Schroders Annual Report 2022

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FY2022 Annual Report · Schroders

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Annual Report and Accounts 2022

Strategic report

Our business

Chair’s statement

Group Chief Executive’s statement

Strategy and business model

Sustainable leadership

Investing sustainably

Prioritising our people and culture

Leading by example

Business and financial review

Stakeholder engagement
and section 172 statement

Risk management

Taskforce on Climate-related Financial
Disclosures (TCFD)

Non-financial information statement

Viability statement and going concern

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

Shareholder information

Five-year consolidated financial
summary

Glossary

108

113

117

169

189

200

201

202

Key performance indicators (KPIs)*

KPI

This year, we have embedded KPI disclosures throughout the
strategic report, providing explanations in context with the
relevant content. We have also added a new KPI, portfolio
temperature score, given the strategic importance of our
climate strategy to our business.

KPIs are identified throughout the strategic report using

the symbol above.

Client investment
performance

Basic operating earnings
per share*

73%

2021: 79%

37.4p

2021: 43.0p

For more information, see page 7

For more information, see page 35

Net new business*

Net operating income*

-£7.6bn

2021: £37.3bn

£2,476m

2021: £2,520m

For more information, see page 8

For more information, see page 34

Assets under
management*

£737.5bn

2021: £766.7bn

Retention of highly-rated
employees

94%

2021: 94%

For more information, see page 10

For more information, see page 30

Dividend per share*

Portfolio temperature score

21.5p

2021: 21.4p

2.6°C

2021: 2.8°C

For more information, see page 5

For more information, see page 27

See our glossary on page 202 for definitions of our KPIs.

* Our KPIs have been updated following the change to the presentation of our

income statement, see page 35, and following the simplification of the dual share
class, see page 63. Prior year numbers have been restated here and throughout
the report.

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 27 April 2023 at 11:30am.

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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.

A number of years ago, we recognised the external forces that were causing
significant disruption to traditional asset management. In response, we sought
to expand our business into areas with greater client longevity, higher margins
and where we believe we can deliver the best returns for clients.

Today, we have succeeded in reshaping our business. We are one of only a
few investment managers with a truly global reach, distinctive set of advice
and investment capabilities, and recognised leadership in sustainability.

We have built a complete private asset business, continued to grow
our public asset offering, placed greater focus on delivering solutions
for our clients, expanded our wealth management offering across the
wealth spectrum and developed our network of global partnerships.

Assets under management

Our focus
areas have
grown
from 35%
of our AUM...

2016

2022

... to 53%
of our AUM.

£453.6bn

£737.5bn

Schroders Annual Report and Accounts 2022

Schroders Wealth
Management

For more information,
see page 18

Schroders Capital

For more information,
see page 20

Schroders Solutions

For more information,
see page 22

Schroders Investment
Management

For more information,
see page 24

Our business

We are a global investment manager offering a
distinctive set of advice and investment capabilities.

Our clients seek advice to help them with a range of complex
challenges. By building trusted partnerships with them, we are
able to nurture deeper, long-lasting relationships. Our business is
organised across two segments – asset and wealth management –
with four distinct business offerings.

classes through mutual funds and institutional mandates.
This is now supplemented by a complete private assets business,
Schroders Capital, whilst Schroders Solutions brings our public and
private asset management capabilities together to offer complete
investment solutions to institutional clients.

In Asset Management our Schroders Investment Management
business offers active management across a full range of asset

Schroders Wealth Management offers advice across the wealth
spectrum through our various brands.

Schroders Wealth Management
£111.4bn AUM

Schroders Capital
£68.3bn AUM

We offer investment, advisory
and platform services to
individuals, family offices and
charities where relationships
are deeper and longer lasting.

We generate revenue from:
financial planning and advice,
platform fees, and management
fees where clients invest into
our funds.

Joint Venture*, £13.3bn
Our joint venture with Lloyds
Banking Group, Schroders
Personal Wealth, offers financial
advice to mass-affluent clients.

* Included within the business

AUM presented above.

Schroders Solutions
£210.2bn AUM

We offer advice and solutions,
working in partnership with
pension funds, financial
services and other large
institutions.

Through deepened relationships
we build bespoke investment
solutions and strategies,
designed to meet complex
needs through Fiduciary
and Liability Management,
and other investment
management services.

Our clients cover:

• Ultra-high-net-worth
• High-net-worth
• Affluent
• Mass Affluent

Our strategies cover:

• Private debt
• Private equity
• Infrastructure
• Real estate
• Alternatives

We offer clients access to
alternative sources of return.
Compared with publicly listed
assets, revenues are typically
more stable and client
relationships longer.

Our clients primarily include
institutions, although increasingly
we are extending this capability
to individuals and pension funds
with some key new mandates.

For more information,
see page 18

For more information,
see page 20

Schroders Investment
Management
£347.6bn AUM

Our clients include:

• Insurance companies
• Pension schemes
• Charities
• Sovereign wealth funds
• Fund platforms

For more information,
see page 24

Our strategies cover:

• Fixed income
• Equities
• Multi-asset
• Risk mitigation

For more information,
see page 22

We offer deep investment
expertise across all asset
classes to a range of clients.
We make our products
available to retail investors
through our mutual funds
business.

Our global presence allows us
to connect with clients around
the world.

Joint ventures and
associates*, £107.7bn
We partner with local champions,
including Bank of Communications
in China and Axis in India, to access
high growth markets.

* Included within the business

AUM presented above.

Schroders Annual Report and Accounts 2022

Enabled by our deep investment
expertise across all asset classes

Strengthened by
sustainable leadership

We have highly specialised teams across public and
private markets, and we increasingly bring this expertise
together to provide complete solutions for our clients.

We see sustainability as a key differentiator for our business and a
key source of client demand. We integrate the consideration of ESG
factors across our portfolios of managed assets to help inform better
investment decisions, the importance of which is increasingly
recognised by our clients.

See page 203 for more information on the integration of ESG factors.

By asset class (£ billion)

Private Assets and
Alternatives

Fixed Income

Equities

Multi-Asset

Wealth Management

68.3

143.0

225.3

189.5

111.4

Portfolios with SustainEx™
score above their benchmark

86%

(for portfolios to which these scores
can be applied)

MSCI ESG Rating

AAA

putting us in the top
13% of our sector
(2021: AAA, 3%)

For more information,
see page 26

Serving clients across the world and
supported by our strategic partnerships

Our global presence enables us to reach clients and meet their
distinctive needs regardless of their geographic location. We also
access high-growth markets through our strategic partnerships with
champion brands.

Long-standing presence in all key global markets
Assets under management, by client domicile

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Americas

12%

45%

locations around
the world
2021: 37

Europe, Middle East and Africa

15%

Asia Pacific

28%

Our strategic partnerships

Schroders Annual Report and Accounts 2022

Chair’s statement

A company that
always thinks
long term

We have the right
strategy and the
talent to deliver it

It is my pleasure to present this first
annual report since I became Chair
in April last year. Schroders, as one of
the world’s leading active managers,
performs a crucial trusted role for our
clients, the intensity of which only gets
magnified during periods of economic
turmoil and geopolitical uncertainty.
2022 was a challenging year for
everybody with markets and
returns dramatically impacted.

I was pleased and heartened by Schroders
response, as our strategy and resilience
were tested and proven.

I have been impressed with the dedication
and determination of the remarkable people
here at Schroders and the way in which the
company has responded, on our clients’
behalf, in a volatile year. Under the high
quality leadership of our executive Directors,
Peter Harrison and Richard Keers, the
company has held true to serving clients
and delivering our strategy.

Asset prices experienced significant
fluctuations during the year, and with
all metrics impacted by lower bond and
equity markets, our financial performance
was affected. Operating profit was
£723.0 million, down from £841.0 million
in 2021. Profit before tax was £586.9 million
(2021: £764.1 million). Assets under
management ended the year at £737.5 billion
(2021: £766.7 billion), principally due to lower
bond and equity markets. These are resilient
results in the circumstances and testament
to our strategy of diversification and staying
close to our clients. Our capital position also
remains strong.

The Board is therefore recommending
a final dividend of 15.0 pence per share
(2021: 14.9 pence), bringing the full year
dividend to 21.5 pence (2021: 21.4 pence).
Subject to shareholder approval at the
Annual General Meeting, the final dividend
will be paid on 4 May 2023 to shareholders
on the register on 24 March 2023.

Global Markets have started 2023 on a more
optimistic note in anticipation of an economic
recovery later this year. We of course
welcome the improvement in sentiment but
recognise that markets are likely to remain
volatile given continuing levels of uncertainty
in the outlook. Our strategy of diversification
positions us well.

Strategy, talent, culture and clients
A demanding environment inevitably puts
greater strain on a company and it is at
precisely these times that strategy is tested.
I am pleased to report that our strategy
helped place us in a resilient position to
continue to deliver for all our stakeholders.
We are putting even more emphasis on
building closer relations with our end clients,
continuing to focus on developing distinctive
capabilities in our asset management
business, and have expanded further
our private assets business.

Throughout this annual report you will
read more about our strategy: what it is,
why it makes us different and how we are
delivering on it both now and will in the
future. Strategy has been a key focus of
our Board discussions over the past year,
culminating in our offsite meeting
in November.

Schroders Annual Report and Accounts 2022

KPI

Dividend per share (pence)

Our objective
Our policy is to provide shareholders with
a progressive and sustainable dividend,
targeting a payout ratio of around 50%.

How we performed

21.5p

The Board recommends a final dividend
of 15.0 pence per share, bringing the total
dividend for the year to 21.5 pence per
share. This represents a payout ratio
of 57%.

2022

2021

2020

2019

2018

21.5

21.4

20.0

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The Board
As the Company evolves, so does the Board
and there is more on how we are doing this
in our Nominations Committee report.
We said farewell to our previous chair Mike
Dobson at our Annual General Meeting in
April after 21 years and I would like to thank
Mike for his support and guidance as I
prepared to succeed him in the Company.
In July we welcomed Paul Edgecliffe-Johnson
to the Board. Paul brings significant strategic
and financial expertise along with global
business experience. Damon Buffini will
leave the Board at the Annual General
Meeting in April after five years. We have
benefitted enormously from Damon’s
experience, particularly in private markets.
We are very sorry to see him go but fully
appreciate the need for him to focus on
his new role as Deputy Chair of the BBC.
The search for Damon’s successor is
well advanced.

Looking forward
High levels of macro uncertainty are likely to
continue. That said, delivering our strategy
and excellence in performance is what
Schroders has always done and will continue
to do. What I have found since joining the
Board has reinforced what I always believed
about Schroders; it is a Company that thinks
and acts for the longer-term benefit of its
clients, shareholders and other key
stakeholders.

Taking over as Chair of your Company
has been an enormous privilege and also
hugely enjoyable. This is principally due to
the quality of the people within Schroders
and their infectious drive to take the
Company forward. I am grateful to them
for all they do and also for the support of
my colleagues on the Board as collectively
we look to the future.

Dame Elizabeth Corley
Chair

1 March 2023

During this the Board fully endorsed
continuing with the strategic direction that
has been pursued since 2016 and the three
pillars on which it is based, while increasingly
taking advantage of technological innovation
to enhance our offering to clients and
maintain cost discipline. The acquisitions of
recent years, including those completed in
2022, all support this drive. Sustainability is
something we see as integral to each of our
strategic pillars and our goal is to become a
leader in this field.

I have now been on the Board for almost
18 months and I am grateful for the warmth
of the welcome I have received. Through my
induction I spent many hours not just with
the executive team but also with many other
employees. I have been impressed by the
rich and diverse talent we have across our
businesses. Understanding the views of
our people is essential in helping the Board
understand the culture of the organisation
and make the right long-term decisions.
With the relaxation of travel restrictions, the
Board was able to go overseas for the first
time since 2019 and we experienced at first
hand the enthusiasm and professionalism
of our colleagues in New York.

Schroders has long held a reputation
for putting our clients at the heart of
everything we do and I have now been able
to experience this at first hand. It is core to
who we are and what we do and the Board
fully recognises that we must protect this
reputation.

In all our Board discussions, the needs of
our clients and wider stakeholders are seen
as paramount. Delivering consistently for
our clients in a volatile and uncertain market
will deliver long-term shareholder value.
We have the right strategy and the talent
to deliver it.

Simplifying our share structure
In September we completed the
simplification of our share structure by
enfranchising our non-voting shares.
Now all shareholders have the same rights.
This was a major step for the Company and
was undertaken after significant consultation
with shareholders. Holders of both classes
of shares overwhelmingly supported our
proposals. We could not have achieved
enfranchisement without the support
of our Principal Shareholder Group.
Despite their voting rights being diluted
by enfranchisement, their support for the
proposals as being in the Company’s best
interests demonstrated their long-term
commitment. This is a major strength as
we move forward.

Schroders Annual Report and Accounts 2022

Group Chief Executive’s statement

Robust results,
resilient
performance

I am heartened that we
lead in opening up new
investment frontiers

Schroders Capital gross
fundraising

£17.5bn

(2021: £12.4bn)

Schroders Wealth
Management NNB

£5.6bn

(2021: £6.1bn)

2022 will be remembered for the slew of
challenges that confronted society. It was
the year that war returned to Europe and
inflation reached a 40-year high, sparking
a once-in-a-generation crisis in the cost
of nearly everything. Amid such acute
pressures, geopolitical tensions
worsened and political divisions
inevitably widened.

For companies, it was a test of financial
strength, of strategy, and of how they
responded in supporting their people.

I’m proud of our response. Schroders
performed and acted as it should when
clouds darken. The strength of our employee
value proposition is perhaps why the ’great
resignation’ never came to Schroders.

It is in times like these that I’m glad Schroders
is a committed active manager. More than
ever, our fund managers have engaged with
companies and challenged their strategies,
sharing our own data on everything from
climate change to employee wages. Our
considerable investment in sustainability –
in active ownership teams, in proprietary
tools – gives us a deep understanding and
therefore an investment edge. Fast forward
to the present day and we have a sizeable,
scaled sustainability capability which is a
real competitive advantage.

In an exceptionally tough year for markets,
our revenues and profits were inevitably
affected but I am pleased with the relative
performance of our core business.

I’m equally pleased with the speed at which
we continue to move to areas of the industry
where relationships with clients are deeper
and longer lasting. Importantly, our strategy
kept moving.

Most notably in 2022, we completed two
major acquisitions: we bought a majority
stake in Greencoat Capital, now an important
component of Schroders Capital, so that
we could offer our clients ownership of
renewable energy assets, and we combined
River and Mercantile’s solutions business
with Schroders Solutions to bolster our
advice capabilities and better solve the
complex challenges faced by clients.

Markets in 2022 served up a reminder
of the need for true diversification. It was
the year that equities and bonds crumbled
simultaneously, defying the convention that
when one falls, the other rises. The classic
portfolio combination of 60% equity and
40% bonds had its worst year in nearly a
century, as research from our Strategic
Research Unit makes abundantly clear
in the chart on the next page.

Clients responded by investing in assets
they may previously have not considered.
In equities, our energy transition strategies
saw the greatest demand. Investors want
choice and they want to back the trends
they believe in. There is a growing desire,
and need, to fund the world’s transition
to carbon net zero.

The company is a leader in opening up these
new investment frontiers to clients, not just
through our thematic funds and the wind
turbine projects of Schroders Greencoat,
but also with natural capital products that
will reward investors for helping to protect
rainforests in Asia.

The measure of a corporate strategy is how it
navigates a company through the hardest of
environments while maintaining a promised
long-term trajectory. This report sets out in
detail how and why Schroders’ strategy met
that test in 2022.

Schroders Annual Report and Accounts 2022

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A portfolio of 60% equities and 40% bonds underperformed
inflation by the most in almost 100 years

KPI

Client investment
performance (%)

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

How we performed

73%

We again delivered strongly for our
clients with 73% of assets outperforming
their relevant comparator over three
years and 76% outperforming over five
years. We have been above our target for
the previous five years.

2022

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40%

30%

20%

10%

-10%

-20%

-30%

1926

1936

1946

1956

1966

1976

1986

1996

2006

2016

2022

Equities are US large cap equities, bonds are long-term US government bonds. Data to 31 December 2022.
Source: CFA Institute, Schroders, Refinitiv.

Our long-term strategy
We have three strategic areas of focus:
building closer relationships with end clients;
growing our asset management business
through providing solutions, leadership in
sustainability and geographic expansion;
and expanding our private assets business.

This strategy is effective because it pivots
our business towards quality: higher margin,
higher growth areas, and increasingly into
areas where relationships with clients are
stronger and longer lasting. Our competitors
have seen the merits of this approach
and have embarked on a similar path.
Our advantage is that we are well
progressed, having set course in 2016.

These strategic areas of focus apply
across our firm and are executed via the
businesses we have built: Schroders Wealth
Management, Schroders Capital, Schroders
Solutions and Schroders Investment
Management. Each has significant market
presence in its own right. The true value is
unlocked by housing these businesses under
one roof; the whole is greater than the sum
of the parts. All Schroders Solutions clients
have access to the private assets capabilities
of Schroders Capital, for example.
By deepening relationships with clients,
we improve the Schroders experience
and we strengthen our business.

Our financial performance
Our revenues and profits inevitably felt the
effect of lower bond and equity prices but
benefitted from our diversification and our
pivot towards quality growth areas. Our core
business performance is reflected in our net
operating revenue excluding performance
fees and net carried interest figure. This
increased 1% to £2,301.9 million, despite the
challenging market backdrop in 2022. Our
operating profit was lower than last year’s
record high, ending the year at £723.0 million.

Considering the difficult environment,
we started the year well compared to our
peers. At the half year we generated net new
business (NNB) of £8.4 billion and saw NNB
of a further £1.0 billion in the third quarter.
The fourth quarter saw a reversal, driven
by a global risk-off sentiment, while in the
UK we navigated a crisis in the gilt market.
In the end, 2022 saw net outflows of
£7.6 billion, or £1.6 billion excluding joint
ventures and associates.

We strive to provide excellent investment
performance to our clients through active
management. That’s our bread and butter
and also what drives our financial
performance. I’m pleased that we again
delivered strongly for our clients with
73% and 76% of assets outperforming their
relevant comparator over three and five years
respectively. Furthermore, 86% of our public
market AUM had a better SustainEx™ score
than their benchmark. This measure shows
the impact our investments have as we act
as the stewards of clients’ assets.

Our strategic plan, now in its seventh year,
continues to drive us forward.

Schroders Annual Report and Accounts 2022

Group Chief Executive’s statement
continued

KPI

Net new business (£ billion)

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

How we performed

-£7.6bn

Overall, total net flows were -£7.6 billion
for the year. Excluding our joint ventures
and associates total net flows were
-£1.6 billion. In 2022, the two strategic
growth areas of Schroders Wealth
Management and Schroders Capital
contributed strongly, with £5.6 billion and
£6.4 billion of net flows respectively.

2022

2021

2020

2019

2018

-7.6

-9.3

37.3

62.7

54.3

The chart, below, shows our net new
business split by business and how our
combined strategic growth areas have
positively contributed. Schroders Wealth
Management had a good year, together with
a number of our private assets businesses.
Had we not embarked on our strategic shift
several years ago, our results would have
looked very different.

Schroders Wealth Management
Over the years we have built a
broad wealth management platform,
advising clients across the spectrum
of ultra-high-net-worth, high-net-worth
and affluent clients, and provide a
technology-driven platform for financial
advisers in the business-to-business
space. Schroders Wealth Management
generated an impressive £5.6 billion
of net new business in 2022.

This success is a result of a combination of
factors. Firstly, we have a strong portfolio
of wealth brands including Cazenove Capital
and Benchmark, together with our Lloyds
Banking Group joint venture, Schroders
Personal Wealth, that are delivering very
competitive investment performance versus
peers. This is leading to higher inflows and
lower attrition levels. Secondly, there has
been strong growth in UK charities where
our sustainability expertise has been very
well received, particularly in the university
sector. Sustainability has been an important
theme in private wealth where families
are becoming more focused on the impact
of their investments. We’ve also seen
strong growth from our expansion of
regional hubs in Birmingham, Leeds,
Bristol and Manchester.

Schroders Capital
Our private assets business has undergone
considerable change in both size and
composition. In 2016, we managed around
£20 billion, predominantly consisting of real
estate, securitised credit and private equity.
Through a targeted programme of bolt-on
acquisitions and complementary organic
investment, we now have a complete
business offering private debt, private equity,
infrastructure, real estate and alternatives.
Schroders Capital ended the year with
£68.3 billion of fee earning assets under
management and generated £17.5 billion of
gross fundraising, with NNB of £6.4 billion in
2022, despite the challenging environment.

The chart on page 9 shows the success of
our acquisition strategy; we have nearly
doubled the £24.6 billion of assets under
management that we have bought since
2016. To take our private equity franchise
as an example, we bought Adveq (now
Schroders Capital private equity) in 2017
when it managed £6.0 billion. It was a solid
business led by great people but to
accelerate growth it needed access to a
strong brand, an efficient and effective
product development machine and global
client reach. Providing this meant that we
could grow the assets by 90% to £11.4 billion
and win some sizeable mandates across
Europe last year. Most notably, we were
awarded a mandate by Nest, a workplace
pension scheme set up by the UK
Government. Its 10 million-plus members
now have access to private equity for the
first time.

Last year, we bought a majority interest in
Greencoat Capital, a green infrastructure
manager adding £7.7 billion of assets and
contributing £0.5 billion of NNB. This is an
attractive proposition for many of our
clients amid the drive toward net zero.

Net new business (£ billion)

Strategic growth areas contributed
£11.8bn of NNB

Schroders Asset Management

-2

-4

-6

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Schroders
Wealth
Management

Schroders
Capital

Schroders
Solutions

Mutual
Funds

Institutional

Asset
Management
associates

Schroders Annual Report and Accounts 2022

Becoming a true trusted
adviser is the next
phase of our strategy

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We foresee a multitude of opportunities to
grow the business in both Europe and the
US. We also acquired Cairn Real Estate in
the Netherlands, completing the jigsaw of
a pan-European real estate capability.

We have also expanded the geographies
we operate in. We now have more Schroders
Capital AUM in Europe than in any other
region. The democratisation of private assets
is a very live conversation for many European
distributors, with the rollout of European
Long-Term Investment Funds, or ELTIFs,
and we are well-placed to partner with
them given the breadth of our Schroders
Capital offering.

Public markets remain out of favour.
McKinsey research has shown that the
number of US company listings dropped by
over 25% between 2000 and 2020. That
trend is inhibiting the opportunities for
active managers and forcing talent into
private markets. In a world where disruption
is accelerating, capital needs to be agile and
be deployed more quickly. Private markets
will likely have a better chance of succeeding
in that environment. The ability to see across
public and private will prove incredibly
valuable for us.

Schroders Solutions
We successfully navigated the gilt crisis
despite only having acquired River and
Mercantile’s solutions business at the
beginning of the year. I personally witnessed
the Herculean efforts of our teams when
markets were most febrile and I know how
well we communicated with clients and their
consultants during times of need. We
experienced short term redemptions as
our clients derisked their portfolios, but
our actions during the crisis give me great
confidence that we have the opportunity to
grow our market share amongst UK pension
funds considerably.

It is widely known that our plumbing, the
speed at which we could respond, worked
and that there were clear benefits from
being both a fiduciary and an asset manager
for some clients. More clients will want such
a full partnership in the years ahead.

The new clients that have partnered
with Schroders Solutions in 2022 is a roll
call of industry leaders – from Lloyd’s of
London to UK energy giant Centrica. I am
confident that the list of future clients will
be equally impressive.

Schroders Investment Management
Our public markets business areas,
Institutional, Mutual Funds and our activities
in India and China via our associates,
are exposed to greater cyclicality than our
other businesses. The risk-off environment
inevitably affected new business growth
for our core, albeit we outperformed peers,
primarily due to strong demand for thematic
funds. Mutual fund net outflows were
£5.9 billion which was mostly due to outflows
from fixed income products. Our Institutional
business saw some larger mandate losses in
the first half of the year due to several clients
restructuring their asset allocations, but
benefitted from the flows gathered by our
Wealth Management Company in China.
The new partnership ended the year as
the number one Wealth Management
Company in terms of flows last year. In total,
Institutional net outflows were £7.3 billion.

Our position in China is very well regarded
and our growth prospects remain
compelling. It is the world’s second-biggest
economy and an important market;
we can bring our experience to the benefit
of millions of families seeking to provide
for their futures. It should also be noted that
China is a leader in low-carbon technologies;
companies at the forefront of innovation
need capital.

Development of acquired AUM in Schroders Capital (£ billion)

Growth
93%

Total AUM
now
£47.4bn

Total acquired
AUM
£24.6bn

2016
Brookfield’s
securitised
credit team

2017
Adveq

2018
Algonquin

2019
Blue AM,
BlueOrchard

2020
Pamfleet

2022
Cairn,
Greencoat

Growth

Combined
total
AUM now

AUM at time of acquisition

Schroders Annual Report and Accounts 2022

Group Chief Executive’s statement
continued

KPI

Assets under management
(£bn)

Our objective
We aim to grow our AUM over time in
excess of market growth through positive
investment outperformance and net new
business. As a sterling-denominated
reporter, currency movements also
impact asset levels.

How we performed

£737.5bn

At the end of 2022, AUM stood at
£737.5 billion. Our strategic acquisitions
contributed £52.0 billion, while
investment performance and currency
movements decreased AUM by
£73.6 billion. Net new business decreased
total AUM by £7.6 billion.

2022

2021

2020

2019

2018

737.5

766.7

694.4

592.8

475.5

Across our whole business, it becomes more
evident each year that investment decisions
must be based on three dimensions rather
than two: risk, return and the impact these
investments have on people and planet.
More clients want to understand what is
under the bonnet of our products; they
want better reporting on sustainability
and transparency on impact.

We measure impact through SustainEx™,
our proprietary investment tool designed
to quantify the positive contributions and
negative impacts companies have on society.
The tool helps analysts, fund managers and
clients measure and manage those social
and environmental impacts and risks more
effectively. The chart, overleaf, shows how
the percentage of our AUM with a better
SustainEx™ score than their benchmark
has increased over the past two years.
The tool also allows wealth clients to receive
a SustainEx™ score on their portfolios.

We remain focused on developing products
of utmost relevance to clients. We have, in
fact, launched more than 130 products over
the last three years. As a result, we have
avoided large outflows; we have evolved to
meet our clients’ ever-changing needs. On
energy transition, for example, we effectively
repurposed our existing team to create a
market-leading capability which now
manages £2.3 billion of assets.

Similarly, part of our real estate team has
branched out so that now we have a smart
global cities equities capability with
£2.2 billion of assets. Energy transition,
smart cities, food and water – these are
what many of our clients care about and our
product set is evolving to meet that demand.

The future of client relationships
Becoming a true, trusted adviser is the next
phase of our strategy. We have built the
platform, now we need to take its full
capabilities to every client. This is not an
adjustment to the model but a reinvention of
the way we work. In mindset, we are moving
from a ‘distribution model’ to a ‘client-centric
model’. At its most literal, we have recently
reshaped our Distribution division and
renamed it the Client Group.

Asset managers who retain a mindset of
pushing products to clients will fall behind.
Those that move rapidly to become a trusted
adviser and solutions provider, as we are
doing, will resonate with clients.

Because of what we have already built, we
have an advantage: the multi-dimensional
nature of our business makes it easier for
us to help with an array of client problems.
It also opens up new opportunities. Because
we had a wealth business, we were easily
able to enter into a banking distribution
model, for example, something that most
of our peers would have found impossible.
We often find ourselves pitching for business
where only two or three firms have the
capabilities to solve a difficult client problem.
We are pitching and we are winning.

This dovetails with our strategy of building
longer-lasting relationships. The rise of the
investment platform has significantly
smoothed the process of switching assets
between funds. In the UK for instance, the
uncomfortable reality is that the average
retail client now moves to a new manager
after less than four years, leaving firms
locked in a constant, and intensifying,
battle to onboard new clients.

Moving that average up by just one year will
significantly improve a company’s long-term
growth rate, and pivoting our business mix
to higher longevity areas has allowed us to
do just that. The more we have offered
services clients want and need, the stickier
our asset base has become. The length of
time a client stays with us is increasing.

Schroders Annual Report and Accounts 2022

Some of the market headwinds we have
experienced will not dissipate quickly in
an era of quantitative tightening, yet so
much remains in our favour: our clear
strategy, our strong market positions,
our diversification across geographies
and clients and our trusted brand.
Innovation is also crucial to our success.
We are determined to develop tokenised
products as we aim to make more of the
world’s assets accessible and investible.

Finally, it is our people who give me most
reason for optimism. We retain, nurture and
attract the industry’s best talent and most
diverse thinkers. In fact, 96% of our people
are proud to work at Schroders.

We have made the right investments in
our people and in our platform and I am
confident that we will continue to deliver
for all our stakeholders in 2023 and in the
exciting years ahead.

Peter Harrison
Group Chief Executive

1 March 2023

Sustainability: being bold
I also have no doubt that our clear and bold
position on sustainability will increasingly
be viewed as having been the right one.
For us, it is a question of returns. We
challenge companies to do the right thing
by all stakeholders, to mitigate risk and to
protect their future profitability.

It is on climate change that we have been
boldest. In February, we were the largest
asset manager in the world to have our
greenhouse gas emission reduction goals
formally validated by the Science Based
Targets initiative (SBTi).

This is not just our own emissions but also
‘financed emissions’ – those arising from
the companies in which we invest. It is
a polarising topic, and it was perhaps
inevitable that in the US, perhaps the most
polarised of countries, we would attract
some mire. The states of Texas and Kentucky
added Schroders to the shortlist of asset
managers that they will boycott.

I have no regrets. It is our fiduciary duty to
understand how the world is changing and
use this knowledge to protect the wealth of
clients. We have made commitments to net
zero as a corporate and we will work
tirelessly to meet them. As stewards of
capital, we will continue to analyse the
risks posed by climate change and help
companies to navigate them.

Business implications arise from this
position. Sometimes there will be new
client opportunities we can’t win, but for
the remainder we will have an edge – our
forward thinking on climate change.

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71%

75%

77%

79%

83%

82%

86%

58%

63%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

Dec-20

Mar-21

Jun-21

Sep-21

Dec-21

Mar-22

Jun-22

Sep-22

Dec-22

Weighted average across in-scope AUM managed by Schroders; excludes Schroders Capital and certain other
portfolios and businesses, for example where measurement is not practicable due to insufficient data coverage.
May include double counting of AUM for certain portfolios.

Schroders Annual Report and Accounts 2022

Strategy and business model

Strategic
context

Our industry is evolving rapidly and we remain alert to a range of external forces which are
disrupting our business model. Anticipating changes before they materialise allows us to
respond to protect our business model and seek opportunities for revenue growth. The
need for capital markets to provide returns has never been greater, with growing global
wealth, more people living into old age and the need for savings to support them beyond
their working lives. Furthermore, businesses need capital for innovation, growth and to
fund the transition to a carbon-free global economy.

Evolving developed
market composition

Pricing pressures

Changing investor needs

• Decline of public listings globally

• Passively managed products

• Increasing importance placed by

• Investors seeking alternative

sources of return

taking market share

• Pricing pressure

The number of publicly listed firms is
declining. In the US for instance, McKinsey
analysis found that the number of public-
company listings dropped from about 5,500
in 2000 to about 4,000 in 2020. Moreover,
businesses are typically floating on public
markets later in their life cycle, which
reduces opportunities to access investment
returns from public markets alone.

Historically, private assets have been
harder to access for most private investors
because of the long-term investment return
horizon and fund structures compared to
traditional listed asset classes. Private
markets today represent around 9% of the
global market and demand remains strong.
Regulation about who can hold private
assets is loosening, and innovation in new
fund structures, products and the potential
of technology are opening up access for
more investors.

The demand for investment products which
passively track a market-weighted index
has continued to grow, outstripping active
management strategies. While this trend
was previously largely confined to equities,
it is now being seen in fixed income too.
This has led to a smaller pool of capital
being allocated to active strategies,
causing increased competition on price
and driving down fee margins.

At the same time, the cost of doing business
is increasing. Additional cost is introduced
as we ensure we meet evolving standards
of transparency and disclosure in line with
changing regulation. Our focus on the safety
of both our clients’ investments and our
brand remains paramount, and is reflected in
our continual investment into cyber security.
Market data and software costs are sensitive
to rising inflation. These additional costs
threaten to erode the profit our business
makes.

investors on the environmental and social
aspects of capital allocation

• Shift towards ‘core-satellite’ portfolio

construction

Environmental, social and governance
(ESG) considerations are playing an
increasing role in investment decisions
across Schroders. We continue to develop
our global product range in response so
that it meets the needs of investors as well
as rapidly evolving regulatory demands.

The energy transition is also set to be an
important source of growth. The Ukraine
conflict has accelerated the investment in
renewables. The US announced $369 billion
of spending on energy security and climate
change in the Inflation Reduction Act.

Investors are increasingly favouring a
core-satellite portfolio approach,
allocating a ‘core’ portion to low risk, low
fee investments, for instance index funds.
Additional allocations are made to actively
managed strategies to gain targeted
exposure to specific markets where alpha
is more readily available, for example
emerging markets or thematics.

How we’ve responded:
• Prioritised the organic build out
of our private asset capabilities

• Completed targeted private asset

acquisitions

How we’ve responded:
• Focus on ‘value-add’ services, such
as advice, solutions and thematics

How we’ve responded:
• Integrated ESG factors across our

portfolios of managed assets

• Invested in a scalable operating platform
and embarked on our transformational
Cloud migration programme

• More than doubled our Sustainable

Investment team over the past two years

• Developed a comprehensive Thematic

• For more information see page 35

product range

Link to strategy
Expanding our private assets business

Link to strategy
Growing asset management

The trends outlined on this page are aligned to the
strategic risks outlined in our risk disclosure.
For more information, see pages 40-45.

Schroders Annual Report and Accounts 2022

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Global differences
in market trends

Demand for advice and solutions

• Growth in Asia

• Wealth creation across the UK

• Demographic changes

• UK advice gap

• Changes in demand from products

to outcome-oriented solutions

The UK high-net-worth segment has
benefitted from thriving entrepreneurial
activity over the last decade across the
country. A number of entrepreneurs have
exited their businesses as a result of private
equity transactions. This led to a new wave
of high-net-worth individuals outside
London and the South East.

UK regulation banned commissions in 2012,
leading to a drop in the number of financial
advisers in UK of nearly 200,000. This left
affluent consumers without access to
financial advice, commonly referred to as
‘the advice gap’.

Many institutional investors are looking for
specialist investment solutions or even
to outsource their day-to-day investment
activities to streamline governance
processes or satisfy stakeholder demand
to meet sustainability goals.

Since 2010, growth of AUM in Asia has
outpaced developed markets. The latest
IMF projections show the Emerging and
Developing Asia region is expected to
continue to outperform with real growth of
5.1% in 2027 versus 1.7% for the Advanced
Economies. India and China play a
significant role in this performance. Recent
changes in foreign ownership rules increase
opportunities for investment managers
from outside China.

A number of emerging markets are
experiencing material demographic
changes. For instance, in Latin America
savers are forced to work their money
harder, given the aging population and the
move away from state-funded retirement.

These factors present opportunities
to establish market share. Market
participants must ensure their approach
factors in potential risks, including
geopolitical tensions.

How we’ve responded:
• Leveraging our long-standing

partnership with Bank of
Communications in China

How we’ve responded:
• Expanded our presence in the regional

UK wealth market

• Launched our joint venture with Lloyds,

• Geographic expansion Latin America

Schroders Personal Wealth

• Standing up local investment teams to
ensure deep understanding of markets

• Acquired River and Mercantile’s solutions

business

Link to strategy
Growing asset management
Building closer relationships with clients

Opportunities

12%

Asia’s AUM compound annual
growth rate (CAGR) since 2010,
compared with 7% CAGR in
developed markets1

Advice gap

Financial advisers in the UK
dropped by nearly 200,000
between 1991 and 20212

$17 trillion

The expected AUM in private
markets by 2026, of which $3 trillion
will be contributed by currently
under-allocated retail investors3

1. BCG, BNP Paribas Exane.
2. Polarisation and Financial Services

Regulation, FSA 2000; Financial advice
firms in 2020 – Platforum, 2020.
3. Oliver Wyman, Morgan Stanley

Research.

Schroders Annual Report and Accounts 2022

Strategy and business model
continued

Our strategy

In response to industry
disruption, we are focused
on growing our revenues
by expanding into areas that
bring us closer to clients
and their needs.

We recognised early that we needed
to change – to increase the length of client
relationships and generate higher lifetime
earnings from those relationships. We also
identified the need to diversify into areas of
our industry that are seeing higher growth
and to expand our global footprint.

We have pursued these goals by focusing
on three priorities across our business:

Build closer relationships
with clients: Developing trusted-
adviser relationships that promote
longer client relationships and more
sustainable margins, particularly
through Schroders Solutions and
Schroders Wealth Management.

Expand our private assets
business: Meeting the increasing
client demand and help us generate
more stable, long-term revenues that
are less exposed to fee pressure,
through our Schroders Capital
offering.

Grow asset management:
Focusing on differentiated
investment capabilities in areas of
demand, such as sustainability and
thematics, and in higher growth
markets, such as China and India.
We offer these capabilities across
the Group.

Where we stand today
By focusing on our three strategic priorities,
we have built four strong businesses
– Schroders Wealth Management,
Schroders Solutions, Schroders
Investment Management and Schroders
Capital. Each business has significant
market presence in its own right. But
combined they offer a valuable opportunity
to take more of our capabilities to more
of our clients.

We are now able to offer a broad set of
investment management and advisory
services for individuals, families and
institutions across public and private
assets. The challenges our clients face to
meet their long-term investment goals are
considerable. Being able to answer those
challenges under one roof is a powerful
and distinctive proposition.

Our strategy is enabled by
sustainable leadership
Sustainability is embedded throughout our
strategy because we believe it is how we can
deliver long-term value for clients and all
stakeholders. We see demand for
sustainable investment as a driver of new
business. As an active investor, it is also
important to lead by example – so we focus
on being true to our purpose in every aspect
of our operations.

Looking ahead
We have largely built the capabilities we need
to meet our strategic goals. Our focus in the
coming years will be on clients’ increasingly
complex needs, as well as growing our
private assets and wealth businesses, which
have significant positive potential.

Schroders Annual Report and Accounts 2022

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Our three strategic priorities are delivered through
four principle businesses that form the Group:

Schroders Wealth
Management

Building long-lasting, sometimes
multi-generation relationships
with clients.

For more information,
see page 18.

Schroders Capital

Seeking more stable, long-term
revenues by expanding our
private assets business.

For more information,
see page 20.

Schroders Solutions

Establishing deeper, trusted-
adviser relationships with larger,
complex clients.

For more information,
see page 22.

Schroders Investment
Management

Optimising the core of
our business by focusing on
high-growth areas.

For more information,
see page 24.

Enabled by sustainable leadership

Investing
sustainably

We integrate the consideration of
ESG factors across our portfolios of
managed assets to help inform
better investment decisions, the
importance of which is increasingly
recognised by our clients.

Read more on pages 32-33.

Schroders Annual Report and Accounts 2022

Strategy and business model
continued

Our business model

By caring about what matters to our clients and putting them first,
we can deliver sustainable value – for our clients and other stakeholders.

What we do

Understand clients’ needs

We understand our clients’ needs, for instance through
surveys and client meetings, and design our offering
accordingly. Our approach is underpinned by our
capabilities, which opens up our expertise to clients.

Actively manage
investments

With operations in 38
locations, we are well
placed to take our deep
investment knowledge and
broad product range to

clients around the world,
via local distribution
teams or trusted

partners.

We aim to provide
excellent investment
performance through
active management.

Innovate products
and solutions

Client needs and the
investment universe
we operate in are dynamic.
In response we have materially

enhanced our product range

over the past six years, with
increased focus on sustainability,
thematics and public/private
solutions.

How we earn money

We earn fees charged as a
percentage of clients’ assets
under management. We may
also earn performance-based
revenues.

What we need to be successful

Investment data and tools

Platform

Talent and culture of excellence

Data and tools are at the heart of our
ceaseless push for investment excellence,
underpinning our investment decision-
making and providing better insights. We
have developed a number of proprietary
tools, including our award-winning
SustainEx™ impact measurement tool.

Our scaled, robust, global operating
platform is the foundation for effective
service delivery. We have materially
upgraded our front office technology and
are migrating the wider platform to the
Cloud to enhance agility and cyber security.

The success of our business relies on our
people. We nurture a culture that allows
individuals to achieve their highest potential,
by supporting their career aspirations and
development, celebrating diversity of
thought and creating a sense of community.

Schroders Annual Report and Accounts 2022
Schroders Annual Report and Accounts 2022

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What makes us different

Breadth of capabilities

Brand and heritage

Sustainable investment expertise

The products we offer span private assets
and alternatives, fixed income, equities
and multi-asset.

We are one of the few publicly listed asset
managers that can offer such breadth
of capabilities.

The Schroders brand embodies the tenets
of excellence, innovation and integrity,
values that are evident in every aspect of
our work. In the NMG survey, we are ranked
fifth globally as an asset management
brand among over 2,000 managers, with
stable recognition across institutional and
retail audiences.

We have built our sustainable investing
experience over the past 20 years. Our
research and tools provide insights, which
help our investors understand the various
sustainability risks and opportunities faced
across their portfolios.

Products launched since 2019

130+

Years of history

200+

Sustainable Investment team growth
(since 2020)

2.6x

Global reach

Investment outperformance

Long-standing partnerships

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

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

Schroders has a rich history of partnerships
across a number of geographies. Working
with local partners has allowed us to access
new markets and client segments.

Locations around the globe

Assets outperforming over three years

Longest strategic partnership

73%

23 years

How we create value over the long term

Responsible stewards of assets

Growing people’s savings and pensions

Shareholder returns

We know that as stewards of more than
£700 billion of assets, we can channel
money to benefit society. We actively invest
in forward-thinking companies, but we also
support them in their journey to a fully
sustainable future.

We strive to create a brighter future for
our clients, investors and planet. It is
imperative that we never lose sight of the
individuals who entrust us with their
savings, which is why clients are at the
heart of everything we do.

Creating shareholder value goes hand
in hand with our core aim of providing
excellent performance to clients. Being able
to service client needs, while thoughtfully
allocating capital to higher growth areas
allows us to generate stable returns for our
shareholders over the long term.

Number of engagements

Client meetings in 2022

3,500+

23,000+

Dividend per share

21.5 pence

Schroders Annual Report and Accounts 2022

Strategy and business model
continued

Schroders
Wealth
Management

A direct and trusted connection with our
clients allows us to build longer-lasting client
relationships which drive more sustainable
revenue and margins.

Our priorities
• Continue enhancing our service and

investment offering to deliver optimal
client outcomes to our private, charity
and trust clients.

• Extend our established business-owner

franchise to serve thriving entrepreneurs
across the UK.

• Develop Benchmark Capital, allowing
more to benefit from our full range of
platform and investment services.

• Nurture our client-centric and

collaborative culture so that we remain
employer of choice and the best home
for clients.

Outcomes

£406.8m

Wealth Management net operating income

16%

6-year AUM CAGR

6.6%

Organic growth of advice business

Schroders Wealth Management AUM
(£ billion)

The growth of our Wealth Management
business sharply illustrates the value
of building closer client relationships.
Assets under management in Schroders
Wealth Management have more than
doubled in five years, to £111.4 billion in
2022, and we see considerable potential for
further growth. That potential is
underpinned by important trends,
particularly a fall in UK adviser numbers, the
success of family-owned businesses across
the country and the need for advice driven
by the growth of defined contribution (DC)
pensions and the transfer of risk for
retirement saving onto individuals.

Client assets in wealth management are
typically held for significantly longer than
in asset management and attract higher
margins. That is why Schroders Wealth
Management is providing a growing share
of diversified Group profits.

We have built on our existing UK, Swiss
and Asian Wealth businesses with a
series of carefully chosen acquisitions
and partnerships.

The acquisition of Cazenove Capital in 2013
enabled us to broaden our offering to high-
and ultra-high-net worth clients in the UK.
Benchmark Capital added an important
technology platform capability and
additional adviser reach. Schroders Personal
Wealth, the joint venture with Lloyds Banking
Group, in 2019 provided access to the mass
affluent client segment with referrals from
their banking network.

We generate revenue in three distinct ways
– from advice (advised), from the assets we
manage on behalf of clients (managed) and
from the platform services which advisers
use to manage investments, track portfolios
and for compliance (platform) – see
breakdown, left. This model shows the
potential we have to generate multiple
revenue streams from a single relationship.

Four branded franchises allow us to
articulate clearly our offering to different
client segments across the wealth spectrum.

Progress in 2022
Accelerating the UK regional growth of
Cazenove Capital: We continued to expand
our business in various locations providing
a platform to extend our business-owner
franchise serving entrepreneurs across the
UK. We now have a presence in six regions
outside London and the South East.

Building relationships with financial
advisers: We attracted 50 new financial
advisers onto Benchmark Capital’s
technology-driven platform allowing them
to benefit from our expanded offering of
platform and investment services.

Our sustainability leadership in wealth:
19.6% of discretionary AUM won in Cazenove
Capital was for sustainability mandates.

Our Responsible Multi-Asset Fund for
charities with AUM of £1.2 billion is the
fastest growing charity fund in each of
the last three years.

Our global family office service: The
2020 acquisition of specialist family-office
business, Sandaire, strengthened Cazenove
Capital’s established franchise with ultra-
high-net-worth clients in the UK. We have
continued to develop this business to
deepen trusted adviser relationships with
clients through the services it provides.

Generating client referrals in Schroders
Personal Wealth: Referrals increased, and
net new business has turned positive in our
joint venture with Lloyds Banking Group,
Schroders Personal Wealth.

£111.4bn

Advised

Platform

Managed

Joint venture

Our four brands:

60.4

17.3

20.4

13.3

UK: High- and
ultra-high-net worth
individuals, families
and charities

International:
High- and ultra-
high-net worth.

UK: a technology
platform supporting
financial advisers
and a network of
advisers servicing
private clients

UK joint venture with
Lloyds Banking
Group: financial
planning and advice
for the mass affluent
client segment

Schroders Annual Report and Accounts 2022

•

Strengths and opportunities
for growth
The UK ‘advice gap’ (see page 13) presents
important opportunities for Schroders
Personal Wealth and Cazenove Capital.

Schroders Personal Wealth, our joint venture
with Lloyds Banking Group, allows us to
extend our reach across client segments
to Lloyds Banking Group’s broad customer
base across the UK.

The expansion of Cazenove Capital into the
UK regions is a response to demand driven
by the success of family-run businesses and
opportunities arising from the UK advice gap
(see page 13). We have a history of building
multi-generational relationships with clients
by having a local presence. In our Cazenove
Capital client survey, 98% reported that we
act in their interests, and thanks to the trust
we establish, many relationships span 20
years or more. Where we have long-standing
relationships with Cazenove, we also enjoy
strong referral flows from clients and their
networks of professional advisers.

Capabilities that span the Group strengthen
the credibility of our wealth offering and
enhance our ability to address clients’ needs.
For example, our leadership in sustainable
investment continues to be an important
differentiator. Over 80% of new business
flows from charities in 2022 were into
mandates with sustainability objectives.
The demand for multiple components is
also strengthened by our private assets
capabilities, which we are increasingly
structuring in a way that is attractive
to private clients.

Our adviser platform in Benchmark Capital
positions us well to reach more clients and
generate revenue from multiple streams.

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Success story: UK regional expansion
of Cazenove Capital

Wealth clients are increasingly looking for a
personalised, local service in order to achieve their
long-term financial objectives. Expanding our local
office network helps us deepen relationships with a
new wave of high- and ultra-high-net-worth clients, to
better understand their needs and to provide them
with the valuable insights of a global firm.

They want advisers they can trust, advisers who
understand the issues that matter to them personally.
Our local presence across the Midlands, Thames Valley,
North West and North East, South West, Yorkshire and
Scotland, allows our advisers to become a part of each
local ecosystem of professional advisers.

At the same time, our ability to draw on Schroders’
global network differentiates us. Being part of a larger
FTSE 100 company gives us tremendous financial
strength. Our global investment expertise enables us
to populate our clients’ investment portfolios with the
very best information. Clients recognise this is
something they wouldn’t get from a mere local
presence.

Karan Sejpal
Head of Business Owners, Cazenove Capital

Schroders Annual Report and Accounts 2022

Strategy and business model
continued

Schroders
Capital

The scale and diversity of private markets
allow us to offer our clients access to
sources of diversified return across a large
investment universe. With longer investment
horizons and more locked-in capital, they
help us generate more stable, long-term
revenues and are less exposed to
fee pressure.

Our priorities
• Scale and globalise our private assets
business, for example by seeking
cross-selling opportunities across
the Group.

• Capture the full growth opportunity from
bringing the breadth of our capabilities
to our clients as a trusted partner and
solutions provider.

• Develop innovative private assets
products for new client segments,
including insurers, private wealth
and DC pensions.

• Expand our leading position in fast-
growing sustainability and impact
investing (S&I) strategies.

Outcomes

£406.1m

Net operating revenue

£6.4bn

Net new business generated

£17.5bn

Fundraising in 2022

Schroders Capital AUM (£ billion)

£68.3bn

Real estate

Private equity

Private debt

Infrastructure

Alternatives

25.1

11.7

20.0

9.2

2.3

Over the past decade, we have systematically
added a comprehensive set of capabilities to
our business across private market asset
classes. As a proportion of the Group’s AUM,
private assets has risen from 5% in 2016 to
9% in 2022. This growth journey culminated
in the launch of the Schroders Capital brand
in 2021 to provide more visible market
presence.

Today, Schroders Capital operates on
a platform that provides synergies in
fundraising and deployment, product
structuring, marketing and operations.
The platform allows clients to access a
broad range of risk and return profiles
and S&I outcomes in specialised – and
more defendable – areas across the four
major private asset classes.

In private equity, we have made over 200
direct and co-investments and are active in
secondary and primary funds across Europe,
US and Asia. Our investments focus on
early-stage venture, growth capital, small
and mid-sized buyouts.

Our unique platform of real estate operators
under one institutional roof allows us to
access and assess best risk-weighted
opportunities to create long-term
sustainable income and value.

In Private debt and credit alternatives we can
offer access to a broad range of diversifying
returns across securitised products,
asset-based finance, leverage loans,
insurance-linked investments and both
infrastructure and real-estate debt. In
infrastructure, we are the largest renewables
investment manager in the UK and Europe.

We are one of the top European head-
quartered private assets business, and we
continue to grow rapidly.

Progress in 2022
Nearly 150 new clients, including a
€750 million property portfolio win for a
leading insurer and a €780 million property
portfolio win for a German public pension
provider.

Increasing our fundraising activity:
We raised £17.5 billion of client funds for
investment, an increase of £5.1 billion on
last year.

Acquiring a leading renewable energy
infrastructure capability: We took a
majority stake in Greencoat Capital, one
of the largest renewable infrastructure
specialists in Europe. Exposure to renewable
energy investments is increasingly relevant
for our clients, fuelled by priorities around
energy transition and energy security.

We have further strengthened our
deployment and reporting capabilities
in S&I investing: We have a developed our
S&I investment policy and launched our first
sustainability and impact report providing a
comprehensive view of our approach to S&I.

Expanding our footprint in Real Estate:
We acquired Cairn Real Estate in the
Netherlands, strengthening our pan-
European real estate business.

Opening access to private assets
investment: We made an important step in
giving defined contribution pension savers
exposure to returns from private equity.
Nest, a defined contribution scheme set up
by the UK Government, representing a third
of the UK workforce appointed us to manage
a £600 million private equity allocation (see
success story, right).

Schroders Annual Report and Accounts 2022

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Success story: Opening access
to private equity

The stock market was always the automatic choice for
fast-growing companies in need of fresh capital. But
markets have evolved. Today, more companies are
choosing to fund their growth through private
markets, and increasingly investors are willing to
provide the capital.

At the core of our private assets business sits our
private equities specialism. It has been built out from
the acquisition, in 2017, of Swiss headquartered Adveq
(now known as Schroders Capital Private Equity),
a leader in private equity.

May 2022 marked an important milestone in the
journey since then. Nest, the National Employment
Savings Trust set up by the UK Government as default
pension provider for its auto-enrolment drive, chose
Schroders Capital to run a new sleeve of private equity
in its portfolio. Most of the 10 million members will
likely be first-time private equity investors. We are
proud to be able to do this and we look forward to
bringing our capabilities to more and more investors.

Our business grows because we focus on what clients
want and need. We open investment frontiers through
accessible structures, those that make illiquid
investments more liquid. Today that might be
Schroders British Opportunities, a public/private
investment trust we launched in 2020; tomorrow it will
likely be tokenised investments made possible from
blockchain technology. From here, the democratisation
of private assets will only accelerate and Schroders will
be leading the drive.

Rainer Ender
Global Head of Private Equity

Strengths and opportunities
for growth
The growth of our platform and the
potential it offers, enables us to attract
entrepreneurial and innovative investment
teams to join us. We have over 300
investment professionals and over 700
employees dedicated to private assets
around the world, providing outstanding
specialist investment expertise with
long-standing records of performance.

Our businesses do not operate in isolation,
they rely on and benefit from each other. All
Schroders clients can benefit from our
private assets capabilities, not just those who
engage with Schroders Capital. The breadth
of our offering across private equity, private
debt and credit alternatives, real estate and
infrastructure, with shared capabilities
across Solutions, S&I investing and manager
research, enables us to combine investments
offerings for institutional and private clients
across the Group.

This makes us relevant to a range of clients,
from those seeking complex, bespoke
mandates to those seeking a single
specialised strategy.

We are opening up private assets with
pioneering new fund structures, embracing
the opportunities from digital technology
and changing regulation – particularly with
the rollout of LTAFs in the UK and European
Long-Term Investment Funds (ELTIF) in
Europe. We can increasingly make private
assets available to individual investors and
DC pensions.

With BlueOrchard’s long-established
impact investing capability and Schroders
Greencoat’s long-established impact
investing capability we have a pioneering
position in S&I investing. The access
and scale provided by the Group’s wider
sustainable investment expertise is an
important source of differentiation.

Schroders Annual Report and Accounts 2022

Strategy and business model
continued

Schroders
Solutions

Positioning ourselves as a trusted adviser,
able to answer the most challenging and
complex questions for clients, allows us to
offer them all of our capabilities and build
longer-lasting valuable relationships.

Our priorities
• Establish a market-leading position as

one of the foremost solutions providers
in the UK and expand our presence in
global markets.

• Become a provider of choice for Fiduciary
Management (FM) and Outsourced Chief
Investment Officer (OCIO) as the market
in the UK continues to consolidate.

• Build on our significant Insurance

Solutions presence globally.

• Meet the specific needs of our

clients globally across Liability Driven
Investments (LDI) and Risk Managed
Investments (RMI).

Outcomes

£292.2m

Net operating revenue

£43.1bn

AUM acquired

15%

6-year AUM CAGR

Schroders Solutions AUM (£ billion)

£210.2bn

Equities

Fixed Income

Multi-Asset

Risk Mitigation

20.6

24.5

86.2

78.9

The investment backdrop, alongside
developments in regulation, climate
change and workforce demographics
are all increasing the challenges facing our
broader client base. They include insurance
companies, pension funds, financial
institutions, endowments, foundations
and other large institutions.

We see a growing demand for advice and
expertise to work in partnership with these
clients as the complexity of their needs
evolve.

Following our acquisition and onboarding
of River and Mercantile Group’s UK Solutions
Division (RMSD), we are now one of the
largest solutions providers in the UK that
is independent of a consulting business.

We are also seeking to build our presence
in global markets where we can identify
need and believe our skills and capabilities
position us to deliver investible solutions
for clients.

Schroders Solutions offers a market-leading
proposition which includes strategic advice,
an advanced and proven investment
process, an integrated implementation
model aligned with an embedded client-
centric approach.

The enhanced capabilities position us as one
of a small number of firms globally able to
solve complex client problems at scale.
We can compete in this space because our
investment capabilities, our long-term track
record and our depth and breadth across
asset classes give us the credibility to do so.
Our advice and holistic design capabilities
combined with our strength in sustainability
and thematics allow us to become long-term
trusted partners with our clients.

Progress in 2022
A key acquisition to expand our
Solutions capability: We welcomed around
140 new colleagues from RMSD and added
£43.1 billion of AUM. Schroders Solutions is
now one of the largest Solutions providers
in the UK, with a combined AUM of
£210.2 billion and over 600 clients.

Growing our business with insurance
clients: Our presence as a provider of
choice able to manage complex investment
requirements for insurance clients grew as
Schroders Solutions managed £100.8 billion
of assets globally for insurance companies.
A testament to this growing reputation was
our appointment as investment partner
for the Lloyd’s of London new investment
platform.

Delivering for clients as a leading
Fiduciary Management specialist:
We enabled our clients to secure nearly
£3.1 billion of pension fund members
benefits in 2022 through buy out and buy
in. This includes a £600 million buy in with
the trustee of the Amey OS Pension Scheme,
helping to secure the benefits of over
3,500 members.

Setting standards in the structure and
delivery of Liability Driven Investments:
We continued to deliver for our pension
clients and their members, designing and
implementing investment strategies to help
them achieve stronger sustainable levels of
funding. Our response to the 2022 gilt
crisis, which resulted from volatility in
the government bond market in the UK
solidified our reputation as a trusted and
client-focused partner.

Winning OCIO mandates: We were
appointed as OCIO by the trustees of the
Centrica pension schemes to manage
£10 billion of their members’ assets. We
continue to see demand for this service as
Trustees and sponsors evaluate the optimal
governance and management structure.

Gaining industry recognition: We were
named ‘Fiduciary Management Firm of
the Year’ at the Pensions Age Awards 2022.

Schroders Annual Report and Accounts 2022

Strengths and opportunities
for growth
The Solutions business brings a trusted
adviser, consultative approach to our
engagement with clients. We apply
open architecture principles for designing
strategies and investing their assets, and
use our in-house investment expertise
where appropriate. We believe this delivers
on our clients’ financial aspirations and
governance needs.

Over the coming years we see growth
opportunities across our business, in
particular in the following areas:

UK defined benefit pensions

An increasing number of defined benefit
pension schemes are nearing maturity and
seeking to secure members’ benefits.
We believe consolidation will continue to
build momentum, and we are positioned
well to be a leader in meeting this demand.

Liability Driven Investments (LDI)

We have an established reputation in the
LDI market and the acquisition of RMSD
has further strengthened our resources
and capabilities. We continue to evolve in
response to clients’ needs, for example by
combining LDI with our capabilities in ‘buy
and maintain’ credit and private assets
investment expertise.

Balance sheet solutions for insurers

Insurance companies face a variety of
competing challenges due to local regulatory
and accounting-standard developments.
We have established a Solutions Insurance
team with the investment capabilities to
meet these needs. We are building
partnerships across the firm to bring
together individuals with the relevant skills
and those with awareness of the insurers’
regulatory frameworks.

Risk managed investments (RMI)

This has been a core part of the business
for many years and as market complexity
increases, the opportunities grow for us
to deliver innovative solutions in this area.

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Success story: launch
of Schroders Solutions

The challenges facing clients globally continue to
become more complex and diverse. UK pension funds
are one example across our client base where we
continue to see significant change. Funds evolve and
mature and therefore risk appetite changes, and the
need to develop and implement really effective cashflow
driven investment (CDI) solutions becomes increasingly
important. We need to understand the challenges each
client faces – which could range from governance,
investment strategy, de-risking, regulatory change
or consolidation – and then tailor investable portfolios
that address their very specific needs.

Growing our business is essential in tackling these
client challenges, and we now have a team across
the UK, Europe, Asia and North America, including a
dedicated team of ESG specialists to help meet those
needs. This scale gives us a real insight into the changing
regulatory backdrop, the advisory landscape and global
market forces.

The mandates we are given by our clients demonstrate
how the combination of the scale of our business, our
brand and the expertise of our outsourced investment
offering is increasingly attractive for pension funds and
our other clients globally.

James Barham
Executive Chairman, Schroders Solutions

Schroders Annual Report and Accounts 2022

Strategy and business model
continued

Schroders
Investment
Management

Active asset management of publicly listed
securities remains the core of our business
and we continue to see untapped potential
to optimise our strengths in the face of
industry disruption.

Our priorities
• Establish a leadership position in

sustainability and impact investing.

• Develop and broaden thematic investing.

• Expand our geographic footprint into

new high-growth regions.

Outcomes

£2,068.7m

Asset Management Net Operating Income

£73.6m

Share of profit from associates

130+

new products launched since 2019

Schroders Investment Management
AUM (£ billion)

£347.6bn

Mutuals Funds

Institutional

Associates

100.8

139.1

107.7

Publicly listed assets provide the greatest
proportion of assets under management
and the bulk of our revenue.

While we have been famous for a long
time as an ‘equities house’, we have since
diversified with well-established fixed
income, multi-asset and quant capabilities.
Offering access to high-quality sources of
alpha remains the foundation of what we
offer clients – it also enhances our advisory
services in Wealth and Solutions. Being able
to offer a full spectrum of active investment
products makes us a valuable partner to our
clients and benefits the whole business.

The needs of clients have changed. It’s no
longer sufficient to be simply a manufacturer
of high-quality investment components.
Retail investors can track benchmark returns
at lower cost with passive funds, so they look
to supplement their portfolios with targeted
exposure to differentiated strategies where
alpha is the goal.

Product innovation – with a focus on
sustainability and thematics – is a priority for
us. We have invested significant amounts of
seed capital to build a dynamic product set
that is geared towards future demand and
the needs of our clients. Being an active
asset manager at our core means that we
can provide top-performing products in
thematics and extend our position as a
leader in sustainable investment. We offer
a sustainable investment option for all of
the main asset classes. We then build our
capabilities into local fund structures so
that our clients can easily access them
locally around the world.

Working in partnership with established local
brands to combine our investment expertise
with their distribution networks allows us to
build our presence in global growth markets.

Data scientists are embedded within
investment teams, and data insights
underpin product innovation and our
stock-picking expertise.

Proprietary sustainable investment data
and bespoke tools such as ThemeEx and
SustainEx™ inform investment strategies
and are a genuine point of differentiation
(see page 26).

Progress in 2022
Broadening our sustainability
offering: We launched eight new funds
with sustainability objectives. We have
developed our Sustainable and Impact
Product Framework (read more on page 28)
to provide greater clarity over the different
approaches taken by our strategies.

