
participant to remain in employment with the Group for three years after the date of grant to vest in full, or 3.5 years for a deferred fund
award. DAP 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. DAP share awards are conditional rights to receive
Schroders shares, granted as nil-cost options. These awards were included in the 2020 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 92. They are also shown in the tables of
Directors’ rights under fund and share awards on page 97.

Individual

Basis of DAP award granted

Peter Harrison

Richard Keers

Deferral of bonus awarded
for performance in 2020

Face value at grant (£’000)

Upfront
fund
awards

Deferred
share
awards

Deferred
fund
awards

Total DAP
award

Share
price at
grant

Number
of
shares

Performance conditions

1,123

2,387

795

4,305

33.58 71,069 Awarded for performance in

506

1,043

348

1,897

33.58 31,086

2020. No further performance
conditions apply.

The following awards under the LTIP were granted to Directors on 8 March 2021 as nil-cost options. Each executive Director subsequently
elected not to accept their respective awards and so each award was void and took no effect. As a result, they are not reflected in the table
of Directors’ rights under share awards on page 97.

Individual

Peter Harrison

Richard Keers

Basis of LTIP award
granted

Face value at
grant (£’000)

Vesting maximum
as % of face value

% of face value
that would vest
at threshold1

Share price
at grant

Number of
shares

End of performance
period

A specified face
value of shares on
the date of grant

600

400

100

33.58

17,867 31 December 2024

11,911 31 December 2024

1. Percentage of face value that would vest if performance under both the EPS and NNB performance measures was 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.

Vesting of LTIP awards granted during 2021 was subject to the same performance conditions as applied to the awards expected to vest
following the end of 2021, as described on page 95, save that the composite index for the measurement of EPS performance for these
awards was as follows: MSCI All Countries Asia Pacific (15%), MSCI All Countries World (15%), MSCI Emerging Markets (10%), MSCI Europe
(5%), FTSE All Share (5%), Bloomberg Barclays Global Aggregate (50%).

Malus and clawback
Annual bonus and LTIP awards (including bonus awards delivered via the Deferred Award Plan) are subject to the Group Malus and
Clawback Policy. The policy sets out a range of circumstances in which malus and/or clawback may be applied which, for the executive
Directors, includes: fraud, misconduct or misbehaviour by the participant; material error by the participant; significant failure of risk
management; failure to meet appropriate standards of fitness or propriety; regulatory sanction or serious reputational damage where the
conduct of the participant significantly contributed; material downturn in financial performance, including corporate failure; material
financial misstatement for which the participant has significant responsibility or which has led to a larger award than would otherwise have
been the case; material error or misrepresentation for which the participant has significant responsibility or which has led to a larger award
than would otherwise have been the case; an award received in breach of regulatory requirements or where the financial sustainability of
the Group or any Member of the Group would be adversely affected; significant increase in the economic/regulatory capital base of the
Group or any part of the Group; participation in or responsibility for conduct resulting in material losses (malus trigger only); and breach of
any of the policies or codes to which the individual is subject (malus trigger only).

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. Under the DAP rules, all awards are subject to the Group Malus
and Clawback Policy. This allows for any DAP awards to be reduced in quantum or for periods to be extended where malus/clawback is
applied to any incentive award held by the individual, whether granted under the DAP or not. To ensure enforceability, all DAP participants
accept their awards, confirming adherence to the DAP rules and Group Malus and Clawback policy. The executive Directors’ contracts also
explicitly provide for clawback.

Schroders Annual Report and Accounts 2021

Directors’ rights under fund awards (audited)
Directors had the following rights under fund awards granted under the Group’s incentive plans, based on the award values at grant.

Peter Harrison

At 31 December 2020

Richard Keers

Granted

Vested

Exercised

At 31 December 2021

At 31 December 2020

Granted

Vested

Exercised

At 31 December 2021

Unvested fund
awards
£’000

Vested fund
awards
£’000

3,514

795

(1,798)

–

2,511

1,450

348

(745)

–

1,053

–

1,123

1,798

(2,921)

–

506

745

(772)

478

Total
£’000

3,514

1,918

–

(2,921)

2,511

1,450

854

–

(772)

1,531

Directors’ rights under share awards (audited)
Directors had the following rights to shares under the Group’s incentive plans, in the form of nil-cost options, based on the number of
shares in each case.

Peter Harrison
(Ordinary shares)

At 31 December 2020

Granted

LTIP award granted but not accepted

Dividend-equivalent accrual

Vested

Lapsed where LTIP conditions were not met

Richard Keers
(Ordinary shares)

Exercised

At 31 December 2021

At 31 December 2020

Granted

LTIP award granted but not accepted

Dividend-equivalent accrual

Vested

Lapsed where LTIP conditions were not met

Exercised

At 31 December 2021

Unvested LTIP
awards1

Other unvested
share awards2

Vested but
unexercised share
awards

Total

61,075

17,867

(17,867)

–

(9,768)

–

41,539

40,717

11,911

(11,911)

–

(6,512)

–

148,044

71,069

–

6,401

(73,251)

–

152,263

61,515

31,086

–

2,694

(30,792)

–

27,693

64,503

45,402

254,521

–

1,192

83,019

–

(95,073)

34,540

27,385

–

591

37,304

–

(65,280)

–

88,936

(17,867)

7,593

–

(9,768)

(95,073)

228,342

129,617

42,997

(11,911)

3,285

–

(6,512)

(65,280)

92,196

1. These awards will only vest to the extent that the relevant performance conditions are met. Includes LTIP awards granted on 5 March 2018, which were
unvested as at 31 December 2021. These awards are expected to partially vest on 3 March 2022 and any balance will lapse.

2. No performance conditions apply for these awards. As well as awards granted under the DAP, this includes awards granted under the Equity Compensation
Plan, which was used for deferred bonus awards granted to the executive Directors until 2018.

During 2021, the aggregate gain on nil-cost options for the Directors, which were settled in shares, was as follows:

• Peter Harrison received £3,420,000 from exercising nil-cost options over 95,073 ordinary shares, granted as an element of his annual

bonus awards for performance in 2017 and 2018.

• Richard Keers received £2,413,000 from exercising nil-cost options over 65,280 ordinary shares, in part granted as an element of his

annual bonus awards for performance in 2017, 2018 and 2019 and in part being the vested element of the LTIP award granted to him in
2017.

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsRemuneration report (continued)

Non-executive Directors’ remuneration (audited)
The fees for the non-executive Directors were not changed in 2021, having last been reviewed during 2019. The structure of non-executive
Directors’ fees is shown below. Fees are usually reviewed biennially.

Chairman

Board member

Senior Independent Director
Audit and Risk Committee Chairman1

Audit and Risk Committee member

Nominations Committee Chairman

Nominations Committee member
Remuneration Committee Chairman1

Remuneration Committee member

1. In addition to the Committee membership fee.

625,000

80,000

20,000

25,000

20,000

nil

25,000

20,000

The total remuneration of each of the non-executive Directors for the years ended 31 December 2021 and 31 December 2020 is set out in
the table below:

£’000

Michael Dobson

Sir Damon Buffini

Dame Elizabeth Corley

Rhian Davies

Claire Fitzalan Howard

Rakhi Goss-Custard

Ian King

Leonie Schroder

Deborah Waterhouse

Matthew Westerman

2021

2020

Basic fee

Committee
Chairman

Committee
member

Taxable
benefits

SID

Total

Basic fee

Committee
Chairman

Committee
member

625

–

635

125

146

102

121

101

120

625

n/a

–

n/a

–

n/a

–

SID

–

n/a

–

Taxable
benefits

–

n/a

–

Total

636

125

n/a

146

102

121

101

The fees shown in each Director’s case reflect the portion of 2020 and 2021 that they each served in their respective roles.

• Matthew Westerman was appointed to the Board with effect from 9 March 2020. Claire Fitzalan Howard was appointed to the Board with

effect from 30 April 2020. In each case, on appointment as non-executive Directors their fees were set at the same level as for other
non-executive Directors.

• Matthew Westerman was appointed a member of the Audit and Risk Committee from his appointment to the Board on 9 March 2020 and

was appointed a member of the Remuneration Committee on 19 November 2020.

• Michael Dobson is due to step down as Chairman at the 2022 Annual General Meeting. Dame Elizabeth Corley, who was appointed to the
Board as non-executive Director and Chair designate on 1 September 2021, will succeed Michael Dobson as Chair at the conclusion of
the Company’s 2022 Annual General Meeting. The Chair fee remains unchanged.

The benefits for Michael Dobson comprised private healthcare and medical benefits for him and his family, life assurance, travel expenses
and occasional private use of a company car and driver. Benefits for Rhian Davies, Claire Fitzalan Howard, Rakhi Goss-Custard, Ian King and
Deborah Waterhouse comprised travel expenses.

Schroders Annual Report and Accounts 2021

Directors’ share interests (audited)
The Directors and their connected persons had the following interests in shares in the Company.

Executive Directors

Peter Harrison

Richard Keers

Non-executive Directors

Michael Dobson

Sir Damon Buffini

Dame Elizabeth Corley

Rhian Davies
Claire Fitzalan Howard1

Rakhi Goss-Custard

Ian King
Leonie Schroder1

Deborah Waterhouse

Matthew Westerman

Number of shares at 31 December 2021

Ordinary shares

Non-voting
ordinary shares

4,979

941

4,965

–

6,000

–

196,165

5,000

6,000

1,000

78,614,727

5,495,293

669

–

2,641

90,422,110

7,671,700

–

2,000

–

1. 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. The interests
of Claire Fitzalan Howard no longer include the beneficial interests of certain individuals who have ceased to be connected parties.

Between 31 December 2021 and 2 March 2022, the only movements in the Directors’ share interests were the acquisition under the Share
Incentive Plan of 15 ordinary shares by Peter Harrison and 15 ordinary shares by Richard Keers.

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. Neither Peter Harrison nor Richard Keers received any fees in
respect of external non-executive roles during 2021.

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. Letters of appointment and service contracts are available for
shareholders to view at the Company’s registered office on business days between the hours of 9am and 5pm and will be available at each
AGM.

Payments for loss of office and payments to former Directors (audited)
No payments for loss of office were paid to Directors or former Directors during 2021. No other payments were made to former Directors
during 2021.

By order of the Board.

Sir Damon Buffini
Chairman of the Remuneration Committee

2 March 2022

Schroders Annual Report and Accounts 2021

Strategic reportGovernanceShareholder informationFinancial statementsDirectors’ report

DIRECTORS’ REPORT

The information contained in the sections of this Annual Report
and Accounts identified below forms part of this Directors’ report:

• Strategic report
• Board of Directors
• Corporate governance report, including the Nominations

Committee report and the Audit and Risk Committee report

• The Statement of Directors’ responsibilities.

to grant rights to subscribe for, or convert securities into,
non-voting ordinary shares. Shareholders also gave approval for
the Company to buy back up to 5,000,000 non-voting ordinary
shares and gave authority for the disapplication of pre-emption
rights in relation to the issue of up to 5,000,000 non-voting
ordinary shares. Renewal of these authorities to a maximum of
5,000,000 non-voting ordinary shares will be sought at the
2022 AGM.

Share capital
Schroders has developed under stable ownership for more than
200 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 is comprised of ordinary shares of £1
each and non-voting ordinary shares of £1 each. The ordinary
shares have a premium listing on the London Stock Exchange and
the non-voting ordinary shares have a standard listing on the
London Stock Exchange.

226,022,400 ordinary shares (80% of the total issued share capital)
were in issue throughout the year. The Company has no authority
to issue or buy back any ordinary shares. Each ordinary share
carries the right to attend and vote at general meetings of the
Company. 56,505,600 non-voting ordinary shares (20% of the total
issued share capital) were in issue throughout the year. No shares
were held in treasury.

The non-voting ordinary shares were created in 1986 to facilitate
the operation of an employee share plan without diluting the
voting rights of ordinary shareholders. The non-voting ordinary
shares carry the same rights as ordinary shares except that they
do not provide the right to attend and vote at general meetings
of the Company and that, on a capitalisation issue, they carry
the right to receive non-voting ordinary shares rather than
ordinary shares.

When the non-voting ordinary shares were created, the ratio of
ordinary shares to non-voting ordinary shares was 4:1. The
Company has at times issued non-voting ordinary shares,
principally in connection with the Group’s employee share plans or
as consideration for an acquisition. The Company has not intended
and does not intend to increase the issued non-voting ordinary
share capital over the medium term and therefore has, at times,
bought back non-voting ordinary shares to maintain the 4:1 ratio.

At the 2021 AGM, shareholders renewed the Directors’ authority to
issue 5,000,000 non-voting ordinary shares in order to provide the
Directors with the flexibility to issue non-voting ordinary shares or

Under the terms of the Schroders Employee Benefit Trust and the
Schroder US Holdings Inc. Grantor Trust, ordinary and non-voting
ordinary shares are held on trust on behalf of employee share plan
participants. The trustees of these trusts may exercise the voting
rights in any way they think fit. In doing so, they may consider the
financial and non-financial interests of the beneficiaries and their
dependants. As at 1 March 2022, 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 8,434,403 ordinary shares and
14,257 non-voting ordinary shares.

Under the terms of the Share Incentive Plan, as at 1 March 2022,
906,580 ordinary shares were held in trust on behalf of plan
participants. At the participants’ direction, the trustees can exercise
the voting rights over ordinary shares in respect of participant
share entitlements.

There are no restrictions on the transfer of the Company’s shares
save 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; and

• 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.

2022 Annual General Meeting
The 2022 AGM will be held on Thursday 28 April 2022 at 11.30am.
All resolutions are voted on separately and the final voting results
are published as soon as practicable after the meeting. Together
with the rest of the Board, the Chairmen of the Nominations, Audit
and Risk, and Remuneration Committees will be present to
answer questions.

100

Schroders Annual Report and Accounts 2021

Substantial shareholdings
The table below shows the holdings of major shareholders in the voting rights of the Company, as at 31 December 2021, as notified and
disclosed to the Company in accordance with the Disclosure Guidance and Transparency Rules.

Member

Vincitas Limited1

Veritas Limited1

Flavida Limited2

Fervida Limited2

Lindsell Train Limited3

Harris Associates L.P.3

Class of shares

No. of voting rights held

% of voting rights held

Ordinary

60,724,609

36,795,041

60,951,886

39,724,396

22,507,143

11,335,848

26.87

16.28

26.97

17.58

9.958

5.02

1. Vincitas Limited and Veritas Limited are trustee companies which act as trustees of certain settlements made by members of the Schroder family. Vincitas

Limited and Veritas Limited are party to the Relationship Agreement.

2. Flavida Limited and Fervida Limited are protector companies which act as protectors of certain settlements made by members of the Schroder Family. Flavida
Limited and Fervida Limited are parties to the Relationship Agreement. Their interests in shares are principally in respect of shares in which Vincitas Limited
and Veritas Limited are also interested.

3. Lindsell Train Limited and Harris Associates L.P. are not party to the Relationship Agreement.

Relationship Agreement
The UK Listing Rules require companies with a shareholder or
shareholders who could, when acting in concert, exercise 30% or
more of the voting rights of a company at a general meeting, to
enter into a binding agreement with that shareholder or
shareholders. This is intended to ensure that the parties to the
agreement comply with certain independence provisions as set
out in the Listing Rules. The Company’s principal shareholder
group, who in aggregate hold or control 108,323,711 (47.93%) of
the Company’s ordinary shares, are deemed to be acting in concert
for these purposes and accordingly the Company is party to such
an agreement (the Relationship Agreement) with the members of
the principal shareholder group.

The principal shareholder group’s interests are in shares owned
directly or indirectly by trustee companies which act as trustees of
various trusts settled by Schroder family individuals, in shares
owned by Schroder family individuals, and in shares owned by a
Schroder family charity. The trustee companies’ holdings include
the interests (43.15%) held by Vincitas Limited and Veritas Limited
disclosed in the above table.

In accordance with Listing Rule 9.8.4(14), the Board confirms that
for the year ended 31 December 2021:

• the Company has complied with the independence provisions

included in the Relationship Agreement; and

• 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.

Dividends
The Directors recommend a final dividend of 85 pence per share,
which if approved by shareholders at the AGM, will be paid on
5 May 2022 to shareholders on the register of members at close of
business on 25 March 2022. Details of the Company’s dividend
policy are set out on page 29. Dividends payable in respect of the
year, subject to this approval, along with the prior year payments,
are set out below.

The Schroders Employee Benefit Trust and the Schroder US
Holdings Inc. Grantor Trust have waived their rights to dividends
paid on both the ordinary and non-voting ordinary shares in
respect of 2021 and future periods. See notes 7 and 22 to the
financial statements.

Corporate responsibility
Details of the Company’s employment practices, including diversity
and employee involvement, can be found in the Strategic report
from page 40.

The Directors have considered climate-related matters
including the risks of climate change when preparing the
Company’s accounts.

We are committed to minimising the environmental impact of our
operations and to delivering continuous improvement in our
environmental performance. See page 35 for more details on our
total CO2e emissions data.
Indemnities and insurance
At the 2007 AGM, shareholders authorised the Company to
provide indemnities to, and to fund defence costs for, Directors in
certain circumstances. All Directors, at the time shareholder
approval was received, were granted specific deeds of indemnity
and any Director appointed subsequently has been granted such
an indemnity. This means that, on their appointment, new
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 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 (the Scheme), and 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.

2021

2020

£m

pence

£m

Ordinary shares and
non-voting ordinary shares

Interim

Final*

pence

37.0

85.0

101.3

232.9

Total
* Subject to approval by shareholders at the 2022 AGM.

334.2

122.0

35.0

79.0

114.0

95.7

217.3

313.0

Schroders Annual Report and Accounts 2021

101

Strategic reportGovernanceShareholder informationFinancial statementsDirectors’ report (continued)

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 (as defined in section 235 of the Companies Act
2006) 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
The Company has procedures in place 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 Company Secretary
and reviewed by the Board on an annual basis. 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 10 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.

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 (2020:
nil) and there is no intention to make or incur any in the
current year.

102

Schroders Annual Report and Accounts 2021

UK Listing Authority Listing Rules (LR) –
compliance with LR 9.8.4C
The majority of the disclosures required under LR 9.8.4 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 9.8.4

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;

(6) Where a director has agreed to waive
future emoluments, details of such waiver
together with those relating to emoluments
which were waived during the period under
review;

See page 77

(12) Details of any arrangements under which
a shareholder has waived or agreed to waive
any dividends.

See pages 101,
118 and 143

(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.

(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 pages 101,
118 and 143

See page 101

Post year end events
On 31 January 2022, the Group completed the acquisition of River
and Mercantile’s UK solutions business and Cairn Real Estate B.V., a
Dutch real estate specialist. Further information can be found in
note 29 to the accounts.

Going concern
The Group’s business activities, together with the factors likely to
affect its future development, performance and position, are set
out in the 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.

In addition, the Directors have assessed the Company’s viability
over a period of five years. The results of this assessment are set
out on page 55.

By order of the Board.

Graham Staples
Company Secretary

2 March 2022

Statement of Directors’ responsibilities

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 they 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 and then apply them

consistently.

• Make estimates and judgements that are reasonable and

prudent.

• State that the financial statements comply with UK adopted
international accounting standards, subject to any material
departure disclosed and explained in the financial statements.

• Prepare the financial statements on a going concern basis,
unless it is inappropriate to presume that the 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 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 financial position of the Company and the Group 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 assets of the Company
and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

Directors’ statement
Each of the Directors, whose name and functions are listed in the
Board of Directors 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 100, includes a
fair review of the development and performance of the business
and the position of the Company and the Group 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 of which the Company’s auditors are unaware.

The Directors have taken all the steps that ought to have been
taken as a Director in order 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 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 upon circumstances in the future and you
should not place reliance on them. Without limitation, any
statements preceded or followed by or that include the words
‘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 2021

103

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements

Consolidated financial statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement

Notes to the accounts
Segmental reporting
1.
Net operating revenue
2.
Net gain on financial instruments and other income
3.
Operating expenses
4.
Tax expense
5.
Earnings per share
6.
Dividends
7.
Trade and other receivables
8.
Financial assets
9.
Associates and joint ventures
10.
Property, plant and equipment
11.
12.
Leases
13. Goodwill and intangible assets
14. Deferred tax
15. Unit-linked liabilities and assets backing unit-linked liabilities
16.
17.
18.
19. Derivative contracts
20.
21.
22. Own shares
23.
24.
25.
26.
27.
28.
29.

Reconciliation of net cash from operating activities
Commitments
Retirement benefit obligations
Share-based payments
Related party transactions
Interests in structured entities
Events after the reporting period

Trade and other payables
Financial liabilities
Provisions and contingent liabilities

Financial instrument risk management
Share capital and share premium

Presentation of the financial statements

Schroders plc financial statements
Schroders plc – Statement of financial position
Schroders plc – Statement of changes in equity
Schroders plc – Cash flow statement

Significant accounting policies
Expenses and other disclosures
Trade and other receivables
Trade and other payables

Schroders plc – Notes to the accounts
30.
31.
32.
33.
34. Deferred tax
35.
36. Own shares
37.
38.

Related party transactions
Subsidiaries and other related undertakings

Financial instrument risk management

105
105
106
107
108

109
111
114
116
117
118
118
119
120
122
124
125
126
127
128
130
130
132
133
135
142
143
144
145
146
150
153
154
156

157

159
160
161

161
162
162
162
163
163
163
164
165

Independent auditor’s report

177

104

Schroders Annual Report and Accounts 2021

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2021

Revenue

Cost of sales

Net operating revenue

Net gain on financial instruments and other income

Share of profit of associates and joint ventures

Net income

Operating expenses

Profit before tax

Tax
Profit after tax1

Earnings per share

Basic

Diluted

Total dividend per share

Notes

Before
exceptional
items
£m

2,959.5

(556.4)

2,403.1

77.5

88.2

2,568.8

(1,732.6)

836.2

(143.2)

693.0

2021

Exceptional
items2
£m

–

(13.3)

(8.9)

(22.2)

(49.9)

(72.1)

2.9

(69.2)

Before
exceptional
items
£m

2,512.7

(453.1)

2,059.6

Total
£m

2,959.5

(556.4)

2,403.1

64.2

79.3

55.5

64.1

2,546.6

2,179.2

(1,782.5)

(1,476.9)

764.1

(140.3)

623.8

702.3

(133.5)

568.8

2020

Exceptional
items2
£m

–

0.4

(21.0)

(20.6)

(71.2)

(91.8)

9.0

(82.8)

Total
£m

2,512.7

(453.1)

2,059.6

55.9

43.1

2,158.6

(1,548.1)

610.5

(124.5)

486.0

244.8p

240.6p

(24.0)p

(23.5)p

220.8p

217.1p

200.8p

197.2p

(28.4)p

(27.9)p

172.4p

169.3p

122.0p

114.0p

5(a)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2021

Profit after tax1

Items that may or have been reclassified to the income statement:

Net exchange differences on translation of foreign operations after hedging

Net (loss)/gain on financial assets at fair value through other comprehensive income

Net gain on financial assets at fair value through other comprehensive income held by associates

Tax on items taken directly to other comprehensive income

Items that will not be reclassified to the income statement:

Net actuarial gain on defined benefit pension schemes

Tax on items taken directly to other comprehensive income

Other comprehensive income for the year, net of tax1

Total comprehensive income for the year1

1. Non-controlling interest is presented in the statement of changes in equity.
2. See note 1(b) for a definition and further details of exceptional items.

