Profit before tax up 35 per cent.
• Continued growth in higher margin business across Retail and Institutional
• Profit before tax up 35 per cent. to £392.5 million (2006: £290.0 million)
• Asset Management profit before tax £266.5 million (2006: £219.0 million)
• Private Banking profit before tax £41.3 million (2006: £26.9 million)
• Private Equity and Group profit before tax £84.7 million (2006: £44.1 million)
• Basic earnings per share up 36 per cent. to 104.8 pence (2006: 76.9 pence)
• Final dividend increased to 21.0 pence per share (final dividend 2006: 17.5 pence per share) taking
the full-year dividend to 30.0 pence per share (2006: 25.0 pence per share)
• Funds under management £139.1 billion (31 December 2006: £128.5 billion)

Year ended 31 December 2007 £mn Year ended 31 December 2006 £mn
Asset Management profit 266.5 219.0
Private Banking profit 41.3 26.9
Private Equity profit 58.5 34.6
Group profit 26.2 9.5
Profit before tax 392.5 290.0
Funds under management (£bn) 139.1 128.5
Basic earnings per share (pence) 104.8 76.9
Total dividend (pence) 30.0 25.0
Contacts:
Schroders
Emma Tovey Head of Corporate Communications +44 (0) 207 658 2329 emma.tovey@schroders.com
Maitland Consultancy
William Clutterbuck +44 (0) 207 379 5151 w.clutterbuck@maitland.co.uk

Management Statement
2007 was a year of continued progress for Schroders in spite of the recent turbulence in financial markets.
This reflected the diversity of our business by region, by client channel and by product.
Income* increased 21 per cent. to £1,004.3 million (2006: £832.3 million) and Group profit before tax increased 35 per cent. to £392.5 million (2006: £290.0 million). Funds under management at the year end were 8 per cent. higher at £139.1 billion (2006: £128.5 million).

Asset Management
We continued to see the benefits of a strategy focused on higher value added, higher margin products in both Institutional and Retail channels and the development of our already extensive international business.
Gross profit margins increased to 60 basis points (2006: 55 basis points) and more than two thirds of income was earned outside the UK. Asset Management income increased 20 per cent. to £785.4 million (2006:
£655.6 million) and profit before tax increased 22 per cent. to £266.5 million (2006: £219.0 million).
We had a record year in our Retail business with net sales of £8.8 billion. Retail net inflows were exceptionally strong in Asia Pacific and the UK, and heavily outweighed net outflows in Continental Europe which to a large extent reflected the experience of the European fund industry as a whole. In Asia Pacific a well established presence on the ground in eight countries across the region coupled with a competitive product range led to a very significant increase in net sales. In the UK net sales doubled compared to 2006,
as did our market share of flows from the independent intermediary sector. In the US, the second year of our initiative in the intermediary channel, we saw a satisfactory increase in flows and an expanding number of distribution relationships. 67 per cent. of funds under management outperformed their peer group in the three years to the end of 2007 and funds under management in Retail ended the year at £56.2 billion (2006:
£42.5 billion). In China our joint venture asset management company had net sales of £0.8 billion bringing funds under management to £3.8 billion at the year end (not reported in total funds under management).
Our Institutional business also made progress in 2007. We won more than 100 new institutional mandates in the UK alone and our business continues to evolve towards new, higher margin asset classes: fees on
business won in 2007 were on average more than 40 per cent. higher than the fees on business lost.
Income in Institutional increased despite net outflows of £10.6 billion, which included continued outflows from UK balanced and UK equities and, to a lesser extent, Japanese and Asian equities, the latter in part driven by client asset allocation decisions. Overall investment performance improved with 69 per cent. of institutional funds under management outperforming their benchmarks in the three years to the end of 2007.
Funds under management in Institutional ended the year at £73.2 billion (2006: £77.4 billion).
We have a growing and widely diversified alternatives business encompassing property, funds of hedge funds, private equity funds of funds, emerging market debt, commodities and agriculture funds. Alternative funds under management now amount to £15.9 billion, more than 25 per cent. up on the year.
We have an extensive network of overseas offices across Asia, Continental Europe and North and South America, with strong representation in developing markets. During the year we added to our presence on the ground with new offices in Mumbai and Dubai, and we expect continued high levels of growth in our international business which is well placed to benefit from the demographic and savings trends in developing markets.

Private Banking
Private Banking had another strong year with income up 11 per cent to £105.9 million (2006: £95.7 million) and profit before tax up 54 per cent. to £41.3 million (2006: £26.9 million). We completed the transfer of our
back office operations to Zurich during the year which enabled us both to improve our client reporting and reduce costs. We recently completed the acquisition of a small private client business in Singapore which
will give us a platform from which to serve high net worth individuals in the region. Net new business in 2007 amounted to £0.2 billion (2006: £0.4 billion) and funds under management ended the year at £9.7 billion (2006: £8.6 billion).
Group and Private Equity In 2007 we achieved realised gains of £101.6 million (2006: £75.7 million) on our investment capital which totalled £979.6 million (2006: £789.0 million) at the year end. A high level of realisations during the year resulted in profit before tax from our private equity portfolio of £58.5 million (2006: £34.6 million). Profit before tax from Group was £26.2 million (2006: £9.5 million). Given more challenging markets, we anticipate
a reduced level of private equity realisations in 2008 and lower returns on seed capital investments.

Dividend
The Board is recommending an increased final dividend of 21.0 pence per share, payable on 30 April 2008 to shareholders on the register at 18 March 2008. This brings the total dividend for the year to 30.0 pence per share (2006: 25.0 pence per share), an increase of 20 per cent.

Outlook
Recent months have seen a setback in equity markets and high levels of volatility as the impact of the subprime crisis in America has spread to world financial markets and the real economy. This in turn has affected investors’ risk appetite and retail flows across the industry have fallen back sharply. We expect these volatile market conditions to persist through much of 2008 and as a result we envisage a less favourable environment for our business. Our cost base has a significant variable component linked to revenues which offsets in part the impact of declining markets. However, we do not intend to scale back our strategic investment plans as we see this more challenging period as an opportunity to position Schroders for further growth in the longer term, taking advantage of our strong financial position and highly diversified business.

* Income comprises gross profit plus net finance income plus share of profit of associates and joint ventures
Copies of today's announcement are available on the Schroders website: www.schroders.com.