Invesco Plc (IVZ)

IVZ 
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Invesco (IVZ)

Q4 2010 Earnings Call

January 27, 2011 9:00 am ET

Executives

Martin Flanagan - Chief Executive Officer, President, Executive Director and Member of Standing Committee

Company Speaker -

Loren Starr - Chief Financial Officer and Senior Managing Director

Aaron Uhde - Director of Investor Relations and Assistant Treasurer

Analysts

Chris Spahr - Credit Agricole Securities (USA) Inc.

William Katz - Citigroup Inc

Glenn Schorr - UBS

Craig Siegenthaler - Crédit Suisse AG

Michael Kim - Sandler O'Neill & Partners

Michael Carrier - Deutsche Bank AG

Robert Lee - Keefe, Bruyette, & Woods, Inc.

Kenneth Worthington - JP Morgan Chase & Co

Marc Irizarry - Goldman Sachs Group Inc.

Daniel Fannon - Jefferies & Company, Inc.

Cynthia Mayer - BofA Merrill Lynch

Roger Freeman - Barclays Capital

Presentation

Company Speaker

This presentation and comments made in the associated conference call today may include forward-looking statements. Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisition, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as believe, expects, anticipates, intends, plans, estimates, projects, forecasts and future or conditional verbs, such as will, may, could, should, and would, as well as any other statement that necessarily depends on future events are intended to identify forward-looking statements. Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectation. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent form 10-K and subsequent Forms 10-Q filed with the SEC. You may obtain these reports from the SEC website at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure, if any forward-looking statement later turns out to be inaccurate.

Operator

Welcome to Invesco's Fourth Quarter Results Conference Call. [Operator Instructions] Now, I would like to turn the call over to the speakers for today: Mr. Martin L. Flanagan, President and CEO of Invesco; and Mr. Loren Starr, Chief Financial Officer. Mr. Flanagan, you may begin.

Martin Flanagan

Thank you very much, and I want to thank everybody for joining Loren and I today. We'll be speaking to the presentation that we've made available to everybody. And this morning, we're going to take a few minutes and provide some perspective on the global business and how Invesco's position in key markets around the world, and then Loren is going to review the business results. And as we traditionally do, we will open it up to Q&A after that. And those that are following the presentation, I'm now on Page 3.

And as we've discussed on previous call, we believe Invesco's well positioned to capture the enormous opportunities created by the global demographic and industry trends. And through a variety of economic and market environments, our progress over the past several years says markets have significantly strengthened our competitive position, which is driving strong business momentum as we head into 2011. And in addition to the work that we did in 2010 to further enhance the business, our recent acquisition significantly strengthened our competitive position here in the United States as well as in Japan, Australia and most recently in the Asian real estate market. Going into the new year, we remain focus on building our presence in the fastest growing and most attractive markets across the globe.

And on Page 4, if you take a look at Invesco's presence around the world, we believe our global presence is a very important competitive advantage for us. Invesco has meaningful in expanding market presence in the world's fastest growing and wealthiest regions of the world. Our strong U.S. presence and growing global presence represents a significant long-term prospect for our business. We are among a very small number of firms that are well positioned globally to continue to grow our business and to build success over the long term.

And on Page 5, what you'll see is the assets under management around the world. And our belief is that broad diversification across asset class, distribution channels and domestic domiciles and other key competitive advantage for our firm. This diversification enables us to weather the different market cycles that benefits our clients, our shareholders and the business itself. I think what you'll all note is our diversification across asset class and domicile is very well aligned with the industry and also with client demand on a global basis.

Our multi-year focus on our strategic plan, combined with our global presence has produced strong financial results over the past five years, driven by strong investment performance and improved market environment and the successful integration of the Morgan Stanley/Van Kampen business, Invesco reported a 55% increase in adjusted earnings per share year-over-year ending 2010.

And our commitment to investment excellence has helped us deliver strong investment performance for our clients. And if you look at the firm as a whole, 78% of the assets were ahead of peers on a five-year basis, 68% of our assets were ahead of peers on a three-year basis, compares very, very favorably to the year 2005. Year one results are less strong that it is the result of the market run at the end of the year vis-a-vis the competitive positioning of a number of our portfolios that we feel very confident about our investment teams and the long-term investment capabilities.

Strong investment performance has contributed to continued trend of positive long term net flows for the firm. And the flow picture has improved steadily over the past two years. Our flows are now well balanced across the firm, with positive net flows in nearly every part of the business in 2010.

Taking a look at Greater China and Japan, Invesco has a leading competitive position in Greater China and Japan with more than $40 billion in client assets in the region. We're physically located in 12 countries in that region. Invesco Japan is now the fifth largest global manager, and we ranked eighth out of all managers in Japanese equities in this huge pension market in Japan. The acquisition of Morgan Stanley in Japan further strengthened our Japanese investment capabilities and enabled us to expand our relationship with top-tier clients. The Japanese team is just extremely capable with very a strong long-term track record.

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