Developing innovative and relevant
Mutual Fund products: We broadened
our offering of thematic funds, evolving
our smart cities equities and energy
transition strategies.

Expanding our geographic reach: We
made important progress through our
strategic partnerships and joint ventures.
Our Wealth Management Company venture
with Bank of Communications in China
began operating in April when Covid-19
measures were in place but has made good
initial progress. Like any expansion into local
markets, our approach is the result of an
assessment of the potential opportunities
and possible risks associated with the region.

The licence for our wholly owned Fund
Management Company in China has been
approved and we expect to begin operating
in the second half of 2023. Building this
business from the ground up has been a
significant investment, which we expect will
provide growth over the mid and long-term.

Latin America contributed positively, adding
£0.3 billion of NNB.

Schroders Annual Report and Accounts 2022

Strengths and opportunities
for growth
We continue to see strong demand for
innovation and a distinctive offering in
sustainability and impact. Flows into
sustainable products remain strong and
our Global Investor Study tells us that clients
continue to seek returns with impact. Our
investment in both the expertise and the
products to support this position us well
to continue being a leader in sustainability.

The demand for thematic investing
offers great potential which is met by the
investment we have made in expanding
our thematics range.

Expanding demand in the Americas and Asia
– particularly India and China – is an
opportunity to scale our business in regions
where we don’t historically have a presence.
The partnerships and relationships we have
built in these regions are the product of
long-term commitment and cannot easily
be replicated by our competitors.

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Success story: Thematic investing
and the power of trends

As early as 2007, we were able to offer our clients
access to a Climate Change fund.

However, six years ago we took a conscious decision to
develop a broader thematics range. The evidence was
growing that investors increasingly wanted to be able
to back the trends they believe in. It was therefore put
at the heart of the strategy to grow and evolve our core
equities and bonds business.

Today our range spans broad themes, such as
disruption, to more narrow specialisms, such
as food and water, digital infrastructure or smart
manufacturing. Our Global Energy Transition strategy
has enjoyed particularly strong demand. It was
drawing attention and assets before last year’s energy
crisis and that has continued unabated. It saw the
largest net inflow of any of our thematic strategies
in 2022.

Our success is underpinned by the skill and vision
of our portfolio managers and their access to data.
Schroders’ early investment in data insights tools
has paid dividends.

We believe we have selected themes with great
potential and are in high demand. Wherever there
is demand, competition is strong. We relish the
challenge. Our success rests on outperforming the
market and our peers over the long term. We never
forget that.

Alex Tedder
Head of Global and Thematic Equities

Schroders Annual Report and Accounts 2022

Sustainable leadership

Our approach to
sustainable leadership

The ways of doing business that have
driven corporate success in the past
will not necessarily drive success in
the future. Today, environmental,
social and governance (ESG) factors
are important considerations for
all companies.

We believe that by recognising and
embracing this change we can deliver
long-term value for our clients, shareholders
and wider stakeholders. We achieve this
by embedding sustainability within our
business – through our approach to
investing sustainably; leading by example
in the way we manage our corporate
impact; and by promoting a positive
culture underpinned by clear values
of excellence, innovation, teamwork,
passion and integrity (see page 30).

The path to net zero

We have made a number of climate and
nature-related commitments to support
achieving net zero by 2050, or sooner.
These span both the investments we
manage and our own operations. These
commitments build on years of research,
risk analysis, proprietary tool development,
and action to understand and manage the
risks and transition opportunities posed by
climate change and biodiversity loss. In
2022, our greenhouse gas (GHG) emission
reduction goals were formally validated by
the Science Based Targets initiative (SBTi).
Our Climate Transition Action Plan, published
in December 2021, and progress against
our targets are outlined in our Climate
(TCFD-aligned) Report.

Read our Climate Transition Action
Plan (www.schroders.com/ctap) and
Climate Report 2022 (in line with
recommendations by the TCFD)
(www.schroders.com/tcfd).

Investing
sustainably

We integrate the consideration
of ESG factors across our
portfolios of managed assets to
help inform better investment
decisions, the importance
of which is increasingly
recognised by our clients.

Market-leading
Engagement Blueprint

won ‘ESG engagement initiative of the year’

Science-based targets
Validated

by the SBTi to be aligned
with a 1.5°C pathway

Better SustainEx™ score than
benchmark
86%

based on public market AUM*

Prioritising people
and culture

We aim to attract and retain
talented employees and
maintain our unique culture so
we continue to deliver against
our purpose.

Leading by
example

As an active investor, we
hold ourselves to the high
standards that we ask of the
companies we invest in.

Proud employees
96%

MSCI ESG Rating
AAA

of our people are proud to work for
Schroders

putting us in the top 13% of our sector with
a consistent score for more than five years

Employees’ Choice Award
Glassdoor

One of the Best Places to Work in 2023

‘Potential, not polish’
2:1

Renewable electricity
95%

of our electricity across our global offices
is from renewable sources

CDP leadership level score
A

degree requirement removed for early
careers

Ranked in the top 2% in the 2022 climate
change questionnaire

Weighted average across in-scope AUM managed by Schroders; excludes Schroders Capital and certain other portfolios and businesses, for example
where measurement is not practicable due to insufficient data coverage. May include double-counting of AUM for certain portfolios.

Schroders Annual Report and Accounts 2022

Investing
sustainably

KPI

Portfolio temperature
score (oC)

Our objective
Align portfolios to a 2.2°C pathway by
2030 and 1.5°C by 2040.1

How we performed

2.6°C
Temperature alignment of in-scope2
assets fell to 2.6°C at end-2022, ahead of
the pace of reduction required to meet
our targets.

2022

2021

2020

2019
base year

2.6

2.8

2.9

32.1

1. Based on Scope 1 and 2 targets for 2030 and Scope
1,2 and 3 targets for 2040, in line with SBTi near and
long-term calculations.

2. Current in-scope asset classes for SBTi include listed
equities, corporate bonds, real estate investment
trusts and exchange-traded funds. This represents
more than 60% of our AUM.

Portfolio temperature score3

2.9°C

2.8°C

2.6°C

Sustainable investment is not just a
research effort, a fund range or a way
of reporting. It is understanding how the
investment decisions we make affect, and
are influenced by, the myriad of social and
environmental issues shaping economies,
industries and investment portfolios.

We have invested heavily in building that
understanding. It means we have conviction
in our views – rather than bending to
pressure from non-governmental
organisations (NGOs) or adhering
to industry league tables.

Our heritage in active management allows us
to be bold; to develop thoughtful views of the
world we are heading toward, rather than the
one we are coming from. As a global, fully
scaled investment platform, we bring
together insights from across our network of
analysts and fund managers, across regions,
investment styles and asset classes.

Active management also brings us the ability
to influence the management teams of
companies and assets held in the
investments we manage. Our ability to
successfully support and encourage the
transition towards more sustainable and
successful business models is an increasingly
important component of the value we create
for our clients. By combining our specialist
expertise in the central Sustainable
Investment team with the breadth and depth
of relationships and insights our investment
teams have across global industries, we have
a strong platform to build on.

Our industry is at the heart of the
reallocation of billions of dollars of capital
that will be needed to tackle the climate
crisis, to reverse nature loss and to mend the
cracks opening in many societies.

Targets

Reported values

2.2°C
near-term target

1.5°C

long-term
target

2019

2021

2022

2030

2040

Schroders Annual Report and Accounts 2022

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We are committed to seeking out
the opportunities that this transition
presents, and to providing a positive
contribution to those challenges that
many of our clients seek.

Climate threats are foremost among those
threats and opportunities. We actively track
the impact of our investments through our
portfolio temperature score.

Climate change is a
sustainability focus
While sustainability spans a wide spectrum
of social and environmental trends and their
investment consequences, climate change
stands out for its dominance of policy
agendas and social concerns. We continue to
invest in building the capabilities to support
transition in portfolios we manage and to
develop investment solutions to support our
clients’ own goals. Reflecting our conviction
of the importance of preparing for the
disruption climate change presents, we
are a founding member of the Net Zero
Asset Managers initiative and the largest
asset manager to have our climate targets
validated by SBTi. Delivering that transition
requires firm-wide engagement and effort.

The route we take to the net zero destination
on which global leaders are focused will
determine our ability to ensure our clients
participate in the opportunities that
transition will create. Companies able to
decarbonise their business models will
be at an advantage and the evidence of
recent years tells us that stock markets
have rewarded companies able to cut their
emissions faster than peers. In 2022, we
embarked on the biggest engagement effort
Schroders has undertaken. Analysts, fund
managers and sustainability specialists
across the firm engaged over 700 companies
representing around half the Group’s
financed emissions from portfolios in
scope of our targets. We have seen the
temperature alignment of those portfolios
falling from 2.8°C to 2.6°C during the year.

Environmental pressures and social cracks
underline the need for the investment
industry to find new ways to connect
capital to the solutions to those challenges.
We have developed a broad range of
investment strategies spanning public
and private assets, including the creation
of Akaria Natural Capital in 2022, a joint
venture to invest in nature-based solutions
in South-East Asia.

3. Schroders temperature score is for illustrative

purposes only as it includes the near-term target,
which covers Scope 1 and 2 financed emissions, but
the long-term target also includes Scope 3 as well.
Though both targets are managed, they are
monitored separately in practice.

Sustainable leadership
continued

Insights

Influence

Innovate

How we analyse
investments
Dedicated Sustainable Investment analysts
work with specialists across investment
teams to examine the consequences of
social and environmental trends.

We have invested heavily across analytical,
data and technology areas to develop
thoughtful models for many asset classes,
and to integrate them into our global
research toolkit, portfolio monitoring
and reporting.

In addition to broader analysis and tools,
such as SustainEx™, we continue to
develop the climate toolkit we have built
in recent years and assess risks, action
and alignment in portfolio companies.

We integrate the consideration of ESG
factors across our clients’ portfolios of
managed assets. Our internal
accreditation framework – which we
continue to adapt and strengthen –
supports that firm wide integration.
Integration focuses on considering ESG
factors alongside traditional investment
metrics, not on eliminating exposure to
challenged parts of markets.

How we influence
management teams
Specialists work with analysts and fund
managers to ensure a coordinated and
consistent approach to influencing change
and supporting transition in companies
and assets we manage.

In 2022, our inaugural Engagement
Blueprint laid out the areas of focus for
companies with our ActiveIQ platform
tracking our engagement actions.
Our influence goals are reflected
in the votes we cast.

We embarked on the largest engagement
programme Schroders has undertaken,
using our voice and influence to encourage
over 700 companies to establish and
deliver ambitious climate goals. We will
continue to engage at that scale in the
years ahead.

The same priorities are reflected in our
voting. Our specialist corporate
governance analysts work with portfolio
managers and analysts to ensure our
transition goals are reflected in the
votes we cast.

How we develop and
manage new products
Clients increasingly want strategies that
explicitly reflect sustainability goals or
processes. In 2022, we developed our
Sustainability and Impact Product
Framework, to bring consistency and
clarity to the outcomes our clients can
expect of different types of funds.

We have drawn on our experience and
expertise to establish an impact investing
framework, spanning public and private
asset classes.

Despite fears that higher energy prices
would lead investors back to oil and gas
exposure, we continued to see strong
demand for our growing range of
climate-focused strategies in 2022. Akaria
Natural Capital, the joint venture we
launched with Conservation International,
marked a statement of ambition in natural
capital investments.

Highlights in 2022
• Established research partnerships

with global clients.

• Shared our views and pushed for
action at the UN Biodiversity
Conference in Montreal.

• Continued investment in

strengthening our technology and
data platform and the transparency
we provide to our clients.

Highlights in 2022
• Rolled out ActiveIQ, our new

engagement database.

Highlights in 2022
• Developed the Sustainable and Impact

Product Framework.

• Published an inaugural Engagement

• Became members of the Operating

Blueprint.

• Awarded “ESG engagement initiative
of the year” by Environmental Finance.

Principles for Impact Management and
launched three new impact funds.

• Developed innovative new products
spanning public and private assets.

2.6x

the growth of our Sustainable Investment team
since 2020

3,500+

Company engagements

new Article 8 and Article 9 funds launched
in 2022

See www.schroders.com/tcfd for more
information on our Climate Report.

See www.schroders.com/engage for more
information on our Engagement Blueprint.

See www.schroders.com/sipf for more
information on our Sustainable and
Impact Product Framework.

Schroders Annual Report and Accounts 2022

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Active Ownership – unleashing the power
of active management

For over 20 years we have conducted
constructive and committed
engagement with the management
teams at the companies and assets
we invest in.

We are rightly proud of our long track
record and of how we accelerated the
impact of our work in recent years.

The process is undertaken by our
Active Ownership team and by
hundreds of fund managers,
investment and sustainability analysts
around the world. Crucially, analysts
and fund managers making
investment decisions are central to
engagement efforts, not a siloed team
sitting in a corner.

Our approach can be broken into
three stages:

1. Dialogue – fact-finding
engagements with companies to
understand if and how they are
preparing for the long-term
challenges they face.

2. Engagement – we support
companies to help them to
understand the potential impact of

these challenges and to encourage
them to take action in the areas where
change may be required.

3. Voting – we use our voice and
rights as shareholders to support the
changes we believe should be
effected.

We must be transparent, and so in
2022 we published our award-winning
Engagement Blueprint. It means that
our expectations are clear to
companies and available to scrutiny by
anyone. Experience has shown us that
sustainability never stands still; new
research will emerge, data sets will
expand and regulation will change,
and so we have committed to update
our Blueprint on an annual basis.

The table below offers a snapshot of
our engagement in numbers. We
report on this regularly. Our quarterly
Sustainable Investment Report carries
the numbers but also tells the stories
of our engagements.

Kim Lewis
Head of Active Ownership

Engagements by theme

Climate change

Diversity and inclusion

Governance and oversight

Human capital management

Human Rights

Natural capital and biodiversity

22%

67%

Q&A with Andy Howard
Global Head of Sustainable
Investment

Schroders’ purpose is to provide excellent

investment performance to clients through
active decision-making. How does sustainable
investing help you to achieve this?

Social and environmental forces are
reshaping businesses and financial markets
creating risks and opportunities. The companies
adapting fastest will thrive. A key point of good
active management is to identify the potential
winners and losers. We will continue to develop
investment products that offer exposure to key
sustainability trends.

ESG is in Schroders’ DNA, but can you say
that all of your investments are sustainable?

We integrate the consideration of ESG factors

across our investment desks. The way in which
those factors are reflected in any given
investment process may vary, so that doesn’t
mean we avoid companies that may not be
considered “sustainable” or which face
challenges. By engaging with companies to
encourage transition toward more sustainable
business models, we can help our clients to
benefit from the value created.

At what point would you decide not to

invest in a company?

If you’re not in the room, you can’t be heard
and you can’t effect change. That said, divestment
is an option when we have tried all other avenues.

Effective engagement is key. We explain in
the case study on the right how we do this
and expand on that summary in our
Engagement Blueprint.

How do you manage the risk of overselling

or greenwashing?

Good governance and transparency are the

antidote. That is why we continue to invest in
building strong processes and controls so that
portfolios meet the commitments we have made.

Secondly, we realise that sustainability means
different things to different people. We have
worked hard to develop models and measures
so that we can be clear what we mean.

Some asset managers have left industry
net zero initiatives, do you still think net zero
is achievable and what is Schroders’ role?

We are proud to be a leader on net zero
commitments. That position won’t change. The
suggestion from some corners is that returns
must be sacrificed in the pursuit of climate goals.
We believe that is fundamentally wrong. Our
climate transition plan is designed to help us
deliver returns for our clients, not constrain us
from that goal. You can read more about our
climate progress on page 27.

Schroders Annual Report and Accounts 2022

Sustainable leadership
continued

Prioritising our
people and
culture

KPI

Retention of highly-rated
employees (%)

Our objective
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 a strong performance rating
in their annual performance review.

How we performed

94%

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

2022

2021

2020

2019

2018

Our people are central to our
purpose and critical in delivering
our firm-wide strategy.
We strive to create an inclusive culture
which celebrates diversity of thought and
provides a world-class work environment.
It helps us to attract and retain exceptional
employees and supports our ability to
deliver excellent investment performance
and client care.

We want to be the employer of choice.
To maintain this position, we offer:

• Purpose and inspiration;

• Fair pay for performance;

• High-quality work in a good environment

that prioritises wellbeing; and

• Personal growth opportunities.

Our Board tracks and measures success by
looking at a range of measures including
how successful we are in retaining
highly-rated employees, and by tracking
the results of our pulse surveys, including
the percentage of our people who feel
proud to be associated with Schroders.

Our values

We strive for excellence: Being good
at what we do is a powerful way to create
value for all 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 openness and responsibility
to deliver on our promises.

Purpose and inspiration

Building an organisation with a clear
purpose for our people through common
shared values and leadership behaviours.

Our managers are key to maintaining
our inclusive culture and reputation
for excellence. 700 of our managers
attended ‘Lead to Win’ training this year
and we introduced a new way for teams to
feedback to managers to help them improve.

Our data-driven approach to inclusion helps
us drive meaningful change. Key
achievements in 2022 include:

• Publishing our first combined workforce
diversity and gender pay gap report,
providing stakeholders with transparency
about our progress (see
www.schroders.com/workforce).

• Removing the 2:1 university degree

criterion from our entry level programmes,
making investment management more
accessible to people from all backgrounds.

• Improving our ranking in the Social

Mobility Employer Index and our score
in the Bloomberg Gender Equality Index.

We will be setting new targets for gender
and other underrepresented groups in 2023.

We are committed to providing equal
employment opportunities and combatting
all forms of discrimination. In keeping with
our Equal Opportunities Policy, we give full
and 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 retraining if necessary
to enable continued career development.

Employees who would recommend
Schroders as a good place to work

92%

Outperformed the benchmark for high-performing
companies

Female representation in senior
management

35.5%

Achieved target of 35% one year early. Details on
gender diversity of our Board and senior
management available on page 110.

Schroders Annual Report and Accounts 2022

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Fair pay for performance

Quality work and environment
that prioritises wellbeing

Personal growth opportunities

Recognising and rewarding employees
with a holistic compensation and
benefits offering.

Annual compensation
Salary and bonus decisions are governed
by our Fair Pay for Performance framework,
meaning each decision takes into account:

1. Annual performance – assessing
firm-wide, team and individual performance,
including behaviours.

2. Market context – pay levels and outlook
among relevant comparators, as well as
wider economic conditions.

3. Relativities and diversity – independent
validation and challenge to ensure fairness
versus peers and markets.

4. Individual context – skills, experience
and potential of each employee.

Carefully balancing all these factors allows
annual pay outcomes to be fair and drive
high performance.

Benefits
We aim to provide generous benefits
and support, over and above local market
norms. Our flexible and inclusive offering
empowers each individual to choose
options that suit them and their personal
circumstances. Enhancements in 2022
included the introduction of an electric car
scheme and augmented medical support
for menopause and gender dysphoria in
the UK.

Salary increases for junior employees
in high inflation countries

8-10%+

Find out more on page 77

Employees who are shareholders
of the company

78%

Providing rewarding work, autonomy,
flexibility, and supportive work
relationships and environment.

Flexible working
In 2020, we were one of the first companies
to launch a global Flexible Working Charter
which sits at the centre of our inclusive
culture. The Charter continues to be a
significant advantage in attracting
diverse talent.

Wellbeing
Supporting the wellbeing of our people
– mental, physical and financial – has
always been important to us. We have
our own Schroders Employee Wellbeing
Model, developed in 2022, that provides
a framework through which we can make
sure that we get help to the people that
need it most.

Our new Wellbeing Hub, currently available
in the UK, will soon be available globally.
It provides tailored help and support for
different career and life events, including
divorce, infertility, going through the
menopause, experiencing financial worries
and struggling with workload. The hub allows
easy access to the wide-ranging wellbeing
support on offer at Schroders, and is
complemented by a comprehensive
calendar of wellbeing events.

With many employees impacted by increased
costs of living, our financial wellbeing efforts
have been particularly important this year.
These include financial education sessions,
1:1 support on topics such as budgeting
and debt consolidation and higher salary
increases being targeted to our lower earners
in countries experiencing higher inflation.

Supporting the development and
career aspirations of our people through
learning offerings and new opportunities
driven by the growth of the business.

Employee feedback and
engagement
We value regular employee feedback as
it helps us deliver the things that are most
important to our people. This feedback
is heard by the Board of Directors and
GMC and helps us in our goal to retain
and recruit the very best people. Our
Global Employee Forum is chaired by the
Senior Independent Director and meets
regularly during the year.

Our work to build a strong feedback culture
has paid off, with 80% of our employees now
agreeing that we ask for and receive regular
feedback, the most improved category
in the latest employee survey.

Learning and development
programmes
‘Career Week’ allows our people at all levels
to plan and take ownership of their own
development and career progression. We
develop bespoke learning opportunities to
give our people the skills they need to
deliver our strategy, such as in sustainable
investment. Other examples include:

Sales Excellence Programme focusing
on critical skills to take a more client-centric,
trusted adviser approach.

Spotlight Programme, a career
development initiative tailored for
Investment to ensure we have a robust
pipeline of emerging talent who are
committed to staying with Schroders
in the long term.

Launched new

Wellbeing Hub

Sustainability related training

5,200+ hours

online and in-person training completed in 2022

Employees who agree leadership
care about wellbeing

90%

‘Lead to Win’ training

700+

managers attended

outperformed the benchmark for high-performing
companies

Schroders Annual Report and Accounts 2022

Sustainable leadership
continued

Leading by
example

In our role as a global employer, a FTSE
100 company and a steward of our clients
assets, we recognise the importance
of using our influence in society wisely
and responsibly.

Founding partner of

Progress Together

promoting social mobility

Donations committed to charitable
causes

£5.2 million

2021: £4.9 million

Reduction of our Scope 1 and 2
greenhouse gas emissions

-34%

from our 2019 base year

Our corporate sustainability strategy
is grounded in the issues that matter to
our stakeholders and reflects priorities
in areas where we can make a meaningful
contribution. Our priority themes relate to
people, by promoting equalities and, planet,
by supporting the transition towards a net
zero and nature-positive future.

volunteering, applying their knowledge
and developing new skills and awareness.
We also ran four emergency fundraising
appeals to support children impacted by the
famine in Afghanistan; the people of Ukraine;
those affected by the floods in Pakistan;
those struggling to feed themselves due
to food insecurity.

We strive to lead by example and hold
ourselves to the same standards as the
companies in which we invest. We are a
signatory to the United Nations Global
Compact and support its ten key principles,
covering human rights, labour, environment
and anti-corruption. By considering these
issues in our operational decisions we help
to promote positive change.

We play an active role in many other
initiatives that drive change across and
beyond our sector. We are members of the
Race to Zero campaign, signatories of the
Finance for Biodiversity Pledge, Change the
Race Ratio, the Women in Finance Charter
and a founding partner of Progress Together,
a social mobility initiative in the City of
London. We support and actively engage
with a range of initiatives, memberships and
organisations to help deliver our corporate
sustainability strategy.

Rewarding shareholders
The interests of our shareholders are 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.
During 2022, the Board proposed changes
to simplify the Company’s dual share class
structure through the enfranchisement
of our non-voting shares and a related
compensatory bonus issue. These
changes were subsequently approved
by shareholders and have now come into
effect. The changes were the result of direct
engagement and enable all shareholders to
enjoy the same economic rewards and risks,
and have the same voting rights.

Our impact on wider society
We want to inspire our people to support
and collaborate with the communities
in which they live and work. We have
established corporate programmes, as
well as employee-led programmes, which
support employees to volunteer, fundraise
and donate. In 2022, we committed
£5.2 million to charitable causes around
the world (2021: £4.9 million), £1.4 million of
which was outside the UK (2021: £0.7 million).
We provide grants to charities on the topics
of inclusion, disability, social mobility and
mental health. Each partnership provides
employees with an opportunity to engage
with our wider communities through

We offer donation-matching schemes for
employee fundraising across Asia, Europe,
the UK and US. We were awarded the
Diamond Quality Mark for our payroll giving
by the Charities Aid Foundation: 22% of our
UK employees used the Give As You Earn
scheme (2021: 24%), which saw £1.2 million
donated (2021: £1.3 million) before the
contributions were matched by Schroders,
to over 1,300 charities across the globe.

We support our employees in collaborating
and contributing their skills within our
communities by offering up to 15 hours of
paid volunteer leave per year. Employees
around the world contributed over 4,800
hours (2021: 4,000) of volunteer work, inside
and outside office hours. We have invested in
the number of volunteer opportunities
available to our people, recognising the
benefits to both the development of our
people’s skills and wider communities.

Addressing modern slavery

We have a responsibility to respect human
rights and tackle modern slavery; whether in
our role as an employer, as a buyer of goods
and services, when carrying out our fiduciary
duties as a provider of financial services or as
an investor in companies.

We apply similar analysis and engagement
principles to our suppliers as we do to the
companies in which we invest. We take a
risk-based approach to the sourcing,
onboarding and monitoring of our own
supply chain and apply enhanced due
diligence to those deemed to be higher risk
regarding modern slavery exposure. In 2022,
we rolled-out awareness-raising training to
all employees, globally.

Our Modern Slavery Statement has been
prepared in accordance with section 54 of
the UK Modern Slavery Act 2015 and section
14 of the Australian Modern Slavery Act 2018.

Read our Modern Slavery Statement:
www.schroders.com/mss

Schroders Annual Report and Accounts 2022

Our operational science-based targets

Scope 1 and 2 emissions performance
(tCO2e)

Renewable electricity consumption

2022

2021

2019
base year

4,500

2022

5,888

2021

6,828

2019
base year

95%

84%

50%

46% reduction (2030)

100% (2025)

Scope 3 business travel performance
(tCO2e)

Suppliers with science-based targets*

2022

2021

2019
base year

8,675

2022

1,722

2021

21,852

2019
base year

25%

10%

50% reduction (2030)

67% (2026)

* Suppliers in scope (by GHG emissions) includes Scope 3 categories purchased goods and services; capital

goods; and upstream transportation and distribution.

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Transitioning our own
operations to net zero
Our operational climate change strategy
focuses on reducing GHG emissions and
resource use across our operations. We are
doing this by decreasing energy demand,
increasing energy efficiency and switching to
low carbon electricity sources. We are also
reducing our business travel and engaging
with our supply chain to encourage them to
set their own science-based targets.

We are currently on track with our science-
based trajectory for our near-term targets.
Our Scope 1 and 2 GHG emissions have
decreased by 34% compared to our 2019
base year, a significant move towards our
46% reduction goal by 2030. We have also
increased our annual sourcing of renewable
electricity to 95%. We are developing
site-specific net zero action plans and
continue to roll-out ISO 14001 Environmental
Management System certification across our
largest office sites.

Despite business travel emissions currently
being 60% lower than 2019 levels, business
travel has increased as Covid-19 restrictions
were eased. We will continue to monitor
and manage this closely. Taking a similar
approach to our active ownership
programme with investee companies, we
have a supplier engagement plan. In 2022,
25% of our suppliers in scope (by GHG
emissions) had set a science-based target.
We are exploring different ways to support
our suppliers in their own net zero journey.

While our primary focus is on our
decarbonisation plan, we continue to
operate as a climate neutral company,
following the CarbonNeutral® Protocol
framework.

For our total operational GHG emissions
footprint and energy data, see page 110.

Schroders Annual Report and Accounts 2022

Business and financial review

Demonstrating
the strength in
our strategy

KPI

Net operating income
(£ million)

Our objective
Net operating income comprises net
operating revenue, which is primarily
generated from AUM, net gains on
co-investments, share of profit of joint
ventures and associates, and other
income. We aim to grow net operating
income over time.

How we performed

£2,476m

Net operating income for 2022 was
£2,476 million, down £44 million
from 2021.

Net operating revenue from our
strategic growth areas increased by
£106 million. However this was offset
by the market turbulence experienced
worldwide in 2022.

2,476

2,520

2,136

2,095

2,107

2022

2021

2020

2019

2018

Our financial results demonstrate the
resilience of our business in what has
been a challenging market environment.
Net operating revenue, excluding
performance-based fees, increased by
1%. This represents good underlying
performance given the wider backdrop.

We reported an operating profit of
£723.0 million (2021: £841.0 million)
and profit before tax of £586.9 million
(2021: £764.1 million). Profit after tax was
£486.2 million (2021: £623.8 million). The
Board has recommended a final dividend
of 15.0 pence per share (2021: 14.9 pence
per share). This means a total dividend
for the year of 21.5 pence per share
(2021: 21.4 pence per share, and a
payout ratio of 57% (2021: 50%).

Continued growth from our
strategic areas of focus
Despite the difficult market conditions,
we continued to grow our revenues across
Schroders Capital, Schroders Solutions and
Wealth Management. These businesses
represent strategic areas of focus for us

as we look to pivot away from the industry-
wide headwinds (see page 12). The growth
they have delivered demonstrates the
strength of our strategy, and the benefits
of further diversification.

Over the past five years, our net operating
revenue from these business areas has
increased by 75% to £1,092.6 million, which
represents a compound annual growth
rate of 12%.

Moreover, demand for products within these
areas continues to rise, with Schroders Capital
and our Wealth Management business
welcoming net new business of £6.4 billion
and £5.4 billion respectively in 2022.

Schroders Capital also benefitted from the
two strategic acquisitions we completed
during the year, which contributed AUM of
£8.8 billion. The most notable of these was our
acquisition of a majority stake in Greencoat
Capital (now Schroders Greencoat), a leading
renewable infrastructure manager. This not
only enhances our capability in infrastructure
assets, but also increases the longevity of our
revenue streams.

Net operating revenue by business area (£ million)

2017

2018

2019

2020

2021

2022

Schroders
Capital

Schroders
Solutions

Wealth

Management

Mutual
Funds

2,010.2

2,070.7

2,052.4

2,059.6

2,403.1

2,361.4

Institutional

Schroders Annual Report and Accounts 2022

Overall, our total net operating revenue was
£2,361.4 million (2021: £2,403.1 million), with
the decrease principally explained by lower
performance fees and net carried interest,
which fell from the record high of 2021 as
markets retreated and portfolios failed to
reach the high watermarks previously set.
Excluding these fees, net operating revenue
increased by 1% year-on-year, demonstrating
the success of our strategy.

Our associates and joint ventures were not
isolated from the challenging environment,
experiencing a reduction in AUM due to net
outflows and the fall in asset values. Net new
business had been positive up until the third
quarter but the prevailing risk-off sentiment
towards the end of the year led to negative
net new business of £6.0 billion. Our share
of profit of associates and joint ventures
therefore reduced to £77.6 million (2021:
£88.2 million).

Long-term investment
The retention of key talent is paramount
to delivering our strategy, and so we were
extremely pleased with the results from the
2022 pulse survey which demonstrated that
96% of our people are proud to work for
Schroders. We maintained cost discipline in
managing our compensation costs, keeping
our total compensation ratio at 46%
(2021: 46%). Compensation costs within
operating expenses therefore reduced to
£1,121.2 million (2021: £1,136.3 million),
despite the increase in headcount.

Non-compensation costs in our operating
segments were £631.3 million (2021:
£542.7 million). The increase was largely
driven by the acquisitions we made and the
impact of foreign exchange movements on
our overseas costs. We also continued to
invest in other areas where appropriate,
including the build out of our presence
in China and in further enhancing our IT
resilience through our cloud migration
programme. As explained in the Chief
Executive’s statement, growth in China
remains an important part of our strategy
for growing our core Asset Management
business. Our transition to the cloud
will result not only in greater operational
resilience, but also future cost savings.

Bringing all of these components together,
we generated an operating profit of
£723.0 million (2021: £841.0 million).

Overall, I am pleased with these results.
Our Schroders Capital and Schroders Wealth
businesses performed very well, helping
to mitigate the effects of the challenging
backdrop our traditional asset management
business faced. We believe that our focus
on long-term goals and strong investment
performance continues to provide a sound
platform for future growth.

Within Schroders Solutions, we successfully
onboarded River and Mercantile’s solutions
business which we acquired at the beginning
of the year. The strength of our client
relationships came to the fore in helping
us successfully navigate the gilt crisis.
This provides a strong endorsement of our
ability to navigate complex issues for our
clients and positions us well going forward.
The market disruption did however lead to
some short-term redemptions as clients
rebalanced their portfolios. As a result,
our Solutions business area saw a marginal
net outflow of £0.2 billion. The interest rate
rises that occurred contributed to a
reduction in the value of our AUM. However,
this generally benefitted our LDI clients as
the value of their liabilities reduced, helping
many of them to move closer to their
objective of achieving a buyout.

As noted earlier, in Wealth Management we
continued to deliver strong growth, with
continued client demand across our three
service lines: advice (including discretionary
management, financial planning, and
banking services); platform services; and
investment management. This reflects
particularly strong growth at Cazenove
Capital, our UK ultra-high-net-worth
business, which delivered resilient
investment performance in volatile markets.
We saw significant demand for our
sustainable investment expertise, and
benefitted from the successful regional
build-out of our business-owner franchise.

Overall, as a result of these developments
the AUM of these three strategic growth
areas rose 5% from £359.7 billion in 2021
to £376.6 billion in 2022, and the net
operating revenue generated from them
now accounts for 46% of our total net
operating revenue (2021: 41%).

Market volatility impacting the
more traditional parts of the Group
The traditional parts of our Asset
Management segment were more impacted
by the challenging conditions. For the first
time in a generation, we saw bond markets
and equity indices fall at the same time. The
MSCI World equity index fell 17% and the
Barclays Global Aggregate fixed income
index fell 16%. This was a significant contrast
to the bull markets that characterised the
latter part of 2021.

Sterling’s depreciation versus the US dollar
and euro (11% and 5% falls respectively)
helped to partly mitigate the impact of this,
given the currency mix of our AUM.

Our Mutual Funds and Institutional
businesses were particularly impacted by
both this, and an increasingly risk-off attitude
of investors as the year progressed. As a
result, net operating revenue from these
business areas reduced to £748.3 million
(2021: £815.0 million) and £520.5 million
(2021: £601.0 million) respectively.

Schroders Annual Report and Accounts 2022

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KPI

Basic operating earnings
per share (pence)

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

How we performed

37.4p

In 2022, basic operating earnings per
share was 37.4 pence.

2022

2021

2020

2019

2018

37.4

43.0

34.9

35.6

38.8

Re-presentation of our income
statement and the revised
treatment of AUM

During 2022, we re-presented our
consolidated income statement and revised
the treatment of AUM. Further information
can be found on page 71 and page 168.

Business and financial review
continued

£ billion

Opening AUM

Restatement1

Transfers2

Restated opening

Gross inflows

Gross outflows

Net new business

Acquisitions
Investment returns3

Closing AUM

Schroders
Capital

Schroders
Solutions

Mutual
Funds

116.0

Institutional

166.2

Asset
Management
534.0

Wealth
Management
81.2

Total (excl.
JVs and
associates)
615.2

53.7

–

(2.0)

51.7

16.1

(9.7)
6.4

8.8

1.4
68.3

198.1

–

8.3

–

0.9

–

(7.2)

206.4

116.9

159.0

39.5

(39.7)
(0.2)

43.1

(39.1)
210.2

33.7

(39.6)
(5.9)

–

(10.2)
100.8

24.3

(31.6)
(7.3)

–

(12.6)
139.1

–

534.0

113.6

(120.6)
(7.0)

51.9

(60.5)
518.4

20.4

–

101.6

14.5

(9.1)
5.4

0.1

(9.0)
98.1

20.4

–

635.6

128.1

(129.7)
(1.6)

52.0

(69.5)
616.5

Joint
ventures and
associates

116.4

14.7

–

Group
Total
731.6

35.1

–

131.1

766.7

240.9

(246.9)
(6.0)

–

(4.1)
121.0

369.0

(376.6)
(7.6)

52.0

(73.6)
737.5

1. Wealth Management AUM has been restated to reflect the basis on which contractual revenues are earned by the Group. AUM is now recognised where separate

contractual client relationships exist that generate incremental revenues for the Group.

2. Emerging Markets Debt and Commodities have been transferred to the Mutual Funds and Institutional business areas and certain pension mandates have been

transferred from Institutional to Schroders Solutions.

3. Includes markets, FX and investment performance. Currency movements increased AUM by around £37.3 billion.

The following commentary provides a more detailed review of our
financial results.

Asset Management segmental results
Our Asset Management results demonstrated the benefits of our
strategy. The two strategic growth areas of Schroders Capital and
Schroders Solutions performed well, supported by strategic
acquisitions. This helped to mitigate the market headwinds that
impacted our Mutual Funds and Institutional business areas.

Net operating revenue for the segment was lower than the prior
year at £1,967.1 million (2021: £2,043.1 million). This was largely due
to lower performance fees and net carried interest which reduced
to £59.1 million (2021: £126.1 million).

Schroders Capital had good growth, with gross fundraising of
£17.5 billion and net new business of £6.4 billion. Net flows were
particularly strong in our real estate and infrastructure capabilities,
although the more liquid parts of our alternative credit products
experienced outflows as clients rebalanced their portfolios. Together
with the acquisitions of Greencoat Capital and Cairn Real Estate in
the Netherlands, the net new business drove an increase in average
AUM for the business area of 35%. This helped offset the impact of
the fall in performance related fees within the business area, and
led to net operating revenue increasing by 16% to £406.1 million
(2021: £350.7 million). The net operating revenue margin excluding
performance fees and carried interest reduced slightly to 61 basis
points (2021: 62 basis points) as a result of a change to the product
mix, including the impact of transfers.

Net operating revenue in Schroders Solutions business grew 6%
to £292.2 million (2021: £276.4 million). This was principally a result
of higher average AUM following the acquisition of River and
Mercantile’s solutions business which contributed £43.1 billion of
AUM. As noted earlier, we dealt with the gilt crisis well, and emerged
relatively unscathed. The net operating revenue margin for the
business area reduced to 13 basis points (2021: 14 basis points),
due to a change in the mix.

The average AUM for both our Mutual Funds and Institutional
business areas reduced as a result of the fall in asset values and net
outflows. As a result, net operating revenue for these business areas
reduced to £748.3 million (2021: £815.0 million) and £520.5 million
(2021: £601.0 million) respectively. Excluding performance fees, the
net operating revenue margin for Mutual Funds reduced to 71 basis
points. This was due to a change in business mix as the adverse
market conditions had a greater impact on our higher margin
products. Excluding performance fees, the net operating revenue
margin for our Institutional business however increased to 34 basis
points (2021: 31 basis points), principally as a result of the impact
of transfers affecting the mix.

Our venture with Bank of Communications in China experienced
a reduction in AUM, which resulted in reduced profits, although
this was partly offset by foreign exchange movements and the
performance of our other interests, including our partnership
with Axis Bank in India. Returns from our Asset Management joint
ventures and associates were largely flat as a result at £73.6 million
(2021: £73.9 million).

Bringing this all together, our net operating income for the year
was £2,068.7 million (2021: £2,137.5 million).

Operating expenses in Asset Management increased to
£1,475.6 million (2021: £1,424.8 million). This reflects not only the
increase in the scale of our business following the acquisitions we
completed during the year, but also higher travel costs as business
continued to open up post Covid-19 and the investment in our
cloud migration noted earlier. Given the currency mix of our
expenses, foreign exchange movements also resulted in
a higher cost base. Overall, these movements resulted in
operating profit of £593.1 million (2021: £712.7 million) for
the Asset Management segment.

Schroders Annual Report and Accounts 2022

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£ billion

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

Total

10.1

508.3

518.4

98.1

121.0
737.5

Statement
of financial
position

Not recorded
in the
statement
of financial
position

–

508.3

93.6

121.0
722.9

10.1

–

10.1

4.5

–
14.6

0.2

0.5

6.0

6.7

21.3

Within Asset Management, assets that are managed by the Group
but not owned by it are not included in the 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. The subsidiaries that provide
banking services are legally responsible for the banking assets and
liabilities. They are therefore included in the Consolidated statement
of financial position. The assets are managed to earn a net interest
margin with consideration of the liquidity demands that may arise
from clients. Reflecting these structures, the Group’s total assets
decreased to £21.3 billion at 31 December 2022 (2021: £24.3 billion).

As at 31 December 2022, investment capital is mainly comprised of
cash, cash-like funds and other funds managed by the Group. During
2022, investment capital reduced by £654 million to £184 million
(2021: £838 million) and our seed and co-investment capital
decreased to £512 million (2021: £666 million). Other assets include
goodwill and intangible assets, which are inadmissible for regulatory
purposes and assets that support our ongoing operating activities in
the form of working capital.

Richard Keers
Chief Financial Officer

1 March 2023

Wealth Management segmental results
Our Wealth Management business had a strong year, in particular
demonstrating the benefit of the UK regional investment we have
made in recent years. Net operating revenue enjoyed an increase
of 10% to £394.3 million (2021: £360.0 million). Within this,
management fees increased by 2% to £318.1 million (2021:
£312.3 million) as a result of higher average AUM. The rise in interest
rates had a positive impact and led to net banking interest increasing
more than threefold to £36.9 million (2021: £11.1 million). This drove
an increase in the net operating revenue margin of 2 basis points to
40 basis points.

We generated net new business of £5.4 billion, with positive
contributions from each of the three services we provide clients:
Advised, Platform and Managed.

Schroders Personal Wealth (SPW), our joint venture with Lloyds
Banking Group, continued to perform well, generating positive
net flows of £0.2 billion and an increase in revenue of 3%.

Operating expenses were £276.9 million (2021: £254.2 million). The
increase in the year principally reflects continued investment in this
growth area, both through strategic hires and improvements to our
IT platform.

As a result of these movements, operating profit for the segment
increased to £129.9 million (2021: £128.3 million). In light of the
overall market environment, this represents a very strong result.

Central costs and other items
Central costs, which are presented below our operating profit,
reduced to £48.8 million from £53.6 million in 2021. These represent
costs incurred as part of our treasury and strategic corporate
development activities and the costs associated with the governance
and corporate management of the Group. The decrease was
principally as a result of the reduction in compensation for our
executive Directors.

As part of the treasury and capital management activities, the Group
holds seed and investment capital. Due to the fall in financial markets
this year, we incurred a net loss on financial instruments and other
income of £6.7 million (2021: gain of £43.9 million). Acquisition costs
and related items increased to £86.4 million (2021: £65.2 million),
reflecting expenses, including amortisation of intangible assets,
incurred as a result of the strategic acquisitions completed by the
Group during the year. The combined impact of these movements
along with the profit from our operating segments resulted in a profit
before tax for the year of £586.9 million (2021: £764.1 million). Profit
after tax was £486.2 million (2021: £623.8 million).

Financial strength and liquidity
Our year-end capital position remains strong, with a capital surplus
of £655 million (2021: £1,454 million). The reduction in our capital
surplus is largely due to the deployment of capital to complete our
strategic acquisitions. These acquisitions highlight our focus on
utilising excess capital to help deliver value for our stakeholders.

The Group’s net assets increased by £54.0 million during 2022
to £4,479.7 million (2021: £4,425.7 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.

Schroders Annual Report and Accounts 2022

Stakeholder engagement and section 172 statement

Our stakeholders

Clients

Shareholders

Our people

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.

Offering fulfilling work and shared values
to our people
Our people are central to the ongoing success
of the business, and 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.

Actively helping our clients achieve their
long-term financial goals
Clients are the primary focus of our business.
The Group’s resilience and ongoing success
are built upon our ability to understand our
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.

We have a dedicated Client Insights Unit
that uses internal and external datasets to
maximise the understanding of our clients
and the environment in which they operate.

We conduct client surveys (independent
third party and our own bespoke surveys) to
hear directly from our clients. As a result of
all of these activities we design our product
solutions and advice offering to best meet
their needs.

How do we engage with them and
consider their interests?
The Board engages with shareholders
throughout the year. After being held
remotely during the pandemic, the 2022
AGM was held as a hybrid meeting following
changes to the Company’s Articles of
Association which gave shareholders
a choice of how they could participate.

Over a number of years, the Company’s
non-voting ordinary shares had become
increasingly illiquid and the discount at which
they traded to the ordinary shares widened
significantly. The Board closely engaged with
the Principal Shareholder Group and our
other major shareholders before
recommending they approved the
simplification of the Company’s dual
class share structure.

See page 63 for more details.

Outcomes
Engagement with clients drives our strategy.
Client needs and the investment universe
we operate in are dynamic and we have
materially enhanced our product range
in recent years.

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.

Our desire to build closer relationships
with end clients, to grow asset management
through product innovation and expand
private assets and alternatives is a direct
result of our understanding of client needs.

The simplification of the Company’s dual
class share structure was as a result of direct
engagement with our shareholders and its
completion has enabled all shareholders,
who share the same economic rewards and
risks to have the same voting rights.

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 so that
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 30 and 31 for more details.

Outcomes
In our latest pulse survey, 96% of employees felt
proud to be working for Schroders, which is a
testament to our strength in having a great
culture. During 2022, we held a global “Career
Week” to help our people plan and take
ownership of their development. We also
launched an annual manager feedback survey
to provide feedback and insights to our
managers so that they can take practical actions
to have greater impact on team engagement
and performance. We also devised a new
wellbeing strategy and developed a new model
to measure wellbeing to be more responsive to
the needs of our people.

Schroders Annual Report and Accounts 2022

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Section 172 statement

The Board is bound by its duties under
the Companies Act 2006 to promote the
success of the Company for the benefit of
its shareholders as a whole, having regard
to our other key stakeholders.

The Board believes that in order to
deliver its strategy and achieve long-term
sustainable success, it must consider the
interests of all stakeholders. We recognise
that engagement with stakeholders in order
to understand their needs and considering
the impact of decisions on them is key to
the continued success of the Company.

Examples of how the Board has considered
the interests of the Group’s stakeholders
appear throughout this Annual Report
and a specific example of how the Board
considered their interests in relation to its
principal decisions made during the year
is set out on page 63 in the Corporate
Governance Report.

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.

Working with trusted partners
We have an established global network of
external service partners that supplement
our own infrastructure and, in many
instances, provide a source of competitive
advantage whereby we benefit from the
expertise and specialised skills they provide.

How do we engage with them and
consider their interests?
We continuously and proactively engage
with our external service providers through
various communication channels by
employees throughout the Group. We have
a framework that governs the sourcing,
selection, on-boarding, management,
oversight and reporting of suppliers. Our
Supplier Code of Conduct sets out the high
standards to which we hold ourselves and
subsequently the treatment and behaviours
we expect of our suppliers, and their
suppliers, covering such fundamental
principles as human rights including
modern slavery, 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 supply chain annually
with a significant focus on material
outsourced providers to ensure that they
are consistent with our strategy to use service
partners that add value to our infrastructure.

Outcomes
Schroders is committed to the fair treatment
of its suppliers who are viewed as key
stakeholders. The Board approved the
Group’s Modern Slavery Statement, which
contains details of the risk assessment and
due diligence processes in place for our
suppliers on the issue of modern slavery.

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 sustainability activities,
including risks and opportunities.

We are committed to respecting human
rights and avoiding human rights
infringements including modern slavery.
This involves raising awareness and helping
our people understand the scale and
complexity of the issue.

During 2022, we published our first
standalone report that is consistent with
the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD).
This provided stakeholders with a fuller
understanding of how we manage exposure
to climate-related risks and opportunities.

Outcomes
We committed £5.2 million to charitable
causes in 2022 and we rolled out modern
slavery awareness training to all
employees globally.

Our climate reporting has been recognised
for its transparency and performance. Our
2022 CDP climate change questionnaire
response (for year end 2021) achieved a
leadership level score of A. This top ranking
was achieved by only 2% of the nearly 15,000
global companies assessed by CDP.

Schroders Annual Report and Accounts 2022

Building respectful relationships
As a global business, we seek to build
collaborative relationships with each of our
regulators providing input and expertise, and
constructive challenge to their thinking where
we think this is needed. This helps us to comply
with current requirements, and to shape future
ones, all of which helps us to serve our clients
better. We also believe this strengthens and
supports the regulators contributing to a more
competitive, more resilient financial system.

How do we engage with them and consider
their interests?
We engage with regulators and policymakers
to understand and contribute to evolving
regulatory requirements. In addition to
compliance and risk teams we have a dedicated
public policy presence in the UK and in
Brussels for the EU.

The Board engaged with the FCA, PRA and
Takeover Panel in respect of certain aspects of
the simplification of the Company’s dual class
share structure. Our Public Policy team has
regular engagement with officials at all levels
and this year held detailed engagements on
topics as diverse as sustainability, digitisation
and governance and culture.

Senior management hold meetings with
our regulators to foster good working
relationships. The Audit and Risk Committee
receives regular reports on engagement with
regulators and how changes in regulatory
regimes may impact our business.

Outcomes
Our engagement delivered better outcomes
for the firm and our clients. This included
engaging on the implementation of the FCA’s
Consumer Duty which sets expectations for
the standard of care to be provided by UK firms
to retail customers. During the implementation
period we are engaged with the FCA to adopt
an approach that is consistent with regulatory
expectations. Similar engagement with the
EU enabled us to meet deadlines for the
implementation of the EU’s Sustainable
Finance Disclosure Regulation. Our input
on related UK Sustainable Disclosure
Requirements is helping to shape the policy.

Risk management

Our risk management framework

Our rapidly evolving industry, global presence and core
business activities mean that we are exposed to a variety of
risks. Our risk management framework and strong system of
internal control enable us to manage our risks and helped us
respond to the challenges of 2022. Integral to our framework
is our strong control culture and the effectiveness of our three
lines of defence. Our second line of defence was strengthened
in 2022 by bringing together our Risk and Compliance functions.
This has allowed us to provide better oversight of the first line,
enabling us to support business growth in a risk controlled
manner through more integrated discussions and alignment
of approach.

Managing risks
The Board is accountable for the maintenance of a prudent and
effective system of internal control and risk management. It
assesses the most significant risks facing the business and also
uses quantitative exposure measures, such as stress tests, where
appropriate, to understand the potential impact on the business.

Non-executive oversight of the risk management framework process
with respect to standards of integrity, risk management and internal
control is exercised through the Audit and Risk Committee, more
details of which are set out on pages 68 to 75. We embed risk
management within all areas of the business at Group and legal entity
level. The Group Chief Executive and Group Management Committee
(GMC), as an advisory committee to the Group Chief Executive,
regularly review the key risks we face. They are also responsible for
monitoring that individual behaviours, within the teams they manage,
reflect the culture and control standards of the business. The Group
Strategy Committee, which supports the Group Chief Executive with
the development and delivery of the Group’s strategy, regularly
receives a risk dashboard which includes metrics to monitor exposure
against key risks. Subsidiary boards fulfil their obligations for managing
risks in line with regulatory and legal requirements.

The executive oversight of risk is delegated by the Group Chief
Executive to the Chief Financial Officer. The Chief Financial Officer has
responsibility for the risk and control framework of the Group and
chairs the Group Risk Committee (GRC). The GRC supports the Chief
Financial Officer in discharging his risk management responsibilities.
The GRC reviews and monitors the adequacy and effectiveness of the

Lines of defence overview

External independent assurance

Group Risk
Committee

Group
Management
Committee

Audit
and Risk
Committee

Three lines
of defence

3rd line
Internal
independent
assurance

2nd line
Control and
oversight functions

1st line
Business operations
and support

Group’s risk management framework, including relevant policies and
limits. It also reviews emerging risks and changes to existing risks.

The GRC is supported by a number of sub-committees, including the
Group Conflicts Committee, the Financial Crime Committee and the
Information Security Risk Oversight committee which review and
challenge risks and report significant risk matters to the GRC.

Lines of defence
The first line of defence in managing and mitigating risk is the business
functions themselves and the line managers across the Group. Heads of
each function 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.

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) and apply to all areas of the business.
We have a Group level risk appetite statement and a number of entity
level statements. In 2022, we reviewed and refreshed our risk appetite
statements for applicable UK entities to reflect the harms identified in our
solo-entity Internal Capital Adequacy and Risk Assessments (ICARAs) and
developed new risk appetite statements for in-scope entities where
needed. See page 41 for further details on our ICARAs.

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.

Strengthening our approach to risk management
In 2022, we combined our Risk and Compliance functions under the
leadership of the Chief Risk Officer (CRO). Bringing these functions
together has allowed us to increase collaboration and effectiveness
across the teams, develop talent, and ultimately improve the
robustness of the second line of defence.

We have found natural synergies between the two functions. For
example, a failure to comply with conduct and regulatory expectations
is most likely to arise due to operational risk failures. As such,
management of these risks in a more integral way is proving beneficial.
We have also seen improvements in our reporting. We have combined
our reports to the GRC and Audit and Risk Committee which has
enabled us to more clearly highlight the key matters for senior
management attention, resulting in more focus on these issues. In
addition, by having our Investment Risk and Investment Compliance
teams work together more closely we have been able to leverage the
skills and experience of both functions in order to provide better
oversight of our portfolios.

Schroders Annual Report and Accounts 2022

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Notable developments

In 2022 a number of initiatives were undertaken to progress our
management of risk. Some of these are summarised below:

firm itself and confirmed that we have sufficient capital and liquidity
resources under the new regime.

• We further enhanced ESG risk dashboards and analytical

techniques to support the review and challenge of ESG risks,
including at the Asset Class Risk and Performance Committees.
These committees are the primary venue for the first and second
line functions to review and challenge risk and performance. For
private assets strategies we developed proprietary scorecards
to assess the ESG risk of individual transactions.

• We successfully completed the first phase of the FCA’s and PRA’s

operational resilience regulations. The Schroders plc Board and
relevant legal entity boards approved the operational resilience
self-assessment documents. These assessments identified our most
important business services, the level of resilience required for these
services and the areas of our operational resilience that we should
enhance. We are now focused on enhancing the areas of operational
resilience identified, integrating ongoing compliance with the
regulations into business-as-usual activities and continuing to mature
our approach to achieve full operational resilience by March 2025.

• The Information Security Oversight Committee continues to

provide oversight of the management of cyber risk. The focus in
2022 has been on testing our cyber defences through simulated
cyber attacks. This has provided valuable insights into the areas
we should prioritise for enhancement. Given this, we have initiated
a Group-wide multi-year programme to further accelerate the
evolution of our cyber defences which will enable us to make
cyber defences as effective as possible and to evolve in line with
the threats that we face. Attacks by organised crime groups
(for example targeted ransomware) remain a risk for financial
services and Schroders is no exception.

• We have been working with the firms we acquired in 2022 to
move them onto our network, integrate them into Schroders’
frameworks (as appropriate) and align our policies so that our
control standards are consistent across the Group.

• We have ten UK entities in scope of the FCA’s Investment Firms

Prudential Regulation (IFPR). The regulation sets risk, capital and
liquidity requirements, revised remuneration and governance
standards and requires investment firms to complete an ICARA.
In 2022, all of our solo-entity ICARAs were approved by their
respective boards. As part of the development of the ICARAs we
identified, assessed and quantified harms to clients, markets and the

• Our Credit Risk team designed and developed a new automated

tool to run loan book stress tests and diversification analysis
reports for the wealth management banks which provide clear
and up to date information for quick decision making in a volatile
market. The reports are presented monthly to the various Assets
and Liabilities Committees for discussion and approval.

• Within operational risk we have continued to enhance our RCA

framework. Our RCAs are a core part of our operational risk
framework and help us 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 the risk profile. This year we:
– Incorporated consideration of ESG and Operational Resilience
risks into the RCA process, leveraging the advice from specialist
teams.

– Implemented a mid-year RCA review to capture changes in

business processes and associated risks on a formal basis. This
was in addition to the existing expectations that RCAs be updated
following periods of business change.

– Developed a quarterly review of high residual risks to track and
monitor the timely progression of actions to reduce risk and any
changes to these risks.

• The way in which we communicate with clients is becoming

increasingly more sophisticated and varied as we are communicating
on a wider product and investment service range, in a wider set
of jurisdictions. To mitigate reputational risk and the risk of non-
compliance with regulatory requirements we have established a
Client Communications Framework, which provides a consistent
method of communicating with clients across the Group.

• We have a robust Conduct Risk Framework which was established

a number of years ago. At the heart of the framework is a requirement
for business areas to submit Conduct Risk Assessments on a quarterly
basis which are reviewed and challenged by the GRC. This year we
enhanced our approach by developing business function Conduct
Risk Appetite statements leveraging the Group risk appetite
approach. These risk appetite statements have enabled us to
further analyse where conduct risk could occur within each business
function, and to develop metrics to assess the current level of risk
versus appetite.

Geopolitical risk, economic pressures and our crisis management approach

The last few years have tested our emerging
risk and crisis management processes. From
the Covid pandemic which began in 2020, to
the geopolitical events of 2022 (specifically
Russia’s invasion of Ukraine in February and
the gilt crisis in September and October),
we have managed all crises with minimal
disruption to the business and our clients.
We consider emerging risks on a regular
basis across the firm and incidents as they
arise. We operated a daily call in February
and an intraday call in September to manage
the impact from the events noted above. We
also have a crisis management plan which
provides a coordinated and structured
approach.

This overall approach served us well in
response to Covid and recent events. Whilst
geopolitical risk continues to remain high
due to war in Europe and some political
tension between China and the West,
our business remains diversified globally,
providing additional resilience. We regularly
monitor our exposure to geopolitical risk and
take proactive action where possible. The
high inflation, low growth economic
environment poses risks to the growth of
our AUM and may in turn add cost pressures
to the business. We must therefore apply
vigilance to maintaining our control
environment and continue to manage
risks effectively.

Schroders Annual Report and Accounts 2022

Risk management
continued

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 and boards.
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, geopolitical
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 RCAs (described on
page 40), 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 GRC 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 principal risks to the firm. These are set out below and on
pages 43 to 45. These pages are not designed to be an exhaustive list
of all risks, but instead capture the principal risks that are most likely
to impact our strategy, business model, external reputation and
future performance. The numeric icons are for presentational
purposes only and do not indicate a rank. The risks represent
our exposure after mitigating controls are applied.

We have included trend arrows showing how our risk profile has
changed since last year. Commentary to explain why risks have
increased since the prior year, can be found on pages 43 to 45.

We have also included a diagram showing the strategic risks faced
by the firm, that are mitigated by our strategy.

We confirm that the Group has an effective risk and controls process,
supported by an appropriate governance framework.

Our strategy mitigates our strategic risks

Principal risks

2022

2021

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Movement versus prior
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Categories of risk

Increased

Decreased

Strategic risk

Business risk

Remained the same

Operational risk

Business model disruption

Changing investor requirements

Conduct and regulatory risk

ESG including climate change

Fee attrition

Financial instrument risk

Information security and technology

Investment performance risk

Market returns

Operational process risk

People and employment practices

Product strategy and management

Reputational risk

Schroders Annual Report and Accounts 2022

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How we manage this

We continue to invest in our technology platform to support
our Schroders Capital business.

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

The acquisition of the River and Mercantile solutions business
and Greencoat Capital have allowed us to evolve our products
to meet a wider range of client needs.

We continue to focus on developing our investment capabilities,
expanding into new investment types and specific areas of
expertise, and commit seed capital to support product
innovation for future growth.

We focus our attention where we believe we are able to make
a more significant difference to our clients through current or
planned future capabilities, in particular closing the UK private
client advice gap.

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.

Principal risks

Description

Business model disruption
Our business model could be disrupted by a range of external
factors including technology advancements, product evolution
and market participants.

Geopolitical turmoil, including sanctions and conflict, could also
impact our business. For example, heightened tension between China
and the West may impact our China-based activities or Chinese assets
which we invest in on behalf of our clients. This risk remains elevated.

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.

The advice gap means 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.

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. This risk increased in 2022 due to regulators
taking varying approaches to ESG, making implementation more
difficult, and disruption in the UK gilt market resulting in increased
regulatory scrutiny.

Environmental, social and governance (ESG)
risk including climate change

Failure to understand, accurately assess and manage investment
risk associated with ESG factors within assets and portfolios, and to
appropriately represent the risks, and our commitments in relation to
them, to clients and stakeholders. This may lead to poor investment
decisions, and a failure to offer appropriate ESG products or to meet
our clients’ expectations, impacting our performance, brand and
reputation. A failure to meet corporate climate change targets may
have a similar impact. This risk has stabilised in 2022 due to improved
data coverage of public assets, developments within SustainEx™ and
the creation of a Schroders Capital Sustainability and Impact working
group. The risk associated with regulators implementing different
approaches to ESG, and their heightened scrutiny on the topic, is
captured within Conduct and Regulatory risk above.

We have developed a range of proprietary tools to better
understand the impacts of ESG risk including climate change on
the portfolios we manage. We use ESG risk toolkits to support
day-to-day risk oversight and formal review and challenge of
investment risk at Asset Class Risk and Performance
Committees. We have an Integration Accreditation Framework
which we use to assess the integration of ESG factors into our
investment desks’ processes and re-accredit them on an annual
basis. Regarding climate specifically, we have developed a Net
Zero Dashboard which enables our investment teams and
central risk function to monitor the temperature alignment
of portfolios and track our progress against our firm-wide
net zero commitment.

Fee attrition
Fee attrition caused by clients allocating more of their assets to
passive products, and less to active managers, coupled with a
lower allocation to public markets, and a greater allocation to
private markets. This has resulted in increased competition on
price in the traditional active management market.

We are also exposed to the risk of intermediaries taking more
revenue streams.

We have continued to focus on solutions and outcome-
oriented strategies, thematic products and private assets,
which diversify our fee income. We have expanded our
fiduciary business within Solutions and partnered with a
number of new clients in 2022. We are also increasingly
diversifying our product offering, supporting
long-term profitability.

We are moving to vertical integration and getting closer to
clients allowing us to better understand their needs. This
has also given us opportunities to access a greater share
of available revenue.

Schroders Annual Report and Accounts 2022

Risk management
continued

Description

How we manage this

Financial instrument risk
We face market, credit, liquidity and capital risks from movements
in the financial markets in which we operate, arising from holding
investments as principal. Due to geopolitical events resulting in
inflation and movements in interest rates we have seen an
increase in the volatility of several asset classes and shifts in
correlations between asset classes which has resulted in an
increase in Financial Instrument risk.

Failure to manage market, credit and liquidity risks arising from
managing AUM on behalf of clients would be considered an
Operational Process risk.

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 leads to a negative impact on the
Schroders business and our client experience. Cyber threats
have remained at the elevated level reported last year due to
the activities of highly capable criminal organisations and
state-sponsored threats. Through our programme of testing
we continue to have greater insight into the areas we should
focus on to enhance our cyber defence capabilities.

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 the investment objectives. The change from a long-term
low interest rate environment to rising interest rates can impact
clients’ performance expectations and our ability to meet them
and may require adjustments within strategies. Strong investment
performance is critical to the success of Schroders.

