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INL/ INP - Investec - Pre-close statement and investor briefing
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06
JSE share code: INL
ISIN: ZAE000081949
Investec plc
Incorporated in England and Wales
Registration number 3633621
JSE share code: INP
ISIN: GB00B17BBQ50
Investec plc and Investec Limited ("Investec" or "the group") - Pre-close
statement and investor briefing
22 March 2007
Continued strong performance in the second half of the financial year
As previously announced, Investec is today hosting an investor pre-close
briefing at 9:00 (GMT) (11:00 South African time) which will focus on
developments within the group`s core business areas in the second half of
the current financial year ending 31 March 2007.
Overall group performance commentary
Operating fundamentals across the group have continued the trends seen in
the first half and as reported at the interim results announcement on 16
November 2006.
As we have outlined previously, our strategy of maintaining a balanced
business model remains an important focus, particularly in the context of a
more volatile operating environment. In this regard, our advances and third
party assets under management (as reported in domestic currencies) have
continued to grow over the reporting period, the result of which is we have
experienced strong growth in net interest income, fees and commissions.
Contributions are well spread across our core activities and geographies.
Stephen Koseff, Group Chief Executive, commented:
"Although the year has not yet ended, we have had a good second half so far
and are on track to deliver a strong performance for the financial year. We
have seen the momentum continue in the majority of our businesses and are
well placed to once again deliver on our financial targets and objectives.
Whilst financial market conditions remain volatile we are continuing to
benefit from increased brand recognition and penetration in our core
activities and geographies."
Bernard Kantor, Group Managing Director, commented:
"We continue to work hard on building a distinctive sustainable business
model. Our strategy to increase the scale in our UK and Australian
operations continues to support the operational performance of the group.
We are delighted with the quality of our business flows and we remain
committed to delivering value for all our stakeholders."
Business commentary
Salient features of the operating performance of our core business areas
are listed below and further details will be provided in the briefing
presentation which can be viewed on our website.
Private Banking
* Strong performance across all geographies - with South Africa and
Australia doing particularly well in 2H07
* UK very strong year on year performance although 2H07 will be
marginally weaker than 1H07
* Continued penetration in all areas of specialisation
* Good momentum in lending turnover and transactional activity
* Wealth management gaining momentum
* Actual loan portfolio growth since 31 March 2006 to 28 February 2007
(in Pounds converted at actual closing rates): an increase of 7.9% to
GBP6.6bn
* Neutral currency loan portfolio growth since 31 March 2006 to 28
February 2007 (in Pounds converted at closing rates that prevailed at
31 March 2006): an increase of 28.1% to GBP7.9bn
Private Client Portfolio Management and Stockbroking
* Increased volatility but benefiting from higher asset levels and
volumes over the period
* Actual funds under management growth since 31 March 2006 to 28
February 2007 (in Pounds converted at actual closing rates): a
decrease of 2.6% to GBP20.4bn
* Neutral currency funds under management growth since 31 March 2006 to
28 February 2007 (in Pounds converted at closing rates that prevailed
at 31 March 2006): an increase of 8.4% to GBP22.7bn
Treasury and Specialised Finance
* Pipeline and levels of activity have been high across the advisory,
lending and debt capital markets areas
* Benefiting from the integration of the N.M. Rothschild and Sons
(Australia) Limited business acquired in Australia
* Resulting in strong 2H07 performances across all geographies
* Growth in core advances continues to be underpinned by:
- Strong activity in the UK
- Solid lending turnover in South Africa (offset by large
redemptions)
* Actual loan portfolio growth since 31 March 2006 to 28 February 2007
(in Pounds converted at actual closing rates): an increase of 10.6% to
GBP3.3bn
* Neutral currency loan portfolio growth since 31 March 2006 to 28
February 2007 (in Pounds converted at closing rates that prevailed at
31 March 2006): an increase of 26.6% to GBP3.8bn
Investment Banking
* Agency and Advisory
- Good corporate finance activity across all geographies
- Slightly weaker performance from Institutional Stockbroking
