Investec plc · LSE:INVP
Investec — FY2005 Earnings Presentation
29 slides from Investec's earnings presentation, 2005
Slide 1: Investec a distinctive specialist banking group
Investec a distinctive specialist banking group March year-end results presentation 2005
Slide 2: Summary of results
Summary of results 31 Mar 31 Mar % UK GAAP 2005 2004 Change Operating profit before tax* (£’000) 208 343 132 260 57.5% Attributable earnings* (£’000) 151 146 106 203 42.3% EPS* (pence) 140.8 103.8 35.6% DPS (pence) 67.0 58.0 15.5% Dividend cover (times) 2.10 1.79 17.4% Total assets under admin (£’mi
Slide 3: Financial objectives: EPS growth
Financial objectives EPS* growth target: UK RPI +10% Result: 35.6% pence 160 140 120 100 80 60 40 20 0 1995 1997 1999 2001 2003 2005 *Before exceptional items and amortisation of goodwill
Slide 4: Financial objectives: ROE
Financial objectives ROE* target: 20% Result: 21.3% % 25 20 target 15 10 5 0 2000 2001 2002 2003 2004 2005 *Return on adjusted equity shareholders’ funds (including goodwill and CCD’s)
Slide 5: Financial objectives: Cost ratio
Financial objectives Cost ratio target: 65% Result: 66.8% % 90 80 70 target 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005
Slide 6: Financial objectives: Recurring income
Financial objectives Recurring income target: 70 -75% Result: 65.2% % 100 80 min target 60 40 20 0 2000 2001 2002 2003 2004 2005 Net interest income Net annuity fees and commissions
Slide 7: Financial objectives: CAR
Financial objectives CAR target: 13 -16% Result: Ltd 20.1% plc 15.5% • Maintain CAR ratio and • Deliver required ROE • Across all businesses and geographies
Slide 8: Operational review
Operational review ~ @ Investec
Slide 9: Balanced portfolio
Balanced portfolio % contribution to operating profit* 100 90 80 70 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 Property Investment Banking Treasury and Specialised Finance Asset Management Private Client Activities *Excluding Assurance and Group Services and Other Activities
Slide 10: Divisional performance
Divisional performance Operating profit* £’mn 105 84.8 85 65 53.9 47.9 47.2 45 37.7 38.2 35.8 24.6 12.3 25 10.1 5 -15 -35 -22.0 -29.8 PC TSF IB AM PA Other** 2004 2005 *Before taxation, exceptional items and amortisation of goodwill **Includes Group Services and Other Activities and Assurance Activi
Slide 11: Private Client Portfolio Management and Stockbroking
Private Client Portfolio Management and Stockbroking Partner of choice – from wealth creation to wealth management • Operating profit* 61.7% to £13.7 million • FUM 14.0% to £9.7 billion • Cost to income 79.2% • ROE (pre-tax)** 62.0% • Recent transactions SA: HSBC private clients UK: Rensburg plc mer
Slide 12: Private Client Portfolio Management and Stockbroking: Outlook
Private Client Portfolio Management and Stockbroking Outlook • Performance dependent on the level of equity markets. • UK: Focus will be on integration with Rensburg and the achievement of synergies. £'mn Operating profit* 16 % of group total: 5.9% 14 12 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 *B
Slide 13: Private Banking
Private Banking Partner of choice – from wealth creation to wealth management • Operating profit* 56.7% to £71.1 million • Loan book 26.5% to £4.3 billion • Retail deposit book 21.4% to £3.2 billion • Non-interest income 36.9% to £95.7 million • Cost to income 56.1% • ROE (pre-tax)** 28.4% *Before e
Slide 14: Private Banking: Outlook
Private Banking Outlook • Targeting 20% earnings growth on the back of a three year 48% compound growth rate. • Positive momentum is supported by a strong pipeline of new initiatives, new deal flow and benefits of scale. Operating profit* £'mn 80 % of group total: 30.9% 60 40 20 0 2000 2001 2002 200
Slide 15: Treasury and Specialised Finance
Treasury and Specialised Finance Specialist structuring and advisory business • Operating profit* 33.9% to £47.9 million • Loan book 34.5% to £1.6 billion • Banking activities 44.7% • Financial markets activities 41.9% (excl. Israel) • Cost to income 62.3% • ROE (pre-tax)** 27.8% *Before exceptional
Slide 16: Treasury and Specialised Finance: Outlook
Treasury and Specialised Finance Outlook • There is a good level of positive momentum in the business and line of sight income is good. • On balance we have built a strong platform and are well positioned to target significant and sustainable growth. Operating profit* £'mn % of group total: 20.8% 55
Slide 17: Investment Banking
Investment Banking Super-boutique strategy targeting specific clients and market niches • Operating profit* 25.0% to £47.2 million • Agency and Advisory profit* 12.0% to £13.8 million • Direct Investments and Private Equity profit* 31.3% to £33.3 million • Cost to income 54.9% • ROE (pre-tax)** 119.