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 geopolitical 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 the energy crisis, continued strict
Covid-19 measures in China, UK government changes and the UK/
EU relationship presented a risk in 2022. 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 stabilised at the higher level reported last year
because none of the factors above have eased.

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 operate a Global Technology Risk
Committee to oversee operational risk associated with IT
services across the organisation.

We are also undertaking a migration of our infrastructure and
systems to the Cloud. This will allow us to use the capabilities
of cloud technologies and the expertise of the providers,
further enhancing our resilience and reducing cyber risk.

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 2022, 73% of client
assets outperformed benchmarks over three years and 76%
outperformed benchmarks over five years.

We have diversified income streams across a range of
markets to mitigate a considerable fall in any one area.
Our AUM from Schroders Capital, Schroders Solutions, and
Schroders Wealth Management increased from £368 billion
in 2021 to £390 billion in 2022, further increasing our
diversification.

Our focus on growing our Schroders Capital product range
and investment capabilities allows us to have a broader range
of income streams which are less directly linked to markets.

Schroders Annual Report and Accounts 2022

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Description

How we manage this

Operational process risk
The risk of failure of significant business processes, such as
compliance with fund or mandate restrictions, fund pricing, trade
execution for investment portfolios and client suitability checks,
whether these occur within Schroders or appointed third parties.
It includes operational integration of acquisitions as there may be
some risks whilst newly acquired firms are operating on different
platforms, and before they are fully aligned to Schroders’ policies.
It also includes the ineffective management of joint ventures and
associates. Overall this risk remains stable as our control
environment continues to mature.

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. This risk has reduced
in 2022 as our early move to a flexible working charter has given
us a competitive advantage over our peers when recruiting and
retaining talent. We are also normalising to a pre-Covid
environment with staff coming back to the office and this has
boosted morale. This is also evidenced with our latest pulse
survey results, with 96% of our employees still feeling proud
to be working for Schroders.

Product strategy and management
There is a risk that our product or service offering is not
suitably diversified or viable or does not provide access to
strategies that will help investors to meet their objectives. There
is also the risk that products are not accurately described, do not
perform in alignment with their investment objectives for a
sustained period, or that product liquidity is not consistent with
the product description or the redemption requirements of
investors.

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 through a number of new acquisitions.
Reputational issues in joint ventures and associates where
we have limited control of the outcome could adversely impact
the Group.

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 work with acquired firms to
move them onto our platforms (where appropriate) and
to align our policies. We have a well-established process to
assess the risks within our supply chain. We review suppliers
throughout the supplier life cycle to identify potential risks
which may impact the quality or continuity of service.

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 and diversity and to manage employment issues
appropriately, handling them consistently, fairly and in
compliance with local legislation.

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. We have a
process to raise awareness of funds identified as having more
challenging liquidity profiles so that any changes to client
sentiment (or potential redemptions) would be notified to
relevant teams rapidly, to reduce potential liquidity risk issues.

We consider reputational risk when initiating changes to our
strategy or operating model and focus on maintaining high
standards of conduct. We have a number of controls and
frameworks to address other risks that could affect our
reputation, including: financial crime, investment risk, client
take-on, client communications and product development.
Our Schroders-appointed board members oversee the
activities of joint ventures and associates, supported
where necessary by oversight committees.

Schroders Annual Report and Accounts 2022

Task Force on Climate-related Financial Disclosures (TCFD)

Climate-related
financial disclosures

The following summary read together with
our detailed Climate Report, which can be
found on our website, is our response to, and
is consistent with, all the recommendations
and relevant recommended disclosures of
the Task Force on Climate-related Financial
Disclosures (TCFD). These disclosures
describe how 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.

The reason we have produced a
supplemental detailed Climate Report is to
provide a more comprehensive and tailored
view for our stakeholders. The summary
disclosure below should therefore be read
in conjunction with our Climate Report.

Read our Climate Report:
www.schroders.com/TCFD

For our total operational GHG emissions
footprint and energy data, see page 110.

See pages 26-33 for more details on our
sustainable leadership.

Summary disclosures

TCFD pillars

Recommended disclosures

Our response

a) Describe the Board’s
oversight of climate-
related risks and
opportunities.

b) Describe management’s

role in assessing
and managing
climate-related risks.

Governance

Read more on
pages 13-19 of
our Climate 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 and nature-related risks and opportunities into our
strategy. The Board is therefore ultimately responsible for the oversight of climate
and nature-related risks and opportunities that could impact our business.

• The Board has delegated overall responsibility for the delivery of the Group’s

strategy to the Group Chief Executive, who has the authority to delegate further,
whilst retaining overall responsibility for the delivery of our strategy. The Group
Chief Executive has management responsibility for overseeing the Group’s
approach to climate change. There are a number of management committees and
working groups that assess, advise on and oversee climate and nature-related risks
and opportunities. The Group Sustainability and Impact Committee, chaired by the
Group Chief Executive, monitors progress towards our climate and nature-related
targets.

Strategy

Read more on
pages 20-50 of
our Climate Report.

a) Describe the climate-
related risks and
opportunities the
organisation has
identified over the
short, medium and long
term.

b) Describe the impact

of climate-related risks
and opportunities on
the organisation’s
businesses, strategy
and financial planning.

c) Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario.

• Risks to our investee companies include physical risks affecting operations (long

term), and transition risks from measures to support global decarbonisation goals
affecting the business proposition (short, medium and long term). In turn, these
can negatively impact our investment performance.

• Opportunities will arise in sectors that stand to benefit from decarbonisation, such
as those focused on energy efficiency, renewable energy infrastructure, or climate
change resilience/adaptation (short and medium term).

• The majority of the risks and opportunities lie in our investments. We identify where
the risks lie and act to respond to those risks. We assess our risk across a range of
temperature scenarios. Our approach is detailed in our Climate Transition Action
Plan, which has been updated, including our progress, in our subsequent 2021
and 2022 Climate Reports.

• Our approach is to measure exposure, track and hold companies to account

and offer client solutions aligned to a net zero pathway.

• We work with our investee companies to transition through engagement.
If companies do not take steps in their transition to a 1.5°C world, we have
the option of exiting those positions.

• For our own operations, we are reducing energy consumption in our offices,

transitioning our company car fleet to electric vehicles, implementing ISO 14001
Environmental Management Systems, increasing renewable power, reducing
business travel and engaging suppliers to set science-based targets.

Schroders Annual Report and Accounts 2022

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TCFD pillars

Recommended disclosures

Our response

Risk
management

a) Describe the

• The process of identifying, assessing and managing climate risks has been

organisation’s
processes for
identifying and
assessing climate-
related risks.

embedded into our Group-wide risk management framework, which operates
a three lines of defence approach. We also identify risks through the lenses
of physical and transition risk.

• Environmental, Social, Governance (ESG) risk including climate change is a key

risk and is monitored using our risk appetite metrics.

b) Describe the

• We assess the risk via research and analytics for investee companies (valuations)

Read more on
pages 51-58 of
our Climate Report.

organisation’s
processes for managing
climate-related risks.

c) Describe how processes

for identifying,
assessing and
managing climate-
related risks are
integrated into the
organisation’s overall
risk management.

or ourselves (reduced revenue/increased costs) using our Climate Analytics
Framework and stress testing.

• Climate risk has been embedded into our key existing processes alongside specific
climate-related governance and decision-making bodies. This includes embedding
it into investment research and decision-making, product development, company
engagement and risk management processes.

• The Group Risk Committee reviews and monitors the adequacy and effectiveness

of the Group’s risk management framework.

Metrics and
targets

Read more on
pages 59-69 of
our Climate Report.

a) Disclose the metrics

• For our clients’ investments, we review greenhouse gas (GHG) emissions using

used by the
organisation to assess
climate-related risks and
opportunities in line
with its strategy and risk
management process.

b) Disclose Scope 1, 2, and,
if appropriate, Scope 3
greenhouse gas
emissions, and the
related risks. (All data is
at 31 December 2022
unless stated
otherwise.)

Describe the targets
used by the
organisation to manage
climate-related risks and
opportunities and
performance against
targets.

absolute and intensity measures, and track implied temperature scores.

• For our own operations, we review and measure GHG emissions in our offices,

company car fleet, business travel and supply chain.

• As an investment manager, our Scope 3 category 15 (financed emissions) represents

our greatest exposure to climate-related risks.

• The combined Scope 1 and 2 carbon footprint for in-scope1 AUM was 59.1 MtCO2e.
The temperature score for the combined Scope 1 and 2 GHG emissions at portfolio
level was 2.6°C.

• Our Scope 1 GHG emissions were 789 tCO2e (29% reduction since 2019). Our Scope
2 location-based GHG emissions were 3,711 tCO2e (35% reduction since 2019). 95%
of our global electricity consumption was from renewable sources.

• Our Scope 3 business travel GHG emissions were 8,675 tCO2e (60% reduction
since 2019). 25% of our suppliers in-scope2 (by GHG emissions) have set a
science-based target.

• For our clients’ investments our target is to align 100% of Scope 1, 2 and 3
temperature score for in-scope1 listed equity, corporate bonds, real estate
investment trusts (REITs) and exchange-traded funds (ETFs) holdings from
3.2°C in 2019 to 1.5°C by 2040.

• For our own operations our targets are to reduce absolute Scope 1 and 2 emissions
by 46% by 2030 from a 2019 base year; increase sourcing of renewable electricity to
100% by 2025; reduce absolute business travel emissions by 50% by 2030 from a
2019 base year; and work with our suppliers so that 67% of suppliers (by GHG
emissions) will have science-based targets by 2026.

1. Includes all mandatory asset classes required by the Science Based Targets initiative, which consist of our listed equity, corporate bond, REIT and ETF exposure. This

accounted for over 60% of our AUM.

2. Includes Scope 3 categories 1 Purchased goods and services; 2 Capital goods; and 4 Upstream transportation and distribution.

Schroders Annual Report and Accounts 2022

Non-Financial Matter

Non-financial information statement

Governing our non-financial information

This section of the strategic report details the policies and standards which
govern our approach to non-financial information. It is in accordance with
sections 414CA and 414CB of the Companies Act 2006.

ESG Policy for Listed Assets – our principles and practices regarding sustainable investing in Schroders’ Asset Management
processes and strategies.

Schroders Capital Sustainability and Impact Policy – our principles and practices regarding sustainable investing in Schroders
Capital Private Assets business.

ESG and Stewardship Policy – our principles and practices regarding sustainable investing in our Wealth Management processes
and strategies.

Statement of Compliance with UN Principles for Responsible Investment

Group Climate Change Position Statement – our position in relation to the environmental management for the investments
we manage and our operations.

Group Nature and Biodiversity Position Statement – our position on nature and biodiversity.

Task Force on Climate-related Financial Disclosures

Engagement Blueprint – the areas on which we are focusing our engagement efforts with companies to support and encourage
management teams to transition towards more sustainable business models that we believe will strengthen the long term value
of their businesses.

Guiding principles and values – our values of excellence, innovation, teamwork, passion and integrity.

Directors’ Remuneration Policy – our approach for setting Directors’ remuneration.

Policy on Board diversity – our approach to board diversity.

Group Personal Data Policy – summarises the obligations imposed upon all Schroders Group Companies and employees
by data protection laws and covers the rights of individual employees with respect to their personal data.

Group Tax Strategy – We aim to comply with both the spirit and letter of the law and are committed to conducting our tax
affairs in an open and transparent way. Our tax strategy, available at www.schroders.com/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.

Modern Slavery Statement – our annual statement on how we assess, manage and report on the risks of modern slavery
practices in our business and value chain.

Supplier Code of Conduct – the standards and behaviours we expect from our suppliers. We also have a number of internal
policies and standards that are not published externally relating to anti-corruption and anti-bribery matters.

Group Human Rights Position Statement – our position for our entities and employees in relation to respect of human rights.

United Nations Global Compact (UNGC) – we were an Early Adopter of the refreshed UNGC Communication on Progress.

Whistleblowing Policy – our internal procedure for reporting and investigating concerns without fear of reprisals
or detrimental treatment.

Environment

Employees

on pages 32, 33, 46 and 47.

on pages 30, 31 and 38.

Social matters
on pages 32, 33 and 39.

Human rights

on pages 32.

Anti-corruption and
anti-bribery
on pages 32 and 39.

Additional information

Description of
business model

Our business model is designed to deliver for our stakeholders. We do this by providing
excellent investment performance to our clients through active decision-making.

On pages 16-17.

Description of principal risks
and impacts of business activity

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.

On pages 40-45.

Non-financial key performance
indicators

In addition to our financial performance metrics, we also measure our performance
through the use of non-financial performance indicators.

On the inside front cover.

Schroders Annual Report and Accounts 2022

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Viability statement and going concern

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 2027 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
February 2023. 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 14-17.

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 Schroders plc 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 40–45. 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 operating expenses to net operating income;

• the early crystallisation of certain climate change risks;

• prevailing economic factors such as the potential for a sustained
period of high inflation, elevated interest rates and a marked
slowdown in global growth.

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.

Going concern

The Group’s business activities, together with the factors likely to
affect its future development, performance and position, are set out
in this Strategic report. In addition, the financial statements include
information on the Group’s approach to managing its capital and
financial risk; details of its financial instruments and hedging
activities; and its exposures to credit and liquidity risk.

The Group has considerable financial resources, a broad range of
products and a geographically diversified business. As a consequence,
the Directors believe that the Group is well placed to manage its
business risks in the context of the current economic outlook.

Accordingly, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in
operational existence for 12 months from the date the Annual Report
and Accounts is approved. They therefore continue to adopt the
going concern basis in preparing the Annual Report and Accounts.

Pages 1 to 49 constitute the Strategic report, which was approved
by the Board on 1 March 2023 and signed on its behalf by:

Peter Harrison
Group Chief Executive

1 March 2023

Schroders Annual Report and Accounts 2022

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

108

113

Schroders Annual Report and Accounts 2022

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Schroders Annual Report and Accounts 2022

Board of Directors and Company Secretary

Leading a
world class
business

Board Committees

Skills, experience
and contribution

Dame Elizabeth Corley
Chair

Peter Harrison
Group Chief Executive

Richard Keers
Chief Financial Officer

Elizabeth was appointed as an
independent non-executive
Director in September 2021
and became Chair at the
conclusion of the 2022
Annual General Meeting.

Elizabeth is a non-executive
Director of BAE Systems plc,
Chair of the Impact Investing
Institute and a Trustee of the
British Museum. She was
previously the CEO of Allianz
Global Investors and a non-
executive Director of Morgan
Stanley Inc. and Pearson plc.

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

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

Peter began his career at
Schroders and subsequently
held roles at Newton Investment
Management, J.P. Morgan Asset
Management as Head of Global
Equities and Multi-Asset and at
Deutsche Asset Management as
Global Chief Investment Officer.
He was Chairman and Chief
Executive of RWC Partners
before re-joining Schroders
as Global Head of Equities in
March 2013.

Having spent his whole career
in the asset management
industry, Peter brings a long
and successful track record
in asset management and
extensive industry and
leadership experience
to the Board.

Richard was appointed as an
executive Director and Chief
Financial Officer in May 2013.

Richard is a chartered
accountant and was a
senior audit partner at
PricewaterhouseCoopers LLP
(PwC) until 2013. He became
a partner at PwC in 1997 and
has 25 years’ experience in the
audits of global financial services
groups. Richard’s experience
includes time spent in PwC’s
New York, Sydney, Edinburgh
and London offices. Richard
was a non-executive member
of Lloyd’s Franchise Board and
Chairman of its Audit Committee
from 2016 to 2019.

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

Current external
appointments

• Non-executive Director of BAE

• Member of the London Stock

• None

Systems plc

• Chair of the Impact Investing

Institute

• Trustee of the British Museum

Exchange’s UK Capital Markets
Industry Taskforce

• Member of the Investment

Association Advisory Council

• Member of the Impact-

Weighted Accounts Initiative
Leadership Council

• Director of FCLT Global

• Member of the Advisory Board

of Antler Global

Schroders Annual Report and Accounts 2022

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Nominations Committee

Remuneration Committee

Audit and Risk Committee

Chair

Ian King
Senior Independent Director

Sir Damon Buffini
Independent non-executive
Director

Rhian Davies
Independent non-executive
Director

Paul Edgecliffe-Johnson
Independent non-executive
Director

N R

N AR R

N AR

Ian was appointed to the
Board as an independent
non-executive Director in
January 2017 and was appointed
as Senior Independent Director
in April 2018.

Damon was appointed as an
independent non-executive
Director in February 2018. He
was Chair of the Remuneration
Committee from November 2019
until April 2022.

Damon was a founding partner
of Permira where he was
Managing Partner between
1997 and 2010 and remained
a partner until 2015.

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

Damon will not be seeking
re-election as a Director and will
stand down at the conclusion
of the 2023 AGM.

Ian was Chief Executive of BAE
Systems plc from 2008 to 2017
having been originally appointed
to the BAE board as Chief
Operating Officer, UK and Rest
of the World. Prior to this, he was
Chief Executive of Alenia Marconi
Systems. Ian also served as
a non-executive Director and
Senior Independent Director
of Rotork plc until June 2014.

Having held a number of
leadership positions in major
multinational companies,
and having capital markets
experience both as an executive
and non-executive director, Ian
brings strong global leadership
experience which is of great
value to the Group as we
continue to grow our
business internationally.

Rhian was appointed as an
independent non-executive
Director in July 2015 and was
appointed as Chair of the Audit
and Risk Committee in 2016.

Rhian is a chartered accountant
and was a partner at Electra
Partners, an independent private
equity fund manager, until June
2015, and then a Senior Adviser
until March 2017. Rhian
previously worked in PwC’s audit
and insolvency practice before
joining Electra in 1992.

Rhian’s background as a
qualified accountant is a
specific strength given her
role as Chair of the Audit and
Risk Committee. With extensive
experience as a partner of a
private equity fund manager,
Rhian brings financial and
industry knowledge to the
Board, particularly in the
area of private assets.

• Senior Adviser to the Board of

• Chair of the National Theatre

• None

Gleacher Shacklock LLP

• Chair of Royal Anniversary

• Chairman of Senior plc

Trust UK

• Director of High Speed Two

• Deputy Chair of the BBC Board

(HS2) Limited and lead
non-executive Director for the
Department of Transport

• Chair of the BBC

Commercial Board

Paul was appointed as an
independent non-executive
Director in July 2022.

Paul is Chief Financial Officer
and Group Head of Strategy at
InterContinental Hotels Group
plc (IHG). Paul held a number
of senior management positions
at IHG from 2004 before being
appointed to the Board in 2014.
Paul previously worked at PwC
where he was Senior Manager
for Private Equity Tax Structuring
and spent seven years working
within Corporate Finance at
HSBC Investment Bank.

Paul is a fellow of the Institute
of Chartered Accountants and
is a graduate of the Harvard
Business School Advanced
Management Programme.
Paul brings his experience
as a Chief Financial Officer of
a FTSE 100 company and also
has considerable experience of
international markets which is of
great benefit as we look to grow
our business around the world.

• Chief Financial Officer and
Group Head of Strategy at
IHG until 19 March 2023

• Paul will become Chief

Financial Officer at Flutter
Entertainment plc on
20 March 2023

Schroders Annual Report and Accounts 2022

Board of Directors and Company Secretary
continued

Claire Fitzalan Howard
Non-executive Director

Rakhi Goss-Custard
Independent non-executive
Director

Leonie Schroder
Non-executive Director

Deborah Waterhouse
Independent non-executive
Director

N AR

N AR R

Claire was appointed as a
non-executive Director in
April 2020.

Rakhi was appointed as an
independent non-executive
Director in January 2017.

Leonie was appointed as a
non-executive Director in
March 2019.

Leonie is currently a Director and
Trustee of the Schroder Charity
Trust and has held a number of
roles in the charity sector.

Leonie is a descendant of John
Henry Schroder, co-founder of
the Schroders business in 1804.
Leonie’s appointment reflects
the commitment to Schroders of
the Principal Shareholder Group
which has been an important
part of Schroders’ success over
the long term.

Claire is a non-executive Director
of Caledonia Investments plc,
Director and Trustee of the
Schroder Charity Trust and
a Trustee of a number of
charitable foundations.
She was previously a non-
executive Director of Gauntlet
Insurance Services.

Claire brings experience of
family-owned businesses in
financial services and from
her non-executive roles. Claire
is a descendant of John Henry
Schroder, co-founder of the
Schroders business in 1804.
Claire’s appointment reflects
the commitment to Schroders
of the Principal Shareholder
Group which has been an
important part of Schroders’
success over the long term.

Rakhi is an experienced
executive in digital retailing
having spent 12 years at Amazon
where she was Director of UK
Media. Prior to joining Amazon,
she held roles at TomTom and
in management consultancy
in the US. She was previously
a non-executive Director
of Intu plc.

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.

Deborah was appointed as an
independent non-executive
Director in March 2019.

Deborah is the CEO of ViiV
Healthcare. ViiV Healthcare
is a leading global company,
majority owned by
GlaxoSmithKline (GSK)
and focused on advancing
science into HIV treatment,
prevention and care. Deborah
is also a member of the GSK
Corporate Executive Team.

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

• Director and Trustee of

• Non-executive Director

• Director and Trustee of

• CEO of ViiV Healthcare

the Schroder Charity Trust

of Trainline plc

• Trustee of a number of
charitable foundations

• Non-executive Director of
Caledonia Investments plc

• Non-executive Director

of Kingfisher plc

• Non-executive Director
of Nisbets plc (unlisted)

• Non-executive Director
of Rightmove plc (until
5 May 2023)

the Schroder Charity Trust

• Director of a number of
private limited companies

• Member of the GSK

Corporate Executive Team

Schroders Annual Report and Accounts 2022

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Nominations Committee

Remuneration Committee

Audit and Risk Committee

Chair

Matthew Westerman
Independent non-executive
Director

Graham Staples
Group Company Secretary

Composition of the Board
at 31 December 2022

N AR R

Matthew was appointed as an
independent non-executive
Director in March 2020 and
was appointed as Chair of the
Remuneration Committee
in April 2022.

Matthew started his career
in 1986 at Credit Suisse First
Boston. He subsequently
worked at Rothschild & Co
where he became Managing
Director and Joint Chief
Executive of ABN AMRO
Rothschild. He joined Goldman
Sachs in 2000 and became
a partner in 2002. During his
tenure he led substantial
businesses within the
Investment Banking Division.
He left Goldman Sachs in 2016
to become Co-Head of Global
Banking at HSBC.

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

Graham was appointed
Group Company Secretary
in 2004. He previously held
senior company secretarial,
compliance and business
development roles at
NatWest, Barclays, TSB
and Computershare.

Graham is responsible
for the Group’s governance
framework and is the
principal adviser on all
governance matters. He
is also Chair of Schroder
Investment Management
(Europe) S.A., the Group’s
main operating company
in the EU.

Graham brings great
experience in corporate
governance and company law.

• Director of MW&L Capital

• Member of the advisory

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

Board of Leeds University
Business School

• Director and Trustee of
Sherborne Girls School
Charitable Foundation

Board
composition

Non-executive
Directors’ tenure

Executive Directors

Non-independent non-
executive Directors

Independent
non-executive Directors

18%

64%

0–3 years

3–6 years

6–9 years

40%

50%

10%

Board gender diversity

Board ethnic diversity

Male

Female

50%

White

Ethnically diverse

83%

17%

Schroders Annual Report and Accounts 2022

Corporate governance report

Developing strategy,
talent and culture

We have a strong governance
framework which ensures the Board
and the Committees do everything
they need to in the right way

I am delighted to present my first governance report since
becoming Chair in April 2022. In the following pages you can
read about our governance arrangements, the operation of the
Board and its Committees and how we discharged our
responsibilities during the year.

By the time I took over as Chair I had already been on the Board for
over seven months and had gone through a very thorough induction
process. This involved meeting a wide range of our people from
across all parts of the Group. I have been impressed by the openness
of everyone I have met and by their clear focus on putting clients first
and ‘doing the right thing’. I had long been an admirer of Schroders
and its culture before joining and everything I have seen and heard
since has reinforced those positive views.

Having a handover period also allowed me to observe the
operation of the Board and its Committees before becoming Chair.
Again, I have been impressed with what I have seen. Colleagues are
open and transparent and there are no ‘no-go’ areas for the Board.
We have a strong governance framework which ensures the Board
and the Committees do everything they need to in the right way.
This was highlighted as a strength in this year’s externally facilitated
evaluation process. This process also identified a number of areas
where we can improve. These are set out later in the report, but the
most important, I believe, is for the Board to be able to focus more
of its time on the longer term strategy for the business.

The lifting of Covid restrictions allowed shareholders to attend
the Annual General Meeting in person again. Our move to hybrid
meetings has opened up our AGM to more shareholders and we will
continue to facilitate attendance in person or virtually going forward
as a matter of course.

Another benefit of the lifting of restrictions was that the Board could
once again travel overseas. As a global business I think it is vital the
Board meets our people in overseas offices and really feel the culture
and get feedback from our colleagues. We had a most successful
trip to New York in September where we combined formal Board
meetings reviewing our strategy for the Americas with breakfast
with high potential staff, dinner with senior regional management
and drinks for all staff. We also benefitted from hearing directly from
one of our major US clients on their perspectives of the industry and
their relationship with us. The Board came away enthused with the
scale of the opportunity we have in the region and quality of the team
we have there to deliver that opportunity. Part of our annual strategy
meeting was held at our Broadlands campus near Horsham, where
we were able to meet with many of our 600 colleagues located there.
We plan to visit colleagues in Paris this year and take a deeper look
at our European businesses.

Talent and succession are themes you will find throughout
the Annual Report. The Nominations Committee has focussed
considerably on the development of our senior talent, but the
Board is also keen to get to know talent across the Company at
all levels. We have introduced a number of initiatives to achieve
this, including breakfast meetings for the Board with high potential
staff, informal lunches and receptions with members of the Group
Management Committee and attendance at Board meetings
of members of the Group Strategy Committee.

Later in this report you can read about the specific topics the
Board discussed across the year, but I should highlight the decision
to enfranchise our non-voting shares. This was a major step for the
Company, which removed a significant governance matter. Setting
terms that would be acceptable to both classes of shareholder was
always going to be a challenge, but with the proposals obtaining
over 98% support from both classes the conclusion is that we
managed to strike the right balance.

Looking forward, our priorities in 2023 will be on our long-term
strategy; protecting our reputation through strong governance;
talent development; and improving Board effectiveness.

Dame Elizabeth Corley
Chair

1 March 2023

Schroders Annual Report and Accounts 2022

2022 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
Committee

Chair

Dame Elizabeth Corley 2

Michael Dobson2

Executive Directors

Peter Harrison

Richard Keers

Non-executive Directors

Ian King

Sir Damon Buffini3

Rhian Davies

Paul Edgecliffe-Johnson4

Claire Fitzalan Howard

Rakhi Goss-Custard

Leonie Schroder

Deborah Waterhouse5

Matthew Westerman6

9/9

5/5

9/9

8/9

9/9

3/3

9/9

8/9

9/9

4/4

1/1

4/4

3/4

4/4

2/2

4/4

5/5

3/3

5/5

4/5

7/7

3/3

7/7

1. There were six scheduled Board meetings held during the year and three additional meetings to consider the simplification of the Company’s dual share class structure.
2. Michael Dobson retired from the Board at the conclusion of the 2022 AGM on 28 April 2022 and was succeeded as Chair by Elizabeth Corley from that date.
3. Damon Buffini was unable to attend a Board meeting which was arranged at short notice in order to consider the simplification of the Company’s dual share class

structure and one meeting of the Nominations Committee due to prior commitments.

4. Paul Edgecliffe-Johnson was appointed to the Board and as a member of the Nominations Committee and Audit and Risk Committee on 1 July 2022.
5. Deborah Waterhouse became a member of the Remuneration Committee on 1 August 2022. Deborah was unable to attend a Board meeting which was arranged at short

notice in order to consider the simplification of the Company’s dual share class structure.

6. Matthew Westerman was unable to attend one meeting of the Audit and Risk Committee due to a prior commitment.

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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 and summarised
on page 58.

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 Chair of each committee provides the Board with
an update of the work currently being carried out by the committee
they chair. Membership of the committees is detailed in each
committee’s report. The committees’ terms of reference can
be found on the Company’s Investor Relations website2.

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

Schroders Annual Report and Accounts 2022

The Chair also has regular meetings with the non-executive Directors
without the executive Directors being present. These meetings are
for informal discussions and do not have fixed agendas.

Board calls are used as an additional avenue for communication to
supplement the formal Board meeting programme; these are held
between the scheduled meetings. At each call, the Group Chief
Executive and Chief Financial Officer provide updates on the
Group’s financial performance, and an update on business issues.

Corporate governance report
continued

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

Annual Report and
financial and regulatory
announcements

Risk management framework,
risk appetite and tolerance
limits

Corporate governance
arrangements, including Board
conflicts of interest

Significant new
business activities

Remuneration strategy

Annual budgets and financial
commitments and strategic or
key acquisitions

Board and Committee
composition, succession
planning and Committee terms
of reference

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/ir

Chair
The Chair is responsible for the
leadership of the Board, ensuring
its effectiveness and setting its
agenda. She is responsible for
creating an environment for open,
robust and effective debate and
challenge. The Chair is
also responsible for ensuring
effective communication with
shareholders and other
stakeholders.

Group Chief Executive
The Group Chief Executive is
responsible for the executive
management of the Company and
its subsidiaries. He is responsible
for proposing the strategy for the
Group and for its execution. He is
assisted by members of the GSC
and GMC in the delivery of his and
the Board’s objectives for the
business.

Senior Independent
Director (SID)
The SID’s role is to act as a
sounding board for the Chair,
oversee the evaluation of the
Chair’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 Chair or Group
Chief Executive. He is the
designated non-executive Director
responsible for engagement with
the workforce as key stakeholders
in the Company.

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.

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.

Chair: Dame Elizabeth Corley

Chair: Rhian Davies

Chair: Matthew Westerman

See page 66 for the
Committee report

See page 68 for the
Committee report

See page 76 for the
Committee report

Group Strategy
Committee (GSC)

The GSC comprises the
senior management team
who have primary
responsibility for the
development and delivery of
the Group’s strategy. It is an
advisory committee to the
Group Chief Executive.

Group
Management
Committee (GMC)

The GMC comprises the
wider senior management
team and is an advisory
committee to the Group
Chief Executive on the
day-to-day running of the
Group’s business.

Group Sustainability
and Impact
Committee (GSI)

The GSI comprises senior
management across the
Group and provides advice to
the Group Chief Executive to
assist him in discharging his
responsibilities regarding
sustainability and impact.

Group Capital
Committee

Assists the Chief
Financial Officer in the
deployment of operating,
seed, co-investment and
investment capital.

Group Risk
Committee (GRC)

Assists the Chief Financial
Officer in discharging his
responsibilities in respect
of risk and controls. The
GRC has a number of
sub-committees, which
look at specific areas of risk
including conduct and
conflicts of interest.

Schroders Annual Report and Accounts 2022

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Board induction
The Group Company Secretary supports the Chair 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.

Paul Edgecliffe-Johnson was the only new appointment to the Board
during 2022 and a comprehensive and tailored induction programme
was provided. The induction process involved:

• Meeting all members of the GMC and their teams to gain an insight
into and an understanding of the opportunities and challenges
facing their area of responsibility.

• One-to-one meetings with other senior management across
the Group, including first, second and third lines of defence
to understand the Group’s internal control and risk
management framework.

I am grateful to my colleagues on the Board for their support
and have enjoyed meeting with people from many areas of the
business both ahead of and after my appointment in July 2022.
I have met with members of the Group Management
Committee and their teams to gain a deeper understanding
of the business.

As a member of the Audit and Risk Committee, I have also had
briefings from management across the second and third lines
of defence including Risk, Compliance, Legal and Internal Audit
which has aided my understanding of the internal control and
risk management framework.

Paul Edgecliffe-Johnson

Independence
The Board remains committed to its stated policy regarding the
benefits of an absolute majority of independent Directors. All the
non-executive Directors are independent in terms of character
and judgement.

Claire Fitzalan Howard and Leonie Schroder are not considered
independent as they are both members of the Principal Shareholder
Group. The Nominations Committee believes the judgement and
experience of Claire Fitzalan Howard and Leonie Schroder continues
to add value to the Board and the Group. The Board will therefore
recommend their re-election at the 2023 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, Paul Edgecliffe-
Johnson will resign and offer himself for election at the AGM on
27 April 2023. All other Directors are required to seek re-election
on an annual basis unless they are retiring from the Board.
Sir Damon Buffini will not be seeking re-election as a Director
and will stand down at the conclusion of the 2023 AGM. Details
of the Directors’ length of tenure are set out on page 55.

Non-executive Directors’ letters of appointment stipulate that they
are expected to commit sufficient time to discharge their duties.
The Board has adopted a policy that allows executive Directors to
take up one external non-executive directorship. Non-executive
Directors are required to consult the Chair before taking on any
additional appointments. The Board is satisfied that all Directors
continue to be effective and demonstrate commitment to their
respective roles.

For details of executive Directors’ service contracts, termination
arrangements and non-executive Directors’ letters of appointment,
please refer to the Remuneration report from page 76.

Board training
The Board believes that the ongoing development and briefing
of Directors is an important part of the Board’s agenda. The Board
receives regular briefings throughout the year in order to provide
them with a deeper understanding of the Group.

During 2022, there was a briefing session on sustainability delivered
by the Global Head of Sustainable Investment and the Global Head
of Corporate Sustainability which included climate and nature-related
issues as well as an overview of human rights and modern slavery.
At this meeting, the Board was updated on how sustainability trends
were shaping our industry, including climate and nature-related risks
and opportunities. This covered the trends, impacts and how the
business was responding.

At the two-day strategy offsite meeting held in November 2022,
a presentation was given to the Board that provided insights
on the challenging macroeconomic environment and how it
can impact Schroders.

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.

Schroders Annual Report and Accounts 2022

Corporate governance report
continued

Compliance with the 2018 UK Corporate Governance Code (Code)
During 2022, 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 Chair in April 2016, and had served on the Board for more than nine years since he was first
appointed. Michael Dobson retired from the Board at the conclusion of the 2022 AGM.

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

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 62.

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 63.

Resources
and controls

The Board reviews the financial performance of the Group at each scheduled meeting and is ultimately
responsible for the Group’s control framework. The Audit and Risk Committee carries out an annual assessment
of the effectiveness of the system of internal control on behalf of the Board.

See the Audit and Risk Committee report on pages 68 to 75.

Engagement

The Board recognises that engaging with and taking account of the views of the Group’s stakeholders is key
to delivering the strategy and long-term objectives of the Group.

See page 63.

Workforce
engagement

The Board receives updates on our 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.

See page 62.

Division of responsibilities

The role
of the Chair

Board
composition

The roles of the Chair and Chief Executive are separate. Their job descriptions can be found on our investor
relations website. The Chair has overall responsibility for the leadership of the Board and for its effectiveness in
all aspects of its operation. Elizabeth Corley became Chair at the conclusion of the 2022 AGM and was considered
independent 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 66.

Role of the
non-executive
Directors

Non-executive Directors are expected to provide independent oversight and constructive challenge and
help develop proposals on strategy, performance and resources, including key appointments and standards
of conduct.

Group Company
Secretary

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 2022

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Composition, succession and evaluation

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 66 to 67.

Skills, experience
and knowledge
of the Board

In 2021, the Nominations Committee carried out a full analysis of the Board to identify the skills and
experience required by future appointments. The results of this analysis formed part of role profiles used
in the appointments of Elizabeth Corley in 2021 and Paul Edgecliffe-Johnson in 2022. We are updating the
analysis and will use it to help identify future candidates for the Board.

See the Nominations Committee report on pages 66 to 67.

Board evaluation

Independent Board Evaluation (IBE) facilitated an external Board evaluation during 2022 in accordance with
the Code requirement. IBE conducted the previous externally facilitated Board evaluation in 2019, with the
evaluations in 2020 and 2021 being conducted internally by the Chair.

See page 65.

Audit, risk and internal control

Internal and
external audit

The Audit and Risk Committee oversees the relationship with the external auditor, Ernst & Young.
The Group Head of Internal Audit reports directly to the Chair of the Audit and Risk Committee.

See the Audit and Risk Committee report on pages 68 to 75.

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 68 to 75.

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 68 to 75.

Remuneration

Policies and
practices

Executive remuneration is designed to align to our purpose. Our existing remuneration policy was approved at
the 2020 AGM. The updated remuneration policy will be considered by shareholders at the 2023 AGM and was
developed following engagement with our shareholders.

See the Remuneration Committee report on pages 76 to 107.

See the updated remuneration policy on pages 92 to 98.

Remuneration
Policy

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

See the Remuneration Committee report on pages 76 to 107.

See the updated remuneration policy on pages 92 to 98.

Exercising
independent
judgement and
discretion

We pay for performance in a simple and transparent way, clearly aligned to shareholder and client interests,
to the financial performance of the Group, and the progress made towards our strategic goals.

See the Remuneration Committee report on pages 76 to 107.

Schroders Annual Report and Accounts 2022

Corporate governance report
continued

Clients

External suppliers

People

Shareholders

Regulators

Wider society

Key areas of focus during the year

At each scheduled Board meeting the Board discusses reports from the Group Chief Executive on the performance of the business, the Chief
Financial Officer on financial performance, the Group Company Secretary on governance developments, and, where relevant, a report from
each of the Board Committees.

Set out below are the key topics considered by the Board during 2022, taking into account the views of key stakeholders while continuing to
promote the Group’s long-term success. Throughout the year, the Board has considered workforce welfare, external markets, our clients, the
Group’s capital position, business operations and the need to keep the market updated on key developments.

Strategy
• The Board continued to focus on the development and delivery of
our overall strategy. In November, the Board held a two-day offsite
meeting to discuss strategy for 2023 and beyond.

• At each scheduled meeting, the Board received a strategic update
from the business. During 2022, these included the Client Group,
our businesses in China, Europe, North America, Latin America and
the UK, including Schroders Solutions, Wealth Management and
Schroders Capital.

Financial performance and risk management
• The Board reviews the financial performance of the Group at each
scheduled Board meeting. In March, the Board reviewed the 2021
Annual Report and Accounts and final dividend proposal. In July,
the Board reviewed the 2022 half-year results and recommended a
dividend of 37 pence per ordinary share of £1 each and non-voting
ordinary shares of £1 each in issue at that time.

• The 2023 budget and five-year forecast was discussed by the

Board at the two-day offsite meeting in November.

• During the year the Board approved the ICAAP, ILAAP, Recovery
Plan, Resolution Pack and Wind-down Plan following their review
by the Audit and Risk Committee.

• The Board also approved the Group’s 2021 Task Force on Climate-
related Disclosures (TCFD) report to provide our shareholders,
clients and other stakeholders with a better understanding of
our exposure to climate-related risks.

People and culture
• The Board relies on our people to deliver the Group’s strategy and
considers our culture to be one of our assets. In September, the
Board received an update on our people strategy and considered
succession planning for critical roles, the initiatives to enhance
inclusion and diversity across the Group and how to protect our
culture in a post-pandemic world.

• Ian King, our Senior Independent Director, is our designated
non-executive Director responsible for gathering workforce
feedback. He chairs the Global Employee Forum to hear directly
from employees on issues that concern them. Ian provided an
update to the Board following the Forum meeting in July, which
covered our approach to ESG and the simplification of the dual
share class structure. At its October meeting, the Forum discussed
flexible working and the inflationary pressures that have led to
increases in the cost of living. Their feedback was discussed by the
Board in November. The Board welcomes the additional feedback
from employees via the Forum and will continue to engage with it
during 2023.

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.

• Following changes to the Company’s Articles of Association,
the 2022 AGM was held as a hybrid meeting to enable more
shareholders to attend. After the meeting the website was
updated with a summary of the presentations and the question
and answer session.

• The Investor Relations programme has continued our engagement
with our major shareholders, particularly around the simplification
of our dual share class structure.

Schroders Annual Report and Accounts 2022

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Stakeholder interests and engagement

In discharging their section 172 duties, the Directors have regard to the factors set out on page 39 and any other factors considered relevant
to the decision being made, such as the interests of shareholders, employees and the views of regulators. The Directors acknowledge that
every decision made will not necessarily result in an equally 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, expect that
its approach to decision-making and consideration of stakeholder interests will be consistent.

The example provided below shows how the Board considered the matters set out in section 172 in respect of one of the key decisions made
during 2022.

In addition, the Board engaged with a number of regulators in
relation to certain aspects of the simplification. These included the
Takeover Panel in relation to the change in the Principal Shareholder
Group’s interest in the Company, the FCA in respect of the bonus
issue of ordinary shares and the delisting of the non-voting ordinary
shares, and the PRA so that the Company’s share capital could
continue to be classified as Tier 1 regulatory capital.

The Board took a number of factors into account when considering
the appropriate level for the compensatory bonus issue designed to
compensate the ordinary shareholders for the dilution of their voting
rights. These included: the reasons for and levels of the discount
between the two share classes; the dilutive effect on the ordinary
shareholders’ voting rights resulting from the enfranchisement; and
the dilutive effect which the compensatory bonus issue would have
on the economic interests of the non-voting ordinary shareholders.

The Board considered the terms of the enfranchisement,
compensatory bonus issue and sub-division, together with the grant
of buyback authority, represented fairly the interests of holders of
both ordinary shares and non-voting ordinary shares.

Simplification of Schroders plc’s dual share
class structure
A key decision made by the Board in 2022 was the recommendation
to shareholders of the simplification of the Company’s dual share
class structure by enfranchising the non-voting ordinary shares.
These proposals were subsequently approved by shareholders
at a General Meeting and a Class Meeting held on 15 August 2022
and came into effect on 20 September 2022.

Over recent years, the non-voting ordinary shares had become
increasingly illiquid and the discount at which they traded to the
ordinary shares had widened significantly. Non-voting shares have
also become increasingly rare in UK listed companies as corporate
governance best practice develops. The enfranchisement helped
address these issues and means that all of the Company’s shares
are eligible for inclusion in the major indices which also enhances
liquidity.

Under the enfranchisement, each non-voting ordinary share was
converted into one ordinary share and re-designated to have the
same rights, including voting rights. The holders of ordinary shares
received a bonus issue of three additional ordinary shares for every
17 ordinary shares held to compensate them for the dilution of their
voting rights. Subsequent to the enfranchisement and bonus issue,
the ordinary shares were sub-divided into five new ordinary shares
with a nominal value of 20 pence each.

The Board considered the simplification of the dual share class
structure at a number of meetings to assess whether it was in
the best interests of its shareholders. The Board engaged with the
Principal Shareholder Group who saw their interest in the Company
diluted from 47.93% to 43.11% as a result. The Board had also
engaged with other major shareholders ahead of announcing
the proposal.

Schroders Annual Report and Accounts 2022

Corporate governance report
continued

2022 Board objectives

The 2021 evaluation was undertaken internally and in light of the findings of that evaluation and the conclusions of the Chair’s Committee,
the Board set the following high level objectives for 2022.

Area of focus for 2022

Progress made during 2022

Reviewing the integration of the major
acquisitions agreed in 2021 and the
progress of follow-on growth plans
for those businesses

Monitoring progress against the five-year
plan agreed in November 2021

Acquisitions have been an important part of our strategy to position our business
for future growth. In 2022, Schroders completed three major acquisitions which were
approved by the Board during 2021, therefore a priority was to integrate them within our
organisation. In July, the Board considered the integration of Greencoat Capital and Cairn
Real Estate as part of the strategic update on Schroders Capital. The integration of River
and Mercantile’s UK solutions business was considered as part of the strategic update
on the UK business.

The Board reviews performance at each scheduled meeting and held a two-day offsite
meeting in 2022 to agree the strategy for 2023 and beyond. Challenging markets have
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.

Reviewing the development of senior
management talent

The Board considered an external review of the GMC and the personal development plans
prepared following that review and also succession planning for the GMC members. The
Board also reviewed our People Strategy in September, which examined the development
of talent below the GMC and HR’s initiatives to enhance inclusion and diversity.

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

The Board reviewed the key business areas during its scheduled meetings in 2022.
Future agendas provide for the review of key business areas to occur on an ongoing basis.
The Board considered Schroders Capital and strategic partnerships in July and reviewed
China alongside the Group’s strategy for Asia at its two-day offsite meeting in November.

Reviewing our clients, their needs and their
perceptions of Schroders

Carrying out regular in-depth reviews
of investment performance

Our success depends on meeting the needs of our clients, therefore the Board assesses
their needs and their perception of Schroders. During 2022, the Board considered our
brand, the market perception of it and how it could be leveraged. The Board reviews key
business areas at each of its scheduled meetings. As part of these reviews the Board
considers the requirements of our clients and how we can continue to meet their needs.

The Board considers investment performance at each scheduled meeting. In addition,
in March and September there were comprehensive reviews focusing on investment
performance and our investment capabilities. We are determined to be leaders in
sustainability and a primary aim is to demonstrate the value of an active approach
to asset management.

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

We saw increased volatility in the business environment during 2022. At its two-day offsite
meeting in November, the Board received an update on the challenging macroeconomic
environment, the impact on our business and how we can navigate for the best interests
of our stakeholders.

Reviewing the adequacy of the Group’s
cyber security arrangements

The Audit and Risk Committee devoted a large part of its agenda to cyber-related topics
and also received briefings on thematic topics, including cloud transition risks, to keep
them up to date with the latest developments in this area. See page 74 for more
information.

Continuing to review our corporate
purpose, what it means in practice
and its articulation

The Board continued to review our corporate purpose so that we were able to continue to
serve our stakeholders. Our corporate purpose is grounded in generating returns for our
clients by navigating opportunity and risk.

Schroders Annual Report and Accounts 2022

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2022 Board evaluation

The 2022 evaluation of the Board, its principal Committees and individual Directors was undertaken externally by Independent
Board Evaluation (IBE). IBE has undertaken previous evaluations but has no other connection with the Company. We chose to
use IBE again to provide continuity and context for their observations given the significant changes to the Board in recent years.

The evaluation process included one-on-one interviews with each Director, the Company Secretary and a number of other
non-Board members who attend or support the Board and its Committees. The process also included the evaluator attending
meetings of the Board, Audit and Risk Committee, Remuneration Committee and Nominations Committee. An overall Board
evaluation report was produced and this was presented to the Board at the January 2023 meeting. Separate reports were
provided to each Committee Chair and these were discussed by the respective Committees at the next meeting of the
Committee. Summaries of the findings are included in the Committee reports.

Individual reports on the performance of each Director, including the Chair, were produced and the Chair discussed these directly
with the relevant Director. Ian King, as Senior Independent Director, discussed the report on the Chair with the rest of the Board
before giving feedback to the Chair.

The overall conclusion of the Board evaluation was that the Board was now modern and diverse with engaged, thoughtful
and forthright members. There was still some adjustment to make for the different style of the Chair and for some new voices
around the table. The dynamics between Chair and CEO were working well. The Board had no ‘no-go’ areas and all Board
members were encouraged to speak up, and their views were welcome. There was a clear desire to spend more time on strategy
and the challenge was to find the right balance between detail and longer term themes. The evaluation indicated that the Board
was on the right track but was not able at present to devote as much time to long-term issues as members would like. The Board
needed to be clear on its priorities and needed to keep out of the detail. A number of recommendations were made, including:

Revising the Board’s objectives to manage the pressure on Board agendas.

2. Opening up induction sessions where appropriate so that any non-executive can attend to refresh their knowledge,

on an opt-in basis.

3. Revising the Board’s skills matrix, in line with the evolving strategy.

Reviewing the Employee Engagement programme to encompass more points of information and to focus more closely
on feedback from employees to the Board.

Scheduling more private sessions of Board members, including a meeting annually of the independent NEDs
and opportunities for NEDs to meet without management present.

The Chair and the Company Secretary were tasked with taking the recommendations forward.

2023 Board objectives

Using the findings of the external evaluation process as context, the Board agreed a number of objectives under four major
themes; strategy, talent, Board effectiveness and governance.

Strategy
• Develop strategic

scenarios and options
for five years plus.

• Review strategy

implementation and
value creation.

Talent
• Increase Board

exposure to talent.

• Complete succession

reviews.

• Continue to

encourage diversity,
equality and inclusion
across the business.

Board effectiveness
• Explore new ways of

Board and Committee
working; embracing a
hybrid working
environment.

• In a continuing period

of rapid change,
ensure Board
maintains knowledge
and currency.

• Appoint new

non-executive
Directors with focus
on priority skills areas.

Governance
• Maintain current
high standards of
governance and
oversight.

• Maintain/enhance our
Brand and reputation
with all stakeholders.

• Explore options for
Board oversight of
reputation.

Schroders Annual Report and Accounts 2022

Nominations Committee report

Focusing on the future

Committee membership

Dame Elizabeth Corley (Chair)

Sir Damon Buffini

Rhian Davies

Michael Dobson (until 28 April 2022)

Paul Edgecliffe-Johnson (from 1 July 2022)

Claire Fitzalan Howard

Rakhi Goss-Custard

Ian King

Leonie Schroder

Deborah Waterhouse

Matthew Westerman

See page 57 for meeting attendance.

Responsibilities of the
Nominations Committee

The Committee is responsible for keeping under review the
composition of the Board and its Committees and for ensuring
appropriate executive and non-executive Director succession
plans are in place.

The Committee’s terms of reference are available on the
Company’s Investor Relations website at schroders.com/ir.

Biographical details and experience of the Committee are set
on pages 52 to 55.

I succeeded Michael Dobson as Chair of the Nominations
Committee following the Annual General Meeting in April 2022.
The process for my appointment as Michael’s successor was led
by Ian King, our Senior Independent Director, and is fully
explained in the 2021 Annual Report.

We also explained in last year’s Annual Report the process we had
gone through to select Paul Edgecliffe-Johnson as an additional
non-executive Director. Paul joined us on 1 July 2022 and is already
making a valuable contribution to our discussions.

At Committee level, we also announced that Matthew Westerman
would succeed Sir Damon Buffini as Chair of the Remuneration
Committee after the Annual General Meeting. Again, this is covered
in detail in last year’s Annual report. Matthew has led the consultation
on our new Remuneration Policy which will be put to shareholders for
approval at the 2023 Annual General Meeting.

With these changes all in hand, we had no immediate succession
issues we needed to address as we entered 2022. However, succession
planning is something we need to think about constantly to ensure
we are well placed for both foreseen and unforeseen changes to
the Board and its Committees. Our meetings in 2022 and early 2023
have therefore focussed mainly on longer term succession for both
executive and non-executive roles. The Committee sees having
internal options as potential successors at executive Director level as
critical given the importance of the leadership team understanding the
culture of the organisation. The Committee has worked closely with the
Chief Executive to identify the senior talent within the business who
may have the potential to join the Board in the future. This group then
undertook externally facilitated assessments which led to specific
development plans being drawn up for them. Each individual was
assigned a mentor from the Board and the Committee received
updates throughout the year on progress. The development of a
strong pool of internal talent with the potential to lead the business
in the future will continue to be a focus for the Committee.

At non-executive level, Damon Buffini indicated in December that he
would like to step down from the Board at the 2023 Annual General
Meeting following his appointment as Deputy Chair of the BBC.
Although there is no immediate need to replace Damon, we have
already commenced a search for a successor. One reason for this is
that we have given a commitment to always having an absolute
majority of independent directors on the Board. With Damon leaving
we would have no contingency should another independent Director
leave the Board for whatever reason. The Committee also felt that we
needed to address some of the gaps in skills and experience Damon’s
departure would leave. At our meeting in January 2023, the Committee
discussed our requirements in detail and agreed to appoint Russell
Reynolds Associates to lead the search for a new non-executive
Director. Russell Reynolds have undertaken a number of assignments
for us in the past, including my own appointment, but there are no
other business relationships with Schroders or individual directors.

Schroders Annual Report and Accounts 2022

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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 30 to 31 and 110. Our gender diversity statistics for both
the Board and senior management can be found on page 110.

Priorities for 2023
Looking ahead to the rest of 2023, the Committee’s priorities are
focussed on executive succession and continuing to evolve the Board
to ensure it has the right skills to support the delivery of our strategy.

Dame Elizabeth Corley
Chair of the Nominations Committee

1 March 2023

The Committee feels that the knowledge and understanding of the
Company Russell Reynolds has acquired through these assignments
makes them well placed to understand our needs and provide a good
range of potential candidates. The process is now well underway, with
a detailed role specification and candidate profile being agreed by
the Committee. Key skills and experience we identified as being
important in helping the Board be aligned better with our strategy
include experience in wealth and alternatives, international
experience and digital disruption including fintech and crypto
as well as broader listed company experience. We expect to start
interviews shortly and to make an appointment as soon as possible.

We addressed succession for Rhian Davies on the Audit and Risk
Committee. We also felt it was important to broaden further the skills
and experience of the Remuneration Committee and we therefore
appointed Deborah Waterhouse to that Committee in August.

As our business becomes more diverse and complex so the skills and
experience required of Board members also change. To ensure the
Board has the right skills we may need to increase the number of
Directors in the medium term.

Directors standing for election and re-election
Any Director standing for election or re-election must have the
support of the Committee and the Board. On the basis of the
feedback from the Board evaluation process, combined with the
many interactions I have had with individual Directors since
becoming Chair, the Committee agreed that all Directors standing for
election and re-election make a valuable contribution to the Board’s
deliberations and recommends their re-election. Rhian Davies, Ian
King and Rakhi Goss-Custard will all have served for six years or more
by the time of the Annual General Meeting. The Committee reviewed
their re-election carefully and there was unanimous support for their
ongoing membership of the Board.

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 2023 Notice of AGM.

Evaluating the performance of the Committee
I included in my Governance report the details of our externally
facilitated 2022 evaluation process. As part of that process the
external evaluator attended a Committee meeting and also received
feedback on the Committee’s effectiveness through interviews with
each Director. The overall conclusion was that the Committee was
operating effectively but could have a more comprehensive agenda
going forward which covers the full people and governance agenda.
This is being progressed.

Schroders Annual Report and Accounts 2022

Audit and Risk Committee report

Evolving in the
face of challenges

Committee membership

Rhian Davies (Chair)

Paul Edgecliffe-Johnson (from 1 July 2022)

Rakhi Goss-Custard

Deborah Waterhouse

Matthew Westerman

I am pleased to present the Committee’s report for the year ended
31 December 2022. 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 recognises its role in promoting the integrity of the
Group’s financial results and high quality reporting. We are grateful
for the support of management and the assurance and challenge
provided by Group Internal Audit and Ernst & Young (EY) as
external auditor. We welcomed the UK Government’s response to its
consultation on Restoring Trust in Audit and Corporate Governance
during the year, which confirmed the intention to take forward many
of the reforms proposed in the consultation. We note the Financial
Reporting Council’s (FRC’s) Draft Minimum Standards for Audit
Committees and will continue to consider the impact of the
reforms as they develop.

During the year, 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 and recovery plans and resolution pack and
various operational stress scenarios to support the Board’s
conclusions on the viability statement and going concern set
out on page 49.

The Committee continues to play 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 Schroders’
conduct risk framework is well placed against regulatory standards.

In line with the FRC’s and PRA’s operational resilience regulations, our
Operational Resilience Consolidated Self-Assessment was approved
by the Board for the first time in March 2022. The Self-Assessment
identifies our important business services, sets our impact tolerances
to avoid intolerable harm to our clients and identifies areas where we
should enhance our operational resilience. This is discussed further
on page 74.

Ahead of the 2022 half-year results, the Committee considered
changes to the presentation of the Group’s income statement and
revisions to the Group’s AUM recognition policy. Further information
on how the Committee challenged management in this regard
is included on page 71.

In November, the Committee discussed Liability Driven Investment
(LDI) strategies and our response to the volatility experienced in the
bond and gilts markets between late September and mid-October.
Further information on our response can be found on page 74.

A large part of the Committee’s agenda during the year was devoted
to cyber-related topics. Further detail on information and cyber
security can be found on page 74.

Climate-related risks remained at the forefront of our discussions
throughout 2022 and were given particular consideration in
relation to the preparation of the Group’s Annual Report and
Accounts. In February, the Committee considered the Group’s
first standalone report in line with the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD). Thematic risks
including climate change will continue to be a key priority for 2023.

The Committee received briefings on business and thematic topics
during the year including on Cloud transition risks and opportunities,
fund liquidity, adequacy of active risk taking and the valuation of
Private Assets.

I would like to welcome Paul Edgecliffe-Johnson, who joined as a
member of the Board and Audit and Risk Committee in July 2022.
Paul’s background as a Chief Financial Officer and Chartered
Accountant will be of specific benefit to the Committee.

I am grateful to all members of the Committee for their support
in 2022 and I look forward to continuing our work in 2023.

Rhian Davies
Chair of the Audit and Risk Committee

1 March 2023

Schroders Annual Report and Accounts 2022

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 52 to 55. 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 Chair, Group Chief Executive and Chief Financial Officer
attended all meetings at the invitation of the Chair of the
Committee. Other regular attendees who advised the Committee
were the Group Financial Controller, the Chief Risk Officer,

the Group Head of Internal Audit and the General Counsel. Other
members of senior management were also invited to attend as
appropriate. The Chair of the Wealth Management Audit and
Risk Committee (WMARC), who is an independent non-executive
Director of Schroder & Co. Limited, attended one meeting of the
Committee and provided an update to each meeting on matters
related to the Wealth Management business.

Representatives from EY, including Julian Young, lead audit
partner for the 2022 financial year, attended all of the Committee’s
scheduled meetings. During 2022, 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 Head of Internal Audit. These meetings
provided an opportunity for any matters to be raised confidentially.

The Committee’s primary responsibilities are detailed below.

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 reporting

• The Group’s risk and control framework and whistleblowing

• The appropriateness of accounting estimates and judgements

• 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

procedures and the financial crime framework

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

and the recovery plan and resolution process

• 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

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Schroders Annual Report and Accounts 2022

Audit and Risk Committee report
continued

Key areas of focus during the year

The key issues that the Committee considered during 2022 are set out below. In addition, at each quarterly meeting,
the Committee received updates from Internal Audit, Compliance, Risk, Legal and external audit covering ongoing projects
and the key issues that had arisen since the last meeting and reviewed a dashboard of metrics in place for monitoring key risks.

Financial reporting and financial controls
• As part of the Group’s annual reporting cycle, the Committee
considered the 2021 Annual Report and Accounts and 2022
half-year results, including financial estimates and judgements and
governance considerations. Ahead of preparing the 2022 Annual
Report and Accounts, updates were provided on the effectiveness
of our internal controls and on the Group accounting policies.
The going concern and viability statements, Pillar 3 regulatory
disclosures and ESG disclosures were also considered.

• In relation to the 2022 half-year results the Committee considered
and approved changes to the presentation of the Group income
statement and revisions to the Group’s AUM recognition policy.

• The Group Head of Tax updated the Committee on the Group’s

tax strategy, our approach to tax risk, the key tax risks facing the
Group and how the Group’s effective tax rate is expected to evolve
in the coming years.

External audit
• When considering the 2021 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 2022,
including key audit matters and new areas of focus to cover recent
acquisitions. Fees for non-audit services were reviewed and
approved by the Committee.

• Policies for safeguarding the independence of the external auditor

were considered for recommendation to the Board.

Internal Audit
• In 2022, as part of the governance considerations for the 2021
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 re-approved

with minor amendments during 2022.

• The results of an independent External Quality Assessment of
the Group’s Internal Audit function and Compliance Assurance
framework were considered. Further information can be found
on page 75.

• Looking ahead to 2023, the Committee considered and approved
the 2023 Internal Audit and Compliance Testing plan, which is
based on an assessment of the risks the business faces.

Risk and internal controls
• When reviewing the 2021 Annual Report and Pillar 3 disclosures

and 2022 half-year results, the Committee considered the Group’s
key risks and risk management framework. The Chair of the
WMARC provided an update on the activities of the WMARC and its
oversight of the financial reporting, risk management and internal
controls of the entities within the Wealth Management division.

• The Committee considered the ICAAP, ILAAP, Group wind-down

plan, Group recovery plan and Operational Resilience Consolidated
Self-Assessment for recommendation to the Board. The approach
taken under the Group’s resolution process was also considered.
The Committee approved the stress scenarios for use in the
Internal Capital and Risk Assessment (ICARA) required for
Schroder Investment Management Limited under the
Investment Firms Prudential Regime (IFPR).

• An update was received on third-party service provider oversight
which included how the regulatory requirements for operational
resilience are being integrated into our supplier framework and
how our Procurement framework and capability has been
evolving to provide ongoing assurances over supply chain risk.

• The Committee reviewed the Group’s approach to managing
conflicts of interest, including consideration of the evolving
regulatory environment and the continuing development of
the Schroders Group Conflict of Interest Framework.

• The Group Head of Financial Crime Compliance provided the

Committee with a review of financial crime risk, including updates
on the regulatory landscape and effectiveness of the Group
Financial Crime framework. An update on the Group’s workflow
management system for onboarding clients was also provided.

• Thematic issues were considered throughout the year including

business services resilience, whistleblowing, our Global Operations
Strategy and conduct and culture risk oversight. The Committee
also reviewed the implications of the market volatility experienced
towards the end of the year affecting the LDI market. Further
information on LDI can be found on page 74.

• The Committee considered the impact of geopolitical events
including the Russian invasion of Ukraine, which led to the
temporary suspension of our SISF Emerging Europe fund due
to sanctions and market disruption.

• The findings of EY’s assessment of the maturity of our cyber

security capabilities in light of the cyber risks posed to the Group
were presented to the Committee, together with updates from the
Chief Information Security Officer and Chief Technology Officer on
information and cyber security and technology risk. Further detail
on information and cyber security can be found on page 74.

• In February, the Committee reviewed climate-related disclosures
in line with the TCFD framework and recommended the Group’s
2021 TCFD report to the Board for approval. In November, the
Committee received an update on proposed changes and
developments to the Group’s climate reporting for 2022. ESG risks
including climate change were also considered as part of the
Committee’s review of key risks.

Schroders Annual Report and Accounts 2022

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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 167 and 168. 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. Further information on how EY
challenged management is included within the independent auditor’s report on pages 189 to 197. The significant estimates and judgements
considered in respect of the 2022 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.

The Committee received a report from the Finance function, 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.

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 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 2022 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 2022, had a funding surplus. The pension obligation,
which was valued as £570.2 million at the year end, is estimated
based on a number of assumptions, including mortality rates, future
investment returns, interest rates and inflation. The Scheme’s assets
are invested in a portfolio designed to generate returns that closely
align with known cash flow requirements and to hedge the interest
rate and inflation risks.

