External Conference Call

Transcription

1 This communication is intended for investment professionals only and must not be relied on by anyone else. A Standard Life presentation External Conference Call 8 September 2010

2 UK Equity High Income Karen Robertson Investment Director 2

3 Agenda Team UK Investment process UK Equity High Income Fund 3

4 Key messages for your clients Premier investment house responsible for over 143.7bn of assets UK Institutional pensions fund assets of over 28.3bn Approximately 25.8bn of UK Equities Clearly differentiated successful UK investment process Source: Standard Life, 30 June 2010 Focused on delivering superior performance 4

5 UK equity resource Average years experience Average years at Standard Life 13 UK Large Company Specialists UK Small Company Specialists Quantitative analysts Corporate Governance & SRI 17 9 Key Attributes Optimum team size Clear incentivisation and accountability structured global input Coverage, co-ordination, communication, rapid investment response Rewarded on delivering client and business performance objectives Active communication structure Source: Standard Life, July

6 UK Equity Team Sector coverage (FTSE350) David Cumming Euan Stirling John Wilson Karen Robertson Lesley Duncan Helen Driver Edward Legget Thomas Moore Kiki MacDonald Mike Bessell Elena Fernandez Andrew Millington Ian Runacres Oil & Gas Producers (Integrated), Mining & Metals Banks, Life Insurance, Equity Investment Instruments, Healthcare, Personal Goods (ex BRBY) Pharmaceuticals & Biotechnology, Oil & Gas Producers, Oil Equipment, Services & Distribution Gas, Water & Multiutilities, Electricity, Beverages, Tobacco Support Services (exc. Business Support Services), Travel & Leisure (Bus & Rail) Travel & Leisure (exc. Bus & Rail) Industrial Transport, Industrial Engineering, Electronics & Electricals, Aerospace & Defence General Financials General Retailers, Food Producers, Food & Drug Retailers Chemicals, Real Estate, Household Goods, Construction & Materials Media, Software & Computer Services, Technology Hardware & Equipment Support Services (Business Support Services), Telecoms (Fixed Line & Mobile) Food Producers, Nonlife Insurance Source: Standard Life, 30 June

7 Research Global and overseas equity investment managers and analysts Economic and market strategy team Bond and corporate debt teams Corporate Governance Team and SRI UK Equity Team 17 As at April 2010 Common investment language across research platform 7

8 UK investment style and process Focus on Change Superior information flow Change in company expectations drives outperformance. Key issue analysis. Identify change early Scale, direct company contact, systematic approach to information gathering, key driver focus Full FTSE350 and small cap coverage No compromise on coverage. Winners List Rigorous corporate governance and SRI Analysis of board performance and incentivisation. Engagement in management change UK Matrix Proprietary stock ranking tool, assimilation of quantitative information. 12 factors linked to share price performance. Proven added value A clearly differentiated investment process 8

9 The UK matrix A proprietary stock ranking tool Effective assimilation of key quantitative information Useful for ideas, screening, identification of issues 10 factors linked to share price performance A key quantitative input to our investment process 9

10 Matrix buy example Britvic Dividend Yield S C O R E EPS Growth S C O R E 3m Earnings S C O R E Short-Term Momentum S C O R E TOTAL Source: Standard Life, 12 August Relative to FTSE350 (Indexed) Expected EPS A S O N D J F M A M J J A 28 Relative Price Share Consensus Earnings Forecast Year 1 (R.H Scale) Consensus Earnings Forecast Year 2 (R.H Scale) Source: Thomson Datastream, 12 August

11 Success of winners list and matrix Performance of winners and matrix top quintiles vs. FTSE 350 since August Winners Perf. Matrix Top Quintile Perf. Source: Standard Life, 13 August Sep-00 Nov-00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10

12 Factor performance over the last 12 months 12 month factor performance relative to FTSE350 1 year performance Ranking Factor Perf Broker Confidence Score Total Score Z-score m EPS Revisions m Sales Revisions Revisions Ratio (EPS FY1) Rolling 12m EPS Growth m Chg in 6m MAV Dividend Yield FY /08/ /08/ /09/ /09/ /10/ /10/ /11/ /11/ /12/ /12/ /01/ /01/ /02/ /02/ /03/ /03/ /03/ /04/ /04/ /05/ /05/ /06/ /06/ /07/ /07/ /08/2010 1m Chg in 6m MAV 1m Chg in 9m MAV Price / Sales Ratio Dividend Yield FY Dividend Cover Forecasts 1m Chg in 9m MAV Fwd 12m PE Rolling 12m EPS Growth Revisions Ratio (EPS FY1) 3m EPS Revisions 3m Sales Revisions Broker Confidence Score Dividend Cover Forecasts Z-score 12 Price / Sales Ratio Total Score Source: Standard Life, 9 August

