Investec plc · LSE:INVP
Investec — H1 2006 Earnings Presentation
30 slides from Investec's earnings presentation, November 2005
Slide 1: Investec a distinctive specialist banking group
Investec a distinctive specialist banking group Interim results For the six months ended 30 September 2005
Slide 2: Summary of results
Summary of results Pro-forma Pro-forma 30 Sep % 30 Sep 1 Apr (IFRS) 2005 Change 2004 2005 Operating profit* (£’000) 152 771 58.2% 96 581 224 124 Profit after tax (£’000) 181 513 188.8% 62 735 113 259 Attrib earnings* (£’000) 93 357 37.4% 67 952 149 510 Adjusted EPS* (pence) 85.2 40.4% 60.7 134.6 DPS
Slide 3: Financial objectives: Adjusted EPS growth
Financial objectives Adjusted EPS* growth target: Result: 40.4% UK RPI +10% % 50 40 30 20 10 0 -10 -20 -30 Mar-95 Mar-98 Mar-00 Mar-02 Mar-04 Sep-05 *Before goodwill impairment and non-operating items Note: The numbers were not reported in terms of IFRS prior to Sep 2005
Slide 4: Financial objectives: ROE
Financial objectives ROE* target: >20% Result: 22.1% % 24 20 target 16 12 8 4 0 Mar- Mar- Mar- Mar- Mar- Mar- Sep- 00 01 02 03 04 05 05 *Return on adjusted shareholders’ equity (including goodwill and CCD’s) Note: Prior to 2005 the numbers are reported in terms of UK GAAP and for Mar 2005 and Sep 20
Slide 5: Financial objectives: Cost ratio
Financial objectives Cost ratio target: < 65% Result: 61.9% % 90 80 70 target 60 50 40 30 20 10 0 Mar- Mar- Mar- Mar- Mar- Mar- Sep- 00 01 02 03 04 05 05 Note: Prior to 2005 the numbers are reported in terms of UK GAAP and for Mar 2005 and Sep 2005 in terms of IFRS
Slide 6: Financial objectives: Capital adequacy ratio
Financial objectives CAR target: 13 - 16% Investec Investec IBL Limited IBUK plc 30 Sep 2005 R'mn R'mn £'mn £'mn Net qualifying capital 10 683 11 217 589 727 Risk-weighted assets 58 789 62 757 3 484 3 895 Capital adequacy ratio 18.2% 17.9% 16.9% 18.7% Tier 1 ratio 11.0% 11.6% 14.4% 11.3%
Slide 7: Operational review
Operational review ™~ o Investec
Slide 8: Divisional performance
Divisional performance Operating profit* £’mn 60 50.1 50 42.1 39.0 40 28.7 30 21.8 21.4 20 18.8 13.9 7.2 10 6.6 3.0 0 -10 -3.1 PCA IB TSF AM PA Other Sep-04 Sep-05 *Before goodwill impairment, non-operating items and taxation PCA = Private Client Activities; TSF = Treasury and Specialised Finance; I
Slide 9: Private Client Activities: Private Banking
Private Client Activities Operating profit* Private Banking £’mn • Operating profit* up 29% 60 • Loan book up 18% (£5.1 bn) 50.1 50 40 39.0 • Cost to income: 59% 30 • ROE (pre-tax): 27% 20 10 0 -10 PCA IB TSF AM PA Other Sep-04 Sep-05 *Before goodwill impairment, non-operating items and taxation PCA
Slide 10: Private Client Activities: Portfolio Management & Stockbroking
Private Client Activities Operating profit* Pvt Client Port Man & Stock £’mn • Operating profit* up 28% 60 50.1 • FUM up 85% (£17.9bn) 50 40 39.0 • Cost to income: 59% 30 • ROE (pre-tax): 40% 20 10 0 -10 PCA IB TSF AM PA Other Sep-04 Sep-05 *Before goodwill impairment, non-operating items and taxati
Slide 11: Investment Banking
Investment Banking Operating profit* • Operating profit* up >100% £’mn • Cost to income: 45% 60 • ROE (pre-tax): >100% 50 42.1 40 30 18.8 20 10 0 -10 PCA IB TSF AM PA Other Sep-04 Sep-05 *Before goodwill impairment, non-operating items and taxation PCA = Private Client Activities; TSF = Treasury and
Slide 12: Treasury and Specialised Finance
Treasury and Specialised Finance Operating profit* • Operating profit* up 34% £’mn • Loan book up 30% (£2.6 bn) 60 • Cost to income: 58% 50 40 • ROE (pre-tax): 27% 28.7 30 21.4 20 10 0 -10 PCA IB TSF AM PA Other Sep-04 Sep-05 *Before goodwill impairment, non-operating items and taxation PCA = Privat
Slide 13: Asset Management
Asset Management Operating profit* • Operating profit* up 57% • FUM up 18% (£27.1 bn) £’mn 60 • Cost to income: 69% 50 40 • ROE (pre-tax): 24% 30 21.8 20 13.9 10 0 -10 PCA IB TSF AM PA Other Sep-04 Sep-05 *Before goodwill impairment, non-operating items and taxation PCA = Private Client Activities;
Slide 14: Property Activities
Property Activities Operating profit* • Operating profit* up 9% • FUM up 7% (R15.7 bn) £’mn 60 • Cost to income: 59% 50 40 • ROE (pre-tax): 74% 30 20 10 6.6 7.2 0 -10 PCA IB TSF AM PA Other Sep-04 Sep-05 *Before goodwill impairment, non-operating items and taxation PCA = Private Client Activities; T