Finance provided the Committee with a report that included the key
financial assumptions, which had been applied by the independent
qualified actuaries, Aon Solutions UK Limited, to determine the
Scheme surplus. EY’s report to the Committee set out its audit
procedures and conclusions on the pension assets and liabilities.
The Committee considered and challenged the proposed
assumptions and was satisfied that the estimates were appropriate.

Please refer to note 23 for more information on the estimates and judgements made in respect of the Scheme

Acquisition of subsidiaries in 2022

During 2022, the Group acquired a number of subsidiaries, including
Greencoat Capital and the solutions business of River and Mercantile.
Significant judgements were made to estimate the fair value of the
identifiable intangible assets acquired in these business combinations
and the fair value of an option to purchase the remaining interest in
Greencoat Capital in the future. The judgements were mainly in respect
of the estimation of forecast returns from the businesses and the
applicable discount rates. The other acquisitions did not require any
significant estimate or judgement in the context of the Group’s results.

The Committee considered a report from Finance that set out the
principal estimates and judgements in respect of the acquisitions of
Greencoat Capital and the solutions business of River and Mercantile.
The Committee considered the assumptions and the sensitivity of
the fair values to changes in these assumptions. Within their Audit
Results Report, EY also provided the Committee with a summary of
the findings from their audit of the acquisition accounting for both
Greencoat Capital and the solutions business of River and Mercantile.
The Committee discussed the findings with EY who confirmed they
had not identified any significant matters to draw to the Committee’s
attention. Once the Committee was satisfied with the proposals, it
concluded that the estimates and judgements were appropriate.

Please refer to note 27 in respect of estimates and judgements made in respect of acquisitions made in 2022

Presentation of the Group income statement
During 2022, the Committee considered changes to the presentation of the Group’s income statement and revisions to the Group’s AUM
recognition policy. Further information on the changes can be found on page 168. The Committee challenged management on the changes,
including the impact of removing the separate presentation of exceptional items and the new presentation of Wealth Management AUM.
After discussion, the Committee agreed that the changes provided better alignment to the operation of the business and provided more
relevant information to users of the financial statements.

Schroders Annual Report and Accounts 2022

Audit and Risk Committee report
continued

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 71. The Committee is also required to report to shareholders
on the process it followed in its review of significant estimates and
judgements that it considered during the year, as set out on page
168. During 2022, the Committee considered and approved changes
to the presentation of the Group income statement and revisions
to the Group’s AUM recognition policy.

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 pages 40 to 45. In
2022, the reports focused on developments made to strengthen our
financial control environment through our Finance Report Cost
Strategy programme, the centralisation of purchasing and payables
processes to a new operations centre in Horsham, enhancement of
our cost reporting and the development of systems and processes to
respond to regulatory change, including new reporting requirements
under IFPR. The reports also considered new estimates and
judgements in relation to business combinations that completed
during the year, which included the acquisition of Cairn Real Estate,
River and Mercantile’s UK solutions business and a majority stake
in Greencoat Capital.

The Committee considers other controls that might have an impact
on financial reporting. During 2022, the Committee considered EY’s
assessment of the cyber risks posed to the Group. In addition, the
Committee reviews the Group’s tax strategy annually, which is
discussed with the external auditors.

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 2022.

The Committee conducted an in-depth review of the Group’s financial
projections and the application of appropriate stress scenarios taking
into account the impact of risks, including climate change and
prevailing macroeconomic factors, so that it can recommend that
the Board can make the viability statement, as set out on page 49,
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 2022
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 2022 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, recommending the
auditor’s appointment at the AGM and determining the
remuneration of the auditor.

The external audit was last put out to tender in 2016, with EY
replacing PwC as the Group’s auditor for the financial year
commencing 1 January 2018. The next external audit tender will take
place within ten years of EY’s appointment and by 2027 at the latest.
We periodically perform an assessment to maintain the highest
possible audit quality and will conduct a competitive tender process
in advance of this date if it is considered to be in the best interests of
the Company. Julian Young is the current lead audit partner and has
held this position since EY’s appointment in 2018. In line with
requirements, the lead audit partner must be rotated within five
years. James Beszant will therefore take over as lead audit partner
during 2023. 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 2022 financial year the Committee considered the scope
of the audit and concluded that it was sufficient. There were 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 February 2022, ahead of the consideration of the
2021 Annual Report and Accounts, the Committee received initial
feedback on the conduct of the 2021 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 Financial Reporting Council’s (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 2022. EY generally scored highly
in the auditor effectiveness questionnaire and was assessed to have
further improved in the fourth year of its audit. Areas of improvement
were identified and discussed with EY to allow for enhancements to
be made ahead of the 2022 audit.

The Committee reviewed the 2022 external audit plan presented
to the Committee in May 2022. The plan included new areas of focus
to cover the acquisitions of River and Mercantile’s UK solutions
business, Cairn and Greencoat Capital, as well as the simplification of
Schroders’ dual share class structure. The Committee concluded that
the audit plan was comprehensive and well structured, with sufficient
resources in place to be conducted effectively. Updates were received
from the external auditor throughout the year demonstrating that
professional scepticism had been applied through challenge of
judgements, estimates and disclosures. Matters arising from the
audit were communicated to the Committee on an ongoing basis.

The Committee reviewed EY’s transparency report and discussed the
findings from the EY audit quality inspection report published by the
FRC, the 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 deliver and maintain a
high-quality audit. EY continues to assess the structure, experience
and knowledge of the team, with a view to maintaining and
enhancing audit quality. In making this assessment, the Committee
and EY have discussed and considered several Audit Quality
Indicators (‘AQIs’), including the responsibilities and time
commitments of senior team members and the extent to
which specialists are involved in the audit.

Schroders Annual Report and Accounts 2022

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In February 2023, ahead of the consideration of the 2022 Annual
Report and Accounts, the Committee received initial feedback on
the conduct of EY’s 2022 audit, which identified no significant areas
of concern. The detailed assessment of EY’s 2022 audit will be
considered by the Committee at its May 2023 meeting with
any findings implemented for the 2023 audit.

Independence and non-audit services
The Committee has responsibility for monitoring the independence
and objectivity of the external auditor. Since its appointment, EY has
continued to confirm its independence and this remained the case
during 2022 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 3c to the
accounts. The policy on non-audit services restricts the appointment
of EY to the provision of services that are closely related to the audit.
Other services, where they are not prohibited, may also be
considered, but these will not normally be approved by the
Committee. Certain services that are provided to the Group are
closely related to the audit but are not required by regulation. The
Committee considers that these services are most appropriately
performed by the Group’s external auditor as they support the
statutory audit 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 15% of audit fees (2021: 16%).

During 2022, 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 2023 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 2022,
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 Group Head of Internal Audit and EY. This enabled an
evaluation of the effectiveness of the Group’s internal control
framework. As part of the internal controls process each member of
the GMC has attested to the appropriateness and adequacy of risk
management arrangements in place in their area, and has confirmed
that appropriate controls are in place. The Group continually works to
enhance systems to support and improve the control environment.

As discussed on page 40 the Risk and Compliance functions have
been combined under the leadership of the Chief Risk Officer. As a
result, combined Risk and Compliance reports are now presented to
the Committee which enables important matters to be clearly
highlighted resulting in greater focus on key issues. The Legal
function remains under the leadership of the Group General Counsel
and Legal reports are now presented on a standalone basis.

Risk and Compliance
Risk and Compliance reports set out changes in the level or nature of
the risks faced by the Group, cover developments in the approach to
managing these risks, and provide information on operational risk
events.

During the year, the reports addressed changes to our global
regulatory environment including new and developing regulatory
initiatives such as the FCA Consumer Duty, material fines and
sanctions in the market, and the Group’s key interactions with
regulators. The reports outlined the planning and execution of the
compliance assurance programme covering testing, monitoring
and automated surveillance.

Additional specific reports allowed the Committee to consider a
range of factors when determining the key emerging and thematic
risks and uncertainties faced by the Group. These included
assessments of risk tolerance and stress testing of the Group’s
capital position, as well as the production of the Group’s ICAAP,
ILAAP, the wind-down plan and the Group’s recovery plan and
resolution process.

The Committee reviewed the Group’s arrangements in relation to
conflicts of interest, financial crime, business services resilience,
information and technology risk, outsourced providers and conduct
and culture risk. The Committee also considered ESG risk including
climate change and the impact of geopolitical events including the
Russian invasion of Ukraine which led to the temporary suspension
of the SISF Emerging Europe fund due to the impact of sanctions
and market disruption. Throughout the year, the Group continued
to engage frequently and proactively with regulators globally. The
Committee regularly reviewed the status of our relationships and
engagement with our principal regulators and received updates on
material regulatory interactions such as those that took place during
the gilt crisis.

Further information can be found in the Risk Management section
of the Strategic report set out on pages 40 to 45.

Schroders Annual Report and Accounts 2022

Audit and Risk Committee report
continued

Set out below 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.

Information and cyber security

Liability Driven Investment

Information and cyber security has been a key area of focus for
the Committee for a number of years as a result of the continually
evolving threat landscape and increasing sophistication of attacks.
As is typical of a Group of our size, we see a continuous stream of
cyber attacks against our business, most typically involving phishing
as a means of establishing initial access. As a result, we have built a
dedicated cyber security department, led by the Chief Information
Security Officer, made up of staff from a diverse set of backgrounds
including financial services, law enforcement, military, government
and various other industries. Using these varied skills, the team has
developed robust defences to protect the Group and its clients
against ongoing attacks, and we continue to strengthen and
develop these defences year-on-year.

During 2022, our cyber security strategy remained focused on
protection against the primary threats facing the financial services
sector such as ransomware. Improvements made continue to be
aligned to input received through external independent reviews such
as the 2021 external review led by PwC, with progress on delivery
against the strategy regularly reported to the Committee. In addition,
EY performed its annual ‘Cyber in the Audit’ assessment to determine
the maturity of our cyber security capabilities in light of the cyber
risks posed to the Group and the robustness of processes and
systems that management has put into place to respond to these
risks. Our Internal Audit function has dedicated technology auditors
that undertake a range of assurance work in this space to provide
assurance to management on the effectiveness of information and
cyber security arrangements and to support the delivery of further
enhancements.

We recognise that cyber security goes beyond our dedicated cyber
teams and is a responsibility of all of our employees. Accordingly, we
have put in place extensive training and testing programmes for our
staff to equip them with the right skills to recognise and respond
appropriately to potential attacks. In addition, we have developed a
strong governance structure for cyber with a focus on transparency
and collaboration. This structure involves a continuous information
flow from our Information Security Risk Oversight and Global
Technology Risk Committees up to the GRC which in turn reports
into the Board Audit and Risk Committee. During 2022, the
Committee devoted a material part of its agenda to cyber-related
topics given the rapidly developing threat landscape including crisis
and recovery plans. In addition, Committee members have received
briefings on thematic topics, including Cloud transition risks, to keep
them up to date with the latest developments in this area and also
ensuring digital security is foremost in our Cloud architecture.

We recognise the value that comes from a strong international
cyber security posture in financial services and are active
participants in government, regulatory and industry bodies
on this topic. We will continue to actively engage in this area
throughout 2023 and beyond.

In November, the Board Audit and Risk Committee discussed Liability
Driven Investment and our response to the volatility experienced in
the gilts and bond markets between late September and mid-
October. During this period, our Solutions business, along with
multiple functions across the firm, engaged in a series of intraday
calls to address the challenges set by the unprecedented events.
Our Distribution and Fiduciary Management teams proactively
communicated with our clients and their consultants to inform
them about the implications of the market disruption. There was
also significant engagement with our regulators in both London
and Luxembourg.

Following the events of this period, we instigated a review spanning
our three lines of defence to determine where our systems and
processes could be strengthened, should similar stresses be
experienced in the future. We have also been engaging
constructively with policy makers on the potential evolution of the
applicable regulatory regimes. Liability Driven Investment will remain
an area of focus for the Committee as the wider implications of the
market events emerge.

Business services and operational resilience

During 2022, there was a focus on the first phase of the FCA and PRA
operational resilience regulations under which our in-scope Group
subsidiaries were required to prepare and approve operational
resilience self-assessments. Under the regulations, Schroders plc
was required to provide overall approval, which was facilitated by
the publication of a consolidated view of the self-assessments. The
Committee reviewed the consolidated self-assessment in February
and recommended it to the Schroders plc Board for approval. The
self-assessments are a written record of our compliance with the
first phase of the regulations and identify our important business
services, set our impact tolerances to avoid intolerable harm to our
clients and identify areas where we should enhance our operational
resilience. In line with the next phase of the regulations, we are now
focusing on continuing to mature and test the resilience of our
important business services against severe but plausible scenarios
and on improving our resilience in the areas identified. This is with
the overall objective of achieving full operational resilience by
March 2025.

The Committee will review progress and the consolidated self-
assessment on an annual basis and will recommend it to the
Schroders plc Board for approval. The applicable subsidiary boards
will similarly review and approve their self-assessments. These
assessments will continue to evolve as we embed the regulatory
requirements into our everyday processes and as we continue
to mature our operational resilience and testing capabilities.

Schroders Annual Report and Accounts 2022

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Legal
Legal reports provide the Committee with information about new
legal risks and notable developments with respect to new law or
regulation. The reports also provide detail on any material ongoing
disputes and emerging risks faced by the Group. During the year,
the Committee was kept up to date on sustainable finance including
the FCA’s proposed Sustainability Disclosure Requirements regime.
Updates on the progress of our data privacy initiatives were
also provided.

Internal Audit
The Committee has authority to appoint or remove the Group Head
of Internal Audit, who reports directly to the Chair of the Committee.
The Chair 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 re-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 skills and continues to be an effective
and valued assurance function within the Group. The Internal Audit
function monitors developments in internal audit practices and
undertakes quality and assurance activities. During 2022, the
function began to develop its data analytics capability to deliver
additional insights and efficiencies. 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.

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.

As required by the International Standards for the Professional Practice
of Internal Auditing, an independent external quality assessment of
the Internal Audit function is conducted every five years, which
provides further assurance. The latest review of the Group’s Internal
Audit function was undertaken during 2022. A similar assessment
was also undertaken for Compliance Assurance. The key conclusions
of those assessments were:

Group Internal Audit external quality assessment
• The Group Internal Audit function “Generally Conforms” to the

Standards, which is the highest assessment.

• Group Internal Audit has the appropriate level of authority and

objectivity to challenge the business.

• Areas of good practice included the quality of the assurance

activity over the Group’s control environment, audit methodology
and the standing of the Group Internal Audit function within
the business.

Compliance Assurance external quality assessment
• Schroders’ Compliance Assurance activity “Generally Aligns”
to expectations of how a Compliance Assurance framework
should operate.

• The documented global framework develops an effective set of

global minimum standards, providing a common methodology to
develop risk-based plans and priorities for Compliance Assurance
teams across global and local entities.

• There is an effective combined control assurance model in

place between the Compliance Assurance function and Group
Internal Audit.

Opportunities to further enhance these two areas, for example
by introducing additional enabling technologies, will be progressed
in 2023.

During 2022, a broad range of audits was conducted across the
business, both in the UK and overseas. Global travel has continued to
open up following the Covid-19 pandemic, allowing increased on-site
audit work to take place, including in Asia Pacific and the Americas.
The 2022 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 2023 Internal Audit plan has been developed in line with the
Group’s key risks. For example, as in previous years, in 2023 a range
of audits will be undertaken by IT auditors to test the adequacy of
aspects of the Group’s information and cyber security framework,
including a focus on cloud security, whilst audits will also be
undertaken across our technology hub sites of Singapore and
Luxembourg for asset management, and Zurich for Wealth
Management. As well as undertaking internal audit projects,
senior Group Internal Audit staff attend relevant oversight and
management committees and regulated entity boards to provide
input and challenge on the topics discussed.

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 40 to 45.

Evaluating the performance of the Committee
The annual evaluation of the Committee’s effectiveness was
undertaken as part of the overall Board evaluation process.

The findings relating to the Committee were discussed with
the Committee Chair, who is considered a very effective and
knowledgeable Chair. The Committee is seen as well-organised and
well-functioning with thorough underlying processes and diligent
support. The work undertaken provides assurance to Directors who
are not on the Committee that the risks relevant to the business are
overseen appropriately.

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.

Priorities for 2023
As well as considering the standing items of business, the Committee
will also focus on the following areas during 2023:

• Information and cyber security

• Thematic risks including climate

• Financial crime

• Business services and operational resilience

• Audit and regulatory changes

By order of the Board.

Rhian Davies
Chair of the Audit and Risk Committee

1 March 2023

Schroders Annual Report and Accounts 2022

Remuneration report

Delivering our
remuneration policy in a
fair and transparent way

Structure of the Remuneration report

Annual report on remuneration in 2022

Remuneration governance

Directors’ remuneration policy

Notes to the annual report on remuneration

Committee membership

Matthew Westerman (Chair)

Sir Damon Buffini

Rhian Davies

Ian King

Deborah Waterhouse (from 1 August 2022)

The pressures facing our
business and people were at
the forefront of the Committee’s
discussions in 2022

See page 57 for meeting attendance and page 90 for a
summary of the responsibilities of the Committee.

People

I am pleased to present our 2022 Remuneration report. This report
provides insight into the decisions the Committee has taken in
determining the pay policy and outcomes for our Directors and wider
workforce.

The market disturbances and economic challenges in 2022 impacted
global financial markets and challenged our business. Crucially, they
also affected many of our people, with the cost of living increasing
significantly across many of the countries in which our employees live.
These pressures facing our business and the impact on our people
were at the forefront of the Committee’s discussions in 2022,
particularly in relation to the annual compensation review, described in
the first section of this report (“2022 outcomes”). Significant 2023 salary
increases have been targeted towards our lower paid employees in
locations with higher inflation, while our higher earners, including our
executive Directors, are again seeing salary freezes where their roles
remain unchanged.

Bonus outcomes across the firm are generally below prior year. The
extent of the decrease applying to the executive Directors, as
calculated through application of the scorecard, is particularly
pronounced, with the year-on-year change significantly below the wider
employee and stakeholder experience at around 50% down on prior
year. This reflects the challenging market conditions that materialised
during 2022, after the scorecard was set.

A new Directors’ remuneration policy will be put to a shareholder vote
at the 2023 AGM as our current policy approaches the end of its
three-year life. During 2022, the Committee undertook a detailed
review of the existing policy, including consultation with a number of
key shareholders who agreed to engage with us. As the second part of
this letter explains (“2023 policy review”), we believe the policy
continues to provide an effective framework for rewarding executives
for the long-term, sustainable success of the Group. As such, no
material changes are proposed.

We will, however, effect some adjustments to the way the policy is
implemented beginning in 2023. These updates are designed to
improve alignment with the Group’s strategic priorities and respond to
feedback from shareholders. They are described in the final section of
this report (“2023 implementation”).

Focus on: key decisions taken this year

Performance
alignment

• Executive Director bonus outcomes c.50%

down on prior year, below the general employee
and stakeholder experience.

• Existing policy reviewed in detail, with the

conclusion that it continues to provide an effective
framework to reward long-term sustainable
success.

• 2023 salary budget targeted towards lower
paid employees, with increases of 8—10%+
applying to those in countries experiencing
heightened inflation and a salary freeze for higher
paid employees where roles remained unchanged.
• Refreshed focus on employee wellbeing, using

a data-led approach to facilitate tailored and
targeted interventions to support mental, physical
and financial health.

Planet

• Introduction of a financial ESG metric in the

executive Director bonus scorecard.

• Shift towards AUM-related climate metric in

the LTIP, replacing the previous internally focused
measure.

Schroders Annual Report and Accounts 2022

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2022 outcomes

Although our assets under management fell by 4% to £738 billion
and operating profit reduced by 14% to £723 million, we saw an
increase in the contribution from our strategic priority areas.
Combined, Schroders Capital, Schroders Solutions and Schroders
Wealth Management contributed an increase in net operating

revenue in 2022 of £105.5 million to the Group’s overall net operating
income of £2,476 million. This performance generated value for our
shareholders of 37.4 pence operating earnings per share, down
13% from 2021. The recommended total dividend per share is
21.5 pence. For more information on our strategic and financial
performance, please see the Group Chief Executive’s statement
beginning on page 6.

Key performance and remuneration metrics

Net operating income

Operating earnings per share

Headcount

Annual bonus pool

2022 vs 2021

-2%

2022 vs 2021

-13%

2022 vs 2021

+12%

2022 vs 2021

-15%

2021 vs 2020

+18%

2021 vs 2020

+23%

2021 vs 2020

+3%

2021 vs 2020

+37%

Net operating profit

Dividend per share

Fixed remuneration costs

Total remuneration costs

2022 vs 2021

-14%

2022 vs 2021

2021 vs 2020

+20%

2021 vs 2020

+7%

2021 vs 2020

+16%

+3%

2022 vs 2021

-2%

2021 vs 2020

+20%

Firm-wide remuneration outcomes
Our investment in strategic priority areas is reflected in the increased
headcount in 2022 which in turn drove increased fixed remuneration
costs. This was a consideration in setting the compensation
outcomes for the year as the Committee sought to balance its
responsibility to manage the ratio of total operating costs to net
operating income through the market cycle with a desire to protect
the ongoing interests of the workforce, in particular the lower paid.

The Committee considered the firm’s financial and non-financial
performance alongside an assessment of overall market conditions
and wider stakeholder experience when setting the bonus pool. The
Committee and Board concluded that a bonus pool of £351 million –
representing a 15% reduction on the prior year – struck the right
balance between relevant stakeholders, including shareholders,
clients and employees. When coupled with the increased headcount,
this meant year-on-year reductions were generally in the range of 0%
to 30% down on prior year. This yielded total remuneration costs
below prior year, notwithstanding the +12% increase in headcount.
Individual allocations were determined by reference to our Fair Pay
for Performance philosophy, as disclosed in our 2021 annual report.
In reviewing outcomes, the Committee evaluated analytics on
differentiation, diversity and competitiveness, and were satisfied the
year-end process was rigorous and bonus outcomes took account of
financial and non-financial performance, including conduct.

For 2023, a 5% overall salary budget was highly targeted towards our
lower paid employees, with increases of 8—10%+ applying to those in
countries exposed to higher levels of inflation, while a salary freeze
applied to senior employees unless there has been a significant
increase in responsibilities.

Our highly targeted approach to 2023 salary increases

Focus on: financial wellbeing

Our long-standing wellbeing strategy focuses on supporting
employees to stay healthy and happy across three pillars: body, mind
and financial. With many employees being impacted by increased
costs of living, our financial wellbeing efforts have been particularly
important this year, including:

• Targeting our salary increases towards our lower earners in high

inflation countries, with increases of 8—10%+ applying from March
2023.

• Running targeted financial education sessions, facilitated by

internal and external experts, including events to promote financial
literacy among our employees’ children too.

• Offering preferential access to Schroders’ expert financial advice

and funds as well as wider tailored discounts.

• Offering specialist 1:1 financial support including budgeting,

financial commitment planning and debt consolidation through
our Employee Assistance Programme, available 24/7, 365 days a
year.

Additionally, giving all employees a one-off “Share in Success” award
of 5% of salary in December 2021 gave employees the ability to
realise additional cash if/as needed during the year, on their own
terms. As at the end of 2022, the majority of employees still held
these awards as Schroders shares.

Admin/support

12%

47%

28%

Junior professionals

Intermediate professionals

18%

27%

Senior professionals

Senior executives

>0%<5%

5%<10%

10%<20%

20% or more

Schroders Annual Report and Accounts 2022

41%

24%

33%

11%

78%

100%

Remuneration report
continued

Executive Director remuneration outcomes
Executive Director bonuses are funded from the firmwide bonus pool
and determined by the Committee using a balanced scorecard. At the
beginning of 2022, the Committee set and disclosed metrics
comprising 70% financial factors and 30% non-financial factors, all
chosen to align to the Group’s strategy. At the end of the year, the
Committee evaluated the level of performance achieved against the
target ranges set for each financial metric. For meeting threshold,
25% payout would be triggered, meeting target, 65% payout and
meeting maximum, 100% payout.

When setting targets for 2022, the Committee reflected on the risk of
ongoing market volatility and the strong performance delivered in
2021. As a result, stretching, asymmetrical upside targets were set.
The story of 2022 was unfortunately not one of a market resurgence,
but was marked by ongoing market challenges and external shocks,
including the UK gilt crisis. This impacted our performance and in
turn the payout against our financial scorecard targets.

The bonus scorecard also includes non-financial performance,
assessed by the Committee by reference to pre-determined strategic
goals and objectives and an assessment of each individual’s personal
performance. As detailed on the next page, strategic progress was
very strong in 2022, with clear outperformance against nearly all
targets, including sustainability leadership, acquisition integration,
continued expansion of strategic growth areas including Schroders
Capital and Schroders Wealth Management, and successful delivery
of non-voting share enfranchisement.

The Committee discussed the overall executive Director bonus
outcome in the context of performance delivered and the
unfavourable market conditions that materialised after setting
scorecard targets. For example, Schroders’ management of the UK

gilt crisis, while praised by clients, had a negative impact on flows
which made the difference between meeting and missing the net
new business threshold target. We ultimately determined not to use
positive discretion, but are conscious of the misalignment that has
arisen versus the wider employee population and shareholder
experience, as well as competitiveness versus our global asset
management peers. Our learnings from this year will be reflected in
the 2023 targets, as we seek to ensure they are stretching and
incentivising in the current environment, and support the delivery of
our Board-approved budget, set to support the achievement of the
firm’s long-term, strategic priorities. The total bonus outcomes for
the Group Chief Executive and Chief Financial Officer are 49% and
47% of maximum respectively.

Focus on: target setting

Target ranges are set taking into account the Board-approved
budget, market expectations, prior year outcomes, strategic
priorities and the wider economy. For 2022, the Committee reflected
on the risk of ongoing market volatility as well as the strong
performance delivered in 2021. In this context, the Committee chose
to introduce additional upside stretch against both profit metrics,
and a stretching upside target for net new business. The resulting
asymmetric profit target ranges included +18% stretch on the upside
and 10% below target for threshold.

Assessment of the financial metrics of the executive Directors’ 2022 annual bonus scorecard (audited)

Performance
measure

Weighting

Threshold
25% payout

Target
65% payout

Maximum
100% payout

Achievement
Payout for
this metric

Resulting
bonus
payout

Financial metrics

Profit before tax
and exceptional
items (£m)

Investment
performance

Net new business (£bn)
(excluding joint ventures
and associates)

vs budget

740

vs prior year

752

3-year

5-year

50%

55%

2.3

35%

20%

15%

822

836

60%

65%

18.8

970

986

674

70%

73%

10%

75%

76%

10%

35.3

-1.6

20%

20%
out of 70%

Schroders Annual Report and Accounts 2022

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Non-financial assessment for executive Director annual bonus scorecard (audited)

Criteria

Performance in 2022

Strategic progress (see pages 12-25 for more information)

Continued
expansion of
Schroders Capital

• £17.5bn fundraising in 2022, including around 12% per annum organic and 24% including inorganic. This achievement

means sales levels are now approaching those of long-standing, Private Asset specialist peers.

• Achieved an important step in giving defined contribution pension savers exposure to returns from private equity

through securing a £600 million private equity allocation from Nest, a defined contribution scheme set up by the UK
government, representing a third of the UK workforce.

Continued
expansion of
Schroders Wealth
Management

Continued
expansion in
strategic growth
markets

Integration of
recent acquisitions

• Target net new business growth of >5% per annum exceeded with £4.9 billion advised NNB, equal to 6.6% of AUM.

• Successfully expanded our UK business in various locations across the country, now with presence in six regions

outside London and the South East.

• Latin America contributed positively to NNB, adding £0.3 billion.

• After significant work over 2022, we received approval for the establishment of a wholly foreign-owned public fund

management company in mainland China.

• Completion of all acquisitions announced in 2021 within anticipated timescales, including Schroders Greencoat, the

solutions business of River & Mercantile and Cairn.

• Successful launch of Schroders Solutions in Q2 2022, as part of the addition of River and Mercantile’s solutions

business as part of our core business offering.

• Concluded negotiations to purchase an additional 8.5% share in majority-owned impact investment manager,

BlueOrchard.

Sustainability (see pages 26-33 for more information)

Climate
engagement with
investee companies

• Far exceeded initial target to engage with companies which represent 20% of AUM in scope of our science-based

targets; over 700 companies engaged with representing over 40% of AUM.

• Target to develop climate voting principles met through the launch of Schroders’ Engagement Blueprint in first half of

2022, latterly awarded ESG Engagement Initiative of the Year at Environmental Finance’s Sustainable Investment
Awards.

Corporate
sustainability
strategy

• Target to be on-track to meet financed emissions target of 2.2ºC by 2030 exceeded, with reduction to 2.6ºC in the past

12 months.

• Target to maintain a leadership level in CDP climate assessment (A-) exceeded, with Schroders’ 2022 rating being

upgraded to the coveted top rating (A), achieved by only 2% of the nearly 15,000 companies assessed by CDP. This
establishes Schroders as a clear leader in corporate transparency and performance on climate change.

Our people (see pages 30-31 for more information)

Retention
of key talent

• Target to retain at least 90% of key talent and top performers exceeded, with 94% retention. This achievement was

particularly pleasing in the context of the widely reported “great resignation” at the start of 2022.

• 96% of our people report that they are proud to work for Schroders through our regular pulse surveys. This

comfortably exceeds market benchmarks, in particular within financial services, and is reflective of the continued
emphasis put on maintaining Schroders’ strong culture.

• Schroders was recommended as one of the Best Places to Work in the UK Employee Glassdoor awards.

Inclusion and
diversity

• Female representation in senior management at 31 December 2022 was 35.5%, meeting our stated Women In

Finance Charter target of 35% female representation in senior leadership, one year early.

• We won a number of industry awards for our approach to diversity and inclusion.

• Ethnic minority representation in the UK at the end of 2022 was 16% overall and 14% in senior management, achieving

our Board-approved target one year early.

• Diversity profile for ethnicity completion has continued to increase, but remains below our 80% target. Good progress

has been made on widening our inclusion strategy to include socio-economic data, including being a founding
member of “Progress Together” in the UK.

Schroders Annual Report and Accounts 2022

Remuneration report
continued

Non-financial assessment for executive Director annual bonus scorecard (audited) continued

Criteria

Performance in 2022

Risk and conduct (see pages 40-45 for more information)

Governance and
risk management

• An independent, external evaluation of the Board was undertaken during the year and feedback was received

highlighting the confidence the Board has in the quality of the internal controls and the culture of the organisation.

• The investment in the Group’s Cloud programme neared completion in 2022, earlier than budgeted, to secure

efficiencies from 2023 onwards.

• The capital ratio remains comfortably above regulatory minimums.

Personal performance assessment
for the Group Chief Executive
Peter Harrison delivered a very strong year of leadership for the
Group, with many notable, transformational achievements for
Schroders, including:

• Strong performance and leadership delivered across a

demanding set of acquisitions and in challenging market
conditions. The successful negotiations and integration process
are central to delivering Schroders’ long-term growth ambitions.

• Negotiation and delivery of a new, simplified share class

structure through enfranchisement of the non-voting shares,
bringing our share structure in line with best practice.

Personal performance assessment
for the Chief Financial Officer
Richard Keers’ contribution has been consistently strong, leading
a number of our key strategic initiatives:

• Delivered enhanced changes to our financial reporting

approach, to better allow investors and analysts information for
understanding the Group’s operating activities.

• Bringing greater transparency and comprehension of the firm’s

technology costs, supporting acquisition integration and
operational process alignment, IT resilience and information
security progress.

• Effective oversight of the continued Cloud migration

• Strong leadership under significant pressure through the UK gilt

programme, driving significant efficiencies in the process.

• Significant contribution to important succession planning

workstreams.

Richard Keers’ oversight of operations continues to deliver a
long-term downward trend in errors and omissions.

In addition to strong leadership across the significant breadth of
his role, Richard Keers is an exemplary representative of the Group
by supporting select, strategic client origination and engagement
matters.

Considering the clear outperformance against nearly all pre-
determined non-financial targets and the strong achievement
against personal objectives, the Committee confirmed a non-financial
bonus scorecard payout of 27% for the Chief Financial Officer.

crisis, receiving positive feedback from clients, mitigation of losses
and positioning Schroders very strongly as the market now looks
to reset.

• Successful reshaping of the senior leadership team, including
implementation of a new executive committee structure and
Board engagement approach.

• Leading the onboarding and building of partnership with new

Company Chair, Elizabeth Corley.

• Continued growth in our sustainability leadership position, this
year being ranked fifth in sustainability among asset managers
globally per a Brand ESG Rankings Report by NMG Consulting.

These landmark achievements are underpinned by continued
positive feedback from key stakeholders:

• An independent assessment of shareholder views ranked Peter

Harrison very highly.

• Employees continue to rank Peter Harrison’s leadership very

highly as he continues to be a major culture carrier, safeguarding
Schroders’ values and brand among the employees who placed
him in the Top 50 CEOs on Glassdoor.

• Independent Board feedback reinforces that Peter Harrison is

highly regarded.

Considering the clear outperformance against nearly all pre-
determined non-financial targets and the very strong achievement
against personal objectives, the Committee confirmed a non-financial
bonus scorecard payout of 29% for the Group Chief Executive.

Schroders Annual Report and Accounts 2022

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2019 LTIP vesting
In addition to annual bonuses, executive Directors are also eligible to
receive long-term plan incentive (LTIP) awards, granted annually
based on performance in the prior year and subject to demanding
performance conditions over a four-year period. In March 2023, the
LTIP awards granted in 2019 are expected to vest at 50%, comprising
0% vesting on the portion based on EPS, and 100% based on the
proportion based on net new business. In performing the EPS
calculation, Schroders’ opening EPS was restated to neutralise the
impact of the simplification of Schroders’ share structure undertaken
in 2022 (enfranchisement of non-voting shares, issuing of bonus

shares for voting shareholders and sub-division of shares). This was
required to allow a like-for-like comparison over the performance
period. The relative performance requirement targets remained
unchanged and threshold vesting was not met. The same adjustment
to opening EPS will be required for the 2022 LTIP awards (2020 and
2021 awards were waived by the executive Directors).

The Committee reviewed the 50% vesting outcome and was
comfortable the outcome appropriately reflected the stakeholder
experience over the period. A 12-month holding period will apply to
the LTIP awards once vested.

2019 LTIP performance scorecard and outcome

Measure

Weighting

Threshold

Maximum

Achievement

Outcome

EPS versus composite index

50%

20%

40%

-16.1%

Net new business

50%

£15 billion

£25 billion

£99.4 billion

100%

Executive Director single figure
Combining the 2022 annual bonus and LTIP due to vest in 2023 with
the executive Directors’ fixed pay gives their single total
remuneration figures for the year. The chart below shows how the
outcome for 2022 is below last year, at 52% of policy maximum. The
Committee considered these outcomes in the context of the wider
workforce and stakeholder experience, noting the resulting
year-on-year change in bonus and total compensation are
significantly below the average employee experience.

Single total remuneration figures

Executive Director

Single total remuneration figure (£’000)

The Group Chief Executive’s total remuneration is 30 times the mean
full-time equivalent total remuneration for UK employees of the
Group (2021: 49 times) and 46 times the median (2021: 84 times). The
decrease from prior year reflects that a larger proportion of the
Group Chief Executive’s total remuneration is based on targets set by
reference to financial performance.

Group Chief Executive
Peter Harrison

2022
actual

12%

19%

33%

11%

4,696

2022
maximum

2021
actual

18%

38%

13%

8,990

40%

13%

8,434

Chief Financial Officer
Richard Keers

2022
actual

18%

28%

2,350

2022
maximum

10%

2021
actual

11%

17%

18%

17%

18%

36%

12%

4,494

37%

12%

4,005

Fixed pay

Upfront bonus – cash

Upfront bonus – fund award

Deferred bonus – share award

Deferred bonus – fund award

LTIP vesting

Schroders Annual Report and Accounts 2022

Remuneration report
continued

2023 policy review

The end of the current three-year policy period is approaching and
shareholders will be asked to vote on a new policy at the 2023 AGM. In
order to assess whether any changes to the policy were warranted, the
Remuneration Committee and Board undertook a detailed review of
our remuneration principles and approach. This included
consideration of how the current policy has supported Schroders’
strategic priorities over the past three years, as well as considering
future strategic priorities, shareholder expectations and feedback,
regulatory expectations and employee and market context.

Reflections on the current policy
Our current policy was approved in 2020, receiving nearly 98% of votes
in favour. At the time, our policy introduced total remuneration caps
for the executive Directors as well as performance scorecards for their
annual bonus awards. This policy has remained in place for the full
three years, receiving strong support from shareholders in each year’s
implementation. Since its approval, the policy has operated well in
volatile market conditions:

• 2020 was a challenging year as firms adapted to a new Covid-19

environment. Schroders did not furlough any employees, accept any
government assistance or make any Covid-19 related redundancies.
From a remuneration perspective, no scorecard targets were
adjusted in light of the economic impact of Covid-19. The Committee
also acknowledged the societal impact of the pandemic by adjusting
downwards the non-financial element of the annual bonus
scorecard and also exercising their discretion to further reduce
bonus outcomes by £250,000 and £100,000 for the Group Chief
Executive and Chief Financial Officer, respectively. The executives
also voluntarily waived entitlement to both their 2020 and 2021 LTIP
awards with aggregate face value of £2 million.

• 2021 saw a year of strong performance, with Schroders delivering
both for our clients and for shareholders. This was reflected in
positive scorecard outcomes for our executive Directors and in
employee outcomes for the year, with an increased overall bonus
pool and the launch of our first ever global share offering to
employees. These “Share in Success” awards encouraged firm-wide
share ownership, a partnership ethos and financial inclusion
throughout the Company.

• 2022 was another challenging year, with negative market movement
and reduced risk appetite from some investors, notwithstanding
excellent progress against strategic objectives. The extent of the
decrease in bonus and total compensation for the executive
Directors is more pronounced than for wider employees and
stakeholders, reflecting the challenging market conditions that
materialised after the scorecard targets were set.

More widely, executive Director salaries have not been adjusted over
the policy period and remain unchanged since 2014. Pension and
benefit provision remain aligned to other London-based employees,
which, in practice, result in lower effective pension contributions for
executive Directors given the application of a maximum pension cap
which applies to employees and executive Directors alike. Our
emphasis on longer-term alignment continues with 60% of executive

We believe the current policy
continues to provide an effective
framework to reward executive
Directors for the long-term
sustainable success of the Group

Director bonuses deferred over three or more years, multi-year
investment metrics included within the bonus scorecard assessment
and five-year time horizons for long-term incentives (four-year
performance period plus additional one-year hold). Our extensive
malus and clawback provisions and shareholding requirements also
provide additional longer-term alignment.

Listening to the employee voice
Maintaining a strong alignment between the way in which we create
value for our stakeholders and our remuneration principles, which then
apply to executive Director and wider pay arrangements, is an important
and conscious priority for the Committee. The Committee considered
the new policy for executive Directors in the context of wider workforce
remuneration policies and outcomes. Our focus on workforce
engagement also allows employee views to be heard directly 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 2022, this included holding a live
Q&A session on our workforce diversity and pay gap report; our Group
Chief Executive and Chief Financial Officer answering questions on
remuneration as part of the annual results presentation to employees;
and our Chair (who attends Remuneration Committee meetings) and
Group Chief Executive fielding remuneration-related questions during
smaller-group “Inside Schroders Live” sessions held throughout the
year. Overall the Committee was comfortable that our current approach
of linking remuneration principles to our purpose and considering
executive Director remuneration alongside workforce remuneration
remains appropriate.

Considering market competitiveness
The Committee considered the executive Director pay policy in the
context of key competitors’ practice, most of whom are headquartered
outside the UK (particularly in the US), and many not publicly listed so
not subject to the same disclosure requirements as Schroders.
Benchmarking data sourced independently from McLagan showed our
pay levels for each executive Director remained conservative versus
peers. While not wholly comfortable from a market for talent
perspective, on balance the Committee determined it would not make
any changes at this time and rather keep the matter under review.

15,727

11,651

Market competitiveness:1
Group Chief Executive

£000s
Total compensation

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

4,578

Low quartile

Median quartile

High quartile

Market

Schroders target

Schroders Max

1 Shows Schroders’ policy against 2021 competitor outcomes, noting most peers

do not operate under total compensation maximum thresholds.

Schroders Annual Report and Accounts 2022

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Feedback from our shareholders
Findings of our desktop review of current policy and market context
were shared with key shareholders through a consultation process.
I would like to thank all those who engaged with us; your feedback and
support was highly valuable and allowed us to test and validate our
initial conclusion that the current policy provides an effective
framework through which to reward our executives.

Policy review conclusion: no material changes proposed
Based on the review findings, we believe the current policy provides
an effective framework through which to reward executive Directors
for the long-term sustainable success of the Group. As such, the policy
included in this Directors’ Remuneration report and being put to
binding shareholder vote is largely unchanged from the existing policy.
The following pages illustrate how this policy aligns with our strategic
purpose and maps out its component parts, including significant
deferral and longer-term alignment.

Current policy implementation summary

Dec
2019

Apr
2020

Dec
2020

Dec
2021

Dec
2022

Apr
2023

Current policy
approved at AGM
by c.98% of
shareholders

Next policy
vote to be
put to
shareholders

AUM: £593bn
Operating profit: £710m
Basic operating EPS: 35.6p
Dividend per share: 20.0p
3-year/5-year investment
performance: 70%/72%

AUM: £694bn
Operating profit: £699m
Basic operating EPS: 34.9p
Dividend per share: 20.0p
3-year/5-year investment
performance: 72%/81%

AUM: £767bn
Operating profit: £841m
Basic operating EPS: 43.0p
Dividend per share: 21.4p
3-year/5-year investment
performance: 79%/78%

AUM: £738bn
Operating profit: £723m
Basic operating EPS: 37.4p
Dividend per share: 21.5p
3-year/5-year investment
performance: 73%/76%

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£8m

£7m

£6m

£5m

£4m

£3m

£2m

£1m

£0

10%

-9%

-1%

49%

41%

-10%

-50%

CEO
annual
bonus

CFO
annual
bonus

CEO
annual
bonus

CFO
annual
bonus

CEO
annual
bonus

CFO
annual
bonus

CEO
annual
bonus

CFO
annual
bonus

Average YOY % change
in executive bonus

Average YOY % change
in employee bonus

Key policy changes

• Introduced annual
bonus scorecard

• Introduced total

compensation caps for
executive Directors

Key decisions
• Discretionary bonus

reduction of £250k/£100k
for CEO/CFO to reflect
challenging external
environment

• Executives waived 2020

and 2021 LTIP awards (£2m)

• Executives each donated
25% of their salaries for
three months

Key decisions
• Climate-related metric
introduced to the LTIP
scorecard (20% weighting)

• Schroders Share in Success

Award – first ever
all-employee share award

We believe the
current policy
has served us
well while
also receiving
strong support
from shareholders

*Before tax and exceptional items

Schroders Annual Report and Accounts 2022

60%

45%

30%

15%

-15%

-30%

-45%

-60%

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Remuneration report
continued

How our approach to remuneration supports the way we create value for our stakeholders

How we create value for
our stakeholders

Our remuneration
principles

Our executive Director
remuneration approach

Delivering
returns
for clients

Delivering
returns for
shareholders

Taking
decisions
to support
sustainability

Taking
decisions
to benefit
our people

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.

Aligned with financial performance
Our ratio of total costs to net income through
the market cycle guides the total spend on
remuneration each year. This is recommended
by the Committee to the Board.

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, fund managers,
ESG investment team members, facilities
managers and procurement staff.

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 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.

Three- and five-year client
investment performance included
in the annual bonus scorecard

Circa 35% of bonus paid
in fund awards

Circa 45% of bonus paid in shares

Stretching shareholding
requirements

Requirement to maintain a level
of shareholding for two years on
stepping down

Financial metrics comprise 70%
of annual bonus scorecard

70% of LTIP awards based on
long-term financial performance

Annual bonus scorecard includes
sustainability-aligned metrics in
both the financial and non-financial
scorecard elements

LTIP includes 30% weighting
on an investment-focused
climate-related metric, linked to
our long-term commitment to
protecting our planet

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

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

Circa 60% of variable pay deferred
over a three- to three and a half-year
period

LTIP subject to four-year deferral
and one-year holding period

Schroders Annual Report and Accounts 2022

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How our approach to remuneration supports the way we create value for our stakeholders

Illustration of our executive Directors remuneration policy

How we create value for

Our remuneration

our stakeholders

principles

Our executive Director

remuneration approach

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.

Aligned with financial performance

Our ratio of total costs to net income through

the market cycle guides the total spend on

remuneration each year. This is recommended

by the Committee to the Board.

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, fund managers,

ESG investment team members, facilities

managers and procurement staff.

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 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.

Three- and five-year client

investment performance included

in the annual bonus scorecard

Circa 35% of bonus paid

in fund awards

Circa 45% of bonus paid in shares

Stretching shareholding

requirements

Requirement to maintain a level

of shareholding for two years on

stepping down

Financial metrics comprise 70%

of annual bonus scorecard

70% of LTIP awards based on

long-term financial performance

Annual bonus scorecard includes

sustainability-aligned metrics in

both the financial and non-financial

scorecard elements

LTIP includes 30% weighting

on an investment-focused

climate-related metric, linked to

our long-term commitment to

protecting our planet

Competitiveness considered by

reference to total compensation

for comparable roles at other large

international asset management

firms

Benchmarking forms a point of

reference, not a primary factor in

remuneration decisions

Circa 60% of variable pay deferred

over a three- to three and a half-year

period

LTIP subject to four-year deferral

and one-year holding period

Performance
year

2022

Total annual
maximum
compensation
for the Group
Chief Executive
is £9 million
and £4.5 million
for the Chief
Financial
Officer.

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

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

Fixed
pay

Upfront bonus
– cash
(circa 20%
of bonus)

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

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

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

Paid via
payroll

Granted under the
Deferred Award Plan (DAP)

LTIP

Granted
under
LTIP

Shareholding requirement:
CEO: 500% base salary CFO: 300% base salary

6-month
holding period

1-year
deferral

1.5-year
deferral

2-year
deferral

2.5-year
deferral

3-year
deferral

3.5-year
deferral

4-year
deferral

Cash

Funds

Holding
period

Feb
2023

Sep
2023

Mar
2024

Sep
2024

Mar
2025

Sep
2025

Mar
2026

Sep
2026

Mar
2027

Sep
2027

Mar
2028

Sep
2028

Mar
2029

Sep
2029

Mar
2030

Sep
2030

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.

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

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 tenth 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 fifth anniversary of grant.

Schroders Annual Report and Accounts 2022

Remuneration report
continued

2023 implementation

While the proposed remuneration policy remains largely unchanged, the Committee identified a few areas where the policy implementation is
being updated to further improve alignment to our strategic priorities and respond to shareholder feedback. These changes reflect three key
business drivers/context:

i. Changes to income statement reporting – during our half year results presentation, we announced the reformatting of our

consolidated income statement to present operating profit from our business segments as a more relevant way to understand the
performance of the Group’s operating activities. Our approach to measuring profit performance for the purposes of the bonus scorecard
will also be updated to reference operating profit (rather than profit before tax and exceptional items) to align to our wider reporting.

ii. Sustainability being a heightened and critical priority for our long-term success – our emphasis on being a leader in sustainability
for our clients and investee companies has featured heavily in our strategic reporting over recent years. Given our firm view that delivering
on sustainability is an important driver of long-term performance, we believe it should be clearly reflected within both our short- and
long-term executive compensation elements in a clear, quantitative and asset/investment focused way. In that context we are proposing
to add proportion of Article 8 and 9 funds as a financial ESG measure in the bonus scorecard while evolving our LTIP climate metric
introduced last year to reflect our portfolio-based commitment to achieving net zero. These are described in more detail below.

iii. Responding to shareholder feedback regarding our EPS measurement approach in our LTIP – certain shareholders fed back that
they considered our approach to measuring EPS versus a composite index as opaque. We are therefore proposing a move to measuring
EPS performance against annualised growth targets, providing a clear and transparent measurement approach which is aligned to market
norms. This also ensures a focus on delivering absolute returns to shareholders, even in volatile markets.

Element

Approach

2023 implementation and changes

Salaries

• Reviewed annually. For the executive Directors
salaries are adjusted infrequently. Current
salaries remain low versus peer data.

• Neither executive Director will receive an increase in

2023. This means the most recent increase for the executive
Directors was in 2014.

Annual bonus

• The Committee determines executive Director

• Updated profit metric from “profit before tax and

bonuses based on a scorecard across a range of
metrics.

exceptional items” to “operating profit” to align with the firm’s
refreshed financial disclosure approach.

• Financial performance factors make up 70% of

the scorecard and the remaining 30% is based on
a combination of non-financial factors.

• In setting the metrics and target ranges, the
Committee takes into account the Board-
approved budget, market expectations, prior year
achievement, strategic priorities and the wider
economic landscape.

• The Committee may apply discretion to adjust
annual bonus awards to the extent it 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 are granted under the DAP, which
shareholders approved at the 2020 AGM.

LTIP awards

• Awards are granted annually, based on
performance in the preceding year.

• Awards vest subject to a four-year performance
period, plus an additional one-year holding
period post vesting.

• The Committee may apply discretion to adjust

vesting to the extent it judges appropriate to align
the results to the overall stakeholder experience.

• Awards are granted under the LTIP rules

approved by shareholders in 2020.

• Profit measurement approach has been simplified, from
two profit target ranges (versus budget and prior year) to a
single measure that takes into account budget and prior year.
This ensures target ranges appropriately take into account
strategic changes in the business such as recent acquisitions
and capital allocation approach. Targets for 2023 are
commercially sensitive and will be disclosed in full
retrospectively.

• Introduction of a new, ESG-related financial measure:

proportion of Articles 8 and 9 funds. This reflects the
importance of sustainability to our strategy, providing a
client-focused and externally defined measure with targets
aligned to our long-term sustainability leadership strategy.

• The Committee decided to grant share-based LTIP

awards with same value as in recent years: £600k for the
Group Chief Executive and £400k for the Chief Financial
Officer. This reflects performance in 2022.

• Awards will be granted in March 2023, with performance

conditions updated as follows:
– EPS range measured against absolute growth targets.
– Increased stretch in net new business target range
which will now include flows from joint ventures and
associates in line with our strategic long-term key
performance indicator (see page 8); and

– Shift of climate measure towards portfolio

temperature score with 30% weighting, marking our
transition to an investment-focused metric aligned to our net
zero ambitions and aligned to our central KPI (see page 1).

Schroders Annual Report and Accounts 2022

Build closer relationships with end clients

Grow Asset Management

Expand Private Assets and Alternatives

2023 annual bonus performance scorecard

Performance measure and weighting

Link to strategy

Financial (70% weighting)

Operating profit (30%)

The Group’s primary measure of financial performance as
reported to stakeholders.

Client investment performance over
three years (10%) and five years (10%)

Helping our clients achieve their long-term financial goals is central
to our purpose and represents a core output of our business.

Annual net new business (10%)
(excluding joint ventures and associates)

Net new business is essential to our success and a key driver of
both AUM and revenues.

Proportion of Article 8 and 9 funds (10%)

Client-focused, financial metric reflective of our commitment to
growing our sustainable offering and establishing and maintaining
our position as a sustainability leader.

All fundamental to the Group’s long-term success, the Committee
sets targets to robustly assess each of these measures.

Non-financial (30% weighting)

Strategic progress
Sustainability
People and talent
Risk and governance
Personal goals

2023 LTIP performance scorecard

Performance measure

Weighting

Threshold (25% vesting*)

Maximum (100% vesting*)

Link to strategy

Operating earnings per share (EPS)

35%

4% per annum

10% per annum

Cumulative net new business (NNB)
(including joint ventures and associates)

Portfolio temperature score

35%

30%

* Straight line vesting between points.

£25bn

£50bn

5% decrease in
portfolio temperature
score

10% decrease in
portfolio temperature
score

Leadership CDP rating on climate change for all
four years

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These updates are designed
to improve alignment with
the Group’s strategic priorities
and respond to feedback
from shareholders

Schroders Annual Report and Accounts 2022

Remuneration report
continued

Focus on: ESG target setting in annual bonus
Proportion of Article 8 and 9 funds
As noted above, 10% of the annual bonus will be based on the
proportion of Article 8 and 9 funds. This measure was chosen as an
externally-defined proxy for the extent to which our product range
offered to clients has sustainable characteristics.

The targets set reflect our strategic priority of being a leader in
sustainability, building on our achievements to date. As such,
targets will require significant outperformance compared to current
active asset manager norms, while also recognising the desire to still
offer some products for clients who do not seek any particular
sustainability-related investment goals.

Looking forward, we are aware categorisation of “sustainable” funds
is a fast evolving area. The recently issued FCA consultation,
additional guidance and consultations from ESMA and wider
European regulators, as well as product focused sustainability
regulation across the U.S. and Asia, all point towards a continued shift
in regulatory approach and expectations. We will continue to closely
monitor these developments with a view that the scorecard
measurement approach will need to continue to evolve in future
years to be as robust and wide reaching as possible. To the extent
changes in externally defined methodology impact the measure
during 2023, the Committee would seek to make appropriate
adjustments to update the target range to ensure they are
equivalently stretching as when set. The regulatory requirements
that apply to the sale of our products, for example through
intermediaries, are designed to mitigate against sales practices
that inappropriately favour particular products, such as
“sustainable” funds.

Focus on: ESG target setting in LTIP
Portfolio temperature score
The portfolio temperature score tracks our progress towards our net
zero ambitions. Introduced as a central, strategic KPI this year (see
page 1), this provides the Committee with an opportunity to
transition to an AUM-related climate metric in the LTIP. In setting
targets for the new climate metric, the Committee took
into consideration Schroders’ disclosed net zero ambitions and
interim target to align portfolios to a 2.2ºC pathway by 2030 as
validated by the SBTi. The specifics of the targets set and the
calculation methodology are as follows:

• To achieve target vesting, a reduction of 7.5% in portfolio

temperature score must be achieved by 2026, as measured by a
four-quarter average.

• The target range (threshold to maximum) has been set taking into

account the anticipated trajectory to deliver our net zero
ambitions. Maximum vesting requires a 10% reduction over a
four-year period, which equates to us being broadly one year
ahead of schedule in meeting the 2030 target.

• The use of a four-quarter average reflects the importance of

identifying and measuring an underlying trend in performance,
and not letting market movements (which impact our portfolio
balance on a month-by-month basis) inadvertently impact the
outcome against this measure.

The Committee acknowledges that practice for climate reporting
continues to evolve and is pleased to be able to take this step
towards a portfolio-aligned, externally referenced, quantitative
metric. We also acknowledge performance against the target range
risks being sensitive to any changes in externally defined calculation
methodologies. As such, the Committee will monitor the LTIP
measurement approach to ensure performance conditions remain as
stretching as they were originally intended. In particular, the
Committee will review any change in asset classes in-scope of the
calculation at the beginning and end of the performance period as
well as any material external reporting methodology changes to
assess how they impact outcomes, including the ability to update the
target range if relevant.

Schroders Annual Report and Accounts 2022

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Stakeholder experience and executive Director pay – alignment highlights
Overall, considering the experience of multiple and varied stakeholders has been a consistent theme for the Committee this year. This was
relevant as we evaluated remuneration outcomes for executive Directors and the wider workforce in 2022, as well as in our review of the
Directors’ remuneration policy and its implementation for 2023. The inter-connectivity between our stakeholder groups and the decisions
we made was reflected in the holistic nature of our discussions.

How key stakeholders were reflected in Committee discussions this year

Shareholders
• Compensation outcomes
reflect key financial and
non-financial performance
delivered in the year

• A significant portion of

compensation is paid in shares
and shareholding requirements
apply, creating alignment

Clients
• Compensation outcomes

reflect investment
performance delivered

• Paying a portion of

compensation in fund
awards creates alignment

Regulators
• Compensation outcomes take
into account risk, compliance
and conduct considerations

• Pay structures are aligned
to relevant regulatory best
practice, including deferral
and malus/clawback

Key topics discussed

2022
outcomes

2023
policy review

2023
implementation

Our people
• Salary budgets are targeted
towards lower paid while
salaries are frozen for
executive Directors and
other senior executives

• Executive Director bonus
outcomes are below the
general employee experience

• Consistent remuneration

principles apply to executives
and employees, including
consistent benefit and
pension provision by location

• 78% of our employees are

shareholders of the company

Society and planet
• Compensation outcomes under
both bonus and LTIP take into
account performance against
sustainability objectives

• The Committee tracks diversity
pay gaps and the actions being
taken to close the gaps

The Committee actively considers multiple stakeholder experiences when determining compensation policies,
practices and outcomes, and retains discretion to adjust compensation outcomes if considered appropriate.

Priorities in 2023
In 2023, we look forward to ongoing dialogue with our
stakeholders to ensure the Committee is able to continue to deliver
the firm’s strategy in a manner which considers all interests. While
no fundamental changes to remuneration approach across the firm
are expected, the Committee expects to focus on acquisition
integration and alignment, performance management, diversity
pay gaps and talent retention in a competitive and volatile market.

Shareholder voting at AGM
Shareholders will be asked to vote on two remuneration
resolutions at the AGM this year: an advisory vote on our annual
report on remuneration and a binding vote on our refreshed (but
largely unchanged) Directors’ remuneration policy. We welcome
feedback from our shareholders and look forward to receiving
your support on both resolutions at the forthcoming AGM.

Matthew Westerman
Chair of the Remuneration Committee

1 March 2023

Schroders Annual Report and Accounts 2022

Navigating this report
Annual report on remuneration
This report from the Chair of the Remuneration Committee,
together with the remuneration governance section on pages 90-91
and the notes on pages 99-107, 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.

Directors’ remuneration policy
Presented in full on pages 92-98, this section will be put to a binding
shareholder vote at the AGM.

Remuneration report
Remuneration governance

Remuneration governance

Responsibilities of the Remuneration Committee

• Reviewing the design and operation of share-based remuneration,

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 Chair and the

executive Directors within the policy approved by shareholders

• Determining the level and structure of remuneration for other

senior executives and the Group Company Secretary; reviewing
the remuneration of the Chief Risk Officer and Group Head of
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

other deferred remuneration plans and employee carried
interest-sharing arrangements

• Overseeing any major change in the employee benefits structure

throughout the Group

• Reviewing remuneration disclosures and compliance with relevant

requirements

• Receiving and considering feedback from shareholders and

representative shareholder bodies

The Committee’s terms of reference are available on our website
at www.schroders.com/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 page 52-55.

Key areas of focus during the year

The table below summarises the key areas considered by the Committee at each of its meetings during 2022. 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

• Compensation outcomes for 2021

7 February

• Compensation outcomes for 2021

• Provisional 2018 LTIP vesting
• Performance conditions for 2022 LTIP grants
• Executive Director bonus scorecard for 2022
• Remuneration disclosures

28 February

• Executive Director bonus scorecard for 2022

June

• Shareholder and voting agency feedback on remuneration
• Latest trends and regulatory requirements, including alignment to corporate responsibility commitments
• Investment Firms Prudential Regime remuneration implementation
• 2023 Directors’ remuneration policy review
• Firm-wide remuneration priorities for 2022/2023
• Remuneration implications of proposed share structure changes
• Committee terms of reference review
• Review of advisers to the Committee

September

• 2023 Directors’ remuneration policy review

October

• Compensation review planning for 2022
• Update on 2022 bonus scorecard performance
• 2023 Directors’ remuneration policy review
• Regulatory matters, including Material Risk Takers framework, compensation structure and annual internal audit of

remuneration

• GMC shareholding levels
• Approval of deferred remuneration grants for sustained high performance and potential

December

• Provisional compensation outcomes for 2022, including bonus and salary approach, control function input,

sustainability of earnings, diversity and competitiveness

• Update on 2022 bonus scorecard performance
• 2023 LTIP performance scorecard measures and targets
• Draft 2019 LTIP vesting
• Group Risk Adjustment framework

Schroders Annual Report and Accounts 2022

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Internal advisers
At the invitation of the Committee Chair, the Group Chair, Group Chief
Executive and Chief Financial Officer attended seven meetings. The
executive Directors left the meetings where/when relevant to avoid
any conflicts of interest. The Chief Risk Officer, General Counsel, and
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
Head of Reward, Wellbeing and Inclusion attended meetings to
provide advice and support to the Committee. The Global Head of
Sustainable Investment also attended meetings to provide expert
input on the topic of sustainability measurement. The Committee
also received regular updates from the Conduct Assessment Group,
comprised of the Control Function Heads, to ensure the firm is taking
account of compliance and conduct risk considerations as part of the
firm’s compensation processes. To avoid conflicts of interest, no
Director or employee participates in decisions determining their own
remuneration.

External advisers
The Committee appointed PricewaterhouseCoopers LLP (PwC) and
McLagan (Aon) Limited (McLagan) to provide advice on executive
Director pay during 2022. Advisers were selected on the
recommendation of the Global Head of Human Resources. 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. 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 2022 on executive Director pay totalled £145,000.

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 and fund audit compliance and
support for corporate acquisitions. The Committee monitors adviser
independence, noting advice received is predominantly based on
objective data trends/facts. PwC are asked to leave discussions when
sensitive strategic context is being discussed, noting their advisory
role for a number of our competitors.

The Committee utilised McLagan data on market conditions and
competitive rates of pay, as McLagan provides remuneration
benchmarking data covering a wide cross section of the Group’s
competitors, including firms that are not publicly listed and so are not
required to publish the remuneration of their directors. The total fees
paid for advice to the Committee during 2022 on executive Director
pay totalled £3,265. 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.

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 highlighted in particular the
diligence and effort of the Committee in the policy year.

