Welcome to the Schroders 2018 Annual Results Meeting. And for those of you who haven't been to London Wall Place, welcome to our new home. We are going to follow a running order this morning very similar to prior years. I'm going to talk briefly about the flows, Richard is going to take you through the details of the numbers and the initiatives. I'm going to come back and talk more about strategy and then we'll do Q&A. Overall, we were pleased with what was a robust set of results and what was -- a clearly a challenging environment. Last year was characterized by lots of important strategic initiatives. If we just take you through the headline numbers, clearly you can see that revenues were up 3%, profits down 5% to £761 million and the dividend up £0.01 penny to £0.114. Those are the numbers that you've got in front of you. What I would like to say -- just briefly put that in the longer term context. This meeting, last year, we were heading to point out 2 things that happened

One is we've earned more performance fees than we would normally expect to earn. And the second that we had a one-off windfall from compensation increased deferrals, which meant that the accounting charge for compensation last year fell and flattered last year's numbers. This year it reverses and hurts this year's numbers. So if you to look through that longer-term trend, we think this is a resilient set of results. And if we get into the details of flows, I'll take you through each of the segments one by one. And the longer-term contracts, clearly, this is disappointing. What this doesn't show, of course, is the £85 billion of unfunded new wins, which we have announced the £80 billion from Lloyd's, another £5 million, which we haven't previously announced. So there are negative headwinds in here, but there is also some good areas of strength. What we saw here is, if you just take the high level, wealth management saw £1.7 billion inflow, Intermediary saw £4.6 billion outflow and our Institutional business saw a £6.6 billion outflow. So net of £11.2 billion out and asset management £1.7 billion in, coming back to £9.5 billion. This is the breakdown by region. The Americas, as we've talked about in the past, we continue to see that turnaround in America. Here we show £2.5 billion of inflow, £2.2 billion of that was in the Institutional channel. And what was pleasing was a very broad array of fund areas that money came into, particularly actually in equities, which was positive. The Hartford relationship, which we talked about before, brought in £1.4 billion of assets. And if you look in the lead tables of U.S. that was a very, very credible performance at the time of pressure in the U.S. We had a one-off outflow, which frustrating in Mexico of £1.9 billion, which is in those Americas numbers. The UK Institutional saw £0.6 billion inflow, there was £0.5 billion out in Intermediary, but £1.7 billion in new wealth, so you can see that number coming and positive inflows in the UK. And there we saw an outflow, £1.6 billion on the Institutional side, predominately actually Middle East, which we count as Europe, and there was another outflow in Nordics. The more important number there is on the Intermediary side, which was £4.5 billion of outflow. Predominantly in those countries, which are dominated by risk of environment. So particularly, the 2 big markets which contributed to that was Switzerland, where obviously the big GFIGs are based and Italy. We did positive flows, particular in Germany, which was very pleasing and its an important market for us, in fact a little bit of work on private assets. And Asia-Pacific, and here, the story, I think, is one of mature markets and growth markets. So we saw the vast majority of that, 90% of that -- 99% of that is Institutional, £6.2 billion of outflows in Japan and £3.7 billion of outflows in Australia. The Australian issue we talked about in the past, which is the pressure about restructuring and the super funds moving themselves. The Japanese number was nearly on one client. So we had one very large client moves that money out. And I think one of the characteristics that we feel of the business at the moment is that we're winning very large mandates. But inevitably, we're winning large mandates. You're going to have lumpy outflows. So we've had -- on both sides of the balance sheet, we had the potential a couple years ago going out. We had very big influence in Friends Life. This year we've announced the Scottish Widows transaction, but I think the characteristic of that was we made very good progress in a lot of the other Asian markets, the growth markets. We saw those two big Institutional outflows. It was a source of frustration. In terms of the balance of flow by asset class, I think, I was much more pleased because we're seeing rewards in the areas that we've been investing. So multi asset saw £4.8 billion inflow, of which about £4.5 billion was Institutional. And importantly, good contribution in the UK Private assets, we saw inflows across nearly all of our private asset strategies, £2 billion of that was Institutional, £0.3 Intermediary. Wealth management continued inflows, which again is pleasing. Fixed income was where that outflow was in the Institutional side in Japan. So broadly speaking, £7 billion of the £8.3 billion was in Institutional and the balance was a small outflow to Intermediary. Equities, the outflows there were characterized particularly by outflows in the UK equities, which was a little over £5 billion. And from comp strategies which were particularly in Australia. The flip side of that is we saw very good inflows into Asia and emerging markets. So there was a very much a developed market outflow and emerging market inflow tone within the flows, within equities. So lots of moving parts, ebbs over a very diversified business and we're trying to give you 2 minutes of summary of the whole thing, it is not easy to do. Richard will take you through the revenue implications of all that, because I think what's important is that our overall gross margin held up well in the -- which was a reflection of the shape of money that's coming both in and out. At this point, I'm going to hand over to Richard, who'll go through the detailed numbers and I'll come back and talk about our overall strategy. Thank you.