Slide 15: Other Activities
Other Activities Operating profit* • Assurance:▼£3.7 mn • Trade Finan: ▼£0.1 mn £’mn 60 • Central Funding: ▲£13.6 mn 50 40 • Central Costs: ▲£4.6 mn 30 20 10 3.0 0 -10 -3.1 PCA IB TSF AM PA Other Sep-04 Sep-05 *Before goodwill impairment, non-operating items and taxation PCA = Private Client Activit
Slide 16: General
General • Non-operating items £75.7 mn • Effective tax rate From 24.2% to 26.9% • Weighted shares From 111.9 to 109.6 mn • Headcount From 4 420 to 4 090
Slide 17: Growth drivers
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Slide 18: Business model
Business model Pools of Balance operational risk Pools of businesses with financial risk third party businesses to build a proprietary assets sustainable business model risk capital Core advisory businesses Core banking businesses • Asset Management • Lending portfolios – Private Client Talent manag
Slide 19: Balanced portfolio
Balanced portfolio % contribution to operating profit* 100 80 60 40 20 0 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Sep-05 Property Investment Banking Treasury and Specialised Finance Asset Management Private Client Activities *Excluding Group Services and Other Activities Note: Prior to 2005 the num
Slide 20: Growth drivers
Growth drivers Third party assets under Core loans and advances up management up 37% to £46.4 bn 23% to £7.9 bn £’bn £’bn 50 10 40 8 30 6 20 4 10 2 0 0 1996 1998 2000 2002 2004 Sep-05 1996 1998 2000 2002 2004 Sep-05
Slide 21: Private Banking – opportunities for growth
Private Banking – opportunities for growth • Strategic differentiation and strong brand • Establish scale in each of the existing specialisations • Continue to invest in new specialisations • Increased distribution platform • New banking product developments • Leverage off infrastructure for non-ban
Slide 22: Private Client Portfolio Management and Stockbroking – opportunities for growth
Private Client Portfolio Management and Stockbroking – opportunities for growth • Extracting maximum value from the HSBC acquisition by introducing the client base to the broader Investec product offering • Leverage off infrastructure • Successful and controlled integration of Rensburg Sheppards plc
Slide 23: Treasury and Specialised Finance – opportunities for growth
Treasury and Specialised Finance – opportunities for growth • Various business initiatives in debt capital markets • Establish funds, e.g. Viridis Clean Energy Fund • Continue to build scale in existing activities • Leverage off strong product capability and infrastructure: – Asset Finance business
Slide 24: Investment Banking – opportunities for growth
Investment Banking – opportunities for growth • Leverage opportunities created by integrated global securities model • Leverage the SA and UK product to the US market • Cross-border initiatives • Expand selected platforms in Private Equity and Direct Investments
Slide 25: Asset Management – opportunities for growth
Asset Management – opportunities for growth • Maintain strong UK retail momentum and build offshore capacity • Create the conditions for meaningful UK institutional inflows • Maintain brand visibility in institutional market • Expand the presence in Taiwan • Formulate and implement a European growth
Slide 26: Property Activities – opportunities for growth
Property Activities – opportunities for growth • Build funds under management • Select development and trading opportunities • Consolidate opportunities in the listed property sector • Roll out model into other geographies
Slide 27: Conclusion
Conclusion ™~ o Investec
Slide 28: Conclusion
Conclusion • After the adjustments made to our business model over the past few years, we have clearly moved onto the front foot and are benefiting from greater scale and focus • We have built a solid franchise and our strategy of delivering for clients is paying off enabling us to take advantage of
Slide 29: Contact details
Contact details • For further information please refer to the investor relations website: www.investec.com/grouplinks/investorrelations • Or contact the investor relations team: – Telephone • UK: +44 207 597 5546 • SA: +27 11 286 7070 – Fax: +27 11 291 1597 – E-mail: investorrelations@investec.com
Slide 30: Investec a distinctive specialist banking group
Investec a distinctive specialist banking group Interim results For the six months ended 30 September 2005