Compliance with the 2018 UK Corporate Governance Code (the Code)

Code requirements

How the Committee has addressed the requirement

Clarity – remuneration arrangements should
be transparent and promote effective
engagement with shareholders and the
workforce

• Prospective disclosure of bonus and LTIP metrics (pages 86—88)

• Full retrospective disclosure of financial targets and non-financial factors (pages 78—81)

• Review of shareholder feedback and guidance and engagement with shareholders

(pages 83—86)

Simplicity – remuneration structures should
avoid complexity and their rationale and
operation should be easy to understand

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

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

Alignment to culture – incentive schemes
should drive behaviours consistent with
Company purpose, values and strategy

• Executive Directors incentivised via annual bonus with deferral and LTIP (page 85)

• Clear disclosure of rationale and operation of each element (see page 92—93)

• Defined maximum limit for annual total remuneration (page 85)

• Significant deferral, providing alignment to clients and shareholders (page 85)

• Committee discretion to adjust formulaic bonus or LTIP outcomes (pages 78 and 81)

• Extensive malus and clawback provisions (page 94)

• Scenario charts and key Committee discretions outlined (see page 95)

• Regular Committee review of likely bonus scorecard outcomes (page 90)

• Annual bonus and LTIP performance measures reviewed annually against strategic

priorities (pages 78—81)

• Significant deferral, providing alignment to clients and shareholders (page 85)

• Extensive malus and clawback provisions (page 94)

• Remuneration principles aligned to our purpose (page 84)

• Executive Director remuneration considered in the context of employee outcomes (page 76)

• Commitment to fair pay for performance across the workforce (page 81 of the 2021

Directors Remuneration Report)

• Inclusion of non-financial metrics in both executive Director annual bonus and LTIP

scorecards (pages 79—80, 87—88)

Schroders Annual Report and Accounts 2022

Remuneration report
Directors’ remuneration policy

Directors’
remuneration policy

The Committee aims to ensure
remuneration policies and practices
support Schroders’ long-term
strategy while supporting effective
risk management and alignment
with key stakeholders

The new Directors’ remuneration policy proposed by the Committee
and the Board is set out on pages 92 to 98. Shareholders will be
asked to approve the new policy at the 2023 AGM on 27 April. This
policy will take effect for Directors from the date it is approved and
is expected to apply for three years.

In 2022, the Remuneration Committee and Board reviewed our
remuneration principles and approach for executive Directors. In
undertaking this review, it was determined that the current policy
continues to provide an effective framework through which to reward
executives for the long-term, sustainable success of the Group.
In that context, it is proposed to retain the policy as approved at the
2020 AGM with nearly 98% votes in favour, with minor amendments,
predominantly to reflect regulatory requirements and investor
preferences that have emerged since the last policy was approved.

Remuneration policy for the executive Directors
The table below sets out the policy for each component of
remuneration for the executive Directors. The remuneration policy
for non-executive Directors is set out on page 96.

Component, purpose and link to strategy

Operation and maximum opportunity

Fixed pay

Base salary
To help recruit, reward and
retain talent of the calibre and
experience required to develop
and deliver the Group’s strategy.
Takes account of the employee’s
role and responsibilities, skills
and experience, and ongoing
contribution.

Benefits and allowances
Supports employee health and
wellbeing and reflects local
market practice.

We aim to pay executive Directors base salaries that are competitive with other large
international asset management firms, both public and private. There is no policy
maximum for salary within the set total compensation maximum for each executive
Director, however, if salaries for the executive Directors are increased, the percentage
increase will not normally exceed the average annualised increase across the wider
workforce. Larger increases may be awarded when Directors’ salaries have fallen
significantly below international competitors. Base salary is normally paid monthly in
cash via payroll.

Executive Directors receive flexible access to a range of benefits in kind on the same
basis as other London-based employees. Directors are covered by the Group’s
Directors’ and Officers’ Liability Insurance. Executive Directors may also benefit from
private use of a car and driver and/or security support, if deemed necessary. The cost of
providing benefits varies according to a range of factors, such as insurance premium
rates, so no formal maximum exists.

Benefits include the ability to participate in the Share Incentive Plan (SIP) on the same
basis as other eligible employees. The value of any SIP matching shares awarded to the
executive Directors during the year is included within the value reported for benefits
and allowances. SIP participation for the executive Directors is subject to the same
statutory maximum limits as for other eligible employees, currently £1,800 per tax year
in partnership shares (or 10% of income if lower) and a maximum ratio of 2:1 for
matching shares.

Additional benefits may be provided if required, for example to support international
relocation.

Retirement benefits
Enables and encourages
provision for retirement and
reflects local market practice.

Executive Directors may participate in pension arrangements, or receive cash in lieu, on
the same basis as other London-based employees, being 16% of pensionable salary plus
a contribution to match employee contributions up to a further 2%. There is flexibility
and choice over the balance between employer pension contributions and cash in lieu.

Maximum
total
remuneration

To provide shareholders with
clarity on the maximum total
remuneration that each
executive Director might be
awarded each year.

The Committee has defined a maximum limit for the total remuneration of each
executive Director each year, based on the aggregate value of: fixed remuneration paid
in the year; annual bonus awarded in respect of the year; and the grant-date market
value of shares under the LTIP award granted following the financial year end. This will
not exceed £9 million for the Group Chief Executive and £4.5 million for the Chief
Financial Officer.

Shareholding
requirements

To align the interests of
executive Directors with those
of shareholders.

The personal shareholding policy for the Group Chief Executive requires the retention of
shares or rights to shares equivalent to at least 500% of base salary. For the other
executive Directors, the requirement is at least 300% of base salary.

On stepping down, executive Directors are required to maintain for a period of two
years a holding of shares or interests in shares equal in number to that which applied
under the personal shareholding policy while they were an executive Director, or the
number actually held on stepping down if lower. Executives would normally be required
to sign a commitment to adhere to this requirement as part of stepping down.

Schroders Annual Report and Accounts 2022

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Component, purpose and link to strategy

Operation and maximum opportunity

Variable pay

Annual bonus award
To incentivise and reward the
achievement of financial,
non-financial and personal
objectives for the year, which
are consistent with the Group’s
multi-year strategy.

Bonus deferral enhances
alignment of interests with
those of shareholders and
clients, and provides an
incentive to stay at Schroders.

In setting executive Directors’ bonuses, the Committee operates an annual bonus
scorecard. Financial performance factors will make up at least 70% of the scorecard each
year. The remainder, no more than 30% of the scorecard, will be based on a combination
of non-financial factors. For threshold performance, 25% of the maximum opportunity is
payable.

Annual bonus awards for the executive Directors operate such that:

• the proportion of bonus that is deferred is initially fixed at 60%

• the amount of the bonus that is deferred is reduced to reflect any LTIP award, such that,

at a minimum, 60% of overall variable pay is deferred

• the deferred portion of the annual bonus is granted 75% as share awards and 25% as

fund awards

• the remainder of the bonus is paid in cash and/or upfront fund awards

• deferred bonus awards are normally made under the Deferred Award Plan (DAP), which

was reapproved by shareholders at the 2020 AGM

Share awards accrue additional shares equivalent to dividends paid on a compound basis
until the share award is exercised. If dividend equivalents cannot be awarded due to
regulations, the number of shares to be awarded may be based on a share price
discounted by reference to an expected dividend yield over the vesting period. Fund
awards are conditional rights to receive a cash sum based on the value of a notional
investment in a range of Schroders funds.

For deferred awards, the deferral period is normally at least three years, with vesting in
three equal instalments from the first anniversary of grant. Malus and clawback terms
apply to the entire annual bonus award (see page 94).

The DAP plan rules allow awards to be used as part of recruitment, in which case the
Committee can set a different vesting period to better align with the awards that the
recruit is forfeiting.

Long Term Incentive Plan
(LTIP)
To incentivise and reward the
achievement of the Group’s
long-term strategic priorities.

LTIP awards are share-based awards typically granted to executive Directors in March
each year. Annual LTIP awards can be up to four times base salary for any individual. If
dividend equivalents cannot be awarded due to regulations, the number of shares to be
awarded may be based on a share price discounted by reference to an expected dividend
yield over the vesting period.

LTIP awards normally have a four-year performance period. The Committee determines
the performance conditions for each award and uses its judgement to set challenging
criteria that are consistent with the Group’s strategy, at least half of which will be financially
based. 25% of the award will vest if threshold performance is achieved, rising to 100%
vesting at maximum performance.

On vesting, awards may be subject to an additional holding period, during which the
underlying shares and notional fund units cannot be sold. The total of the performance
period and the holding period will not be less than five years. Malus and clawback terms
apply (see page 94).

The plan rules allow LTIP awards to be used as part of recruitment, in which case the
Committee can set a different vesting period and performance conditions to better align
with the awards that the recruit is forfeiting.

Notes to the policy table
In approving the application of this policy to the executive Directors, authority is given for the Group to honour any commitments entered into
with current or former Directors prior to the approval and implementation of the policy (such as payment of pension or the grandfathering of
past awards), provided that such commitments complied with any applicable remuneration policy in effect at the time they were entered into.
Any remuneration commitment made prior to an individual becoming a Director and not in anticipation of their appointment to the Board may
be honoured, even where it is not consistent with the Directors’ remuneration policy in place at the time it is fulfilled. For these purposes,
commitments include the satisfaction of past awards of variable remuneration, the terms of which are set at the time the award is granted.

The rules of the DAP and the LTIP were submitted to shareholders for approval at the 2020 AGM. There are various discretions afforded to the
Committee in these incentive plans, such as the treatment of leavers, the discretion to override formulaic LTIP outcomes, discretion to adjust
the structure of awards in the event a participant is internationally mobile to avoid unfavourable legal, regulatory or tax outcomes for
participants or the Group, or in the event of a variation of the Company’s share capital or other corporate event. At the Committee’s discretion,
share-based awards may be settled in cash, but this would only be used in exceptional circumstances, for instance in a jurisdiction where
settlement in shares would create an adverse outcome for the Group or award holder. The terms of awards may be amended in accordance
with the relevant plan rules, for example to take account of legal, tax and regulatory changes. The general application of each plan is subject
to variation in some jurisdictions to reflect local restrictions, regulation and practice. If there is a takeover or delisting of the Company, DAP
awards will normally vest in full. The extent to which LTIP awards vest in these circumstances will be determined by the Committee based on
(i) its estimate of the extent to which the relevant performance conditions would have been satisfied over the original performance period and
(ii) the proportion of the performance period that has elapsed.

Schroders Annual Report and Accounts 2022

Remuneration report
Directors’ remuneration policy continued

Performance conditions and approach to target setting
At the beginning of each performance year, the Committee sets
scorecard metrics and targets for the annual bonus and LTIP
scorecards, taking into account the Board-approved budget, market
expectations, prior-year financial outcomes, strategic priorities and
wider economic landscape. Metrics are chosen to reflect Schroders’
strategy and broader stakeholder experience and will generally include
the key measures of progress and success as set out in the strategic
and annual reports. Non-financial factors may include (but not limited
to) measures relating to strategic progress, sustainability, people and
talent, risk and conduct and each executive Director’s individual
objectives for the year.

The Committee may amend performance conditions if an event
occurs that causes it to consider that it is appropriate to do so,
provided that the amended performance condition is, in the opinion
of the Committee, no more or less difficult to satisfy than it was
originally intended to be. To avoid overly formulaic outcomes for both
the annual bonus and LTIP, the Committee has the discretion to alter
the scorecard outcome (including to nil) to the extent it judges the
outcomes do not align with results achieved. This discretion includes
if any member of the Group has suffered a material failure of risk
management or if the Committee judges that the unadjusted
outcome from the performance conditions does not reflect
underlying performance of the Group, any member of the Group, any
business unit or the participant. Any such adjustment would be
disclosed in the relevant Annual report on remuneration.

Malus and clawback policy
The policy sets out a range of circumstances in which malus and/or
clawback may be applied. For executive Directors this 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

• The Group has received a reduction notice in relation to a buyout

award

• An award has vested/been settled, or is capable of vesting/being
settled, to a greater extent than would otherwise have been the
case, as a result of erroneous or misleading data

• 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

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. 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.

Considerations when setting policy and the
Committee’s decision-making process
In recommending the Directors’ remuneration policy to the Board
and to shareholders, the Committee intends that policies and
practices support Schroders’ long-term strategy and sustainable
growth, while supporting effective risk management so as not to
encourage excessive or inappropriate risk-taking. The Group’s
remuneration policies and practices take account of legislation,
regulation, corporate governance standards, best practice and
guidance issued by regulators, shareholders and shareholder
representative bodies.

Reward policies comply with the relevant provisions of the FCA’s
Remuneration Codes, the Remuneration Part of the PRA Rulebook
and the UK Corporate Governance Code. The Committee continues
to believe the policy addresses Provision 40 of the corporate
governance code in terms of clarity, simplicity, risk, predictability,
proportionality, and alignment to Schroders’ culture as set out on
page 91.

The responsibilities of the Committee are set out in its terms of
reference and summarised on page 90. To avoid conflicts of interest,
no Director or employee participates in decisions determining their
own remuneration. The Committee assesses the performance of its
external advisers annually, to ensure that the advice provided is
independent of any support provided to management (see page 91).
In determining the remuneration of the General Counsel, Global
Head of Human Resources, Chief Risk Officer and Head of Internal
Audit, the Committee intends that remuneration is appropriate based
on the achievement of objectives linked to their functions and that
any conflicts of interest are identified and managed.

Remuneration policy changes
As set out above, the Committee has decided not to make any
substantive changes to the policy, and maintain the policy approved
at the 2020 AGM. Some minor changes have been made to align with
regulatory requirements and best practice, for example:

• Extension of the clawback period for variable pay awards to align

with the latest regulatory requirements and also explicitly reference
failure to meet standards of fitness and propriety.

• Incorporation of the ability for the Committee to adjust the

grant-date share price for LTIP and DAP to reflect loss of dividend
yield over the vesting period in the event that dividend equivalents
cannot be awarded due to regulatory requirements.

• Clarification on the circumstances when a bonus buyout may be

considered.

• Significant increase in the economic/regulatory capital base of the

• Clarification that fixed pay may be subject to mitigation upon

Group or any part of the Group

termination.

• Participation in or responsibility for conduct resulting in material

losses (malus trigger only)

• Breach of any of the policies or codes to which the individual is

subject (malus trigger only)

• Participation in or responsibility for an event resulting in material
adverse reputational damage for the Group (malus trigger only)

• The Group has suffered regulatory sanctions to which the
participant’s conduct contributed (malus trigger only)

• Any other circumstances that may justify it, including local

regulatory obligations

The Committee has made some changes to the implementation of
the policy, reflecting shareholder feedback and to ensure continued
alignment with Schroders’ strategy. The key changes to the
implementation are set out in the Committee Chair’s Remuneration
overview on pages 86-88 .

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Executive Directors’ remuneration policy illustration
The diagram on page 85 illustrates the structure of the executive Directors’ remuneration, including the timing of when they receive each
component of their total remuneration.

The potential value of each component of remuneration for the executive Directors is illustrated below. These scenario charts show, for each
of the executive Directors, the relative split of fixed components of remuneration, annual bonus awards and LTIP awards, in accordance with
the proposed Directors’ remuneration policy.

Executive Directors’ remuneration policy illustration

(£’000)

Group Chief Executive
Peter Harrison

Fixed

100%

Threshold

21%

26%

16%

Mid-point

10%

22%

30%

10%

559

2,669

5,835

Maximum

21%

34%

11%

9,000

50% share
price increase

20%

33%

11%

10%

9,300

Chief Financial Officer
Richard Keers

Fixed

100%

10%

Threshold

24%

32%

Mid-point

14%

26%

19%

427

1,445

2,973

Maximum

50% share
price increase

23%

22%

23%

22%

27%

4,500

25%

13%

4,700

Fixed pay

Upfront bonus – cash

Upfront bonus – fund award

Deferred bonus – share award

Deferred bonus – fund award

LTIP vesting

Fixed pay

Fixed pay consists of base salary, benefits and allowances and retirement benefits. Base salary is the annual salary
effective from 1 March 2023. Benefits and allowances and retirement benefits are the actual amounts received in
respect of 2022, as shown in the single total remuneration figure table on page 100.

£’000

Base salary Benefits and allowances

Retirement benefits

Total fixed pay

Peter Harrison

Richard Keers

500

375

559

427

Threshold

Mid-point

Maximum

Annual bonus
award

The amount payable if all the threshold
targets in the annual bonus scorecard
are met, which is 25% of the maximum
scenario.

The mid-point of the threshold
and maximum scenarios.

The maximum payable if all the
maximum targets for each metric
in the annual bonus scorecard
are met.

In all three scenarios the annual bonus award is partly paid in cash, partly granted as an upfront fund award and
partly subject to deferral into share and fund awards, as outlined in the policy.

LTIP

The face value of the March 2023
award, assuming 25% vesting.

The mid-point of the threshold
and maximum scenarios.

The face value of the March 2023
award, assuming 100% vesting.

The maximum scenario above includes the face value of the March 2023 LTIP award, assuming 100% vesting. If the Schroders share price
increased between the date of grant and date of vesting of the LTIP award, the remuneration value disclosed in the single total remuneration
figure table would be higher. For example, share price growth of 50% on the LTIP award would increase maximum total remuneration
values to £9.3 million and £4.7 million respectively, calculated by uplifting the face value at grant of the LTIP shares to be granted in
March 2023 by 50%.

Schroders Annual Report and Accounts 2022

Remuneration report
Directors’ remuneration policy continued

Current approach to remuneration for the
wider workforce
Schroders applies the same remuneration principles across the
Group and, where appropriate from a market and commercial
perspective, there is consistency in the structures that apply. Base
salaries, benefits and pension are reviewed in the context of local
market practice and requirements. All permanent employees are
eligible for an annual bonus. Bonuses are fully discretionary and
based on performance against a number of financial and non-
financial factors, which may change year-to-year to reflect the
priorities of the Group, business and individual, while taking into
consideration alignment with Schroders’ values. Individuals in receipt
of larger bonuses are subject to a graduated level of deferral up to
50%. Individuals identified as Material Risk Takers under the
remuneration regulations applicable to Schroders are subject to
deferral in line with those requirements. Bonuses for these
individuals are typically delivered in a mixture of cash, shares, and
funds. Additional deferred awards with a five-year vesting period are
used very selectively each year to reward individuals with sustained
high performance and potential. Some employees participate in
carried interest plans and other long-term incentive structures
designed for particular areas of the business. Currently only the
executive Directors participate in the LTIP as outlined in the policy.

The Committee discusses key remuneration topics for the wider
workforce throughout the year, including the annual bonus pool and
resulting pay outcomes, the budget and allocation approach for
salary increases, gender and ethnicity pay gaps, regulatory
compensation matters and ad hoc proposals requiring the
Committee’s review and approval under their terms of reference. The
Committee does not set fixed ratios for Directors’ pay relative to
other employees as it believes this would restrict flexibility in aligning
reward and performance appropriately. To help aid the decision
making of the Committee and Board, feedback from employees is
gathered by management and the Board in a range of ways through
the year, including via the Global Employee Forum, chaired by our
Senior Independent Director, Ian King – who is also a Remuneration
Committee member, regular employee engagement surveys and
town hall meetings.

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.

Remuneration policy for the non-executive Directors
The table below sets out the remuneration policy for non-executive Directors, who only receive fixed pay and benefits.

Component

Policy and operation

y
a
p
d
e
x
i
F

Fees
To reflect the skills,
experience and time
required to undertake the
role.

Fees for the Chair are determined by the Committee, and fees for other non-executive Directors are
determined by the Board, in each case based on market information for comparable asset managers
and other financial services groups and the constituent companies of the FTSE 100 Index. Non-
executive Directors do not participate in decisions concerning their own fees. Fees are usually reviewed
biennially.

Benefits
To enable the non-
executive Directors to
undertake their roles.

Non-executive Directors’ benefits are principally expenses incurred in connection with the Group’s
business and reflect business needs. Non-executive Directors may receive private use of a driver, car
parking, meals, travel costs and tax on reimbursed expenses deemed taxable by HMRC. Non-executive
Directors do not participate in post-employment or retirement benefits, or in any of the Group’s
incentive arrangements.

New non-executive Directors receive fees and benefits in line with the policy for other non-executive Directors. When recruiting new non-
executive Directors, the Board’s policy is that letters of appointment will have a mutual notice period of six months.

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Recruitment of new Directors
The table below summarises the remuneration policy when hiring new executive Directors.

Component

Policy and operation

Overall approach

Maximum total
remuneration

Notice periods

Base salary

Other fixed pay

Annual bonus award

LTIP

Legal fees

Buyout awards

On appointment, the Committee aims to pay executive Directors remuneration that is appropriate in
level and structure to attract, motivate, retain and reward Directors of the quality required to run the
Group successfully, while avoiding paying more than is necessary.

On appointment of any new executive Directors to the Board, the Committee will consider the
appropriate maximum total remuneration value for the role, within the parameters of the current
policy.

The Group’s general policy is that each executive Director will have a rolling contract of employment
with mutual notice periods of six months. The Committee will consider the appropriate notice period
when appointing any new executive Director. If necessary to secure a new hire, a notice period of up to
12 months may be offered. When recruiting new executive Directors, the Committee’s policy is that
contracts will not contain any provision for compensation upon early termination.

Base salary is likely to be set at a similar level as for other executive Directors, provided this is justifiable
by reference to the candidate’s skills and experience, the anticipated role scope, taking into account
external market rates for roles with similar responsibility, remuneration in their previous roles and
wider internal relativities.

Benefits and allowances, retirement benefits and SIP participation will be provided to new executive
Directors on a similar basis as those available to other employees. If the Group hires a new executive
Director internationally then relocation support may be offered in the relevant location, on a similar
basis to that which might be offered for other employees. This may include support such as temporary
accommodation, assistance finding new accommodation, transportation of household goods, school
search for children moving internationally with the Director, tax advice and assistance preparing tax
returns and other allowances/support provided to other employees.

New executive Directors would be eligible to be considered for annual bonus awards in the same way
as existing Directors. Consideration may be given to making an award to compensate for any variable
pay opportunity foregone from a previous employer as a result of joining Schroders if considered
essential to secure the candidate, as detailed in the ‘Buyout awards’ section below. In line with the
requirements of the PRA and FCA remuneration rules, any bonus buyout will be limited to the
individual’s first year of service, subject to the Group’s deferral arrangement and any performance
requirements determined by the Committee.

New executive Directors would be eligible to be considered for LTIP awards in the same way as existing
Directors.

The Group may pay reasonable fees for a new executive Director to obtain independent legal advice in
relation to their appointment, including any tax due thereon.

Where a candidate will forfeit remuneration as a result of leaving their current employer or joining
Schroders, the Group may mitigate that loss by making one-off awards as a term of their appointment.
The Committee will take reasonable steps (within the terms of the Group’s incentive plans) so that any
buyout awards are aligned in amount and terms with the remuneration being forfeited. Malus and
clawback terms will apply to any such awards. Any buyout awards are not included in the maximum
total remuneration section above.

Appointments outside
the UK

If a new executive Director is based outside the UK, the Committee will adapt the terms of the
Directors’ remuneration policy to comply with local requirements and so the executive Director can
participate in arrangements that are in line with the wider workforce in that jurisdiction.

Grandfathering

Any remuneration commitment made prior to an individual becoming a Director and not in anticipation
of their appointment to the Board will be honoured, even where it is not consistent with the Directors’
remuneration policy in place at the time it is fulfilled.

Schroders Annual Report and Accounts 2022

Remuneration report
Directors’ remuneration policy continued

Policy on termination arrangements
The table below sets out the remuneration policy on termination of a Director.

Component

Policy and operation

Overall approach

Fixed pay

Annual bonus award

DAP awards

LTIP awards

Restrictive covenants

Shareholding
requirements

Legal fees

When an executive Director leaves the Group, the Committee will review the circumstances and apply the treatment
that it believes is appropriate. Any payments will be determined in accordance with the Directors’ remuneration
policy, as well as the terms of the Directors’ service contract and the rules of any applicable incentive plans. There are
no contractual provisions for non-executive Directors to receive compensation upon termination.

Base salary, benefits and allowances, and retirement benefits for executive Directors, and fees for non-executive
Directors, will continue to be paid through the notice period. The Committee also has the discretion to make a
payment in lieu of notice to executive Directors, normally based on salary only. Certain benefits (for example medical
or life insurance) may continue until the end of the normal cover period and others may be extended to post-
termination where appropriate, for example repatriation for globally mobile individuals or assistance with tax return
services. The treatment of shares acquired or awarded under the SIP will be in accordance with the plan rules.
Payment may be subject to mitigation.

Departing executive Directors do not have a contractual entitlement to an annual bonus award. If a departing Director
works during the notice period in support of the Group’s strategic priorities as set out in the annual bonus scorecard
and supports an effective transition of responsibilities, or leaves due to death, ill health, injury or disability, the
Committee may recommend to the Board that a discretionary payment be made to reflect the Director’s contribution
during the proportion of the financial year worked. Any such payment will normally be subject to the same deferral
arrangements as an annual bonus award, provided this is permitted and effective under applicable law and
regulations, and except in the case of death, ill health, injury or disability when at the Committee’s discretion payment
may be fully in cash.

The treatment of awards under the DAP will be in accordance with the relevant plan rules. The normal treatment is
that unvested awards are forfeited. In certain circumstances, such as death, ill health or injury, or otherwise at the
Committee’s discretion (which might be used in circumstances such as retirement with the agreement of the
Company or leaving by mutual agreement), those rules permit participants to retain some or all of their unvested
awards following the termination of their employment. Any unvested awards that are retained vest on their normal
vesting date, or vest immediately in the case of death, or ill health, injury or disability at the Committee’s discretion.

The treatment of awards under the LTIP will be in accordance with the relevant plan rules. The normal treatment is
that unvested awards are forfeited. In certain circumstances, such as death, ill health or injury, or otherwise at the
Committee’s discretion (which might be used in circumstances such as retirement with the agreement of the
Company or leaving by mutual agreement), the award normally still vests after the performance period, subject to
the performance conditions and holding period, with the proportion that vests reduced pro rata for the portion of
the performance period that has elapsed. Vesting may be accelerated in the case of death, or ill health, injury or
disability at the Committee’s discretion, with the proportion that vests determined by estimating the extent to which
the performance conditions will be met.

Executive Directors’ service contracts include restrictions prohibiting the solicitation of Schroders’ clients or
employees for a period of 12 months after leaving employment, against which any period spent on notice or garden
leave is offset. If the Committee uses its discretion to permit a departing Director to retain unvested DAP or LTIP
awards, the unvested portions that the leaver is allowed to retain normally remain at risk of forfeiture for a specified
period if they join a competitor or solicit Schroders’ clients or employees before the award vests. The same applies if
a retiring executive Director is allowed to retain portions of their unvested awards and then takes up an executive
role at another publicly listed company within 12 months.

On stepping down, executive Directors are required to maintain for a period of two years a holding of shares or
interests in shares equal in number to that which applied under the personal shareholding policy while they were an
executive Director, or the number actually held on stepping down if lower. Executives would normally be required to
sign a commitment to adhere to this requirement as part of stepping down.

The Group may pay reasonable fees for a departing Director to obtain independent legal advice in relation to their
termination arrangements and nominal consideration for agreement to any contractual terms protecting the
Company’s rights following termination. If the value of either of these exceeds £10,000 it will be disclosed in the
annual report on remuneration.

Retirement gifts

The Board may choose to make a retirement gift to a departing Director. If the value of any such gift exceeds £10,000
it will be disclosed in the annual report on remuneration.

Settlement agreements

Other payments

Change of control

The Committee may agree additional exit payments where such payments are made in good faith to discharge an
existing legal obligation, as damages for breach of such obligation, in settlement or compromise of any claim or
potential claim arising on termination of a Director’s office or employment or to strengthen the Group’s rights
post-termination. This may include the provision of outplacement support. If the value of any such payment exceeds
£10,000 it will be disclosed in the annual report on remuneration.

Other payments to former Directors that do not exceed £10,000 will not be disclosed in the annual report on
remuneration. Payments can also be made where an amendment to the policy authorising the Company to make the
payment has been approved by shareholders.

Outstanding awards will be treated in line with the provisions under which they were granted. If there is a takeover or
delisting of the Company, DAP awards will normally vest in full. The extent to which LTIP awards vest in these
circumstances will be determined by the Committee based on (i) its estimate of the extent to which the relevant
performance conditions would have been satisfied over the original performance period and (ii) the proportion of
the performance period that has elapsed.

Schroders Annual Report and Accounts 2022

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Remuneration report
Notes to the annual report on remuneration

Notes to the annual report on remuneration

The notes set out on pages 99—107 supplement the information set out in the main narrative on pages 76—89, 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 2022 and 2021, split between portions paid in cash and
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 Award1
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

2022

46%

£m

221.1

29.3

54.4

46.5

351.3

n/a

29%

5,999

2021

46%

£m

234.8

38.9

73.7

64.9

412.3

23.6

34%

4,939

£58,554

£13,300

1.1%

1.6%

£83,470

£19,865

1.8%

2.7%

1. 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 in both years.

You can find more information about our current global workforce, along with the publication of our voluntary global gender pay gap, by
visiting our website at www.schroders.com/wdr

Relative spend on pay
The charts below illustrate the relative spend on pay for 2022 compared with 2021. The values are taken from the financial statements and
show how remuneration costs compare with shareholder distributions, taxes arising and earnings retained, to illustrate how net operating
income is utilised.

2022

13%

28%

10%

26%

Fixed remuneration

£703.1m +15%

Variable remuneration – upfront

£250.9m -22%

Variable remuneration – deferred

£106.0m -19%

Other operating expenses

£618.9m +17%

Other income/expenses

£122.0m +121%

2021

12%

10%

13%

25%

Fixed remuneration

£611.6m

Variable remuneration – upfront

£321.1m

Variable remuneration – deferred

£130.3m

13%

Other operating expenses

£530.5m

21%

Other income/expenses

£55.2m

Corporate tax and social security

£188.2m -23%

Retained earnings

£152.8m -48%

Interim dividend paid and final

dividend recommended
£333.4m 0%

Schroders Annual Report and Accounts 2022

£245.2m

Retained earnings

£291.1m

Interim dividend paid and

final dividend recommended
£332.7m

Remuneration report
Notes to the annual report on remuneration 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 2022 and 31 December 2021 is set out in the
table below.

2022 (£’000)

Peter Harrison

Richard Keers

Total

2021 (£’000)

Peter Harrison

Richard Keers

Total

Base
salary1

Benefits and
allowances2

Retirement
benefits3

Total fixed
pay

500

375

875

559

427

986

Base
salary1

Benefits and
allowances2

Retirement
benefits3

Total fixed
pay

500

375

875

553

430

983

Annual
bonus
award4

3,842

1,726

5,568

Annual
bonus
award4

7,612

3,395

11,007

LTIP vested5

Total
variable pay

Total
remuneration

295

197

492

4,137

1,923

6,060

4,696

2,350

7,046

LTIP vested5

Total
variable pay

Total
remuneration

269

180

449

7,881

3,575

11,456

8,434

4,005

12,439

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. The table below shows how the retirement benefits figures above are comprised for each Director.

4. Pages 78—80 sets out the basis on which annual bonus awards for 2022 were determined. The table below breaks down the annual bonus awards for 2022 into cash paid

through the payroll in February 2023 and the upfront fund awards, deferred fund awards and deferred share awards that will be granted in March 2023.

5. Represents the estimated value that is expected to vest on 1 March 2023 from LTIP awards granted on 11 March 2019, using the average closing mid-market share price

over the three months ended 31 December 2022 and the percentage expected to vest. The comparative value for 2021 represents the actual value that vested on 3 March
2022 from LTIP awards granted on 5 March 2018. The LTIP vested values disclosed last year were estimates, as the Annual Report and Accounts was finalised prior to the
vesting date. Page 81 sets out the performance achieved and how vesting will be determined, with further detail on page 101. Page 101 also shows how the value above
has been calculated, including how much of the value is attributable to share price movement during the period from grant to vesting. Page 104 sets out information on
LTIP awards granted to the executive Directors during 2022. Pages 86-88 sets out information on LTIP awards to be granted to the executive Directors in March 2023.

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 2022 and
31 December 2021. For the executive Directors, the sum of employer contributions and cash in lieu each year is reflected in the single total
remuneration figures above. Employer contributions represent contributions paid into DC pension arrangements during the year and exclude
any contributions made by the Directors. There has been no defined benefit (DB) pension accrual since 30 April 2011.

£’000

Peter Harrison

Richard Keers

2022
employer
contributions

2022 cash
in lieu of
pension1

–

2022
retirement
benefits
total

2021
employer
contributions

2021 cash
in lieu of
pension1

2021
retirement
benefits
total

Accrued DB
pension at
31 December
2022

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 2022 annual bonus award for each executive Director was structured along with the face value of
the LTIP award granted during 2023 (see page 86) and the resulting percentage of variable pay deferred across annual bonus and LTIP
combined.

2022 (£’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
deferred

DAP award

LTIP award

LTIP
granted
during 2023

Percentage
of total
variable pay
deferred

888

425

888

425

1,550

657

516

219

2,954

1,301

3,842

1,726

54%

51%

600

400

60%

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.

100

Schroders Annual Report and Accounts 2022

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LTIP award vesting – additional detail (audited)
The LTIP awards granted on 11 March 2019, covering the 2019 to 2022 performance period, are expected to vest on 1 March 2023. The criteria
for determining the extent of vesting and outcome achieved are set out below.

Performance measure

Weighting Performance achieved

Vesting %

EPS1
If the growth in 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%

no vesting

12.5% vests

• between 20—40%

straight-line basis

• 40% or greater

50% vests

NNB2 cumulative over the four-year performance period:

• less than £15 billion

no vesting

• equal to £15 billion

12.5% vests

• between £15–25 billion

straight-line basis

• £25 billion or greater

50% vests

50%

Four-year growth in the composite
index: 15.9% (see below)

Schroders four-year EPS growth:
-0.2%

• Performance below the composite
index: no vesting of this part of the
award

50%

Four-year cumulative NNB:
£99.4 billion

• Performance above maximum

target: full vesting of this part of the
award

50%

Total expected to vest in relation to 2019 to 2022 performance

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

17.5%

15.0%

7.5%

5.0%

50.0%

Growth over
the four-year
performance
period

23.4%

53.8%

15.5%

36.4%

27.6%

-1.3%

15.9%

The estimated value expected to vest on 1 March 2023 from LTIP awards granted on 11 March 2019 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 2022 and the expected vesting
percentage shown in the table above. Awards are over ordinary shares.

Individual

Peter Harrison

Richard Keers

Value of shares expected to vest (£’000)

Grant-date
face value of
LTIP award
£’000

Proportion
expected to
vest in relation
to 2019—2022
performance

Face value
at time of grant

600

400

50%

300

200

Impact of
dividend
equivalents
since grant1

–

Impact of share
price movement
since grant

Total estimated
value vesting

Number of
shares expected
to vest

(5)

(3)

295

197

69,447

46,297

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 2022

101

Remuneration report
Notes to the annual report on remuneration continued

The Group Chief Executive’s total remuneration over the past ten years
The chart below illustrates the Group Chief Executive’s single total remuneration figure over the past ten years and compares it 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
FTSE 100 Index

2
1
0
2
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e
b
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e
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e
D
1
3
n
o
d
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t
s
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0
0
1
£
f
o
e
u
a
V

£300

£250

£200

£150

£100

£50

£0

a
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s

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m
£

(
e
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i
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i
t
a
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n
u
m
e
r

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Michael Dobson

Peter Harrison

Single total remuneration figure (£’000)

8,414 8,155 8,905 2,451 6,311 7,059 6,735 6,453 6,321 8,434 4,696

Annual bonus award (outcome as a % of maximum,
or actual award as a % of ten-year highest bonus)1, 2, 3
LTIP (vesting as a % of maximum)4

81% 87% 100% 25% 70% 82% 78% 72% 69% 97% 49%

100% 50% 50% 50% 50%

n/a

0% 50% 50% 50% 50%

1. From performance year 2020, this represents the Group Chief Executive’s actual annual bonus award as a percentage of the maximum annual bonus award for the year.
For performance years prior to 2020, each annual bonus award is shown as a percentage of the highest bonus award over the past ten years, as no maximum annual
bonus opportunity was in place.

2. The 2016 remuneration for Michael Dobson reflects the actual remuneration that he received for the portion of 2016 that he served as Chief Executive.
3. Peter Harrison was appointed Group Chief Executive on 3 April 2016. The 2016 remuneration value above reflects his full-year single total remuneration figure.
4. The first LTIP award vested on 5 March 2014 based on the four-year performance period ended on 31 December 2013 and so is shown under 2013 in the table. 2017

shows as ‘n/a’ as Peter Harrison did not receive an LTIP award in 2014 and so had no LTIP due to vest based on performance to the end of 2017.

UK pay ratios
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 2022 plus any annual bonus award
in respect of 2022 and any other incentive awards granted during 2022. 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.

The table below compares the Group Chief Executive’s single total remuneration figure for 2022 to the remuneration of the Group’s UK
workforce as at 31 December 2022, along with the comparative figures for the previous year. The CEO pay ratio has decreased this year. This
reflects a difference in the structure of the Group Chief Executive’s overall pay versus typical employees, with a larger proportion variable,
based on business performance each year. For 2022, the percentage decrease in bonus for the Group Chief Executive is below the lower
quartile, median and average percentage change applying to all employees. The Group is focused on pay fairness across the workforce and
the concept of offering greater certainty in remuneration to junior and lower paid employees in the form of proportionally higher fixed pay is
consistent with the pay and reward policies for the Group’s UK and global employees as a whole.

2022

2021

2020

2019

Method

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

74:1

134:1

110:1

117:1

46:1

84:1

70:1

72:1

28:1

49:1

42:1

63,067

63,093

57,205

55,400

49,702

47,000

45,000

50,000

101,409

100,761

89,541

89,743

75,000

69,433

58,000

68,000

167,622

173,941

150,310

154,667

110,000

100,000

122,500

85,000

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Comparing Director and wider workforce pay
The Committee considers executive Director pay structures and outcomes in the context of wider workforce pay. The table below compares
percentage change in base salary/fees, benefits and annual bonus awards for the Directors with the average change across employees of the
Group as a whole for the past three performance years. The outcome for employees of Schroders plc is also included to satisfy the statutory
requirement but is shown as not applicable given the legal entity does not itself have any employees. The values shown for the executive
Directors are based on those shown in the single total remuneration figure table on page 100 and those for non-executive Directors are
based on the table on page 106. The employee mean and median figures in this table represent the change experienced for individual
employees who were employed by Schroders in both years.

2022

2021

2020

Base
salary/
fee

Benefits

Bonus

Base
salary/
fee

Benefits

Bonus

Base
salary/
fee

Benefits

Bonus

Executive Directors

Peter Harrison

Richard Keers

Non-executive Directors
Dame Elizabeth Corley1
Michael Dobson

Sir Damon Buffini

Rhian Davies

Paul Edgecliffe-Johnson

Claire Fitzalan Howard

Rakhi Goss-Custard
Ian King1
Leonie Schroder
Deborah Waterhouse1
Matthew Westerman1
Employees

Employees of the Group2,3,4
Mean

Median

+38%

-26%

-50%

-49%

n/a

-67%

-13%

n/a

+2%

+8%

+14%

n/a

-11%

n/a

-50%

n/a

+0%

n/a

+0%

n/a

+51%

+0%

+43%

+16%

+49%

+40%

+41%

n/a

-9%

n/a

+0%

n/a

+0%

-100%

+0%

n/a

+0%

n/a

+0%

+20%

+13%

n/a

+0%

+24%

+47%

n/a

-45%

-3%

n/a

-35%

n/a

-4%

+2%

n/a

Employees of Schroders plc

n/a

n/a
Excl. Share
in Success
Award

Incl. Share
in Success
Award

n/a

n/a
Excl. Share
in Success
Award

Incl. Share
in Success
Award

+10%

+5%

+8%

+6%

-10%

-17%

-22%

-28%

+9%

+2%

+5%

+3%

+49%

+34%

+78%

+62%

+4%

+2%

+3%

+7%

+0%

1. The fee increases shown reflect the timing of appointment to the Board and/or appointment to roles on Board Committees, as well as a change to the Senior Independent

Director fee, as set out on page 106.

2. For base salary, employees of the Group are those who were in employment between 31 December 2021 and 31 December 2022 and represents the salary increase over

this period. Salary adjustments agreed as part of the 2022 compensation review will be effective in 2023.

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 2021 and 2022. More commentary on the annual bonus award for each executive
Director can be found on pages 78—81.

Shareholder voting on remuneration
The following votes were cast in respect of the Directors’ remuneration report at our 2022 AGM and the Directors’ remuneration policy at our
2020 AGM.

To approve the Remuneration report at the 2022 AGM

To approve the Director’s remuneration policy at the 2020 AGM

Votes for

Votes against

Votes withheld

190,263,888

6,663,293

13,149

Votes for

Votes against

Votes withheld

192,427,541

4,157,537

3,871,858

2022 AGM

97%

2020 AGM

Votes for

Votes against

Votes for

Votes against

98%

Schroders Annual Report and Accounts 2022

103

Remuneration report
Notes to the annual report on remuneration continued

Executive Director alignment to shareholders (audited)
To align the interests of senior management with those of shareholders, the executive Directors and the other members of the GMC are
required, over time, to acquire and retain a holding of Schroders shares or rights to shares. The required shareholdings are 500% of base
salary for the Group Chief Executive and 300% of base salary for the Chief Financial Officer. Shares that count towards this policy include the
estimated after-tax value of unvested deferred share awards under the DAP or previous incentive plans (shown as “Other unvested share
awards” on page 105) and of vested DAP or LTIP awards (shown as “Vested but unexercised share awards” on page 105) 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%

993%

64%

Actual

696%

57%

Policy Shareholding LTIP shares subject to performance conditions

The above illustration includes LTIP awards expected to vest on 1 March 2023 (see page 101) and DAP deferred share awards to be granted in
respect of performance in 2022 (see page 100).

Directors’ rights under fund and share awards
DAP and LTIP granted during 2022 (audited)
The following awards under the DAP were granted to Directors on 7 March 2022 in respect of deferred bonuses for performance during 2021.
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 2021 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 100. They are also shown in the tables of Directors’ rights under fund and share
awards on page 105.

Individual

Basis of DAP award granted

Peter Harrison

Richard Keers

Deferral of bonus
awarded for
performance in 2021

Face value at grant (£’000)

Upfront
fund
awards

Deferred
share
awards

Deferred
fund
awards

Total DAP
award

Share
price
at grant

1,560

3,369

1,123

6,052

28.78

704

1,490

497

2,691

28.78

Number
of

shares Performance conditions

117,067 Awarded for performance in 2021.
No further performance
conditions apply

51,782

The following awards under the LTIP were granted to Directors on 7 March 2022 as nil-cost options. They are also reflected in the table of
Directors’ rights under share awards on page 105.

Individual

Basis of LTIP award granted

Peter Harrison

Richard Keers

A specified face value of
shares on the date of
grant

Face
value at
grant
(£’000)

Vesting
maximum as
% of face
value

% of
face value
that would
vest at
threshold1

600

400

100

Share
price
at grant

Number
of shares End of performance period

28.78

20,847 31 December 2025

28.78

13,898 31 December 2025

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 2022 are subject to performance conditions which include 20% based on achievement of a long-term
climate metric with targets as follows: threshold (25% vesting) requiring 92% of global electricity from renewable sources and maximum (100%
vesting) requiring 100% of global electricity from renewable sources, while maintaining leadership CDP rating on climate change for all four
years of the performance period. The remaining 80% is split evenly between net new business and EPS, which were subject to the same
targets as applied to the awards expected to vest following the end of 2022, as described on page 81, save that the composite index for the
measurement of EPS performance for the 2022 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%).

104

Schroders Annual Report and Accounts 2022

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Annual bonus and LTIP awards (including bonus awards delivered via the DAP) are subject to the Group malus and clawback policy.

Directors’ rights under fund awards (audited)
Directors had the following fund award rights under the Group’s incentive plans, based on the award values at grant:

Peter Harrison

At 31 December 2021

Richard Keers

Granted

Vested

Exercised

At 31 December 2022

At 31 December 2021

Granted

Vested

Exercised

At 31 December 2022

Unvested fund
awards £’000

Vested fund
awards £’000

Total £’000

2,512

1,123

(1,426)

–

2,209

1,053

497

(594)

–

956

–

1,560

1,426

(2,986)

–

478

704

594

(1,550)

226

2,512

2,683

–

(2,986)

2,209

1,531

1,201

–

(1,550)

1,182

Directors’ rights under share awards (audited)
Directors had the following shares rights under the Group’s incentive plans. These are in the form of nil-cost options shown based on the
number of shares in each case.

Peter Harrison
(Ordinary shares)

Richard Keers
(Ordinary shares)

At 31 December 2021

Granted

Dividend-equivalent accrual
Corporate transaction3
Vested

Lapsed where LTIP conditions were not met

Exercised

At 31 December 2022

At 31 December 2021

Granted

Dividend-equivalent accrual
Corporate transaction3
Vested

Lapsed where LTIP conditions were not met

Exercised

At 31 December 2022

Unvested LTIP
awards1

Other unvested
share awards2

Vested but
unexercised
share awards

41,538

20,847

–

217,064

(8,963)

–

152,263

117,067

8,291

974,447

(78,035)

–

34,541

–

4,456

567,454

86,998

–

Total

228,342

137,914

12,747

1,758,965

–

(8,963)

(640,726)

261,523

1,174,033

52,723

1,448,279

27,692

13,898

–

144,707

(5,976)

(5,975)

–

64,504

51,782

3,620

425,378

(32,780)

–

1,422

196,161

38,756

–

92,196

65,680

5,042

766,246

–

(5,975)

–

174,346

512,504

236,339

923,189

1. These awards will only vest to the extent that the relevant performance conditions are met. Includes LTIP awards granted on 11 March 2019, which were unvested as at

31 December 2022. These awards are expected to partially vest on 1 March 2023 and any balance will lapse.

2. No performance conditions apply for these awards.
3. Share enfranchisement, bonus issue and subdivision of shares that occurred on 20 September 2022. The value of the award remained unchanged.

During 2022, the aggregate gain on nil-cost options for the Directors, which were settled in shares, was as follows:

• Prior to the corporate transaction on 20 September 2022, Peter Harrison received £283,000 from exercising nil-cost options over 9,769

ordinary shares, granted as an element of his 2017 LTIP award. After this time, he received £2,864,000 from exercising nil-cost options over
630,957 shares being an element of his annual bonus awards for performance years 2019, 2020 and 2021.

Schroders Annual Report and Accounts 2022

105

Remuneration report
Notes to the annual report on remuneration continued

Non-executive Directors’ remuneration (audited)
In July 2022, the Board agreed that the annual fees paid to the Senior Independent Director would increase to £25,000 with effect from
1 August 2022. This brings the fee into line with both the median fee paid within FTSE 100 financial services companies and the fee paid to
Chairs of plc board committees. The fees for the other non-executive Directors were not changed. Fees are usually reviewed biennially.

Chair

Board member

Senior Independent Director
Audit and Risk Committee Chair1
Audit and Risk Committee member

Nominations Committee Chair

Nominations Committee member
Remuneration Committee Chair1

Remuneration Committee member

1. In addition to the Committee membership fee.

625,000

80,000

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 2022 and 31 December 2021 is set out in the
table below:

£’000

Dame Elizabeth
Corley

Michael Dobson

Sir Damon Buffini

Rhian Davies

Paul Edgecliffe-
Johnson

Claire Fitzalan
Howard

Rakhi Goss-
Custard

Ian King

Leonie Schroder

Deborah
Waterhouse

Matthew
Westerman

Basic fee

Committee
Chair

Committee
member

Taxable
benefits

SID

Total

Basic fee

Committee
Chair

Committee
member

Taxable
benefits

SID

Total

2022

2021

448

204

–

449

213

108

146

101

123

109

137

625

–

635

125

146

–

102

121

101

120

The fees shown in each Director’s case reflect the portion of 2022 and 2021 that they each served in their respective roles.

• Michael Dobson stepped 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, succeeded Michael Dobson as Chair at the conclusion of the
Company’s 2022 Annual General Meeting.

• Paul Edgecliffe-Johnson was appointed to the Board with effect from 1 July 2022, with fees set at the same level as for other non-executive

Directors.

• Matthew Westerman was appointed Chair of the Remuneration Committee during the year, succeeding Sir Damon Buffini who remained a

member of the Committee.

• Deborah Waterhouse joined the Remuneration Committee from 1 August 2022.

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 Dame Elizabeth Corley, Rhian Davies, Claire Fitzalan Howard, Rakhi Goss-
Custard, Ian King and Deborah Waterhouse comprised travel expenses.

106

Schroders Annual Report and Accounts 2022

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

Dame Elizabeth Corley

Sir Damon Buffini

Rhian Davies

Paul Edgecliffe-Johnson
Claire Fitzalan Howard1
Rakhi Goss-Custard

Ian King
Leonie Schroder1
Deborah Waterhouse

Matthew Westerman

Former Directors
Michael Dobson2

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Number of
shares at
31 December
2022

Ordinary shares
of 20 pence each

60,536

6,405

65,294

25,000

5,000

625,859,426

3,935

13,205

671,881,802

–

11,764

Number of shares at
28 April 2022

Ordinary shares
of £1 each

Non-voting
ordinary shares
of £1 each

4,965

196,165

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.
2. The interests of Michael Dobson refer to the position as at 28 April 2022, the date he stepped down as a Director of the Company.

Between 31 December 2022 and 1 March 2023, the only movements in the Directors’ share interests were the acquisition under the Share
Incentive Plan of 107 ordinary shares by Peter Harrison and 107 ordinary shares by Richard Keers.

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 2022. No payments were made to former Directors during
2022.

Further remuneration disclosures
The remuneration disclosures required under the Capital Requirements Directive are incorporated into the Group’s Pillar 3 disclosures and are
available at https://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/.

By order of the Board

Matthew Westerman
Chair of the Remuneration Committee

1 March 2023

Schroders Annual Report and Accounts 2022

107

Directors’ 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.

Share capital
Since 20 September 2022, the Company’s share capital comprises
1,612,071,525 ordinary shares of 20 pence each, which have a
premium listing on the London Stock Exchange. No shares are held
in treasury.

Between 1 January 2022 and 20 September 2022; 226,022,400
ordinary shares of £1 each (80% of the total issued share capital) and
56,505,600 non-voting ordinary shares of £1 each (20% of the total
issued share capital) were in issue. No shares were held in treasury.
The Company completed the simplification of its dual share class
structure on 20 September 2022 whereby it:

• enfranchised 56,505,600 non-voting ordinary shares of £1 each

by re-designating them into 56,505,600 ordinary shares of £1 each
with full voting rights;

• issued 39,886,305 ordinary shares of £1 each to existing holders
of ordinary shares by way of a bonus issue (representing three
additional ordinary shares for every 17 ordinary shares held by
ordinary shareholders); and

• subsequently sub-divided the Company’s total resulting

322,414,305 ordinary shares of £1 each into 1,612,071,525
ordinary shares of 20 pence each.

Following the simplification of the dual share class structure,
there are no non-voting ordinary shares in issue.

Under the terms of the Schroders Employee Benefit Trust and the
Schroder US Holdings Inc. Grantor Trust, ordinary shares are held
in trust on behalf of employee share plan participants. The trustees
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 28 February
2023, 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
59,743,982 ordinary shares.

Under the terms of the Share Incentive Plan, as at 28 February 2023,
6,121,780 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.

Principal Shareholder Group
The history of Schroders began in 1804 when JH Schroder became
a partner in J.F. Schröder & Co, a London-based firm founded by his
brother JF Schroder. It has evolved since then into the company today
known as Schroders plc. Throughout that time, the Schroder family
have maintained a significant interest in the business, which the
Company believes has been a significant benefit to it. Today, the
interests of some members of the Schroder family (being certain
descendants of the late Helmut Schroder and, in some cases, their
spouse or former spouse) are spread across a number of parties,
who are collectively known as the Principal Shareholder Group.

The Principal Shareholder Group is comprised of a number of private
trustee companies (and investment companies controlled by those
trustee companies), a number of Schroder family individuals, and a
Schroder family charity which, directly or indirectly, are Shareholders
in the Company.

The Principal Shareholder Group currently holds 694,947,871
Ordinary Shares (43.11% of the issued Ordinary Shares) in the
Company. This is comprised as follows:

A. 647,627,870 of the Ordinary Shares (40.17%) are owned directly
or indirectly by four private trustee companies which act as the
trustees of various trusts settled by the Schroder family and
investment companies wholly owned by the private trust
companies. The trustee companies are Vincitas Limited, Veritas
Limited, Alster Limited and Treva Limited. Flavida Limited and
Fervida Limited are protector companies which act as protectors
of certain of those trusts, and therefore also form part of the
Principal Shareholder Group.

B. 28,688,354 of the Ordinary Shares (1.78%) are owned directly or
indirectly by certain trustee and investment companies following
the execution of the estate of Bruno Lionel Schroder (deceased).
The trustee companies are Lionel Trustees I Limited and Lionel
Trustees II Limited. The investment companies are MEB
Investments Limited, CRH Investments Limited and JMF
Investments Limited, which are controlled by those trustee
companies.

C. 16,333,518 of the Ordinary Shares (1.01%) are personally held,

directly or indirectly, by certain Schroder family individuals (who
are direct descendants of the late Helmut Schroder or, in some
cases, a spouse or former spouse of such direct descendants).

D. 2,298,129 of the Ordinary Shares (0.14%) are owned by the

Schroder Charity Trust, a family charity.

Relationship Agreement
As the Principal Shareholder Group is presumed to be acting in
concert, it is required to enter into a binding agreement with the
Company to comply with certain independence provisions as set out
under the Listing Rules. On 14 November 2014, the Company entered
into such an agreement (the Relationship Agreement) with members
of the Principal Shareholder Group holding ordinary shares at that
time. Additional persons who have since become members of the
Principal Shareholder Group holding ordinary shares have adhered
to the Relationship Agreement.

The Company’s Group provides private banking and wealth
management services to certain members of the Principal
Shareholder Group. These arrangements are conducted at
arm’s length and on normal commercial terms.

108

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In accordance with Listing Rule 9.8.4(14), the Board confirms
that for the year ended 31 December 2022:

• 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.

Substantial shareholdings
The table below shows the notifiable holdings of major shareholders
in the voting rights of the Company, as at 31 December 2022, as
disclosed to the Company in accordance with the Disclosure
Guidance and Transparency Rules.

On 6 January 2023, Blackrock Inc., notified the Company that their
holding had increased to 5.00% of voting rights held. There have
been no other changes to these notifications or additional
notifications as at the date of the report.

Shareholder
Vincitas Limited 1
Veritas Limited 1
Flavida Limited 1
Fervida Limited 1
Lindsell Train Limited 2
Harris Associates L.P. 2
HSBC Holdings Limited 2, 3
Sir Michael Kadoorie 2, 4

% of voting
rights held

23.62

15.22

23.72

16.27

9.958

5.02

3.45

3.44

1. Vincitas Limited, Veritas Limited, Flavida Limited and Fervida Limited are party to
the Relationship Agreement. Flavida Limited and Fervida Limited are protector
companies and have made notifications as protectors of certain settlements,
which include the holdings of Vincitas Limited and Veritas Limited

2. Lindsell Train Limited, Harris Associates L.P., HSBC Holdings Limited and
Sir Michael Kadoorie are not parties to the Relationship Agreement.

3. HSBC Holdings Limited is acting as a Corporate Director for the underlying client.
4. Shares are held through Orchid Equity Limited.

Dividends
It is our policy to provide shareholders with a progressive and
sustainable dividend, targeting a payout ratio of around 50%.
The payout ratio is determined as the total dividend per share in
respect of the year, divided by the Group’s basic operating earnings
per share. In line with this policy the Board recommends a final
dividend of 15.0 pence per share (2021: 14.9 pence per share), which
if approved by shareholders at the AGM, will be paid on 4 May 2023
to shareholders on the register of members at close of business on
24 March 2023. It means a total dividend for the year of 21.5 pence
per share (2021: 21.4 pence per share), representing a payout ratio
of 57% (2021: 50%).

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 £2.7 billion
(2021: £2.8 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 increase in the ratio of total costs to
net income. After deducting the regulatory capital requirement and
regulatory capital buffer, there continues to be sufficient capital to
maintain our current dividend level for at least three years before
taking account of any future profits.

The Schroders Employee Benefit Trust and the Schroder US Holdings
Inc. Grantor Trust have waived their rights to dividends paid on both
the ordinary and non-voting ordinary shares in respect of 2022 and
future periods. See notes 6 and 20 to the financial statements.

2023 Annual General Meeting
The 2023 AGM will be held on Thursday, 27 April 2023 at 11.30am.
All resolutions are voted on separately and the final voting results will
be published as soon as practicable after the meeting. Together with
the rest of the Board, the Chairs of the Nominations, Audit and Risk,
and Remuneration Committees will be present to answer questions.

Rule 9 Waiver and authority to purchase own shares
At the General Meeting held on 15 August 2022, the Company was
authorised by shareholders to purchase up to 161,207,153 ordinary
shares. Renewal of this authority will be sought at the 2023 AGM.
Exercise of this authority would be subject to prior PRA consent.

As a consequence of any buyback of shares, it is likely that the
Principal Shareholder Group’s aggregate shareholding in the
Company would passively increase from the current 43.11%. If this
were to happen, under the Takeover Code the Principal Shareholder
Group would be required to make a mandatory cash offer for the
whole Company. Accordingly, a waiver has been obtained from
the Takeover Panel of this obligation if the aggregate shareholding
of the Principal Shareholder Group were to increase as a result
of any buyback of shares. This waiver is conditional on approval
by the Independent Shareholders of the Waiver Resolution at
the 2023 AGM.

In addition, as a result of the dilution of its aggregate shareholding
following the simplification, the Principal Shareholder Group is
permitted prior to 20 September 2023 to acquire, in aggregate,
1% holding of ordinary shares without being required to make a
mandatory cash offer for the whole Company under the Takeover
Code. Members of the Principal Shareholder Group announced on
29 December 2022 that they (through nominees) had entered into
a forward purchase contract with UBS Switzerland AG with the
intention of exercising this “1% Bounceback” right from 30 December
2022 up until 15 August 2023. The earliest that members of the
Principal Shareholder Group will acquire ordinary shares under this
arrangement is 19 March 2023. If this right were to be exercised in
full (without the Company carrying out any purchases under the
Buyback Authority) then the Principal Shareholder Group’s holding
of ordinary shares would increase to 44.11%.

Importantly, the waiver and the use of the 1% Bounceback will not
in themselves permit the Principal Shareholder Group’s holding of
ordinary shares to increase above the 47.93% holding of voting
ordinary shares held prior to the simplification of the Company’s
dual share class structure without triggering a mandatory cash
offer for the whole Company.

Members of the Principal Shareholder Group are supportive
long-term shareholders and intend to retain a substantial
shareholding in the Company over the long term. The Board expects
to seek renewal of the Buyback Authority (and the associated Waiver
Resolution) annually until such time as the Principal Shareholder
Group’s holding of ordinary shares has returned to the level
of 47.93%.

Schroders Annual Report and Accounts 2022

109

Directors’ report
continued

Employment practices
Details of the Company’s employment practices, including diversity
and employee engagement, can be found in the Strategic report
on pages 30 and 31.

Workforce Diversity
We are proud to have published our Workforce Diversity and Gender
Pay Gap Report and we will be releasing our 2022 report in Q1 2023.
This demonstrates our commitment to progress towards a more
diverse workforce. We have an equal split of male and female
representation at Board level, 17% of our Board identify as ethnic
minorities and we comply with the recommendations of the Parker
Review. We also introduced Board-approved ethnicity targets in 2021,
including a 16% target for employees in the UK by the end of 2023
which we have met a year early. 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.

Details of the gender diversity of our Board and senior management
are set out below.

50.0%
6

76.4%
110

72.1%
93

57.4%
3,694

58.2%
3,347

64.5%
664

66.7%
662

65.9%
774

67.3%
755

Gender diversity

Schroders plc Directors

2022

2021

50.0%
6

Subsidiary Directors

2022

2021

23.6%
34

27.9%
36

All employees

2022

2021

42.6%
2,740

41.8%
2,403

Senior management

2022

2021

35.5%
366

33.3%
331

Total senior management

2022

2021

34.1%
400

32.7%
367

Female

Male

110

Corporate sustainability
The Directors have considered climate-related matters including
the risks of climate change when preparing the Company’s accounts.

Decarbonising our operations
We are committed to minimising the environmental impact of
our operations and to delivering continuous improvement in our
environmental performance. We are doing this by decreasing energy
demand, increasing energy efficiency and switching to low carbon
electricity sources. Our office energy efficiency measures include
equipment and lighting upgrades, and adjusting temperature set
points and plant run times.

The below table provides details on our total operational
greenhouse gas emissions (GHG) and energy data, and is in line
with the Streamlined Energy and Reporting (SECR) requirements.
For a more detailed summary of our climate change strategy
and both our operational emissions and emissions associated
with our investments, please refer to our Climate Report at
www.schroders.com/TCFD.

Greenhouse gas emissions (tCO2e)
Total Scope 1 emissions

2022

789

2021

1,980

2019
(base year)

1,110

Total Scope 2 emissions
(location-based)

Total Scope 2 emissions
(market-based)

Total Scope 1 and 2
emissions (location-based)

Of which UK Scope 1 and 2
(location-based)

Total Scope 1 and 2
emissions (market-based)

Of which UK Scope 1 and 2
(market-based)

Total Scope 3 operational
emissions1
Metrics

Scope 1 and 2 emissions
(tCO2e) per employee

Global energy consumption (kWh)

Total energy consumption

Of which UK energy
consumption

3,711

3,908

5,718

717

1,063

3,255

4,500

5,888

6,828

2,767

3,824

4,621

1,506

3,043

4,365

809

1,723

2,408

117,417

96,421

115,048

0.73

1.04

1.27

2022

2019
19,258,182 20,952,475 26,265,797

2021

13,410,123 13,206,057 18,495,195

We report our GHG emissions inventory using the GHG Protocol
Corporate Standard, the GHG protocol Scope 3 calculation guidance,
the GHG Protocol Value Chain (Scope 3) Standard and the Global
GHG Accounting and Reporting Standard for the Financial Services
Industry which was developed by the Partnership for Carbon
Accounting Financials (PCAF).

The financial control boundary approach has been applied to our
GHG inventory, which follows our accounting consolidation approach.
No category of emissions has been excluded from this boundary.

1. We have re-stated our supplier emissions (category 1: Purchased goods and

services, category 2: Capital goods and category 4: Upstream transportation and
distribution) from 2019 to 2021 due to material updates that were made to the
emissions factors published by Defra.

Schroders Annual Report and Accounts 2022

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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
financial year and remain in force.

Directors’ and Officers’ Liability Insurance is maintained by the
Company for all Directors.

