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Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights

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Page 1: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

Results presentationFor the year-ended 31 March 2006

A distinctive specialist banking group

Highlights

Page 2: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 3: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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%

Page 4: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 5: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 6: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 7: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 8: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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*…………………...

Page 9: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 10: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 11: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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)

Page 12: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 13: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 14: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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)

Page 15: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 16: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 17: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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…..………......

Page 18: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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…………….........

Page 19: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 20: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 21: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 22: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 23: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

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

Page 24: Group analyst presentation FOR SCREEN€¦ · Results presentation For the year-ended 31 March 2006 A distinctive specialist banking group Highlights. Strong results Constant pursuit

Results presentationFor the year-ended 31 March 2006

A distinctive specialist banking group