Invesco Ltd · NYSE:IVZ
Invesco — Q4 2007 Earnings Presentation
39 slides from Invesco's earnings presentation, Feb 5, 2008
Slide 1: Full Year 2007 & 4th Quarter Results
Invesco Full Year 2007 & 4th Quarter Results February 5, 2008 Martin L. Flanagan, Chief Executive Officer Loren M. Starr, Chief Financial Officer
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
Discussion Topics 1. Financial Results- Full Year 2007 and 4th Quarter 2. Well Positioned For Growth 3 3. Q Questions i and dAAnswers 4. Appendix pp 3
Slide 4: Financial Highlights – 2007 Was a Record Year
Financial Highlights – 2007 Was a Record Year 2007 2006 Vs. 2006 2005 AUM $500.1bn $462.6 +8.1% $386.3 Operating $3,879 $3,247 +19.5% $2,873 Revenues Operating Income $994 $759 +31.0% $408 Impact of +$23 Relisting/Settlement* Diluted EPS $1.64 $1.19 +37.8% $0.54 Impact of +$0.04 Relisting/Settlement
Slide 5: In 2007 We Gained Momentum Against Key Financial Metrics
In 2007 We Gained Momentum Against Key Financial Metrics… Ending AUM Operating Income* 2006 vs. 2007 Growth = +8.1% 2006 vs. 2007 Growth = +31.0% ($ billions) ($ millions) 500 994 463 759 386 408 2005 2006 2007 2005 2006 2007 Net Long-Term Flows (16.2) (1.4) (3.4) Net Operating Margin* 2006 vs. 2007
Slide 6: Annual Long-Term Flows
Annual Long-Term Flows Gross sales increased in 2007 despite p volatile markets in the latter half of the year y Net flows were -$3.4 billion for the year Excluding Stable Value, net flows were $12.8bn positive in 2007 Annual Long-Term Flows ($ billions) Net Flows Excluding Stable Value* ($ bi
Slide 7: Assets Under Management – Annual
Assets Under Management – Annual ($ billions) 2007 2006 % Change 2005 Beginning Assets $462.6 $386.3 19.8% $382.1 Inflows 119.9 85.8 39.7% 66.3 Outflows (123.3) (87.2) 41.4% (82.5) Net flows (3.4) (1.4) 142.9% (16.2) Net flows in Money Market Funds and Other 10.1 12.8 (21.1)% 0.5 Market Gains/Reinve
Slide 8: Delivering Investment Excellence
Delivering Investment Excellence Asset Weighted 3-Year Performance December 31, 2007 September 30, 2007 Above Above Benchmark Benchmark 1Q and 2Q 1Q and 2Q 70% 72% Below B l B l Below Benchmark Benchmark 3Q or 4Q 3Q or 4Q 30% 28% Rated AUM as of December 31, 2007 was $380.0bn. Rated AUM as of Septem
Slide 9: Delivering Investment Excellence
Delivering Investment Excellence Ensuring well-defined, 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-07 Sep-07 Dec-06 Dec-07 Sep-07 Dec-06 Dec-07 Sep-07 Dec-06 US (Lipper)* 45% 44% 62% 64
Slide 10: Financial Highlights – 4Q07
Financial Highlights – 4Q07 4Q07 3Q07 Vs. 3Q07 AUM $500.1bn $507.2 (1.4)% Operating Revenues $1,023 $977 +4.8% p g Income Operating $244 $ $257 $ (5.0)% ( ) Impact of Relisting/Settlement* +$23 Diluted EPS $0.43 $0.41 +4.9% Impact of Relisting/Settlement* +$0.04 Net Operating Margin** 34 4% 34.4% 37
Slide 11: Quarterly Long-Term Flows
Quarterly Long-Term Flows Gross sales remained at a relatively high level despite volatile markets in the 4th quarter Net flows were negative $5.0 billion Excluding Stable Value, net flows were positive $3.9 billion Quarterly Long-Term Flows ($ billions) Net Flows Excluding Stable Value* ($ bi
Slide 12: Institutional Money Market Growth
Institutional Money Market Growth Institutional money market assets increased $67.7 billion to $71.1 billion. Strong growth within high quality money market capability Growth in Institutional Money Market ($ billions) Ending Assets Net Flows 75 14 71 1 71.1 12 70 67.7 10 65 8 61.8 5.9 60.6 59.8
Slide 13: Distribution Channels – Quarterly Long-Term Flows
Distribution Channels – Quarterly Long-Term Flows Retail gross sales continue at a higher level than 2006, with net inflows in the UK and Asia offset by net outflows tfl iin the th US andd Canada C d Institutional gross redemptions increased with stable value outflows offset by net inflows in al
Slide 14: Assets Under Management – 3Q07 vs. 4Q07
Assets Under Management – 3Q07 vs. 4Q07 ($ billions) 4Q07 3Q07 % Change Beginning Assets $507.2 $491.6 3.2% Inflows 30.9 31.1 (0.6)% Outflows (35 9) (35.9) (30 9) (30.9) 16 2% 16.2% Net flows (5.0) 0.2 N/A Net flows in Money Market Funds and Other 3.5 5.7 (38.6)% Market Gains/Reinvestment (5 0) (5.0
