Investec Plc · LSE:INVP
Investec — Corporate Update (September 2018)
32 slides from Investec's corporate update, Sep 14, 2018
Slide 1: Investor pre-close briefing
Investor pre-close briefing 14 September 2018
Slide 2: Proviso
Proviso • Please note that matters discussed in today’s presentation may contain forward looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to: - the further development of standards and interpretations under IFRS applicable to past,
Slide 3: Operational review
Operational review Out of the Ordinary® ~. & Investec
Slide 4: Proviso
Proviso • Please note that unless otherwise stated, figures and trends discussed in the operational review relate to the five month period to 31 Aug 2018 and compare 1H2019 vs 1H2018 • References to operating profit relate to adjusted* operating profit. Trends within the divisional sections relate t
Slide 5: Overview of operating environment
Overview of operating environment 115% Year end • Notwithstanding Brexit related uncertainty, 110% the UK economy has remained resilient • The South African economy entered into a Exchange 105% technical recession with pressures on rates 100% household spending and dented business 95% confidence due
Slide 6: Overview of the six months ending Sept 2018
Overview of the six months ending 30 Sept 2018 • The Asset Management business is expected to report results ahead of the prior period, while the Wealth & Investment business is expected to report results behind the prior period. Both divisions have benefitted from higher levels of average funds und
Slide 7: Overview of the six months ending Sept 2018
Overview of the six months ending 30 Sept 2018 • Overall group results have been negatively impacted by the depreciation of the average Rand against Sterling exchange rate of approximately 3.5% over the period • Revenue is expected to be moderately ahead of the prior period • Recurring income as a p
Slide 8: Overview of the six months ending Sept 2018
Overview of the six months ending 30 Sept 2018 • For the period 31 Mar 2018 to 31 Aug 2018: - Third party assets under management increased 4.0% to £167.0bn o An increase of 8.7% on a currency neutral* basis - Customer accounts (deposits) decreased 5.5% to £29.3bn o An increase of 2.5% on a currency
Slide 9: Balance sheet soundness
Balance sheet soundness Liquidity Cash and near cash • The group has maintained strong liquidity levels • The loans to customer deposits ratio at 31 Aug 2018 was 79.6% (31 Mar 2018: 79.6%) Average Capital • Investec Limited and Investec plc CET1 ratios are expected to remain in line with the group’s
Slide 10: Divisional review
Out of the Ordinary® ~. o& Investec Divisional review
Slide 11: Asset management
Asset management • 1H2019 earnings supported by market levels and Assets under management: substantial net inflows of £4.4bn to end of Aug Since 31 Mar 2018: up 4.9% to £109.0bn - Up 9.7% on a currency neutral^ basis 2018 £’bn • Competitive investment performance over the 120 long-term, in spite of
Slide 12: Wealth and Investment
Wealth and Investment • Overall performance of the global business Funds under management: expected to be behind the prior period Since 31 March 2018: up 2.4% to £57.4bn - Up 7.1% on a currency neutral^ basis - Higher average funds under management £’bn - Net inflows of £0.6bn to end of Aug 2018 70
Slide 13: Specialist Banking
Specialist Banking The Specialist Bank results are expected to be ahead of the prior period: Net interest and net fee income • Net interest increase driven by book growth in both the UK and South Africa • Net fees and commissions increase supported by good performance from the UK corporate advisor
Slide 14: Additional aspects
—_— Out of the Ordinary® Additional aspects ~. o& Investec
Slide 15: Other Information
Other Information • Effective tax rate: expected to be approximately 18% (1H18: 14.5%) • Net non-controlling interests of approximately £35mn (profits attributable) relating to the Asset Management business and the consolidation of the Investec Property Fund • Weighted number of shares in issue for
Slide 16: Conclusion
Out of the Ordinary® ~. & Investec Conclusion
Slide 17: Conclusion
Conclusion • The environment remains challenging in both core geographies − Uncertainty around the type of Brexit continues to impact on confidence in certain sectors of the UK. Activity levels have however been acceptable supporting profitable growth − Negative emerging market sentiment and continu
Slide 18: Proposed demerger and listing of Investec Asset Management (IAM)
Proposed demerger and listing of Investec Asset Management (IAM)
