Invesco Ltd · NYSE:IVZ
Invesco — Amvescap — FY2006 Earnings Presentation
54 slides from Invesco's earnings presentation, Feb 13, 2007
Slide 1: AMVESCAP Full Year 2006 and 4th Quarter Results
AMVESCAP Full Year 2006 and 4th Quarter Results February 13, 2007
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may include statements that constitute “forward-looking statements” under the United States securities laws. Forward-looking statements include information concerning possible or assumed future results of our operations, earnings, liquidity, cash flow and
Slide 3: Discussion Topics
AMVESCAP Discussion Topics 1 Financial Results –Full Year 2006 and 4th Quarter 2 Our Business Today 3 Our Progress and Initiatives 4 Question and Answer 5 Appendix 2
Slide 4: AMVESCAP Leadership Representatives
AMVESCAP Leadership Representatives Marty Flanagan, President & CEO Loren Starr, SMD & CFO Bob Yerbury, SMD & Head of U.K. Mark Armour, SMD & Head of Worldwide Institutional Phil Taylor, SMD & Head of North American Retail James Robertson, SMD & Head of Global Operations Colin Meadows,
Slide 5: Fiscal Year 2006 Financial Highlights
Fiscal Year 2006 Financial Highlights 2006 Year-over-Year AUM $462.6bn +20% Net Revenues $2,415 +11% Operating Profit $785 +57% Net Operating Margin 32.5% +9.5 points Diluted EPS $0.60 +76% 4 Note: Figures used in year over year comparison are before the 2005 restructuring charge of $75.7m
Slide 6: In 2006 We Gained Momentum Against Key Financial Metrics
In 2006 We Gained Momentum Against Key Financial Metrics… Ending AUM 2005 vs. 2006 Growth = +20% Operating Profit 2005 vs. 2006 Growth = +57% ($ billions) ($ millions) 463 751 785 549 398 382 386 512 333 371 501 500 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 Net Long-Term Flows Net
Slide 7: Annual Flows
Annual Flows The annual long-term flow trend is positive despite latter-half 2006 redemptions Institutional money market assets increased 27% in 2006 Annual Long-Term Flows* Annual Institutional Money Market Flows Gross sales ($ billions) ($ billions) Ending Assets Gross redemptions Net Flows Ne
Slide 8: Focusing On Investment Excellence
Focusing On Investment Excellence Ensuring well-defined, repeatable and disciplined investment processes that meet client expectations Retail Results % of AUM in Top Half of Peer Group 1yr 3yr 5yr Dec-06 Sep-06 Dec-05 Dec-06 Sep-06 Dec-05 Dec-06 Sep-06 Dec-05 US (Lipper)* 63% 65% 62% 74% 68% 34% 67%
Slide 9: US Retail Update
US Retail Update Performance and Industry Highlights The industry has experienced concentrated flows to a very small number of providers f Top 3 firms: almost 50% of industry net flows in 2006 f Introducing new ways to increase share with PowerShares ETF’s, Independence Funds, and leveraging our g
Slide 10: Assets Under Management - 2005 vs. 2006
Assets Under Management - 2005 vs. 2006 ($ billions) 2006 2005 % Change Beginning Assets $386.3 $382.1 1.1% Inflows 85.8 66.3 29.4% Outflows (87.2) (82.5) 5.7% Net flows (1.4) (16.2) (91.4)% Net flows in Money Market Funds and Other 12.8 0.5 n/a Market Gains/Reinvestment 46.5 24.4 90.6% Acquisitions
Slide 11: Operating Results – 2005 vs. 2006
Operating Results – 2005 vs. 2006 ($ millions) 2006 2005* % Change** Management Fees 2,610 2,214 17.9% Service and Distribution 535 538 (0.6)% Other 97 127 (24.0)% Total Revenues 3,242 2,879 12.6% Third-party distribution, service and advisory fees (827) (706) 17.1% Net Revenues 2,415 2,173 11.1% Co
Slide 12: Quarterly Flows
