Investec Plc · LSE:INVP
Investec — Investor Presentation (September 2005)
35 slides from Investec's investor presentation, Sep 21, 2005
Slide 1: Investor pre-close briefing
Investor pre-close briefing Wednesday, 21 September 2005 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 sta
Slide 2: Transition to IFRS – restated information
Transition to IFRS – restated information IFRS timeline and elections Year end March 2006 Fully compliant with all IFRS Standards in issue 1 Apr 2004 1 Apr 2005 30 Sep 2005 31 Mar 2006 Date of transition Date of adoption 1st public disclosure FY 2005 – Comparative restated IAS 32/39 – Financial Inst
Slide 3: Basis of presentation - pro-forma adjustments
Basis of presentation - pro-forma adjustments • To improve comparability in the restated numbers, pro-forma income statement produced for 31 March 2005 and 30 September 2004 • Includes: – Recognition of income on lending transactions on an effective yield basis – Adjustments from provisioning to imp
Slide 4: Impact on operating profit
Impact on operating profit 31 Mar 2005 - £’000 UK GAAP Pro-forma IFRS Difference Operating profit before tax as reported 208 343 229 234 20 891 Adjusting items: IFRS 2 - Share based payments (9 158) IAS 17 - Leases (8 590) IAS 18 - Revenue recognition (4 634) IAS 27,28,31 - Consolidations 4 191 IAS
Slide 5: Impact on attributable profit and EPS
Impact on attributable profit 31 Mar 2005 - £’000 UK GAAP Pro-forma IFRS Difference Operating profit before tax as reported 208 343 229 234 20 891 Associates 14 045 - (14 045) Goodwill (51 807) (37 010) 14 797 Other non-operating items (11 832) (14 629) (2 797) Taxation (57 265) (60 759) (3 494) Min
Slide 6: Adjusted earnings and EPS; impact on the balance sheet
Adjusted earnings and EPS 31 Mar 2005 - £’000 UK GAAP Pro-forma IFRS Difference Attributable profit pre goodwill and non- operating items 151 146 154 362 3 216 Adjust for: appropriate matching of dividends relating to perpetual preference shareholders (1 275) (1 275) Adjusted operational earnings 15
Slide 7: Operational review
Impact on financial objectives 31 Mar 2005 UK GAAP IFRS as reported pro-forma ROE 21.3% 20.2% Cost to income ratio 66.8% 66.7% Staff compensation to operating income ratio 43.8% 44.2% Adjusted operational EPS 140.8 137.8 Dividend cover 2.10 2.06 Operational review
Slide 8: Favourable operating environment
• Proviso: unless otherwise stated, figures and trends discussed in the operational review relate to the five month period to 31 August 2005 (i.e. 1H06) according to IFRS Favourable operating environment 31 Aug 2005 31 Mar 2005 % Move 31 Mar 2004 JSE ALSI 15 414 `13 299 15.9% 10 693 FTSE All Share I
Slide 9: Divisional review – Private Banking
Divisional review Private Banking • The Private Banking operations in all Loan portfolio geographies have performed well £'bn 5 • Momentum in lending turnover and Up 13.0% to £4.8 billion transactional activity has continued to 4 since Mar 2005 drive performance 3 2 1 0 2000 2001 2002 2003 2004 2005
Slide 10: Private Client Portfolio Management and Treasury and Specialised Finance
Private Client Portfolio Management and Stockbroking • Favourable market conditions, increased Funds under management volumes and increased corporate activity £'bn benefited overall performance 18 16 Up 69.1% to £16.4 billion since Mar 2005 • Third party assets under administration 14 includes: 12 1
Slide 11: Investment Banking and Asset Management
Investment Banking • Agency and Advisory – UK: Solid performance across the division – Australia: Strong M&A and IPO pipeline supported by resurgence in equity markets – SA: Stable pipeline continues with strong performance from stockbroking business as a result of buoyant markets and increased volu
Slide 12: Property Activities and Other Activities
Property Activities • Property activities in SA Assets under administration continue to perform well £'bn supported by strong property 1.5 Up 4.0% to £1.3 billion fundamentals since Mar 2005 1.0 0.5 0.0 2000 2001 2002 2003 2004 2005 Aug- 05 Other Activities • International Trade Finance – Positive e