Thank you, Peter, and good morning, everybody. As you just heard, 2018 has been an important year for us. We have made good progress against a number of our strategic priorities, and we have delivered on some of our key operational objectives, including our new front office investment platform, which went live in second half. And our moving to our new Quebec headquarters. These strategic developments have had an impact in this year's results, which I'll explain in more detail shortly, but let me start by putting the results in context. This slide shows the normal breakdown of the movement in profits, which before exceptional items and tax decreased by 5% to £761 million. Profit after exceptionals, a gain before tax was £650 million. But before we look at the results in more detail, there are 2 key points that I want to focus on and Peter did touch on this. Firstly, the movement in pre-exceptional profits. Last year, I highlighted a couple of one-off benefits that increased profits by around £58 million. We generated unusually high performance fees of £78 million in 2017, which was significantly above our long-term experience of around £40 million. We also had a one-off accounting benefit that led us to reduce our comp ratio by about 1 percentage point or £20 million in 2017. About half of that benefit unwound this year. In this context, we are pleased with the underlying performance, which is very similar to last year, despite a much more challenging environment. The second area of focus is our exceptional items. As you know, these are normally acquisition related including amortization of intangible assets. But this year, following the operational changes we have made and are making, they include £56 million of expenses from a significant cost reduction program. This is unusual step for us, but we believe it is important to realize efficiencies from investments we are making particularly in technology. We are continuing to reshape our business model aligned to our growth ambitions and to address the industry headwinds. This enables us to manage our total cost ratio and still reward our people appropriately. The goal is to ensure we are able to attract and retain the best talent over the long term. Given the one-off nature of such a program and because it does not reflect the ongoing costs of the business, we have displayed it separately in our results. We expect exceptional items to return to more normal levels in 2019 of around £40 million, which are mainly historic acquisition-related costs. Overall and particularly given the market backdrop, we see this is good set of results with the delivery as an important milestones. Now let me go through some of the key other points, starting with net income. Net operating revenues increased by £61 million, driven by 6% in average -- increase in average AUM. As you know, the movement is normally driven by 4 things