Quarterly Flows Long term net flows decreased due to higher redemptions partially offset by an increase in gross sales in each of our distribution channels Money market flows were slightly negative for the quarter due to client end-of-year liquidity needs Quarterly Long-Term Flows* Gross sales G
Slide 13: Distribution Channels – Quarterly Flows
Distribution Channels – Quarterly Flows Retail flows remained negative during the quarter with net outflows in North American Retail and Europe partially offset by positive net flows in the UK and Asia Institutional business lost assets mostly in the US and largely fixed income and stable value
Slide 14: Assets Under Management – 3Q06 vs. 4Q06
Assets Under Management – 3Q06 vs. 4Q06 ($ billions) 4Q06 3Q06 % Change Beginning Assets $440.6 $413.8 6.5% Inflows 22.9 16.3 40.5% Outflows (27.4) (17.0) 61.2% Net flows (4.5) (0.7) 542.9% Net flows in Money Market Funds and Other (1.5) 4.6 n/a Market Gains/Reinvestment 24.0 13.4 79.1% Acquisitions
Slide 15: Operating Results – 3Q06 vs. 4Q06
Operating Results – 3Q06 vs. 4Q06 ($ millions) 4Q06 3Q06 % Change* Management Fees 722 642 12.5% Service and Distribution 136 130 3.6% Other 21 19 13.3% Total Revenues 879 791 11.1% Third-party distribution, service and advisory fees (224) (204) 9.5% Net Revenues 655 587 11.6% Compensation 268 288 (
Slide 16: PowerShares and WL Ross & Co. Update
PowerShares and WL Ross & Co. Update Business Update f PowerShares Launched 22 new ETFs, including11 new portfolios based on Intellidex indices during 4Q Launched the industry’s first Private Equity ETF 3rd largest ETF provider in terms of creation unit building in 2006 f WL Ross & Co. Ong
Slide 17: 2006 Expense Guidance Analysis
2006 Expense Guidance Analysis The variance in the year includes $16m for market, $26m for FX, $45m related to our 2003 performance options, $18m related to our net insurance settlement, and $12m in expenses for PowerShares and WL Ross. 2006 operating expenses ($1,629m) were largely on track wit
Slide 18: Capital Update
Capital Update Capital Deployment Priorities f Reinvest in our business f Acquisitions when they makes sense f Dividends – steadily increase with no target payout ratio f Share repurchases Recommend Final Dividend of $0.104 f Consistent with policy of steadily increasing dividends in USD terms
Slide 19: Discussion Topics
AMVESCAP Discussion Topics 1 Financial Results – Full Year 2006 and 4th Quarter 2 Our Business Today 3 Our Progress and Initiatives 4 Question and Answer 5 Appendix 18
Slide 20: Industry Trends
Industry Trends Favorable demographic trends Growing demand for global investment capabilities Seeking alpha in alternatives 19
Slide 21: Positioned in Developed and High Growth Markets
Positioned in Developed and High Growth Markets Top 10 Markets with Highest AMVESCAP Projected 2010 AUM 2005‐2010 $, Billions CAGR Presence 30,595 7.7% 9 4,313 7.1% 9 1,634 7.8% 9 1,599 8.9% 9 1,588 7.2% 9 1,587 10.5% 9 1,368 4.6% 9 987 7.7% 9 727 9.7% 9 606 12.6% Source: Cerulli, AMVESCAP 20
Slide 22: Focused and Specialized Global Resources
Focused and Specialized Global Resources Worldwide Resources X Focus only on Asset Management X Local Presence in 19 countries X Over 500 investment professionals X Specialized investment teams supported by global infrastructure Worldwide Client Base and Offerings X AUM of $463 billion X Over 40% of
Slide 23: We Are Diversified As A Firm
We Are Diversified As A Firm Delivering a diverse set of solutions to meet a broad set of global investment needs As of December 31, 2006 By Client Domicile By Channel By Asset Class Canada Retail Alterna- 10% 50% tives 6% Equity 47% U.K. 16% U.S. Institutional Balanced 57% 46% Stable 10% Europe Val