Notes

2021
£m

623.8

2020
£m

486.0

5(b)

(19.0)

(2.8)

0.1

1.1

(20.6)

27.6

(6.7)

20.9

37.8

1.4

0.1

(0.3)

39.0

30.4

(5.0)

25.4

0.3

64.4

624.1

550.4

Schroders Annual Report and Accounts 2021

105

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 December 2021

Assets

Cash and cash equivalents

Trade and other receivables

Financial assets

Associates and joint ventures

Property, plant and equipment

Goodwill and intangible assets

Deferred tax

Retirement benefit scheme surplus

Assets backing unit-linked liabilities

Cash and cash equivalents

Financial assets

Total assets

Liabilities

Trade and other payables

Financial liabilities

Lease liabilities

Current tax

Provisions

Deferred tax

Retirement benefit scheme deficits

Unit-linked liabilities

Total liabilities

Net assets

Total equity1

Notes

11, 12

2021
£m

2020
£m

4,207.3

1,000.9

3,132.3

466.7

560.0

1,168.5

145.0

197.9

10,878.6

911.7

12,551.4

13,463.1

3,469.6

840.3

2,871.8

405.2

590.9

1,208.0

32.9

168.2

9,586.9

746.3

11,339.9

12,086.2

24,341.7

21,673.1

1,115.0

4,793.6

373.8

52.2

26.8

80.4

11.1

927.7

4,085.2

397.2

21.5

26.4

31.5

11.5

6,452.9

5,501.0

13,463.1

12,086.2

19,916.0

17,587.2

4,425.7

4,085.9

4,425.7

4,085.9

1. Non-controlling interest is presented in the statement of changes in equity.

The financial statements were approved by the Board of Directors on 2 March 2022 and signed on its behalf by:

Richard Keers

Director

106

Schroders Annual Report and Accounts 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2021

Attributable to owners of the parent

Share
capital
£m

Share
premium
£m

Own
shares
£m

Notes

Net
exchange
differences
reserve
£m

Associates
and joint
ventures
reserve
£m

Profit
and loss
reserve
£m

Non-
controlling
interest
£m

Total
£m

Total
equity
£m

At 1 January 2021

282.5

124.2

(159.8)

165.6

133.6

3,456.7

4,002.8

83.1

4,085.9

Profit for the year

Other comprehensive income1

Total comprehensive income for the year

Own shares purchased

Share-based payments

Tax in respect of share schemes

Other movements

Dividends

Transactions with shareholders

Transfers

At 31 December 2021

5(c)

–

(75.3)

–

(75.3)

84.9

–

(21.0)

79.3

0.1

532.6

19.2

611.9

(1.7)

11.9

2.0

623.8

0.3

(21.0)

79.4

551.8

610.2

13.9

624.1

–

(75.3)

89.5

4.7

89.5

4.7

–

(27.4)

52.6

(75.3)

89.5

4.7

25.2

(318.6)

(9.8)

(328.4)

(251.8)

(327.1)

42.8

(284.3)

(29.6)

(55.3)

–

282.5

124.2

(150.2)

144.6

183.4

3,701.4

4,285.9

139.8

4,425.7

Attributable to owners of the parent

Share
capital
£m

Share
premium
£m

Own
shares
£m

Notes

Net
exchange
differences
reserve
£m

Associates
and joint
ventures
reserve
£m

Profit
and loss
reserve
£m

Non-
controlling
interest
£m

Total
£m

Total
equity
£m

At 1 January 2020

282.5

124.2

(169.1)

128.4

106.1

3,308.8

3,780.9

66.6

3,847.5

Profit for the year

Other comprehensive income1

Total comprehensive income for the year

Own shares purchased

Share-based payments

Tax in respect of share schemes

Other movements

Dividends

Transactions with shareholders

Transfers

At 31 December 2020

5(c)

–

(58.3)

–

(58.3)

67.6

–

37.2

43.1

0.1

433.2

26.5

476.3

63.8

9.7

0.6

486.0

64.4

37.2

43.2

459.7

540.1

10.3

550.4

–

0.2

–

56.1

3.5

(8.0)

(58.3)

56.1

3.5

(7.8)

–

6.3

(58.3)

56.1

3.5

(1.5)

(311.7)

(0.1)

(311.8)

0.2

(260.1)

(318.2)

6.2

(312.0)

(15.9)

(51.7)

–

282.5

124.2

(159.8)

165.6

133.6

3,456.7

4,002.8

83.1

4,085.9

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. Other comprehensive income reported in the associates and joint ventures reserve represents post-tax fair value movements on financial assets at fair
value through other comprehensive income. Other comprehensive income reported in the profit and loss reserve comprises the post-tax actuarial gain on the Group’s
retirement benefit scheme surplus and post-tax fair value movements on financial assets at fair value through other comprehensive income.

Schroders Annual Report and Accounts 2021

107

Strategic reportGovernanceShareholder informationFinancial statements
Financial statements (continued)

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2021

Net cash from operating activities

Cash flows from investing activities

Net acquisition of businesses, associates and joint ventures

Net acquisition of property, plant and equipment and intangible assets

Acquisition of financial assets

Disposal of financial assets

Non-banking interest received

Distributions received from associates and joint ventures

Net cash from investing activities

Cash flows from financing activities

Purchase of subsidiary shares from non-controlling interest holders

Cash from non-controlling interest holders

Lease payments

Acquisition of own shares

Dividends paid

Other flows

Net cash used in financing activities

Notes

2021
£m

1,234.2

(18.7)

(89.4)

(1,946.0)

2,123.9

12.5

35.1

117.4

(32.4)

54.5

(47.5)

(75.3)

(328.4)

(0.6)

(429.7)

2020
£m

832.5

(18.3)

(92.8)

(1,728.2)

1,974.2

14.9

1.5

151.3

(15.8)

–

(44.4)

(58.3)

(311.8)

(0.8)

(431.1)

Net increase in cash and cash equivalents

921.9

552.7

Opening cash and cash equivalents

Net increase in cash and cash equivalents

Effect of exchange rate changes

Closing cash and cash equivalents

Closing cash and cash equivalents consists of:

Cash and cash equivalents available for use by the Group

Cash held in consolidated pooled investment vehicles

Cash and cash equivalents presented within assets

Cash and cash equivalents presented within assets backing unit-linked liabilities

Closing cash and cash equivalents

4,215.9

921.9

(18.8)

5,119.0

4,075.5

131.8

4,207.3

911.7

5,119.0

3,632.9

552.7

30.3

4,215.9

3,421.9

47.7

3,469.6

746.3

4,215.9

108

Schroders Annual Report and Accounts 2021

NOTES TO THE ACCOUNTS

1. Segmental reporting
(a) Operating segments

The Group has three business segments: Asset Management, Wealth Management and the Group segment. The Asset Management segment
principally comprises investment management including advisory services in respect of equity, fixed income, multi-asset solutions and private
assets and alternatives products. The Wealth Management segment principally comprises investment management, wealth planning and
financial advice, platform services and banking services, primarily for private clients. The Group segment principally comprises the Group’s
treasury management, corporate development and strategy activities and the management costs associated with governance and corporate
management.

Segmental information is presented on the same basis as that provided for internal reporting purposes to the Group’s chief operating decision
maker, the Group Chief Executive. The Wealth Management segment includes the Group’s proportional share of the income and expenses of its
49.9% interest in Schroders Personal Wealth (SPW) on an individual account line basis. This reflects the basis on which the Group monitors the
performance of the business. The adjustment column re-presents the results of SPW on a post-tax basis within share of profit of associates and
joint ventures in accordance with the accounting standards.

Operating expenses includes 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.

Year ended 31 December 2021

Revenue

Cost of sales

Net operating revenue

Net gain on financial instruments and other income

Share of profit of associates and joint ventures

Net income

Operating expenses

Profit before tax and exceptional items

Year ended 31 December 2020

Revenue

Cost of sales

Net operating revenue

Net gain on financial instruments and other income

Share of profit of associates and joint ventures

Net income

Operating expenses

Profit before tax and exceptional items

Asset
Management
£m

Wealth
Management
£m

2,582.5

(539.4)

2,043.1

21.0

73.9

2,138.0

(1,424.8)

713.2

452.1

(31.3)

420.8

11.7

1.2

433.7

(305.1)

128.6

Asset
Management
£m

Wealth
Management
£m

2,182.6

(435.4)

1,747.2

(9.8)

49.5

1,786.9

(1,213.6)

573.3

393.3

(26.4)

366.9

14.7

1.1

382.7

(272.2)

110.5

Group
£m

–

48.6

–

48.6

(53.6)

(5.0)

Group
£m

–

58.1

–

58.1

(39.6)

18.5

Segmental
total
£m

3,034.6

(570.7)

2,463.9

81.3

75.1

2,620.3

(1,783.5)

836.8

Segmental
total
£m

2,575.9

(461.8)

2,114.1

63.0

50.6

2,227.7

(1,525.4)

702.3

Adjustments
£m

(75.1)

14.3

(60.8)

(3.8)

13.1

(51.5)

50.9

(0.6)

Adjustments
£m

(63.2)

8.7

(54.5)

(7.5)

13.5

(48.5)

48.5

–

Group
total
£m

2,959.5

(556.4)

2,403.1

77.5

88.2

2,568.8

(1,732.6)

836.2

Group
total
£m

2,512.7

(453.1)

2,059.6

55.5

64.1

2,179.2

(1,476.9)

702.3

Segment assets and liabilities are not required to be presented as such information is not presented on a regular basis to the Group’s chief operating
decision maker.

Schroders Annual Report and Accounts 2021

109

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

1. Segmental reporting continued
(b) Exceptional items

Exceptional items are significant items of income and expenditure that have been separately presented by virtue of their nature to enable a
better understanding of the Group’s financial performance. Exceptional items relate principally to items arising from acquisitions (including
associates and joint ventures) undertaken by the Group, including amortisation of acquired intangible assets and certain one-off costs in 2020
relating to the Group’s property estate.

Year ended 31 December 2021

Profit before tax and exceptional items

Exceptional items presented within net income:

Net gain on financial instruments and other income

Associates and joint ventures amortisation of acquired
intangible assets and other costs

Exceptional items presented within operating expenses:

Amortisation of acquired intangible assets

Other expenses

Asset
Management
£m

Wealth
Management
£m

713.2

128.6

Group
£m

(5.0)

Segmental
total
£m

Adjustments
£m

836.8

(0.6)

Group
total
£m

836.2

(13.3)

(0.3)

(13.6)

(13.2)

(13.4)

(26.6)

–

(8.5)

(20.3)

(3.0)

(23.3)

–

(13.3)

(8.8)

(22.1)

(33.5)

(16.4)

(49.9)

–

(13.3)

(0.1)

(8.9)

(22.2)

–

(33.5)

(16.4)

(49.9)

Profit before tax and after exceptional items

673.0

96.8

(5.0)

764.8

(0.7)

764.1

Year ended 31 December 2020

Profit before tax and exceptional items

Exceptional items presented within net income:

Net gain on financial instruments and other income

Associates and joint ventures amortisation of acquired
intangible assets and other costs

Exceptional items presented within operating expenses:

Amortisation of acquired intangible assets

Other expenses

Asset
Management
£m

Wealth
Management
£m

573.3

110.5

Group
£m

18.5

Segmental
total
£m

702.3

0.4

–

0.4

(13.8)

(16.4)

(30.2)

–

(21.0)

(22.5)

(2.2)

(24.7)

–

(16.3)

0.4

(21.0)

(20.6)

(36.3)

(34.9)

(71.2)

Profit before tax and after exceptional items

543.5

64.8

2.2

610.5

The Group’s non-current assets1 are located in the following countries:

United Kingdom

China

Switzerland

United States

France

Singapore

Other

Total

Adjustments
£m

–

Group
total
£m

702.3

0.4

(21.0)

(20.6)

(36.3)

(34.9)

(71.2)

610.5

2021
£m

2020
£m

1,468.5

1,513.4

199.6

184.5

106.9

78.4

39.2

159.4

187.4

111.7

86.6

44.2

123.5

2,200.6

107.6

2,210.3

1. Comprises the following non-current assets: property, plant and equipment, goodwill and intangible assets, associates and joint ventures and prepayments.

110

Schroders Annual Report and Accounts 2021

1. Segmental reporting continued
(d) Non-cash items

Year ended 31 December 2021

Operating expenses include the following non-cash items:

Share-based payments

Depreciation and amortisation

Year ended 31 December 2020

Operating expenses include the following non-cash items:

Share-based payments

Depreciation and amortisation

Where applicable, exceptional items are included in the non-cash items presented above.

2. Net operating revenue

Asset
Management
£m

Wealth
Management
£m

75.7

133.3

8.5

29.5

Asset
Management
£m

Wealth
Management
£m

48.9

125.6

4.1

30.4

Group
£m

5.3

–

Group
£m

3.1

12.8

Group
total
£m

89.5

162.8

Group
total
£m

56.1

168.8

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 when certain performance hurdles are met and the service has been provided. 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).

Schroders Annual Report and Accounts 2021

111

Strategic reportGovernanceShareholder informationFinancial statementsAsset
Management
£m

Wealth
Management
£m

Group
£m

Segmental
total
£m

Adjustments
£m

Group
total
£m

–

Group
£m

–

2,792.8

(75.1)

2,717.7

94.4

71.5

64.6

11.3

–

94.4

71.5

64.6

11.3

3,034.6

(75.1)

2,959.5

(530.9)

(39.6)

(0.2)

(570.7)

14.3

–

14.3

(516.6)

(39.6)

(0.2)

(556.4)

2,463.9

(60.8)

2,403.1

Segmental
total
£m

2,390.4

86.9

21.3

60.1

17.2

Adjustments
£m

Group
total
£m

(63.2)

2,327.2

–

86.9

21.3

60.1

17.2

2,575.9

(63.2)

2,512.7

(446.2)

(12.5)

(3.1)

(461.8)

8.7

–

8.7

(437.5)

(12.5)

(3.1)

(453.1)

2,114.1

(54.5)

2,059.6

Financial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

2. Net operating revenue continued
a) Net operating revenue by segment is presented below:

Year ended 31 December 2021

Management fees

Performance fees

Carried interest

Other fees

Wealth Management interest income

Revenue

Fee expense

Cost of financial obligations in respect of carried interest

Wealth Management interest expense

Cost of sales

2,388.6

404.2

94.2

71.5

28.2

–

0.2

–

36.4

11.3

2,582.5

452.1

(499.8)

(39.6)

–

(539.4)

(31.1)

–

(0.2)

(31.3)

Net operating revenue

2,043.1

420.8

Year ended 31 December 2020

Management fees

Performance fees

Carried interest

Other fees

Wealth Management interest income

Revenue

Fee expense

Cost of financial obligations in respect of carried interest

Wealth Management interest expense

Cost of sales

Asset
Management
£m

Wealth
Management
£m

2,058.0

332.4

85.8

21.3

17.5

–

1.1

–

42.6

17.2

2,182.6

393.3

(422.9)

(12.5)

–

(435.4)

(23.3)

–

(3.1)

(26.4)

Net operating revenue

1,747.2

366.9

112

Schroders Annual Report and Accounts 2021

2. Net operating revenue continued
b) Net operating revenue is presented below by region based on the location of clients:

Year ended 31 December 2021

Management fees

Performance fees

Carried interest

Other fees

Wealth Management interest income

Revenue

Fee expense

Continental
Europe &
Middle East
£m

UK
£m

908.4

869.0

8.2

–

30.8

10.3

32.0

71.5

23.2

0.9

Asia Pacific
£m

Americas
£m

Segmental
total
£m

Adjustments
£m

Group
total
£m

643.3

28.9

–

10.4

0.1

372.1

25.3

–

0.2

–

2,792.8

(75.1)

2,717.7

94.4

71.5

64.6

11.3

–

94.4

71.5

64.6

11.3

957.7

996.6

682.7

397.6

3,034.6

(75.1)

2,959.5

(80.6)

(215.5)

(181.7)

(53.1)

(530.9)

14.3

(516.6)

Cost of financial obligations in respect of carried interest

–

(39.6)

Wealth Management interest expense

Cost of sales

(0.2)

(80.8)

–

(39.6)

(0.2)

–

(39.6)

(0.2)

(255.1)

(181.7)

(53.1)

(570.7)

14.3

(556.4)

Net operating revenue

876.9

741.5

501.0

344.5

2,463.9

(60.8)

2,403.1

Year ended 31 December 2020

Management fees

Performance fees

Carried interest

Other fees

Wealth Management interest income

Revenue

Fee expense

Cost of financial obligations in respect of carried interest

Wealth Management interest expense

Cost of sales

Continental
Europe and
Middle East
£m

UK
£m

784.4

724.4

7.8

–

37.1

14.5

31.9

21.3

14.0

2.3

Asia Pacific
£m

Americas
£m

Segmental
total
£m

Adjustments
£m

Group
total
£m

589.6

26.5

–

8.9

0.4

292.0

20.7

–

0.1

–

2,390.4

(63.2)

2,327.2

86.9

21.3

60.1

17.2

–

86.9

21.3

60.1

17.2

843.8

793.9

625.4

312.8

2,575.9

(63.2)

2,512.7

(59.8)

(175.6)

(171.4)

(39.4)

(446.2)

8.7

(437.5)

–

(3.0)

(62.8)

(12.5)

(0.1)

–

(12.5)

(3.1)

–

(12.5)

(3.1)

(188.2)

(171.4)

(39.4)

(461.8)

8.7

(453.1)

Net operating revenue

781.0

605.7

454.0

273.4

2,114.1

(54.5)

2,059.6

Estimates and judgements – revenue
Carried interest represents the Group’s contractual right to a share of the profits of 113 private asset investment vehicles (2020: 95 vehicles), if
certain performance hurdles are met. It is recognised when the relevant services have been provided and it is highly probable that a significant
reversal will not occur.

The amount of carried interest that will ultimately be received by the Group is dependent on the cash flows realised by the respective investment
vehicles when the underlying investments are successfully disposed of. The resultant cash flows are assessed against the applicable performance
hurdle, which is dependent on the capital invested and the timing and quantum of distributions. For accounting purposes, the outcome is
discounted to determine the present value of the carried interest to be recognised. The actual amount receivable at maturity will depend on the
realised value and may differ from the projected value.

The Group estimates the cash flows that will be received by the investment vehicles with reference to the current fair value of the underlying
investments. Judgement is applied to determine certain assumptions used in the estimate. Those assumptions principally relate to the future
growth and the timing of distributions. No future growth is assumed, reflecting the uncertainty of future investment returns. The timing of
distributions to clients is based on individual investment managers’ expectations as to the realisation of cash flows from the successful disposal
of the underlying securities.

The Group assesses the maturity of the respective investment vehicles by reference to the percentage of committed capital invested and original
capital returned to clients. This helps the Group to understand whether a significant risk of reversal exists and to determine whether the revenue
should be recognised or further constrained in accordance with the accounting standards.

Schroders Annual Report and Accounts 2021

113

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

Estimates and judgements – cost of sales
The crystallisation of associated financial obligations in respect of carried interest (carried interest payable, see note 17) 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 £3.6 million (2020: £2.8 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 £3.0 million/£4.2 million (2020: £1.6 million/£3.0
million) and this amount would be lower than the corresponding increase/reduction in revenue.

3. Net gain on financial instruments and other income

The Group’s net gain on financial instruments and other income principally arises from financial instruments it holds to support its capital
strategies, which comprise working capital and investment capital.

A portion of the Group’s financial instruments measured at fair value are classified as financial instruments at fair value through profit or loss
(FVTPL). The remainder of the Group’s financial assets measured at fair value are classified as financial assets at fair value through other
comprehensive income (FVOCI). An explanation of how the Group’s financial assets and financial liabilities are classified and measured is included
in notes 9 and 17.

Net gains and losses on financial instruments at FVTPL principally comprise unrealised gains and losses on investments in debt securities,
equities, pooled investment vehicles, and derivatives (which mainly arise from hedging activities) as well as gains and losses on contingent
consideration and other financial liabilities arising from business combinations.

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 investment is sold or otherwise realised. Interest earned on FVOCI assets is
recognised using the effective interest method and recorded as net finance income within net gains on financial instruments and other income.

Expected credit losses (ECL) are calculated on financial assets measured at amortised cost and debt instruments measured at FVOCI. Movements
in the ECL provision are recognised in net gains on financial instruments and other income in the income statement (see note 20).

Net gains and losses on financial instruments presented in the income statement excludes net gains and losses on financial instruments at
FVTPL that are held to hedge deferred employee cash awards and the cost of financial obligations in respect of carried interest. These items are
included within operating expenses and cost of sales respectively and are presented separately within this note. In both instances, the
presentation better reflects the substance of these transactions and provides more relevant information about the Group’s net income and
operating expenses.

Net finance income is derived from interest on non-banking activities, principally generated from cash and deposits with banks, but also as a
result of holding investments in debt securities at amortised cost or FVOCI. Debt securities and cash held outside of Wealth Management entities
are managed mainly by Group Treasury to earn competitive rates of return and provide liquidity throughout the Group. Significant amounts of
the Group’s cash and interest-earning securities are held within Wealth Management and are managed by the Wealth Management treasury
team. Interest earned on the assets held within Wealth Management is included in revenue and interest incurred on the liabilities assumed is
included in cost of sales. Interest is recognised using the effective interest method (see note 2).

Other income includes amounts arising from ancillary services provided by Benchmark Capital, gains and losses on foreign exchange and rent
receivable from subletting properties.

114

Schroders Annual Report and Accounts 2021

3. Net gain on financial instruments and other income continued

Year ended 31 December

Net gain on financial instruments at FVTPL

Net (loss)/gain arising from fair value movements

Net transfers on disposal

Net (loss)/gain on financial assets at FVOCI

Net finance (expense)/income

Other income/(expense)

2021

Income
statement
£m

Other
comprehensive
income
£m

36.1

–

1.8

(2.0)

28.3

(1.0)

(1.8)

(2.8)

–

Total
£m

36.1

(1.0)

–

(1.0)

(2.0)

28.3

Income
statement
£m

58.0

–

0.5

1.1

(3.7)

2020

Other
comprehensive
income
£m

–

1.9

(0.5)

1.4

–

Total
£m

58.0

1.9

–

1.9

1.1

(3.7)

Net gain on financial instruments and other income1

64.2

(2.8)

61.4

55.9

1.4

57.3

Net gain on financial instruments held to hedge employee deferred cash
awards – presented within operating expenses (see note 4)

Cost of financial obligations in respect of carried interest – presented
within cost of sales (see note 2)

Net gain on financial instruments and other income – including
amounts presented elsewhere

1. Includes a charge of £13.3 million (2020: £0.4 million credit) of exceptional items.

22.2

(39.6)

–

22.2

25.6

(39.6)

(12.5)

–

25.6

(12.5)

46.8

(2.8)

44.0

69.0

1.4

70.4

Schroders Annual Report and Accounts 2021

115

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

4. Operating expenses

Operating expenses represent the Group’s administrative expenses and are recognised as the services are received. Certain costs, such as
depreciation of property, plant and equipment and amortisation of intangible assets, are charged evenly over the life of the relevant contract or
useful life of the asset. The biggest component of the Group’s operating expenses is the cost of employee benefits, as shown below. Other costs
include accommodation, information technology, marketing and outsourcing costs.

