Post on 22-Aug-2020
Results presentationFor the year-ended 31 March 2006
A distinctive specialist banking group
Highlights
Strong results
Constant pursuit of a sustainable, distinctive growth strategy
Investec plc relative to the FTSE 350
Source: Datastream
85
105
125
145
165
185
205
Apr05
May05
Jun05
Jul05
Aug05
Sep05
Oct05
Nov05
Dec05
Jan06
Feb06
Mar06
Reb
ased
to
100
Investec plc FTSE350
Penetrating our core markets
Constant pursuit of a sustainable, distinctive growth strategy
Note: Prior to 2005 the numbers are reported in terms of UK GAAP and for Mar 2005 and Mar 2006 in terms of IFRS
0
50
100
150
200
250
300
350
400
450
500
2000 2001 2002 2003 2004 2005 2006
£'mn
Fees and commissions Net interest income
0
50
100
150
200
250
300
2000 2001 2002 2003 2004 2005 2006
£'mn
£259.2 mn£436.9 mn
Increased brand recognitionConstant pursuit of a sustainable, distinctive growth strategy
Benefited from favourable market conditions
Constant pursuit of a sustainable, distinctive growth strategy
Source: Datastream
90
100
110
120
130
140
150
160
Mar 05 May 05 Jul 05 Sep 05 Nov 05 Jan 06 Mar 06
Reb
ased
to 1
00
Australian All Ordinaries JSE All Share FTSE All Share
▲ 53%
▲ 25%
▲ 24%
Resulting in…Constant pursuit of a sustainable, distinctive growth strategy
* Before goodwill impairment and non-operating items
190.8%113 259329 368Profit after tax (£’000)
%
Change
Pro-forma
31 Mar
200531 Mar
2006(IFRS)
91.0
209.5
230 017
388 767 73.5%224 124Operating profit* (£’000)
35.8%67.0DPS (pence)
55.6%134.6Adjusted EPS* (pence)
53.8%149 510Attributable earnings* (£’000)
Delivered on our targets
*Before goodwill impairment and non-operating items
Note: Prior to 2005 the numbers are reported in terms of UK GAAP and for Mar 2005 and Mar 2006 in terms of IFRS
Adjusted EPS* growth target: UK RPI +10%
-30
-20
-10
0
10
20
30
40
50
60
1996 1998 2000 2002 2004 2006
%55.6%
Constant pursuit of a sustainable, distinctive growth strategy
Delivered on our targets
*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 Mar 2006 in terms of IFRS
ROE* target: >20%
target
%
0
4
8
12
16
20
24
28
2000 2001 2002 2003 2004 2005 2006
25.5%
Constant pursuit of a sustainable, distinctive growth strategy
Delivered on our targets
Note: Prior to 2005 the numbers are reported in terms of UK GAAP and for Mar 2005 and Mar 2006 in terms of IFRS
Cost ratio target: < 65%
target
0
10
20
30
40
50
60
70
80
90
2000 2001 2002 2003 2004 2005 2006
%
58.7%
Constant pursuit of a sustainable, distinctive growth strategy
Leveraging off our platformsConstant pursuit of a sustainable, distinctive growth strategy
*Before goodwill impairment, non-operating items and taxation, excluding income from associates
92.1 91.3
51.443.8
87.6
16.8
48.6
103.6
-3.4
91.5
-5
15
35
55
75
95
115
SouthernAfrica
UK &Europe
Australia Other Total group
2005 2006
£'000
Operating profit per employee*
Growing into our capitalCAR target: 13 - 16%
11.6%14.4%11.1%10.0%Tier 1 ratio
17.7%19.0%16.3%16.1%Capital adequacy ratio
4 312 3 815 74 560 68 517Risk-weighted assets
762 72512 134 11 035 Net qualifying capital
£'mn£'mnR'mnR'mn31 Mar 2006
Investec plcIBUK
Investec LimitedIBL
Constant pursuit of a sustainable, distinctive growth strategy
Operational review
Divisional performance
*Before goodwill impairment, non-operating items and taxation PC = Private Client Activities; TSF = Treasury and Specialised Finance; IB = Investment Banking; AM = Asset Management; PA = Property Activities
Operating profit*
118.2100.9
24.8
-6.3
80.3
49.3 46.436.3
18.2
66.9 59.4
18.6
-35
-15
5
25
45
65
85
105
125
145
PC IB TSF AM PA Other
2005 2006
£'mn
Private Banking
Partner of choice – from wealth creation to wealth management
Overall • Strong performance from all geographies
• All specialisations performed well
• Benefited from growth strategy and initiatives actioned in prior years
• Building a quality business
Partner of choice – from wealth creation to wealth management
*Before goodwill impairment, non-operating items and taxation
**Return on adjusted shareholders’ equity (including goodwill and CCD’s)
Salient financials
Private Banking
59.7% ▼Cost to income…………………...