Slide 24: We Have Investment Capabilities To Meet Client Demand
We Have Investment Capabilities To Meet Client Demand A diversified set of investment objectives for institutional, retail and high net worth investors Money Market Fixed Income Balanced Equity Alternatives Prime Convertibles Core Small Cap Core Financial Structures Government/Treasury Core/Core Plu
Slide 25: Discussion Topics
AMVESCAP Discussion Topics 1 Financial Results – Full Year 2006 and 4th Quarter 2 Our Business Today 3 Our Progress and Initiatives 4 Question and Answer 5 Appendix 24
Slide 26: We're In The Right Industry At The Right Time
We’re In The Right Industry At The Right Time The Markets are Global, and so is Our Company 1 Achieve strong investment performance Long-Term Goals: Ensure clearly articulated investment disciplines aligned with client expectations underpinned by diligent oversight and rigorous quality control pro
Slide 27: Executing Against Our Strategic Drivers In 2006: Investment Performance
Executing Against Our Strategic Drivers In 2006 1 Achieve strong investment performance Long-Term Goals 2006 Accomplishments Ensure clearly articulated investment disciplines aligned with client expectations underpinned by diligent oversight and rigorous quality control 9 Strengthened investment e
Slide 28: Executing Against Our Strategic Drivers In 2007: Investment Performance
Executing Against Our Strategic Drivers In 2007 1 Achieve strong investment performance Long-Term Goals 2007 Initiatives Ensure clearly articulated investment disciplines aligned with client expectations underpinned by diligent 9 Enhance the employee value oversight and rigorous quality control pr
Slide 29: Executing Against Our Strategic Drivers In 2006: Deliver Products Worldwide
Executing Against Our Strategic Drivers In 2006 2 Deliver our products anywhere in the world to meet client needs Long-Term Goals 2006 Accomplishments Delivering the combined power of our distinctive worldwide investment management 9 Introduced our investment capabilities to capabilities globally
Slide 30: Executing Against Our Strategic Drivers In 2007: Deliver Products Worldwide
Executing Against Our Strategic Drivers In 2007 2 Deliver our products anywhere in the world to meet client needs Long-Term Goals 2007 Initiatives Delivering the combined power of our distinctive worldwide investment management 9 Re-investing in the growth of our business capabilities globally S
Slide 31: Executing Against Our Strategic Drivers in 2007: Global Operating Platform
Executing Against Our Strategic Drivers in 2007 3 Unlock the power of our global operating platform Long-Term Goals 2007 Initiatives Act as one firm, not a collection of many Simplify our global operating model 9 Unify our North American retail business Prioritize for profitable growth and ach
Slide 32: Executing Against Our Strategic Drivers In 2006: Global Operating Platform
Executing Against Our Strategic Drivers In 2006 3 Unlock the power of our global operating platform Long-Term Goals 2006 Accomplishments Act as one firm, not a collection of many Simplify our global operating model 9 Established a global operational platform Prioritize for profitable growth 9
Slide 33: Executing Against Our Strategic Drivers in 2007: Global Operating Platform
Executing Against Our Strategic Drivers in 2007 3 Unlock the power of our global operating platform Long-Term Goals 2007 Initiatives Act as one firm, not a collection of many Simplify our global operating model 9 Continue to leverage and optimize global operations platform Prioritize for profi