investment returns, FX, net new business and acquisitions. Markets were relatively weak in 2018 with most standing year before below where they started. However, across the year, markets increased our average AUM by £23 billion relative to 2017. That resulted in a £28 million increase in revenues. But FX has been a negative for us this year. On average, Sterling was stronger in 2018 compared to 2017. As a result, FX fully offset the benefit of stronger markets. What this picture tells you is that the main driver of revenue growth was net new business and acquisitions. Given our outflows this year, the growth in revenue from flows might be surprising. So let's spend a few moments looking at how flows have impacted our results. Total net operating revenue for the group grew by £61 million, and as I showed, £41 million of that was due to flows. You remember that the annualized revenue is an important measure for us. It shows the impact we can expect to revenue from each flow over 12 months. And to fully understand the impact, you need to look at the picture over a 2-year period. The chart shows you that we had a strong tailwind going into 2018 that came from annualized revenues on 2017 flows, which generated £39 million of additional income in 2018. On top of that, we started the year well and flows continued to increase in the first quarter, pushing up the cumulative annualized revenues still further. That trend stopped in Q2 as market uncertainty combined with some client restructuring their investment strategies led to outflows. These outflows pulled down cumulative annualized revenues over the remainder of the year. Nevertheless, 2018 net flows still added £2 million to our revenues resulting in total contribution from flows of £41 million. In 2019, we will see revenue decline -- a revenue decline of £35 million from the 2018 outflows. If we look across the 2 years, the picture is still one of revenue growth with £30 million of additional revenues on the back of no net new business. That's because on average we have lost lower margin business, but gained it via strategies at higher rates such as private assets, which is part of the reason our net operating revenues margins have held up at 47 basis points even though the external fee pressures are still real. The other significant factor is acquisitions as we increased our private asset capabilities. Let's look at the net operating revenue progression at a channel level starting with Wealth Management. As you know, Wealth Management is one of our strategic priorities. The growth we've seen here is again good, where net operating revenue is up 6% to £282 million. That was driven mainly by a £12 million increase in management fees. A small increase came from net banking interest, which more than offset the slight reduction in transaction fees. Net operating revenues from benchmark capital increased by £3 million to £13 million, that's in addition to other revenues of £8 million on assets under administration. Let's focus on the chart on the right. This shows sustained growth with £13 million of annualized revenue generated on net inflows of £4 billion across the 2 years. Importantly and in contrast with the rest of the group, we have a tailwind from flows in 2018 which will add to our revenues in 2019. We will also see significant growth opportunities through Schroders Personal Wealth, our new JV with Lloyd's, which Peter has just talked about. Revenue margins excluding performance fees were 61 basis points, which is in line with 2017. For your models, we expect margins to be around the same level in 2019. But as usual business mix, the level of transaction fees and interest income would have an effect moving to Intermediary. Net operating revenues increased £8 million to £938 million in 2018. Excluding performance fees the increase was £27 million. That increase was driven by net new business and higher average AUM. The net inflows we generated in 2017 of £3.4 billion drove annualized revenues of around £44 million, £25 million of that is included in these results. However, the benefit has been partly offset by revenues lost as a result of £4.6 billion of outflows. Those outflows equate to reduction in annualized revenue of £32 million, of which £2 million is included in these results. What is important is that despite that being net outflows across the 2 years, we have still grown our revenues by £12 million. Revenue margins were unchanged at 72 basis points. Despite margins holding up this year, we do still see longer-term pricing pressure. This may mean our margins fall a little in 2019 by perhaps a bit. But as you know, this will depend on how business mix changes. Moving to Institutional. Net operating revenues were up £37 million to £851 million. The increase was driven by higher average AUM, which was up £15 billion. This time last year, I highlighted the demand we've been seeing from Institutional clients, the lower margin, fixed income and multi-asset products. As expected, this trend continued in 2018. But offsetting this, we're now seeing the benefit of the investments we've made to develop our private asset capabilities. There is demand for this asset class as Institutional -- institutions look for increased long-term returns. And for us, it represents high margin business, and importantly, a long-term partnership with the client. As Peter has highlighted, we do noted £2 billion of net inflows in private assets in 2018. That's in addition to the assets we gained through the acquisition of Algonquin. Together, they bring our total private assets AUM in this channel to £28 billion. Including other flows, we had total net outflows of £6.6 billion in the Institutional channel. That equates to reduction of around £7 million in annualized revenues, but that has had no impact on these results. So the chart on the right is the same story as with the group in Intermediary. A tailwind into 2018 from flows and a headwind into 2019, but overall annualized revenues were up £5 million on the back of £2 billion outflows across the 2 years. Net operating revenue margins excluding performance fees and carried interest was basically unchanged at 31 basis points. That's normally the guidance I gave you and reflects the benefit of the growth in private assets that I've just talked about. In 2019, margins may come up a little, but we don't expect this to be significant with some further benefit from our growth in private assets. So now let's turn back to the overall income bridge. You can clearly see the benefit of the acquisitions we have made, which have added £72 million of net operating revenues in 2018. These were mainly in the institutional channel that I've just been talking about. The revenues include the impact of the acquisitions this year, most notably Algonquin, together with the full year affect of the acquisitions completed in 2017, including Adveq, which introduced carried interest to the group. In 2018, we earned £28 million of net carried interest which helped offset some of the reduction from the unusually high performance fees we had in 2017. I touched on carried interest of the half year. And given it is new for you, I want to take you through this in a bit more detail. As you know, carried interest is similar to performance fees we earn on our core asset management business, but it is received over a longer time frame. In cash terms, carried interest is received after distributions are made to investors to the fund and they have received a minimum preferred return. There's a catch-up phase where we receive a 100% to the return up to an agreed share of profits. For us, this is typically 90 to 10 in favor of investors. After this, we typically share -- sorry, we share another further returns in the same split. We also have commitments to pay away carry, which is a percentage of the carry we receive. We have 74 investment vehicles that entitle us to some form of carried interest, although the rise can vary significantly from vehicle to vehicle. They represent around £8 billion of our AUM. The vehicles are normally liquidated after a period of around 15 years. For us, the earnings potential is significant. But in cash terms, they will be received over a long time frame. The chart on the screen shows in simple terms how the returns are attributed. And now we have to deal with accounting for both the income and the payaways. I would love to recognize this from a cash basis. But I'm not allowed to under the accounting rules. And to make matters worse, we're required to have a different basis for recognizing the income and the payaway, even though the payaway is a portion of the income we receive. Under our accounting rules, we have to recognize the cost earlier than the corresponding income. I realize this is complex. But with this helpful background to understand a challenging -- challenges in forecasting any net income from the source over the short term. In 2018, we've earned £56 million of gross revenue that came from 9 funds, and these were generally well advanced in their life. We believe this revenue is prudent, but it still may be impacted by market movements until it is realized. We've also recognized £27 million in costs in relation to the payaways. Importantly, although carry is a new category of net revenue for us, and we expect it to be an increasing part of the financial results over the long term. For now, it represents only about 1% of net operating revenues, and I don't think you need to focus on it too much in your models. So turning again to the overall income bridge, acquisitions contributed £72 million to the growth of which £28 million was carry. I've also mentioned that performance fees were unusually high in 2017, and these reduced £52 million in 2018. Going forward, it makes sense that you could carry in performance fees together. These 2 revenue sources contributed net operating revenues of £55 million in 2018. At this early stage, we think that about £50 million per annum for both net carried interest and performance fees is a reasonable -- is reasonable over the medium term. That's up £10 million from the £40 million, I used to guide to. Lastly, other income decreased by £6 million. This increased revenues from our assets under administration as well as the returns on our investment capital portfolio in FX and other gains. The small reduction is mainly due to lower investment returns as a result of the market falls we saw in second half of the year. Putting it all together, net income was up 3% to a little over £2.1 billion, that's interim revenue. Let's now look at what's happening to our operating costs. Total cost continue to be the biggest component of our cost base as they make up 66% of our total costs. As I've already mentioned, we're seeing the one-off accounting benefit from company sales reduced by about half this year. My guidance was for this to increase our comp ratio to 43.5%. However, we've maintained our ratio at 43%. This reflects continued cost discipline. Looking forward, we expect the remainder of accounting benefit to fully unwind next year. You might expect this to translate into a higher comp ration of 43.5% in 2019. But as a consequence of our focus on managing our costs, we're targeting at 43% ratio. As you've heard from me before, our focus is on delivering long term growth. In challenging markets, it's even more important to do the right thing and invest in our strategic growth areas. In 2018, we're seeing some important changes being realized and we have made further investments for the future. These include our new headquarters, our front office investment platform and the acquisitions we have made to expand our private asset capabilities. As a result, our non-comp costs were £459 million, that's slightly higher than the £455 million I guided to, but is simply due to acquisitions and FX. We need a total cost ratio of 64%, which continues to be best in our long-term target. Both Peter and I have talked about the importance of investments we're making and driving the long-term growth of Schroders. We've remained focused on our strategy and are continuing to invest for the future. As a result, we expect to see some increases in our long comp costs this year. There are 3 key areas driving this, the first of which is technology. We are investing to deliver