Slide 19: Proposed demerger and listing of Investec Asset Management (IAM)
Proposed demerger and listing of Investec Asset Management (IAM) • Since the Group’s management succession announcement in Feb 2018, we have focused on the orderly transition of leadership • Fani Titi and Hendrik du Toit will assume their roles as Joint CEOs on 1 Oct 2018 • In conjunction with this
Slide 20: Proposed demerger and listing of IAM
Proposed demerger and listing of IAM • The Board has further concluded that it is now appropriate to demerge and publicly list IAM (“the Transaction’”) • The Investec Specialist Banking and Investec Wealth & Investment businesses will remain part of the Group’s current Dual Listed Companies structur
Slide 21: Proposed demerger and listing of IAM
Proposed demerger and listing of IAM • The Transaction is subject to regulatory, shareholder and other approvals and is expected to be completed within the next twelve months • It is intended that IAM will be listed on the London Stock Exchange with an inward listing on the JSE Limited • The IAM man
Slide 22: Proposed demerger and listing of IAM
Proposed demerger and listing of IAM • Our individual businesses are well-positioned strategically, with strong market positions and good prospects • It is now the right time to demerge and list our asset management business to support it in the next phase of its development • In recent years we hav
Slide 23: Appendices
Appendices
Slide 24: Contact Details
Contact Details For further information please refer to the Investor Relations section of www.investec.com • Or contact the Investor Relations team: • Telephone: − UK: +44 (0) 207 597 5546 − UK: +44 (0) 207 597 4493 − SA: +27 (0) 11 286 7070 • E-mail: investorrelations@investec.co.za 24
Slide 25: Operating environment
Operating environment % move since Mar 31 Aug 18 31 Mar 18 30 Sept 17 2018 JSE All share 58 668 55 475 55 580 5.6% FTSE All share 4 106 3 894 4 050 5.4% SA prime overdraft rate 10.00% 10.00% 10.25% - UK Clearing Banks Base Rate 0.75% 0.50% 0.25% 0.25% Year to date 31 Aug 18 31 Mar 18 30 Sept 17 Curr
Slide 26: Adjusted operating profit for the year ended Mar 2018
Adjusted* operating profit for the year ended 31 Mar 2018 £’000 UK & Other Southern Africa Total group Asset Management 103 918 74 127 178 045 Wealth & Investment 69 269 29 296 98 565 Specialist Banking 59 958 320 535 380 493 233 145 423 958 657 103 Group costs (33 789) (15 809) (49 598) Total group
Slide 27: Adjusted operating profit for the six months ended Sept 2017
Adjusted* operating profit for the six months ended 30 Sept 2017 £’000 UK & Other Southern Africa Total group Asset Management 49 949 33 284 83 233 Wealth & Investment 35 441 14 087 49 528 Specialist Banking 41 208 165 291 206 499 126 598 212 662 399 260 Group costs (17 295) (7 361) (24 656) Total g
Slide 28: Investec Asset Management: assets under management
Investec Asset Management: assets under management* £’million 31 Aug 2018 31 Mar 2018 30 Sept 2017 31 Mar 2017 % change YTD vs Mar 2018 UK and international 75 036 69 371 64 912 66 319 8.2% - Mutual funds 31 189 29 615 26 290 26 406 5.3% - Segregated mandates 43 847 39 756 38 622 39 913 10.3% Southe
Slide 29: Investec Wealth & Investments: funds under management
Investec Wealth & Investments: funds under management £’million 31 Aug 2018 31 Mar 2018 30 Sept 2017 31 Mar 2017 % change YTD vs Mar 2018 UK and Other 39 452 36 923 37 111 35 555 6.8% Southern Africa 17 952 19 125 18 344 19 218 (6.1%) Total 57 404 56 048 55 455 54 773 2.4% Investec Wealth & Investme
Slide 30: Investec Wealth and Investments SA: funds under management
Investec Wealth and Investments SA: funds under management R’million 31 Aug 2018 31 Mar 2018 30 Sept 2017 31 Mar 2017 % change YTD vs Mar 2018 Discretionary 133 924 115 287 117 086 109 869 16.2% Non-discretionary 207 931 202 589 214 942 212 411 2.6% Total 341 855 317 876 332 028 322 280 7.5% £’milli
Slide 31: Total group core loans
Total group core loans £’million 31 Aug 2018 31 Mar 2018 30 Sept 2017 31 Mar 2017 % change YTD vs Mar 2018 UK and Other 9 877 9 687 8 900 8 621 2.0% Southern Africa 13 863 15 445 13 897 14 086 (10.2%) Total core loans 23 740 25 132 22 797 22 707 (5.5%) Home currency 31 Aug 2018 31 Mar 2018 30 Sept 2
Slide 32: Total group customer deposits
Total group customer deposits £’million 31 Aug 2018 31 Mar 2018 30 Sept 2017 31 Mar 2017 % change YTD vs Mar 2018 UK and Other 12 141 11 624 10 841 11 013 4.4% Southern Africa 17 133 19 363 17 125 18 098 (11.5%) Total customer deposits 29 274 30 987 27 966 29 111 (5.5%) Home currency 31 Aug 2018 31