Slide 34: Executing Against Our Strategic Drivers In 2006: High Performance Organization
Executing Against Our Strategic Drivers In 2006 4 Build a high performance organization Long-Term Goals 2006 Accomplishments Commit to continuous improvement and performance excellence throughout the organization 9 Advanced the overall employee value Foster a true meritocracy where proposition p
Slide 35: Executing Against Our Strategic Drivers in 2007: High Performance Organization
Executing Against Our Strategic Drivers in 2007 4 Build a high performance organization Long-Term Goals 2007 Initiatives Commit to continuous improvement and performance excellence 9 Continue to enhance employee overall throughout the organization value proposition and practices Foster a true me
Slide 36: Investing in Our Business in 2007
Investing in Our Business in 2007 To estimate future expenses, 2006 expenses should be adjusted for non-recurring items and the costs of higher AUM and weakness of the US Dollar 2007 guidance assumes continuation of year-end 2006 business environment, and does not contemplate impact of potential
Slide 37: A Closer Look at Our Growth Plan
A Closer Look at Our Growth Plan Key Expense Reduction Initiatives Key Re-Investment Opportunities North America Retail transformation $ 17.6 New products and market initiatives $ (20.5) Infrastructure and app. rationalization 15.3 Asian business development (6.1) Global procurement 8.6 Product merg
Slide 38: Building Our Success from the Inside Out
Building Our Success from the Inside Out Mission Business Principles Differentiators Client Benefits 37
Slide 39: Building Our Success from the Inside Out: INVESCO
Building Our Success from the Inside Out United under a shared company name: INVESCO Mission Business Principles Differentiators Client Benefits 38
Slide 40: We Understand What It Takes to Win
We Understand What It Takes to Win Positioned against our evolving world …mindful of the competition and our changing world Implemented effectively …by our talented people focused on execution and continuous improvement Led by a powerful strategy …that delivers on our aspiration to become a pr
Slide 41: Discussion Topics
AMVESCAP Discussion Topics 1 Financial Results – Full Year 2006 and 4th Quarter 2 Our Business Today 3 Our Progress and Initiatives 4 Question and Answer 5 Appendix 40
Slide 42: Questions and Answers
Questions and Answers Marty Flanagan, President & CEO Loren Starr, SMD & CFO Bob Yerbury, SMD & Head of U.K. Mark Armour, SMD & Head of Worldwide Institutional Phil Taylor, SMD & Head of North American Retail James Robertson, SMD & Head of Global Operations Colin Meadows, SMD & Chief A
Slide 43: Discussion Topics
AMVESCAP Discussion Topics 1 Financial Results – 4th Quarter and Full Year 2006 2 Our Business Today 3 Our Progress and Initiatives 4 Question and Answer 5 Appendix 42
Slide 44: Operating Results – Annual
Operating Results – Annual ($ millions) 2006 2005* 2004** 2003 2002 Management Fees 2,610 2,214 2,053 1,757 1,841 Service and Distribution 535 538 593 475 439 Other 97 127 112 110 128 Total Revenues 3,242 2,879 2,758 2,342 2,408 Third-party distribution, service and advisory fees (827) (706) (633) (
Slide 45: Assets Under Management - Annual
Assets Under Management - Annual ($ billions) 2006 2005 2004 2003 2002 Beginning Assets $386.3 $382.1 $370.6 $332.6 $397.9 Inflows 85.8 66.3 67.0 77.3 86.3 Outflows (87.2) (82.5) (86.5) (87.9) (100.5) Net flows (1.4) (16.2) (19.5) (10.6) (14.2) Net flows in Money Market Funds and 12.8 0.5 (8.3) (10.