Compensation costs are managed to a target total compensation ratio of between 45% and 49%. Targeting a total compensation ratio range
provides some flexibility to manage the overall cost base in response to market conditions. Total costs are managed to a target long-term key
performance indicator ratio of total costs to net income of 65%.

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
charged to the income statement over the performance period and the vesting period. The Group holds investments that are linked to these
performance awards in order to hedge the related expense. Gains and losses on these investments are netted against the relevant costs in the
income statement but are presented separately below (see note 3).

Further detail on other employee benefits can be found elsewhere within these financial statements, see note 25 for pension costs and note 26
for compensation that is awarded in Schroders plc shares.

(a) Employee benefits expense and number of employees

Year ended 31 December

Salaries, wages and other remuneration

Social security costs

Pension costs

Employee benefits expense

Net gain on financial instruments held to hedge deferred cash awards

Employee benefits expense – net of hedging

2021
£m

1,034.6

104.9

57.4

1,196.9

(22.2)

1,174.7

2020
£m

871.5

82.5

54.1

1,008.1

(25.6)

982.5

The employee benefits expense net of hedging of £1,174.7 million (2020: £982.5 million) includes £6.6 million (2020: £7.8 million) that is presented
within exceptional items.

Information about the compensation of key management personnel can be found in note 27. 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 77 to 99.

The monthly average number of employees of the Company and its subsidiary undertakings during the year was:

Full-time employees

Contract and temporary employees

Employed as follows:

Asset Management

Wealth Management

Group

(b) Audit and other services

Year ended 31 December

Fees payable to the auditor for the audit of the Company and Consolidated financial statements

Fees payable to the auditor and its associates for other services:

Audit of the Company’s subsidiaries

Audit-related assurance services

Other assurance services

2021
Number

5,358

292

5,650

4,419

1,202

5,650

2021
£m

0.7

4.0

1.1

0.7

6.5

2020
Number

5,165

391

5,556

4,384

1,142

5,556

2020
£m

0.6

3.6

1.1

0.5

5.8

116

Schroders Annual Report and Accounts 2021

5. 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 14). 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

Year ended 31 December

UK current year charge

Rest of the world current year charge

Prior year adjustments

Total current tax

Origination and reversal of temporary differences

Prior year adjustments

Effect of changes in corporation tax rates

Total deferred tax

2021
£m

71.1

104.4

33.6

209.1

(31.2)

(34.4)

(3.2)

(68.8)

2020
£m

49.9

69.3

(4.8)

114.4

0.5

5.0

4.6

10.1

Tax charge reported in the income statement

140.3

124.5

(b) Analysis of tax charge reported in other comprehensive income

Year ended 31 December

Current tax charge on movements in financial assets at fair value through other comprehensive income

Deferred tax charge on actuarial gains and losses on defined benefit pension schemes

Deferred tax credit on other movements through other comprehensive income

Deferred tax – effect of changes in corporation tax rates

Tax charge reported in other comprehensive income

Year ended 31 December

Current tax credit on Deferred Award Plan and other share-based remuneration

Deferred tax credit on Deferred Award Plan and other share-based remuneration

Deferred tax – effect of changes in corporation tax rates

Tax credit reported in equity

2021
£m

–

5.2

(1.0)

1.4

5.6

2021
£m

(3.7)

(0.8)

(0.2)

(4.7)

2020
£m

0.2

5.6

(0.1)

(0.4)

5.3

2020
£m

(2.7)

(0.5)

(0.3)

(3.5)

(d) Factors affecting tax charge for the year
The UK standard rate of corporation tax for 2021 is 19% (2020: standard rate of 19%). The tax charge for the year is higher (2020: higher) than a
charge based on the UK standard rate. The differences are explained below:

Year ended 31 December

Profit before tax

Less share of profit of associates and joint ventures

Profit before tax of Group entities

2021
£m

764.1

(79.3)

684.8

2020
£m

610.5

(43.1)

567.4

Profit before tax of consolidated Group entities multiplied by corporation tax at the UK standard rate

130.1

107.8

Effects of:

Different statutory tax rates of overseas jurisdictions

Permanent differences including non-taxable income and non-deductible expenses

Net movement in temporary differences for which no deferred tax is recognised

Deferred tax adjustments in respect of changes in corporation tax rates

Prior year adjustments

Tax charge reported in the income statement

6.7

6.9

0.6

(3.2)

(0.8)

5.9

10.0

(4.0)

4.6

0.2

140.3

124.5

Schroders Annual Report and Accounts 2021

117

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

5. Tax expense continued

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 (2020: none).

6. 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:

Year ended 31 December

Weighted average number of shares used in the calculation of basic earnings per share

Effect of dilutive potential shares – share options

Effect of dilutive potential shares – contingently issuable shares

Weighted average number of shares used in the calculation of diluted earnings per share

2021
Number
Millions

277.1

4.7

0.1

281.9

2020
Number
Millions

276.2

5.0

0.1

281.3

The pre-exceptional earnings per share calculations are based on pre-exceptional profit after tax excluding non-controlling interest of £14.7 million
(2020: £14.2 million). After exceptional items, the profit after tax attributable to non-controlling interest was £11.9 million (2020: £9.7 million).

7. 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 or approved by shareholders. The reduction in equity in the year therefore comprises the prior
year final dividend and the current year interim dividend.

Prior year final dividend paid

Interim dividend paid

Total dividends paid

2022

£m

Pence per
share

2021

2020

£m

217.3

101.3

318.6

Pence per
share

79.0

37.0

116.0

£m

216.0

95.7

311.7

Pence per
share

79.0

35.0

114.0

Current year final dividend recommended

232.9

85.0

Dividends of £9.1 million (2020: £10.4 million) on shares held by employee benefit trusts have been waived and dividends may not be paid on
treasury shares. The Board has recommended a 2021 final dividend of 85.0 pence per share (2020 final dividend: 79.0 pence), amounting to
£232.9 million (2020 final dividend: £216.3 million). The dividend will be paid on 5 May 2022 to shareholders on the register at 25 March 2022 and will
be accounted for in 2022.

In addition, the Group paid £9.8 million of dividends to holders of non-controlling interests in subsidiaries of the Group during 2021 (2020: £0.1
million), resulting in total dividends paid of £328.4 million (2020: £311.8 million).

118

Schroders Annual Report and Accounts 2021

8. Trade and other receivables

Trade and other receivables includes 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 9). 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.

Trade and other receivables held at amortised cost:

Fee debtors

Settlement accounts

Accrued income

Prepayments

Other receivables

Current tax

–

67.5

5.4

10.5

–

83.4

Non-current
£m

2021

Current
£m

Total
£m

Non-current
£m

2020

Current
£m

76.8

285.3

426.9

62.6

25.6

37.8

76.8

285.3

494.4

68.0

36.1

37.8

–

53.8

6.2

7.6

–

77.6

155.2

430.2

52.3

39.5

14.8

915.0

998.4

67.6

769.6

837.2

Total
£m

77.6

155.2

484.0

58.5

47.1

14.8

Trade and other receivables held at fair value:

Deposits with banks in the form of bullion

–

2.5

–

3.1

Total trade and other receivables

83.4

917.5

1,000.9

67.6

772.7

840.3

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 9 for details on the fair value hierachy.

Estimates and judgements – carried interest receivable
Accrued income includes £100.0 million of receivables in respect of carried interest (2020: £90.7 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.

Schroders Annual Report and Accounts 2021

119

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

9. Financial assets

The Group holds financial assets including equities, debt securities, pooled investment vehicles and derivatives to support its Group capital
strategies and its Wealth Management banking book, including loans to clients. The Group also enters into derivatives on behalf of Wealth
Management clients, referred to as client facilitation (see note 19).

Classification and measurement
The Group initially records all financial assets at fair value. The Group subsequently holds each financial asset at FVTPL, 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 a fixed interest rate (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 model (see note 3 and note 20).

Financial assets at fair value through other comprehensive income
Financial assets are held 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 within the Group’s Wealth
Management entities and to debt securities held as part of the Group’s investment capital portfolio. Impairment is recognised for debt securities
classified as FVOCI under the expected credit loss model (see note 3 and note 20).

Financial assets at fair value through profit or loss
All other financial assets are held at FVTPL. The Group’s financial assets at FVTPL principally comprise investments in debt securities, equities,
pooled investment vehicles and derivatives.

Estimates and judgements – fair value measurements
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, asset and mortgage backed securities, and loans held at fair value. Valuation techniques may
include using a broker quote in an inactive market or an evaluated price based on a compilation of primarily observable market information
utilising information readily available via external sources. For funds not priced on a daily basis, the net asset value which is issued monthly or
quarterly is used; and

– Level 3 fair value measurements are those derived from valuation techniques that include significant inputs that are not based on observable
market data. The Group’s level 3 financial assets principally comprise holdings in pooled investment vehicles, including private equity funds,
and holdings in property investment vehicles that operate hotel businesses. The pooled investment vehicles are measured in accordance with
International Private Equity and Venture Capital Valuation Guidelines 2018 using the valuation technique that is most suitable to the applicable
investment. The property investment vehicles are valued based on the expected future cash flows that could be generated from the
underlying hotel businesses. Given the application of different valuation techniques, and as the investments are not homogenous in nature,
there are no significant assumptions or reasonably possible alternatives that would lead to a material change in fair value.

120

Schroders Annual Report and Accounts 2021

9. Financial assets continued

Financial assets at amortised cost:

Loans and advances to banks

Loans and advances to clients

Debt securities

Financial assets at FVOCI:

Debt securities

Financial assets at FVTPL:

Debt securities

Pooled investment vehicles

Equities

Derivative contracts

2021

Level 1
£m

Level 2
£m

Level 3
£m

–

405.7

185.5

603.9

557.8

28.5

–

4.2

231.1

38.0

4.1

49.3

–

4.0

135.1

8.2

–

1,375.7

322.5

147.3

Not at
fair value
£m

153.0

614.0

109.9

876.9

–

Total
£m

153.0

614.0

109.9

876.9

409.9

420.6

777.0

570.1

77.8

1,845.5

Total financial assets

1,781.4

326.7

147.3

876.9

3,132.3

Financial assets at amortised cost:

Loans and advances to banks

Loans and advances to clients

Debt securities

Financial assets at FVOCI:

Debt securities

Financial assets at FVTPL:

Loans and advances to clients

Debt securities

Pooled investment vehicles

Equities

Derivative contracts

2020

Level 1
£m

Level 2
£m

Level 3
£m

–

343.0

–

99.0

668.5

293.7

0.6

–

246.5

4.1

168.0

62.8

21.5

33.5

1,061.8

289.9

–

6.2

108.8

23.3

–

138.3

Not at
fair value
£m

206.5

477.9

107.9

792.3

–

Total
£m

206.5

477.9

107.9

792.3

589.5

4.1

273.2

840.1

338.5

34.1

1,490.0

Total financial assets

1,404.8

536.4

138.3

792.3

2,871.8

Schroders Annual Report and Accounts 2021

121

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

9. Financial assets continued

Current

Non-current

2021
£m

2,435.5

696.8

3,132.3

2020
£m

2,354.3

517.5

2,871.8

The fair value of financial assets at amortised cost approximates their carrying value. No financial assets were transferred between levels during 2021
(2020: none).

Movements in financial assets categorised as level 3 during the year were:

At 1 January

Exchange translation adjustments

Net gain recognised in the income statement

Additions

Disposals

At 31 December

10. Associates and joint ventures

2021
£m

138.3

(3.8)

42.4

29.3

(58.9)

147.3

2020
£m

134.9

3.0

4.1

23.3

(27.0)

138.3

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 9). 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 9). 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

At 1 January

Exchange translation adjustments

Additions

Disposals

Profit/(loss) for the year after tax

Gains recognised in other comprehensive income

Other movements in reserves of associates and joint ventures

Distributions of profit

At 31 December

2021

Associates
£m

Joint ventures
£m

211.0

6.1

1.1

(0.8)

72.3

0.1

–

(29.2)

260.6

194.2

(0.1)

5.9

–

7.0

–

(0.9)

206.1

Total
£m

405.2

6.0

7.0

(0.8)

79.3

0.1

–

(30.1)

466.7

2020

Associates
£m

Joint ventures
£m

200.2

197.8

2.0

0.2

(34.3)

48.5

0.1

0.2

(5.9)

211.0

(0.1)

2.5

–

(5.4)

–

(0.6)

194.2

Total
£m

398.0

1.9

2.7

(34.3)

43.1

0.1

0.2

(6.5)

405.2

Information about the significant associates and joint ventures held by the Group at 31 December 2021 is shown below. The companies are unlisted.

Name of associate or joint venture

Nature of its
business

Principal place of
business

Class of share

Scottish Widows Schroder Wealth Holdings Limited (SPW)

Wealth management

England

Ordinary shares

Bank of Communications Schroder Fund Management Co.
Ltd. (BoCom)

Investment management

Axis Asset Management Company Limited (Axis)

Investment management

A10 Capital Parent Company LLC (A10)

Real estate lending

China

India

Ordinary shares

Common units

Percentage
owned by the
Group

49.9%

30.0%

25.0%

19.3%

122

Schroders Annual Report and Accounts 2021

10. Associates and joint ventures continued

Non-current assets

Current assets

Non-current liabilities

Current liabilities

Total equity

2021

SPW1
£m

BoCom
£m

209.7

157.3

54.6

756.2

Axis
£m

14.3

96.2

A10
£m

Other
£m

Total
£m

SPW
£m

BoCom
£m

1,390.2

5.8

1,674.6

216.0

36.7

176.9

22.5

1,209.1

143.0

636.4

2020

Axis
£m

13.1

58.5

A10
£m

Other
£m

Total
£m

953.2

125.5

2.2 1,221.2

19.4

982.8

(23.2)

(1.1)

–

(1,404.0)

(1.5)

(1,429.8)

(22.0)

(0.9)

(4.7)

(956.6)

(0.7)

(984.9)

(58.0)

(146.7)

(14.4)

(113.1)

(5.9)

(338.1)

(68.1)

(142.2)

(6.8)

(77.9)

(3.7)

(298.7)

285.8

663.0

96.1

50.0

20.9

1,115.8

268.9

530.0

60.1

44.2

17.2

920.4

Group’s share of net assets

142.6

198.9

Goodwill and intangible assets

Deferred tax liability

58.1

(3.1)

–

24.0

10.4

–

9.6

1.3

–

7.7

17.2

–

382.8

134.2

159.0

87.0

(3.1)

60.9

(3.1)

–

15.0

10.4

–

Carrying value held by the Group

197.6

198.9

34.4

10.9

24.9

466.7

192.0

159.0

25.4

8.5

1.2

–

9.7

6.1

322.8

13.0

–

85.5

(3.1)

19.1

405.2

Net income

135.1

355.2

79.4

66.5

29.0

665.2

125.2

263.3

57.4

34.0

23.4

503.3

4.0

0.5

4.5

0.8

–

4.1

165.7

–

0.5

4.1

166.2

1.6

(1.3)

47.2

(4.1)

Profit/(loss) for the year

16.9

201.4

36.7

Other comprehensive income

–

Total comprehensive income

16.9

201.4

36.7

14.1

0.3

14.4

8.1

–

8.1

277.2

0.3

277.5

(6.8)

141.7

22.7

–

(6.8) 141.7

22.7

Group’s share of profit/(loss)
for the year before amortisation2

Amortisation charge

Group’s share of profit/(loss)
for the year

Group’s share of other
comprehensive income

Group’s share of total
comprehensive income

8.4

(2.8)

60.4

–

9.2

–

5.6

60.4

9.2

–

5.6

60.4

9.2

2.7

–

2.7

0.1

2.8

(1.4)

83.5

(4.2)

(3.4)

42.5

(2.8)

–

5.7

–

1.4

79.3

(6.2)

42.5

5.7

0.8

0.3

43.1

–

0.1

–

0.1

–

0.1

1.4

79.4

(6.2)

42.5

5.7

0.9

0.3

43.2

1. SPW is a joint venture of the Group and has £114.8 million of cash and cash equivalents (2020: £105.6 million) within its current assets.
2. Includes £4.7 million of exceptional items within the share of profit of associates and joint ventures (2020: £16.9 million).

(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.

2021

Schroder ISF
Smart
Manufacturing
£m

SSSF Wealth
Management USD
Balanced
£m

Schroder Core
Plus FIC FIA
£m

ICBC (Europe)
ECITS SICAV
£m

Schroder QEP Global
Active value
£m

Schroder Advanced
Beta Global
Corporate Bond
£m

Current assets

Current liabilities

Total equity

Net income

Profit for the year

Total comprehensive income

32.1

–

32.1

1.4

15.4

–

15.4

0.3

5.8

–

5.8

0.1

21.9

–

21.9

0.1

458.9

–

458.9

13.7

Country of incorporation

Luxembourg

Brazil

Luxembourg

Percentage owned by the Group

29%

28%

33%

27%

1,277.7

(0.7)

1,277.0

19.6

23%

Schroders Annual Report and Accounts 2021

123

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

10. Associates and joint ventures continued

2020

Schroder Absolute
Return Emerging
Markets Debt
Portfolio LP
£m

Schroder ISF
Healthcare
Innovation
£m

Schroder
Indian
Equity
£m

Schroder
Global CB
Fund PPIT
Unhedged
£m

Schroder
Fusion
Managed
Defensive
£m

ICBC (Europe)
ECITS SICAV
£m

SPW
Balanced
Portfolio
£m

Schroder Long
Dated
Corporate
Bond
£m

Schroder All
Maturities
Corporate
Bond
£m

5.9

–

5.9

0.4

38.2

30.0

–

38.2

30.0

2.1

–

17.6

–

17.6

2.2

21.8

–

21.8

0.6

22.3

–

22.3

0.2

4.5

–

4.5

–

395.6

1,231.2

–

395.6

1,231.2

11.1

20.8

11.1

20.7

US Luxembourg

Japan

UK Luxembourg

30%

21%

23%

24%

25%

33%

24%

26%

34%

Current assets

Current liabilities

Total equity

Net income

Profit for the year

Total comprehensive income

Country of incorporation

Percentage owned by the
Group

11. Property, plant and equipment

The Group’s property, plant and equipment provides the infrastructure to enable the Group to operate, and principally comprises 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 12). Assets are initially stated at cost, which includes expenditure
associated with 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 as it is assumed to have an indefinite useful life.

2021

2020

Leasehold
improvements
£m

Land and
buildings
£m

Other
assets
£m

Total
£m

Leasehold
improvements
£m

Land and
buildings
£m

Other
assets
£m

Total
£m

Cost

At 1 January

Exchange translation adjustments

Additions

Disposals

188.7

19.7

157.5

365.9

187.6

19.7

145.4

352.7

(0.8)

11.2

(4.5)

–

(1.6)

14.8

(4.9)

(2.4)

26.0

(9.4)

–

4.9

(3.8)

–

0.9

14.0

(2.8)

0.9

18.9

(6.6)

At 31 December

194.6

19.7

165.8

380.1

188.7

19.7

157.5

365.9

Accumulated depreciation

At 1 January

Exchange translation adjustments

Depreciation charge

Disposals

At 31 December

(50.7)

0.6

(13.6)

4.5

(59.2)

(1.3)

–

(0.5)

–

(1.8)

(77.8)

0.8

(17.1)

4.9

(129.8)

1.4

(31.2)

9.4

(89.2)

(150.2)

(34.0)

(0.1)

(19.6)

3.0

(50.7)

(0.9)

–

(0.4)

–

(1.3)

(60.2)

(0.2)

(19.6)

2.2

(95.1)

(0.3)

(39.6)

5.2

(77.8)

(129.8)

Net book value at 31 December

135.4

17.9

76.6

229.9

138.0

18.4

79.7

236.1

Right-of-use assets (see note 12)

Property, plant and equipment
net book value at 31 December

330.1

560.0

354.8

590.9

124

Schroders Annual Report and Accounts 2021

12. 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
11). 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 whilst
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 extensions/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 cashflows.

2021

2020

Right-of-use
assets
£m

Lease
liabilities
£m

Right-of-use
assets
£m

Lease
liabilities
£m

At 1 January

Exchange translation adjustments

Additions and remeasurements of lease obligations

Lease payments

Depreciation charge

Interest expense

At 31 December

354.8

(1.8)

14.5

–

(37.4)

–

330.1

397.2

(1.2)

14.5

(47.5)

–

10.8

373.8

The depreciation charge and interest expense relating to leases are recorded within operating expenses.

Lease liabilities – current

Lease liabilities – non-current

The Group’s lease liabilities contractually mature in the following time periods:

Less than 1 year

1 – 2 years

2 – 5 years

More than 5 years

394.7

0.1

4.4

–

(44.4)

–

354.8

2021

31.2

342.6

373.8

2021
£m

46.3

47.9

98.8

267.9

414.6

425.3

(0.7)

5.0

(44.4)

–

12.0

397.2

2020

35.9

361.3

397.2

2020
£m

48.7

47.1

114.8

283.5

445.4

460.9

494.1

Schroders Annual Report and Accounts 2021

125

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

13. 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, 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 operating expenses 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 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.

Cost

At 1 January

Exchange translation adjustments

Additions

Disposals

At 31 December

Accumulated amortisation

At 1 January

Exchange translation adjustments

Amortisation charge for the year

Disposals

At 31 December

2021

Acquired
intangible
assets
£m

Software
£m

Total
£m

Goodwill
£m

2020

Acquired
intangible
assets
£m

Software
£m

Total
£m

362.8

413.2

1,587.7

761.8

326.0

340.6

1,428.4

(3.2)

2.3

–

(0.8)

63.4

(5.1)

(12.3)

65.7

(5.1)

16.6

33.3

–

5.4

31.4

–

0.6

73.9

(1.9)

22.6

138.6

(1.9)

Goodwill
£m

811.7

(8.3)

–

803.4

361.9

470.7

1,636.0

811.7

362.8

413.2

1,587.7

–

(220.2)

(159.5)

(379.7)

0.9

(33.5)

–

0.6

(60.7)

4.9

1.5

(94.2)

4.9

(252.8)

(214.7)

(467.5)

–

(182.7)

(112.3)

(295.0)

(1.2)

(36.3)

–

(0.6)

(48.5)

1.9

(1.8)

(84.8)

1.9

(220.2)

(159.5)

(379.7)

Carrying amount at 31 December

803.4

109.1

256.0

1,168.5

811.7

142.6

253.7

1,208.0

The Group did not complete any business combinations during 2021 (2020: £29.1 million of intangible assets were acquired as a result of business
combinations). The Group acquired £2.3 million (2020: £2.3 million) of customer contracts through Benchmark Capital that were not considered to be
business combinations.

Estimates and judgements
The Group estimates the fair value of 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, it is the Group’s judgement that the lowest level of CGU used to determine impairment is segment level
for Asset Management. The Benchmark Capital business within Wealth Management is assessed separately from the rest of Wealth
Management. Of the total goodwill, £574.9 million (2020: £583.1 million) is allocated to Asset Management and £228.5 million (2020: £228.6
million) is allocated to Wealth Management, of which £68.1 million (2020: £68.1 million) relates to Benchmark Capital.

126

Schroders Annual Report and Accounts 2021

13. 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 (2020: 2%), a pre-tax discount rate of 10% (2020: 10%), expected flows and expected changes to 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 (2020: 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.