Slide 15: Operating Results – 3Q07 vs. 4Q07
Operating Results – 3Q07 vs. 4Q07 ($ millions) 4Q07 3Q07 % Change Change* Investment Management Fees 816 792 3.1% Performance Fees 13 4 227.5% Service and Distribution Fees 151 151 0.1% Other 43 30 41.7% Total Operating Revenues 1 023 1,023 977 4 8% 4.8% Employee Compensation 286 278 2.9% Third-Part
Slide 16: 2007 Expense Guidance Analysis
2007 Expense Guidance Analysis The variance in the year includes: — $22m for $22 f market, k t $25m $25 forf FX — $35m related to relisting, proposed legal settlement, and other expenses — $25m related to the amortization of the WL Ross & Co. purchase price 2007 operating expenses ($2,885m) were
Slide 17: Capital Update
Capital Update Capital Deployment Priorities Reinvest in our business - Prudently reinvest balancing growth opportunities with market levels in 2008 Acquisitions when they make sense Dividends – steadily increase with no target payout ratio - Final 2007 dividend of $0.22 per share will be paid
Slide 18: Discussion Topics
Discussion Topics 1. Financial Results- Full Year 2007 and 4th Quarter 2. Well Positioned for Growth 3 3. Q Questions ti and dAAnswers 4. Appendix pp 18
Slide 19: Well-Positioned for Growth
Well-Positioned for Growth We are building real momentum in terms of: — Investment performance — Assets and flows — Operating results Well-positioned p to compete p in current environment A disciplined approach to improve our competitive p position 19
Slide 20: Discussion Topics
Discussion Topics 1. Financial Results- Full Year 2007 and 4th Quarter 2. Well Positioned for Growth 3 3. Questions and Answers 4. Appendix 20
Slide 21: Questions & Answers
Questions & Answers Q Martin L. Flanagan, Chief Executive Officer Loren M. Starr, Chief Financial Officer
Slide 22: Discussion Topics
Discussion Topics 1. Financial Results- Full Year 2007 and 4th Quarter 2. Well Positioned for Growth 3 3. Questions and Answers 4. Appendix 22
Slide 23: We Are Diversified As A Firm
We Are Diversified As A Firm Delivering a diverse set of solutions to meet a broad set of global investment needs By Client Domicile By Channel By Asset Class High Net Balanced Canada Worth 8.1% 9.3% 3.5% Money Market 14.9% U.K. 18.0% Retail U.S. Equity Fixed 57.9% 51.9% Institutional 49.6% Income 4
Slide 24: Operating Results – Annual
Operating Results – Annual ($ millions) 2007 2006 % Change* 2005 Investment Management Fees 3,080 2,508 22.8% 2,167 Performance Fees 70 82 (14.4)% 34 Service and Distribution Fees 593 535 10.9% 538 Other 135 122 11.4% 134 Total Operating Revenues 3 879 3,879 3 247 3,247 19 5% 19.5% 2 873 2,873 Emplo
Slide 25: Assets Under Management – 2007 by Channel
Assets Under Management – 2007 by Channel ($ $ billions) Total Retail Institutional PWM December 31, 2006 $462.6 $234.0 $211.8 $16.8 Inflows 119.9 86.6 28.2 5.1 Outflows (123.3) (80.6) (37.4) (5.3) Net flows (3.4) 6.0 (9.2) (0.2) Net flows in Money Market Funds 10.1 (0.3) 10.4 - and Other Market Gai
Slide 26: Assets Under Management – 2007 by Asset Class
Assets Under Management – 2007 by Asset Class Fixed Money Stable ($ billions) Total Equity Income Balanced Market Value Alternative December 31. 2006 $462.6 $217.5 $42.8 $38.2 $64.3 $46.9 $52.9 Inflows 119.9 74.6 10.7 10.1 1.5 4.0 19.0 Outflows (123.3) (64.2) (14.9) (9.6) (2.1) (20.2) (12.3) Net flo
Slide 27: Assets Under Management – 2007 by Client Domicile
Assets Under Management – 2007 by Client Domicile ($ billions) T t l Total US U.S. C Canada d UK U.K. E Europe A i Asia December 31, 2006 $462.6 $280.4 $43.3 $74.7 $38.1 $26.1 Inflows 119.9 48.2 6.7 22.0 21.4 21.6 Outflows (123.3) (64.7) (6.8) (10.0) (25.6) (16.2) Net flows (3 4) (3.4) (16 5) (16.5)
Slide 28: Operating Results – Quarterly
Operating Results – Quarterly ($ millions) 4Q07 3Q07 % Change* 2Q07 1Q07 4Q06 3Q06 2Q06 1Q06 Investment Management Fees 816 792 3 1% 3.1% 766 706 688 626 612 582 Performance Fees 13 4 227.5% 34 19 26 10 13 33 Service and Distribution Fees 151 151 0.1% 148 143 135 131 133 136 Other 43 30 41.7% 31 32