Slide 18: Investment Banking: Outlook
Investment Banking Outlook • We have a balanced portfolio of businesses. • The current level of momentum is good. • Solid deal pipeline in place. Operating profit* £'mn % of group total: 20.5% 55 35 15 -5 2000 2001 2002 2003 2004 2005 Agency and Advisory Private Equity and Direct Investments *Before
Slide 19: Asset Management
Asset Management Investment specialist focused on performance and client needs • Operating profit* 55.1% to £38.2 million • FUM 11.4% to £22.9 billion • Investment performance • Cost to income 69.9% • ROE (pre-tax)** 21.7% *Before exceptional items and amortisation of goodwill **Return on adjusted e
Slide 20: Asset Management: Outlook
Asset Management Outlook • Prospects remain good. • Although dependent on market levels, we have built a foundation to grow confidently. Operating profit* £'mn 40 % of group total: 16.6% 30 20 10 0 2000 2001 2002 2003 2004 2005 *Before exceptional items and amortisation of goodwill
Slide 21: Property Activities
Property Activities Leading fund management consolidator, seeking out selective trading opportunities • Operating profit* 21.5% to £12.3 million • FUM 17.8% to £1.3 billion • Cost to income 56.0% • ROE (pre-tax)** 66.1% *Before exceptional items and amortisation of goodwill **Return on adjusted equi
Slide 22: Property: Outlook
Property Outlook • SA: Property market favourable given the low interest rate environment. • UK: Commercial property is still in a good space and we are co-investing alongside quality professionals as opposed to direct participation. • There is a reasonable pipeline of property projects and good pro
Slide 23: Group Services and Other Activities
Group Services and Other Activities • Assurance profit* from £4.6 million to £7.8 million • International Trade Finance profit* from £2.7 million to £3.5 million • Central Funding* from (£8.3 million) to (£1.2 million) • Central Costs* from (£25.7 million) to (£30.3 million) *Before exceptional item
Slide 24: General
General • Exceptional items (£8.6 million) • Effective tax rate From 21.0% to 27.5% • Weighted shares From 102.3 to 107.4 million and expected to be 108.6 million in 2006
Slide 25: Outlook
Outlook ~ @ Investec
Slide 26: Outlook: Third party assets under management
Outlook Key growth drivers UK Aus SA Third party assets under management ¸ ¸ ¸ £’bn 40 30 20 10 0 1995 1997 1999 2001 2003 2005
Slide 27: Outlook: Core loans and advances
Outlook Key growth drivers UK Aus SA Core loans and advances ¸ ¸ ¸ £’bn 6 5 4 3 2 1 0 1995 1997 1999 2001 2003 2005
Slide 28: Outlook: Transactional activity and market conditions
Outlook Key growth drivers UK Aus SA Transactional activity ¸ ¸ µ Stock market activity ¸ ¸ ¸ General economic conditions ´ ´ µ
Slide 29: Investec a distinctive specialist banking group
Investec a distinctive specialist banking group March year-end results presentation 2005