14. 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.

At 1 January

Income statement credit/(charge)

Income statement credit/(charge)
due to changes in tax rates

(Charge)/credit to other
comprehensive income

(Charge)/credit to statement of
other comprehensive income due
to changes in tax rates

Credit to equity

Credit to equity due to changes in
tax rates

Business combinations

Exchange translation adjustments

2021

2020

Accelerated
capital
allowances
£m

Deferred
employee
awards
£m

Pension
schemes
£m

(4.6)

12.6

82.3

13.6

(31.2)

(0.5)

Tax
losses
£m

3.0

34.7

Other net
temporary
differences
£m

(48.1)

5.2

Total
£m

1.4

65.6

Accelerated
capital
allowances
£m

Deferred
employee
awards
£m

Pension
schemes
£m

Other net
temporary
differences1
£m

Total
£m

(5.7)

1.3

77.3

1.1

(22.3)

(0.5)

(28.6)

20.7

(7.4)

(5.5)

3.8

4.9

(10.3)

10.4

(5.6)

3.2

(0.3)

3.2

(3.4)

(4.1)

(4.6)

–

0.8

0.2

–

(0.5)

(5.2)

(1.5)

–

1.0

(4.2)

0.1

–

(1.4)

0.8

0.2

–

0.1

48.2

(0.6)

(1.0)

(48.0)

64.6

0.1

(4.6)

(5.6)

0.1

(5.5)

–

0.5

0.3

–

(0.1)

0.6

(0.2)

–

(5.5)

0.6

0.4

0.5

0.3

(5.5)

0.6

1.4

82.3

(31.2)

(45.1)

At 31 December

11.8

101.3

(48.7)

1. Tax losses for 2020 are presented within other net temporary differences.

The UK corporation tax rate is currently 19%. The UK Chancellor announced in the March 2021 Budget that the rate will increase to 25% from April
2023. The rate increase was substantively enacted in May 2021 and the UK deferred tax balances have been revalued accordingly.

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 and non-voting shares at the time the awards are exercised.

A deferred tax asset of £6.5 million (2020: £7.6 million) relating to £34.3 million of realised and unrealised 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 £13.3 million (2020: £11.1 million) relating to £56.2 million of other losses and other temporary differences have not been
recognised as there is insufficient evidence that there will be sufficient taxable profits in the future against which these deferred tax assets could be
utilised.

Schroders Annual Report and Accounts 2021

127

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

14. Deferred tax continued

After offsetting deferred tax assets and liabilities where appropriate within territories, the net deferred tax asset comprises:

Deferred tax assets

Deferred tax liabilities

2021
£m

145.0

(80.4)

64.6

2020
£m

32.9

(31.5)

1.4

15. 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 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 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 and liabilities held by the Life Company are measured at FVTPL. Other balances include cash and receivables, which are
measured at amortised cost (see note 9). 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 and liabilities held to cover investor obligations are attributable to investors in the Life
Company or third party investors in the funds. As a result, any gain or loss is offset by a change in the obligation to investors.

Financial liabilities due to Life Company investors

Financial liabilities due to third parties1

2021
£m

10,439.8

3,023.3

13,463.1

2020
£m

9,727.6

2,358.6

12,086.2

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.

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 9.

Assets backing unit-linked liabilities

Financial assets at fair value through profit or loss:

Debt securities

Pooled investment vehicles

Equities

Derivative contracts

Financial assets at amortised cost:

Cash and cash equivalents

Trade and other receivables

2021

Level 1
£m

Level 2
£m

Level 3
£m

Not at
fair value
£m

Total
£m

2,130.6

3,654.5

4,952.6

62.8

1,547.2

–

10.8

40.0

10,800.5

1,598.0

–

22.9

–

22.9

–

911.7

130.0

3,677.8

3,677.4

4,963.4

102.8

12,421.4

911.7

130.0

1,041.7

Total assets backing unit-linked liabilities

10,800.5

1,598.0

22.9

1,041.7

13,463.1

Unit-linked liabilities

13,369.6

77.7

–

15.8

13,463.1

128

Schroders Annual Report and Accounts 2021

15. Unit-linked liabilities and assets backing unit-linked liabilities continued

Assets backing unit-linked liabilities

Financial assets at fair value through profit or loss:

Debt securities

Pooled investment vehicles

Equities

Derivative contracts

Financial assets at amortised cost:

Cash and cash equivalents

Trade and other receivables

2020

Level 1
£m

Level 2
£m

Level 3
£m

Not at
fair value
£m

Total
£m

1,57 1,572.7

1,722.1

3,369.0

4,480.4

37.6

9,459.7

–

1.9

4.6

1,728.6

–

3.3

24.8

–

28.1

–

746.3

123.5

869.8

3,298.1

3,393.8

4,482.3

42.2

11,216.4

746.3

123.5

869.8

Total assets backing unit-linked liabilities

9,45 9,459.7

1,728.6

28.1

869.8

12,086.2

Unit-linked liabilities

11,963.8

58.9

–

63.5

12,086.2

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 (2020: none).

Estimates and judgements – fair value measurements
Each instrument has been categorised within one of three levels using a fair value hierarchy (see note 9). 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 compromise 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 fair value.

Movements in financial assets categorised as level 3 during the year were:

At 1 January

Exchange translation adjustments

Net gain recognised in the income statement

Additions

Disposals

At 31 December

2021
£m

28.1

(1.1)

10.4

–

(14.5)

22.9

2020
£m

29.5

(0.9)

3.4

2.1

(6.0)

28.1

Schroders Annual Report and Accounts 2021

129

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

16. Trade and other payables

Trade and other payables includes 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 9). 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.

Trade and other payables at amortised cost:

Settlement accounts

Trade creditors

Social security

Accruals and deferred income

Other payables

Trade and other payables at fair value:

Deferred cash awards

Bullion deposits by customers

Non-current
£m

2021

Current
£m

Total
£m

Non-current
£m

2020

Current
£m

–

28.4

18.5

–

46.9

80.6

–

80.6

138.2

8.8

86.5

619.7

14.7

867.9

117.4

2.2

119.6

138.2

8.8

114.9

638.2

14.7

914.8

198.0

2.2

200.2

–

21.0

13.4

0.3

34.7

84.7

–

84.7

151.7

11.0

70.1

463.3

18.9

715.0

90.2

3.1

93.3

Total
£m

151.7

11.0

91.1

476.7

19.2

749.7

174.9

3.1

178.0

Total trade and other payables

127.5

987.5

1,115.0

119.4

808.3

927.7

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 9). 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:

Less than 1 year1

1 – 2 years

2 – 5 years

More than 5 years

2021
£m

987.5

65.4

60.3

1.8

2020
£m

808.3

59.0

59.3

1.1

127.5

119.4

1,115.0

927.7

1. Settlement accounts are generally settled within four working days and trade creditors have an average settlement period of 20 working days (2020: 23 working days).

17. Financial liabilities

The Group’s financial liabilities principally comprise deposits by Wealth Management clients and banking counterparties. They also include
derivatives held for client facilitation or interest rate matching in Wealth Management (see note 19), and the hedging of risk exposures within
investment capital (see note 19). Other financial liabilities at fair value mainly comprise liabilities that arise from financial obligations in respect
of carried interest, contingent consideration and other financial liabilities arising from acquisitions completed by the Group, and third party
interests in consolidated funds. Consolidation occurs when the Group is deemed to control a fund, usually in respect of Life Company or seed
capital investments. When a fund is consolidated, the Group accounts for the fund in its statement of financial position as if it were wholly owned
by the Group, but records an additional liability representing the fair value of the proportion of the fund owned by third-party investors. Where
the investment is held by the Life Company, the fair value of the proportion of the fund owned by third-party investors is shown as part of
unit-linked liabilities (see note 15). Each instrument has been categorised within one of three levels using a fair value hierarchy (see note 9).

130

Schroders Annual Report and Accounts 2021

17. Financial liabilities continued

Financial liabilities at amortised cost:

Client accounts

Deposits by banks

Other financial liabilities

Financial liabilities at fair value through profit or loss:

Derivative contracts (see note 19)

Other financial liabilities

2021

Level 1
£m

Level 2
£m

Level 3
£m

Not at
fair value
£m

Total
£m

–

29.8

733.0

762.8

–

58.5

–

58.5

–

149.7

3,748.3

69.9

4.4

69.9

4.4

3,822.6

–

88.3

882.7

971.0

Total financial liabilities

762.8

58.5

149.7

3,822.6

4,793.6

Financial liabilities at amortised cost:

Client accounts

Deposits by banks

Other financial liabilities

Financial liabilities at fair value through profit or loss:

Derivative contracts (see note 19)

Other financial liabilities

2020

Level 1
£m

Level 2
£m

Level 3
£m

Not at
fair value
£m

Total
£m

–

3.9

279.9

283.8

–

29.1

–

29.1

–

143.7

3,550.3

72.8

5.5

72.8

5.5

3,628.6

–

33.0

423.6

456.6

Total financial liabilities

283.8

29.1

143.7

3,628.6

4,085.2

For the maturity profiles of client accounts, deposits by banks and derivative contracts see notes 19 and 20.

The fair value of financial liabilities held at amortised cost approximates their carrying value.

Current

Non-current

2021
£m

4,660.9

132.7

4,793.6

2020
£m

3,945.5

139.7

4,085.2

Estimates and judgements
The Group holds financial liabilities that are measured at fair value. The carrying value of financial liabilities may involve estimation or be derived
from readily available sources. Financial liabilities have been categorised using a fair value hierarchy that reflects the extent of estimates and
judgements used in the valuation (see note 9). 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 financial liabilities arising from prior
acquisitions completed by the Group. Information about the estimates and judgements made in determining the fair value of carried interest
payable is set out in note 2. The remaining level 3 liabilities are measured using different valuation methodologies and assumptions, and there
are no assumptions that are individually significant or reasonably possible alternatives that would lead to a material change in fair value.

Schroders Annual Report and Accounts 2021

131

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

17. Financial liabilities continued

Movements in financial liabilities categorised as level 3 during the year were:

At 1 January

Exchange translation adjustments

Net loss recognised in the income statement

Additions

Disposals and settlements

At 31 December

18. Provisions and contingent liabilities

2021
£m

143.7

(2.7)

59.0

1.1

(51.4)

149.7

2020
£m

155.1

4.6

14.6

18.4

(49.0)

143.7

Provisions are liabilities where there is uncertainty over the timing or amount of settlement and therefore 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 is 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 only disclosed where significant and are not included within the statement of financial position.

At 1 January 2021

Exchange translation adjustments

Provisions utilised

Additional provisions charged

At 31 December 2021

Current – 2021

Non-current – 2021

Current – 2020

Non-current – 2020

The Group’s provisions are expected to mature in the following time periods:

Less than 1 year

1 – 2 years

2 – 5 years

More than 5 years

132

Schroders Annual Report and Accounts 2021

Dilapidations
£m

Legal, regulatory
and other
£m

15.2

(0.2)

(0.1)

0.3

15.2

11.2

–

(1.2)

1.6

11.6

Dilapidations
£m

Legal, regulatory
and other
£m

1.0

14.2

15.2

–

15.2

4.6

7.0

11.6

5.2

6.0

11.2

2021
£m

5.6

8.2

0.8

12.2

21.2

Total
£m

26.4

(0.2)

(1.3)

1.9

26.8

Total
£m

5.6

21.2

26.8

5.2

21.2

26.4

2020
£m

5.2

7.5

1.8

11.9

21.2

26.8

26.4

18. Provisions and contingent liabilities continued

Dilapidation provisions associated with the Group’s office leases have a weighted average maturity of 13 years (2020: 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
(2020: 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 is 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 (2020: none). The provisions included in the financial statements at 31 December 2021 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.

19. 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 currencies. The Group uses equity contracts 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.

Risk management: the Group actively seeks to limit and manage its exposures to risk where that exposure is 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 risk that the Group faces through such use of derivative contracts is credit 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 20.

Schroders Annual Report and Accounts 2021

133

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

19. Derivative contracts continued
(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:

Equity contracts

Forward foreign exchange contracts

Net-settled derivative contracts1 maturing/repricing2 in:

Less than 1 year

1 – 2 years

2 – 5 years

More than 5 years

Gross-settled derivatives3 maturing/repricing2 in less than 1 year:

Gross inflows

Gross outflows

Difference between future contractual cash flows and fair value

1. Equity contracts.
2. Whichever is earlier.
3. Forward foreign exchange contracts.

2021

Assets
£m

59.7

18.1

77.8

Liabilities
£m

(71.7)

(16.6)

(88.3)

2020

Assets
£m

1.9

32. 32.2

34.1

Liabilities
£m

(11.9)

(21.1)

(33.0)

2021

2020

Assets
£m

Liabilities
£m

Assets
£m

Liabilities
£m

59.7

(71.7)

1.9

(11.9)

–

59.7

(71.7)

1.9

(11.9)

1,066.9

(1,048.9)

0.1

18.1

953.0

(969.7)

0.1

(16.6)

1,402.2

(1,374.1)

4.1

32.2

874.4

(889.8)

(5.7)

(21.1)

77.8

(88.3)

34.1

(33.0)

134

Schroders Annual Report and Accounts 2021

20. Financial instrument risk management

The Group Capital Committee (GCC) 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.

The Life Company provides unit-linked investment products through a life assurance wrapper. 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. Financial instrument risk management disclosures in respect of the Life Company’s financial
instruments are set out in note 15.

(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 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 £937 million (2020: £874 million). The TCR incorporates the Group’s
Pillar 1 regulatory capital requirement of £769 million (2020: £717 million). In addition to the TCR of the banking group, the Group is required to hold
additional capital of £282 million (2020: £256 million) in respect of its insurance companies and regulatory buffers. The Group’s overall regulatory
capital requirement was £1,220 million at 31 December 2021 (2020: £1,130 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 investible or otherwise available to meet the Group’s operating or regulatory requirements.

The table below shows the components of our capital position:

Working capital – regulatory and other

Working capital – seed and co-investment

Investment capital – liquid

Investment capital – illiquid

Other items

Total equity

2021
£m

1,403

666

780

1,519

4,426

2020
£m

1,548

612

320

1,509

4,086

(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. Other investible
equity held in excess of operating requirements is transferred to investment capital, which is managed centrally in accordance with limits approved by
the Board.

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 2021

135

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

20. 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. It is mainly held in cash, funds managed by the Group and investment grade corporate bonds. Liquid investments are
available to 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. Investment capital also includes certain commercial private equity investments and illiquid legacy investments.

(iii) Other items
Other items comprises assets that are not investible 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, minority 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:

Assets

Cash and cash equivalents

Trade and other receivables

Financial assets:

Loans and advances to banks

Loans and advances to clients

Debt securities

Pooled investment vehicles

Equities

Derivatives

Associates and joint ventures

Property, plant and equipment

Goodwill and intangible assets

Deferred tax

Retirement benefit scheme surplus

Assets backing unit-linked liabilities

Total assets

Liabilities

Trade and other payables

Financial liabilities

Lease liabilities

Current tax

Provisions

Deferred tax

Retirement benefit scheme deficits

Unit-linked liabilities

Total liabilities

Capital

Financial
instruments at
amortised cost
£m

Financial assets
at fair value
through other
comprehensive
income
£m

2021

Financial
instruments
at fair value
through
profit or loss1
£m

4,207.3

892.6

153.0

614.0

109.9

–

1,041.7

7,018.5

799.9

3,822.6

373.8

–

26.8

–

15.8

5,038.9

–

409.9

–

409.9

–

420.6

777.0

570.1

77.8

–

12,421.4

14,266.9

198.0

971.0

–

13,447.3

14,616.3

Non-financial
instruments
£m

–

108.3

–

466.7

560.0

1,168.5

145.0

197.9

–

2,646.4

117.1

–

52.2

–

80.4

11.1

–

260.8

Total
£m

4,207.3

1,000.9

153.0

614.0

940.4

777.0

570.1

77.8

466.7

560.0

1,168.5

145.0

197.9

13,463.1

24,341.7

1,115.0

4,793.6

373.8

52.2

26.8

80.4

11.1

13,463.1

19,916.0

4,425.7

1. Financial assets at fair value through profit or loss includes £12,432.1 million of assets that are designated at fair value through profit or loss and £1,834.8 million that are
mandatorily measured at fair value through profit or loss. Financial liabilities at fair value through profit or loss includes £14,522.2 million of liabilities that are designated
at fair value through profit or loss and £94.1 million that are mandatorily measured at fair value through profit or loss.

136

Schroders Annual Report and Accounts 2021

20. Financial instrument risk management continued
(a) Capital continued

Assets

Cash and cash equivalents

Trade and other receivables

Financial assets:

Loans and advances to banks

Loans and advances to clients

Debt securities

Pooled investment vehicles

Equities

Derivatives

Associates and joint ventures

Property, plant and equipment

Goodwill and intangible assets

Deferred tax

Retirement benefit scheme surplus

Assets backing unit-linked liabilities

Total assets

Liabilities

Trade and other payables

Financial liabilities

Lease liabilities

Current tax

Provisions

Deferred tax

Retirement benefit scheme deficits

Unit-linked liabilities

Total liabilities

Capital

2020

Financial assets
at fair value
through other
comprehensive
income
£m

Financial
instruments at fair
value through
profit or loss1
£m

Financial
instruments at
amortised cost
£m

3,469.6

763.9

206.5

477.9

107.9

–

869.8

5,895.6

658.6

3,628.6

397.2

–

26.4

–

63.5

4,774.3

–

589.5

–

589.5

–

4.1

273.2

840.1

338.5

34.1

–

11,216.4

12,706.4

174.9

456.6

–

12,022.7

12,654.2

Non-financial
instruments
£m

Total
£m

–

76.4

3,469.6

840.3

–

405.2

590.9

1,208.0

32.9

168.2

–

2,481.6

94.2

–

21.5

–

31.5

11.5

–

158.7

206.5

482.0

970.6

840.1

338.5

34.1

405.2

590.9

1,208.0

32.9

168.2

12,086.2

21,673.1

927.7

4,085.2

397.2

21.5

26.4

31.5

11.5

12,086.2

17,587.2

4,085.9

1. Financial assets at fair value through profit or loss includes £11,255.0 million of assets that are designated at fair value through profit or loss and £1,451.4 million that are
mandatorily measured at fair value through profit or loss. Financial liabilities at fair value through profit or loss includes £12,602.4 million of liabilities that are designated
at fair value through profit or loss and £51.8 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 49 and 70 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 their
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 2021

137

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

20. 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

Credit rating:

AAA

AA+

AA-

A+

A-

BBB+ and lower

Not rated

2021
£m

128.0

117.4

173.5

2020
£m

140.4

159.2

277.3

2,260.3

2,131.6

898.6

188.3

391.3

47.5

2.4

437.7

44.9

231.7

44.7

2.1

2021
£m

–

14.8

56.2

45.0

30.6

–

6.4

–

2020
£m

–

55.2

27.1

119.5

–

4.7

–

4,207.3

3,469.6

153.0

206.5

2021
£m

279.7

76.6

16.9

286.3

8.4

15.7

8.8

158.0

90.0

940.4

2020
£m

257.8

9.1

11.0

159.9

139.9

40.0

59.5

206.5

86.9

970.6

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 life assurance policies.

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 2021, the fair value of collateral that could be sold or repledged but had not been, relating solely to these arrangements, was £534.9
million (2020: £831.8 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.

138

Schroders Annual Report and Accounts 2021

20. 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 2021 were £0.3 million (2020:
£0.4 million). Loans and advances to clients includes one under-performing (stage 2) loan of £2.9 million (2020: £2.9 million) and no non-performing
(stage 3) loans (2020: £2.0 million) giving rise to no expected credit losses (2020: nil and £0.2 million respectively). 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) (2020: same).

Expected credit losses on financial assets at fair value through other comprehensive income within the Wealth Management entities at 31 December
2021 were £0.1 million (2020 £0.3 million). All financial assets at fair value through other comprehensive income were performing (stage 1) (2020:
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 2021 were £48.6 million (31 December 2020: £54.3 million), the majority of which were less
than 90 days past due (31 December 2020: 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. Corporate bond portfolios have an investment grade mandate, and exposure to
sub-investment grade debt is low.

Most derivative positions, other than forward foreign exchange contracts, 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 funds.

Expected credit losses on financial assets at amortised cost within non-Wealth Management entities at 31 December 2021 were £0.8 million (2020:
£0.7 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) (2020: same).

There were no expected credit losses on financial assets at fair value through other comprehensive income within non-Wealth Management entities at
31 December 2021 (2020: £0.3 million). Debt securities includes no under-performing (stage 2) securities (2020: £10.7 million giving rise to £0.1
million of expected credit losses). All other financial assets at fair value through other comprehensive income were performing (stage 1) (2020: 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, 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 2021

139

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

20. 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:

Assets

Cash and cash equivalents

Loans and advances to banks

Loans and advances to clients

Debt securities

Other financial assets

Total financial assets

Liabilities

Client accounts

Deposits by banks

Other financial liabilities

Total financial liabilities

Cumulative gap

Assets

Cash and cash equivalents

Loans and advances to banks

Loans and advances to clients

Debt securities

Other financial assets

Total financial assets

Liabilities

Client accounts

Deposits by banks

Other financial liabilities

Total financial liabilities

Cumulative gap

Less than 1 year
£m

1–2 years
£m

2–5 years
£m

More than 5 years
£m

Total
£m

2021

2,966.0

147.2

236.4

329.3

3.4

3,682.3

3,748.3

69.9

9.1

3,827.3

–

89.8

164.6

–

254.4

–

287.0

–

0.8

–

2,966.0

147.2

614.0

493.9

3.4

287.0

0.8

4,224.5

–

3,748.3

69.9

9.1

3,827.3

(145.0)

109.4

396.4

397.2

Less than 1 year
£m

1–2 years
£m

2–5 years
£m

More than 5 years
£m

Total
£m

2020

2,894.1

189.9

228.9

322.6

13.9

3,649.4

3,550.3

72.8

20.9

3,644.0

–

49.8

107.3

–

157.1

–

203.3

–

203.3

–

2,894.1

189.9

482.0

429.9

13.9

4,009.8

3,550.3

72.8

20.9

3,644.0

5.4

162.5

365.8

Other activities
The Group’s exposure to liquidity risk outside of its Wealth Management activities is low. Excluding the Life Company and consolidated funds, the Asset
Management and Group segment together hold cash and cash equivalents of £1,109.5 million (2020: £527.8 million). Financial liabilities relating to
other operating entities are £966.4 million (2020: £441.2 million).

The Group has a committed revolving credit facility of £595.0 million (2020: £595.0 million), which expires on 4 October 2024. The facility was
undrawn at 31 December 2021 (31 December 2020: undrawn). On 11 February 2022 the Group increased the committed revolving credit facility to
£765.0 million.

(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, deferred employee compensation in the form of fund awards and some investments held for regulatory
capital purposes.

140

Schroders Annual Report and Accounts 2021

20. 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 4).

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 against policies and limits set by the relevant risk committee on a daily basis. 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 basis point rise
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 against policies and limits set by the relevant risk committees on a daily basis. 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 through investments in currencies other than sterling. The Group uses forward foreign exchange
contracts with third parties to mitigate this exposure. The gain or loss on these contracts is included in the statement of other comprehensive income
or the income statement, as appropriate. The use of such instruments is subject to approval by the GCC.