13 UK Equity High Income Fund Aims to provide a high level of income and capital appreciation from investments in mainly UK Equities To fulfil IMA UK Equity Income Sector requirements, the fund must have a yield of at least 110% of the FT All Share Number of stocks range No sector constraints Tracking error 4-7% High conviction stock picking fund 13

14 UK Equity High Income Fund Active money positions Overweight Fund % Position % Underweight Fund % Position % Britvic BHP Billiton Vedanta Resources HSBC Holdings Xstrata AstraZeneca DS Smith BG Group GKN Tesco BP Royal Dutch Shell WH Smith Anglo American GlaxoSmithKline Diageo BBA Aviation Reckitt Benckiser Group Smiths Group SABMiller Source: Standard Life, 11 August

15 UK Equity High Income Fund Overweight/underweight positions General Industrials Financial Services Gas, Water & Multiutilities Industrial Engineering Electricity Food Producers Support Services Banks Food & Drug Retailers Oil & Gas Producers -5.00% -4.00% -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Source: Standard Life, 11 August

16 UK Equity High Income Fund Q dealing activity Bought Fenner Barratt Domino Printing Vedanta Ladbrokes Sold Mondi IMI National Grid Britvic N Brown Source: Standard Life, 30 June

17 UK Equity High Income Fund Percentile ranking relative to peer group Percentile ranking within the IMA UK Equity Income Sector months 16 6 months Year 3 Years 5 Years UK Equity High Income 10 7 Years Years Top decile performance over 3 months and 7 years and top quartile performance over 6 months and 5 and 10 years AA rating from OBSR AAA rating from S&P Fund Research Citywire Income Fund Manager of the Year Award in 2006 Source: Morningstar, 5 April

18 months 6 months 1 Year 2 Years 3 Years Percentile ranking within the IMA UK Equity Income Sector 5 Years 7 years 10 years UK Equity High Income Fund Percentile ranking relative to peer group UK Equity High Income Source: Morningstar, 1 August 2010

19 UK Equity High Income long term performance Percentile ranking for the Standard Life UK Equity Income fund against the Morningstar IMA UK Equity Income sector for each discrete year Percentile ranking within the IMA UK Equity Income Sector UK Equity High Income Source: Morningstar, bid-bid, 31 January 2010 The value of your units may go down as well as up. Past performance is not necessarily a guide to the future. 19

20 UK Equity High Income Fund Q performance attribution Positives Overweight Underweight Britvic, N Brown, IMI, Severn Trent, Wincanton, Domino Printing, Hiscox, IG Group BHP Billiton, Anglo American Negatives Overweight Underweight BP, Xstrata, Vedanta, DSGI Astra Zeneca, B Sky B, SAB Miller, Diageo Source: Standard Life, 30 June

21 UK Equity High Income distributions since 2000 Total distribution for calendar year ( ) * % +8.67% +5.38% -5.99% % % +7.55% % +4.89% , , , , Average Income Growth 7.98% p.a. optimism regarding 2010 * based on 25,000 invested on 31 December 1999 Source: Lipper Hindsight 21

22 Reasons to be positive To 12 August Q4,08 Q1,09 Q2,09 Q3,09 Q4,09 Q1,10 Q2,10 Q3, O N D J F M A M J J A S O N D J F M A M J J FTSE ALL SHARE - TOT RETURN IND MSCI WORLD EX UK - TOT RETURN IND FTSE BRIT.GOVT.FIXED ALL STOCKS - TOT RETURN IND Global recession is over Corporate news flow improving Earnings forecasts increasing Monetary policy supportive Excessive double dip fears Valuations very attractive versus bonds and cash Sources: Thomson Datastream and Standard Life, 12 August 2010 Market focus will return to improving fundamentals 22

23 UK equities still attractive? Equities expensive Equities cheap UK Bond Yield / UK Dividend Yield Ratio UK Equity dividend 12m fwd 10 Yr gilts Cash (6m LIBOR) PE ratio (All Share) Sources: Thomson Datastream, 1 August 2010 Source: Standard Life, August % 3% 1.1% % 8.5 Royal & Sun Alliance Vodafone GlaxoSmithKline Shell December 2010 forward yield Sources: Thomson Datastream, Bloomberg, 1 August % 6.0% 5.5% 6.2% Developing corporate environment provides opportunities for active investors who respond to change Attractive yield vs. bonds and cash Valuation very attractive given earnings recovery prospects Technical pressures (fund raisings) have eased M&A activity increased 23