firstly, process efficiencies; secondly, to improve our client experience; and finally, to deliver data insights for outflow generation. The second key area of non-comp cost is accommodation. Despite the potential for cognitive automation, we are fundamentally a people business. And this is our talented workforce to ultimately support our growth. As we expand, we need more space. And we're, therefore, be making investments in our property estate. In 2019, it is also important to understand the impact of IFRS 16. This requires us to recognize greater lease costs at the start before lease reduce over time. It accounts for about half the increase in our 2019 accommodation costs, to many, well certainly to me, this is a strange outcome as it does not match costs to the benefits received. It also moves us further away from cash view. The third and final key area of non-comp costs is the full year impact of the acquisitions we have made. Together, the changes made on non-comp costs may increase to around £490 million in 2019. Looking further ahead, and as I mentioned earlier, we have also been making some structural changes, particularly in Luxembourg. These are important parts of the developments we are making to our operating model. As a result, in time, we may see a shift between comp and non-comp costs. However, we do not expect this to have much impact in 2020 -- before 2020, sorry, I was slippy. As always, our focus remains in managing our total costs. Now let's turn to the last section on capital. We continue to maintain a strong capital position with total capital of £3.6 billion, that's up £150 million from last year. As you would expect, our registry capital requirement has increased as we've grown, but it is also impacted by a number of other changes. We have a £50 million increase following the final transitional change to the capital conservation buffer. In addition, we have a further £55 million increase as a result of the Bank of England's decision to significantly increase the count of cyclical buffer on UK exposures. On top of which, IFRS 16 has had a further impact resulting in a £55 million increase in our requirement. I pause there, IFRS 16, and I just do -- I don't know what to say in terms of -- a national increase in our balance sheet further increases our capital charge by £55 million. I'm sure it makes sense to someone. After allowing for the final dividend, our capital surface is £1.2 billion. As you know, we have been focused on making our capital work harder to support our future growth. In 2018, we've continued to invest in the development of new products and in carried investments to support our Private Assets business. As a result, our seed and current investment capital has increased to £535 million. Despite this increase, we continue to maintain significant liquidity as part of our working capital into our liquid investments. You can see that both our capital surplus and our liquidity are managed carefully and that we're deploying this effectively to support our great agenda. Overall, we continue to maintain a strong position. So in summary, it's been an important year as we delivered on the number of strategic priorities. Net income increased by 3% and our total cost ratio returned to more normal level of 64%. That resulted in profit before tax and exceptional items of £761 million, which equates to a 5% decrease in basic EPS before exceptional items to £0.2158. Despite this reduction, we've maintained our final dividend at £0.79. It means a full year dividend of £0.114, which is £0.01 higher than 2017, and represents a payout ratio of 53%. I now hand you back to Peter.

Thank you, Richard. You got a lot. There are no numbers on the next chart replacing that. What I want to do is, we've talked a lot about how we're reshaping the group and how the investment that we're making in being a different business for the future given the trends in the industry. I want to just try and take you back to the growth drivers that we've talked about in the past. And what that means from a structural change to the business. Because the lot of the initiatives being talked about, lets just try and put them in some sort of context. We've talked in the past of these 7 drivers of growth. And for those of you who remember our Investor Day, we went through a number of these. We're having another Investor Day on the 15th of May to unpack some more, so hopefully you've got that in your diaries. But those 7 drivers of growth, we've had a whole series of initiatives against each of these. And those are -- I'll come back to those in just a moment. But fundamentally, what are we trying to do with the business? And that really splits into 3 distinct and clear areas