29.3%▲ROE (pre-tax)**…………………..
£70.6 thousand▲Profit per employee*……..….……
75.9% to £1.9 billion▲Funds under advice……...……...
46.3% to £4.8 billion▲Retail deposit book……………...
43.2% to £6.2 billion▲Loan book…..…………………….
52.7% to £101.5 million▲Operating profit*…………………...
Outlook
• Earnings visibility across all geographies is positive, with meaningful deal flow
• Planned growth strategies include the expansion of distribution capability together with new strategic initiatives
Partner of choice – from wealth creation to wealth management
Private Banking
Operating profit*
0
20
40
60
80
100
120
2000 2001 2002 2003 2004 2005 2006
£'mn
% of group total: 27.9%
*Before goodwill impairment, non-operating items and taxationNote: Prior to 2005 the numbers are reported in terms of UK GAAPand for Mar 2005 and Mar 2006 in terms of IFRS
Private Client Portfolio Management and Stockbroking
Partner of choice – from wealth creation to wealth management
Overall
• Benefited from positive equity market conditions
• Acquisition of HSBC’s Private Client business in South Africa
• Successful and controlled integration of Rensburg Sheppards
plc in the UK
Private Client Portfolio Management and Stockbroking
Partner of choice – from wealth creation to wealth management
*Before goodwill impairment, non-operating items and taxation
**Return on adjusted shareholders’ equity (including goodwill and CCD’s)
Salient financials
£66.1 thousand▲Profit per employee*……..….……
40.8%▼ROE (pre-tax)**………….………..
55.9%▼Cost to income……………..……..
116.2% to £20.9 billion▲Funds under management…..…..
20.6% to £16.6 million▲Operating profit*…………………...
Private Client Portfolio Management and StockbrokingOutlook
• Continue to leverage off the increased scale
Partner of choice – from wealth creation to wealth management
*Before goodwill impairment, non-operating items and taxation
Operating profit*
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006
£'mn
% of group total: 4.6%
Note: Prior to 2005 the numbers are reported in terms of UK GAAPand for Mar 2005 and Mar 2006 in terms of IFRS
Overall
• Leveraged strong platform
• Launched securitisation in SA and UK
• Focused on structured derivatives
• Increased capability in Australia
Treasury and Specialised Finance
Specialist structuring and advisory business
Treasury and Specialised Finance
Specialist structuring and advisory business
Salient financials
56.5% ▼Cost to income…………………...
27.3%▲ROE (pre-tax)**…………………..
£137.3 thousand▲Profit per employee*……..….……
50.8% to £3.0 billion▲Loan book…..…………………….
44.3% to £66.9 million▲Operating profit*…………………...
*Before goodwill impairment, non-operating items and taxation
**Return on adjusted shareholders’ equity (including goodwill and CCD’s)
Outlook
• We have initiatives in place and are developing niche specialisations to ensure continued performance
• Securitisation and specialist funds are key areas of focus
Treasury and Specialised Finance
Specialist structuring and advisory business
0
10
20
30
40
50
60
70
80
2000 2001 2002 2003 2004 2005
£'mn
% of group total: 18.4%
Operating profit*
*Before goodwill impairment, non-operating items and taxationNote: Prior to 2005 the numbers are reported in terms of UK GAAPand for Mar 2005 and Mar 2006 in terms of IFRS
Investment Banking
Overall
• Very strong performance
• More effective people
• Increase size and quality of our client base
• Improved market share
• Fast growing international brand recognition
Integrated business focused on local client delivery with international access
Investment Banking
Integrated business focused on local client delivery with international access
Salient financials
45.2% ▼Cost to income…………………...