24 Where are we now? Momentum UK earnings forecast improving rapidly total profits 2010E bn Corporate refinancing ( 82.5bn rights issues 2009) Cost cutting and earnings recovery underestimated Trend in earnings forecasts strongly upwards Balance sheet leverage now low across market vs. history D J F M A M J J A S O N D J F M A M J Source: Factset, June 2010 Valuation opportunities above average 24

25 Where are we now? Sectors seeing the greatest changes in forecasts Revisions to 2010 profit estimates (% change on previous quarter) % Change Q1 Q2 Q3 Q4 Q1 Oil & Gas Producers Mining Beverages Food Producers Housebuilders Tobacco Pharmaceuticals Food Retailers General Retailers Media Travel & Leisure Mobile Telecoms Banks Total Excluding Financials Excluding Resources Excluding Resources & Financials Domestic sectors performing strongly Defensives lagging even with currency tailwind which is now abating Q Source: Factset, June

26 UK quoted corporate sector in sound shape Balance sheet repair complete Dividend Cover Dividend cover much higher than in early 1990s supportive 1.0 Jan-70 Jan-75 Jan-80 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Source: Morgan Stanley, Thomson Datastream, 1 May % Net Corporate Flows as % of Mkt Value (3m MA) FTSE100 Level (rhs) Source: Thomson Datastream, UBS, 1 May 2010 FTSE 350 dividend growth now forecast to be -2% in 2010 and +17% in 2011 (pre-bp cut, forecasts were +8% and +9%) net net 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 Dividend cover high relative to this point in previous cycle Balance sheet leverage now low across market vs. history Buybacks and special dividends making a return Corporate refinancing ( 82.5bn rights issues 2009) 26

27 High Yield stocks have underperformed FTSE PRICE INDEX FTSE ACTUARIES 350 HIGHER YIELD - PRICE INDEX Source: Thomson Datastream, 7 September

28 Barbell approach key for consistent outperformance Low yielders include: Greater than 3.5% Less than 3.5% DSGI easyjet ITV Tullow Oil Rios Vedanta 28

29 Standard Life Performance awards in 2010 Our dedication to meeting your financial needs is what drives us to deliver excellent performance. We've been delighted to receive a raft of industry awards in recognition of this commitment. The Standard Life UK Smaller Companies Trust Plc has, for the fourth consecutive year, won the UK Smaller Companies category (Moneywise Investment Trust Awards, 2010) Standard Life won the 'Best Fund Equity Global High UK' category for the performance of its Managed Fund over a three and five year period (Lipper Awards, March 2010) Thomas Moore of the UK Larger Companies team was ranked 1 st in the Thomson Reuters Extel Pan-European survey 2008 and again in 2010 for the Speciality & Other Financial sector And other notable awards in 2009 Standard Life received the award for the Fastest Growing Money Manager over $10 billion, recognising Canada's most innovative plan sponsors and money managers (Benefits Canada Awards, November 2009) For the second consecutive year, Standard Life won the Best UK Small Cap category (Money Observer Investment Trust Awards, 2009) Standard Life won a 5 Star Award in the Investment category (FTAdviser Online Service Awards, June 2009) Standard Life UK Smaller Companies Trust Plc won the Smallcap Fund of the Year award (Growth Company Awards, 2009) Standard Life won the Global Fixed Income, unhedged category (Asian Investor Awards, 2009) Standard Life won the Best Sterling Corporate Bond Fund category (Morningstar 2009 Fund Awards) Standard Life UK Smaller Companies Trust Plc won the UK Smaller Companies category for the third consecutive year (Moneywise Investment Trust Awards, 2009) For the second consecutive year, Harry Nimmo and the UK Smaller Companies team took the number one spot in Citywire s Top One Hundred Fund Manager of the Year 2009 Standard Life won the 'Bond Pound Sterling High Yield' category and the Hong Kong based Award of the 'Best Bond Group' category (Lipper Awards, 2009) 29

30 Our competitive advantage Focus on change Superior information flow Full FTSE350 and small cap coverage Consistent outperformance Matrix Active corporate governance A clearly differentiated investment process 30

31 The information shown relates to the past. Past performance is not a guide to the future. The value of investment can go down as well as up. For full details of the fund's objective, policy, investment and borrowing powers and details of the risks investors need to be aware of please refer to the full prospectus which can be found on Standard Life Limited, tel , a company registered in Scotland (SC123321) Registered Office 1 George Street Edinburgh EH2 2LL. The Standard Life group includes Standard Life (Mutual Funds) Limited, SLTM Limited, Standard Life (Corporate Funds) Limited and SL Capital Partners LLP. Standard Life Limited acts as Investment Manager for Standard Life Assurance Limited and Standard Life Pension Funds Limited. Standard Life may record and monitor telephone calls in the UK to help improve customer service. All companies are authorised and regulated by the Financial Services Authority Standard Life 31