The first is we want to find a growth strategy for the core business. Still the largest part of our business is absolutely critical. But within that, we're targeting client longevity, and sticky assets and being able to retain assets for long periods of time is the significant difference between an Asset Management business and the growth of some of the private markets businesses or some of the advisory business that we say is that volatility of assets, and we're trying to slow that down. So whether it be complex insurance mandates or different types of relationships with clients, that is mission critical in that core area. The second area where we talked about is getting closer to consumer. We had a number of initiatives there. Go back in time, we acquired the Hoare's business. In Asset Management, we've -- most recently, you'll see we acquired a business in Singapore, ThirdRock, and the Lloyds joint venture, and I'll come back to that in just a moment. And finally, growth in private assets business. And what we're seeing is, and this is a news to any of you as analysts, the number of public companies continues to shrink. Public markets in the west are becoming less attractive places for capital. Our clients are moving more money into private markets, and private markets are increasingly becoming accessible to the mass market. So we want to ensure that we've got a strong capability in private markets, that has the added advantage of having more sticky money and more capacity for higher revenue products. So those 3 elements are critical. And clearly to do that you need to have a strong underpinning of technology. We wouldn't to be able to be making the progress and solutions and complex mandates without a strong technology underpinning. So how does those various -- the technology works at those various initiatives that we've taken across those 7, move into the 3 pillars that we're talking about. First of all, the core business. And this year, the key achievement there was the acquisition of the Scottish Widows mandate, but we've also seen very significant growth in our solutions business, it's a key area of that. And we're seeing very good momentum across the range of jurisdictions. We've launched our Helix fund, which is now out there, which is a multi-strategy fund, a very different proposition in the core marketplace. And clearly, we've seeded a significant number of new strategies taking multi-asset strategies around the world. That enables growth to follow on in different markets. That's not to say we're putting the white flag up on the rest, absolutely not. We still see significant growth, but new growth drivers in that core business is important. On the consumer side, we've talked in the past about the relationship with Hartford in the U.S., which has transformed the profile of our U.S. business. We bought Benchmark Capital last -- 2 years ago, which has helped our presence in the U.K. ThirdRock has now -- will develop our presence in Singapore very significantly as a strong growth adviser business there. And I'll just spend a moment talking about the Lloyds joint venture. This is obviously different from and separate to the SWIP mandate. And here what we're trying to do is to take what the best of the banking business. So you've got very large market share in Lloyds across mortgages, high affluent people. So 20% to 30% depending on how you measure it in the UK The number 1 digital bank in the UK. And marry that with an investment brand, which resonates well with advisers and resonates well with end customers, when we tested it, would prefer to buy from investment brand rather than a banking brand. Within the Lloyds network, there is clearly a very significant number of referrals. And that is, to my mind, the rocket fuel to advise that that's what they need as referrals. And that is a huge, we say, as a potential to mine it a lot further. So the combination of being able to take in a large adviser force. But most importantly, transform the referrals which exists within that network, we think gives us the potential for new growth business between the two of us. We'll brand it Schroders Personal Wealth, is in the process of being established at the moment. So the management team has been appointed. The offices are being drawn together. The regulatory applications are in, but the reality of the timeline of these things is, we won't have regulatory approval, we think, until the third quarter before we can launch. But there are a lot of moving parts. And looking forward, on a 3-year view, I think, it's an interesting business. I wouldn't want you getting firmly at the math about it for next year because there is a lot to do. But -- so fundamentally, we see the Wealth business and the proximity of the consumer as a growth business. And as Richard showed in his charts, the persistency of that growth is very clear for the numbers. And then on the private asset side, we've talked about this in the past. We made further progress this year buying a business called Algonquin, but more importantly embedding the private assets capabilities we've got into different markets. We've hired a new alternative sales team that has worked well, is now starting to gain traction. We hired -- we acquired a small debt origination business in the U.S. A10, which will drive our securitized credit too. So we've made 4 or 5 primarily organic or small acquisitions in this area. But what we're starting to see is good momentum. I think the challenge here is that we're late cycle. We expect that market to show lots of very low covenant issues being made. We expect the amount of distress in that market to pick up. It's not the time when you'd logically go out and acquire businesses on [Indiscernible] There's a couple of businesses traded at very high prices, that's not the business that we want to be in. We've been able to buy the business we bought at very sensible prices. And clearly, we need to do a lot with an underpinning technology, and Richard said, that's technology for investors, technology for clients, and robotics exception for a strong operational platform, and it nearly worked. But the -- you can see that the 3 pillars, it's absolutely critical to how we can reshape the growth. And I think -- if we go one-man show that we all were very clear about is that we are investing for growth. There are different strategies emerging in our industry, but I was very clearly around. We see this is a growth industry. We see there are still significant opportunities, and we want to invest behind those. That is now it. Thank you. I'm going to turn the floor open for questions-and-answers. Richard and I will endeavor to answer all. If I could just ask one thing that you give your name -- sorry, sorry, outlook statement. It does not say a great deal, but we got to cover it. We do so -- I mean, this is not news for this room, but there are challenging market conditions, but we do see there are opportunities for growth and we've got -- we've talked about the strong pipeline for new business. Our focus is on delivering that effectively and on finding those new markets. And Richard said, there are headwinds entering into 2019 based on the profile of last year's new business wins. But yes, we do see a good pipeline of new business on the other side. Right, we're now to Q&A. And if you could give your name and number that will be -- that's great. The first one to grab a mic.