171.8%▲ROE (pre-tax)**…………………..
£378.3 thousand▲Profit per employee*……..….……
102.6% to £74.3 million▲Direct Investments and Private Equity profit*….…………………...
111.1% to £26.6 million▲Agency and Advisory profit*…..…
104.8% to £100.9 million▲Operating profit*…………………...
*Before goodwill impairment, non-operating items and taxation
**Return on adjusted shareholders’ equity (including goodwill and CCD’s)
Outlook• Solid pipeline of deals in all geographies
• Portfolio’s well-positioned to take advantage of favourable market conditions
• Integrated platform and increasing brand recognition provide growth opportunities
Investment Banking
Integrated business focused on local client delivery with international access
-5
15
35
55
75
95
115
2000 2001 2002 2003 2004 2005 2006
£'mn
Agency and Advisory Private Equity and Direct Investments
Operating profit*
% of group total: 27.7%
*Before goodwill impairment, non-operating items and taxationNote: Prior to 2005 the numbers are reported in terms of UK GAAPand for Mar 2005 and Mar 2006 in terms of IFRS
Asset Management
Investment specialist focused on performance and client needs
Overall
• Significant growth underpinned by favourable market conditions and net inflows
• Attracted substantial inflows to a highly scaleable platform
• Investment performance remains very good
• Maintained cost control
Investment specialist focused on performance and client needs
Salient financials
65.4%▼Cost to income………………….....
36.3%▲ROE (pre-tax)**……………..……..
£78.4 thousand▲Profit per employee*……..….……
▲Investment performance……….…
38.1% to £31.7 billion▲Assets under management…...…
63.6% to £59.4 million▲Operating profit*…………………...
Asset Management
*Before goodwill impairment, non-operating items and taxation
**Return on adjusted shareholders’ equity (including goodwill and CCD’s)
Operating profit*
Outlook• Built a durable platform for growth based on
• Competitive long term investment performance
• Management continuity
• Growing brand recognition
Asset Management
Investment specialist focused on performance and client needs
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006
£'mn
% of group total: 16.3%
*Before goodwill impairment, non-operating items and taxationNote: Prior to 2005 the numbers are reported in terms of UK GAAPand for Mar 2005 and Mar 2006 in terms of IFRS
Property Activities
Leading fund management consolidator, seeking out selective trading opportunities
Overall
• Favourable property market environment
• Strong results in South Africa
• Offset by weaker performance in the UK
Property Activities
Leading fund management consolidator, seeking out selective trading opportunities
Salient financials
51.7%▲Cost to income………………….....
76.8%▼ROE (pre-tax)**……………..……..
£76.9 thousand▼Profit per employee*……..….……
34.4% to £1.8 billion▲Funds under management…….…
2.1% to £18.6 million▲Operating profit*…………………...
*Before goodwill impairment, non-operating items and taxation
**Return on adjusted shareholders’ equity (including goodwill and CCD’s)
Operating profit*
Outlook
• Property business in South Africa will continue to leverage off favourable market conditions
• Extending our property fund management activities into our othercore geographies
Property Activities
Leading fund management consolidator, seeking out selective trading opportunities
*Before goodwill impairment, non-operating items and taxation
0
5
10
15
20
2000 2001 2002 2003 2004 2005 2006
£'mn
% of group total: 5.1%
Note: Prior to 2005 the numbers are reported in terms of UK GAAPand for Mar 2005 and Mar 2006 in terms of IFRS
0
20
40
60
80
100
2000 2001 2002 2003 2004 2005 2006
Property ActivitiesInvestment BankingTreasury and Specialised FinanceAsset ManagementPrivate Client Activities
% contribution to operating profit*
*Excluding Group Services and Other Activities
Prior to 2005 the numbers are reported in terms of UK GAAP and for Mar 2005 and Mar 2006 in terms of IFRS
Balanced portfolio of businesses
Group Services and Other Activities
*Before goodwill impairment, non-operating items and taxation
from £4.7 million to £4.5 million▼International Trade Finance*..
