Schroders hikes shareholders’ payout but costs scupper profit

Michael Bow
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SCHRODERS, the money manager, yesterday dialled up dividends and reported good sales despite an overall fall in profits due to an increase in money spent on staff.

The full year dividend increased to 43p after the 200-year old company improved its capital base to over £2bn. “This is a one-off rise,” chief financial officer Kevin Parry said, “reflecting the strong capital position. Our policy remains to increase the dividend in-line with operating profits.”

An investor surge towards the firm helped add an extra £6.2bn of net inflows to its funds over the year. Schroders’ assets under management now stand at £212bn for the year ending 2012, almost double that reported in 2008.

Despite this, higher staff costs, lower performance fees and poor performance at its private bank all dragged down profits.

The company’s decision to go on a hiring spree boosted its workforce to over 3,000 people last year but helped push up costs by four per cent. Performance fees for its fund managers also fell some £8m. “It wasn’t a vintage year for performance fees,” Parry added.

Underlying revenues at the private bank fell ten per cent and chief executive Michael Dobson has promised to reverse its fortunes by streamlining the management structure.

Profit before tax across the whole group fell 12 per cent overall. But Dobson sounded a bullish note and said strong inflows had continued into the first part of this year. “We’ve seen a significant increase in investor demand,” he added.