Thank you. It's Chris Turner from Berenberg Two questions if I may. Firstly, on the regulatory capital that increased about 20% year-on-year. You highlighted about £100 million of that was from capital conservation buffers, countercyclical buffers, which I'm guessing related to the banking licensing in Wealth Management. Is there anything you can do there going forward to optimize that maybe consider dropping the banking license, maybe part of the Lloyds joint venture? Secondly, your working capital also increased by about £400 million, about 27% year-on-year. Can you just discuss the drivers of that? I think I said I had 2 questions, I also got third, sorry about that. Peter, you spoke about client longevity. Obviously, 2018 was a bit tricky. Your gross redemption has actually picked up year-on-year. What is that, that gives you confidence? Is it the mix? Is it the client mix, the product mix, that gives you confidence that longevity will continue to increase? Thank you.

Okay. Thanks, Chris. I think -- first on the banking license. Banking is an important part of our proposition to the wealth clients we have in the UK. So it's not an easy decision to say you should give up our banking license. And the time when we've got surplus capital, at least, some of it is allocated to countercyclical buffers, so be it. I mean it's not capital that's burning a hole in our pocket. And as I said, we're at that stage of the cycle where we're somewhat skeptical about valuations, et cetera. So it's not as if we would be looking to redeploy that elsewhere. So -- but it's clearly -- the size of those buffers are large, given the size of our UK lender, which is very, very small indeed. Do you want to talk about that was?

And working capital -- there's a lot so safe and sound. Obviously, we're getting bigger. And so it is timing differences and we have attractive profits from some of the various subsidiaries. So there's not a lot to look into there. It's just going up generally because it is getting bigger.

Client longevity is a really important metric for us and for a lot our distribution too. What we've see is that 2 things. An underlying -- from an Institutional perspective the mix of assets that we're taking on the more complicated manner, you'd expect those to have good longevity and the more strategic partnerships one develops, the better the longevity is around those. In the Intermediary market, we're very much more the whim of risk-on risk-off. So that's far shorter. And that's where we saw some of the total -- obviously, if you have a one-off big outflow, that impacts your client longevity. And so in Japan, we had that this year. But I think the actions we're taking to my mind feel as if the trends are in good shape. But -- clearly, the more one does in private assets. If you do the math on just having 20% of your business in private assets that would effectively add 2% or 3% to your underlying growth rate, just from the client and the longevity mix.

Hey. It's Hubert Lam from Bank of America. Three questions. Firstly on SWIP, if you can give us an update as to when we should expect -- you should expect the SWIP as to come on board? Any update on the arbitration case that's currently on going on that? Second question is on AustralianSuper funds, continue to see outflows coming from that as they internalize their asset management. What's your exposure left on the AustralianSuper funds? Is this something that we should expect more to come through for you going forward? Or the risk is now minimized? The third question is on the dividend. You've increase your dividend this year by p, although your earnings -- EPS has gone down. So your payout ratio has gone up to 53%. Historically, I think, you've guided towards 50%. Is this a step change now in your payout ratio?

I'll do the first and I'll give Richard the third one. SWIP is a -- obviously, it's not our arbitration, it's a third-party's arbitration. We've the combination how to keeps that at arms length. My understanding is it's being heard in March. And assuming there is a positive outcome, which I think is our hope and expectation, then we will push the button in terms of implementation for a good chunk of the assets coming out this year, and the details of that are being worked through at the moment, but the arbitration is ongoing and will follow its own course. The AustralianSuper funds, I think, is a good question, because it's been the theme of the last 3 years of which -- as we've seen now restructure. And I think the big super fund changes are largely behind us now. There is also the Australian equivalent of RDR going on in the background. And the major review of bank behaviors, which is going on been so much in the headlines. But those are much less important for the dynamics of our business. So I would like to think the biggest changes are behind us there. Richard, do you want to comment on that?

On these dividend, now our policies are progressive dividend. So we would anticipate it declining year-on-year. Clearly, targets are low this year, 53% payout ratio. But we still -- in the long term, we would see a 50% payout ratio, but that's subject to profit growth. If profits decline, clearly the payout ratio is going to tick out if we don't reduce the dividend. I think it's fair to say that our balance sheet is still relatively strong. And hopefully, there will be a significant likelihood on the dividend reduction. I'm not saying it's impossible, but it's quite unlikely.

Hi. It's Haley Tam from Citi. Just 3 quick questions for me, please. Firstly, just to follow-up on Hubert's question. Could you give us a number for the main Australian superannuation of AUM if possible? Secondly, just on these structural changes to the group. Can we confirm that the benefit to cost is really just to come for over 43% this year rather than anything beyond that? And then the third thing, a question on flows as well if I can. The half of success has been really impressive the last couple of years. I guess, we could now start to be concerned that those funds have been around for a bit longer, so there might be a natural level of redemption. So is anything you can guide us on in terms of how some of Hartford's other relationships [indiscernible] they've been historically, that would be great. Thank you.