Slide 13: Review of financial targets
Additional aspects Review of financial targets ROE: >20% Cost to income ratio: < 65% Adjusted EPS* growth: 10% >UK RPI Dividend cover: 1.7 – 2.3 times Capital adequacy ratio**: 13% - 16% Recurring income***: reviewed *pre goodwill impairments and non-operating items **for Investec plc and Investec L
Slide 14: Review of financial targets and headcount by business
Review of financial targets % contribution to operating profit* 100 90 80 70 60 50 40 30 20 10 0 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Property Activities Investment Banking Treasury and Specialised Finance Asset Management Private Client Activities *Excluding Assurance and Group Services and Ot
Slide 15: Other information; Conclusion
Other information • Effective tax rate: expected to average 26-27% • Non-operating items: gain on sale of Carr Sheppards Crosthwaite • Weighted number of shares in issue for the six months ended 30 September 2005 expected to be approximately 109 million Conclusion
Slide 16: Conclusion
Conclusion Third party assets under management Core loans and advances up 13.8% up 28.1% to £43.4 billion to £6.7 billion £’bn £’bn 50 7 6 40 5 30 4 3 20 2 10 1 0 0 1995 1997 1999 2001 2003 2005 Aug 05 1995 1997 1999 2001 2003 2005 Aug 05 Conclusion • Strong performance from all our businesses • Out
Slide 17: Appendix – Transition to IFRS: summary key adjustments
Appendix – Transition to IFRS Additional information for the year ended 31 March 2005 Summary key adjustments Attributable £'000 profit Assets Liabilities Equity Key statements / impacts 31 Mar 05 1 Apr 05 1 Apr 05 1 Apr 05 IFRS 2 - Share based payments (8 018) 1 240 686 554 IFRS 3 - Business combin
Slide 18: Impact on adjusted EPS; divisional analysis – summary
Impact on adjusted EPS 31 Mar 2005 UK GAAP Pro-forma IFRS Difference Adjusted EPS (pence) 140.8 137.8 (3.0) Adjusting items: Share based payments (7.2) Leases (5.7) Revenue recognition (3.1) Embedded derivatives 2.9 Consolidations 2.1 Impairment of loans 8.2 Investment properties 3.9 Other 0.6 Weigh
Slide 19: Divisional analysis – Private Banking and Stockbroking
Divisional analysis – Private Banking Operating profit before goodwill and non-operating items At 31 Mar 2005 £'000 Total SA Non-SA As previously reported ito UK GAAP 71 149 28 078 43 071 As reported ito IFRS 71 602 24 816 46 786 Impact of IFRS 453 (3 262) 3 715 Adjustments: Share based payments (1
Slide 20: Divisional analysis – Treasury and Investment Banking
Divisional analysis – Treasury and Specialised Finance Operating profit before goodwill and non-operating items At 31 Mar 2005 £'000 Total SA Non-SA As previously reported ito UK GAAP 47 934 31 121 16 813 As reported ito IFRS 46 369 31 335 15 034 Impact of IFRS (1 565) 214 (1 779) Adjustments: Share
Slide 21: Divisional analysis – Asset Management and Property
Divisional analysis – Asset Management Operating profit before goodwill and non-operating items At 31 Mar 2005 £'000 Total SA Non-SA As previously reported ito UK GAAP 38 175 32 617 5 558 As reported ito IFRS 36 303 31 259 5 044 Impact of IFRS (1 872) (1 358) (514) Adjustments: Share based payments
Slide 22: Group Services and Other Activities; six months to September 2004
Divisional analysis – Group Services and Other Activities Operating loss/profit before goodwill and non-operating items At 31 Mar 2005 £'000 Total SA Non-SA As previously reported ito UK GAAP (22 063) 2 194 (24 257) As reported ito IFRS (53) 23 111 (23 164) Impact of IFRS 22 010 20 917 1 093 Adjustm
Slide 23: Summary key adjustments; impact on operating profit
Summary key adjustments Attributable £'000 profit Assets Liabilities Equity Key statements / impacts 30 Sep 04 30 Sep 04 30 Sep 04 30 Sep 04 IFRS 2 - share based payments (4 525) 100 330 (230) IFRS 3 - business combinations 23 760 23 877 - 23 877 IFRS 4 – insurance contracts 78 873 78 873 - IAS 10 -
Slide 24: Divisional analysis – overall adjustments; attributable profit
Divisional analysis – overall adjustments Operating profit/loss before goodwill and non-operating items – 30 Sep 2004 £'000 Rev rec & SA UK Aus Other Total impairments Private Banking (2 845) 924 286 - (1 635) Rev rec & Private Client Stockbroking impairments (53) - - - (53) Treasury and Specialised