Under the Trust Deed and Rules of the Schroders Retirement
Benefit Scheme (the Scheme), the Company provides a qualifying
pension scheme indemnity in line with the Companies Act 2006.
The indemnity covers each director of the trustee company that acts
as trustee of the Scheme. The provisions have been in force during
the financial year.

As part of the integration of Cazenove Capital, the Cazenove
Capital Management Limited Pension Scheme was merged with
the Schroders Retirement Benefits Scheme, with effect from
31 December 2014. Pursuant to that merger, a qualifying pension
scheme indemnity (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 and Recusal Policy
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 Group 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.

The Company entered into an amended Shareholders Agreement
with Greencoat management shareholders on 10 April 2022, with
respect to their respective shareholdings in Greencoat Capital
Holdings Limited. On a change of control of the Company, to a
person who does not form part of the “Principal Shareholder
Group”, the management shareholders have the right to sell their
shares to Schroder International Holdings Limited, a subsidiary of
the Company.

Directors’ and employees’ employment contracts do not normally
provide for compensation for loss of office or employment as a result
of a change of control. However, the provisions of the Company’s
employee share schemes may cause awards granted to employees
under such schemes to vest on a change of control.

Political donations
No political donations or contributions were made or expenditure
incurred by the Company or its subsidiaries during the year (2021: nil)
and there is no intention to make or incur any in the current year.

Schroders Annual Report and Accounts 2022

111

Directors’ report
continued

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

(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.

(12) Details of any arrangements under which
a shareholder has waived or agreed to waive
any dividends.

(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.

Disclosure
provided

See page 82

See pages
109, 128 and
153

See pages
108 and 109

By order of the Board.

Graham Staples
Company Secretary

1 March 2023

112

Schroders Annual Report and Accounts 2022

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• The Directors’ report contained in this Annual Report and Accounts
which comprises the sections described on page 108, 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.

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 in accordance with IAS8

Accounting Policies, Changes in Accounting Estimates and Errors
and then apply them consistently.

• make estimates and judgements that are reasonable and prudent.

• present information, including accounting policies, in a manner

that provides relevant, reliable, comparable and understandable
information.

• provide additional disclosure where compliance with the specific
requirements of UK-adopted international accounting standards
is insufficient to enable users to understand the impact of
a particular transaction, other events or conditions on the
Company or Group’s financial position or financial performance.

• state whether the financial statements comply with UK adopted

international accounting standards, subject to any material
departure disclosed and explained in the financial statements.

• prepare the financial statements on a going concern basis, unless
it is inappropriate to presume that the Company or Group will
continue in business, in which case there should be supporting
assumptions or qualifications as necessary.

The Directors are also required by the Disclosure and Transparency
Rules of the 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.

Schroders Annual Report and Accounts 2022

113

Financial
statements

Financial statements

Consolidated financial statements

Schroders plc financial statements

Independent auditor’s report

117

169

189

114

Schroders Annual Report and Accounts 2022

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Schroders Annual Report and Accounts 2022

115

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

2. Net operating revenue

Total expenses

Tax expense

Earnings per share

6. Dividends

Trade and other receivables

Financial assets and liabilities

Associates and joint ventures

10. Property, plant and equipment

11. Leases

12. Goodwill and intangible assets

13. Deferred tax

14. Unit-linked liabilities and assets backing unit-linked liabilities

15. Trade and other payables

16. Provisions and contingent liabilities

17. Derivative contracts

18. Financial instrument risk management

19. Share capital and share premium

20. Own shares

21. Reconciliation of net cash from operating activities

22. Commitments

23. Retirement benefit obligations

24. Share-based payments

25. Related party transactions

26.

Interests in structured entities

27. Business combinations

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

Schroders plc – Notes to the accounts

28. Significant accounting policies

29. Expenses and other disclosures

30. Trade and other receivables

31. Trade and other payables

32. Deferred tax

33. Financial instrument risk management

34. Own shares

35. Related party transactions

36. Subsidiaries and other related undertakings

Independent auditor’s report

117

118

119

120

121

122

125

126

127

128

129

133

135

136

137

138

139

141

142

143

145

152

153

154

155

156

160

163

164

166

167

169

170

171

172

173

174

175

189

116

Schroders Annual Report and Accounts 2022

Consolidated financial statements
Consolidated income statement
for the year ended 31 December 2022

Revenue

Cost of sales
Net operating revenue

Of which: Performance fees
Of which: Net carried interest income

Net operating revenue excluding performance-based revenues

Share of profit of associates and joint ventures

Other operating income

Net operating income

Operating expenses

Operating profit

Central costs

Net (loss)/gain on financial instruments and other income

Interest income/(expense)

Acquisition costs and related items

Profit before tax

Tax
Profit after tax2

Earnings per share3

Basic

Diluted

Operating earnings per share

Basic

Diluted

Consolidated statement of comprehensive income
for the year ended 31 December 2022

Profit after tax2

Items that may or have been reclassified to the income statement:

Net exchange differences on translation of foreign operations after hedging

Net loss 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 (loss)/gain on defined benefit pension schemes

Tax on items taken directly to other comprehensive income

Other comprehensive income for the year, net of tax2

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2022
£m

2,891.7

(530.3)
2,361.4

43.0
16.5

20211
£m

2,959.5

(556.4)
2,403.1

94.4
31.9

2,301.9

2,276.8

77.6

36.5

88.2

28.7

2,475.5

2,520.0

(1,752.5)

723.0

(1,679.0)

841.0

(48.8)

(6.7)

5.8

(86.4)

586.9

(100.7)

486.2

30.4p

29.9p

37.4p

36.7p

2022
£m

486.2

148.6

(1.5)

–

(0.2)

146.9

(66.0)

16.5

(49.5)

97.4

(53.6)

43.9

(2.0)

(65.2)

764.1

(140.3)

623.8

38.7p

38.1p

43.0p

42.2p

2021
£m

623.8

(19.0)

(2.8)

0.1

1.1

(20.6)

27.6

(6.7)

20.9

0.3

Notes

4(a)

Notes

4(b)

Total comprehensive income for the year2

583.6

624.1

1. The 2021 comparatives have been re-presented (see note (g) presentational changes on page 168).
2. Non-controlling interest is presented in the statement of changes in equity.
3. Earnings per share has been restated following the simplification of the Company’s dual share class structure (see note 19).

Schroders Annual Report and Accounts 2022

117

Consolidated financial statements
Consolidated statement of financial position
at 31 December 2022

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

Current tax

Lease liabilities

Provisions

Deferred tax

Retirement benefit scheme deficits

Notes

10, 11

2022
£m

2021
£m

4,440.3

896.5

2,670.3

497.7

524.1

1,929.5

185.8

136.3
11,280.5

605.0

9,449.1
10,054.1

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

21,334.6

24,341.7

1,049.5

5,140.1

73.1

361.0

25.4

138.9

12.8
6,800.8

1,115.0

4,793.6

52.2

373.8

26.8

80.4

11.1
6,452.9

Unit-linked liabilities

10,054.1

13,463.1

Total liabilities

Net assets

Total equity1

16,854.9

19,916.0

4,479.7

4,425.7

4,479.7

4,425.7

1. Non-controlling interest is presented in the statement of changes in equity.

The financial statements were approved by the Board of Directors on 1 March 2023 and signed on its behalf by:

Richard Keers
Director

118

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Consolidated financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2022

Attributable to owners of the parent

Share
premium
£m

Own
shares
£m

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

124.2

(150.2)

144.6

183.4

3,701.4 4,285.9

139.8

4,425.7

Notes

Share
capital
£m

282.5

At 1 January 2022

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 movements2
Bonus issue

Dividends

4(c)

–

39.9

–

(39.9)

–

(120.2)

–

Transactions with
shareholders

39.9

(39.9)

(120.2)

Transfers

–

85.3

–

146.6

71.5

408.2

–

(51.2)

479.7

95.4

6.5

2.0

486.2

97.4

146.6

71.5

357.0

575.1

8.5

583.6

–

(120.2)

68.2

(3.4)

68.2

(3.4)

–

(120.2)

68.2

(3.4)

(113.3)

(15.2)

(128.5)

(4.3)

–

(4.3)

(332.1)

(9.3)

(341.4)

(384.9)

(505.1)

(24.5)

(529.6)

(51.3)

(34.0)

–

At 31 December 2022

322.4

84.3

(185.1)

291.2

203.6

3,639.5

4,355.9

123.8

4,479.7

Attributable to owners of the parent

Share
premium
£m

Own
shares
£m

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

124.2

(159.8)

165.6

133.6

3,456.7 4,002.8

83.1

4,085.9

Notes

Share
capital
£m

282.5

At 1 January 2021

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 movements2
Dividends

4(c)

Transactions with
shareholders

Transfers

–

(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)

–

At 31 December 2021

282.5

124.2

(150.2)

144.6

183.4

3,701.4 4,285.9

139.8

4,425.7

1. Other comprehensive income reported in the net exchange differences reserve comprises the net foreign exchange gain/(loss) 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 (loss)/gain on the
Group’s retirement benefit schemes and post-tax fair value movements on financial assets at fair value through other comprehensive income.

2. Other movements principally comprise amounts relating to financial liabilities in respect of options to purchase the remaining non-controlling interest in certain

subsidiaries (see note 8).

Schroders Annual Report and Accounts 2022

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Consolidated financial statements
Consolidated cash flow statement
for the year ended 31 December 2022

Net cash from operating activities1

Cash flows from investing activities

Net acquisition of businesses, associates and joint ventures

Net acquisition of property, plant and equipment and software

Acquisition of financial assets

Disposal of financial assets

Non-banking interest received

Distributions received from associates and joint ventures

Net cash (used in)/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

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents

Opening cash and cash equivalents

Net (decrease)/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

Notes

2022
£m

972.8

2021
£m

1,234.2

(607.5)

(104.3)

(1,734.7)

1,820.4

7.3

15.0

(603.8)

(13.6)

–

(51.3)

(120.2)

(341.4)

(6.8)

(533.3)

(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)

(164.3)

921.9

5,119.0

(164.3)

90.6

4,215.9

921.9

(18.8)

5,045.3

5,119.0

4,409.8

30.5

4,440.3

605.0

5,045.3

4,075.5

131.8

4,207.3

911.7

5,119.0

1. Includes Wealth Management interest income received of £75.3 million (2021: £11.3 million) and interest paid of £38.4 million (2021: £0.2 million).

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Notes to the accounts

1. Segmental reporting
(a) Operating segments

The Group has two operating segments: Asset Management and Wealth Management. The Asset Management segment principally
comprises investment management including advisory services in respect of equity, fixed income, multi-asset and private assets and
alternatives products. The Wealth Management segment principally comprises investment management, wealth planning and financial
advice, platform services and banking services.

Segmental information is presented on the same basis as that provided for internal reporting purposes to the Group’s chief operating
decision maker, the Group Chief Executive. The segmental reporting note has been re-presented to reflect the changes made to the
income statement (see presentational changes on page 168) and to present the results of Schroders Personal Wealth (SPW) within
share of profit of associates and joint ventures using the equity accounting method. The results of SPW were previously consolidated
on a proportional basis within the Wealth Management segment for the purpose of segmental reporting. This new presentation reflects
changes to the basis on which the Group monitors the performance of the business.

Operating expenses represent the costs incurred in running the Asset Management and Wealth Management segments and include
an allocation of costs between the individual business segments on a basis that aligns the charge with the resources employed by the
Group in respect of particular business functions. This allocation provides management with the relevant information as to the business
performance to effectively manage and control expenditure. Operating expenses exclude items related to acquisitions and central
management activities (see note 3). The reconciliation of operating profit to profit before tax is available on the income statement.

Year ended 31 December 2022

Revenue

Cost of sales
Net operating revenue

Of which: Performance fees
Of which: Net carried interest income

Net operating revenue excluding performance-based revenues

Share of profit of associates and joint ventures

Other operating income

Net operating income

Operating expenses

Operating profit

Year ended 31 December 20211

Revenue

Cost of sales
Net operating revenue

Of which: Performance fees

Net carried interest income

Net operating revenue excluding performance-based revenues

Share of profit of associates and joint ventures

Other operating income

Net operating income

Operating expenses

Operating profit

Asset
Management
£m

Wealth
Management
£m

2,441.9

(474.8)
1,967.1

42.6
16.5
1,908.0

73.6

28.0

449.8

(55.5)
394.3

0.4
–
393.9

4.0

8.5

Total
£m

2,891.7

(530.3)
2,361.4

43.0
16.5
2,301.9

77.6

36.5

2,068.7

406.8

2,475.5

(1,475.6)

593.1

(276.9)

129.9

(1,752.5)

723.0

Asset
Management
£m

Wealth
Management
£m

2,582.5

(539.4)
2,043.1

94.2
31.9
1,917.0

73.9

20.5

2,137.5

(1,424.8)

712.7

377.0

(17.0)
360.0

0.2
–
359.8

14.3

8.2

382.5

(254.2)

128.3

Total
£m

2,959.5

(556.4)
2,403.1

94.4
31.9
2,276.8

88.2

28.7

2,520.0

(1,679.0)

841.0

1. The 2021 comparatives have been re-presented (see note (g) presentational changes on page 168).

Segment assets and liabilities are not presented as such information is not presented on a regular basis to the Group’s chief operating
decision maker.

Schroders Annual Report and Accounts 2022

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Notes to the accounts
continued

1. Segmental reporting continued
(b) Geographical information
The Group’s non-current assets1 are located in the following countries:

United Kingdom

China

Switzerland

United States

France

India

Singapore

Other

Total

2022
£m

2021
£m

2,115.9

1,468.5

244.8

205.3

116.6

79.4

45.3

37.8

111.1

199.6

184.5

106.9

78.4

34.4

39.2

89.1

2,956.2

2,200.6

1. Comprises the following non-current assets: property, plant and equipment, goodwill and intangible assets, associates and joint ventures and prepayments.

2. Net operating revenue

Revenue
The Group’s primary source of revenue is fee income from investment management activities performed within both the Asset
Management and Wealth Management segments. Fee income includes management fees, performance fees, carried interest
and other fees. Revenue also includes interest income earned within the Wealth Management segment.

Management fees are generated through investment management agreements and are generally based on an agreed percentage
of the valuation of AUM. Management fees are recognised as the service is provided and it is probable that the fee will be collected.

Performance fees and carried interest are earned from certain arrangements when contractually agreed performance levels are exceeded
within specified performance measurement periods. They are only recognised where it is highly probable that a significant reversal will
not occur in future periods. Performance fees are typically earned over one year and are recognised at the end of the performance period.
Carried interest is earned over a longer time frame and is recognised 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).

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2. Net operating revenue continued
(a) Net operating revenue by segment is presented below:

Year ended 31 December 2022

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

Total
£m

2,334.5

335.2

2,669.7

42.6

32.3

32.5

–

0.4

–

38.9

75.3

43.0

32.3

71.4

75.3

2,441.9

449.8

2,891.7

(459.0)

(15.8)

–

(474.8)

(17.1)

–

(38.4)

(55.5)

(476.1)

(15.8)

(38.4)

(530.3)

Net operating revenue

1,967.1

394.3

2,361.4

Year ended 31 December 20211

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

2,388.6

94.2

71.5

28.2

–

2,582.5

(499.8)

(39.6)

–

(539.4)

329.1

0.2

–

36.4

11.3

377.0

(16.8)

–

(0.2)

(17.0)

Total
£m

2,717.7

94.4

71.5

64.6

11.3

2,959.5

(516.6)

(39.6)

(0.2)

(556.4)

Net operating revenue

2,043.1

360.0

2,403.1

1. The 2021 comparatives have been re-presented (see note (g) presentational changes on page 168).

Schroders Annual Report and Accounts 2022

123

Notes to the accounts
continued

2. Net operating revenue continued
(b) Net operating revenue is presented below by region based on the location of clients:

(476.1)

(15.8)

(38.4)

(530.3)

Total
£m

2,717.7

94.4

71.5

64.6

11.3

Year ended 31 December 2022

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

UK
£m

882.9

6.5

–

37.5

65.7

992.6

(58.5)

–

(38.3)

(96.8)

Continental
Europe &
Middle East
£m

814.1

15.4

32.3

25.9

8.1

895.8

(196.2)

(15.8)

–

Asia Pacific
£m

608.9

8.2

–

8.0

1.5

Americas
£m

363.8

12.9

–

Total
£m

2,669.7

43.0

32.3

71.4

75.3

626.6

376.7

2,891.7

(169.1)

–

(0.1)

(52.3)

–

(212.0)

(169.2)

(52.3)

Net operating revenue

895.8

683.8

457.4

324.4

2,361.4

Year ended 31 December 20211

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

UK
£m

833.3

8.2

–

30.8

10.3

882.6

(66.3)

–

(0.2)

(66.5)

Continental
Europe &
Middle East
£m

Asia Pacific
£m

Americas
£m

869.0

32.0

71.5

23.2

0.9

996.6

(215.5)

(39.6)

–

(255.1)

643.3

28.9

–

10.4

0.1

682.7

372.1

25.3

–

0.2

–

397.6

2,959.5

(181.7)

(53.1)

–

(181.7)

(53.1)

(516.6)

(39.6)

(0.2)

(556.4)

Net operating revenue

816.1

741.5

501.0

344.5

2,403.1

1. The 2021 comparatives have been re-presented (see note (g) presentational changes on page 168).

Estimates and judgements – revenue
The principle estimates and judgements for revenue relate to carried interest. Carried interest represents the Group’s contractual right to a
share of the profits of 122 private asset investment vehicles (2021: 113 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.

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2. Net operating revenue continued

Estimates and judgements – cost of sales
The principle estimates and judgements for cost of sales relate to carried interest. The crystallisation of associated financial obligations
in respect of carried interest (carried interest payable, see note 8) is contingent on the Group receiving the related revenue. The areas of
estimates and judgements are the same as those used to determine the present value of the carried interest receivable, adjusted to reflect
the portion that is payable to third parties. The actual amount payable at maturity will depend on the realised value of the carried interest
receivable and may differ from the projected value. An increase in the growth rate of 3% would increase cost of sales by £3.1 million
(2021: £3.6 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 £2.1 million/£2.0 million (2021: £3.0 million/£4.2 million) and
this amount would be lower than the corresponding increase/reduction in revenue.

3. Total expenses

Total expenses represent the Group’s administrative expenses including compensation costs. They are recognised as the services
are received. Certain costs, such as depreciation of property, plant and equipment and amortisation of intangible assets, are expensed
evenly over the useful life of the asset, or relevant contract.

Expenses comprise operating expenses, central costs and acquisition costs and related items. Operating expenses are those costs
incurred through the operating activities of the Group’s operating segments; Asset Management and Wealth Management. Central costs
are those arising from capital and treasury management activities, corporate development and strategy activities and the costs associated
with the governance and corporate management of the Group. Acquisition costs and related items include deal costs associated with
corporate transactions and costs associated with the integration of acquired businesses and amortisation of acquired intangible assets.

The biggest component of the Group’s total expenses is the cost of employee benefits, as shown below. Other costs primarily consist
of accommodation, information technology, marketing and outsourcing costs. Compensation costs are managed to a target total
compensation ratio of between 45% and 49%. Targeting a compensation ratio range provides some flexibility to manage the overall
cost base in response to market conditions.

Employee benefits expense includes salaries and wages, together with the cost of other benefits provided to employees such as pension
and bonuses. The Group makes some performance awards to employees that are deferred over a specified vesting period. Such awards
are expensed to the income statement over the performance and vesting periods. The Group holds investments that are linked to these
performance awards in order to hedge the related exposure. Gains and losses on these investments are netted against the relevant
costs in the income statement but are presented separately below.

Further detail on other employee benefits can be found elsewhere within these financial statements, see note 23 for pension costs
and note 24 for compensation that is awarded in Schroders plc shares.

(a) Group cost components

Year ended 31 December

Operating expenses

Central costs

Acquisition costs and related items

Total expenses

(b) 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 loss/(gain) on financial instruments held to hedge deferred cash awards

Employee benefits expense – net of hedging

2022
£m

2021
£m

1,752.5

1,679.0

48.8

86.4

53.6

65.2

1,887.7

1,797.8

2022
£m

1,001.1

88.2

66.1

1,155.4

11.7

1,167.1

2021
£m

1,034.6

104.9

57.4

1,196.9

(22.2)

1,174.7

The employee benefits expense net of hedging includes £19.7 million (2021: £6.6 million) that is presented within acquisition costs and related
items.

Schroders Annual Report and Accounts 2022

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Notes to the accounts
continued

3. Total expenses continued
(b) Employee benefits expense and number of employees continued
Information about the compensation of key management personnel can be found in note 25. Details of the amounts payable to Directors
along with the number of Directors who exercised share options in the year is provided in the Remuneration report on pages 76 to 107.

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

Central

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

4. Tax expense

2022
Number

5,934

262

6,196

4,909

1,258

6,196

2022
£m

0.7

4.7

1.3

0.7

7.4

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

The Group is headquartered in the UK and pays taxes according to the rates applicable in the countries and states in which it operates.
Most taxes are recorded in the income statement (see part (a)) and relate to taxes payable for the reporting period (current tax).
The charge also includes benefits and charges relating to when income or expenses are recognised in a different period for tax and
accounting purposes or when there are specific treatments applicable relating to items such as acquisitions (deferred tax – see note 13).
Some current and deferred taxes are recorded through other comprehensive income (see part (b)), or directly to equity where the tax
arises from changes in the value of remuneration settled as shares (see part (c)).

(a) Analysis of tax charge reported in the income statement

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

2022
£m

71.6

74.7

1.8

148.1

(29.8)

(3.0)

(14.6)

(47.4)

2021
£m

71.1

104.4

33.6

209.1

(31.2)

(34.4)

(3.2)

(68.8)

Tax charge reported in the income statement

100.7

140.3

(b) Analysis of tax (credit)/charge reported in other comprehensive income

Year ended 31 December

Deferred tax (credit)/charge on actuarial gains and losses on defined benefit pension schemes

Deferred tax charge/(credit) on other movements through other comprehensive income

Deferred tax – effect of changes in corporation tax rates

Tax (credit)/charge reported in other comprehensive income

2022
£m

(12.6)

0.1

(3.8)

(16.3)

2021
£m

5.2

(1.0)

1.4

5.6

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4. Tax expense continued
(c) Analysis of tax charge/(credit) reported in equity

Year ended 31 December

Current tax credit on Deferred Award Plan and other share-based remuneration

Deferred tax charge/(credit) on Deferred Award Plan and other share-based remuneration

Deferred tax – effect of changes in corporation tax rates

Tax charge/(credit) reported in equity

2022
£m

(1.5)

5.7

(0.8)

3.4

2021
£m

(3.7)

(0.8)

(0.2)

(4.7)

(d) Factors affecting tax charge for the year
The UK standard rate of corporation tax for 2022 is 19% (2021: standard rate of 19%). The tax charge for the year is higher (2021: 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 after amortisation

Profit before tax of Group entities

2022
£m

586.9

(71.5)

515.4

2021
£m

764.1

(79.3)

684.8

Profit before tax of consolidated Group entities multiplied by corporation tax at the UK standard rate

97.9

130.1

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

(0.4)

7.7

11.3

(14.6)

(1.2)

6.7

6.9

0.6

(3.2)

(0.8)

100.7

140.3

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 (2021: none).

5. Earnings per share

This key performance indicator shows the portion of the Group’s profit after tax that is attributable to each share issued by the Company,
excluding own shares held by the Group. The calculation is based on the weighted average number of shares in issue during the year.
The diluted figure recalculates that number as if all share options that would be expected to be exercised, as they have value to the option
holder, had been exercised in the year. Shares that may be issued are not taken into account if the impact does not reduce earnings
per share.

Reconciliation of the figures used in calculating basic and diluted earnings per share:

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

2022
Number
Millions

1,576.6

27.4

0.4

2021
Number
Millions1

1,580.1

27.0

0.4

Weighted average number of shares used in the calculation of diluted earnings per share

1,604.4

1,607.5

1. The 2021 comparatives have been restated following the simplification of the Company’s dual share class structure (see note 19).

Profit after tax attributable to non-controlling interest was £6.5 million (2021: £11.9 million).

Operating earnings per share calculations are based on operating profit after tax of £599.4 million (2021: £693.6 million) less non-controlling
operating earnings of £10.4 million (2021: £14.7 million).

Schroders Annual Report and Accounts 2022

127

Notes to the accounts
continued

6. Dividends

Dividends are distributions of profit to holders of the Group’s share capital, usually announced with the Group’s half-year and annual
results. Dividends are recognised only when they are paid 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

Current year final dividend
recommended

2023

£m

Pence per
share

2022

2021

£m

231.5

100.6

332.1

Pence per
share1

14.9

6.5

21.4

£m

217.3

101.3

318.6

Pence per
share1

13.9

6.5

20.4

232.8

15.0

1. Dividends per share have been restated following the simplification of the Company’s dual share class structure (see note 19).

Dividends of £12.6 million (2021: £9.1 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 2022 final dividend of 15.0 pence per share (2021 restated final dividend: 14.9 pence),
amounting to £232.8 million (2021 final dividend: £231.5 million). The dividend will be paid on 4 May 2023 to shareholders on the register at
24 March 2023 and will be accounted for in 2023.

The Group paid £9.3 million of dividends to holders of non-controlling interests in subsidiaries of the Group during 2022 (2021: £9.8 million),
resulting in total dividends paid of £341.4 million (2021: £328.4 million).

7. 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 8). Prepayments arise where the Group pays cash
in advance for services. As the service is provided, the prepayment is reduced and the operating expense is recognised in the income
statement. Accrued income, other than amounts relating to carried interest, represents unbilled revenue and is not dependent on future
performance. Amounts due from third parties also include settlement accounts for transactions undertaken on behalf of funds and
investors. Deposits with banks in the form of bullion are recorded at fair value.

Trade and other receivables held
at amortised cost:

Fee debtors

Settlement accounts

Accrued income

Prepayments

Other receivables

Current tax

Trade and other receivables held
at fair value:

Non-current
£m

2022

Current
£m

Total
£m

Non-current
£m

2021

Current
£m

–

95.4

4.9

5.8

–

106.1

91.2

103.9

395.4

71.7

112.7

12.9

787.8

91.2

103.9

490.8

76.6

118.5

12.9

893.9

–

67.5

5.4

10.5

–

83.4

76.8

285.3

426.9

62.6

25.6

37.8

915.0

Total
£m

76.8

285.3

494.4

68.0

36.1

37.8

998.4

Deposits with banks in the form of bullion

–

2.6

–

2.5

Total trade and other receivables

106.1

790.4

896.5

83.4

917.5

1,000.9

The fair value of trade and other receivables held at amortised cost approximates their carrying value. Deposits with banks in the form
of bullion are categorised as level 1 in the fair value hierarchy. Refer to note 8 for details on the fair value hierarchy.

Estimates and judgements – carried interest receivable
Accrued income includes £110.9 million of receivables in respect of carried interest (2021: £100.0 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.

128

Schroders Annual Report and Accounts 2022

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8. Financial assets and liabilities

Financial assets
The Group holds financial assets including loans and advances to clients and banks, equities, debt securities, pooled investment vehicles
and derivatives to support its Group capital strategies, activities within the Wealth Management banking book and client facilitation (see
note 17).

The Group initially records all financial assets at fair value. The Group subsequently holds each financial asset at fair value through profit or
loss (FVTPL), fair value through other comprehensive income (FVOCI) or amortised cost. Fair value is the price that would be received to sell
an asset or paid to transfer a liability between market participants. Amortised cost is the amount determined based on moving the initial
fair value to the maturity value on a systematic basis using the effective interest rate, taking account of repayment dates and initial
expected premiums or discounts.

Financial assets at amortised cost
Financial assets are measured at amortised cost when their contractual cash flows represent solely payments of principal and interest and
they are held within a business model designed to collect cash flows. This classification typically applies to the Group’s loans and advances,
trade receivables and some debt securities held by the Group’s Wealth Management entities. The carrying value of amortised cost financial
assets is adjusted for impairment under the expected credit loss (ECL) model. Movements in the ECL provision are recognised in other
operating income in the income statement (see note 18).

Financial assets at FVOCI
Financial assets are 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. Impairment is recognised for debt securities classified as FVOCI under the ECL model. Movements
in the ECL provision are recognised in other operating income in the income statement (see note 18). Unrealised gains and losses on debt
securities classified as financial assets at FVOCI are recorded in other comprehensive income. Cumulative gains and losses are transferred
to the income statement if the investment is sold or otherwise realised. Interest earned on FVOCI assets is recognised using the effective
interest method and recorded as interest in the income statement.

Financial assets at FVTPL
All other financial assets are held at FVTPL. Net gains and losses are presented in the income statement based on the substance of the
transaction. Net gains and losses on co-investments are presented within other operating income; net gains and losses on the Group’s
investment and seed capital are presented within net (loss)/gain on financial instruments and other income; and net gains and losses on
investments that are held to hedge deferred employee cash awards are presented within operating expenses (see note 3). This separate
presentation provides more relevant information about the applicable components of the Group’s income statement.

Financial liabilities
The Group’s financial liabilities principally comprise deposits by Wealth Management clients and banking counterparties. They also include
derivatives to support its Group capital strategies, activities within the Wealth Management banking book and client facilitation. Financial
liabilities also arise from obligations in respect of carried interest, contingent consideration and other liabilities arising from acquisitions
completed by the Group, and third party interests in consolidated funds.

The Group initially records all financial liabilities at fair value. These are subsequently held at amortised cost or fair value.

Financial liabilities at amortised cost
The majority of the Group’s financial liabilities are measured at amortised cost and the classification typically applies to the Group’s
Wealth Management client accounts, banking deposits and trade payables.

Financial liabilities at FVTPL
Financial liabilities are measured at FVTPL when this measurement reduces an accounting mismatch or when otherwise required by
the accounting standards. This classification typically applies to financial obligations in respect of carried interest, third party interests
in consolidated funds (see basis of preparation on page 167) and contingent consideration.

Net gains and losses are presented in the income statement based on the substance of the instrument. Net gains and losses on
financial obligations in respect of carried interest are presented within cost of sales; and net gains and losses on contingent consideration
are presented within acquisition costs and related items. This separate presentation provides more relevant information about the
applicable components of the Group’s income statement.

Liabilities to purchase subsidiary shares
Financial liabilities in relation to equity transactions arise on certain acquisitions where the Group has a liability to purchase the remaining
interest in a subsidiary that is not wholly owned by the Group (see basis of preparation on page 167).

Schroders Annual Report and Accounts 2022

129

Notes to the accounts
continued

8. Financial assets and liabilities 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 (see note 17)

2022

Level 1
£m

Level 2
£m

Level 3
£m

–

588.4

21.9

462.4

190.8

5.9

681.0

–

3.5

126.2

60.2

0.5

17.0

203.9

–

179.6

11.6

–

191.2

Not at
fair value
£m

122.8

615.6

263.9

Total
£m

122.8

615.6

263.9

1,002.3

–

591.9

148.1

702.2

202.9

22.9

1,076.1

Total financial assets

1,269.4

207.4

191.2

1,002.3

2,670.3

Financial liabilities at amortised cost:

Client accounts

Deposits by banks

Other financial liabilities

Financial liabilities at FVTPL:

Derivative contracts (see note 17)

Other financial liabilities

–

3.7

205.8

209.5

–

24.6

–

24.6

–

91.4

Liabilities to purchase subsidiary shares

–

218.7

4,532.8

59.4

3.7

59.4

3.7

4,595.9

–

28.3

297.2

325.5

218.7

Total financial liabilities

209.5

24.6

310.1

4,595.9

5,140.1

130

Schroders Annual Report and Accounts 2022

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8. Financial assets and liabilities 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 (see note 17)

2021

Level 1
£m

Level 2
£m

Level 3
£m

–

405.7

185.5

603.9

557.8

28.5

1,375.7

–

4.2

231.1

38.0

4.1

49.3

322.5

–

4.0

135.1

8.2

–

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 liabilities at amortised cost:

Client accounts

Deposits by banks

Other financial liabilities

Financial liabilities at FVTPL:

Derivative contracts (see note 17)

Other financial liabilities

Total financial liabilities

–

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

149.7

3,822.6

4,793.6

The Group has recognised a net loss on financial instruments at fair value through profit and loss of £10.9 million (2021: gain of £18.7 million).
A net loss on financial instruments at fair value through other comprehensive income of £0.1 million (2021: gain of £1.8 million) has been
transferred to the income statement.

For the maturity profiles of client accounts, deposits by banks and derivative contracts see notes 17 and 18.

The fair value of financial assets and liabilities at amortised cost approximates their carrying value. No financial assets or liabilities
were transferred between levels during 2022 (2021: none).

Current

Non-current

2022

2021

Financial
assets
£m

1,928.5

741.8

2,670.3

Financial
liabilities
£m

4,827.7

312.4

5,140.1

Financial
assets
£m

2,435.5

696.8

3,132.3

Financial
liabilities
£m

4,660.9

132.7

4,793.6

Schroders Annual Report and Accounts 2022

131

Notes to the accounts
continued

8. Financial assets and liabilities continued
Movements in financial assets and liabilities categorised as level 3 during the year were:

At 1 January

Exchange translation adjustments

Net gain or loss recognised in the income statement

Additions

Disposals and settlements

Remeasurements

At 31 December

2022

Financial
liabilities
at FVTPL
£m

Liabilities to
purchase
subsidiary
shares
£m

88.9

8.1

18.1

2.2

(25.9)

–

91.4

60.8

7.5

–

173.0

(21.4)

(1.2)

218.7

Financial
assets
at FVTPL
£m

147.3

13.2

(0.8)

48.2

(16.7)

–

191.2

2021

Financial
assets
at FVTPL
£m

138.3

(3.8)

42.4

29.3

(58.9)

–

147.3

Financial
liabilities
at FVTPL
£m

143.7

(2.7)

59.0

1.1

(51.4)

–

149.7

Estimates and judgements
The Group holds financial instruments that are measured at fair value. The fair value of financial instruments may be derived from readily
available sources or may require some estimation. The degree of estimation involved depends on the individual financial instrument and is
reflected in the fair value hierarchy below. Judgements may include determining which valuation approach to apply as well as determining
appropriate assumptions. For level 2 and 3 financial instruments, the judgement applied by the Group gives rise to an estimate of fair value.
The approach to determining the fair value estimate of level 2 and 3 financial instruments is set out below. The fair value levels are based
on the degree to which the fair value is observable and are defined as follows:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities
and principally comprise investments in pooled investment vehicles, quoted equities, government debt and exchange-traded derivatives.

• Level 2 fair value measurements are those derived from prices that are not traded in an active market but are determined using
valuation techniques, which make maximum use of observable market data. The Group’s level 2 financial instruments principally comprise
foreign exchange contracts, certain debt securities and asset and mortgage backed securities. Valuation techniques may include using a
broker quote in an inactive market or an evaluated price based on a compilation of primarily observable market information utilising
information readily available via external sources. For funds not priced on a daily basis, the net asset value which is issued monthly or
quarterly is used.

• Level 3 fair value measurements are those derived from valuation techniques that include significant inputs that are not based on
observable market data. The Group’s level 3 financial assets principally comprise holdings in pooled investment vehicles, including private
equity funds, and holdings in property investment vehicles that operate hotel businesses. The pooled investment vehicles are measured
in accordance with International Private Equity and Venture Capital Valuation Guidelines 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. The Group’s financial liabilities categorised as level 3 principally consist of third party liabilities related to carried interest
arrangements, obligations arising from contingent consideration and other liabilities to purchase the remaining interest in acquired
subsidiaries. Information about the estimates and judgements made in determining the fair value of carried interest payable is set out in
note 2. Liabilities in respect of options to purchase the remaining interest in certain subsidiaries require judgement in determining the
appropriate assumptions to be applied in the estimation of the fair value. The amount that will ultimately be paid in relation to an option is
dependent on the future earnings of the subsidiary and may be subject to a cap over the enterprise value. In estimating the liability, the
assumptions principally relate to the future earnings of the business and the rate applied to discount the liability back to present value.
The future earnings of the applicable subsidiaries are estimated using different methodologies and consequently there is no one
assumption that is individually material to the valuation. Discount rates between 11% and 13% have been used to discount these liabilities.
An increase/decrease in the discount rate of two percentage points would decrease/increase the financial liability by
£19 million/£17 million. 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.

132

Schroders Annual Report and Accounts 2022

9. Associates and joint ventures

Associates are entities in which the Group has an investment and over which it has significant influence, but not control, through
participation in the financial and operating policy decisions. Joint ventures are entities in which the Group has an investment where it, along
with one or more other shareholders, has contractually agreed to share control of the business and where the major decisions require
the unanimous consent of the joint partners. In both cases, the Group initially records the investment at the fair value of the purchase
consideration, including purchase related costs. The Group’s income statement reflects its share of the entity’s profit or loss after tax and
amortisation of intangible assets. The Group’s statement of other comprehensive income records the Group’s share of gains and losses
arising from the entity’s financial assets at FVOCI (see note 8). The statement of financial position subsequently records the Group’s share
of the net assets of the entity plus any goodwill and intangible assets that arose on purchase less subsequent amortisation. The statement
of changes in equity records the Group’s share of other equity movements of the entity. At each reporting date, the Group applies
judgement to determine whether there is any indication that the carrying value of associates and joint ventures may be impaired.

The associates and joint ventures reserve in the statement of changes in equity represents the Group’s share of profits in its investments
yet to be received (for example, in the form of dividends or distributions), less any amortisation of intangible assets. Certain associates are
held within financial assets at fair value through profit or loss where permitted by the accounting standards (see note 8). Information about
the Group’s principal associates measured at fair value is disclosed within this note.

(a) Investments in associates and joint ventures accounted for using the equity method

At 1 January

Exchange translation adjustments

Additions

Disposals
Profit for the year after tax1
Gains recognised in other comprehensive
income

Distributions of profit

At 31 December

2022

Associates
£m

Joint ventures
£m

260.6

206.1

7.4

1.7

(0.3)

72.7

–

(37.3)

304.8

0.4

1.6

–

(1.2)

–

(14.0)

192.9

Total
£m

466.7

7.8

3.3

(0.3)

71.5

–

(51.3)

497.7

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

1. Share of profit of associates and joint ventures as presented on the face of the income statement excludes acquisition costs and related items net of tax of £6.1 million

(2021: £8.9 million).

Information about the significant associates and joint ventures held by the Group at 31 December 2022 is shown below. The companies are
unlisted.

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Name of associate or joint venture

Scottish Widows Schroder Wealth Holdings Limited
(SPW)

Bank of Communications Schroder Fund Management
Co. Ltd. (BoCom)

Nature of its
business

Principal place
of business

Class of share

Wealth management

England

Ordinary shares

Axis Asset Management Company Limited (Axis)

Investment management

A10 Capital Parent Company LLC (A10)

Real estate lending

Investment management

China

India

Ordinary shares

Common units

Percentage
owned by the
Group

49.9%

30.0%

25.0%

19.3%

Schroders Annual Report and Accounts 2022

133

Notes to the accounts
continued

9. Associates and joint ventures continued
(a) Investments in associates and joint ventures accounted for using the equity method continued

2022

2021

SPW1
£m

BoCom
£m

Axis
£m

A10
£m

Other
£m

Total
£m

SPW1
£m

BoCom
£m

Axis
£m

A10
£m

Other
£m

Total
£m

Non-current assets

Current assets

207.2

119.1

61.9

46.4 1,243.5

8.2 1,567.2

885.9

109.1

219.3

25.8 1,359.2

209.7

157.3

54.6

756.2

14.3 1,390.2

5.8 1,674.6

96.2

176.9

22.5 1,209.1

Non-current liabilities

(22.5)

(0.4)

– (1,246.8)

(1.2) (1,270.9)

(23.2)

(1.1)

– (1,404.0)

(1.5) (1,429.8)

Current liabilities

Total equity

(41.6)

(193.4)

(16.4)

(139.8)

(6.4)

(397.6)

(58.0)

(146.7)

(14.4)

(113.1)

(5.9)

(338.1)

262.2

754.0

139.1

76.2

26.4 1,257.9

285.8

663.0

96.1

50.0

20.9 1,115.8

Group’s share of net assets

130.8

226.2

55.2

(2.4)

–

34.8

10.5

–

14.7

1.4

–

9.1

17.4

–

415.6

84.5

(2.4)

142.6

198.9

58.1

(3.1)

–

24.0

10.4

–

9.6

1.3

–

7.7

382.8

17.2

–

87.0

(3.1)

Goodwill and intangible assets

Deferred tax liability

Carrying value held
by the Group

183.6

226.2

45.3

16.1

26.5

497.7

197.6

198.9

34.4

10.9

24.9

466.7

Net income

125.8

359.2

98.9

63.7

28.3

675.9

135.1

355.2

79.4

66.5

29.0

665.2

Profit for the year

6.2

191.0

43.2

23.7

5.1

269.2

16.9

201.4

36.7

Other comprehensive income

–

Total comprehensive income

6.2

191.0

43.2

23.7

5.1

269.2

16.9

201.4

36.7

14.1

0.3

14.4

8.1

277.2

–

0.3

8.1

277.5

Group’s share of profit for the
year

Amortisation charge

Group’s share of profit for the
year after amortisation

Group’s share of other
comprehensive income

Group’s share of total
comprehensive income

3.1

(4.6)

57.3

10.8

–

4.6

–

1.8

(1.5)

77.6

(6.1)

8.4

(2.8)

60.4

–

9.2

–

2.7

–

2.8

(1.4)

83.5

(4.2)

(1.5)

57.3

10.8

4.6

0.3

71.5

5.6

60.4

9.2

2.7

1.4

79.3

–

0.1

–

0.1

(1.5)

57.3

10.8

4.6

0.3

71.5

5.6

60.4

9.2

2.8

1.4

79.4

1. SPW is a joint venture and has £81.6 million of cash and cash equivalents (2021: £114.8 million) within its current assets.

(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.

Schroder
Global
Sustainable
Growth Fund
(Canada)
£m

ICBC (Europe)
ECITS SICAV
£m

2022

Schroder
Indian
Equity
Fund
£m

Schroder ISF
Nordic
Smaller
Companies
£m

22.0

–

22.0

–

33%

16.2

–

16.2

0.7

29%

28.0

–

28.0

0.1

30.4

–

30.4

0.2

UK Luxembourg

27%

23%

Schroder
Global
Emerging
Markets
Fund
£m

628.8

(1.9)

626.9

Schroder
Global
Equity
Component
Fund
£m

107.8

(0.2)

107.6

Schroder
Long Dated
Corporate
Bond
£m

180.7

(0.9)

179.8

8.1

29%

0.4

29%

7.0

21%

Current assets

Current liabilities

Total equity

Net income

Profit for the year

Total comprehensive income

Country of incorporation

Percentage owned by the Group

134

Schroders Annual Report and Accounts 2022

9. Associates and joint ventures continued
(b) Investments in associates measured at fair value continued

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

2021

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

Percentage owned by the Group

29%

28%

Brazil

28%

Luxembourg

33%

27%

1,277.7

(0.7)

1,277.0

19.6

23%

10. 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 11). 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 which is assumed to have an indefinite useful life.

2022

2021

Leasehold
improvements
£m

Land and
buildings
£m

Other
assets
£m

Total
£m

Leasehold
improvements
£m

Land and
buildings
£m

Other
assets
£m

Total
£m

S
t
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a
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e
g

i
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r
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p
o
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G
o
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e
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a
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c
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n
a
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c
i

s
t
a
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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

Cost

At 1 January

Exchange translation adjustments

Additions

Disposals

At 31 December

Accumulated depreciation

At 1 January

Exchange translation adjustments

Depreciation charge

Disposals

At 31 December

194.6

19.7

165.8

5.1

7.6

(0.3)

–

207.0

19.7

(59.2)

(2.5)

(14.3)

0.3

(75.7)

(1.8)

–

(0.4)

–

4.6

12.1

(13.5)

169.0

(89.2)

(3.0)

(21.3)

1.5

380.1

9.7

19.7

(13.8)

395.7

(150.2)

(5.5)

(36.0)

1.8

(2.2)

(112.0)

(189.9)

188.7

19.7

157.5

365.9

(0.8)

11.2

(4.5)

–

(1.6)

14.8

(4.9)

(2.4)

26.0

(9.4)

194.6

19.7

165.8

380.1

(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)

Net book value at 31 December

131.3

17.5

57.0

205.8

135.4

17.9

76.6

229.9

Right-of-use assets (see note 11)

Property, plant and equipment
net book value at 31 December

318.3

524.1

Schroders Annual Report and Accounts 2022

330.1

560.0

135

Notes to the accounts
continued

11. Leases

The Group’s lease arrangements primarily consist of operating leases relating to office space.

The Group initially records a lease liability in the statement of financial position reflecting the present value of the future contractual cash
flows to be made over the lease term, discounted using the Group’s incremental borrowing rate. This is the rate that the Group would have
to pay for a loan of a similar term, and with similar security to obtain an asset of similar value. A right-of-use (ROU) asset is recorded at the
value of the lease liability plus any directly related costs and estimated future dilapidation expense and is presented within property, plant
and equipment (see note 10) on the balance sheet. Interest is accrued on the lease liability using the effective interest method to give a
constant rate of return over the life of the lease while the balance is reduced as lease payments are made. The ROU asset is depreciated
from commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term as the benefit of the
asset is consumed. Increases or decreases that occur at contractually agreed market rent review dates are included in the lease liability
once revised market rents have been agreed.

The Group considers whether the lease term should reflect options to extend or reduce the life of the lease. Relevant factors that could
create an economic incentive to exercise the option are considered and the 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.

2022

2021

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

330.1

9.8

18.0

–

(39.6)

–

318.3

373.8

12.3

15.6

(51.3)

–

10.6

361.0

The depreciation charge and interest expense relating to leases are recorded within operating expenses (see note 3).

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

354.8

(1.8)

14.5

–

(37.4)

–

330.1

2022
£m

39.2

321.8

361.0

2022
£m

48.9

47.3

106.7

235.2

389.2

397.2

(1.2)

14.5

(47.5)

–

10.8

373.8

2021
£m

31.2

342.6

373.8

2021
£m

46.3

47.9

98.8

267.9

414.6

438.1

460.9

136

Schroders Annual Report and Accounts 2022

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12. Goodwill and intangible assets

Intangible assets (other than software) arise when the Group acquires a business and the fair value paid exceeds the fair value of the net
tangible assets acquired. This premium reflects additional value that the Group determines to be attached to the business. Identifiable
acquired intangible assets relating to business combinations include technology, contractual agreements to manage client assets and gain
additional access to new or existing clients and geographies. Where such assets can be identified, they are classified as acquired intangible
assets and amortised to the income statement within acquisition costs and related items on a straight line basis, primarily over seven years.

Consideration paid to acquire a business in excess of the acquisition date fair value of net tangible and identifiable intangible assets
is known as goodwill. Goodwill is not charged to the income statement unless its value has diminished. The assessment of whether
goodwill has become impaired is based on the expected future returns of the relevant cash-generating unit (CGU) as a whole.

Software purchased and developed for use in the business is also classified as an intangible asset. The cost of purchasing and developing
software is taken to the income statement over time as an amortisation charge within operating expenses. The treatment is similar to
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

Goodwill
£m

803.4

36.1

400.2

–

2022

Acquired
intangible
assets
£m

Software
£m

Total
£m

Goodwill
£m

2021

Acquired
intangible
assets
£m

Software
£m

Total
£m

361.9

15.7

332.4

–

470.7

1,636.0

4.7

97.6

–

56.5

830.2

–

811.7

(8.3)

–

362.8

413.2

1,587.7

(3.2)

2.3

–

(0.8)

63.4

(5.1)

(12.3)

65.7

(5.1)

At 31 December

1,239.7

710.0

573.0

2,522.7

803.4

361.9

470.7

1,636.0

Accumulated amortisation

At 1 January

Exchange translation adjustments

Amortisation charge

Disposals

At 31 December

–

(252.8)

(214.7)

(8.9)

(47.1)

–

(3.5)

(66.2)

–

(467.5)

(12.4)

(113.3)

–

(308.8)

(284.4)

(593.2)

–

(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)

Carrying amount at 31 December

1,239.7

401.2

288.6

1,929.5

803.4

109.1

256.0

1,168.5

The Group acquired £328.8 million of identifiable intangible assets as a result of business combinations during 2022 (2021: none). The Group
acquired £3.6 million (2021: £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 identifiable intangible assets acquired at the acquisition date based on forecast profits, taking
account of synergies, derived from existing contractual arrangements. This assessment involves judgement in determining assumptions
relating to potential future revenues, profit margins, appropriate discount rates and the expected duration of client relationships. The
difference between the fair value of the consideration and the value of the identifiable assets and liabilities acquired, including intangible
assets, is accounted for as goodwill.

At each reporting date, the Group applies judgement to determine whether there is any indication that an acquired intangible asset
may be impaired. If any indication exists, a full assessment is undertaken. Goodwill is assessed for impairment on an annual basis.
If the assessment of goodwill or an acquired intangible asset determines that the carrying value exceeds the estimated recoverable
amount at that time, the assets are written down to their recoverable amount.

The recoverable amount of goodwill is determined using a discounted cash flow model. Any impairment is recognised in the income
statement and cannot be reversed. Goodwill acquired in a business combination is allocated to the CGUs that are expected to benefit from
that business combination. For all relevant acquisitions the Group has determined the lowest level CGU for Asset Management acquisitions
is the segment. The Benchmark Capital business within Wealth Management is assessed separately from the rest of Wealth Management.
Of the total goodwill, £1,009.6 million (2021: £574.9 million) is allocated to Asset Management and £230.1 million (2021: £228.5 million) is
allocated to Wealth Management, of which £68.2 million (2021: £68.1 million) relates to Benchmark Capital.

Schroders Annual Report and Accounts 2022

137

Notes to the accounts
continued

12. Goodwill and intangible assets continued

The recoverable amounts of the CGUs are determined from value-in-use calculations applying a discounted cash flow model using the
Group’s five-year strategic business plan cash flows. The key assumptions on which the Group’s cash flow projections are based include
long-term market growth rates of 2% per annum (2021: 2%), a pre-tax discount rate of 12% (2021: 10%), expected flows and expected
changes to revenue margins. The results of the calculations indicate that goodwill is not impaired.

Movements in the growth rate and/or the discount rate of 1% would not lead to any impairment. This is due to the amount of goodwill
allocated to the relevant CGU relative to the size of the relevant future profitability estimate. A comparison of actual results to the projected
results used to assess goodwill impairment in prior years shows that the Group would have recognised no changes (2021: nil) to its
goodwill asset in the year as a result of inaccurate projections.

The recoverable amount of acquired intangible assets is the greater of fair value less costs to sell and the updated discounted valuation
of the remaining net residual income stream. Any impairment is recognised in the income statement but may be reversed if relevant
conditions improve.

13. Deferred tax

Deferred tax assets and liabilities represent amounts of tax that will become recoverable and payable in future accounting periods. They
arise as a result of temporary differences, where the time at which profits and losses are recognised for tax purposes differs from the time
at which the relevant transaction is recorded. A deferred tax asset represents a tax reduction that is expected to arise in a future period
based on past transactions. A deferred tax liability represents taxes that will become payable in a future period as a result of current or
prior year transactions.

Deferred tax liabilities also arise on certain acquisitions where the amortisation of the acquired intangible asset does not result in a tax
deduction. The deferred tax liability is established on acquisition and is released to the income statement to match the intangible asset
amortisation. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the year-end date.

At 1 January

Income statement credit/(charge)

Income statement credit/(charge) due to changes
in tax rates

Credit/(charge) to other comprehensive income

Charge to statement of other comprehensive
income due to changes in tax rates

Charge to equity

Credit to equity due to changes in tax rates

Business combinations

Exchange translation adjustments

At 31 December

Accelerated
capital
allowances
£m

Deferred
employee
awards
£m

Pension
schemes
£m

11.8

4.2

0.1

–

(0.2)

15.9

101.3

(1.5)

10.1

–

(5.7)

0.8

1.8

4.1

(48.7)

(0.7)

(0.2)

12.6

3.9

–

110.9

(33.1)

Accelerated
capital
allowances
£m

Deferred
employee
awards
£m

Pension
schemes
£m

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

Exchange translation adjustments

(4.6)

12.6

3.8

–

82.3

13.6

4.9

–

0.8

0.2

(0.5)

(31.2)

(0.5)

(10.3)

(5.2)

(1.5)

–

At 31 December

11.8

101.3

(48.7)

–

0.3

68.3

2021

Tax
losses
£m

3.0

34.7

2022

Tax
losses
£m

48.2

14.8

Intangible
assets on
acquisition
£m

Other net
temporary
differences
£m

(25.5)

8.4

(22.5)

7.6

5.0

(0.6)

–

(79.9)

(0.9)

(98.5)

0.2

(0.1)

–

(1.7)

(16.6)

Intangible
assets on
acquisition
£m

Other net
temporary
differences
£m

(27.7)

6.4

(20.4)

(1.2)

10.4

(4.4)

–

(1.2)

1.0

0.1

–

0.1

48.2

0.2

(25.5)

(0.8)

(22.5)

Total
£m

64.6

32.8

14.6

12.5

3.8

(5.7)

0.8

(78.1)

1.6

46.9

Total
£m

1.4

65.6

3.2

(4.2)

(1.4)

0.8

0.2

(1.0)

64.6

138

Schroders Annual Report and Accounts 2022

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13. Deferred tax continued
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 shares at the time the awards are exercised.

A deferred tax asset of £9.7 million (2021: £6.5 million) relating to £41.2 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 £26.5 million (2021: £13.3 million) relating to £111.5 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.

After offsetting deferred tax assets and liabilities where appropriate within territories, the net deferred tax asset comprises:

Deferred tax assets

Deferred tax liabilities

2022
£m

185.8

(138.9)

46.9

2021
£m

145.0

(80.4)

64.6

14. Unit-linked liabilities and assets backing unit-linked liabilities

The Group operates a unit-linked life assurance business through the wholly owned subsidiary Schroder Pension Management Limited (the
Life Company). The Life Company provides 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 8). 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

2022
£m

8,174.1

1,880.0

10,054.1

2021
£m

10,439.8

3,023.3

13,463.1

1. In accordance with the accounting standards, the Group is deemed to hold a controlling interest in certain funds as a result of the investments held by the Life Company.
This results in all of the assets and liabilities of those funds being consolidated within the statement of financial position and the third party interest in the fund being
recorded as a financial liability due to third party investors.

The Group has no primary exposure to market risk, credit risk or liquidity risk in relation to the investments due to Life Company investors.
The risks and rewards associated with its investments are borne by the investors in the Life Company’s investment products or third party
investors in the funds and not by the Life Company itself. Consequently, no further financial instrument risk disclosures are included.

Schroders Annual Report and Accounts 2022

139

Notes to the accounts
continued

14. Unit-linked liabilities and assets backing unit-linked liabilities continued
Fair value measurements of Life Company financial assets and liabilities
Each of the Life Company’s financial assets and liabilities has been categorised using a fair value hierarchy as shown below. These levels
are based on the degree to which the fair value is observable and are defined in note 8.

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

2022

Level 1
£m

Level 2
£m

Level 3
£m

Not at
fair value
£m

2,385.3

2,478.6

2,639.3

12.4

7,515.6

–

1,731.3

–

29.8

51.5

1,812.6

–

22.8

–

22.8

–

605.0

98.1

703.1

Total
£m

4,116.6

2,501.4

2,669.1

63.9

9,351.0

605.0

98.1

703.1

Total assets backing unit-linked liabilities

7,515.6

1,812.6

22.8

703.1

10,054.1

Unit-linked liabilities

9,996.1

48.7

–

9.3

10,054.1

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

–

3,677.8

3,677.4

4,963.4

102.8

12,421.4

911.7

130.0

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

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 (2021: none).

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14. Unit-linked liabilities and assets backing unit-linked liabilities continued

Estimates and judgements – fair value measurements
Each instrument has been categorised within one of three levels using a fair value hierarchy (see note 8). Level 1 investments principally
comprise quoted equities, investments in pooled investment vehicles, government debt and exchange-traded derivatives. Level 2
investments principally comprise debt securities such as commercial paper and certificates of deposit. Level 3 investments principally
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

Disposals

At 31 December

15. Trade and other payables

2022
£m

22.9

0.6

5.6

(6.3)

22.8

2021
£m

28.1

(1.1)

10.4

(14.5)

22.9

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 8). Amounts due to be paid by the Group in the normal course of business are made up of creditors and accruals. Accruals represent
costs, including remuneration, that are not yet billed or due for payment, but for which the goods or services have been received. Deferred
cash awards (being deferred employee remuneration payable in cash), and bullion deposits by customers are recorded at fair value.

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

2022

Current
£m

Total
£m

Non-current
£m

–

19.5

22.3

–

41.8

52.8

–

52.8

96.6

14.7

88.6

568.6

24.3

792.8

159.5

2.6

162.1

96.6

14.7

108.1

590.9

24.3

834.6

212.3

2.6

214.9

–

28.4

18.5

–

46.9

80.6

–

80.6

2021

Current
£m

138.2

8.8

86.5

619.7

14.7

867.9

117.4

2.2

119.6

Total
£m

138.2

8.8

114.9

638.2

14.7

914.8

198.0

2.2

200.2

Total trade and other payables

94.6

954.9

1,049.5

127.5

987.5

1,115.0

Schroders Annual Report and Accounts 2022

141

Notes to the accounts
continued

15. Trade and other payables continued
The fair value of trade and other payables held at amortised cost approximates their carrying value. The fair value of bullion deposits by
customers is derived from level 1 inputs (see note 8). The fair value of deferred cash awards is derived from level 1 inputs, being equal to the
fair value of the units in funds to which the employee award is linked.

The Group’s trade and other payables contractually mature in the following time periods:

Less than 1 year1

1 – 2 years

2 – 5 years

More than 5 years

2022
£m

954.9

46.8

45.8

2.0

94.6

2021
£m

987.5

65.4

60.3

1.8

127.5

1,049.5

1,115.0

1. Settlement accounts are generally settled within four working days (2021: four working days) and trade creditors have an average settlement period of 24 working days

(2021: 20 working days).

16. Provisions and contingent liabilities

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 2022

Exchange translation adjustments

Provisions utilised

Provisions charged

Provisions released

Additions

At 31 December 2022

Current – 2022

Non-current – 2022

Current – 2021

Non-current – 2021

Dilapidations
£m

Legal,
regulatory
and other
£m

15.2

0.3

–

0.3

–

2.4

18.2

11.6

0.2

(2.1)

1.6

(4.1)

–

7.2

Dilapidations
£m

Legal,
regulatory
and other
£m

1.0

17.2

18.2

1.0

14.2

15.2

2.5

4.7

7.2

4.6

7.0

11.6

Total
£m

26.8

0.5

(2.1)

1.9

(4.1)

2.4

25.4

Total
£m

3.5

21.9

25.4

5.6

21.2

26.8

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16. Provisions and contingent liabilities continued
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

2022
£m

3.5

5.7

2.7

13.5

21.9

25.4

2021
£m

5.6

8.2

0.8

12.2

21.2

26.8

Dilapidation provisions associated with the Group’s office leases have a weighted average maturity of 13 years (2021: 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 (2021: 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 (2021: none). The provisions included in the financial statements at
31 December 2022 are based on estimates of reasonable ranges of likely outcomes, applying assumptions regarding the probability
of payments being due and the settlement value. The aggregate reasonable ranges have been assessed as not materially different
to the carrying values.

17. Derivative contracts
(a) The Group’s use of derivatives

The Group holds derivatives for risk management, client facilitation and within its consolidated structured entities to provide exposure to
market returns. The Group most commonly uses forward foreign exchange contracts, where it agrees to buy or sell specified amounts of
a named currency at a future date, allowing the Group to effectively fix exchange rates so that it can avoid unpredictable gains and losses
on financial instruments in foreign currency assets and liabilities. The Group uses futures, total return swaps and credit default swaps to
hedge market-related gains and losses on its seed capital investments where the purpose of investing is to help establish a new product
rather than gain additional market exposure. Interest rate contracts are used to hedge exposures to fixed or floating rates of interest.

The Group designates certain derivatives as hedges of a net investment in a foreign operation. In these scenarios, and where relevant
conditions are met, hedge accounting is applied and the Group formally documents the relationship between the derivative and any
hedged item, its risk management objectives and its strategy for undertaking the various hedging transactions. It also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in the fair value of hedged items. In respect of hedges of a net investment in a foreign operation,
the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in other
comprehensive income. The Group’s net investment hedges are generally fully effective, but any ineffective portion that may arise
is recognised in the income statement. On disposal of the foreign operation, together with the hedged gain or loss, the cumulative
gain or loss on the hedging instrument is transferred to the income statement.

Schroders Annual Report and Accounts 2022

143

Notes to the accounts
continued

17. Derivative contracts continued
(a) The Group’s use of derivatives continued
Risk management: the Group actively seeks to limit and manage its exposures to risk where 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 risks that the Group faces through such use of derivative
contracts is credit risk and liquidity risk.

Client facilitation: the Group’s Wealth Management entities are involved in providing portfolio management, banking and investment
advisory services, primarily to private clients. In carrying out this business, they transact as agent or as principal in financial assets and
liabilities (including derivatives) in order to facilitate client portfolio requirements. Wealth Management’s policy is to hedge, as appropriate,
market risk on its client facilitation positions. This does not eliminate credit risk.

For details of how the Group manages its exposure to credit risk, see below and note 18.

(b) Derivatives used by the Group
Forwards are contractual obligations to buy or sell foreign currency on a future date at a specified exchange rate. The maximum exposure
to credit risk is represented by the fair value of the contracts.

Currency, interest rate, total return and credit default swaps are commitments to exchange one set of cash flows for another. Swaps result
in an economic exchange of currencies, interest rates or total returns (for example, fixed rate for floating rate) or a combination of these
(i.e. cross-currency interest rate swaps). No exchange of principal takes place, except in the case of certain currency swaps. The Group’s credit
risk represents the potential cost of replacing the swap contracts if counterparties fail to perform their obligations. This risk is monitored on an
ongoing basis with reference to the current fair value, the proportion of the notional amount of the contracts, and the liquidity of the market.
To control the level of credit risk taken, the Group assesses counterparties in accordance with its internal policies and procedures.

Futures contracts are standardised contracts to buy or sell specified assets for an agreed price at a specified future date. Contracts are
negotiated at a futures exchange, which acts as an intermediary between the two parties. For futures contracts, the maximum exposure
to credit risk is represented by the fair value of the contracts.