The sensitivities to market risk are estimated as follows:

Variable1

Interest rates2

US dollar against sterling

Euro against sterling

US dollar against Euro

FTSE All-Share Index3

31 December 2021

31 December 2020

A reasonable change
in the variable within
the next calendar year
%

Increase/
(decrease) in
post-tax profit
£m

A reasonable change in
the variable within
the next calendar year
%

Increase/
(decrease) in
post-tax profit
£m

-increase

-decrease

-strengthen

-weaken

-strengthen

-weaken

-strengthen

-weaken

-increase

-decrease

1.0

(0.8)

(10)

(8)

(10)

(20)

1.5

(1.1)

(3)

(2)

(1)

(37)

0.2

(0.4)

(10)

(8)

(10)

(20)

(2)

(1)

(3)

(38)

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 who determine reasonable assumptions.

Schroders Annual Report and Accounts 2021

141

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

21. Share capital and share premium

Share capital represents the number of issued ordinary and non-voting ordinary shares in Schroders plc multiplied by their nominal value of £1
each. Share premium substantially represents the aggregate of all amounts that have ever been paid above nominal value to Schroders plc when
it has issued ordinary and non-voting ordinary shares. There are certain circumstances in which the share premium can be reduced but these did
not arise in 2020 or 2021. The Company has no authority to issue, buy back, or cancel ordinary shares in issue (including those held in trust) and
has authority limited by shareholder resolution to issue or purchase non-voting ordinary shares, which may either be cancelled or held in treasury.

At 1 January 2021

At 31 December 2021

At 1 January 2020

At 31 December 2020

Issued and fully paid:

Ordinary shares of £1 each

Non-voting ordinary shares of £1 each

Number
of shares
Millions

282.5

Number
of shares
Millions

282.5

Ordinary
shares
£m

226.0

Ordinary
shares
£m

226.0

Non-voting
ordinary
shares
£m

56.5

Non-voting
ordinary
shares
£m

56.5

Total
shares
£m

282.5

Total
shares
£m

282.5

Share
premium
£m

124.2

Share
premium
£m

124.2

2021
Number
of shares
Millions

2020
Number
of shares
Millions

226.0

56.5

282.5

226.0

56.5

282.5

The difference between the share classes
The non-voting ordinary shares carry the same rights as ordinary shares except that they do not confer the right to attend and vote at any
general meeting of the Company, and that on a capitalisation issue they carry the right to receive non-voting ordinary shares rather than ordinary
shares.

142

Schroders Annual Report and Accounts 2021

22. Own shares

Own shares are recorded by the Group when non-voting ordinary shares are acquired by the Company, or ordinary or non-voting ordinary shares
are acquired through employee benefit trusts. This enables the Group to hold some of its shares in treasury 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:

At 1 January

Own shares purchased

Awards vested

At 31 December

2021
£m

2020
£m

(159.8)

(169.1)

(75.3)

84.9

(58.3)

67.6

(150.2)

(159.8)

During the year 2.1 million own shares (2020: 2.4 million own shares) were purchased and held for hedging share-based awards. 3.1 million shares
(2020: 2.6 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:

Ordinary shares

Non-voting ordinary shares

Ordinary shares:

Cost

Fair value

Non-voting ordinary shares:

Cost

Fair value

Total:

Cost

Fair value

Number of
vested
shares
Millions

2021

Number of
unvested
shares
Millions

3.3

–

3.3

Vested
shares
£m

83.0

118.0

–

5.2

–

5.2

2021

Unvested
shares
£m

150.0

185.1

0.2

0.3

Total
Millions

8.5

–

8.5

Total
£m

233.0

303.1

0.2

0.3

83.0

118.0

150.2

185.4

233.2

303.4

Number of
vested
shares
Millions

2.4

0.1

2.5

2020

Number of
unvested
shares
Millions

6.2

–

6.2

Vested
shares
£m

2020

Unvested
shares
£m

159.6

207.7

0.2

0.3

58.1

82.7

0.2

0.6

58.3

83.3

Total
Millions

8.6

0.1

8.7

Total
£m

217.7

290.4

0.4

0.9

159.8

208.0

218.1

291.3

Schroders Annual Report and Accounts 2021

143

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

23. 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.

Profit before tax

Adjustments for income statement non-cash movements:

Depreciation of property, plant and equipment and amortisation of intangible assets

Net gain on financial instruments

Share-based payments

Net charge/(release) for provisions

Other non-cash movements

Adjustments for which the cash effects are investing activities:

Net finance income

Interest expense on lease liabilities

Share of profit of associates and joint ventures

Adjustments for statement of financial position movements:

(Increase)/decrease in loans and advances within Wealth Management

Increase in trade and other receivables

Increase in deposits and client accounts within Wealth Management

Increase/(decrease) in trade and other payables, other financial liabilities and provisions

Adjustments for Life Company and consolidated pooled investment vehicles movements:

Net (increase)/decrease in financial assets backing unit-linked liabilities

Net increase/(decrease) in unit-linked liabilities

Net increase/(decrease) in cash within consolidated pooled investment vehicles

Tax paid

Net cash from operating activities

2021
£m

764.1

162.8

(20.5)

89.5

1.9

(8.0)

2020
£m

610.5

168.8

(71.6)

56.1

(5.3)

6.3

225.7

154.3

2.0

10.8

(79.3)

(66.5)

(96.1)

(10.5)

212.9

149.4

255.7

(1,211.5)

1,376.9

84.1

249.5

(1.1)

12.0

(43.1)

(32.2)

77.8

(6.9)

453.6

(26.7)

497.8

113.4

(339.7)

(34.2)

(260.5)

(194.3)

(137.4)

1,234.2

832.5

144

Schroders Annual Report and Accounts 2021

24. 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 and commitments under IT service agreements.

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.

Undrawn loan facilities

Investment call commitments

Commitments for property, plant and equipment and leases

Commitments under IT service agreements

Total commitments

Operating leases receivable as lessor

Net commitments payable

Undrawn loan facilities

Investment call commitments

Commitments for property, plant and equipment and leases

Commitments under IT service agreements

Total commitments

Operating leases receivable as lessor

Net commitments payable

2021

No later than
1 year
£m

Later than 1 year
and no later
than 5 years
£m

Later than
5 years
£m

5.7

70.7

1.4

37.0

56.1

20.4

5.8

35.3

114.8

117.6

(0.8)

114.0

(2.4)

115.2

2020

0.3

2.1

20.6

–

23.0

(0.5)

22.5

No later than
1 year
£m

Later than 1 year
and no later
than 5 years
£m

Later than
5 years
£m

4.7

74.5

16.4

12.0

55.4

18.2

26.1

22.5

107.6

122.2

(1.3)

106.3

(3.0)

119.2

–

1.8

21.3

–

23.1

(1.3)

21.8

Total
£m

62.1

93.2

27.8

72.3

255.4

(3.7)

251.7

Total
£m

60.1

94.5

63.8

34.5

252.9

(5.6)

247.3

Office property sub-leases have a weighted average term of 3 years (2020: 3 years) and rentals are fixed for a weighted average term of 3 years (2020:
3 years).

Schroders Annual Report and Accounts 2021

145

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

25. 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:

Pension costs – defined contribution plans

Pension credit – defined benefit plans

Other post-employment benefits

2021
£m

57.9

(0.6)

0.1

57.4

2020
£m

55.0

(1.1)

0.2

54.1

(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 four 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 2021, there were no active members in the DB section (2020: nil) and 2,249 active members in the DC section (2020: 2,159). The
weighted average duration of the Scheme’s DB obligation is 18 years (2020: 19 years).

Membership details of the DB section of the Scheme as at 31 December are as follows:

Number of deferred members

Total deferred pensions (at date of leaving Scheme)

Average age (deferred)

Number of pensioners

Average age (pensioners)

Total pensions in payment

2021

1,116

2020

1,199

£7.6m per annum

£8.2m per annum

982

937

£21.8m per annum

£20.8m 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.

146

Schroders Annual Report and Accounts 2021

25. 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 71% (2020: 71%) 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 2021, the liability matching portfolio was designed to mitigate 83% (2020:
83%) 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 2021, the liability matching portfolio was designed to mitigate 83% (2020:
83%) 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:

Discount rate

RPI inflation rate

CPI inflation rate

Future pension increases (for benefits earned before 13 August 2007)

Future pension increases (for benefits earned after 13 August 2007)

Average number of years a current pensioner is expected to live beyond age 60:

Men

Women

2021
%

2.0

3.3

2.9

3.2

2.2

2020
%

1.4

2.8

2.2

2.7

2.0

Years

Average number of years future pensioners currently aged 45 are expected to live beyond age 60:

Years

Men

Women

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 2021

147

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

25. Retirement benefit obligations 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 147, 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% (2020: 1.0%) per annum. An additional adjustment, an “A parameter” set
to 0.25% (2020: 0.25%) per annum, allows for the typically higher rate of mortality improvement among members of the Scheme compared to
general population statistics. The latest base mortality tables have been adopted with no scaling (2020: 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 2021.

The amounts recognised in the income statement are:

Interest income on Scheme assets

Interest cost on Scheme liabilities

Net interest income recognised in the income statement in respect of the Scheme

Income statement charge in respect of other defined benefit schemes

Total defined benefit schemes income statement credit

The amounts recognised in the statement of comprehensive income are:

Gains on Scheme assets in excess of that recognised in interest income

Actuarial (gains)/losses due to change in demographic assumptions

Actuarial (gains)/losses due to change in financial assumptions

Actuarial losses/(gains) due to experience

Total other comprehensive gain in respect of the Scheme

Other comprehensive loss/(gain) in respect of other defined benefit schemes

Total other comprehensive gain in respect of defined benefit schemes

The sensitivity of the Scheme pension liabilities to changes in assumptions are:

Assumption

Discount rate

Assumption change

Increase by 0.5% per annum

Decrease by 0.5% per annum

Expected rate of pension increases

Increase by 0.5% per annum

Expected rate of pension increases

Decrease by 0.5% per annum

Life expectancy

Increase by one year

Decrease by one year

2021
£m

(14.8)

12.4

(2.4)

1.8

(0.6)

2021
£m

(20.1)

(1.0)

(18.6)

11.4

(28.3)

0.7

(27.6)

2020
£m

(20.7)

17.8

(2.9)

1.8

(1.1)

2020
£m

(91.5)

0.6

74.8

(12.9)

(29.0)

(1.4)

(30.4)

2021

2020

Estimated
(increase)/
decrease in
pension
liabilities
£m

Estimated
(increase)/
decrease in
pension
liabilities
%

Estimated
(increase)/
decrease in
pension
liabilities
£m

Estimated
(increase)/
decrease in
pension
liabilities
%

66.2

(78.3)

(51.5)

51.3

(43.6)

42.9

7.6

(9.0)

(5.9)

5.5

(4.7)

4.9

78.1

(87.7)

(80.7)

62.3

(45.4)

44.6

8.6

(9.6)

(8.9)

6.9

(5.0)

4.9

148

Schroders Annual Report and Accounts 2021

25. Retirement benefit obligations continued
Movements in respect of the assets and liabilities of the Scheme are:

At 1 January

Interest income

Remeasurement of assets

Benefits paid

Administrative expenses1

Fair value of plan assets

At 1 January

Interest cost

Actuarial gains/(losses) due to change in demographic assumptions

Actuarial gains/(losses) due to change in financial assumptions

Actuarial (losses)/gains due to experience

Benefits paid

Present value of funded obligations

Net assets

2021
£m

2020
£m

1,077.2

1,001.5

14.8

20.1

(40.5)

(1.0)

20.7

91.5

(36.5)

–

1,070.6

1,077.2

(909.0)

(12.4)

1.0

18.6

(11.4)

40.5

(865.2)

(17.8)

(0.6)

(74.8)

12.9

36.5

(872.7)

(909.0)

197.9

168.2

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.

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 2021, 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:

Liability matching investments

Portfolio funds

Exchange-traded futures and over-the-counter derivatives

Cash

2021

2020

Of which not
quoted in an
active market
£m

–

44.6

–

Value
£m

752.3

307.3

(12.3)

23.3

Value
£m

762.4

286.9

3.3

24.6

1,070.6

44.6

1,077.2

Of which not
quoted in an
active market
£m

–

38.8

5.6

–

44.4

Schroders Annual Report and Accounts 2021

149

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

26. 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), 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 8.7%
(2020: 6.4%) of salaries, wages and other remuneration (see note 4).

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 £92.1 million (2020: £57.5 million) arising from share-based payment transactions during the year, of which
£89.5 million (2020: £56.1 million) were equity-settled share-based payment transactions. In 2021, there were total exceptional costs of £1.5 million
included within equity-settled share-based payments (2020: £2.0 million).

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.

Rights outstanding at 1 January

Granted

Forfeited

Exercised

Rights outstanding at 31 December

Vested

Unvested

Weighted average fair value of shares granted (£)

Weighted average share price at date of exercise (£)

The weighted average exercise price per share is nil.

A charge of £79.9 million (2020: £39.7 million) was recognised during the year.

2021
Number of
ordinary
shares
Millions

2020
Number of
ordinary
shares
Millions

3.8

2.4

–

(1.0)

5.2

1.5

3.7

2.8

1.7

(0.1)

(0.6)

3.8

0.6

3.2

33.80

35.14

23.86

27.43

The table below shows the expected charges for awards issued under the Deferred Award Plan to be expensed in future years:

2022

2023

2024+

£m

15.2

6.3

4.4

25.9

150

Schroders Annual Report and Accounts 2021

26. Share-based payments continued

(b) Equity Compensation Plan

Awards over ordinary and non-voting 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.

2021

2020

Number of
ordinary
shares
Millions

Number of
non-voting
ordinary shares
Millions

Number of
ordinary
shares
Millions

Number of
non-voting
ordinary shares
Millions

Rights outstanding at 1 January

Granted

Forfeited

Exercised

Rights outstanding at 31 December

Vested

Unvested

Weighted average fair value of shares granted (£)

Weighted average share price at dates of exercise (£)

The weighted average exercise price per share is nil.

A charge of £3.7 million (2020: £10.3 million) was recognised during the year.

3.5

0.1

(0.1)

(0.8)

2.7

1.4

1.3

–

0.1

–

(0.1)

–

35.04

23.88

3.9

0.8

(0.1)

(1.1)

3.5

1.5

2.0

23.76

28.67

The table below shows the expected charges for awards issued under the Equity Compensation Plan to be expensed in future years:

2022

2023

0.1

–

0.1

–

18.93

£m

1.2

0.1

1.3

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.

Rights outstanding at 1 January

Granted

Forfeited

Exercised

Rights outstanding at 31 December

Vested

Unvested

Weighted average fair value of shares granted (£)

Weighted average share price at dates of exercise (£)

The weighted average exercise price per share is nil.

A charge of £3.6 million (2020: £3.8 million) was recognised during the year.

2021
Number of
ordinary
shares
Millions

2020
Number of
ordinary
shares
Millions

1.3

–

(0.1)

(0.2)

1.0

0.5

–

35.90

1.4

0.2

(0.1)

(0.2)

1.3

0.4

0.9

27.82

30.24

Schroders Annual Report and Accounts 2021

151

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

26. 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:

2022

2023

2024

2025

(d) Long Term Incentive Plan

£m

3.0

2.2

1.5

0.7

7.4

Awards over ordinary and non-voting 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.

2021

2020

Number of
ordinary
shares
Millions

Number of
non-voting
ordinary shares
Millions

Number of
ordinary
shares
Millions

Number of
non-voting
ordinary shares
Millions

0.1

–

0.1

–

0.1

–

36.50

0.1

–

(0.1)

–

23.88

0.1

–

0.1

–

0.1

–

0.1

–

0.1

–

Rights outstanding at 1 January

Granted

Forfeited

Exercised

Rights outstanding at 31 December

Vested

Unvested

Weighted average fair value of shares granted (£)

Weighted average share price at dates of exercise (£)

The weighted average exercise price per share is nil.

A charge of £0.2 million (2020: £0.3 million) was recognised during the year.

(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 64,556 ordinary shares in 2021 (2020: 73,339) at a weighted average share price of £35.86 (2020: £29.22).
A charge of £2.1 million (2020: £2.0 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 2021, the total carrying value of liabilities arising from cash-settled share-based awards was £5.6 million (2020: £4.1 million).
The total intrinsic value at 31 December 2021 of liabilities for which the employee’s right to cash or other assets had vested by that date was
£2.6 million (2020: £2.4 million).

A charge of £2.6 million (2020: £1.4 million) was recognised during the year. This charge has arisen as the liability was remeasured at the balance
sheet date at a share price of £35.60 (31 December 2020: £33.37).

152

Schroders Annual Report and Accounts 2021

27. 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 10.

£41.3 million (2020: £40.4 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 £7.6 million (2020: £1.6 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 15).
At 31 December 2021, the fair value of these assets was £127.8 million (2020: £136.4 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:

Type of remuneration

Typical composition of this type of benefit

Short-term employee benefits

Salary and upfront bonus

Share-based payments

Other long-term benefits

Termination benefits

Post-employment benefits

Deferred share awards

Deferred cash awards

Termination benefits

Pension plans

2021
£m

29.7

20.4

17.6

1.2

0.1

69.0

2020
£m

23.3

12.8

–

0.1

49.0

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 2021

153

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

28. 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.

Asset Management

Wealth Management

Asset Management

Wealth Management

2021

AUM outside of
structured
entities
£bn

AUM within
consolidated
structured
entities
£bn

AUM within
unconsolidated
structured
entities
£bn

293.0

71.2

364.2

229.8

10.0

239.8

11.2

–

11.2

2020

AUM outside of
structured
entities
£bn

AUM within
consolidated
structured
entities
£bn

AUM within
unconsolidated
structured
entities
£bn

281.2

65.3

346.5

9.8

–

9.8

211.4

6.7

218.1

Total
£bn

534.0

81.2

615.2

Total
£bn

502.4

72.0

574.4

Certain AUM is 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 exists 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.

154

Schroders Annual Report and Accounts 2021

28. Interests in structured entities continued
(a) Interests arising from managing assets continued

Fee income includes £1,506.1 million (2020: £1,290.6 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.

Fee debtors from structured entities

Accrued income from structured entities

Total exposure due to investment management activities

2021
£m

22.4

287.1

309.5

2020
£m

20.1

272.6

292.7

(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 £43.8 million (2020: £35.5 million). The carrying values represent the Group’s maximum exposure to loss
from these interests.

Cash and cash equivalents

Financial assets

Total exposure due to the Group’s investments

2021
£m

177.9

686.9

864.8

2020
£m

203.4

693.9

897.3

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 (2020: nil). Financial assets
include seed and co-investment capital, legacy private equity investments and hedges of deferred cash awards. Of the financial assets, £685.8 million
(2020: £458.6 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 20 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 24.

The statement of financial position also includes the Life Company assets of £13,403.7 million (2020: £12,086.2 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 £181.4 million (2020: £120.3 million) to provide seed capital
to investment funds managed by the Group, of which £145.2 million (2020: £69.1 million) resulted in the consolidation of those funds and
£36.2 million (2020: £51.2 million) did not.

Schroders Annual Report and Accounts 2021

155

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

29. Events after the reporting period

The Group has completed two acquisitions after the reporting period with a further acquisition announced and not yet completed.

On 31 January 2022, the Group acquired 100% of the issued share capital of River and Mercantile Investments Limited, the Solution’s Division of River
and Mercantile Group plc. The acquisition contributed £43.1 billion of Asset Management AUM and strengthens the Group’s position in the UK
fiduciary management market. The initial consideration was satisfied by means of a £237.2 million cash payment, of which approximately 70% is
represented by goodwill and approximately 30% is represented by intangible assets.

On 31 January 2022, the Group acquired 100% of the issued share capital of Cairn Real Estate B.V., a European real estate asset management
business. The acquisition contributed approximately £1.1 billion of Asset Management AUM and strengthens the Group’s Private Asset capabilities.
The initial consideration was satisfied by means of a £24.1 million cash payment, of which approximately 75% is represented by goodwill and
approximately 25% is represented by intangible assets.

Due to the timing of the acquisitions, the determination of the final amounts is ongoing and subject to review. The results for the year ended 31
December 2021 for these acquisitions have not been included in these financial statements.

The Group announced an agreement to acquire a majority interest in Greencoat Capital Holdings Limited and expects the transaction to complete in
the near future.

156

Schroders Annual Report and Accounts 2021

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 in respect of deferred cash awards and
certain deposits both with banks and by customers and banks (including
those that relate to bullion).

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 other Standards
or Interpretations that were in issue but were not required to be
adopted by the Group at the year end date. No other Standards or
Interpretations have been issued that are expected to have a material
impact on the consolidated financial statements.

(c) 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 10). 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 38.

The entities included in the consolidation may vary year on year due to
both 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. The most significant
non-controlling interest relates to a third party interest of 19.1% in
Schroders Wealth Holdings Limited (SWHL). The profit after tax of

SWHL’s Group was £45.6 million for the year (2020: £22.4 million). The
net assets of SWHL were £325.8 million at 31 December 2021 (31
December 2020: £291.2 million). Dividends of £7.9 million were paid to
SWHL’s non-controlling interest during the year (2020: none).

(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 ‘Net gain on financial
instruments and other income’ in the consolidated income statement.

(e) Cash and cash equivalents
Cash and cash equivalents include cash at bank and any highly liquid
investments with a contractual maturity less than three months.

(f) Estimates and judgements
The preparation of the consolidated financial statements in conformity
with 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.

The separate classification and presentation of exceptional items in the
consolidated income statement requires judgement of whether this
enables better understanding of the Group’s financial performance. This
consideration is reassessed if there are indications that the
circumstances leading to the presentation have changed.

In applying IFRS 10 Consolidated Financial Statements, the Group uses
judgement to determine whether its interests in funds (and other
entities), including those held by the Life Company, constitute controlling
interests. The Group has interests in funds through its role as fund
manager and through its proprietary investments in pooled investment
vehicles. The Group is exposed to variable returns and judgement is
required to determine whether the power to affect those variable
returns is substantive. The Group considers all relevant facts and
circumstances in making this judgment. This includes consideration of
the purpose and design of an investee, the extent and nature of the
Group’s exposure to variability of returns as an investor and, where
appropriate, as a fund manager, and the Group’s ability to direct the
relevant activities, including whether voting rights are substantive or
protective in consideration of rights held by other parties. These
considerations are reassessed if there are indications that circumstances
have changed since the original assessment.

Schroders Annual Report and Accounts 2021

157

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

NOTES TO THE ACCOUNTS CONTINUED

Presentation of the financial statements continued
(f) Estimates and judgements continued
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

Note 5

Note 8

Note 9

Note 13

Note 15

Note 17

Note 18

Note 25

Net operating revenue

Tax expense

Trade and other receivables

Financial assets

Goodwill and intangible assets

Unit-linked liabilities and assets backing
unit-linked liabilities

Financial liabilities

Provisions and contingent liabilities

Retirement benefit obligations

Climate risks have been considered in the preparation of these
consolidated financial statements where relevant. The principal areas of
focus include: 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. Where financial assets are
carried at amortised cost, climate risks are considered as part of the
credit risk assessments.

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.