So our total Institutional exposure, both super funds and other Institutional exposure in Australia was £14.9 billion. So -- that's a pretty well diversified exposure. The lumpy ones have now gone. If Richard could take the question on comp, I'll just quickly cover off the Hartford. I think that -- we're actually still probably 1 year away from the maturity of that 1 year, 1.5 year away from the maturity of that growth. And what we're putting is, there is a new product, whether it be more interval funds, securitized credit, et cetera. So it has got a growth dynamic to it. And we would expect to see growth slow significantly growth in that and into the future for some other. That book is quite a sticky book based on the experience that the one of the managers has had with them. So we feel good about the difference between growth in that.

And then in terms of restructuring, you're right. Naturally, the 43 wouldn't -- 50 -- 42.5this year, all things being equal because the underlined of that accounting benefit we had last year. So we are looking to hold yet come close to that 43%, so that is a lasting benefit. What it also means is we can pay off people appropriately to retain our best talent and that's really important in kind of business as well. So that does have significant benefits in terms of delivering the outgoing strategies.

Good morning. It's Gurjit Kambo, JPMorgan. So -- just 3 questions. Firstly, in terms of the -- you've a lot of businesses that you've been entering lots of new strategies that you've been entering. Are there any areas where you've actually been exiting or streamlining the business? That's the first question. Secondly, in terms of the mandates -- large mandates that you've lost. Is there any sort of theme why you've lost those mandates? Now it performance, insourcing, fee structure? And finally, just in terms of the Schroders Personal Wealth. The cost to set that up, are they included in the guidance that you've given?

So, on businesses, we've exited the 2 of those standout is the streamlining of our wealth business. So we've exited a small business we had in Italy. And we've exited the business in Eastern Europe. So we've just took the view to simplifying our business in those areas where we didn't see growth was the right thing to do. And I think -- ones got to be quite clear, which battles you're going to pick, and private assets is a clear battle wealth in the UK strength, wealth for us in Asia given the strength Schroders brand was a clear strength, but fighting the battle in Italy and Eastern Europe was -- didn't feel like the right thing to do. Shape on redemption, well, I think, there are 2 -- the 2 big ones that I would look at this year, or probably 3

One is the change of the UK. local authority. So you remember that UK. local authorities went from 84-or-so to a pooled 8 super funds. Now the manager selection process for that is going on. We saw £5 billion out of our UK equity business, part of that was around the restructuring of local authorities. The second big outflow was the one in Japan. That was a Japanese barmaintained, bond mandate whereby there was a -- the manager will consolidate the managers down to 1 as a very, very low fee that 1 we wouldn't participated at that low fee level. And it clears the price that -- it some -- you're going to clear about what business you're in, and that wasn't one for us. And the third was a piece of business in Mexico and that was as direct results of BlackRock buying the business and saying we'll run the money ourselves. So you will have these things. But I think, I should -- I would like to draw a contrast between the fundamental growth we've got going in some of these things and then the one-offs that you're going to get along the way, which unfortunate, but something inevitable.

And -- did the last question?

I'm sorry, in terms of cost, all costs that, I'm aware, but I've got pretty good visibility of cost included in my guidance. You need just see about Schroders Personal Wealth, which is a JV. So we're going to get equity counting there so share profits that comes through this year. Those -- that share profit is more significant in that business that exists. So it would be later this year, when we start seeing that benefit. But importantly, it also includes all the cost simulation to take on off the SWIP mandate. So that's clearly included in my guidance. I know what we need to do to get ready for take on -- I don't have clarity in terms of when the assets arrive. But in terms of costs everything is included in that number. So it should only change acquisitions and FX.

Yes.

Which is -- I've been pretty accurate so far -- now this year and last year, my guidance, other benefits, because I can't control, obviously I could .It would make my life a lot easier. And acquisitions, I guess, we do have some control, but I've got the crystal ball exactly when they are going to pay us. So I wouldn't -- shouldn't be surprised by the long-term costs.

Good morning. This is Arnaud Giblat from Exane. Two quick questions, please. Firstly, on method. I was wondering if you had seen any impact from the panel relatedsessions in Europe to -- from independent channels given that your -- you seem to have had outflows from Switzerland and Italy? And my second question is around the JV Schroders Personal Wealth. I'm wondering if you could give us a bit more on the business model. What sort of the fees are being charged? How in terms of advice, in terms of platform, in terms of Asset Management? Is it going to be a restricted model? Or even using financial advisers? You're talking about becoming a top 3 player in the medium term, how are you thinking about recruiting? Because I think the number of financial advisers are out there are shrinking rather than growing. Thank you.

Yes. So, I mean, you're obviously right. There are changes going on in Europe. But I think that the -- they are much more marginal in terms of the extent to which they relate to MiFID. I would actually say that the biggest by far driver of the outflows we saw in Italy and Switzerland are simply result of risk of appetite. And you can see what fund -- what type of funds that were coming out of and the timings of those play as you saw the fourth quarter impact, that wasn't restructuring. But I think we have in mind that those markets are changing and we're working with slightly different group of distributors in different ways. And that's right and we will continue to evolve, but I think we feel pretty posted about being in a good position through those changes. The second issue about advise, the business model for that is going to be a restricted network. It wouldn't be independent network. The investment proposition is being worked up and clearly we will launch that when it's ready, but it will be a restricted network. And I think it's important as points on advisers. There is a -- the UK market suffers a massive advice gap, a huge, huge of it. We are not looking to go and try and hire a lot of other advisers, and lot of these painful. This is a growth market where there are a vast number of people under advised and technology is underutilized. So the issue for us is how do we train and build adviser network, restricted adviser network with a really world-class investment proposition, to grow that over time, focusing initially on the referrals that came out of Lloyds, than more broadly. So it's been -- and there has been a lot of speculation about us going poaching other things. For me, this is how you grow organically a new adviser network. Because the opportunity, the average age of advisers in the UK is something like 56. The opportunity for this is to get the next generation right, is to take the 20 of it, not take 2 or 3 of you. And that's the proposition that we want to build.