The fair value of derivative instruments becomes favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market interest
rates, indices, foreign exchange rates and other relevant variables relative to their terms. The aggregate contractual amount of derivative
financial instruments held, the extent to which instruments are favourable or unfavourable, and thus the aggregate fair values of derivative
financial assets and liabilities, can fluctuate significantly from time to time. The fair values and contractual maturities are set out below:

Equity contracts

Forward foreign exchange contracts

Net-settled derivative contracts1 maturing/repricing2 in:
Less than 1 year

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.

2022

2021

Assets
£m

6.4

16.5

22.9

Liabilities
£m

(4.7)

(23.6)

(28.3)

Assets
£m

59.7

18.1

77.8

Liabilities
£m

(71.7)

(16.6)

(88.3)

2022

2021

Assets
£m

Liabilities
£m

Assets
£m

Liabilities
£m

6.4

983.5

(967.6)

0.6

16.5

(4.7)

874.1

(897.2)

(0.5)

(23.6)

22.9

(28.3)

59.7

1,066.9

(1,048.9)

0.1

18.1

77.8

(71.7)

953.0

(969.7)

0.1

(16.6)

(88.3)

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18. Financial instrument risk management

The Group Capital Committee is responsible for the management of the Group’s capital and sets objectives for how it is deployed. This note
explains how the Group manages its capital, setting out the nature of the risks the Group faces as a result of its operations, and how these
risks are quantified and managed.

The Group is exposed to different forms of financial instrument risk including: (i) the risk that money owed to the Group will not be received
(credit risk); (ii) the risk that the Group may not have sufficient cash available to pay its creditors as they fall due (liquidity risk); and (iii) the
risk that the value of assets will fluctuate as a result of movements in factors such as market prices, interest rates and foreign exchange
rates (market risk). The management of such risks is embedded in managerial responsibilities fundamental to the wellbeing of the Group.

The Group’s primary exposure to financial instrument risk is derived from the financial instruments that it holds as principal. In addition,
due to the nature of the business, the Group’s exposure extends to the impact on investment management and other fees that are
determined on the basis of a percentage of AUM and are therefore impacted by the financial instrument risk exposure of our clients – the
secondary exposure. This note deals only with the direct or primary exposure of the risks from the Group’s holding of financial instruments.

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 14.

(a) Capital
The Group’s approach to capital management is to maintain a strong capital position to enable it to invest in the future of the Group, in line
with its strategy, and to support the risks inherent in conducting its business. Capital management is an important part of the Group’s risk
management framework and is underpinned by the Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP considers the relevant
current and future risks to the business and the capital considered necessary to support these risks. The Group actively monitors its capital
base to ensure it maintains sufficient and appropriate capital resources to cover the relevant risks to the business and to meet consolidated
and local regulatory and working capital requirements.

The Group’s lead regulator is the Prudential Regulation Authority as the Group includes an entity with a UK banking licence. The Group is
required to maintain adequate capital resources to meet its Total Capital Requirement (TCR) of £1,022 million (2021: £937 million). The TCR
incorporates the Group’s Pillar 1 regulatory capital requirement of £862 million (2021: £769 million). In addition to the TCR of the banking
group, the Group is required to hold additional capital of £323 million (2021: £282 million) in respect of its insurance companies and
regulatory buffers. The Group’s overall regulatory capital requirement was £1,346 million at 31 December 2022 (2021: £1,220 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

2022
£m

1,538

512

127

2,246

4,480

2021
£m

1,403

666

780

1,519

4,426

(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 2022

145

Notes to the accounts
continued

18. Financial instrument risk management continued
(a) Capital continued
(ii) Investment capital
Available capital held in excess of working capital requirements is transferred to investment capital. Investment capital is managed with the
aim of achieving a low-volatility return. Liquid investments are available to support the organic development of existing and new business
strategies and to respond to other investment and growth opportunities as they arise, such as acquisitions. Investment capital also includes
certain commercial private equity investments and illiquid legacy investments.

(iii) Other items
Other items comprise 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:

2022

Financial
instruments at
amortised cost
£m

Financial assets
at fair value
through other
comprehensive
income
£m

Liabilities to
purchase
subsidiary
shares
£m

Financial
instruments
at fair value
through
profit or loss1
£m

Non-financial
instruments
£m

4,440.3

804.4

122.8

615.6

263.9

–

703.1

6,950.1

726.5

4,595.9

–

361.0

25.4

–

9.3

5,718.1

–

591.9

–

591.9

–

218.7

–

218.7

–

148.1

702.2

202.9

22.9

–

9,351.0

10,427.1

212.3

325.5

–

10,044.8

10,582.6

–

92.1

–

497.7

524.1

1,929.5

185.8

136.3

–

3,365.5

110.7

–

73.1

–

138.9

12.8

–

335.5

Total
£m

4,440.3

896.5

122.8

615.6

1,003.9

702.2

202.9

22.9

497.7

524.1

1,929.5

185.8

136.3

10,054.1

21,334.6

1,049.5

5,140.1

73.1

361.0

25.4

138.9

12.8

10,054.1

16,854.9

4,479.7

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

Current tax

Lease liabilities

Provisions

Deferred tax

Retirement benefit scheme deficits

Unit-linked liabilities

Total liabilities

Capital

1. Financial assets at fair value through profit or loss are mandatorily measured at fair value through profit or loss. Financial liabilities at fair value through profit or loss

includes £10,508.8 million of liabilities that are designated at fair value through profit or loss and £83.1 million that are mandatorily measured at fair value through profit or
loss.

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18. Financial instrument risk management continued
(a) Capital continued
(iii) Other items 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

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 are mandatorily measured at fair value through profit or loss. Financial liabilities at fair value through profit or loss

includes £14,480.0 million of liabilities that are designated at fair value through profit or loss and £136.3 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 40 and 68 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 2022

147

Notes to the accounts
continued

18. Financial instrument risk management continued
(b) Credit risk, liquidity risk and market risk continued
(i) Credit risk continued
The Group has exposure to credit risk from its normal activities where it is exposed to the risk that a counterparty will be unable to pay
amounts when due. The Group carefully manages its exposure to credit risk by monitoring exposures to individual counterparties and sectors,
monitoring counterparties’ creditworthiness, taking collateral and reducing settlement risk where possible and approving lending policies that
specify the type of acceptable collateral and lending margins. The Group’s maximum exposure to credit risk is represented by the gross
carrying value of its financial assets.

Externally published credit ratings are indicators of the level of credit risk associated with a counterparty. A breakdown of the Group’s relevant
financial assets held with rated and unrated counterparties is set out below:

Credit rating:

AAA

AA+

AA-

A+

A-

BBB+ and lower

Not rated

Cash and cash equivalents

Loans and advances to banks

Debt securities

2022
£m

230.2

233.9

135.9

2021
£m

128.0

117.4

173.5

2,576.7

2,260.3

673.5

137.2

430.5

22.0

0.4

898.6

188.3

391.3

47.5

2.4

2022
£m

–

9.0

–

41.6

65.2

7.0

–

2021
£m

–

14.8

56.2

45.0

30.6

–

6.4

–

2022
£m

317.8

0.1

11.7

331.5

112.4

47.7

47.4

99.2

36.1

4,440.3

4,207.3

122.8

153.0

1,003.9

2021
£m

279.7

76.6

16.9

286.3

8.4

15.7

8.8

158.0

90.0

940.4

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 2022, the fair value of collateral that could be sold or repledged but had not been, relating solely to these
arrangements, was £813.4 million (2021: £534.9 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.

148

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18. Financial instrument risk management continued
(b) Credit risk, liquidity risk and market risk continued
(i) Credit risk continued
Wealth Management takes a conservative approach to its treasury investments, placing them with, or purchasing debt securities issued by,
UK and overseas banks and corporates, central banks, supranational banks and sovereigns.

Expected credit losses on financial assets at amortised cost within the Wealth Management entities at 31 December 2022 were £0.3 million
(2021: £0.3 million). There were no under-performing (stage 2) or non-performing (stage 3) loans and advances to clients (2021: one under-
performing (stage 2) loan of £2.9 million and no non-performing (stage 3) loans) giving rise to no expected credit losses (2021: nil). All other
financial assets at amortised cost (excluding trade and other receivables to which the three stage model is not applied) were performing
(stage 1) (2021: same).

Expected credit losses on financial assets at fair value through other comprehensive income within the Wealth Management entities
at 31 December 2022 were £0.1 million (2021: £0.1 million). All financial assets at fair value through other comprehensive income were
performing (stage 1) (2021: 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 2022 were £70.0 million (31 December 2021: £48.6 million), the majority of which
were less than 90 days past due (31 December 2021: less than 90 days).

The Group seeks to manage its exposure to credit risk arising from debt securities and derivatives within the investment portfolio by adopting
a conservative approach and through ongoing credit analysis and may hedge some of the credit risk with credit default swaps. Corporate
bond portfolios, when in place, have an investment grade mandate, and exposure to sub-investment grade debt is low.

Most derivative positions, other than forward foreign exchange contracts and total return swaps, are taken in exchange-traded securities
where there is minimal credit risk. Forward foreign exchange positions generally have a maturity between one and three months.

The Group’s cash and cash equivalents in the non-Wealth Management entities are held primarily in current accounts, on deposit with
well-rated banks, or invested in money market or similar funds.

Expected credit losses on financial assets at amortised cost within non-Wealth Management entities at 31 December 2022 were £0.8 million
(2021: £0.8 million). All financial assets at amortised cost (excluding trade and other receivables to which the three stage model is not applied)
were performing (stage 1) (2021: 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 2022

149

Notes to the accounts
continued

18. Financial instrument risk management continued
(b) Credit risk, liquidity risk and market risk continued
(ii) Liquidity risk continued
The contractual maturity of Wealth Management financial assets and liabilities is set out below:

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

3,512.2

114.0

251.1

639.5

8.2

4,525.0

4,533.2

59.4

10.9

4,603.5

2022

1–2 years
£m

2–5 years
£m

More than
5 years
£m

–

70.7

188.4

–

259.1

–

293.8

–

293.8

–

Total
£m

3,512.2

114.0

615.6

827.9

8.2

5,077.9

4,533.2

59.4

10.9

4,603.5

(78.5)

180.6

474.4

Less than
1 year
£m

2,966.0

147.2

236.4

329.3

3.4

3,682.3

3,748.3

69.9

9.1

3,827.3

2021

1–2 years
£m

2–5 years
£m

More than
5 years
£m

–

89.8

164.6

–

254.4

–

287.0

–

287.0

–

0.8

–

0.8

–

Total
£m

2,966.0

147.2

614.0

493.9

3.4

4,224.5

3,748.3

69.9

9.1

3,827.3

(145.0)

109.4

396.4

397.2

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 segment along with the Group’s Investment capital and treasury management activities together hold cash and cash
equivalents of £897.6 million (2021: £1,109.5 million). Financial liabilities relating to other operating entities are £536.6 million (2021:
£966.4 million).

The Group has a committed revolving credit facility of £850.0 million (2021: £595.0 million), that was put in place in November 2022 (to replace
a facility of £765.0 million that was due to expire on 4 October 2024) and which expires in November 2027. The maximum amount drawn down
under the facility was £225.0 million (2021: nil). The facility was undrawn at 31 December 2022 (31 December 2021: undrawn).

(iii) Market risk
Market risk is the risk that the value of assets will fluctuate as a result of movements in factors such as market prices, interest rates and foreign
exchange rates.

Pricing risk
Pricing risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market prices other
than those arising from interest rate risk or currency risk.

In respect of financial instrument risk, the Group’s exposure to pricing risk is principally through investments held in investment capital,
seed and co-investment capital, deferred employee compensation in the form of fund awards.

150

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18. Financial instrument risk management continued
(b) Credit risk, liquidity risk and market risk continued
(iii) Market risk continued
Pricing risk continued
The Group does not hedge exposures to pricing risk except in relation to seed capital, where it is practical to do so, and in respect of deferred
employee compensation awards, where these can be matched by interests in funds managed by the Group. Where financial instruments are
held to hedge deferred compensation awards, movements in the fair value of the asset are normally offset by changes in the amounts payable
to employees (see note 3).

Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates.

Wealth Management activities
In Wealth Management, interest rate risk is monitored 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 shift
in interest rates, and the potential impact of severe but plausible stress scenarios.

Other activities
Cash held by the other operating companies is not normally expected to be placed on deposit for longer than three months and is not
exposed to significant interest rate risk.

The Group’s capital can include investments in corporate investment-grade bonds managed by the Group’s fixed income fund managers.
The market risk (including interest rate risk) exposure of these investments is actively monitored against limits set by the Board.

Foreign exchange risk
Foreign exchange risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in foreign
exchange rates.

Wealth Management activities
In Wealth Management, foreign exchange risk is monitored each day against policies and limits set by the relevant risk committees.
Foreign exchange risk is managed within set limits by the treasury departments using spot, forward and foreign exchange swap contracts.

Other activities
The Group’s policy in relation to foreign exchange risks arising from revenue, expenditure and capital currency exposure from its Asset
Management activities is generally not to hedge. The Group’s revenue is earned and expenditure incurred in many currencies and the
resulting exposure is considered to be a normal part of the Group’s business activities.

The Group also has exposure to foreign currency on financial instruments in currencies other than sterling. This has resulted in a £37.7 million loss
in the income statement (2021: £11.0 million gain) and a £148.6 million gain in other comprehensive income (2021: £19.0 million loss). 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 Group Capital Committee.

The sensitivities to market risk at 31 December are estimated as follows:

Variable1
Interest rates2

US dollar against sterling

Euro against sterling

US dollar against Euro

FTSE All-Share Index3

-increase

-decrease

-strengthen

-weaken

-strengthen

-weaken

-strengthen

-weaken

-increase

-decrease

2022

2021

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

1.5

(0.5)

(15)

(10)

(20)

(5)

(3)

(1)

(3)

(48)

1.0

(0.8)

(10)

(8)

(10)

(20)

(1)

(3)

(2)

(1)

(37)

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 2022

151

Notes to the accounts
continued

19. Share capital and share premium

Share capital primarily comprises the number of issued ordinary shares in Schroders plc multiplied by their nominal value of 20 pence each
(2021: £1 each). Share premium substantially represents the aggregate of all amounts that have ever been paid to Schroders plc when
it has issued shares. The Company has authority to buyback ordinary shares, restricted by minimum and maximum price caps and a
maximum number of shares. Any ordinary shares bought back may be cancelled or held in treasury. Unless renewed, authority will
expire at the Company’s next annual general meeting, or on 30 June 2023 if earlier.

At 1 January 2022

Enfranchisement of non-voting shares

Compensatory Bonus Issue

Sub-Division of shares

At 31 December 2022

Number
of shares
Millions

282.5

–

39.9

1,289.7

1,612.1

Ordinary
shares
£m

226.0

56.5

39.9

–

322.4

Non-voting
ordinary
shares
£m

56.5

(56.5)

–

Total
shares
£m

282.5

–

39.9

–

322.4

Share
premium
£m

124.2

–

(39.9)

–

84.3

On 20 September 2022, the Company completed the simplification of its dual share class structure. All non-voting ordinary shares were
re-designated as ordinary shares with full voting rights (Enfranchisement); holders of existing ordinary shares received a bonus issue of three
additional ordinary shares for every seventeen held (Compensatory Bonus Issue). Following the Enfranchisement and Compensatory Bonus
Issue, each ordinary share of £1 was sub-divided into five ordinary shares of 20 pence (Sub-Division).

The Compensatory Bonus Issue resulted in the Company’s share capital increasing by £39.9 million. All 39.9 million bonus shares were fully
paid at their nominal value of £1 from the Company’s share premium account.

At 1 January 2021

At 31 December 2021

Issued and fully paid:

Ordinary shares of 20p each (2021: £1 each)

Non-voting ordinary shares (2021: £1 each)

Number
of shares
Millions

282.5

Ordinary
shares
£m

226.0

Non-voting
ordinary
shares
£m

56.5

Total
shares
£m

282.5

2022
Number
of shares
Millions

1,612.1

–

1,612.1

Share
premium
£m

124.2

2021
Number
of shares
Millions

226.0

56.5

282.5

152

Schroders Annual Report and Accounts 2022

20. Own shares

Own shares are recorded by the Group when ordinary shares are acquired by the Company or acquired through employee benefit trusts.
This enables the Group to hold some of its shares 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

2022
£m

(150.2)

(120.2)

85.3

(185.1)

2021
£m

(159.8)

(75.3)

84.9

(150.2)

During the year 4.9 million own shares (2021: 2.1 million own shares) were purchased and held for hedging share-based awards. 3.7 million
shares (2021: 3.1 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

Number of
vested
shares
Millions

23.5

–

23.5

2022

Number of
unvested
shares
Millions

37.2

–

37.2

Total
Millions

60.7

–

60.7

Number of
vested
shares
Millions

3.3

–

3.3

20211

Number of
unvested
shares
Millions

5.2

–

5.2

Total
Millions

8.5

–

8.5

1. A simplification of the Company’s dual share class structure took place in 2022 (see note 19). The number of shares in 2021 comparatives have not been restated. Had

2021 been restated the number of vested shares would be 19.4 million and the number of unvested shares would be 30.6 million.

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Ordinary shares:

Cost

Fair value

Non-voting ordinary shares:

Cost

Fair value

Total:

Cost

Fair value

Vested
shares
£m

107.4

102.6

–

2022

Unvested
shares
£m

185.1

162.1

–

Total
£m

292.5

264.7

–

Vested
shares
£m

83.0

118.0

–

107.4

102.6

185.1

162.1

292.5

264.7

83.0

118.0

2021

Unvested
shares
£m

150.0

185.1

0.2

0.3

150.2

185.4

Schroders Annual Report and Accounts 2022

Total
£m

233.0

303.1

0.2

0.3

233.2

303.4

153

Notes to the accounts
continued

21. Reconciliation of net cash from operating activities

This note should be read in conjunction with the cash flow statement. It provides a reconciliation to show how profit before tax, which
is based on accounting rules, translates to cash flows.

Profit before tax

Adjustments for income statement non-cash movements:

Depreciation of property, plant and equipment and amortisation of intangible assets

Net loss/(gain) on financial instruments

Share-based payments

Net (release)/charge for provisions
Other non-cash movements1

Adjustments for which the cash effects are investing activities:

Interest (income)/expense

Interest expense on lease liabilities

Share of profit of associates and joint ventures after amortisation

Adjustments for statement of financial position movements:

Decrease/(increase) in loans and advances within Wealth Management

Decrease/(increase) in trade and other receivables

Increase in deposits and client accounts within Wealth Management

(Decrease)/increase in trade and other payables, other financial liabilities and provisions

Adjustments for Life Company and consolidated pooled investment vehicles movements:

Net decrease/(increase) in financial assets backing unit-linked liabilities

Net (decrease)/increase in unit-linked liabilities

Net (decrease)/increase in cash within consolidated pooled investment vehicles

Tax paid

Net cash from operating activities

1. Other non-cash movements primarily consist of exchange translation adjustments, before hedging activities.

2022
£m

586.9

188.9

11.0

68.2

(2.6)

43.5

309.0

(5.8)

10.6

(71.5)

(66.7)

64.5

68.9

682.7

(159.6)

656.5

2021
£m

764.1

162.8

(20.5)

89.5

1.9

(8.0)

225.7

2.0

10.8

(79.3)

(66.5)

(96.1)

(10.5)

212.9

149.4

255.7

3,102.3

(3,409.0)

(101.3)

(408.0)

(1,211.5)

1,376.9

84.1

249.5

(104.9)

(194.3)

972.8

1,234.2

154

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22. Commitments

Commitments represent amounts the Group has contractually committed to pay to third parties but do not yet represent a liability
or impact the Group’s financial results for the year.

The Group’s commitments primarily relate to investment call commitments, commitments for property, plant and equipment and future
leases not yet commenced.

The Group sublets a small number of its owned and leased properties where such properties, or parts of such properties, are not
required for use by the Group. The table below discloses the commitments sub-lessees have made in respect of such arrangements.
These commitments are not recorded on the statement of financial position in advance of the period to which they relate.

Undrawn loan facilities

Investment call commitments

Commitments for property, plant and equipment and leases

Total commitments

Operating leases receivable as lessor

Net commitments payable

Undrawn loan facilities

Investment call commitments

Commitments for property, plant and equipment and leases

Total commitments

Operating leases receivable as lessor

Net commitments payable

2022

Later than
1 year
and no later
than 5 years
£m

Later than
5 years
£m

No later than
1 year
£m

15.8

59.2

4.5

79.5

(1.0)

78.5

20.8

19.9

16.8

57.5

(2.4)

55.1

3.3

2.5

46.1

51.9

–

51.9

2021

Later than
1 year
and no later
than 5 years
£m

Later than
5 years
£m

No later than
1 year
£m

5.7

70.7

1.4

77.8

(0.8)

77.0

56.1

20.4

5.8

82.3

(2.4)

79.9

0.3

2.1

20.6

23.0

(0.5)

22.5

Total
£m

39.9

81.6

67.4

188.9

(3.4)

185.5

Total
£m

62.1

93.2

27.8

183.1

(3.7)

179.4

Office property sub-leases have a weighted average term of 2 years (2021: 3 years) and rentals are fixed for a weighted average term of 2 years
(2021: 3 years).

Schroders Annual Report and Accounts 2022

155

Notes to the accounts
continued

23. Retirement benefit obligations

The Group has two principal types of pension benefit for employees: defined benefit (DB), where the Group has an obligation to provide
participating employees with pension payments that represent a specified percentage of their final salary for each year of service, and
defined contribution (DC), where the Group’s contribution to an employee’s pension is measured as, and limited to, a specified percentage
of salary.

Accounting for DB schemes requires an assessment of the likely quantum of future pension payments to be made. If ring-fenced assets are
held specifically to meet this cost, the scheme is funded, and if not, it is unfunded. The Group periodically reviews its funded DB schemes
using actuarial specialists to assess whether it is on course to meet the expected pension payments that current and former employees
are, or will be, entitled to. In the case of a projected shortfall, a plan must be formulated to reverse the deficit.

The income statement charge or credit represents the sum of pension entitlements earned by employees in the period, plus a notional
net interest charge (if the scheme is in deficit) or income (if it is in surplus) based on the market yields on high quality corporate bonds.
Experience differences, principally the difference between actual investment returns and the notional interest amount, as well as actuarial
changes in estimating the present value of future liabilities, are recorded in other comprehensive income.

Assets or liabilities recognised in the statement of financial position represent the differences between the fair value of plan assets (if any)
and the actuarially determined estimates of the present value of future liabilities. The Group closed its largest DB scheme to future accrual
on 30 April 2011, although it still operates some small unfunded schemes overseas. This means that no future service will contribute to the
closed scheme member benefits but those members continue to have the benefits determined by the Scheme rules as at 30 April 2011.

The Group’s exposure to funding DC pension schemes is limited to the contributions it has agreed to make. These contributions generally
stop when employment ceases. The income statement charge represents the contributions the Group has agreed to make into employees’
pension schemes in that year.

The disclosures within this note are provided mainly in respect of the principal DB scheme, which is the DB section of the funded Schroders
Retirement Benefits Scheme (the Scheme).

The income statement charge for retirement benefit costs is as follows:

Pension costs – defined contribution plans

Pension credit – defined benefit plans

Other post-employment benefits

2022
£m

68.4

(2.4)

0.1

66.1

2021
£m

57.9

(0.6)

0.1

57.4

(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 2022, there were no active members in the DB section (2021: nil) and 2,572 active members in the DC section (2021: 2,249).
The weighted average duration of the Scheme’s DB obligation is 13 years (2021: 18 years). The Group expects that the plan liabilities will settle
gradually over time until all members have left the plan. On termination of the Scheme, any assets that remain after the Trustee has settled the
Scheme’s liabilities will be returned to the Group.

Membership details of the DB section of the Scheme as at 31 December are as follows:

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

2022

1,032

2021

1,116

£7.1m per annum

£7.6m per annum

1,029

982

£22.8m per annum

£21.8m 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.

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23. Retirement benefit obligations continued
(c) Risks of the Scheme
The Company and the Trustee have agreed a long-term strategy for reducing investment risk as and when appropriate. This includes
an asset-liability matching policy that aims to reduce the volatility of the funding level of the Scheme by investing in assets that perform
in line with the liabilities of the Scheme.

The most significant risks to which the Scheme exposes the Group are:

Asset volatility
The liabilities are calculated using a discount rate set with reference to corporate bond yields. If assets underperform this yield, this will reduce
the surplus or may create a deficit. The Group manages this risk by holding 51% (2021: 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 2022, the liability
matching portfolio was designed to mitigate 90% (2021: 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 2022, the liability matching
portfolio was designed to mitigate 90% (2021: 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

Average number of years future pensioners currently aged 45 are expected to live beyond age 60:

Men

Women

2022
%

4.8

3.2

2.5

3.0

2.0

Years

2021
%

2.0

3.3

2.9

3.2

2.2

Years

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 2022

157

Notes to the accounts
continued

23. Retirement benefit obligations continued
(d) Reporting at 31 December continued

Estimates and judgements
The Group estimates the carrying value of the Scheme by applying judgement to determine the assumptions as set out on page 157,
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% (2021: 1.0%) per annum.
An additional adjustment, an “A parameter” set to 0.25% (2021: 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 (2021: 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 2022.

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:

Losses/(gains) on Scheme assets in excess of that recognised in interest income

Actuarial gains due to change in demographic assumptions

Actuarial gains due to change in financial assumptions

Actuarial losses due to experience

Total other comprehensive loss/(gain) in respect of the Scheme

Other comprehensive loss in respect of other defined benefit schemes

Total other comprehensive loss/(gain) in respect of defined benefit schemes

The sensitivity of the Scheme pension liabilities to changes in assumptions are:

2022
£m

(21.0)

17.1

(3.9)

1.5

(2.4)

2022
£m

345.2

(0.2)

(299.4)

18.5

64.1

1.9

66.0

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)

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

2022

2021

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
%

34.4

(39.7)

(26.2)

25.6

(20.9)

20.6

6.0

(7.0)

(4.6)

4.5

(3.7)

3.6

66.2

(78.3)

(51.5)

51.3

(43.6)

42.9

7.6

(9.0)

(5.9)

5.5

(4.7)

4.9

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23. Retirement benefit obligations continued
(d) Reporting at 31 December 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 due to change in demographic assumptions

Actuarial gains due to change in financial assumptions

Actuarial losses due to experience

Benefits paid

Present value of funded obligations

2022
£m

2021
£m

1,070.6

1,077.2

21.0

(345.2)

(38.5)

(1.4)

706.5

(872.7)

(17.1)

0.2

299.4

(18.5)

38.5

(570.2)

14.8

20.1

(40.5)

(1.0)

1,070.6

(909.0)

(12.4)

1.0

18.6

(11.4)

40.5

(872.7)

Net assets

136.3

197.9

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 2022, 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

2022

2021

Of which not
quoted in an
active market
£m

–

92.2

–

Value
£m

752.3

307.3

(12.3)

23.3

92.2

1,070.6

Of which not
quoted in an
active market
£m

–

44.6

–

44.6

Value
£m

358.0

313.1

10.1

25.3

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Schroders Annual Report and Accounts 2022

159

Notes to the accounts
continued

24. Share-based payments

Share-based payments are remuneration payments to selected employees that take the form of an award of shares in Schroders plc.
Employees are generally not able to exercise such awards in full until three years after the award has been made, although conditions vary
between different types of award. The accounting for share-based awards settled by transferring shares to the employees (equity-settled)
differs from the accounting for similar awards settled in cash (cash-settled). The charge for equity-settled share-based payments is
determined based on the fair value of the award on the grant date. Such awards can include share awards that may or may not have
performance criteria. The initial fair value of the award takes into account the current value of shares expected to be issued (i.e. estimates
of the likely levels of forfeiture and achievement of performance criteria), and the contribution, if required, by the employee. This initial fair
value is charged to the income statement reflecting benefits received from employment, where relevant, in the performance period and
over the vesting period. The income statement charge is offset by a credit to the statement of changes in equity, where the award is
expected to be settled through the issue of shares. Such awards constituted 6.8% (2021: 8.7%) of salaries, wages and other remuneration
(see note 3).

The Group may make share-based payments to employees through awards over or linked to the value of ordinary shares and by the grant
of market value share options over ordinary shares. These arrangements involve a maximum term of ten years.

It is the Group’s practice to hedge all awards to eliminate the impact of changes in the market value of shares between the grant date and
the exercise date.

Awards that lapse or are forfeited during the vesting period result in a credit to the income statement (reversing the previous charge) in the
year in which they lapse or are forfeited.

The Group recognised total expenses of £68.1 million (2021: £92.1 million) arising from share-based payment transactions during the year,
of which £68.2 million (2021: £89.5 million) were equity-settled share-based payment transactions. In 2022, there was £1.1 million of equity
settled share based payments included within acquisition costs and related items (2021: £1.5 million).

A simplification of the Company’s dual share class structure took place in 2022 (see note 19). The 2021 comparatives have not been restated in
this note.

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.

2022
Number of
ordinary
shares
Millions

2021
Number of
ordinary
shares
Millions

Rights outstanding at 1 January

Corporate transaction

Granted

Forfeited

Exercised

Rights outstanding at 31 December

Vested

Unvested

5.2

35.0

4.5

(0.3)

(2.7)

41.7

11.7

30.0

The weighted average exercise price per share is nil. A charge of £62.3 million (2021: £79.9 million) was recognised during the year.

The table below shows the expected charges for awards issued under the Deferred Award Plan to be expensed in future years:

3.8

–

2.4

–

(1.0)

5.2

1.5

3.7

£m

21.1

8.8

5.5

35.4

2023

2024

2025+

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24. Share-based payments continued
(b) Equity Compensation Plan

Awards over ordinary shares made under the Group’s Equity Compensation Plan are charged at fair value as operating expenses in the
income statement. Fair value is determined at the date of grant and is equal to the market value of the shares at that time. The fair value
charges, adjusted to reflect actual levels of vesting, are spread over the performance period and the vesting periods of the awards. Awards
are structured as nil-cost options.

2022

Number of
ordinary
shares
Millions

2021

Number of
ordinary
shares
Millions

Number of
non-voting
ordinary shares
Millions

Rights outstanding at 1 January

Corporate transaction

Granted

Forfeited

Exercised

Rights outstanding at 31 December

Vested

Unvested

2.7

10.8

0.1

–

(1.3)

12.3

8.8

3.5

–

0.1

(0.1)

(0.8)

2.7

1.4

1.3

The weighted average exercise price per share is nil. A charge of £1.0 million (2021: £3.7 million) was recognised during the year.

The table below shows the expected charges for awards issued under the Equity Compensation Plan to be expensed in future years:

2023

0.1

–

(0.1)

–

£m

0.1

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.

2022
Number of
ordinary
shares
Millions

2021
Number of
ordinary
shares
Millions

Rights outstanding at 1 January

Corporate transaction

Granted

Forfeited

Exercised

Rights outstanding at 31 December

Vested

Unvested

1.0

4.9

–

(0.3)

5.6

3.0

2.6

The weighted average exercise price per share is nil. A charge of £2.3 million (2021: £3.6 million) was recognised during the year.

Schroders Annual Report and Accounts 2022

1.3

–

(0.1)

(0.2)

1.0

0.5

161

Notes to the accounts
continued

24. Share-based payments continued
(c) Equity Incentive Plan continued
The table below shows the expected charges for awards issued under the Equity Incentive Plan to be expensed in future years:

2023

2024

2025

(d) Long Term Incentive Plan

£m

2.0

1.3

0.6

3.9

Awards over ordinary shares made under the Group’s Long Term Incentive Plan are charged at fair value to the income statement over a
four-year vesting period. Fair value is calculated using the market value of the shares at the grant date, discounted for dividends forgone
over the vesting period of the award and adjusted based on an estimate at the year-end date of the extent to which the performance
conditions are expected to be met. Awards are structured as nil-cost options.

2022

Number of
ordinary
shares
Millions

2021

Number of
ordinary
shares
Millions

Number of
non-voting
ordinary shares
Millions

Rights outstanding at 1 January

Corporate transaction

Granted

Forfeited

Exercised

Rights outstanding at 31 December

Vested

Unvested

0.1

0.4

–

0.5

0.1

0.4

0.1

–

0.1

–

0.1

The weighted average exercise price per share is nil. A charge of £0.2 million (2021: £0.2 million) was recognised during the year.

The table below shows the expected charges for awards issued under the Long Term Incentive Plan to be expensed in future years:

2023

2024

2025

(e) Share Incentive Plan

0.1

–

(0.1)

–

£m

0.1

0.3

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 235,042 ordinary shares in 2022 (2021: 64,556). A charge of £2.4 million (2021: £2.1 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 2022, the total carrying value of liabilities arising from cash-settled share-based awards was £4.8 million (2021: £5.6 million).
The total intrinsic value at 31 December 2022 of liabilities for which the employee’s right to cash or other assets had vested by that date was
£2.7 million (2021: £2.6 million).

A credit of £0.1 million (2021: charge of £2.6 million) was recognised during the year. This credit has arisen as the liability was remeasured at
the balance sheet date at a share price of £4.36.

162

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25. Related party transactions

Transactions between the Group and parties related to the Group are required to be disclosed to the extent that they are necessary for
an understanding of the potential effect of the relationship on the financial statements. Other disclosures, such as key management
personnel compensation, are also required.

The Group is not deemed to be controlled or jointly controlled by a party directly or through intermediaries under the accounting standards.
As a result, the related parties of the Group are members of the Group, including associates and joint ventures, key management personnel,
close family members of key management personnel and any entity controlled by those parties.

Cash transactions with associates or joint ventures are reported in the cash flow statement and in note 9.

£24.5 million (2021: £41.3 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 £5.9 million (2021: £7.6 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 14).
At 31 December 2022, the fair value of these assets was £94.4 million (2021: £127.8 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

2022
£m

23.0

12.5

9.5

–

0.2

45.2

2021
£m

29.7

20.4

17.6

1.2

0.1

69.0

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.

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Schroders Annual Report and Accounts 2022

163

Notes to the accounts
continued

26. Interests in structured entities

Structured entities are those entities that have been designed so that voting or similar rights are not the dominant factor in deciding who
has control, such as when any voting rights relate to administrative tasks only, or when the relevant activities are directed by means of
contractual arrangements. The Group’s interests in consolidated and unconsolidated structured entities are described below.

The Group has interests in structured entities as a result of contractual arrangements arising from its principal activity, the management
of assets on behalf of its clients. AUM, excluding deposits by Wealth Management clients and some segregated client portfolios held within
the Group’s Asset Management business, is managed within structured entities. These structured entities typically consist of investment
vehicles such as Open Ended Investment Companies, Authorised Unit Trusts, Limited Partnerships and Sociétés d’Investissement à Capital
Variable, which entitle investors to a percentage of the vehicle’s net asset value. The vehicles are financed by the purchase of units or shares
by investors. The Group also has interests in structured entities through proprietary investments. These are mainly into vehicles that help
facilitate the Group’s stated aim of generating a return on investment capital and when it deploys seed and co-investment capital in
developing new investment strategies or as it invests alongside its clients. Additionally, the Group holds interests in structured entities for
liquidity management purposes, for example via investments in money market funds.

The Group does not guarantee returns on the investments it manages or commit to financially support its structured entities. A small
proportion of the Group’s AUM, principally real estate funds, is permitted to raise finance through loans from banks and other financial
institutions. Where external finance is raised, the Group does not provide a guarantee for the repayment of any borrowings.

The business activity of all structured entities in which the Group has an interest, is the management of assets in order to generate
investment returns for investors from capital appreciation and/or investment income. The Group earns a management fee from its
structured entities, normally based on a percentage of the entity’s net asset value, committed capital value or gross asset value and,
where contractually agreed, a performance fee or carried interest, based on outperformance against predetermined benchmarks.
In addition, where the Group owns a proportion of the structured entity it is entitled to receive investment returns.

(a) Interests arising from managing assets
The Group’s interests in structured entities arising as a result of contractual relationships from its principal activity, the management of assets
on behalf of its clients, are reflected in the Group’s AUM excluding associates and joint ventures.

Asset Management

Wealth Management

Asset Management

Wealth Management

2022

AUM outside
of structured
entities
£bn

AUM within
consolidated
structured
entities
£bn

AUM within
unconsolidated
structured
entities
£bn

281.8

88.2

370.0

228.6

9.9

238.5

8.0

–

8.0

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

11.2

–

11.2

229.8

10.0

239.8

Total
£bn

518.4

98.1

616.5

Total
£bn

534.0

81.2

615.2

Certain AUM are managed outside of structured entities. Within Asset Management, this occurs either because it is formed of segregated
investment portfolios for institutional clients comprising directly held investments in individual financial instruments, or because the voting
structures of the vehicles themselves allow the investment manager to be removed without cause. Within Wealth Management, AUM is not
generally considered to be within structured entities as the contractual relationships exist directly with the client rather than with structured
entities, for example discretionary and advisory asset management and banking services. In addition, Wealth Management AUM in the form
of loans and advances to customers is conducted outside of structured entities.

Certain structured entities are deemed to be controlled by the Group and are accounted for as subsidiaries and consolidated in accordance
with the accounting standards. AUM within consolidated structured entities represents the net assets of the beneficial interest in the
consolidated structured entity owned by third parties.

AUM within unconsolidated structured entities constitutes the remaining balance, represented principally by the net asset value of pooled
vehicles managed for Intermediary clients, as well as some assets invested in pooled vehicles on behalf of Institutional and Wealth
Management clients. The Group’s beneficial interest in structured entities is not included within AUM and is described separately overleaf.

The Group has no direct exposure to losses in relation to the AUM reported above, as the investment risk is borne by clients. The main risk
the Group faces from its interest in AUM managed on behalf of clients is the loss of fee income as a result of the withdrawal of funds by clients.
Outflows from funds are dependent on market sentiment, asset performance and investor considerations.

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26. Interests in structured entities continued
(a) Interests arising from managing assets continued
Fee income includes £1,444.4 million (2021: £1,506.1 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

2022
£m

35.4

272.4

307.8

2021
£m

22.4

287.1

309.5

(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 loss on financial instruments and other income of £7.7 million (2021: net gain of £43.8 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

2022
£m

245.2

588.0

833.2

2021
£m

177.9

686.9

864.8

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 (2021: nil).
Financial assets include seed and co-investment capital, legacy private equity investments and hedges of deferred cash awards. Of the
financial assets, £582.0 million (2021: £685.8 million) is invested in funds managed by the Group. The Group has no interest apart from its role
as investor in those funds for which it does not act as manager. The main risk the Group faces from its interests in unconsolidated structured
entities arising from proprietary investments is that the investments will decrease in value. Note 18 includes further information on the
Group’s exposure to market risk arising from proprietary investments.

The Group has contractual commitments to co-invest alongside its clients and provide a minimum level of capital for certain private assets
and alternative vehicles. The Group’s investment call commitments are set out in note 22.

The statement of financial position also includes the Life Company assets of £10,054.1 million (2021: £13,403.7 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 £95.1 million (2021: £181.4 million) to provide seed capital
to investment funds managed by the Group, of which £41.8 million (2021: £145.2 million) resulted in the consolidation of those funds and
£53.3 million (2021: £36.2 million) did not.

Schroders Annual Report and Accounts 2022

165

Notes to the accounts
continued

27. Business combinations

The Group applies the acquisition method to account for business combinations. The consideration for the acquisition of a subsidiary is
the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and any equity interests issued by the
Group. The consideration includes the fair value of any asset or liability resulting from contingent or deferred consideration arrangements.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. The Group recognises any non-controlling interest at the fair value of the proportionate share of the
acquiree’s identifiable net assets.

The Group completed four business combinations during the year ending 31 December 2022.

The most significant of these transactions completed on 11 April 2022, when the Group acquired 75% of the issued share capital of Greencoat
Capital Holdings Limited (Greencoat), a leader in European renewables, for a total consideration of £357.5 million. The acquisition contributed
£7.7 billion of Asset Management AUM and strengthens the Group’s private assets capabilities.

On 31 January 2022, the Group acquired 100% of the issued share capital of River and Mercantile Investments Limited (River and Mercantile),
the Solutions division of River and Mercantile Group plc for a total consideration of £238.6 million. The acquisition contributed £43.1 billion of
Asset Management AUM and strengthens the Group’s position in the UK fiduciary management market.

The Group completed two further acquisitions during the year for a combined consideration of £29.2 million. These acquisitions contributed
£1.2 billion of AUM.

The fair value of net assets acquired in the transactions together with goodwill and intangible assets arising are as follows:

Greencoat
£m

2022

River and
Mercantile
£m

13.0

0.9

8.4

6.0

(28.5)

(0.2)

228.2

228.4

(55.8)

(43.1)

357.5

8.9

–

22.8

–

(13.9)

17.8

154.1

87.9

(21.2)

–

238.6

357.5

238.6

–

357.5

238.6

Other
£m

5.2

0.3

2.9

1.3

(8.0)

1.7

17.9

12.5

(2.9)

–

29.2

25.8

2.8

0.6

29.2

Total
£m

27.1

1.2

34.1

7.3

(50.4)

19.3

400.2

328.8

(79.9)

(43.1)

625.3

621.9

2.8

0.6

625.3

Net assets acquired:

Cash

Property, plant and equipment

Trade and other receivables

Financial assets

Trade and other payables

Tangible net assets

Goodwill

Intangible assets arising on acquisition

Deferred tax arising on acquisition

Non-controlling interest

Total

Satisfied by:

Cash

Contingent/deferred consideration

Fair value of the Group’s pre-existing interest

Total

The goodwill arising on acquisition is attributable to the value from:

• Additional investment capabilities;
• A broader platform for business growth;
• Talented management and employees; and
• Opportunities for synergies from combining certain activities.

Goodwill will not be deductible for tax purposes.

In the period between the acquisition dates and 31 December 2022, the four acquired businesses contributed £93.8 million to the Group’s
net operating income. The contribution to operating profit was £28.1 million.

If the acquisitions had been completed on 1 January 2022, the Group’s net operating income for the year would have been £2,489.1 million
and the operating profit for the year on the same basis would have been £727.6 million.

Estimates and judgements
The fair value of certain items of consideration, assets acquired and liabilities assumed requires some estimation. For intangible assets this
estimation required assumptions regarding the level of future management fees that will be earned over the relevant period.

The net impact of changes to these assumptions would be to change the carrying value of individual assets and liabilities with a
corresponding change to goodwill.

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The consolidated cash flow statement separately presents
acquisitions and disposals of interests in consolidated pooled
vehicles. Cash movements within the pooled vehicles are shown net
within cash flows from operating activities as the cash held within the
underlying pooled investment vehicles is restricted and is not
available to the Group for corporate purposes. This presentation
provides more relevant information about the impact of the Group’s
investment in pooled vehicles on corporate cash resources than an
analysis of the underlying cash flows of the vehicles.

The Group records any non-controlling interest at the proportionate
share of the acquiree’s identifiable assets. Where an option exists to
acquire a further interest in the shares of a subsidiary a financial
liability is recognised. These liabilities are measured at the present
value of the expected amount payable on exercise. As the option
relates to a change in the ownership interest of a subsidiary, the
non-controlling interest is adjusted and changes in value are
recognised directly in equity. If these options expire unexercised,
the financial liability is derecognised with the corresponding credit
recognised directly in equity.

The most significant non-controlling interests relate to third party
interests of 19.1% in Schroders Wealth Holdings Limited (SWHL) and
49% in Schroder BOCOM Wealth Management Company Limited
(WMC BOCOM). The consolidated profit after tax of SWHL was
£61.4 million for the year (2021: £45.6 million). The net assets of
SWHL were £324.2 million at 31 December 2022 (31 December 2021:
£325.8 million). Dividends of £6.7 million were paid to SWHL’s
non-controlling interest during the year (2021: £7.9 million). The loss
after tax of WMC BOCOM was £18.3 million for the year (2021: nil).
The net assets of WMC BOCOM were £101.4 million at 31 December
2022 (2021: none). No dividends were paid to WMC BOCOM’s
non-controlling interest during the year (2021: none).

No other non-controlling interest is considered to be individually
material on the basis of the carrying value at 31 December 2022
(2021: same).

(d) Net gains and losses on foreign exchange
Many subsidiaries are denominated in currencies other than sterling.
The results of these subsidiaries are translated at the average rate
of exchange. At the year end, the assets and liabilities are translated
at the closing rate of exchange. Gains or losses on translation are
recorded in the consolidated statement of comprehensive income
and as a separate component of equity together with gains or losses
on any hedges of overseas operations. Such gains or losses are
transferred to the consolidated income statement on disposal or
liquidation of the relevant subsidiary. Transactions undertaken in
foreign currencies are translated into the functional currency of
the subsidiary at the exchange rate prevailing on the date of
the transaction.

Foreign currency assets and liabilities, other than those measured at
historical cost, are translated into the functional currency at the rates
of exchange ruling at the year end date. Any exchange differences
arising are included within the consolidated income statement.

(e) Cash and cash equivalents
Cash and cash equivalents include cash at bank and short-term
deposits with contractual maturities of less than three months.

Presentation of the financial statements
(a) Basis of preparation
The consolidated financial statements are prepared in accordance
with UK-adopted international accounting standards and in
conformity with the requirements of the Companies Act 2006.

The consolidated financial information presented within these
financial statements has been prepared on the going concern basis
under the historical cost convention, except for the measurement at
fair value of derivative financial instruments and financial assets and
liabilities that are held at fair value through profit or loss or at fair
value through other comprehensive income, liabilities to purchase
subsidiary shares, liabilities in respect of deferred cash awards and
certain deposits both with banks and by customers and banks
(including those that relate to bullion).

In making an assessment on going concern, the Directors have
considered a wide range of information relating to present and future
conditions, including future capital requirements, prediction of
profitability and cashflows. These assessments showed the Group has
sufficient capital and liquidity to support future business requirements
and adequate resources to continue as a Going Concern for at least 12
months following the approval of the financial statements.

The consolidated statement of financial position is shown in order of
liquidity. The classification between current and non-current is set
out in the notes. The Group’s Life Company business is reported
separately. If the assets and liabilities of the Group’s Life Company
business were to be included within existing captions on the
consolidated statement of financial position, the effect would be to
gross up a number of individual line items to a material extent. By not
doing this, the Group can provide a more transparent presentation
that shows the assets of the Life Company and the related unit-linked
liabilities as separate and distinct from the remainder of the
consolidated statement of financial position.

The Group’s principal accounting policies have been consistently
applied. Further information is provided below and highlighted in the
notes to the accounts.

(b) Future accounting developments
The Group did not implement the requirements of any 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 9).
Intercompany transactions and balances are eliminated on
consolidation. Consistent accounting policies have been applied
across the Group in the preparation of the consolidated financial
statements. Details of the Company’s related undertakings are
presented in note 36.

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.

Schroders Annual Report and Accounts 2022

167

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.

(g) Presentational changes
The consolidated income statement has been re-presented to show
both operating profit generated from the Group’s business segments
and profit before tax. The new presentation provides information
that is more relevant to understanding the performance of the
Group’s operating activities. It also provides greater prominence
to items of income and expense that are managed outside of the
business segments, see note 3. A reconciliation of operating profit
to profit before tax and exceptional items is provided below.

The segmental reporting note has been re-presented to reflect these
changes and to present the results of Schroders Personal Wealth
(SPW) within the share of profit from associates and joint ventures
using the equity accounting method. The results of SPW were
previously consolidated on a proportional basis within the Wealth
Management segment. This new presentation reflects changes
to the basis on which the Group monitors the performance of
the business.

Reconciliation of operating profit to profit before
tax and exceptional items

Year ended 31 December

Operating profit

Less:

Central costs

Net (loss)/gain on financial instruments
and other income

Non-banking interest income

2022
£m

2021
£m

723.0

841.0

(48.8)

(53.6)

(6.7)

6.3

(49.2)

45.3

3.5

(4.8)

Profit before tax and exceptional items

673.8

836.2

Notes to the accounts
continued

Presentation of the financial statements continued
(f) Estimates and judgements
The preparation of the consolidated financial statements in
conformity with UK-adopted international accounting standards
requires the use of certain significant accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group’s accounting policies and in determining whether
certain assets and liabilities should be recorded or an impairment
recognised. Any areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant
to the consolidated financial statements, are disclosed within the
notes and identified under the title estimates and judgements.
Estimates and judgements used in preparing the financial
statements are periodically evaluated and are based on historical
experience and other factors, including expectations of future events
that are believed to be reasonable. The resulting accounting
estimates may not equal the related actual results.

In applying IFRS 10 Consolidated Financial Statements, the Group
uses judgement to determine whether its interests in funds (and
other 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.

The other estimates and judgements that could have a significant
effect on the carrying amounts of assets and liabilities are set out in
the following notes, including sensitivities where relevant or material:

Note 2 Net operating revenue
Tax expense
Note 4
Trade and other receivables
Note 7
Financial assets and liabilities
Note 8
Note 12 Goodwill and intangible assets
Note 14 Unit-linked liabilities and assets backing unit-linked liabilities
Note 16 Provisions and contingent liabilities
Note 23 Retirement benefit obligations
Note 27 Business combinations

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.

168

Schroders Annual Report and Accounts 2022

Schroders plc – Statement of financial position
at 31 December 2022

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

2022
£m

2021
£m

1,462.4

136.3

37.5

3,092.6

4,728.8

175.9

34.1

210.0

1,427.0

197.9

33.5

3,092.6

4,751.0

25.3

49.3

74.6

4,518.8

4,676.4

4,742.9

275.3

(332.1)

(100.8)

217.7

(318.6)

34.4

4,518.8

4,676.4

The financial statements were approved by the Board of Directors on 1 March 2023 and signed on its behalf by:

Richard Keers
Director

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Schroders Annual Report and Accounts 2022

169

Schroders plc – Statement of changes in equity
for the year ended 31 December 2022

At 1 January 2022

Profit for the year

Items that will not be reclassified to the income statement:

Net actuarial loss 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

Bonus issue

Dividends

Transactions with shareholders

Transfers

At 31 December 2022

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

Notes

Share
capital
£m

282.5

Share
premium
£m

Own
shares
£m

Profit and
loss
reserve
£m

Total
£m

124.2

(134.2)

4,403.9

4,676.4

Notes

–

39.9

–

39.9

–

322.4

Share
capital
£m

282.5

–

(39.9)

–

(108.9)

–

(39.9)

(108.9)

275.3

(65.5)

16.4

(49.1)

(65.5)

16.4

(49.1)

226.2

–

61.7

(0.2)

(4.3)

(332.1)

(274.9)

(108.9)

61.7

(0.2)

(4.3)

(332.1)

(383.8)

–

84.3

75.3

(75.3)

–

(167.8)

4,279.9

4,518.8

Share
premium
£m

Own
shares
£m

Profit and
loss
reserve
£m

Total
£m

124.2

(144.1)

4,480.3

4,742.9

–

(67.7)

–

(67.7)

217.7

27.3

(6.7)

20.6

27.3

(6.7)

20.6

238.3

–

81.2

0.3

(318.6)

(237.1)

(67.7)

81.2

0.3

(318.6)

(304.8)

77.6

(77.6)

–

282.5

124.2

(134.2)

4,403.9

4,676.4

The distributable profits of Schroders plc are £2.7 billion (2021: £2.8 billion) and comprise retained profits of £2.8 billion (2021: £2.9 billion),
included within the ‘Profit and loss reserve’, less amounts held within the own shares reserve.

The Group’s ability to pay dividends is however restricted by the need to hold regulatory capital and to maintain sufficient other operating
capital to support its ongoing business activities. In addition, the Group invests in its own funds as seed capital for the purposes of supporting
new investment strategies. An analysis of the Group’s capital position is provided in note 18.

170

Schroders Annual Report and Accounts 2022

Schroders plc – Cash flow statement
for the year ended 31 December 2022

Profit before tax

Adjustments for:

(Increase)/decrease in trade and other receivables

Increase 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 finance income adjustment

Net cash from operating activities

Cash flows from financing activities:

Repayment of loan received from a Group company

Acquisition of own shares

Dividends paid

Other flows

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

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2022
£m

272.3

(31.7)

145.6

(3.9)

61.7

–

(3.0)

2021
£m

213.3

103.1

1.1

(2.4)

81.2

(9.0)

–

441.0

387.3

4.3

(108.9)

(332.1)

(4.3)

(441.0)

–

(1.0)

(67.7)

(318.6)

–

(387.3)

–

Schroders Annual Report and Accounts 2022

171

Schroders plc – Notes to the accounts

28. Significant accounting policies

The separate financial statements of Schroders plc (Company) have been prepared on a going concern basis in accordance with UK-
adopted international accounting standards and in conformity with the requirements of the Companies Act 2006. The Company has taken
advantage of the exemption in section 408 of the Act not to present its own income statement and statement of comprehensive income.

The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those
set out in the Group’s financial statement note disclosures, where applicable. In addition, note 36 sets out the accounting policy in respect
of investments in subsidiary undertakings.

29. Expenses and other disclosures
The auditor’s remuneration for audit services to the Company was £0.7 million (2021: £0.7 million). There was £0.1 million of other assurance
services in the year (2021: £0.1 million).

Key management personnel compensation
The remuneration policy is described in more detail at www.schroders.com/directors-remuneration-policy. The Company has no employees.
The key management personnel of the Company are defined as the Board of Directors. The remuneration of key management personnel,
borne by the Company, during the year was as follows:

Type of remuneration

Typical composition of this type of benefit

Short-term employee benefits

Salary and upfront bonus

Share-based payments

Other long-term benefits

Deferred share awards

Deferred cash awards

30. Trade and other receivables

Amounts due from subsidiaries

Prepayments and accrued income

Other receivables

2022
£m

5.8

3.6

1.6

11.0

2021
£m

7.7

4.8

3.0

15.5

2022
£m

2021
£m

1,461.3

1,426.2

0.1

1.0

0.5

0.3

1,462.4

1,427.0

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 2022 were £1.1 million (2021: £1.1 million). Note 18 sets out the details of
the expected credit loss calculation.

31. Trade and other payables

Trade and other payables held at amortised cost:

Social security

Accruals

Amounts owed to subsidiaries

Non-current
£m

1.3

1.0

–

2.3

2022

Current
£m

0.6

4.8

168.2

173.6

Total
£m

Non-current
£m

1.9

5.8

168.2

175.9

1.9

3.0

–

4.9

2021

Current
£m

1.1

7.2

12.1

20.4

The Company’s trade and other payables mature in the following time periods:

Less than one year

1 – 2 years

2 – 5 years

2022
£m

173.6

0.9

1.4

2.3

Total
£m

3.0

10.2

12.1

25.3

2021
£m

20.4

2.5

2.4

4.9

Amounts owed to subsidiaries include an interest-bearing loan of £7.1 million (2021: £2.8 million) that is repayable on demand.

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175.9

25.3

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32. Deferred tax

At 1 January

Income statement (credit)/charge

Income statement (credit)/charge due
to changes in tax rates

(Credit)/charge to statement of other
comprehensive income

(Credit)/charge to statement of other
comprehensive income due to
changes in tax rates

At 31 December

Deferred
employee
awards
£m

(3.1)

0.5

(0.3)

–

0.2

(2.7)

2022

2021

Losses
£m

(30.4)

(3.4)

(1.0)

–

(34.8)

Pension
surplus
£m

49.3

1.0

0.2

Total
£m

15.8

(1.9)

(1.1)

(12.5)

(3.9)

34.1

(3.7)

(3.4)

Deferred
employee
awards
£m

(3.0)

0.1

(0.2)

–

Losses
£m

–

(23.1)

(7.3)

–

(3.1)

(30.4)

Pension
surplus
£m

31.8

0.5

10.3

5.2

1.5

49.3

Total
£m

28.8

(22.5)

2.8

5.2

1.5

15.8

Net deferred tax at 31 December comprises a deferred tax asset of £37.5 million (2021: £33.5 million) and a deferred tax liability of £34.1 million
(2021: £49.3 million).

33. Financial instrument risk management
The Company’s policy is to have adequate capital for all activities undertaken in the normal course of business. In particular, it should have
adequate capital to maintain sufficient liquid funds to meet peak working capital requirements. Generally, surplus capital is loaned back to
the Group’s investment capital management entities.

The risk management processes of the Company are aligned with those of the Group as a whole. Details of the Group’s risk management
processes are outlined in the ‘Risk management’ section within the Strategic report and the ‘Risk and internal controls’ section within
the Audit and Risk Committee report as well as in note 18. The Company’s specific risk exposures are explained below.

Credit risk
The Company has exposure to credit risk from its normal activities where the risk is that a counterparty will be unable to pay in full amounts
when due. The Company’s counterparties are predominantly its subsidiaries and therefore there is minimal external credit risk exposure.

Liquidity risk
Liquidity risk is the risk that the Company cannot meet its obligations as they fall due or can only do so at a cost. The Group’s liquidity policy is
to maintain sufficient liquidity to cover any cash flow funding, meet all obligations as they fall due and maintain solvency. The Company holds
sufficient liquid funds to cover its needs in the normal course of business. The Company can recall intercompany loans to subsidiaries or utilise
the Group loan facility to maintain sufficient liquidity.

Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in market interest
rates.

At 31 December 2022, if interest rates had been 150 bps higher (2021: 100 bps higher) or 50 bps lower (2021: 75 bps lower) with all other
variables held constant, the Company estimates that profit after tax for the year would have increased by £14.9 million (2021: increased by
£10.9 million) or decreased by £5.0 million (2021: decreased by £8.2 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.

Schroders Annual Report and Accounts 2022

173

Schroders plc – Notes to the accounts
continued

34. Own shares
Movements in own shares during the year were as follows:

At 1 January

Own shares purchased

Awards vested

At 31 December

2022
£m

(134.2)

(108.9)

75.3

(167.8)

2021
£m

(144.1)

(67.7)

77.6

(134.2)

During the year 4.4 million own shares (2021: 1.9 million) were purchased and held for hedging share-based awards. 3.3 million shares
(2021: 2.8 million) awarded to employees vested in the year and were transferred out of own shares.

The total number of shares in the Company held within the Company’s employee benefit trusts comprise:

Ordinary shares

Non-voting ordinary shares

Number of
vested
shares
Millions

23.5

–

23.5

2022

Number of
unvested
shares
Millions

33.0

–

33.0

Number of
vested
shares
Millions

3.3

–

3.3

20211

Number of
unvested
shares
Millions

4.6

–

4.6

Total
Millions

56.5

–

56.5

Total
Millions

7.9

–

7.9

1. A simplification of Schroders plc’s dual share class structure took place in 2022 (see note 19). The number of shares in 2021 comparatives have not been restated.

Had 2021 been restated the number of vested shares would be 19.4 million and the number of unvested shares would be 27.1 million.

Ordinary shares:

Cost

Fair value

Non-voting ordinary shares:

Cost

Fair value

Total:

Cost

Fair value

Vested
shares
£m

107.4

102.7

–

107.4

102.7

2022

Unvested
shares
£m

167.8

143.9

–

167.8

143.9

Total
£m

275.2

246.6

–

275.2

246.6

Vested
shares
£m

83.2

118.0

–

83.2

118.0

2021

Unvested
shares
£m

134.0

161.0

0.2

0.3

134.2

161.3

Total
£m

217.2

279.0

0.2

0.3

217.4

279.3

35. 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 29), are disclosed below:

Subsidiaries of the Company

Key management personnel

Subsidiaries of the Company

Key management personnel

Revenue
£m

284.8

0.8

Expenses
£m

18.9

–

Revenue
£m

252.2

0.6

Expenses
£m

24.4

–

2022

Interest
receivable
£m

21.2

–

2021

Interest
receivable
£m

2.1

–

Interest
payable
£m

(5.4)

(0.1)

Amounts owed
by related
parties
£m

Amounts owed
to related
parties
£m

1,461.3

5.9

(168.2)

(15.0)

Interest
payable
£m

Amounts owed
by related
parties
£m

Amounts owed
to related
parties
£m

–

1,426.2

7.6

(12.1)

(33.7)

Transactions with related parties were made at market rates. The amounts outstanding are unsecured and will be settled in cash.

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36. 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 2022 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 185 to 188.

(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

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

OS,
Redeemable

100% PO Box 334, Regency Court, Glategny Esplanade, St. Peter Port,

Guernsey, GY1 3UF, Channel Islands

100%

Schroder Investment Management (Hong Kong) Limited OS

100% Level 33, Two Pacific Place, 88 Queensway, Hong Kong,

Hong Kong

Luxembourg

Schroder Investment Management (Europe) S.A.
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.

COS

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 2022

175

Schroders plc – Notes to the accounts
continued

36. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries

Name

Advison Limited

Share class Footnote %

Address

100% 31 Badgers Way, Buckingham, MK18 7EG, England

Schroders Capital Private Equity Founder Partner (GP) Limited OS

100% 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ, Scotland

Schroders Capital Private Equity Founder Partner Limited OS

Schroders Capital Private Equity GP LLP

TransPennine GP (Scot) LLP

Alderbrook Financial Planning Limited (In Liquidation)

Brian Potter Consultants Limited (In Liquidation)

Cazenove Capital Management Limited (In Liquidation)

Invicta Independent Financial Advisers Limited (In Liquidation) OS

Richard Martin Financial Solutions Limited (In Liquidation)

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 Investment Management North America Limited OS

Schroder Nominees Limited

Schroder Pension Management Limited

Schroder Pension Trustee Limited

Schroders Capital Junior Infrastructure Debt United
Kingdom GP LLP

Schroders IS Limited

UK PEM Partners Limited

Benchmark Capital Limited

Benchmark Financial Planning Limited

Best Practice IFA Group Limited

Bright Square Pensions Limited

Creative Technologies Limited

Evolution Wealth Network Limited

Fusion Wealth Limited

PP Nominees Limited

PP Trustees Limited

RIA Pension Trustees Limited

Redbourne Wealth Management Limited

Schroders Sustainable Invest Limited

Algonquin Management Partners (UK) Ltd (In Liquidation)

Chilcomb Wealth Ltd (In Liquidation)

CT Connect Limited (In Liquidation)

Fusion Funds Limited (In Liquidation)

McPhersons Walpole Harding (Financial Services) Limited
(In Liquidation)

Mitchell & Company (IFA) Limited (In Liquidation)

Mitchell & Company Holdings (Reigate) Limited (In Liquidation) OS

RJC Consultancy Limited (In Liquidation)

Waterhouse Financial Planning Limited
Australia

Schroder Australia Holdings Pty Limited
Austria

Schroder Real Estate Asset Management Österreich GmbH OS
Belgium

Algonquin Management Partners S.A.
Bermuda

Schroder Venture Managers Limited

Schroders (Bermuda) Limited

SITCO Nominees Limited
Brazil

Schroder Investment Management Brasil Ltda

COS

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% Broadlands Business Campus, Langhurstwood Road, Horsham,

West Sussex, RH12 4QP, England

100%

100% Begbies Traynor (Central) LLP, Town Wall House, Balkerne Hill,
100%

Colchester, Essex, CO3 3AD, England

100%

100% 26a-28a Bishop Street, Derry, BT48 6PP, Northern Ireland

100% Level 20, Angel Place, 123 Pitt Street, Sydney, NSW 2000, Australia

100% Zwerchäckerweg 2-10, 1220 Vienna, Austria

100% Avenue Louise, 523 – 1050, Bruxelles, Belgium

100% Wellesley House, 2nd Floor, 90 Pitts Bay Road, Pembroke HM 08,
100%

Bermuda

100%

100% Av Presidente Juscelino Kubitschek, 1327, 12º andar, sala 121,

São Paulo, SP, 04543-011, Brazil

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(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued

Name

Canada

Share class Footnote %

Address

Schroder Canada Investments Inc.