158

Schroders Annual Report and Accounts 2021

SCHRODERS PLC – STATEMENT OF FINANCIAL POSITION

at 31 December 2021

Assets

Trade and other receivables

Retirement benefit scheme surplus

Deferred tax

Investments in subsidiaries

Total assets

Liabilities

Trade and other payables

Deferred tax

Total liabilities

Net assets

Equity at 1 January

Profit for the year

Dividends

Other changes in equity

Equity at 31 December

Notes

2021
£m

2020
£m

1,427.0

197.9

33.5

3,092.6

4,751.0

25.3

49.3

74.6

1,536.1

168.2

–

3,092.6

4,796.9

25.2

28.8

54.0

4,676.4

4,742.9

4,684.2

217.7

(318.6)

34.4

346.4

(311.7)

24.0

4,676.4

4,742.9

The financial statements were approved by the Board of Directors on 2 March 2022 and signed on its behalf by:

Richard Keers

Director

Schroders Annual Report and Accounts 2021

159

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2021

At 1 January 2021

Profit for the year

Items that will not be reclassified to the income statement:

Net actuarial gain on defined benefit pension scheme

Tax on items taken directly to other comprehensive income

Other comprehensive income

Total comprehensive income for the year

Own shares purchased

Share-based payments

Tax in respect of share schemes

Dividends

Transactions with shareholders

Transfers

At 31 December 2021

At 1 January 2020

Profit for the year

Items that will not be reclassified to the income statement:

Net actuarial gain on defined benefit pension scheme

Tax on items taken directly to other comprehensive income

Other comprehensive income

Total comprehensive income for the year

Own shares purchased

Share-based payments

Tax in respect of share schemes

Dividends

Transactions with shareholders

Transfers

At 31 December 2020

Notes

Share
capital
£m

282.5

Share
premium
£m

Own
shares
£m

Profit and
loss
reserve
£m

124.2

(144.1)

4,480.3

–

Total
£m

4,742.9

217.7

27.3

(6.7)

20.6

217.7

27.3

(6.7)

20.6

238.3

(67.7)

–

(67.7)

–

81.2

0.3

(318.6)

(237.1)

(67.7)

81.2

0.3

(318.6)

(304.8)

77.6

(77.6)

–

Total
£m

4,684.2

346.4

29.0

(4.9)

24.1

346.4

29.0

(4.9)

24.1

370.5

(50.9)

–

(50.9)

–

50.5

0.3

(311.7)

(260.9)

(50.9)

50.5

0.3

(311.7)

(311.8)

58.7

(58.7)

–

282.5

124.2

(134.2)

4,403.9

4,676.4

Notes

Share
capital
£m

282.5

Share
premium
£m

Own
shares
£m

Profit and
loss
reserve
£m

124.2

(151.9)

4,429.4

282.5

124.2

(144.1)

4,480.3

4,742.9

The distributable profits of Schroders plc are £2.8 billion (2020: £2.9 billion) and comprise retained profits of £2.9 billion (2020: £3.0 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 20.

160

Schroders Annual Report and Accounts 2021

SCHRODERS PLC – CASH FLOW STATEMENT

for the year ended 31 December 2021

Profit before tax

Adjustments for:

Decrease/(increase) in trade and other receivables

Increase/(decrease) in trade and other payables

Net credit taken in respect of the scheme

Share-based payments

Amounts received in respect of Group tax relief

Net cash from operating activities

Cash flows from financing activities:

Repayment of loan received from a Group company

Acquisition of own shares

Dividends paid

Net cash used in financing activities

Net decrease in cash and cash equivalents

Opening cash and cash equivalents

Net decrease in cash and cash equivalents

Closing cash and cash equivalents

30. Significant accounting policies

2021
£m

213.3

103.1

1.1

(2.4)

81.2

(9.0)

2020
£m

344.1

(33.9)

(3.0)

(2.9)

50.5

9.0

387.3

363.8

(1.0)

(67.7)

(318.6)

(387.3)

(1.2)

(50.9)

(311.7)

(363.8)

–

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 38 sets out the accounting policy in respect of investments
in subsidiary undertakings.

Schroders Annual Report and Accounts 2021

161

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – CASH FLOW STATEMENT CONTINUED

31. Expenses and other disclosures
The auditor’s remuneration for audit services to the Company was £0.7 million (2020: £0.6 million). There were no fees relating to further assurance
services in the year (2020: nil).

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

Short-term employee benefits

Salary and upfront bonus

Share-based payments

Other long-term benefits

Deferred share awards

Deferred cash awards

32. Trade and other receivables

Amounts due from subsidiaries

Prepayments and accrued income

Other receivables

2021
£m

7.7

4.8

3.0

15.5

2020
£m

6.3

3.6

3.0

12.9

2021
£m

2020
£m

1,426.2

1,525.0

0.5

0.3

0.2

10.9

1,427.0

1,536.1

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 2021 were £1.1 million (2020: £1.2 million). Note 20 sets out the details of the
expected credit loss calculation.

33. Trade and other payables

Trade and other payables held at amortised cost:

Social security

Accruals

Amounts owed to subsidiaries

2021

2020

Non-current
£m

Current
£m

Total
£m

Non-current
£m

Current
£m

1.9

3.0

–

4.9

1.1

7.2

12.1

20.4

3.0

10.2

12.1

25.3

1.6

3.5

–

5.1

The Company’s trade and other payables mature in the following time periods:

Less than one year

1 – 2 years

2 – 5 years

Total
£m

2.7

10.3

12.2

25.2

2020
£m

20.1

2.0

3.1

5.1

1.1

6.8

12.2

20.1

2021
£m

20.4

2.5

2.4

4.9

Amounts owed to subsidiaries include an interest-bearing loan of £2.8 million (2020: £3.8 million) that is repayable on demand.

25.3

25.2

162

Schroders Annual Report and Accounts 2021

SCHRODERS PLC – NOTES TO THE ACCOUNTS

34. Deferred tax

At 1 January

Income statement (credit)/charge

Income statement (credit)/charge due to changes in tax rates

Charge to statement of other comprehensive income

Charge/(credit) to statement of other comprehensive income due to
changes in tax rates

Deferred
employee
awards
£m

(3.0)

0.1

(0.2)

–

2021

Losses
£m

–

(23.1)

(7.3)

–

At 31 December

(3.1)

(30.4)

Deferred
employee
awards
£m

(3.1)

0.4

(0.3)

–

(3.0)

Total
£m

28.8

(22.5)

2.8

5.2

1.5

15.8

2020

Pension
surplus
£m

23.1

0.5

3.3

5.5

Total
£m

20.0

0.9

3.0

5.5

(0.6)

31.8

(0.6)

28.8

Pension
surplus
£m

31.8

0.5

10.3

5.2

1.5

49.3

35. 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 20. 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 2021, if interest rates had been 100 bps higher (2020: 15 bps higher) or 75 bps lower (2020: 35 bps lower) with all other variables
held constant, the Company estimates that profit after tax for the year would have increased by £10.9 million (2020: increased by £1.8 million)
or decreased by £8.2 million (2020: decreased by £4.2 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.

36. Own shares
Movements in own shares during the year were as follows:

At 1 January

Own shares purchased

Awards vested

At 31 December

2021
£m

2020
£m

(144.1)

(151.9)

(67.7)

77.6

(50.9)

58.7

(134.2)

(144.1)

During the year 1.9 million own shares (2020: 2.1 million) were purchased and held for hedging share-based awards. 2.8 million shares (2020: 2.2
million) awarded to employees vested in the year and were transferred out of own shares.

Schroders Annual Report and Accounts 2021

163

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – NOTES TO THE ACCOUNTS CONTINUED

36. Own shares continued
The total number of shares in the Company held within the Company’s employee benefit trusts comprise:

Ordinary shares

Non-voting ordinary shares

Ordinary shares:

Cost

Fair value

Non-voting ordinary shares:

Cost

Fair value

Total:

Cost

Fair value

Number of
vested
shares
Millions

3.3

–

3.3

Vested
shares
£m

83.2

118.0

–

2021

Number of
unvested
shares
Millions

4.6

–

4.6

2021

Unvested
shares
£m

134.0

161.0

0.2

0.3

Total
Millions

7.9

–

7.9

Total
£m

217.2

279.0

0.2

0.3

83.2

118.0

134.2

161.3

217.4

279.3

Number of
vested
shares
Millions

2.4

0.1

2.5

Vested
shares
£m

58.3

82.7

0.3

0.6

58.6

83.3

2020

Number of
unvested
shares
Millions

5.5

–

5.5

2020

Unvested
shares
£m

143.8

182.6

0.3

Total
Millions

7.9

0.1

8.0

Total
£m

202.1

265.3

0.6

0.9

144.1

182.9

202.7

266.2

37. 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 31), are disclosed below:

Subsidiaries of the Company

Key management personnel

Subsidiaries of the Company

Key management personnel

Revenue
£m

Expenses
£m

252.2

0.6

24.4

–

Revenue
£m

370.9

0.3

Expenses
£m

18.9

–

2021

Interest
receivable
£m

2.1

–

2020

Interest
receivable
£m

4.1

–

Interest
payable
£m

Amounts owed
by related
parties
£m

Amounts owed
to related
parties
£m

–

1,426.2

7.6

(12.1)

(33.7)

Interest
payable
£m

Amounts owed
by related
parties
£m

Amounts owed
to related
parties
£m

0.1

–

1,525.0

1.0

(12.2)

(30.7)

Transactions with related parties were made at market rates. The amounts outstanding are unsecured and will be settled in cash.

164

Schroders Annual Report and Accounts 2021

38. 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 2021 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 173 to
176.

(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

Leadenhall Securities Corporation Limited

Schroder & Co. Limited

Schroder Administration Limited

Schroder Corporate Services Limited

Schroder Financial Holdings Limited

Schroder Financial Services Limited

Schroder International Holdings Limited

Schroder Investment Company Limited

Schroder Investment Management Limited

Schroder Private Assets Holdings Limited

Schroder Real Estate Investment Management Limited

Schroder Unit Trusts Limited

Schroder Wealth Holdings Limited

Schroder Wealth International Holdings Limited
Australia

Schroder Investment Management Australia Limited
Guernsey

Schroder Investment Company (Guernsey) Limited

Schroders (C.I.) Limited
Hong Kong

Schroder Investment Management (Hong Kong) Limited
Luxembourg

Schroder Investment Management (Europe) S.A.
Singapore

Schroder Investment Management (Singapore) Ltd.

Switzerland

Schroder & Co Bank AG

Schroder Investment Management (Switzerland) AG

Schroders Capital Management (Switzerland) AG
United States

Schroder Investment Management North America Inc.

Schroder US Holdings Inc.

Share class

Footnote

% Address

100% 1 London Wall Place, London, EC2Y 5AU, England

80.9%

100%

80.9%

100%

OS, CPS

100% Level 20, Angel Place, 123 Pitt Street, Sydney, NSW 2000, Australia

COS

100% PO Box 334, Regency Court, Glategny Esplanade, St. Peter Port,

100%

Guernsey, GY1 3UF, Channel Islands

100% Level 33, Two Pacific Place, 88 Queensway, Hong Kong, Hong Kong

100% 5 rue Höhenhof, L-1736 Senningerberg, Luxembourg

100% 138 Market Street, #23-01, CapitaGreen, Singapore, 048946,

Singapore

100% Central 2, 8021, Zurich, Switzerland

100% Central 2, 8001, Zurich, Switzerland

100% Affolternstrasse 56, 8050, Zurich, Switzerland

100% 7 Bryant Park, New York, New York, 10018, USA

100% National Registered Agents, Inc., 160 Greentree Drive, Suite 101,

Dover, Delaware, 19904, USA

Schroders Annual Report and Accounts 2021

165

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – NOTES TO THE ACCOUNTS CONTINUED

38. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure
Fully owned subsidiaries

Name

Adveq Founder Partner (GP) Limited

Adveq Founder Partner Limited

Adveq GP LLP

TransPennine GP (Scot) LLP

Alderbrook Financial Planning Limited (In Liquidation)

Brian Potter Consultants Limited (In Liquidation)

Cazenove Capital Management Limited (In Liquidation)

GYP Limited (In Liquidation)

Invicta Independent Financial Advisers Limited (In Liquidation)

Richard Martin Financial Solutions Limited (In Liquidation)

Schroder Adveq Management (UK) Limited (In Liquidation)

Squirrel Financial Planning Limited (In Liquidation)

Algonquin Management Partners (UK) Ltd

Croydon Gateway Nominee 1 Limited

Croydon Gateway Nominee 2 Limited

Gatwick Hotel Feeder GP LLP

J. Henry Schroder Wagg & Co. Limited

Ruskin Square Management Company Limited

Schroder Infra Debt GP LLP

Schroder Investment Management North America Limited

Schroder Nominees Limited

Schroder Pension Management Limited

Schroder Pension Trustee Limited

UK PEM Partners Limited

Aspect8 Limited

Benchmark Capital Limited

Best Practice IFA Group Limited

Bright Square Pensions Limited

Creative Technologies Limited

CT Connect Limited

Evolution Wealth Network Limited

Fusion Wealth Limited

PP Nominees Limited

PP Trustees Limited

RIA Pension Trustees Limited

Redbourne Wealth Management Limited

RJC Consultancy Limited

Chilcomb Wealth Ltd (In Liquidation)

Fusion Funds Limited (In Liquidation)

Mitchell & Company (IFA) Limited (In Liquidation)

Mitchell & Company Holdings (Reigate) Limited (In Liquidation)

Australia

Schroder Australia Holdings Pty Limited

Austria

Share class

Footnote

% Address

d, e

100% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, Scotland

100%

100% CVR Global LLP, Town Wall House, Balkerne Hill, Colchester, Essex,

CO3 3AD, England

100%

100% 1 London Wall Place, London, EC2Y 5AU, England

100%

100% Holmwood House, Broadlands Business Campus, Langhurstwood

Road, Horsham, West Sussex, RH12 4QP, England

100%

100% Begbies Traynor (Central) LLP, Town Wall House, Balkerne Hill,

Colchester, Essex, CO3 3AD, England

100%

100% Level 20, Angel Place, 123 Pitt Street, Sydney, NSW 2000, Australia

Schroder Real Estate Asset Management Österreich GmbH

100% Zwerchäckerweg 2-10, 1220 Vienna, Austria

Belgium

Algonquin Management Partners S.A.

Bermuda

Schroder Venture Managers Limited

Schroders (Bermuda) Limited

SITCO Nominees Limited
Brazil

Schroder Investment Management Brasil Ltda

Canada

Schroder Canada Investments Inc.

COS

166

Schroders Annual Report and Accounts 2021

100% Avenue Louise, 523 – 1050, Bruxelles, Belgium

100% Wellesley House, 2nd Floor, 90 Pitts Bay Road, Pembroke HM 08,

Bermuda

100%

100% Av Presidente Juscelino Kubitschek, 1327, 12º andar, sala 121,

São Paulo, SP, 04543-011, Brazil

100% Cidel Financial Group, 60 Bloor Street West, 9th Floor, Toronto, Ontario,

M4W 3B8, Canada

38. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued

Name

Cayman Islands

AEROW SMA Management I L.P.

AEROW SMA Management II L.P.

PEM Partners Ltd

Schroders Capital cPl Global Management III L.P.
Chile

Schroders Chile SpA

China

Schroder Investment Management (Shanghai) Co., Ltd.

Share class

Footnote

% Address

100% Maples & Calder, PO Box 309 GT, Ugland House, South Church Street,

George Town, Grand Cayman, Cayman Islands

100%

100% Avenida Cerro El Plomo 5420 Oficina 1104, Les Condes, Santiago,

Chile

100% Unit 33T52B, 33F, Shanghai World Financial Centre, 100 Century

Schroders Capital Private Fund Management (Shanghai) Co., Ltd. OS

100%

Avenue, FTZ, Shanghai, China

Schroders Capital Investment Management (Beijing) Co., Ltd.

100% Room 1929-1932, Winland International Finance Centre, 7 Finance

Curaçao

cPl Schroders Capital Investments Management B.V

Schroder Adveq Investors B.V.

Schroders Capital Management (Curaçao) N.V.
France

Holdco LC Paris Blomet SAS

Schroder Real Estate (France)

Schroder Adveq France UP SAS
Germany

Blitz 06-953 GmbH

Real Neunzehnte Verwaltungsgesellschaft mbH

Schroder Eurologistik Fonds Verwaltungs GmbH

Schroder Holdings (Deutschland) GmbH

Schroder Italien Fonds Verwaltungs GmbH

Schroder Real Estate Investment Management GmbH

Schroder Real Estate Kapitalverwaltungsgesellschaft mbH

Schroders Capital Management (Deutschland) GmbH

SIMA 5 Verwaltungsgesellschaft mbH

Schroder Real Estate Asset Management Austria GmbH

Schroder Real Estate Asset Management GmbH
Guernsey

Burnaby Insurance (Guernsey) Limited

CC Private Debt Feeder Company Limited

CC Private Equity Feeder Company PCC Limited

Schroder Venture Managers (Guernsey) Limited

OS, NCRPS

Schroders Wealth Private Assets PCC Limited

Schroder Investment Management (Guernsey) Limited

Schroder Investments (Guernsey) Limited

Schroder Nominees (Guernsey) Limited

Secquaero Re (Guernsey) ICC Ltd

Hong Kong

Schroder & Co. (Hong Kong) Limited

India

Schroders India Private Limited (In Liquidation)

Ireland

Schroder Investment Management (Ireland) Limited
Japan

Schroder Investment Management (Japan) Limited

Street, Xicheng District, Beijing, China

100% Johan van, Walbeeckplein 11, Willemstad, Curaçao

100%

100% 1 rue Euler, 75008, Paris, France

100%

100% 37 avenue Pierre 1er de Serbie, 75008 Paris, France

100% Taunustor 1, 60310, Frankfurt, Germany

100%

100% Maximilanstrasse 31, 80539, München, Germany

100%

100% Heritage Hall, Le Marchant Street, St. Peter Port, Guernsey, GY1 4JH,

Channel Islands

100% Trafalgar Court, Les Banques, St. Peter Port, Guernsey, GY1 3QL,

Channel Islands

100%

100% PO Box 334, Regency Court, Glategny Esplanade, St. Peter Port,

Guernsey, GY1 3UF, Channel Islands

100%

100% PO Box 33, Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1

4AT, Channel Islands

100% Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong,

Hong Kong

100% 1209, Navjivan Society, Bldg. No. 3, Lamington Road, Mumbai Central,

Mumbai, Maharashtra-MH, 400008, India

100% George's Court, 54-62 Townsend Street, Dublin 2, Ireland

100% 8-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-0005, Japan

Schroders Annual Report and Accounts 2021

167

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – NOTES TO THE ACCOUNTS CONTINUED

38. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued

Name

Jersey

AAF Management II L.P.

AAF Management III L.P.

BKMS Management L.P.

BKMS Management II L.P.

Confluentes Partners I L.P.

Cresta Management L.P.

Cresta Management II L.P.

Cresta Partners III L.P.

EEM Management L.P.

EEM Management II L.P.

EEM Opportunities Management L.P.

Gemini Management L.P.

GPEP Management I L.P.

GPEP Management IV L.P.

GPEP Partners V L.P.

IST3 Manesse PE Management L.P.

IST3 Manesse PE2 Management L.P.

Malatrex Partners L.P.

Marmolata Partners L.P.

Milele Partners L.P.

PSY Private Equity Partners L.P.

SA Co-Investment Management 1 L.P.

SA RP CO Management 1 L.P.

SA TG Management L.P.

SA VS Management L.P.

SA-EL Asia Partners I L.P.

SA-EL Partners II L.P.

SC-SA Co-Invest Opportunities 2018 Management L.P.

Salève 2017 Management L.P.

Salève 2020 Management L.P.

SC Global Opportunities Management L.P.

Schroder Adveq Santé Direct Partners L.P.

Schroder Adveq Shanghai Private Equity Investment Management L.P.

Schroders Capital cPl Global Management S.à.r.l.

Schroders Capital cPl Global Partners IV L.P.

Schroders Capital Multi Private Credit Management L.P.

Schroders Capital Private Equity Asia Partners V L.P.

Schroders Capital Private Equity Europe Direct Partners II L.P.

Schroders Capital Private Equity Europe Direct Partners III L.P.

Schroders Capital Private Equity Europe Partners VII L.P

Schroders Capital Private Equity Europe Partners VIII L.P.

Schroders Capital Private Equity Global Direct Partners III L.P.

Schroders Capital Private Equity Global Innovation Partners IX L.P.

Schroders Capital Private Equity Global Innovation Partners X L.P.

Schroders Capital Private Equity Global Partners II L.P.

Schroders Capital Private Equity Global Partners III L.P.

Schroders Capital Private Equity Healthcare Partners L.P.

Schroders Capital Private Equity Mature Secondaries (Orthros) Management L.P.

Schroders Capital Private Equity Mature Secondaries (Orthros) Management II L.P.

Schroders Capital Private Equity Mature Secondaries (Orthros) Management III L.P.

Schroders Capital Private Equity Mature Secondaries (Orthros) Management IV L.P.

Schroders Capital Private Equity Secondaries Management III L.P.

Schroders Capital Private Equity Secondaries Partners IV L.P.

Schroders Capital Private Equity US Partners V L.P.

TMC Management III L.P.

TMC Management IV L.P.

TMCO Management I L.P.

168

Schroders Annual Report and Accounts 2021

Share class

Footnote

% Address

100% 26 New Street, St. Helier, Jersey, JE2 3RA, Channel

Islands

100%

38. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued

Name

Jersey (continued)

Wilmersdorf Secondary Management II L.P.

Cazenove Capital Holdings Limited (In Liquidation)

Schroders Capital Management Jersey Ltd

Croydon Gateway GP Limited

Croydon Gateway Investments Limited

Income Plus Real Estate Debt GP Limited

Schroder Real Estate Managers (Jersey) Limited

Schroders RECaP SSF (GP) Limited

UK Retirement Living Fund (ReLF) GP Limited
Luxembourg

Confluentes Management S.à r.l.

GPEP Management S.à r.l.

Marmolata Management S.à r.l.

PSY Private Equity Management S.à.r.l.

Schroders Capital Management (Luxembourg) S.à.r.l.

Schroders Capital Private Equity Asia Management V S.à.r.l.

Schroders Capital Private Equity Europe Management VIII S.à r.l.

Schroders Capital Private Equity Global Direct Management III S.à.r.l.

Schroders Capital Private Equity Global Innovation Management X S.à r.l.

Schroders Capital Private Equity Global Management III S.à r.l.

Schroders Capital Private Equity Healthcare Management S.à r.l.

Schroders Capital Private Equity Secondaries Management IV S.à r.l.

Schroders Capital Private Equity US Management V S.à.r.l.

Cresta Management S.à r.l.

KVT PE Management S.à r.l.

Schroders Capital Insurance-linked Opportunities GP S.à r.l.

Schroders Capital Insurance-linked Opportunities SCSp

Schroders Capital Private Equity Europe Direct Management III S.à r.l

IED UK GP S.à.r.l.

Schroder European Operating Hotels GP S.à r.l.

Schroder IFL S.à.r.l.

Schroder Real Estate (CIP) GP S.à.r.l.

Schroder Real Estate Investment Management (Luxembourg) S.à.r.l.