Good morning. It's Anil Sharma from Morgan Stanley. Just two questions, please. If I look at the Intermediary business, particularly over the last 18 months, and if you take out the flows from Hartford, the growth there has been pretty tough. And that's despite pretty strong market backdrop. So just trying to understand what the drivers might be behind the under performance there? And if you see a reversal and into the growth? And then secondly on costs, Richard, please, correct me if I'm wrong, but I think you said there was £56 million of exceptional costs related to the cost saving plan. So I'm just trying understand what cost synergies do you expect from that plan? And then once Aladdin -- once the transition to Aladdin is complete, which I think is also due this year, what extra cost saving should we expect? Are they going to, I'm assuming that 2020 cost savings?

Just quickly on the Hartford, first of all. It's easy to get -- unfortunately, some of the winds we get from Hartford are Institutional. So when I gave you the Hartford number, I gave you the aggregate Hartford number, but that is a mix of Intermediary institutions. So that level probably confusional model. And before you asked me the question, last year how much is Institutions and Intermediary, have gone off top of my head. But I -- it is something of the order of, I think, £600 million of it, what was camped under Intermediary, something like that. So -- and then, I think, Intermediary, if I was to say, we've performed credibly, but the one area that I feel we have underbatted has been on European multi-asset. And as we've been shot a low-vol product at the time when that's been best selling category in Europe. And we've -- obviously capital had gone into developing that product, but the reality was we didn't have the right product on the shelves as the market moved into that segment. So that's -- if you like it's been not playing in the high growth segment within Europe is probably been challenging having rather more market share and equities and multi-asset. We fully participate, I think, in credit, and done a very good job though but that was the headwind. We've lost a bit of, I think, in Asia. There has been -- come a lot more competition come into the income space. So we had -- we were very early innovators in the multi-asset income, and that's now much more competitive marketplace. So that doesn't matter to the small point. Those were two questions.

So on costs. So -- on the £56 million, that's all about the comp ratio, and we're 43% this year. And we're -- yes, I think, we should get back to last year when we were 43%, and I think I've set out, that should have moved to 44%. 43% was artificial. So by taking out restructuring costs, we are essentially trying to deliver an ongoing ratio of 43%. So a whole 1% increase, not the half, because it should move to 44%, and we don't assume that this year. In terms of Aladdin and other efficiencies that we should be driving from that. We've got a lot of decommission to do. And this year is a hard year in that there is a lot of work to be done to tail off a lot of other applications and to get a real benefit of a simplified business process. So this year there isn't much. Actually, there is more incremental costs, because it costs money to turn things off. By 2020 is the year that we're looking forward to, because we will get to have more simplified, globally consistent business processes. But this year was always going to be painful and you probably in the meetings we've had pick that up, and I haven't been promising very much in 2019, but it is only the cost guidance I'm giving you, so being very transparent I think what costs are going to be.

Thanks. Mike Werner from UBS. Two questions, please. I saw in the press release this morning that your management fees in North America were up 10% year-on-year. And I know that's a key area of growth for you guys, but I was just wondering if you had an idea of what portion of that was organic versus inorganic through acquisitions? And then second, also saw a sharp decline in terms of the 1 year performance for the company, down about, I think, 43%, if memory is correct. And I was just wondering is that something that we saw throughout the year? Was that something that was more specific to Q4? If you could just provide a little bit of color there.

Yes, sure. North America is easy one, it's a 100% organic. And when we talked about flows, one of the characteristics of North Americas was we're taking in lots of equity mandates, particularly emerging markets. And that was the major reason for that increase. I wish I could say because we're putting up prices, but it wouldn't be true. 1-year performance numbers were based around 2 areas

fixed income and multi-asset. Multi-asset was impacted of markets, particularly in the fourth quarter. And fixed income was, again a fourth quarter anomaly. If you remember that last week of December, we saw a very significant rather odd shape of market. We've had a good bounce back for the first 2 months of the year across both fixed income and multi-asset. And if you -- if I mean -- 1-year numbers are not the basis on which clients make decision, but if you look at the 3-year numbers, if we look at what's -- if I was to make it better, which way the numbers are going to go at the next reporting point, I think, you're going to move out rather than down because of the short-term noise, which is moving out from 3 years ago. So -- in terms of performance, we're pretty comfortable about where that sits. Thank you, all, very much. I look forward to seeing those of you who want to come along on the 15th of May, Investor Day. Thank you for joining us.