from £19.3 million to £66.8 million▲Central Funding……………….
from (£40.0 million) to (£57.8 million)▲Central Services………………
post tax of £1.0 millionAssurance profit…..………......
Impairments
127.3%110.7%Specific impairments as a % of net non-performing loans
0.88%0.75%Gross non-performing loans as a % of loans and advances to customers
5772Gross non-performing loans
1 Apr
2005
31 Mar
2006£’million
0.11%
28
9 646 6 445Total gross loans and advances to customers
0.14%Portfolio impairments as a % of net loans and advances to customers
22Net non-performing loans
General
Taxation
from 28.2% to 29.2%Effective tax rate………………...
from 25.9% to 26.5%Effective tax rate (ex Assur)……...
from 111.1 to 109.8 millionWeighted shares………..…….…
£73.6 millionNon-operating items…….………
accrual of approx. £10 millionJCI transaction…………….........
Sub-division of shares
• The Board intends to ask shareholders to approve resolutions at the Annual General Meeting which will result in the subdivision of Investec plc and Investec Limited ordinary shares
• An announcement will follow in due course
Outlook
Strategy
• Our main strategic imperative is to build the business organically with bolt-on acquisitions where appropriate
Sustainable business model
Pools of third party assets
Pools of proprietary risk capital
Core advisory businesses Core banking businesses
SecuritisationTalent management
Networking and distribution
Balance operational risk businesses with financial risk businesses to build a sustainable business model
Sustainable business model
Pools of proprietary risk capital
Core advisory businesses Core banking businesses
SecuritisationTalent management
Networking and distribution
£’bn
Third party assets under management up 60.8% to £54.4 billion
0
10
20
30
40
50
60
1996 1998 2000 2002 2004 2006
Pools of third party assets
Core advisory businesses Core banking businesses
SecuritisationTalent management
Networking and distribution
£’bn
Loans and advances up 49.9% to £9.6 billion
0
2
4
6
8
10
1996 1998 2000 2002 2004 2006
Sustainable business model
Sustainable business model
Pools of third party assets
Pools of proprietary risk capital
Talent management
Core advisory businesses Core banking businesses
Securitisation
Networking and distribution
0
2
4
6
8
10
1996 1998 2000 2002 2004 2006
0
10
20
30
40
50
60
1996 1998 2000 2002 2004 2006
Third party assets under management up 60.8% to £54.4 billion
Loans and advances up 49.9% to £9.6 billion
£’bn£’bn
Sustainable business model
Pools of third party assets
Pools of proprietary risk capital
Talent management
Core advisory businesses
Core banking businesses
Securitisation
Networking and distribution
Principal transactions of £246.0 million
Net interest income of
£259.0 million
£505.0 million
Sustainable business model
Pools of third party assets
Pools of proprietary risk capital
Talent management
Balance operational risk businesses with financial risk businesses to build a sustainable business model
Core advisory businesses Core banking businesses
Securitisation
Networking and distribution
Net fees and commissions of £436.9 million
Other of £22.5 million
£459.4 million
Principal transactions of £246.0 million
Net interest income of
£259.0 million
£505.0 million
Outlook
• We continue to make significant strides in enhancing the quality
and sustainability of our earnings
• While the levels of activity and momentum have continued into
the new financial year, we remain mindful of the volatile
operating environment to which some of our businesses are
exposed
• We look forward to the future with the firm belief that our niche
focus, distinctive offering and capability of our people will enable
us to take advantage of growth opportunities as they arise
Results presentationFor the year-ended 31 March 2006
A distinctive specialist banking group