Slide 46: Assets Under Management – 2006 by Channel
Assets Under Management – 2006 by Channel ($ billions) Total Retail Institutional PWM December 31, 2005 $386.3 $190.2 $179.8 $16.3 Inflows 85.8 58.4 23.2 4.2 Outflows (87.2) (57.9) (24.4) (4.9) Net flows (1.4) 0.5 (1.2) (0.7) Net flows in Money Market Funds and 12.8 (0.3) 13.1 0.0 Other Market Gains
Slide 47: Assets Under Management – 2006 by Asset Class
Assets Under Management – 2006 by Asset Class Fixed Money Stable Alter- ($ billions) Total Equity (b) Balanced Income Market Value natives(c) December 31, 2005 (a) $386.3 $177.6 $48.7 $40.4 $52.1 $45.7 $21.8 Inflows 85.8 42.5 24.3 7.4 1.9 4.3 5.4 Outflows (87.2) (46.6) (17.9) (9.6) (3.1) (5.6) (4.4)
Slide 48: Assets Under Management – 2006 by Client Domicile
Assets Under Management – 2006 by Client Domicile ($ billions) Total U.S. Canada U.K. Europe Asia December 31, 2005 (a) $386.3 $235.9 $42.6 $52.9 $32.5 $22.4 Inflows 85.8 30.0 4.5 14.5 23.6 13.2 Outflows (87.2) (42.2) (7.7) (10.2) (18.0) (9.1) Net flows (1.4) (12.2) (3.2) 4.3 5.6 4.1 Net flows in Mo
Slide 49: Operating Results – Quarterly
Operating Results – Quarterly ($ millions) 4Q06 3Q06 2Q06 1Q06 4Q05* Management Fees 722 642 626 620 574 Service and Distribution 136 130 133 136 129 Other 21 19 29 27 32 Total Revenues 879 791 788 783 735 Third-party distribution, service and advisory fees (224) (204) (200) (199) (183) Net Revenues
Slide 50: Assets Under Management - Quarterly
Assets Under Management - Quarterly ($ billions) 4Q06 3Q06 2Q06 1Q06 4Q05 Beginning Assets $440.6 $413.8 $410.9 $386.3 $380.5 Inflows 22.9 16.3 23.5 23.1 15.8 Outflows (27.4) (17.0) (21.2) (21.6) (19.5) Net flows (4.5) (0.7) 2.3 1.5 (3.7) Net flows in Money Market Funds and Other (1.5) 4.6 2.2 7.4 1
Slide 51: Assets Under Management – 4Q06 by Channel
Assets Under Management – 4Q06 by Channel ($ billions) Total Retail Institutional PWM September 30, 2006 $440.6 $218.8 $204.8 $17.0 Inflows 22.9 14.5 7.4 1.0 Outflows (27.4) (15.6) (10.1) (1.7) Net flows (4.5) (1.1) (2.7) (0.7) Net flows in Money Market Funds and (1.5) (0.3) (1.2) 0.0 Other Market G
Slide 52: Assets Under Management – 4Q06 by Asset Class
Assets Under Management – 4Q06 by Asset Class Fixed Money Stable Alter- ($ billions) Total Equity (b) Balanced Income Market Value natives (c) September 30, 2006 (a) $440.6 $198.7 $59.6 $43.2 $65.8 $48.1 $25.2 Inflows 22.9 13.2 5.3 2.1 0.6 0.6 1.1 Outflows (27.4) (11.9) (6.9) (3.2) (0.9) (2.8) (1.7)
Slide 53: Assets Under Management – 4Q06 by Client Domicile
Assets Under Management – 4Q06 by Client Domicile ($ billions) Total U.S. Canada U.K. Europe Asia September 30, 2006 (a) $440.6 $258.4 $44.6 $65.4 $44.3 $27.9 Inflows 22.9 10.1 1.3 4.2 4.6 2.7 Outflows (27.4) (14.8) (1.7) (2.9) (5.7) (2.3) Net flows (4.5) (4.7) (0.4) 1.3 (1.1) 0.4 Net flows in Money
Slide 54: Additional Income and Expense Information
Additional Income and Expense Information 2006 2005 ($ millions) Q406 Q306 Full Year Q405 Full Year Operating items: Management revenues: - Performance fees 25.9 10.4 82.2 16.4 33.5 Compensation: - 2003 share option expense (3.6) (41.1) (44.7) -- -- - Expenses related to German Bank -- -- -- -- (4.7