Schroder Real-Estate SICAV-SIF

SEOHF (CIP) SCSp

SEOHF AGGREGATOR (CIP) SCSp

SNI Management S.à.r.l.

Schroder Euro Enhanced Infra Debt Fund II GP S.à r.l.

Schroder Euro IG Infra Debt Fund V GP S.à.r.l

Schroders Capital Real Estate Debt GP S.à r.l.
Netherlands

Schroder International Finance B.V.
Singapore

Schroder & Co. (Asia) Limited

Schroder Singapore Holdings Private Limited

South Korea

Schroders Korea Limited

Switzerland

Schroder Real Estate Management Switzerland GmbH

Schroders Capital Holding (Switzerland) AG

Share class

Footnote

% Address

100% 26 New Street, St. Helier, Jersey, JE2 3RA,

Channel Islands

100% 44 Esplanade, St. Helier, Jersey, JE4 9WG,

Channel Islands

100% 40 Esplanade, St. Helier, Jersey, JE2 9WB,

Channel Islands

100% 47 Esplanade, St. Helier, Jersey, JE1 0BD,

Channel Islands

100%

100% 6C rue Gabriel Lippmann, Munsbach, L-5365,

Luxembourg

100%

100% 7, rue Robert Stümper, L-2557 Luxembourg

100%

100% 5 rue Höhenhof, L-1736 Senningerberg, Luxembourg

100%

100% 46A Avenue J.F.Kennedy, L-1855, G.D. Luxembourg

100%

100% 15 boulevard F.W. Raiffeisen, L-2411, Luxembourg

100% 1 London Wall Place, London, EC2Y 5AU, England

100% 138 Market Street, #23-02, CapitaGreen, Singapore,

048946, Singapore

100% 138 Market Street, #23-01, CapitaGreen, Singapore,

048946, Singapore

100% 15th fl., Centropolis A, 26, Ujeongguk-ro, Jongno-gu,

Seoul, Republic of Korea

100% Lavaterstrasse 40, 8002, Zurich, Switzerland

100% Affolternstrasse 56, 8050, Zurich, Switzerland

Schroders Annual Report and Accounts 2021

169

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – NOTES TO THE ACCOUNTS CONTINUED

38. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued

Name

Taiwan

Schroder Investment Management (Taiwan) Limited
United States

Schroder Canada Inc.

Schroder Fund Advisors LLC

Schroder Venture Managers Inc.

Schroders Incorporated

Schroder FOCUS II GP, LLC

Schroder Flexible Secured Income GP, LLC

Schroder Helix Investment Partner LLC

Schroder Securitized Credit Flexible Opportunities GP, LLC

Schroder Taft-Hartley Income GP, LLC

Schroders Capital Management (US) Inc.

Schroders Capital PERLS GP, LLC

Schroders Capital PILLARS GP, LLC

Share class

Footnote

% Address

COS

100% 9/F, 108 Sec.5, Hsin-Yi Road, Hsin-Yi District, Taipei 11047, Taiwan

100% 7 Bryant Park, New York, New York, 10018, USA

100%

100% Corporate Trust Center, 1209 Orange Street, Wilmington, Delaware,

19801, USA

100%

Subsidiaries where the ownership is less than 100%

Name

Cazenove New Europe (CFM1) Limited

Cazenove New Europe (PPI) Limited

Cazenove New Europe Staff Interest Limited

Residential Land Development (GP) LLP

Sand Aire Limited

Schroder & Co Nominees Limited

Schroder Wealth Management (US) Limited

The Lexicon Management Company Limited

CCM Nominees Limited (In Liquidation)

Argentina

Schroder Investment Management S.A.

Schroder S.A. Sociedad Gerente de Fondos Comunes de
Inversion
British Virgin Islands

Alpha Park Limited

Flete Holdings Limited

Pamfleet China Limited
Cayman Islands

Pamfleet China Investment Management Limited

Pamfleet China Investment Management II Limited

Pamfleet International Limited

Schroder Adveq Europe Management II L.P.

Schroder Adveq Technology Management V L.P.

Schroder Adveq Technology Management VI L.P.

Schroder Adveq US Management I L.P.

Schroders Capital cPl Global Management L.P.

Schroders Capital cPl Global Management II L.P.

Schroders Capital Private Equity Asia Management L.P.

Schroders Capital Private Equity Asia Management II L.P.

Schroders Capital Private Equity Europe Management IV A L.P.

Schroders Capital Private Equity Europe Management IV B L.P.

Schroders Capital Private Equity US Management II L.P.
China

Pamfleet (Shanghai) Enterprise Management Limited

Schroder BOCOM Wealth Management Company Limited
(Preparatory)
France

Schroder AIDA SAS

170

Schroders Annual Report and Accounts 2021

Share class

Footnote

% Address

a, c

80.9% 1 London Wall Place, London, EC2Y 5AU, England

80.9%

67%

80.9%

50%

a, c

80.9% Begbies Traynor (Central) LLP, Town Wall House, Balkerne Hill,

Colchester, Essex, CO3 3AD, England

95% Ing.Enrique Butty 220, Piso 12, Buenos Aires, C1001AFB, Argentina

95%

51% Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola,

VG1110, British Virgin Islands

51%

51% Maples Corporate Services Limited, PO Box 309, Ugland House, Grand

Cayman, KY1-1104, Cayman Islands

35.7%

51%

20% Maples & Calder, PO Box 309 GT, Ugland House, South Church Street,

George Town, Grand Cayman, Cayman Islands

89%

65%

76%

63%

88%

75%

65%

59%

70%

87%

51% 302 Block 9 No 697 Weihai Road, Jing’An, Shanghai, China

51% Fl.59, Wheelock Square, 1717 West Nanjing Road, Jingan District,

Shanghai, China

90% 1 rue Euler, 75008, Paris, France

38. 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

France (continued)

Schroder Mid Core Infra II UP

Schroder Mid Infra UP

Schroders IDF IV UP

Terre et Mer Holding SAS
Germany

CM Komplementr 06-379 GmbH & Co KG
Guernsey

SV (Nominees) Limited

Hong Kong

Pamfleet Asset Management (China) Limited

Pamfleet Asset Management (HK) Limited

Pamfleet (HK) Limited

Pamfleet Holdings (Hong Kong) Limited
Indonesia

PT Schroder Investment Management Indonesia

Jersey

AAF Management I L.P.

GPEP Management II L.P.

GPEP Management III L.P.

Schroder Adveq Europe Management III L.P.

Schroder Adveq Real Assets Harvested Resources Management L.P.

Schroders Capital Private Equity Asia Management III L.P.

Schroders Capital Private Equity Asia Management IV L.P.

Schroders Capital Private Equity Europe Direct Management L.P.

Schroders Capital Private Equity Europe Management V L.P.

Schroders Capital Private Equity Europe Management VI L.P.

Schroders Capital Private Equity Global Innovation Management VII L.P.

Schroders Capital Private Equity Global Innovation Management VIII L.P.

Schroders Capital Private Equity Global Management L.P.

Schroders Capital Private Equity Secondaries Management II L.P.

Schroders Capital Private Equity US Management III L.P

Schroders Capital Private Equity US Management IV L.P.

TMC Management I L.P.

TMC Management II L.P.

Wilmersdorf Secondary Management L.P.
Luxembourg

BlueOrchard Asset Management (Luxembourg) S.A.

BlueOrchard Invest S.à r.l

Schroder Property Services B.V.

Schroders Capital Real Estate Asia IV GP S.à r.l.

SRE Invest SCSp

SRE ReLF (CIP) SCSp

SRE SoHo (CIP) SCSp
Mexico

Consultora Schroders, S.A. de C.V.

Peru

BlueOrchard America Latina S.A.C
Singapore

BlueOrchard Investments Singapore PTE Ltd

Pamfleet Asset Management (Singapore) Pte. Limited
Switzerland

BlueOrchard Finance AG

Share class

Footnote

% Address

90% 1 rue Euler, 75008, Paris, France

90%

80%

95% Taunustor 1, 60310, Frankfurt, Germany

50%

PO Box 255, Trafalgar Court, Les Banques, St. Peter Port,
Guernsey, GY1 3QL, Channel Islands

h, i

51% Level 33, 88 Queensway, Hong Kong, Hong Kong

51%

99% 30th Floor, Indonesia Stock Exchange Building, Tower 1, Jl

Jendral Sudirman Kav 52-53, Jakarta, 12190, Indonesia

48% 26 New Street, St. Helier, Jersey, JE2 3RA, Channel Islands

70%

87.9%

73%

53%

70%

73%

74%

46%

78%

71%

53%

51%

73%

54%

49%

71%

81.5% 1 rue Goethe, L-1637, Luxembourg City, Luxembourg

81.5%

70% 5 rue Höhenhof, L-1736 Senningerberg, Luxembourg

51%

82.3%

83.8%

82.8%

d, e

99% Montes Urales 760 Desp. 101, Col. Lomas de Chapultepec,

Mexico, DF, 11000, Mexico

81.5% Calle Dean, Valdivia 227, Office 501, San Isidro, Lima, Peru

81.5%

3 Church Street, #25-01 Samsung Hub, 049483, Singapore

51% 61 Club Street, Singapore 069436, Singapore

81.5% Seefeldstrasse 233, 8008, Zurich, Switzerland

Schroders Annual Report and Accounts 2021

171

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – NOTES TO THE ACCOUNTS CONTINUED

38. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Associates and joint ventures

Name

Clarke-Walker Financial Management Limited

Finura Partners Limited

Kellands (Bristol) Limited

Natural Capital Research Limited

Rayner Spencer Mills Research Limited

Retirement Planning Partnership Ltd

James Harvey Associates Limited

Nippon Life Schroders Asset Management Europe Limited

Ruskin Square Phase One LLP

Social Supported Housing CIP LLP

Social Supported Housing GP LLP

Robertson Baxter Limited

Scottish Widows Schroder Wealth Holdings Limited

Waterhouse Financial Planning Limited
Australia

Schroders RF Limited
Belgium

Algonquin Astrid
British Virgin Islands

Graceful Lane Limited

China

Bank of Communications Schroder Fund Management Company
Limited
France

Algonquin France Hotels Services

JV Hotel La Villette SAS
Guernsey

Share class

Footnote

% Address

20% 125-135 Preston Road, Fifth Floor Telecom House, Brighton, BN1 6AF,

England

49% 15 Bowling Green Lane, London, EC1R 0BD, England

30.8% Quays Office Park, Conference Avenue, Portishead, Bristol, BS20 7LZ,

England

20% 8 King Edward Street, Oxford, OX1 4HL, England

49% 20 Ryefield Business Park, Belton Road, Silsden, Keighley, West

Yorkshire, BD20 0EE, England

d, e

52.4% Kestrel House, Alma Road, Romsey, Hampshire, SO51 8ED, England

49% Santon House, 53-55 Uxbridge Road, London, W5 5SA, England

33% 1 London Wall Place, London, EC2Y 5AU, England

50%

24% Beck House, Abbey Road, Shepley, Huddersfield, HD8 8EP, England

49.9% 25 Gresham Street, London, EC2V 7HN, England

20% 1 Carlisle Terrace, Derry, BT48 6JX, Northern Ireland

50.1% Level 9, 60 Castlereagh St., Sydney NSW 2000, Australia

33% Avenue Louise, 523 – 1050 Bruxelles, Belgium

30% Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola,

VG1110, British Virgin Islands

30% 2nd Floor Bank of Communications Tower, 188 Middle Yincheng Road,

Pudong New Area, Shanghai, 200120, China

36% 1 rue Euler, 75008, Paris, France

50%

Schroder Ventures Investments Limited

OS, R, D

50% PO Box 255, Trafalgar Court Les Banques, St. Peter Port, Guernsey,

GY1 3QL, Channel Islands

India

Axis Asset Management Company Limited

Axis Mutual Fund Trustee Limited
Jersey

Bracknell General Partner Limited

UK Retirement Living (CIP) GP Limited
Singapore

Nippon Life Global Investors Singapore Limited

Planar Investments Private Ltd

United States

25% 1st Floor, Axis House C-2 Wadia International Centre, Pandurang

25%

Budhkar Marg, Worli-Mumbai, 400025, India

50% 47 Esplanade, St. Helier, Jersey, JE1 0BD, Channel Islands

50%

33% 138 Market Street, #34-02, CapitaGreen, Singapore, 048946,

Singapore

24.1% 1 Phillip Street, #06-00, Royal One Phillip, Singapore, 048692,

Singapore

A10 Capital Parent Company LLC

COS

19.3% 1209 Orange Street, Wilmington, Delaware, 19801, USA

Share class abbreviations
CS
COS
NCRPS
CPS
D
OS
PI
PS
R

Capital shares.
Common stock.
Non-cumulative redeemable preference shares.
Convertible preference shares.
Deferred shares.
Ordinary shares.
Partnership interest.
Promote shares.
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.

172

Schroders Annual Report and Accounts 2021

38. 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

Schroder Flexible Retirement Fund
Brazil

Schroder Best Ideas ESG
Luxembourg

Schroder ISF Carbon Neutral Credit 2040

Schroder ISF Global Sustainable Value

Schroder ISF Social Impact Credit

Subsidiaries where the ownership is less than 100%

Fund Name

Schroder Diversified Growth Fund

Schroder Dynamic Multi Asset Fund

Schroder Global Emerging Markets Fund

Schroder Global Equity Component Fund

Schroder Global Sovereign Bond Tracker Component Fund

Schroder Multi Asset Total Return Fund

Schroder QEP Global Emerging Markets

Schroder Sustainable Multi Factor Equity

Schroder UK Multi-Cap Income Fund

SPW Adventurous Portfolio Fund
Australia

Schroder Australian Equity Long Short Fund
Brazil

Schroder Best Ideas FIA
Hong Kong

Schroder Global Multi Asset Thematic Fund

Schroder Global Multi Asset Thematic Fund
Japan

Schroder YEN Target

Schroder YEN Target (Annual)

Schroder YEN Target (Semi-Annual)
Luxembourg

Schroder GAIA Helix

Schroder GAIA II Global Innovation Private Plus

Schroder GAIA Oaktree Credit

Schroder ISF BlueOrchard Emerging Markets Climate Bond

Schroder ISF Carbon Neutral Credit

Schroder ISF Changing Lifestyles

Schroder ISF China A All Cap

Schroder ISF Cross Asset Momentum Component

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

100%

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

Share/unit class

X Accumulation

Unspecified

I Accumulation

Share/unit class

I Accumulation

Z Accumulation

A Accumulation

X Accumulation

I Accumulation

X Accumulation

I Accumulation

X Accumulation

P Accumulation

Unspecified

I Accumulation

93%

63%

62%

89%

40%

65%

99%

92%

87%

85%

100%

62%

100%

A Distribution MV AUD Hedged

35%

A Distribution MV2 AUD Hedged 97%

A Distribution MV2 CNY Hedged 74%

A Distribution MV HKD

A Distribution MV2 HKD

A Distribution MV CNY Hedged

A Accumulation

C Accumulation

A Distribution MV

A Distribution MV2

Unspecified

I Accumulation

29%

20%

88%

91%

11%

93%

61%

48%

84%

95%

100%

50%

71%

67%

100%

67%

80%

93%

58%

39%

89%

25%

24%

66%

90%

69%

75%

80%

62%

21%

61%

48%

84%

32%

67%

33%

62%

35%

62%

66%

31%

Schroders Annual Report and Accounts 2021

173

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – NOTES TO THE ACCOUNTS CONTINUED

38. 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

Luxembourg (continued)

Schroder ISF Digital Emerging Markets Local Currency

Schroder ISF Digital Infrastructure

Schroder ISF Dynamic Indian Bond

Schroder ISF Emerging Markets Equity Impact

Schroder ISF European Innovators

Schroder ISF European Large Cap

Schroder ISF European Sustainable Equity

Schroder ISF Global Climate Leaders

Schroder ISF Global Credit Income Short Duration

Schroder ISF Global Managed Growth

Schroder ISF Global Sustainable Convertible Bond

Schroder ISF Global Sustainable Food and Water

Schroder ISF Sustainable Future Trends

Schroder ISF Sustainable US Dollar Short Duration Bond

SSSF Wealth Management USD Cautious

SSSF Wealth Management USD Growth
United States

Hartford Schroders Commodity Strategy Fund

Hartford Schroders Diversified Emerging Markets Fund

Hartford Schroders ESG US Equity Fund

Schroder Global Sustainable Growth Fund (Canada)

Schroder Securitized Credit Fund Limited

Associates

Fund Name

Schroder Global Corporate Bond Managed Credit Component Fund

Schroder QEP Global Active Value
Brazil

Schroder Core Plus FIC FIA
Luxembourg

ICBC (Europe) UCITS SICAV

Schroder ISF Smart Manufacturing

SSSF Wealth Management USD Balanced

Share/unit class

I Accumulation

C Accumulation

I Accumulation

S Accumulation

Unspecified

SD Distribution

I Distribution

Unspecified

A Distribution

Share/unit class

I Accumulation

X Accumulation

I Accumulation

Unspecified

X Accumulation USD

I Accumulation

S Accumulation

Significant holdings in structured entities not classified as subsidiaries or associates

Fund Name

Schroder Absolute Return Bond Fund

Schroder All Maturities Corporate Bond Fund

Schroder European Fund

Schroder Global Energy Transition Fund

Schroder Global Equity Fund

Schroder India Equity

Schroder Institutional UK Smaller Companies Fund

Schroder Long Dated Corporate Bond Fund

Schroder QEP Global Core Fund

Schroder Sterling Broad Market Bond Fund

Schroder UK-Listed Equity Income Maximiser Fund

Schroder US Equity Income Maximiser

SPW Dynamic Portfolio Fund

SSSF Sterling Liquidity Plus

174

Schroders Annual Report and Accounts 2021

Share/unit class

X Income

I Accumulation

I Income

S Accumulation

I Accumulation

X Accumulation

I Accumulation

L Accumulation

L Accumulation GBP Hedged

X Accumulation

I Accumulation

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

76%

63%

100%

56%

100%

36%

70%

42%

85%

81%

100%

56%

100%

95%

74%

47%

50%

49%

90%

97%

76%

62%

99%

56%

42%

63%

35%

85%

39%

97%

41%

46%

68%

99%

65%

48%

47%

50%

49%

90%

97%

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

18%

43%

98%

28%

33%

83%

87%

14%

27%

28%

33%

29%

28%

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

100%

22%

34%

47%

36%

23%

100%

46%

40%

38%

98%

87%

90%

20%

17%

19%

11%

22%

14%

12%

19%

13%

38. 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

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

Fund Name

Australia

Schroder Equity Opportuntities Fund
Brazil

Schroder Premium 45 Advisory FI RF CP LP

Schroder US Dollar Bond FIC FIM IE
Cayman Islands

Share/unit class

I Accumulation

Unspecified

Musashi Smart Premia Fund (Exclusively for Qualified Institutional Investors with Re-Sale
Restriction for the Japanese Investors)

Musashi Smart Premia Fund (Exclusively for Qualified Institutional Investors with Re-Sale
Restriction for the Japanese Investors)
Hong Kong

Schroder Asian Asset Income Fund
Ireland

Schroder Private Equity Fund of Funds IV
Luxembourg

BlueOrchard Emerging Markets SDG Impact Bond Fund

Schroder Alternative Solutions Commodity Fund

Schroder Alternative Solutions Commodity Total Return Fund

Schroder GAIA Blue Trend

Schroder GAIA II Global Private Equity

Schroder GAIA Two Sigma Diversified

Schroder ISF Alternative Securitised Income

Schroder ISF Emerging Markets Debt Absolute Return

Schroder ISF Global Corporate

Schroder ISF Global Credit High Income Bond

Schroder ISF Global Credit Income

Schroder ISF Global Disruption

Schroder ISF Global Equity Yield

Schroder ISF Global Gold

Schroder ISF Global High Yield

Schroder ISF Global Multi Credit

Schroder ISF Global Multi-Asset Balanced

Schroder ISF Global Recovery

Schroder ISF Global Sustainable Growth

Schroder ISF Healthcare Innovation

Schroder ISF Inflation Plus

Schroder ISF Japanese Equity

Schroder ISF Japanese Opportunities

Schroder ISF Middle East

Schroder ISF Multi Asset Total Return

Schroder ISF QEP Global ESG

Schroder ISF Strategic Bond

Schroder ISF Sustainable Emerging Market Synergy

Schroder ISF Sustainable Multi Asset Income

Schroder ISF Sustainable Swiss Equity

Schroder ISF US Dollar Bond

Schroder Property FCP - FIS - Schroder Property Eurologistics Fund No.1 (A)

Schroder Property FCP - FIS - Schroder Property Eurologistics Fund No.1 (B)
United States

Hartford Schroders China A Fund

Hartford Schroders Securitized Income Fund

100%

43%

51%

100%

90%

100%

20%

21%

99%

97%

75%

100%

I Accumulation

I Accumulation GBP Hedged

I Accumulation EUR Hedged

C Accumulation CHF

I Accumulation

C Accumulation GBP Hedged

58%

IZ Accumulation

I Accumulation EUR Hedged

I Accumulation

I Accumulation EUR Hedged

I Accumulation

I Accumulation GBP Hedged

I Accumulation EUR Hedged

I Accumulation CHF Hedged

I Accumulation

I Accumulation GBP

I Accumulation

I Accumulation EUR Hedged

I Accumulation

I Accumulation EUR Hedged

I Accumulation

100%

28%

92%

100%

46%

98%

99%

100%

99%

92%

38%

60%

98%

35%

87%

100%

91%

38%

I Accumulation EUR Hedged

100%

I Accumulation

C Accumulation

I Accumulation

I Accumulation EUR Hedged

SD Accumulation

77%

100%

23%

38%

100%

12%

20%

24%

14%

19%

16%

20%

Schroders Annual Report and Accounts 2021

175

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

SCHRODERS PLC – NOTES TO THE ACCOUNTS CONTINUED

The registered offices for each of the related undertakings listed on pages 173 to 175 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 ESG
Schroder Best Ideas FIA

Cayman Islands
Maples Corporate Services Limited, Ugland House, PO Box 309, Grand Cayman,
KY11-1104, Cayman Islands

Hong Kong
HBSC Institutional Trust Services (Asia) Limited, 1 Queen’s Road Central, Hong Kong

Ireland
Georges Court, 54-62 Townsend Street, Dublin 2, Ireland

Japan
The registered office for the following related undertakings is 1-1 Chuo-ku, Saitama
City, Saitama Shintoshin Godo Choushya 1st Building, Saitama Prefecture, 330-9716,
Japan

Schroder YEN Target
Schroder YEN Target (Annual)
Schroder YEN Target (Semi-Annual)

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

ICBC (Europe) UCITS SICAV
Schroder Property FCP-FIS – Schroder Property EuroLogistics Fund No.1 (A)
Schroder Property FCP-FIS – Schroder Property EuroLogistics Fund No.1 (B)

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 Fund
Hartford Schroders Diversified Emerging Markets Fund
Hartford Schroders ESG US Equity Fund
Hartford Schroders Securitized Income Fund

176

Schroders Annual Report and Accounts 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF SCHRODERS PLC

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 2021 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
2021 which comprise:

Group

Parent company

Consolidated income statement for the year ended 31 December 2021

Schroders plc - Statement of financial position at 31 December 2021

Consolidated statement of comprehensive income for the year ended 31
December 2021

Schroders plc - Statement of changes in equity for the year ended
31 December 2021

Consolidated statement of financial position at 31 December 2021

Consolidated statement of changes in equity for the year ended 31
December 2021

Consolidated cash flow statement for the year ended 31 December 2021

Notes to the accounts 1 to 29 and Presentation of the financial statements

Schroders plc - Cash flow statement for the year ended 31
December 2021

Schroders plc - Notes to the accounts 30 to 38

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 and determined that the models are appropriate to enable management to

make an assessment on the going concern of the Group. We also performed back-testing on prior year forecasts;

– 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 that consider the key risks identified by management. We evaluated
management’s analysis by testing the clerical accuracy and assessing the conclusions reached in the stress and reverse stress test scenarios;

– assessed the plausibility of available options 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 is 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.