Slide 25: Impact on attributable profit and EPS; adjusted earnings
Impact on attributable profit and EPS 30 Sep 2004 - £’000 UK GAAP Pro-forma IFRS Difference Attributable profit as reported 37 776 61 663 23 887 Add back: Goodwill 18 419 (4 308) (22 727) Add back: Other non operating items 15 688 16 492 804 Less: Preference dividends (5 675) (5 986) (311) Pre goodw
Slide 26: Impact on adjusted EPS and the balance sheet
Impact on adjusted EPS 30 Sep 2004 UK GAAP Pro-forma IFRS Difference ADJUSTED EPS (pence) 61.7 60.9 (0.8) Adjusting items: Share based payments (4.0) Leases (2.8) Revenue recognition (2.5) Consolidations 0.9 Impairment of loans 3.1 Investment properties 2.5 Embedded derivatives 1.5 Other 3.0 Weighte
Slide 27: Divisional analysis – summary and Private Banking
Divisional analysis – summary Operating profit/loss before goodwill and non-operating items As reported ito IFRS – 30 Sep 2004 £'000 SA UK Aus Other Total Private Banking 10 905 19 125 1 466 1 753 33 249 Private Client Stockbroking 2 404 3 562 - - 5 966 Treasury and Specialised Finance 15 133 6 159
Slide 28: Divisional analysis – Stockbroking and Treasury
Divisional analysis – Private Client Stockbroking Operating profit before goodwill and non-operating items 30 Sep 2004 £'000 Total SA Non-SA As previously reported ito UK GAAP 6 019 2 457 3 562 As reported ito IFRS 5 966 2 404 3 562 Impact of IFRS (53) (53) - Adjustments: Share based payments (53) (
Slide 29: Divisional analysis – Investment Banking and Asset Management
Divisional analysis – Investment Banking Operating profit before goodwill and non-operating items At 30 Sep 2004 £'000 Total SA Non-SA As previously reported ito UK GAAP 17 984 11 488 6 496 As reported ito IFRS 18 805 11 712 7 093 Impact of IFRS 821 224 597 Adjustments: Share based payments (615) (4
Slide 30: Divisional analysis – Property and Group Services
Divisional analysis – Property Activities Operating profit before goodwill and non-operating items At 30 Sep 2004 £'000 Total SA Non-SA As previously reported ito UK GAAP 6 712 2 550 4 162 As reported ito IFRS 6 629 2 467 4 162 Impact of IFRS (83) (83) - Adjustments: Share based payments (95) (95) -
Slide 31: Other appendices – core loans and advances
Other appendices Core loans and advances – home currency % growth 31 Aug 05 31 Mar 05 since Mar 05 Private Bank South Africa (R'mn) 33 416 28 963 15.4% Australia (A$'mn) 809 724 11.7% UK and Europe (£'mn) 1 592 1 491 6.8% Treasury and Specialised Finance South Africa (R'mn) 14 593 14 106 3.5% Austra
Slide 32: Core loans and advances; funds under management
Core loans and advances – total in pounds % growth £'million 31 Aug 05 31 Mar 05 since Mar 05 Total Private Bank 4 808 4 256 13.0% South Africa 2 878 2 471 16.5% Australia 338 294 15.1% UK and Europe 1 592 1 491 6.8% Total Treasury and Specialised Finance 1 902 1 643 15.8% South Africa 1 257 1 210 3
Slide 33: Investec Asset Management: AUM movement and SA institutional performance
Investec Asset Management: movement in assets under management £ million* Total Institutional Retail 31 Mar 2005 22 913 16 074 6 839 31 Aug 2005 25 680 17 397 8 283 £ million** Total UK & int’l SA SA (R’mn) 31 Mar 2005 22 913 9 244 13 669 160 402 31 Aug 2005 25 680 10 550 15 130 175 697 * sourced ba
Slide 34: Asset Management: SA retail and UK institutional performance
Investec Asset Management: SA retail investment performance One year Three years 4th Quartile 6.6% 4th Quartile 1st Quartile 23.5% 23.5% 3rd Quartile 20.0% 1st Quartile 46.7% 3rd Quartile 23.5% 2nd Quartile 2nd Quartile 29.5% 26.7% Performance to 31 Aug 2005 Source: Calculated from Standard & Poors
Slide 35: Asset Management: UK and global retail performance
Investec Asset Management: UK and global retail investment performance One year Three years 4th Quartile 11.9% 4th Quartile 25.6% 1st Quartile 30.8% 1st Quartile 38.1% 3rd Quartile 23.8% 3rd Quartile 15.4% 2nd Quartile 2nd Quartile 26.2% 28.2% Performance to 31 Aug 2005 Source: Calculated from Stand