Slide 29: Assets Under Management - Quarterly
Assets Under Management - Quarterly ($ billions) 4Q07 3Q07 % Change 2Q07 1Q07 4Q06 Beginning Assets $507.2 $491.6 3.2% $471.2 $462.6 $440.6 Inflows 30.9 31.1 (0.6)% 27.5 30.4 22.9 Outflows (35.9) (30.9) 16.2% (26.8) (29.7) (27.4) Net flows (5.0) 0.2 -- 0.7 0.7 (4.5) Net flows in Money Market Funds a
Slide 30: Assets Under Management – by Channel
Assets Under Management – by Channel ($ billions) Total Retail Institutional PWM June 30, 2007 $491.6 $256.1 $218.2 $17.3 Inflows 31.1 21.5 8.5 1.1 Outflows (30.9) (21.2) (8.6) (1.1) Net flows 0.2 0.3 (0.1) - Net flows in Money Market Funds 5.7 (0.1) 5.8 - and Other Market Gains/Reinvestment 4.1 1.8
Slide 31: Assets Under Management – by Asset Class
Assets Under Management – by Asset Class Fixed Money Stable ($ billions) Total Equity Income Balanced Market Value Alternative June 30, 2007 $491.6 $243.3 $42.9 $39.9 $64.8 $46.1 $54.6 Inflows 31.1 19.7 1.9 2.8 0.4 1.1 5.2 Outflows (30.9) (16.0) (3.3) (1.9) (0.4) (6.6) (2.7) Net flows 0.2 3.7 (1.4)
Slide 32: Assets Under Management – by Client Domicile
Assets Under Management – by Client Domicile ($ billions) Total U.S. Canada U.K. Europe Asia June 30, 2007* $491.6 $291.2 $48.9 $85.6 $36.6 $29.3 Inflows 31.1 12.7 1.4 4.6 5.3 7.1 Outflows (30 9) (30.9) (17 9) (17.9) (1 5) (1.5) (2 5) (2.5) (5 6) (5.6) (3 4) (3.4) Net flows 0.2 (5.2) (0.1) 2.1 (0.3)
Slide 33: Condensed Consolidated Reconciliations from US GAAP to IFRS
Condensed Consolidated Reconciliations from US GAAP to IFRS Consolidation of In Millions except per-share data variable Third-party Joint interest Three months ended December 31, 2007 U.S. GAAP costs(1) Ventures(2) entities(3) Other(4) IFRS Operating revenues $1,023.1 (284.9) 28.5 1.8 0.9 $769.4 Ope
Slide 34: Condensed Consolidated Reconciliations from US GAAP to IFRS
Condensed Consolidated Reconciliations from US GAAP to IFRS In Millions except per-share data Consolidation of variable Third-party Joint interest Three months ended September 30, 2007 U.S. GAAP costs(1) Ventures(2) entities(3) Other(4) IFRS Operating revenues $976.6 (270.8) 16.6 (2.1) -- $720.3 Ope
Slide 35: Condensed Consolidated Reconciliations from US GAAP to IFRS
Condensed Consolidated Reconciliations from US GAAP to IFRS Consolidation In Millions except per-share data of variable Third-party Joint interest Three months ended December 31, 2006 U.S. GAAP costs(1) Ventures(2) entities(3) Other(4) IFRS Operating revenues $871.6 (223.5) 3.6 1.7 1.9 $655.3 Operat
Slide 36: Condensed Consolidated Reconciliations from US GAAP to IFRS
Condensed Consolidated Reconciliations from US GAAP to IFRS In Millions except per-share data Consolidation of variable Third-party Joint interest Year ended December 31, 2007 U.S. GAAP costs(1) Ventures(2) entities(3) Other(4) IFRS Operating revenues $3,878.9 (1,051.1) 60.6 (6.5) 1.0 $2,882.9 Opera
Slide 37: Condensed Consolidated Reconciliations from US GAAP to IFRS
Condensed Consolidated Reconciliations from US GAAP to IFRS In Millions except per-share data Consolidation of variable Third-party Joint interest Year ended December 31, 2006 U.S. GAAP costs(1) Ventures(2) entities(3) Other(4) IFRS Operating revenues $3,246.7 (826.8) 8.1 (15.2) 1.8 $2,414.6 Operati
Slide 38: Schedule of Non-GAAP Information
Schedule of Non-GAAP Information For the three months ended ($ Millions) Q407 Q307 Q406 Operating revenues, GAAP basis $1,023.1 $976.6 $871.6 Third-party distribution, service and advisory costs (284.9) (270.8) (223.5) Proportional share of revenues, net of third-party distribution fees, from joint
Slide 39: Schedule of Non-GAAP Information
Schedule of Non-GAAP Information 2007 2006 2005 ($ Millions) Operating revenues, GAAP basis $3,878.9 $3,246.7 $2,872.6 Third-party distribution, service and advisory costs (1,051.1) (826.8) (706.0) Proportional share of revenues, net of third-party distribution fees, from joint venture investments 6