Schroders Annual Report and Accounts 2021

177

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF SCHRODERS PLC CONTINUED

Overview of our audit approach

Audit scope

– The Group is comprised of over 300 legal entities domiciled in 31 countries.
– We performed an audit of the complete financial information of six legal entities and audit procedures on specific

balances for a further 18 legal entities.

– The legal entities where we performed full or specific audit procedures accounted for 86% of profit before tax and

exceptional items, 90% of revenue and 91% of total assets.

– Certain of the Group’s processes over financial reporting are centralised in the finance operations hubs of London,

Luxembourg, Singapore and Zurich. 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 £42 million, which represents 5% of profit before tax and exceptional items.

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 24 legal entities within the following countries: United Kingdom, Luxembourg, Switzerland,
Singapore, Australia, China, Guernsey, Japan, and United States of America.

Of the 24 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 18 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 14% of the Group’s profit before tax and exceptional items, we performed other Group
procedures, including: analytical review, 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 and exceptional items

Revenue

14%

18%

Full scope
entities
Speciﬁc scope
entities
Other
procedures

(2020: 81%)

(2020: 15%)

(2020: 4%)

10%

26%

Full scope
entities
Speciﬁc scope
entities
Other
procedures

(2020: 65%)

(2020: 27%)

(2020: 8%)

68%

64%

Changes from the prior year
PT Schroder Investment Management Indonesia and Schroder Singapore Holdings Private Limited were previously considered to be specific scope
entities, but were not considered to be specific or full scope for the current year audit.

Schroders Capital Management (Switzerland) AG is considered to be a specific scope entity for the current year audit. It was previously considered to
be neither specific nor full 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 and
Zurich. Our teams in these locations performed centralised testing in the finance hubs for certain accounts including revenue, costs of sales,
administrative expenses, variable compensation, provisions and intercompany transactions.

178

Schroders Annual Report and Accounts 2021

For non-centralised processes, 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.

The Group team has maintained oversight of component teams through use of remote collaboration platforms 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 36-37 in the Task Force on Climate-related Financial Disclosures and on pages 51-54 in the principal risks and uncertainties, which form part
of the ‘Other information’. Our procedures on these 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.

As explained in the Estimates and Judgements section of the Presentation of the financial statements on pages 157 to 158, 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 climate change 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 the impairment assessments. We also
challenged the Directors’ considerations of climate change in their assessment of viability and associated disclosure.

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

Group only risk:
Improper recognition of revenue (£2,959.5 million,
2020: £2,512.7 million)

Refer to the Audit and Risk Committee report (page 70)
and Note 2 of the Consolidated financial statements
(pages 111 to 114)

Schroders manages funds in numerous domiciles, which
consist of many share classes. Schroders also manages
segregated portfolios for a range of institutions and
provides wealth management services. The inputs and
calculation methodologies that drive the fees vary
significantly across this population. In particular,
performance fees and segregated accounts have a
range of calculation methodologies due to the number
of bespoke arrangements. 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 in manually calculated revenues, such as
performance fees and carried interest; and

– inappropriate judgments are made by management in

the calculation and recognition of carried interest.

Our response to the risk

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. Verified
management’s interpretation of the calculation methodology as set out in the
agreement and applied in the revenue systems or in management’s manual
calculations;

– 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;

– billing: tested controls over the billing and cash management process. For a sample
of fees, agreed the amounts recorded to the invoice sent to the client, as well as
assessing the recoverability of debtors through testing of subsequent 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 Schroder Adveq funds, agreed the inputs used in the
carried interest calculations to third party sources, where applicable, and legal
agreements; recalculated the value of the carried interest receivable; and traced the
discounted carried interest income calculated to the revenue recorded;

– performance fees: for a sample of performance fees, we have agreed the inputs

used in the performance fee calculations to accounting records, third party sources
and legal agreements; recalculating the value of the fee; and tracing the amounts
invoiced to the revenue recorded.

Schroders Annual Report and Accounts 2021

179

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF SCHRODERS PLC CONTINUED

Risk

Our response to the risk

There is also the risk that management may
influence the timing or recognition of revenue in
order to meet market expectations or net operating
revenue-based targets.

– review of other information: inspected the global complaints register and operational

incident log to identify errors in revenue or control deficiencies; and

– management override: in order to address the residual risk of management override we

have performed enquiries of management, read minutes throughout the year and
performed journal entry testing.

We performed full and specific scope audit procedures over this risk area in four locations,
which covered 90% of the total revenue. Due to the centralised nature of the revenue process,
the majority of our testing was performed in London and Luxembourg for Asset Management
revenue, and London and Zurich for Wealth Management revenue.

Based on the procedures performed, we have no matters to report in respect of revenue recognition.

Risk

Group only risk:
Improper recognition of cost of sales (£556.4
million, 2020: £453.1 million)

Refer to the Audit and Risk Committee report (page
70) and Note 2 of the Consolidated financial
statements (pages 111 to 114)

Schroders has fee expense agreements in place with
many parties. These expenses include: commissions,
carried interest payable, external fund manager fees,
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
expense:

– 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 timing or recognition of cost of sales in
order to meet market expectations or net operating
revenue-based targets.

Our response to the risk

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 performed by Schroders and an
additional sample performed by external third parties, agreed the fee expense terms
used in the calculation to IMAs, fee letters or rebate agreements. Verified
management’s interpretation of the calculation methodology as set out in the
agreement and applied in the fee expense systems;

– 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 for 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, agreed the amount recorded to the rebate statement sent to the client;
– carried interest: challenged management over the judgments and estimates used in
the valuation of the carried interest liability. For a sample of Schroder Adveq funds:
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 traced the discounted carried interest expense calculated to the cost of
sales recorded;

– review of other information: inspected the global complaints register and operational
incident log to identify errors in fee expense or control deficiencies, and to verify that
fee expense errors, if any, have been appropriately addressed; and

– management override: in order to address the residual risk of management override
we have performed enquiries of management, read minutes throughout the year and
performed journal entry testing.

We performed full and specific scope audit procedures over this risk area in London and
Luxembourg, which covered 90% 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.

180

Schroders Annual Report and Accounts 2021

Prior year comparison
There have been no changes to our assessment of key audit matters.

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 £42 million (2020: £35 million), which is 5% (2020: 5%) of profit before tax and exceptional items. We
believe that profit before tax and exceptional items is the most relevant performance measure to the stakeholders of the entity.

We determined materiality for the Parent company to be £47 million (2020: £47 million), which is 1% (2020: 1%) of net assets. The Parent company
primarily holds the 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 2021 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% (2020: 75%) of our planning materiality, namely £31 million (2020: £26 million).

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 £6.2 million to £17.1 million (2020: £5.2 million to £14.3 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 £2.1 million (2020: £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 103 and 184 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.

Schroders Annual Report and Accounts 2021

181

Strategic reportGovernanceShareholder informationFinancial statementsFinancial statements (continued)

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF SCHRODERS PLC CONTINUED

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 102;

– 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 102;

– 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 55;

– Directors’ statement on fair, balanced and understandable, as set out on page 103;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks, as set out on pages 49 to 55;
– the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems, as set out on page

74; and

– the section describing the work of the Audit and Risk Committee, as set out on pages 70 to 76.

Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities set out on page 103, 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.

182

Schroders Annual Report and Accounts 2021

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 Prudential
Regulation Authority (‘PRA’) and Financial Conduct Authority (‘FCA’) rules and regulations.

– 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, Head of Compliance, 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, including in a remote-working environment; 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 four years, covering the years ended 2018 to

2021.

– 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.

Julian Young (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

2 March 2022

Schroders Annual Report and Accounts 2021

183

Strategic reportGovernanceShareholder informationFinancial statementsShareholder information

SHAREHOLDER INFORMATION

Schroders plc
Registered in England and Wales Company No. 3909886

Registered office
1 London Wall Place, London, EC2Y 5AU
Tel: +44 (0) 20 7658 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
Fax: +44 (0) 870 703 6101
Website: investorcentre.co.uk

Financial calendar

Ex-dividend date

Record date

DRIP election date deadline

Annual General Meeting

Final dividend payment date

Half-year results announcement

Interim dividend paid*

24 March 2022

25 March 2022

11 April 2022

28 April 2022

5 May 2022

28 July 2022

September 2022

* Date to be confirmed.
Annual General Meeting
Our AGM will be held as a hybrid meeting at 1 London Wall Place,
London, EC2Y 5AU and electronically via a live broadcast on
28 April 2022 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.

184

Schroders Annual Report and Accounts 2021

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 101.

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 unauthorised firms of which it is
aware, which can be accessed at fca.org.uk/consumers/
unauthorised-firms-individuals#list.

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
Capital gains tax values for the Company’s shares as at 31 March
1982 and values relating to the disposal of the investment banking
business in 2000 can be found on the Company’s website.

FIVE-YEAR CONSOLIDATED FINANCIAL SUMMARY

Before exceptional items

Profit before tax

Tax

Profit after tax

After exceptional items

Profit before tax

Tax

Profit after tax

Pre-exceptional earnings per share:

Basic earnings per share1
Diluted earnings per share1

Post-exceptional earnings per share:

Basic earnings per share1
Diluted earnings per share1

Dividends:

Cost (£m)
Pence per share2

Total equity (£m)

Net assets per share (pence)3

Group employees at year end 31 December

United Kingdom

Europe, Middle East and Africa

Americas

Asia Pacific

2021
£m

836.2

(143.2)

693.0

2021
£m

764.1

(140.3)

623.8

2021
Pence

244.8

240.6

2021
Pence

220.8

217.1

2021

318.6

116.0

2020
£m

702.3

(133.5)

568.8

2020
£m

610.5

(124.5)

486.0

2020
Pence

200.8

197.2

2020
Pence

172.4

169.3

2020

311.7

114.0

2019
£m

701.2

(140.5)

560.7

2019
£m

624.6

(128.9)

495.7

2019
Pence

201.6

198.0

2019
Pence

178.9

175.8

2019

312.3

114.0

2018
£m

761.2

(163.3)

597.9

2018
£m

649.9

(145.2)

504.7

2018
Pence

215.8

211.8

2018
Pence

183.1

179.7

2018

311.7

114.0

2017
£m

800.3

(171.6)

628.7

2017
£m

760.2

(165.8)

594.4

2017
Pence

226.9

222.4

2017
Pence

215.3

211.0

2017

267.6

98.0

4,425.7

4,085.9

3,847.5

3,621.2

3,471.0

1,567

2021
Number

3,329

940

388

1,093

5,750

1,446

2020
Number

3,188

938

379

1,066

5,571

1,362

2019
Number

3,284

964

376

1,049

5,673

1,282

2018
Number

2,798

873

369

999

1,229

2017
Number

2,535

822

353

909

5,039

4,619

1. See note 6 for the basis of this calculation.
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.

3. Net assets per share are calculated by using the actual number of shares in issue at the year end date (see note 21).

Exchange rates – closing 31 December

2021

2020

2019

2018

2017

Sterling:

Euro

US dollar

Swiss franc

Australian dollar

Hong Kong dollar

Japanese yen

Singaporean dollar

Chinese renminbi

Exchange rates – average

Sterling:

Euro

US dollar

Swiss franc

Australian dollar

Hong Kong dollar

Japanese yen

Singaporean dollar

Chinese renminbi

1.19

1.35

1.23

1.86

10.56

155.97

1.83

8.63

2021

1.16

1.37

1.25

1.83

10.68

151.02

1.84

8.86

1.12

1.37

1.21

1.77

1.18

1.32

1.28

1.88

10.60

141.13

10.32

143.97

1.81

8.89

2020

1.13

1.29

1.21

1.87

10.05

137.89

1.78

8.93

1.78

9.23

2019

1.14

1.28

1.27

1.84

10.03

139.63

1.74

8.83

1.11

1.27

1.26

1.81

9.97

139.73

1.74

8.74

2018

1.13

1.33

1.30

1.78

10.44

147.17

1.80

88.82

1.13

1.35

1.32

1.73

10.57

152.39

1.81

8.81

2017

1.15

1.30

1.27

1.69

10.10

145.42

1.79

8.75

Schroders Annual Report and Accounts 2021

185

Strategic reportGovernanceShareholder informationFinancial statementsGlossary

GLOSSARY

About our business areas

Private Assets and Alternatives
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 clients access to our investment capabilities
through intermediary networks.

Institutional
Makes investment components available directly to institutions
and through 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.
Certain of the Group’s APMs exclude exceptional items which
are defined in note 1(b) on page 113 and presented separately
in the Consolidated income statement. The Group’s APMs are
defined below.

Basic or diluted earnings per share before exceptional items
Profit after tax but before exceptional items divided by the
relevant weighted average number of shares (see note 6 on
page 118). The presentation of earnings per share before
exceptional items provides transparency of recurring revenue
and expenditure from our operational activities to aid
understanding of the financial performance of the Group.

Payout ratio
The total dividend per share in respect of the year (see note 7
on page 118) divided by the pre-exceptional basic earnings per
share.

Profit before tax and exceptional items
Profit before tax but excluding exceptional items. This
presentation provides transparency of recurring revenue and
expenditure from our operational activities to aid
understanding of the financial performance of the Group.

Ratio of total costs to net income
Total Group costs before exceptional items divided by net
income before exceptional items (see note 4 on page 116).
A 65% ratio is targeted to ensure costs are aligned with net
income, although we recognise that in weaker markets the
ratio may be higher than our long-term target.

Total compensation ratio
Pre-exceptional compensation costs (see note 4 on page 116)
divided by pre-exceptional net income. By targeting a total
compensation ratio of 45% to 49%, depending upon market
conditions, we align the interests of shareholders and
employees.

186

Schroders Annual Report and Accounts 2021

Active management
The management of investments based on active decision-making
rather than with the objective of replicating the return of an index.

AIFMD
The Alternative Investment Fund Managers Directive was
implemented in the UK in July 2013 and is a regulatory framework
for alternative investment fund managers, including managers of
hedge funds, private equity firms and investment trusts.

Alpha
Excess return over market returns relative to a market benchmark.

Article 8 and 9
See Sustainable Finance Disclosures Regulation.

Assets under management (AUM)
The aggregate value of assets managed on behalf of clients for the
Group, including joint ventures and associates. In Wealth
Management this includes assets where Schroders provides
advisory services but the investment decisions are made by the
client as well as assets held in custody where the client
independently makes investment decisions, whether it is through
direct contact with Schroders or via the Fusion wealth platform.

For Schroder Adveq, the aggregate value of assets managed is
based on committed funds by clients. 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.

Basis point (bps)
One one-hundredth of a percentage point (0.01%).

Beta
Market returns.

Carbon dioxide equivalent (CO2e)
A standard unit for measuring carbon footprints. It enables the
impact of different greenhouse gas emissions on global warming
to be expressed using an equivalent amount of carbon dioxide
(CO2) as a reference.

Carried interest
Carried interest is similar to the performance fees we earn on our
core business, but is part of Private Assets and Alternatives fee
structures.

CDP
The Carbon Disclosure Project is a not-for-profit charity that runs
the global disclosure system for investors, companies, cities, states
and regions to manage their environmental impacts.

CDP climate score
The Carbon Disclosure Project (CDP) scoring methodology
assesses the level of detail and comprehensiveness of content
provided in the questionnaire. It examines the company’s
awareness of climate change issues, management methods and
progress towards action taken on climate change as reported in
the response.

Client investment performance
Client investment performance is a measure of how investments
are performing relative to a benchmark or other comparator. 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 virtually all applicable AUM that have a
complete track record over the one year, three years and five years
reporting periods.

Applicable AUM excludes £53.1 billion of assets, principally
comprising those managed by third parties, assets, non-
discretionary assets and Wealth Management assets held on a
custody-only, advisory or execution-only basis.

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
11% of assets in the calculation.

• Assets with no specific outperformance objective, including
those with a buy and maintain objective, that are measured
against a cash alternative, if applicable. This applies to 7% of
assets in the calculation.

Clients
Within our Asset Management business 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.

Compensation cost
Total cost of employee benefits.

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.

EMEA
Europe, the Middle East and Africa.

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.

ESG integration
ESG integration refers to the explicit and systematic incorporation
of a range of risks and opportunities related to environmental,
social and governance (ESG) factors into investment decision-
making. In principle, this leads to a broader assessment of the
environment in which companies operate and their performance
in managing different stakeholders, giving a fuller understanding
of potential future opportunities and risks than traditional financial
analysis alone. For certain businesses acquired recently we have
not yet integrated ESG factors into investment decision-making. A
small portion of our business for which ESG integration is not
practicable or possible, for example our legacy businesses or
investments in the process of being liquidated, and certain joint
venture businesses are excluded.

Family offices
These manage and/or advise on the financial affairs and
investments of ultra-high net worth individuals or families.

FCA
Financial Conduct Authority of the United Kingdom.

FRC
Financial Reporting Council.

GAIA
Global Alternative Investor Access.

GHG Protocol
Greenhouse gas protocol, a global standardised framework to
measure and manage greenhouse gas emissions.

GCC
Group Capital Committee.

GMC
Group Management Committee.

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.

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.

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.

Schroders Annual Report and Accounts 2021

187

Strategic reportGovernanceShareholder informationFinancial statementsGlossary (continued)

Life Company
Schroder Pension Management Limited, a wholly owned
subsidiary, which provides investment products through a life
assurance wrapper.

MSCI ESG rating
The Morgan Stanley Capital Internationals ESG rating is designed
to measure a company’s resilience to long-term, industry material
ESG risks.

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 47.93% of the ordinary shares of
Schroders plc.

RCA
Risk and Control Assessment.

Net income
A sub-total comprising net operating revenue, net gains on
financial instruments and other income and share of profit of joint
ventures and associates.

Regulatory surplus capital
Total equity less the Group’s overall regulatory capital requirement
and regulatory deductions, in accordance with the EU Capital
Requirements Regulation as set out in the Group’s Pillar 3 disclosures.

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). New funds and funds withdrawn are calculated as at
31 December 2021 on the basis of actual funding provided or
withdrawn.

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 target
A “net zero” target refers to reaching net zero carbon emissions
by a selected date and refers to balancing the amount of emitted
greenhouse gases with the equivalent emissions that are either
offset or sequestered.

Renewably sourced electricity
Electricity that is directly or indirectly (via Renewable Energy
Certificates) procured from a verifiable renewable source.

Schroders Personal Wealth
Schroders Personal Wealth (SPW) is a joint venture between Lloyds
Banking Group and Schroders. It provides personal wealth
planning, advice and investment management services to clients in
the UK.

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
All direct greenhouse gas emissions from company facilities and
vehicles from for example gas and oil.

Passive products
Products whose stated objective is to replicate the return of an
index.

Scope 2
Indirect greenhouse emissions from consumption of purchased
electricity, heat or steam.

Pillar 1
The minimum capital requirements in relation to credit risk,
operational risk and market risk taken by the Group as principal.

Pillar 2
The requirement for companies to assess the level of additional
capital held against risks not covered in Pillar 1.

Pillar 3
This complements Pillar 1 and Pillar 2 with the aim of improving
market discipline by requiring companies to publish certain details
of their risks, capital and risk management. Schroders’ Pillar 3
disclosures are available at 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. It is calculated 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.

PRA
Prudential Regulation Authority.

Scope 3
Other indirect emissions, such as the emissions associated with
our investments, electricity-related activities, waste disposal,
business travel, employee commuting, employee homeworking
etc.

Seed and co-investment capital
Seed capital comprises an initial investment put into a fund or
strategy by the business 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.

Sustainable Finance Disclosures Regulation (SFDR)
Under the EU legislation on Sustainable Finance Disclosures
Regulation, asset managers have to publish which of their
products fall into three distinct categories (Article 6, 8 and 9).
Article 8 funds promote ‘environment’ or ‘social’ characteristics but
do not have them as the overarching objective. Article 9 funds
specifically have sustainable goals as their objective.

Sustainalytics ESG rating
Sustainalytics ESG Risk Ratings measure a company’s exposure to
industry-specific material ESG risks and how well a company is
managing those risks. This multi-dimensional way of measuring
ESG risk combines the concepts of management and exposure to
arrive at an absolute assessment of ESG risk.

188

Schroders Annual Report and Accounts 2021

SustainEx™
SustainEx™ is Schroders’ proprietary measure of the social and
environmental impact that a company may create. Based on
independent data and research, the model combines measures of
both the harm companies can do (for example, through activities
like carbon emissions) and the good they can bring (for example,
through paying a “living wage”) to produce an aggregate measure
of each company’s social and environmental impact. The aim of the
model is to allow our investors to target their ESG investments
effectively by assessing the extent to which companies are in credit
or deficit having regard to such measures, and the risks they face if
the social and environmental “costs” they externalise are pushed
into their own financial costs.

TCFD
The Financial Stability Board Task Force on Climate-related Financial
Disclosures (TCFD) is a market-driven initiative to help investors
understand their financial exposure to climate risk and help
companies disclose this information in a clear and consistent way.

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 PRA.

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.

Total equity
Total assets less total liabilities.

UCITS
Undertakings for the Collective Investment in Transferable
Securities. The UCITS directive is a regulatory framework of the
European Union that creates a harmonised regime throughout
Europe for the management and sale of investment funds.

UCITS/AIF MRTs
Employees deemed to be material risk takers under the UCITS
Directive or AIFMD.

UK Stewardship Code
A set of principles or guidelines from the Financial Reporting
Council directed at institutional investors who hold voting rights in
United Kingdom companies.

UN PRI
The United Nations-supported Principles for Responsible
Investment Initiative is an international network of investment
companies working together to implement the six Principles for
Responsible Investment. Its goal is to understand the implications
of sustainability and support signatories to incorporate these
issues into their investment decision-making and ownership
practices.

Weighted average carbon intensity (WACI)
Measures a portfolio’s exposure to carbon intensive companies by
assessing the percentage holding in the investee company by their
emissions. Scope 1 and 2 greenhouse gas emissions are allocated
based on portfolio weights (the current value of the investment
relative to the current portfolio value).

Schroders Annual Report and Accounts 2021

189

Strategic reportGovernanceShareholder informationFinancial statementsPrinted by Pureprint Group on FSC® certified paper.
Pureprint Group is an EMAS certified
CarbonNeutral® Company and its Environmental
Management System is certified to ISO14001.
100% of the inks used are vegetable oil-based.
This document is printed on Splendorgel Extra
White, a paper containing virgin fibre sourced from
well managed, sustainable, FSC® certified forests
and other controlled sources. The pulp used in this
product is bleached using an elemental chlorine
free (ECF).
Designed and produced by Black Sun plc.

190

Schroders Annual Report and Accounts 2021