COS

100% Cidel Financial Group, 60 Bloor Street West, 9th Floor, Toronto,

Ontario, M4W 3B8, Canada

Cayman Islands

AEROW SMA Management I L.P.

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.

Schroders Capital Private Fund Management (Shanghai)
Co., Ltd.

Schroders Capital Investment Management (Beijing)
Co., Ltd.
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)

Schroders Capital Management (France) SAS

Schroders Capital Mid Infra II UP

Schroder Mid Infra UP

Schroders IDF IV UP

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 (In Liquidation)

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

Ireland

Schroder Investment Management (Ireland) Limited

OS, R

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 33T72, 33F, Shanghai World Financial Centre, 100 Century

Avenue, FTZ, Shanghai, China

100% Unit 33T52B, 33F, Shanghai World Financial Centre, 100 Century

Avenue, FTZ, Shanghai, China

100% Room 1929-1932, Winland International Finance Centre,

7 Finance 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% 5/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong,

Hong Kong

100% George's Court, 54-62 Townsend Street, Dublin 2, Ireland

Schroders Annual Report and Accounts 2022

177

Schroders plc – Notes to the accounts
continued

36. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued

Name

Japan

Share class Footnote %

Address

Schroder Investment Management (Japan) Limited

100% 8-3, Marunouchi 1-chome, Chiyoda-ku,

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.

Marmolata PE Impact 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.

Salève 2022 Partners L.P.

SC Global Opportunities Management 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 cPl Global Partners V L.P.

Schroders Capital Multi Private Credit Management L.P.

Schroders Capital Private Equity Asia Partners V L.P.

Schroders Capital Private Equity Asia Partners VI L.P.

Schroders Capital Private Equity China Partners IV 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 Innovation Partner XI 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.

178

Tokyo, 100-0005, Japan

100% 26 New Street, St. Helier, Jersey, JE2 3RA,

Channel Islands

100%

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36. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued

Name

Jersey (continued)

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.

Schroders Capital Private Equity US Partners VI L.P.

Schroders Capital Taft-Hartley Ventures Partners L.P.

TMC Management III L.P.

TMC Management IV L.P.

TMCO Management I L.P.

Wilmersdorf Secondary Management II L.P.

Cazenove Capital Holdings Limited (In Liquidation)

Schroders Capital Management Jersey Ltd

Schroders Capital Private Equity Wollstonecraft Management Ltd.

Croydon Gateway GP Limited

Croydon Gateway Investments Limited

Income Plus Real Estate Debt GP Limited

Schroder Real Estate Managers (Jersey) Limited

Schroder RECaP SSF Nominee 1 Limited

Schroder RECaP Nominee 2 Limited

SRECaP 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 S.C.S.p.

Schroders Capital Private Equity Europe Direct Management III 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.

Schroders Capital

Schroders Capital Junior Infrastructure Debt Europe II GP S.à r.l.

Schroders Capital Junior Infrastructure Debt Europe III GP S.à r.l.

Schroders Capital Junior Infrastructure Debt United Kingdom II GP S.à r.l.

Schroders Capital Junior Infrastructure Debt United Kingdom II S.C.S.p.
SICAV-RAIF

Schroders Capital Senior Crossover Infrastructure Debt Europe GP S.à r.l.

Schroders Capital Senior Crossover Infrastructure Debt Europe S.C.S.p.
SICAV-RAIF

Schroders Capital Senior Infrastructure Debt Europe V GP S.à r.l.

Share class Footnote %

Address

26 New Street, St. Helier, Jersey, JE2 3RA,
Channel Islands

44 Esplanade, St. Helier, Jersey, JE4 9WG,
Channel Islands

40 Esplanade, St. Helier, Jersey, JE2 9WB,
Channel Islands

47 Esplanade, St. Helier, Jersey, JE1 0BD,
Channel Islands

6C rue Gabriel Lippmann, Munsbach, L-5365,
Luxembourg

7, rue Robert Stümper, L-2557 Luxembourg

5 rue Höhenhof, L-1736 Senningerberg,
Luxembourg

46A Avenue J.F.Kennedy, L-1855, G.D.
Luxembourg

100%

Schroders Annual Report and Accounts 2022

179

Schroders plc – Notes to the accounts
continued

36. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Fully owned subsidiaries continued

Name

Luxembourg (continued)

Manesse PE Management S.à r.l.

PE III Management S.à r.l.

Salève Management S.à r.l.

Schroder GAIA II Global Private Equity Holding Management S.à r.l.

Schroders Capital Private Equity Asia Management VI S.à r.l.

Schroders Capital Private Equity China Management S.à r.l.

Schroders Capital Private Equity Global Innovation Management XI S.à r.l.

Schroders Capital Private Equity US Management VI S.à r.l.

IED UK GP S.à.r.l.

Schroders Capital European Operating Hotels GP S.à r.l.

Schroders Greencoat European Renewables GP S.à r.l.

Schroders Capital Real Estate Debt GP S.à r.l.

SNI Management S.à.r.l.

Schroders Capital Real Estate Asia IV S.C.S.p.
Netherlands

Schroders Capital Real Estate Netherlands B.V.

Cairn KS Management Services B.V.

Dutch REAM B.V.

HCRE Beheerder B.V.

Real Estate Fund Management B.V.

Real Estate Management B.V.

RES Participations B.V.

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
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 Taft-Hartley Income GP, LLC

Schroders Capital ERISA Flexible Secured Income GP, LLC

Schroders Capital FOCUS III GP, LLC

Schroders Capital Management (US) Inc.

Schroders Capital PERLS GP, LLC

Schroders Capital PILLARS GP, LLC

Schroders Capital Securitized Hi-Grade Flexible Total Return GP, LLC

Share class Footnote %

Address

COS

100% 17 boulevard F.W. Raiffeisen, L- 2411, Luxembourg

100%

100% 15 boulevard F.W. Raiffeisen, L-2411, Luxembourg

100%

100% 4 Rue du Fort Wallis, L-2714, Luxembourg

100% Strawinskylaan 1547, WTC, Level 14, 1077 XX

Amsterdam, Netherlands

100% Strawinskylaan 1547, WTC, Level 15, 1077 XX

Amsterdam, Netherlands

100%

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

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%

180

Schroders Annual Report and Accounts 2022

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36. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Subsidiaries where the ownership is less than 100%

Name

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)

Greencoat Buckingham GP Unlimited

Greencoat Buckingham Investments LLP

Greencoat Capital Management Investment Limited

Greencoat Carlisle Place GP LLP

Greencoat Carlisle Place Investments Limited

Greencoat Cornwall Gardens GP LLP

Greencoat Cornwall Gardens Investments Limited

Greencoat Embankment GP LLP

Greencoat Embankment Investments Limited

Greencoat GRI Investments Limited

Greencoat Hudson GP LLP

Greencoat Hudson Investments Limited

Greencoat Sejong GP LLP

Greencoat Sejong Investments Limited

Greencoat Solar GP Unlimited

Greencoat Solar II GP Unlimited

Greencoat Solar II Investments LLP

Greencoat Solar Investments LLP

Greencoat Tachbrook GP LLP

Greencoat Tachbrook Investments Limited

Greencoat Tothill GP LLP

Greencoat Tothill Investments Limited

Greencoat Villiers GP LLP

Greencoat Villiers Investments Limited

Greencoat Wilton GP LLP

Greencoat Wilton Investments Limited

Greencoat York GP LLP

Greencoat York Investments Limited

Schroders Greencoat Holdings Limited

Schroders Greencoat Investment Limited

Schroders Greencoat LLP

Greencoat GRI GP LLP

Greencoat Sejong FP LP
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

Share class Footnote %

Address

a, c

f, k

80.9% 1 London Wall Place, London, EC2Y 5AU, England

80.9%

67%

80.9%

50%

80.9% Begbies Traynor (Central) LLP, Town Wall House,

Balkerne Hill, Colchester, Essex, CO3 3AD,
England

4th Floor, The Peak, 5 Wilton Road, London,
SW1V 1AN, England

50 Lothian Road, Festival Square, Edinburgh,
EH3 9WJ, Scotland

Ing.Enrique Butty 220, Piso 12, Buenos Aires,
C1001AFB, Argentina

Vistra Corporate Services Centre, Wickhams Cay
II, Road Town, Tortola, VG1110, British Virgin
Islands

75%

95%

51%

Schroders Annual Report and Accounts 2022

181

Schroders plc – Notes to the accounts
continued

36. 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

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

France

Terre et Mer Holding SAS
Germany

CM Komplementr 06-379 GmbH & Co KG

Greencoat Capital (Deutschland) GmbH
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

Ireland

Greencoat Capital ICAV

Schroders Greencoat (Ireland) Limited

Greencoat Capital AIFM (Ireland) Limited
Jersey

AAF Management I L.P.

GPEP Management II L.P.

GPEP Management III L.P.

Schroder Adveq Europe Management III 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.

Share class Footnote %

Address

f, k

51%

35.7%

51%

20%

89%

65%

76%

63%

88%

75%

65%

59%

70%

87%

51%

Maples Corporate Services Limited, PO Box 309,
Ugland House, Grand Cayman, KY1-1104,
Cayman Islands

Maples & Calder, PO Box 309 GT, Ugland House,
South Church Street, George Town, Grand
Cayman, Cayman Islands

302 Block 9 No 697 Weihai Road, Jing’An,
Shanghai, China

Fl.59, Wheelock Square, 1717 West Nanjing Road,
Jingan District, Shanghai, China

80%

1 rue Euler, 75008, Paris, France

Taunustor 1, 60310, Frankfurt, Germany

Cranachstraße 15, 40235, Düsseldorf, Germany

PO Box 255, Trafalgar Court, Les Banques, St.
Peter Port, Guernsey, GY1 3QL, Channel Islands

Level 33, 88 Queensway, Hong Kong, Hong Kong

30th Floor, Indonesia Stock Exchange Building,
Tower 1, Jl Jendral Sudirman Kav 52-53, Jakarta,
12190, Indonesia

32 Molesworth Street, Dublin 2, Ireland

Riverside One, 37-42 John Rogerson’s Quay,
Dublin 2, D02 X576, Ireland

26 New Street, St. Helier, Jersey, JE2 3RA,
Channel Islands

95%

75%

50%

51%

99%

75%

48%

70%

87.9%

53%

70%

73%

74%

182

Schroders Annual Report and Accounts 2022

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Name

Jersey (continued)

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.
BlueOrchard Financial Inclusion Fund SCA SICAV-RAIF
BlueOrchard Latin America and Caribbean Gender, Diversity and Inclusion
Fund SCA SICAV-RAIF
Schroders Capital Real Estate Asia IV GP S.à r.l.

Schroder Property Services B.V.
Schroders Capital Hotel (CIP) S.C.S.p.

SEOHF (CIP) S.C.S.p.

SEOHF AGGREGATOR (CIP) S.C.S.p.

SRE ReLF (CIP) S.C.S.p.

SRE SoHo (CIP) S.C.S.p.
SRE Invest S.C.S.p.
Mexico

Consultora Schroders, S.A. de C.V.

Netherlands

Data Invest B.V.
Frame Offices B.V.
ITC Invest B.V.
RES Retail B.V.
RES Transit II B.V.

Schroders Greencoat (Nederland) B.V.

Peru

BlueOrchard America Latina S.A.C.

Singapore

BlueOrchard Investments Singapore Pte. Ltd

Pamfleet Asset Management (Singapore) Pte. Limited
Switzerland

BlueOrchard Finance AG
United States

Schroders Greencoat US LLC

Greencoat Columbus GP LLC

Greencoat Columbus II GP LLC

Share class Footnote %

Address

OS
OS
OS, PI
OS, PI

OS
PI

PI
PI

OS
OS
OS
OS
OS, PS

26 New Street, St. Helier, Jersey, JE2 3RA,
Channel Islands

1 rue Goethe, L-1637, Luxembourg City,
Luxembourg

2 rue d’Alsace, L-1122 Luxembourg, Grand Duchy
of Luxembourg

4 rue du Fort Wallis, 2714 Luxembourg, Grand
Duchy of Luxembourg

5 rue Höhenhof, L-1736 Senningerberg,
Luxembourg

46%

78%

71%

53%

51%

73%

54%

49%

71%

90%
90%
90%
90%

51%

70%
76.3%

47.3%

22.4%

h, i
h, i
i
i

88.8%
87.8%
82.3% 15 boulevard F.W. Raiffeisen, L-2411, Luxembourg

d, e

99% Montes Urales 760 Desp. 101, Col. Lomas de

Chapultepec, Mexico, DF, 11000, Mexico

Amsterdam, Netherlands

21.9% Strawinskylaan 1547, WTC Level 15, 1077 XX
40%
35.5%
51.5%
58.7%

75% Willem Beukelsstraat 9, 1097 CP, Amsterdam,

Netherlands

90%

Calle Dean, Valdivia 227, Office 501, San Isidro,
Lima, Peru

90%

3 Church Street, #25-01 Samsung Hub, 049483,
Singapore

51%

61 Club Street, Singapore 069436, Singapore

90%

Seefeldstrasse 233, 8008, Zurich, Switzerland

75%

251 Little Falls Drive, City of Wilmington, County of
New Castle, Delaware 19808, USA

75% Maples Fiduciary Services (Delaware) Inc., 4001
Kennett Pike, Suite 302, Wilmington, Delaware
19807, USA

75%

f, k

Schroders Annual Report and Accounts 2022

183

Schroders plc – Notes to the accounts
continued

36. Subsidiaries and other related undertakings continued
(a) Related undertakings arising from the Company’s corporate structure continued
Associates and joint ventures

Share class Footnote

Address

OS
OS

OS
PI
PI
PI
OS

Name
UK
Chartered Independent Limited

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
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
Schroder Ventures Investments Limited

India
Axis Asset Management Company Limited
Axis Mutual Fund Trustee Limited

Jersey
Bracknell General Partner Limited
UK Retirement Living (CIP) GP Limited
Singapore
Akaria Natural Capital Pte. Ltd

Nippon Life Global Investors Singapore Limited

Planar Investments Private Ltd

United States
A10 Capital Parent Company LLC

f
f

OS, R, D, B
Preference

OS
OS

d, e

49%

20%

49%

6 Church Street, Wellington, Telford, TF1 1DG,
England
125-135 Preston Road, Fifth Floor Telecom
House, Brighton, BN1 6AF, England
15 Bowling Green Lane, London, EC1R 0BD,
England

30.8% Quays Office Park, Conference Avenue,

20%
49%

Portishead, Bristol, BS20 7LZ, England
24 Greville Street, London, EC1N 8SS, England
20 Ryefield Business Park, Belton Road, Silsden,
Keighley, West Yorkshire, BD20 0EE, England

52.4% Kestrel House, Alma Road, Romsey, Hampshire,

49%

33%
50%
50%
50%
24%

SO51 8ED, England
Santon House, 53-55 Uxbridge Road, London,
W5 5SA, England
1 London Wall Place, London, EC2Y 5AU, England

Beck House, Abbey Road, Shepley, Huddersfield,
HD8 8EP, England

49.9% 25 Gresham Street, London, EC2V 7HN, England

50.1% Level 9, 60 Castlereagh St., Sydney NSW 2000,

Australia

33%

Avenue Louise, 523 – 1050 Bruxelles, Belgium

30%

36%

50%

25%
25%

50%
50%

Vistra Corporate Services Centre, Wickhams Cay
II, Road Town, Tortola, VG1110, British Virgin
Islands

2nd Floor Bank of Communications Tower, 188
Middle Yincheng Road, Pudong New Area,
Shanghai, 200120, China

1 rue Euler, 75008, Paris, France

PO Box 255, Trafalgar Court Les Banques, St.
Peter Port, Guernsey, GY1 3QL, Channel Islands

1st Floor, Axis House C-2 Wadia International
Centre, Pandurang Budhkar Marg, Worli-
Mumbai, 400025, India

47 Esplanade, St. Helier, Jersey, JE1 0BD,
Channel Islands

40%

1 Robinson Road, #18-00, AIA Tower, 048542,
Singapore
138 Market Street, #34-02, CapitaGreen,
Singapore, 048946, Singapore
24.1% 1 Phillip Street, #06-00, Royal One Phillip,

33%

Singapore, 048692, Singapore

COS

19.3% 1209 Orange Street, Wilmington, Delaware,

19801, USA

Share class abbreviations

Footnotes

Capital shares.
Common stock.

CS
COS
NCRPS Non-cumulative redeemable preference shares.
CPS
D
OS
PI
PS
R

Convertible preference shares.
Deferred shares.
Ordinary shares.
Partnership interest.
Promote shares.
Redeemable preference shares.

184

a Owned through Schroder Wealth Holdings Limited.
b Held directly by the Company.
c Dormant Company.
d The Company holds ordinary B shares.
e The Company holds ordinary A shares.
f Financial year end 31 March.*
g Owned through Pamfleet Holdings (Hong Kong) Limited.
h Financial year end 30 June.*
i Owned through BlueOrchard Finance AG.
j Financial year end 31 May.*
k Owned through Schroders Greencoat Holdings Limited.
* Entities where the year end is not coterminous with the group primarily relate to

those which were acquired in recent years.

Schroders Annual Report and Accounts 2022

36. 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.

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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

87%

17%

52%

49%

71%

59%

39%

90%

99%

15%

51%

33%

81%

16%

25%

62%

24%

99%

33%

43%

185

Share/unit class

A Accumulation

Unspecified

I Accumulation

Share/unit class

I Accumulation

X Accumulation

Z Accumulation

X Accumulation

P Accumulation

Unspecified

A Distribution MV2 HKD

A Distribution MV HKD

89%

88%

98%

54%

91%

59%

39%

90%

99%

28%

A Distribution MV2 CNY Hedged 73%

A Distribution MV AUD Hedged

15%

A Distribution MV2 AUD Hedged 90%

A Distribution MV CNY Hedged

A Accumulation

A Distribution MV2

A Distribution MV

I Accumulation

C Accumulation

Unspecified

I Accumulation

I Accumulation GBP Hedged

I Accumulation

C Accumulation

I Accumulation

18%

98%

94%

10%

100%

92%

51%

33%

81%

23%

100%

29%

100%

36%

38%

100%

Fully owned subsidiaries

Fund Name

Brazil

Schroder Best Ideas ESG

Schroder Premium Diversified Credit Vintage A FIC FIM CP

Schroder Premium Vintage A FIC FIRF CP
Luxembourg

Schroder ISF Carbon Neutral Credit 2040

Schroder ISF Social Impact Credit

Schroder ISF Sustainable Emerging Markets ex China Synergy

Schroders Capital Semi-Liquid Circular Economy Private Plus

Subsidiaries where the ownership is less than 100%

Fund Name

Schroder Diversified Growth Fund

Schroder Global Sovereign Bond Tracker Component Fund

Schroder Multi-Asset Total Return Fund

Schroder Sustainable Future Multi-Asset Fund

Schroder Sustainable Multi-Factor Equity Fund
Australia

Schroder Australian Equity Long Short Fund
Brazil

Schroder Best Ideas FIA

Schroder Core Plus FIC FIA

Schroder Premium Diversified Credit FIC FIM CP
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 ISF Carbon Neutral Credit

Schroder ISF Changing Lifestyles

Schroder ISF Digital Infrastructure

Schroder ISF Dynamic Indian Income Bond

Schroder ISF Emerging Markets Equity Impact

Schroder ISF European Innovators

Schroders Annual Report and Accounts 2022

Schroders plc – Notes to the accounts
continued

36. 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 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 Value

Schroder ISF Sustainable Future Trends

Schroder ISF Sustainable US Dollar Short Duration Bond

Schroders Capital Semi-Liquid Global Innovation Private Plus

Schroders Capital Semi-Liquid Global Real Estate Total Return

SSSF Wealth Management USD Cautious

SSSF Wealth Management USD Growth
United States

Hartford Schroders Diversified Emerging Markets Fund

Hartford Schroders ESG US Equity Fund

Associates

Fund Name

Schroder Global Emerging Markets Fund

Schroder Global Equity Component Fund

Schroder India Equity Fund

Schroder Long Dated Corporate Bond Fund
Luxembourg

ICBC (Europe) UCITS SICAV

Schroder ISF Nordic Smaller Companies
United States

Share/unit class

I Accumulation

C Accumulation

I Accumulation

S Accumulation

SD Distribution

I Distribution

Share/unit class

A Accumulation

X Accumulation

I Accumulation

X Accumulation USD

I Accumulation

Schroder Global Sustainable Growth (Canada)

Unspecified

Significant holdings in structured entities not classified as subsidiaries or associates

Fund Name

Schroder European Fund

Schroder Global Corporate Bond Managed Credit Component Fund

Schroder Global Energy Transition Fund

Schroder Global Equity Fund

Schroder Institutional Pacific

Schroder Institutional UK Smaller Companies

Schroder QEP Global Active Value Fund

Schroder QEP Global Core Fund

Schroder Sterling Broad Market Bond Fund

Schroder Sustainable Bond Fund

Schroder Tokyo Fund

Schroder UK-Listed Equity Income Maximiser Fund

Schroder US Equity Income Maximiser Fund
Australia

Schroder Equity Opportunities Fund

186

Share/unit class

I Income

I Accumulation

X Accumulation

S Accumulation

I Accumulation

I Accumulation GBP Hedged

I Accumulation

X Accumulation

I Accumulation

X Income

A Income

L Accumulation

L Accumulation GBP Hedged

I Accumulation

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

34%

36%

66%

100%

23%

70%

100%

33%

74%

99%

100%

74%

79%

49%

22%

36%

39%

96%

14%

39%

51%

33%

62%

99%

84%

51%

42%

49%

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

50%

48%

29%

56%

33%

100%

29%

27%

21%

33%

23%

29%

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

28%

39%

24%

36%

100%

25%

100%

99%

25%

37%

100%

20%

98%

85%

100%

10%

20%

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36. Subsidiaries and other related undertakings continued
(b) Related undertakings arising from the Company’s interests in structured entities continued
Significant holdings in structured entities not classified as subsidiaries or associates continued

Fund Name

Cayman Islands

Share/unit class

Holding in
share/unit class

Total holding
in undertaking
via share/unit class

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)
Guernsey

Schroder Institutional Developing Markets
Hong Kong

Schroder Asian Asset Income Fund
Luxembourg

BlueOrchard Sustainable Asset Fund

Schroder Alternative Solutions Commodity Fund

Schroder Alternative Solutions Commodity Total Return Fund

B Income

I Accumulation USD

Unspecified

I Accumulation GBP Hedged

I Accumulation EUR Hedged

I Accumulation GBP Hedged

Schroder Property FCP - FIS - Schroder Property Eurologistics Fund No.1 (A)

Schroder Property FCP - FIS - Schroder Property Eurologistics Fund No.1 (B)

Schroder GAIA BlueTrend

Schroder GAIA Helix

Schroder GAIA Oaktree Credit

Schroder ISF Alternative Securitised Income

Schroder ISF Carbon Neutral Credit

Schroder ISF Commodity

Schroder ISF Emerging Europe

C Accumulation CHF Hedged

C Accumulation GBP Hedged

I Accumulation

IZ Accumulation

I Accumulation

X9 Accumulation

100%

45%

99%

97%

99%

100%

56%

76%

48%

50%

100%

23%

43%

51%

Schroder ISF Emerging Markets Debt Absolute Return

I Accumulation EUR Hedged

100%

Schroder ISF EURO High Yield

Schroder ISF Global Cities

Schroder ISF Global Corporate Bond

Schroder ISF Global Credit High Income

Schroder ISF Global Credit Income

Schroder ISF Global Equity Yield

Schroder ISF Global Gold

Schroder ISF Global High Yield

Schroder ISF Global Multi-Asset Balanced

Schroder ISF Global Multi-Asset Income

Schroder ISF Global Recovery

Schroder ISF Global Sustainable Growth

Schroder ISF Inflation Plus

Schroder ISF Japanese Equity

Schroder ISF Japanese Opportunities

Schroder ISF Multi-Asset Total Return

Schroder ISF Nordic Micro Cap

Schroder ISF Smart Manufacturing

Schroder ISF Strategic Bond

Schroder ISF Sustainable European Market Neutral

Schroder ISF Sustainable Global Multi Credit

Schroder ISF Sustainable Multi-Asset Income

Schroder ISF Sustainable Swiss Equity

Schroder ISF US Dollar Bond

SIF Core Insurance Linked Securities

SSSF Diversified Alternative Assets

SSSF Wealth Management USD Balanced
United States

Hartford Schroders China A Fund

Hartford Schroders International Contrarian Value Fund

Hartford Schroders Securitized Income Fund

Hartford Schroders Sustainable International Core Fund

Schroders Annual Report and Accounts 2022

I Accumulation

C Accumulation BRL Hedged

I Accumulation GBP Hedged

I Accumulation

I Accumulation EUR

I Accumulation EUR Hedged

22%

97%

90%

100%

99%

I Accumulation GBP Hedged

100%

I Accumulation CHF Hedged

I Accumulation

I Accumulation GBP Hedged

I Accumulation

I Accumulation EUR Hedged

I Accumulation

I Accumulation EUR Hedged

I Accumulation

I Accumulation EUR Hedged

C Accumulation

I Accumulation EUR Hedged

C Accumulation

I Accumulation

I Accumulation EUR Hedged

I Accumulation

S Accumulation

SD Accumulation

Unspecified

SD Distribution

Unspecified

94%

21%

44%

63%

38%

86%

100%

89%

100%

21%

99%

100%

20%

84%

24%

27%

100%

99%

45%

99%

45%

16%

15%

18%

15%

14%

49%

15%

49%

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Schroders plc – Notes to the accounts
continued

36. Subsidiaries and other related undertakings continued
(b) Related undertakings arising from the Company’s interests in structured entities continued

The registered offices for each of the related undertakings listed on pages 185 to 187 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

Guernsey

PO Box 255, Trafalgar Court, Les Banques, St Peter Port, Guernsey

Hong Kong

HBSC Institutional Trust Services (Asia) Limited, 1 Queen’s Road Central,
Hong Kong

Japan
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 Diversified Emerging Markets Fund
Hartford Schroders ESG US Equity Fund
Hartford Schroders International Contrarian Value Fund
Hartford Schroders Securitized Income Fund
Hartford Schroders Sustainable International Core Fund

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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 2022 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

Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. To evaluate
the Directors’ assessment of the Group and Parent company’s ability
to continue to adopt the going concern basis of accounting, we have:

• assessed the assumptions used in management’s five-year

forecast by comparing to internal management information and
external market sources. We also determined that the model is
appropriate to enable management to make an assessment of the
going concern of the Group for a period of twelve months from the
date the financial statements are approved. We also performed
back-testing on prior year forecasts by comparing them to the
Group’s results over the same periods;

the requirements of the Companies Act 2006.

• 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 determined by management by considering the key risks
identified by management, our understanding of the business and
the external market environment. We evaluated the assumptions
used in the scenarios by comparing them to internal management
information and external market sources, tested the clerical
accuracy and assessed the conclusions reached in the stress
and reverse stress test scenarios;

• assessed the plausibility of the available options identified by

management to mitigate the impact of the key risks by comparing
them to our understanding of the Group;

• performed enquiries of management and those charged with
governance to identify risks or events that may impact the
Group’s ability to continue as a going concern. We also reviewed
the management paper approved by the Board and minutes of
meetings of the Board and its committees; and

• assessed the appropriateness of the going concern disclosures

by comparing them to management’s assessment for consistency
and for compliance with the relevant reporting requirements.

Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group
and Parent company’s ability to continue as a going concern for
twelve months from the date the Annual Report and Accounts
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.

We have audited the financial statements of Schroders plc (the
‘Parent company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2022 which comprise:

Group

Parent company

Consolidated income statement
for the year ended 31 December
2022

Schroders plc – Statement of
financial position at
31 December 2022

Consolidated statement of
comprehensive income for the
year ended 31 December 2022

Schroders plc – Statement of
changes in equity for the
year ended 31 December 2022

Schroders plc – Cash flow
statement for the year ended
31 December 2022

Schroders plc – Notes to the
accounts 28 to 36

Consolidated statement of
financial position at
31 December 2022

Consolidated statement of
changes in equity for the
year ended 31 December 2022

Consolidated cash flow
statement for the year ended
31 December 2022

Notes to the accounts 1 to 27
and Presentation of the financial
statements

The financial reporting framework that has been applied in
their preparation is applicable law and UK-adopted international
accounting standards and, as regards the Parent company financial
statements, as applied in accordance with section 408 of the
Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities
under those standards are further described in the ‘Auditor’s
responsibilities for the audit of the financial statements’ section of
our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Independence
We are independent of the Group and Parent company in accordance
with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the Financial Reporting
Council’s (‘FRC’) Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.

The non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the Group or the Parent company and we remain
independent of the Group and the Parent company in conducting
the audit.

Schroders Annual Report and Accounts 2022

189

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

The charts below illustrate the coverage obtained from the work
performed by our audit teams.

legal entities domiciled in 27 countries.
• We performed an audit of the complete
financial information of six legal entities
and audit procedures on specific balances
for a further 25 legal entities.

• The legal entities where we performed full
or specific audit procedures accounted for
95% of profit before tax, 93% of revenue
and 97% of total assets.

• Certain of the Group’s processes over

financial reporting are centralised in the
finance operations hubs of London,
Luxembourg, Singapore and Zurich.
Where appropriate, our testing was
performed in these locations.

Profit before tax

Revenue

Full scope entities

73% (2021: 68%)

Specific scope entities

22% (2021: 18%)

Other procedures

5% (2021: 14%)

Full scope entities

62% (2021: 64%)

Specific scope entities

31% (2021: 26%)

Other procedures

7% (2021: 10%)

Key audit matters

• Improper recognition of revenue

Materiality

• Improper recognition of cost of sales

• Accounting for corporate activity

• Overall Group materiality of £36 million,
which represents 5% of operating profit.

An overview of the scope of the Parent company
and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for
each entity within the Group. Taken together, this enables us to form
an opinion on the consolidated financial statements. We take into
account size, risk profile, the organisation of the Group and
effectiveness of Group-wide controls, changes in the business
environment and other factors, such as recent internal audit results,
when assessing the level of work to be performed at each entity.

In assessing the risk of material misstatement to the Group financial
statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements, we selected 31 legal
entities within the following countries: United Kingdom, Luxembourg,
Switzerland, Singapore, Australia, China, Guernsey, Indonesia, Japan
and United States of America.

Of the 31 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 25 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 5% of the Group’s
profit before tax, we performed procedures, including: analytical
review; obtaining cash confirmations; and testing of consolidation
journals and intercompany eliminations, centralised processes and
controls, and foreign currency translation recalculations, to respond
to potential risks of material misstatement of the Group financial
statements.

Changes from the prior year
Schroder Administration Limited was previously considered to be
a specific scope entity, but was not considered to be specific or full
scope for the current year audit.

PT Schroder Investment Management Indonesia, Benchmark Capital
Limited, Bank of Communications China Wealth Management
Company, BlueOrchard Asset Management (Luxembourg), S.A.,
Best Practice IFA Group Limited and Creative Technologies Limited
are considered to be specific scope entities for the current year
audit. These entities were previously considered to be neither
specific nor full scope.

Schroders IS Limited (formerly River and Mercantile Investments
Limited) and Schroders Greencoat LLP were new entities acquired
in the year. We consider these entities to be specific scope for the
current year audit.

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, cost of sales, administrative expenses,
variable compensation, provisions and intercompany transactions.

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.

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The Group team has maintained oversight of component teams
through use of remote collaboration platforms, in-person visits and
virtual meetings, in particular with the Luxembourg, Zurich and
Singapore audit teams. This allowed the Group team to gain a greater
understanding of the business issues faced in each location, discuss
the audit approach with the local team and any issues arising from
their work, review relevant audit working papers, and attend
meetings with local management.

Climate change
The Group has determined that the majority of its climate-related risk
lies in the assets it manages on behalf of its clients. This is primarily
explained on pages 46 to 47 in the Task Force for Climate related
Financial Disclosures and on pages 42 to 45 in the Risk Management
section of the Annual Report and Accounts. The Group has also
explained their climate commitments on pages 26 to 33. All of these
disclosures form part of the ‘Other information’. Our procedures on
these unaudited disclosures therefore consisted solely of considering
whether they are materially inconsistent with the financial
statements, or our knowledge obtained in the course of the audit,
or otherwise appear to be materially misstated, in line with our
responsibilities in relation to ‘Other information’.

In planning and performing our audit, we assessed the potential
impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.

As explained in the Estimates and Judgements section of the
Presentation of the financial statements on page 168, climate
risks have been considered in the preparation of the consolidated
financial statements where management consider it appropriate.
The principal areas of consideration by management include the

measurement of financial assets and impairment assessments.

Our audit effort in considering the impact of climate change on the
financial statements was focused on assessing whether the effects
of potential climate risks have been appropriately reflected by
management in reaching their judgments in relation to the
measurement of financial assets and the impairment assessments.
As part of this evaluation, we performed our own risk assessment
to determine the risks of material misstatement in the financial
statements from climate change, which needed to be considered
in our audit.

We also challenged the Directors’ considerations of climate
change risks in their assessment of going concern and viability
and associated disclosures.

Based on our work, we have not identified the impact of climate
change on the financial statements to be a key audit matter or as
a factor that impacts a key audit matter.

Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in our opinion thereon,
and we do not provide a separate opinion on these matters.

Risk

Group only risk:

Our response to the risk

We have:

Improper recognition of revenue (£2,891.7 million, 2021:
£2,959.5 million)

Refer to the Audit and Risk Committee report (page 68) and Note 2 of
the Consolidated financial statements (pages 122 to 125)

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. For example, performance fees,
fees related to segregated accounts and fees generated from private
assets 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,

certain private assets fees and carried interest; and

• inappropriate judgments are made by management in the

calculation and recognition of carried interest.

• 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;

• confirmed our understanding of the procedures and controls in

place for businesses acquired in the period with material revenue
streams, principally Greencoat and R&M (now Schroders IS
Limited);

• 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;

Schroders Annual Report and Accounts 2022

191

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.

• 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 the 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
funds with carried interest arrangements, 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, challenged the discount rate applied;
and traced the discounted carried interest income to the revenue
recorded;

• performance fees: for a sample of performance fees, agreed the
inputs used in the performance fee calculations to third party
sources and legal agreements, recalculating the value of the fee
and tracing the amounts invoiced to the revenue recorded;
• certain private assets fees: for a sample of private assets fees,

agreed the inputs used in the fee calculation to third party sources
and legal agreements, recalculating the value of the fee and
tracing amounts invoiced to revenue recorded;

• review of other information: inspected the global complaints

• management override: in order to address the residual risk of

management override we have performed enquiries of
management, read minutes of board and committee meetings
held throughout the year and performed journal entry testing.

We performed full and specific scope audit procedures over this risk
area in four locations, which covered 95% of the total revenue. Due to
the centralised nature of the revenue process, the majority of our
testing was performed in London for Asset Management revenue,
and London and Zurich for Wealth Management revenue.

Based on the procedures performed, we have no matters to report in respect of revenue recognition.

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Risk

Group only risk:

Our response to the risk

We have:

Improper recognition of cost of sales (£530.3 million, 2021:
£556.4 million)

Refer to the Audit and Risk Committee report (page 68) and Note 2
of the Consolidated financial statements (pages 122 to 125)

Schroders has fee expense agreements in place with many parties.
These expenses include commissions, carried interest payable,
external fund manager fees, expenses paid on behalf of UK-managed
funds, and distribution fees payable to financial institutions,
investment platform providers and financial advisers. The expenses
are generally based on AUM.

The following are identified as the key risks or subjective areas in
correctly recognising fee expenses:

• not all agreements in place have been identified and accounted

for;

• fee expense terms have not been correctly interpreted;
• AUM has not been properly identified or attributed to clients or

third parties with fee expense arrangements; and

• inappropriate judgments are made by management in the

calculation of carried interest payable.

There is also the risk that management may influence the recognition
of cost of sales in order to meet market expectations or net operating
revenue-based targets.

• 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 funds with carried interest arrangements: agreed
the inputs used in the carried interest calculations to accounting
records, third party sources and legal agreements; recalculated
the value of the carried interest liability; and traced the discounted
carried interest expense to the cost of sales recorded;

• review of other information: inspected the global complaints
register and operational incident log to identify errors in fee
expenses or control deficiencies, and determined whether
fee expense errors, 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 of board and committee meetings
held throughout the year and performed journal entry testing.

We performed full and specific scope audit procedures over this
risk area in London, which covered 88% 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.

Schroders Annual Report and Accounts 2022

193

Independent auditor’s report to the members of Schroders plc
continued

Risk

Group only risk:

Our response to the risk

We have:

Accounting for corporate activity (additions to goodwill and
acquired intangible assets £732.6 million, 2021: £2.3 million)

Refer to the Audit and Risk Committee report (page 68) and Notes 12
and 27 of the Consolidated financial statements (pages 137-138 and 166)

Accounting for acquisitions, investments and disposals can be
complex. Management must use their judgment to determine how
these transactions should be accounted for and disclosed in the
consolidated financial statements. There is a risk that the approach
adopted by management may not be in line with the applicable
accounting standards: IFRS 3 – Business Combinations (‘IFRS 3’),
IFRS 10 – Consolidated Financial Statements (‘IFRS 10’) and IAS 38 –
Intangible Assets (‘IAS 38’).

In 2022, management completed:

• the acquisition of River and Mercantile Group Plc’s UK Solutions
division, which consists of River and Mercantile Investments
Limited (‘R&M’), for consideration of £239 million. The acquisition
completed on 31 January 2022;

• the acquisition of Cairn Real Estate B.V. (‘Cairn’) for consideration
of £26 million. The acquisition completed on 31 January 2022; and

• the acquisition of a 75% shareholding in Greencoat Capital

Holdings Limited (‘Greencoat’), for consideration of £358 million.
The acquisition completed on 11 April 2022.

For each of the acquisitions, intangible assets and goodwill arose
where the fair value of the consideration exceeded the fair value
of the net tangible assets acquired. Management are required to
estimate the value of the intangible assets recognised on acquisition.
The assessment is subjective and requires a number of estimates
to be made by management in respect of: future revenues, profit
margins, discount rates and duration of client relationships. There
is a risk that inaccurate estimates made by management could lead
to the incorrect valuation of intangible assets being recognised.

Management must use their judgment to assess whether any
retrospective adjustments are required to the provisional amounts
recognised at the acquisition date to reflect new information
obtained during the year.

• confirmed and updated our understanding of the processes

and controls in place through walkthrough procedures;

• understood the nature of each transaction by reading the relevant
legal agreements and other supporting documentation to assess
whether material contractual obligations had been accounted for;

• challenged the accounting judgments made by forming an

independent view of how the transactions should be accounted
for, and compared this to management’s existent accounting;

• read management’s papers, including any retrospective

adjustments made to the provisional amounts recognised at
the acquisition date, to assess whether the methodology used
to identify and ascribe value to the intangible assets acquired is in
accordance with IAS 38 and market practice valuation techniques;

• with the support of our valuation specialists, challenged the
methodology and key assumptions used in the calculation of
intangible assets identified on acquisition;

• agreed the total consideration used in the calculation of goodwill

to agreements and other supporting documentation and
discussed with management the treatment of certain items as
consideration or remuneration under the accounting standards;
• challenged the judgments and estimates used in the valuation of

the redemption liability with the support of our valuation
specialists;

• challenged management regarding the inputs into the redemption
liability year-end valuation model, including considering external
data such as, the impact of changes to UK energy rates, market
sentiment to investment strategies, and other relevant external
factors;

• traced the final amounts through to the underlying accounting

records; and

• reviewed the relevant disclosures in the Annual Report and

Accounts.

The acquisition of Greencoat gave rise to a redemption liability,
recognising a put option available over the remaining equity, and
a non-controlling interest (‘NCI’). Management must consider the
appropriate accounting treatment for the redemption liability and
NCI. The accounting for these arrangements is complex and there
are multiple acceptable approaches. There is a risk that an
inappropriate accounting judgment could result in an incorrect
valuation of the liability and NCI recognised.
Key observations communicated to the Schroders Audit and Risk Committee
All transactions tested have been materially accounted for in accordance with IFRS 10, IAS 36 and IFRS 3. The valuation of intangible assets
recognised on acquisition are within a reasonable range. The valuation at acquisition of the Greencoat financial liability in respect of the
option to purchase the remaining NCI is within a reasonable range. Based on our procedures performed, we have no matters to report
in respect of accounting for corporate activity.

Prior year comparison
In the current year, our auditor’s report includes a key audit matter in relation to ‘Accounting for corporate activity’. This matter resulted in
increased audit effort in the current year due to the number and materiality of transactions undertaken during the year and their overall
significance to the Schroders business. Accounting for transactions outside the ordinary course of business can be complex and management
must make specific accounting judgments for each transaction.

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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 £36 million (2021:
£42 million), which is 5% of operating profit (2021: 5% of profit
before tax and exceptional items). For the 2022 Half-year financial
statements and onwards, Schroders management elected to stop
separately reporting exceptional items on the face of the Income
Statement. This change resulted in us reassessing the appropriate
measurement basis for materiality. We believe that operating profit
is the most relevant performance measure to the stakeholders of
the entity.

We determined materiality for the Parent company to be £45 million
(2021: £47 million), which is 1% (2021: 1%) of net assets. The Parent
company primarily holds investments in Group entities and, therefore,
net assets is considered to be the key focus for users of the financial
statements.

During the course of our audit, we reassessed initial materiality
based on 31 December 2022 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% (2021: 75%) of our planning
materiality, namely £27 million (2021: £31 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
£5.4 million to £14.9 million (2021: £6.2 million to £17.1 million).

Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.

We agreed with the Audit and Risk Committee that we would report
to them all uncorrected audit differences in excess of £1.8 million
(2021: £2.1 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 113 and 198 to 204, including
the Strategic report, Governance, and Shareholder information
sections, other than the financial statements and our auditor’s report
thereon. The Directors are responsible for the other information in
the Annual Report.

Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance
conclusion thereon.

Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of
the audit, or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a
material misstatement of the other information, we are required to
report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the Directors’ Remuneration report
to be audited has been properly prepared in accordance with
the Companies Act 2006.

In our opinion, based on the work undertaken in the course
of the audit:

• the information given in the Strategic report and the Directors’

report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and

• the Strategic report and the Directors’ report have been prepared

in accordance with applicable legal requirements.

Matters on which we are required to report by
exception
In light of the knowledge and understanding of the Group and the
Parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic
report or the Directors’ report.

We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:

• adequate accounting records have not been kept by the Parent

company, or returns adequate for our audit have not been received
from branches not visited by us; or

• the Parent company financial statements and the part of the

Directors’ Remuneration report to be audited are not in agreement
with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are

not made; or

• we have not received all the information and explanations we

require for our audit.

Schroders Annual Report and Accounts 2022

195

Independent auditor’s report to the members of Schroders plc
continued

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 49;

• 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 49;

• 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 49;

• Directors’ statement on fair, balanced and understandable, as set

out on page 113;

• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks, as set out on pages 42-45;
• the section of the Annual Report that describes the review of

effectiveness of risk management and internal control systems,
as set out on page 70; and

• the section describing the work of the Audit and Risk Committee,

as set out on pages 68-75.

Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities
set out on page 113, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.

In preparing the financial statements, the Directors are responsible
for assessing the Group and Parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent company
or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of these financial statements.

Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. The extent to
which our procedures are capable of detecting irregularities,
including fraud, is detailed below.

However, the primary responsibility for the prevention and detection
of fraud rests with both those charged with governance of the Parent
company and management.

• We obtained an understanding of the legal and regulatory

frameworks that are applicable to the Group and determined
that the most significant are those that relate to the reporting
framework (UK-adopted international accounting standards, the
Companies Act 2006 and UK Corporate Governance Code) and
relevant tax compliance regulations. In addition, we concluded that
there are certain significant laws and regulations which may have
an effect on the determination of the amounts and disclosures in
the financial statements being the Listing Rules and relevant
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,
Chief Risk Officer, Head of Internal Audit and the Chairman of the
Audit and Risk Committee. We corroborated our understanding
through our review of board and committee meeting minutes,
papers provided to the Audit and Risk Committee, and
correspondence received from the PRA and FCA.

• We assessed the susceptibility of the Group’s financial statements
to material misstatement, including how fraud might occur, by
meeting with management to understand where they considered
there was susceptibility to fraud. We also considered performance
targets and their potential influence on efforts made by
management to manage or influence the perceptions of analysts.
We considered the controls that the Group has established to
address risks identified, or that otherwise prevent, deter and
detect fraud; and how senior management monitors these
controls. Where the risk was considered to be higher, we
performed audit procedures to address each identified fraud risk.
• Based on this understanding we designed our audit procedures to
identify non-compliance with such laws and regulations identified
in the paragraphs above. Our procedures involved: journal entry
testing, with a focus on manual journals and journals indicating
large or unusual transactions based on our understanding of the
business; enquiries of senior management, including those at full
and specific scope entities; and focused testing, as referred to in
the key audit matters section above.

A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.

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Schroders Annual Report and Accounts 2022

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 five years, covering the years
ended 2018 to 2022.

• 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

1 March 2023

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Notes:
1. The maintenance and integrity of the Schroders plc website is the responsibility

of the Directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website.

2. Legislation in the United Kingdom governing the preparation and dissemination

of financial statements may differ from legislation in other jurisdictions.

Schroders Annual Report and Accounts 2022

197

Shareholder
information

Shareholder information

Five-year consolidated financial summary

Glossary

200

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Schroders Annual Report and Accounts 2022

199

Shareholder information

Schroders plc
Registered in England and Wales Company No. 3909886

Registered office
1 London Wall Place, London, EC2Y 5AU
Tel: +44 (0) 207 658 6000
Email: companysecretary@schroders.com
Website: www.schroders.com

Share Registrar
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ

UK Shareholder helpline:
Freephone (UK callers only): 0800 923 1530
International: +44 117 378 8170
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*

* Date to be confirmed.

23 March 2023

24 March 2023

12 April 2023

27 April 2023

4 May 2023

27 July 2023

September 2023

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 27 April
2023 at 11:30am.

Investor Centre
Computershare is the Company’s share registrar. Investor Centre is
Computershare’s free, self-service website where shareholders can
manage their interests online.

The website enables shareholders to:

• View share balances

• Change address details

• View payment and tax information

• Update payment instructions

• Update communication instructions

Shareholders can register their email address at investorcentre.co.uk
to be notified electronically of events such as AGMs, and can receive
shareholder communications such as the Annual Report and
Accounts and the Notice of Meeting online.

Enquiries and notifications concerning dividends, share certificates
or transfers and address changes should be sent to the Registrar.

Dividends
Paying dividends into a bank or building society account helps reduce
the risk of fraud and will provide you with quicker access to your
funds than payment by cheque. Applications for an electronic
mandate can be made by contacting the Registrar.

If your dividend is paid directly into your bank or building society
account, you will receive an annual consolidated dividend
confirmation, which will be sent to you in September each
year at the time the interim dividend is paid.

Dividend confirmations are available electronically at
investorcentre.co.uk to those shareholders who have their payments
mandated to their bank or building society accounts and who have
expressed a preference for electronic communications.

The Company operates a Dividend Reinvestment Plan (DRIP), which
provides shareholders with a way of increasing their shareholding in
the Company by reinvesting their dividends. A copy of the DRIP terms
and conditions and application form can be obtained from the
Registrar.

Details of dividend payments can be found in the Directors’ report
on page 109.

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 implications of simplification of the
Schroders plc dual share class structure
Information on capital gains tax relating to the Enfranchisement,
Compensatory Bonus issue and Sub-Division of Schroders plc
shares that took place in September 2022 can be found on the
Company’s website.

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Five-year consolidated financial summary

Operating profit before tax

Tax

Operating profit after tax

Profit before tax

Tax

Profit after tax

Operating earnings per share:
Basic earnings per share1
Diluted earnings per share1

Earnings per share:
Basic earnings per share1
Diluted earnings per share1

Dividends:

Cost (£m)
Pence per share2

Total equity (£m)

2022
£m

723.0

(123.6)

599.4

2022
£m

586.9

(100.7)

486.2

2022
Pence

37.4

36.7

2022
Pence

30.4

29.9

2022

332.1

21.4

2021
£m

841.0

(147.4)

693.6

2021
£m

764.1

(140.3)

623.8

2021
Pence

43.0

42.2

2021
Pence

38.7

38.1

2021

318.6

20.4

2020
£m

698.5

(134.9)

563.6

2020
£m

610.5

(124.5)

486.0

2020
Pence

34.9

34.3

2020
Pence

30.2

29.7

2020

311.7

20.0

2019
£m

709.7

(144.2)

565.5

2019
£m

624.6

(128.9)

495.7

2019
Pence

35.6

35.0

2019
Pence

31.4

30.8

2019

312.3

20.0

2018
£m

779.7

(166.1)

613.6

2018
£m

649.9

(145.2)

504.7

2018
Pence

38.8

38.1

2018
Pence

32.1

31.5

2018

311.7

20.0

4,479.7

4,425.7

4,085.9

3,847.5

3,621.2

Net assets per share (pence)3

278

275

253

239

225

Group employees at year end 31 December

United Kingdom

Europe, Middle East and Africa

Americas

Asia Pacific

2022
Number

2021
Number

2020
Number

3,788

1,031

427

1,188

6,434

3,329

940

388

1,093

5,750

3,188

938

379

1,066

5,571

2019
Number

3,284

964

376

1,049

5,673

2018
Number

2,798

873

369

999

5,039

1. See note 5 for the basis of this calculation. Prior year comparatives have been restated following the simplification of the Company’s dual share class structure (see note 19).
2. Dividends per share are those amounts approved by the shareholders to be paid within the year on a per share basis to the shareholders on the register at the specified

dates. Prior year comparatives have been restated following the simplification of the Company’s dual share class structure (see note 19).

3. Net assets per share are calculated by using the actual number of shares in issue at the year end date. Prior year comparatives have been restated following the

simplification of the Company’s dual share class structure (see note 19).

Exchange rates – closing 31 December

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

Schroders Annual Report and Accounts 2022

2022

1.13

1.20

1.11

1.77

9.39

158.72

1.61

8.36

2022

1.17

1.24

1.18

1.78

9.71

161.25

1.71

8.32

2021

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

2020

1.12

1.37

1.21

1.77

10.60

141.13

1.81

8.89

2020

1.13

1.29

1.21

1.87

10.05

137.89

1.78

8.86

2019

1.18

1.32

1.28

1.88

10.32

143.97

1.78

9.23

2019

1.14

1.28

1.27

1.84

10.03

139.63

1.74

8.83

2018

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
201

Glossary

About our business areas

Schroders Capital

Gives investors access to opportunities in private markets, such as real
estate, private equity and infrastructure, as well as alternatives.

Schroders 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.

Schroders Wealth Management

Provides wealth management and financial planning for ultra-high-
net-worth, high-net-worth and affluent individuals and charity clients
as well as family offices and advisers.

Alternative Performance Measures

An Alternative Performance Measure (APM) is a financial measure of
historical or future financial performance, financial position, or
cashflows, other than a financial measure defined or specified in the
applicable financial reporting framework. The Group’s APMs are
defined below.

Exceptional items

Exceptional items are significant items of income and expenditure that
were previously presented separately by virtue of their nature. They
related principally to items arising from acquisitions undertaken by the
Group.

Operating earnings per share

Operating profit after tax excluding non-controlling operating
earnings divided by the relevant weighted average number of shares
(see note 5). The presentation of operating earnings per share
provides transparency from our operational activities to aid
understanding of the financial performance.

Operating profit

Profit before tax but excluding revenue and expenditure that does not
fall into the core operations of Asset Management or Wealth
Management, or are acquisition related in nature (see note 3).

Payout ratio

The total dividend per share in respect of the year (see note 6) divided
by the operating 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.

Total compensation ratio

Compensation costs, excluding those recognised within ‘Acquisition
costs and related items’, divided by net operating income. By targeting
a total compensation ratio of 45% to 49%, depending upon market
conditions, we align the interests of shareholders and employees.

Active asset management
The management of investments based on active decision-making rather
than with the objective of replicating the return of an index.

Alpha
Excess return over market returns relative to a market benchmark.

Article 8 and Article 9
See Sustainable Finance Disclosure Regulation.

Assets under management (AUM)
AUM represents the aggregate value of client assets managed, advised or
otherwise contracted, from which the Group, including joint ventures and
associates, earns operating revenue.

Asset Management AUM includes investment management, fiduciary
management and liability management services. For Schroders Capital
Private Equity, the aggregate value of assets managed includes client
commitments on which we earn fees. This is changed to the lower of
committed funds and net asset value, typically after seven years from the
initial investment, in line with the fee basis.

Wealth Management AUM comprises the aggregate value of assets
where Schroders provides advice or discretionary management (Advised
AUM), platform services (Platform AUM) and investment management
services (Managed AUM). Advised AUM comprises assets where
Schroders provides discretionary or advisory management services
including assets where the client independently makes investment
decisions. Platform AUM represents the value of assets on the
Benchmark Fusion platform. The Fusion platform enables financial
advisors to administer and manage their clients’ accounts by providing
dealing and settlement services, valuation statements and custody
services through a third party. Managed AUM includes assets where the
client invests in Schroders’ funds.

Basis point (bps)
One one-hundredth of a percentage point (0.01%).

2e)

Carbon dioxide equivalent (CO
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.

Carbon Disclosure Project (CDP)
CDP is a not-for-profit charity that runs the global disclosure system for
investors, companies, cities, states and regions to manage their
environmental impacts.

Client investment performance
Client investment performance is a measure of how investments are
performing relative to a benchmark or other comparator. As an active
asset manager, we prioritise consistently delivering positive investment
outcomes for our clients which is why our three-year investment
performance is a key performance indicator for the Group. It is calculated
internally by Schroders to give shareholders and financial analysts
general guidance on how our invested assets are performing. The data is
aggregated and is intended to provide information for comparison to
prior reporting periods only. It is not intended for clients or potential
clients investing in our products. All calculations for investment
performance are made gross of fees with the exception of those for which
the stated comparator is a net of fees competitor ranking. When a
product’s investment performance is disclosed in product or client
documentation it is specific to the strategy or product. Performance will
either be shown net of fees at the relevant fund share-class level or it will
be shown gross of fees with a fee schedule for the strategy supplied.

The calculation includes virtually all applicable assets under management
that have a complete track record over the one year, three year and
five-year reporting periods, respectively.

202

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Applicable assets under management does not include our joint ventures
and associates and excludes £79.3 billion of assets, principally comprising
those managed by third parties or held on an execution-only basis, assets
managed by Schroders Capital Real Estate Hotels, non-discretionary
assets and assets held on a custody-only basis as well as Wealth
Management platform assets on the Benchmark Fusion platform.
Performance is calculated relative to the relevant comparator for each
investment strategy as summarised below. These fall into one of four
categories, the percentages for each of which refer to the three-year
calculation:

• For 72% 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 12% of
assets in the calculation.

• Assets with no specific outperformance objective, including those with
a buy and maintain objective, are measured against a cash alternative,
if applicable. This applies to 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.

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.

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.

Family offices
These manage and/or advise on the financial affairs and investments of
ultra-high net worth individuals or families.

Fiduciary Management
A form of investing where pension scheme trustees delegate some or all
of the investment decisions to a third party ‘fiduciary manager’. This
reduces the day-to-day governance burden on trustees. Fiduciary
management offerings will often include investment advice and a
portfolio which consists of a growth solution and a liability-driven
investment (LDI) solution.

Financed emissions
Absolute emissions that banks and investors finance through their loans
and investments. Schroders’ in scope financed emissions include all
mandatory asset classes required by the Science Based Targets initiative,
which consist of our listed equity, corporate bond, real estate investment
trust and exchange-traded fund exposure.

Fundraising
This is a term used in our Schroders Capital business comprising new
funds invested into our products and contractual commitments from
clients to invest their capital in the future.

Gilt crisis
The UK government’s 23 September 2022 mini-budget caused sharp falls
in the pound’s exchange rate and UK government bond prices as a result
of fears the government would be unable to fund its Growth Plan 2022.

Greenhouse Gas (GHG) Protocol
Greenhouse gas protocol, a global standardised framework to measure
and manage greenhouse gas emissions.

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.

Integration of ESG factors
The incorporation of a range of risks and opportunities related to
environmental, social and governance (ESG) factors into the investment
decision-making process. In principle, this leads to a broader assessment
of the drivers of business and asset valuations than traditional financial
analysis alone, particularly in the long term.

Recognising that no standard framework exists to assess the integration
of ESG factors into investment processes, we have developed a
proprietary accreditation framework which we apply to our investment
processes. Different investment strategies may consider different ESG
factors as part of their investment process and apply them in different
ways. The ESG factors may not be the primary factors that influence an
investment decision. The framework requires investment teams to
describe how ESG factors are incorporated into their investment
processes and provides a consistent basis on which to assess how those
factors are taken into account.

For certain businesses acquired more recently we have not yet accredited
the integration of ESG factors into investment decision making. A small
portion of our business for which the integration of ESG factors 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.

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 2022

203

Glossary
continued

Life Company
Schroder Pension Management Limited, a wholly owned subsidiary, which
provides investment products through a life assurance wrapper.

Renewably sourced electricity
Electricity that is directly or indirectly (via Renewable Energy Certificates)
procured from a verifiable renewable source.

MSCI ESG rating
The Morgan Stanley Capital International ESG rating is designed to
measure a company’s resilience to long-term, industry material ESG risks.

Net new business (NNB)
New funds from clients less funds withdrawn by clients. This is also
described as net inflows (when positive) or net outflows (when negative).
These are calculated as at 31 December 2022 on the basis of actual
funding provided or withdrawn.

Net operating income
A sub-total comprising net operating revenue, share of profit of
associates and joint ventures, and other operating income.

Net operating revenue
A sub-total consisting of revenue less cost of sales as defined in note 2 of
the financial statements.

Net operating income revenue margins
Net operating revenue excluding performance fees, net carried interest
and real estate transaction fees divided by the relevant average AUM.

Net zero / net zero target
Net zero emissions is achieved when the amount of emitted greenhouse
gases are balanced by the equivalent of emissions removed. 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.

Other operating income
Other operating income primarily relates to gains and losses on
co-investments and foreign exchange.

Passive products
Products whose stated objective is to replicate the return of an index.

Performance based revenues
Includes fee types such as performance fees and net carried interest
income. Performance fees are earned when contractually agreed
performance levels are exceeded.

Pillar 1, 2 and 3
Pillar 1 sets rule-based minimum capital standards. Pillar 2 establishes
the approach to supervisory review and the setting of individual capital
requirements, taking into consideration the firm’s own assessment of
how much capital is required to support the business. Pillar 3 sets
disclosure requirements, which aim to promote market discipline by
enabling market participants to access information relating to regulatory
capital and risk exposures. See www.schroders.com/pillar3.

Platforms
Platforms in the UK savings market offer a range of investment products
such as unit trusts, Individual Saving Accounts (ISAs), unit-linked life and
pension bonds and Self-Invested Personal Pensions (SIPPs) to facilitate
investment in many funds from different managers through one portal.

Portfolio temperature score
The temperature score is calculated in accordance with the CDP-WWF
temperature rating methodology. 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.

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 43.11% of the ordinary shares of Schroders plc.

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.

SBTi
The Science Based Targets initiative defines and promotes best practice
in science-based target setting. Offering a range of target-setting
resources and guidance, the SBTi independently assesses and approves
companies’ targets in line with its criteria.

Science-based target

A science-based target provides a clearly-defined pathway for companies
to reduce their greenhouse gas emissions. The target is considered
‘science-based’ if it is in line with what the latest climate science deems
necessary to meet the goals of the Paris Agreement – limiting global
warming to well below 2°C above pre-industrial levels and pursuing
efforts to limit warming to 1.5°C.

Scope 1 / Scope 2 / Scope 3
See GHG. Scope 1 is direct greenhouse gas emissions from sources
owned or controlled by the company, such as emissions from gas, oil and
company vehicles. Scope 2 is indirect greenhouse gas emissions from
sources owned or controlled by the company, such as emissions from
consumption of purchased electricity, heat or steam. Scope 3 is indirect
greenhouse gas emissions from sources not owned or controlled by the
company, such as emissions from business travel or investments.

Seed and co-investment capital
Seed capital comprises an initial investment put into a fund or strategy 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 Disclosure Regulation (SFDR)
Under the EU’s Sustainable Finance Disclosure Regulation, asset
managers have to disclose how sustainability risks are considered in their
investment processes and which of their products meet the disclosure
requirements of ‘Article 6’, ‘Article 8’ and ‘Article 9’. ‘Article 8’ products
promote environmental or social characteristics amongst others, but do
not necessarily have them as their overarching objective. ‘Article 9’
products must have sustainable investment as their objective. ‘Article 6’
products are those products that are in-scope of SFDR, but do not meet
the requirements for Article 8 or Article 9.

SustainEx™
Schroders’ proprietary estimate of the net ‘impact’ that an issuer may
create in terms of social and environmental ‘costs’ or ‘benefits’. It uses
certain metrics with respect to that issuer, and quantifies them positively
(for example, by paying ‘fair wages’) and negatively (for example, the
carbon an issuer emits) to produce an aggregate notional measure of the
issuer’s social and environmental ‘externalities’. The aim of the model is to
enable our investors to assess the investments they may make, having
regard to such measures, and the risks those issuers potentially face if the
social and environmental ‘costs’ they create were to be reflected in their
own financial costs.

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.

204

Schroders Annual Report and Accounts 2022

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