largely due to one-off costs
* Direct Investments and Private Equity
- South Africa Private Equity has had a very strong 2H07 performance
largely benefiting from an increase in the value of the underlying
investments in the portfolio
- South Africa Direct Investments has had a good 2H07 performance
- The UK Direct Investments and Private Equity divisions have benefited
from the consolidation of two investments (which have performed better
in the 2H07) (negative impact on minorities - discussed below)
Asset Management
* Earnings growth continues to be enhanced by the momentum of UK and
international business
* Solid long term investment performance
* Strong growth in retail assets under management
* Significantly widened distribution reach
* Actual assets under management growth since 31 March 2006 to 28
February 2007 (in Pounds converted at actual closing rates): a
decrease of 7.1% to GBP29.4bn
* Neutral currency assets under management growth since 31 March 2006 to
28 February 2007 (in Pounds converted at closing rates that prevailed
at 31 March 2006): an increase of 9.9% to GBP34.8bn
Property Activities
* Property fundamentals in South Africa remain strong
* A few realisations have been concluded in the current period resulting
in a much stronger 2H07 performance
* Actual assets under administration growth since 31 March 2006 to 28
February 2007 (in Pounds converted at actual closing rates): a
decrease of 6.9% to GBP1.7bn
* Neutral currency assets under administration growth since 31 March
2006 to 28 February 2007 (in Pounds converted at closing rates that
prevailed at 31 March 2006): an increase of 23.3% to GBP2.3bn
Other Activities
* Central Funding stronger performance:
- Largely due to improved earnings on the underlying assets in the
South African shareholders portfolio
- Central Costs - largely in line with 1H07
Other information
* Effective tax rate: expected to be between 26.0%-27.0%
* Increase in earnings attributable to minorities:
- Largely due to consolidation of investment banking investments
* Weighted number of shares in issue for the year to 31 March 2007
expected to be approximately 563mn
Notes:
1 Key trends set out above, unless stated otherwise, relate to the
eleven months ended 28 February 2007, and compare the first half of
the financial year (1H07) to the second half of the financial year
(2H07)
2 Please note that matters discussed in the briefing and highlighted
above 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
International Financial Reporting Standards (IFRS) applicable to past,
current and future periods, evolving practices with regard to the
interpretation and application of standards under IFRS.
- domestic and global economic and business conditions.
- market related risks.
* A number of these factors are beyond the Company`s control.
* These factors may cause the Company`s actual future results,
performance or achievements in the markets in which it operates to
differ from those expressed or implied.
* Any forward looking statements made are based on the knowledge of the
Company at today`s date.
3 Our reporting currency is Pounds Sterling. Certain of our operations
are conducted by entities outside the UK. The results of operations
and the financial condition of our individual companies are reported
in the local currencies in which they are domiciled, including Rands,
Australian Dollars and Euros. These results are then translated into
Pounds Sterling at the applicable foreign currency exchange rates for
inclusion in our combined consolidated financial statements. In the
case of the income statement, the weighted average rate for the
relevant period is applied and, in the case of the balance sheet, the
relevant closing rate is used.
The following table sets out the movements in certain relevant exchange
rates against Pounds Sterling over the period:
28 Feb 2007 30 Sept 2006 31 March 2006
Currency per GBP1.00 Period Average Period Average Period Average
end end end
South African Rand 14.20 13.31 14.49 12.66 10.72 11.43
Australian Dollar 2.49 2.48 2.50 2.46 2.44 2.37
Euro 1.48 1.47 1.47 1.46 1.43 1.47
Presentation details
The briefing starts at 9:00 (GMT) (11:00 South African time) and will be
broadcast live via video conference from the group`s offices in
Johannesburg to London. The briefing will also be available via a live and
recorded telephone conference call, a live and delayed video webcast, a
delayed podcast and a delayed Mp3. Further details in this regard can be
found on the website at: www.investec.com
Timetable:
Year end: 31 March 2007
Release of year end results: 17 May 2007
For further information please contact:
Investec Investor Relations
UK: +44 (0) 207 597 5546
South Africa: +27 (0) 11 286 7070
investorrelations@investec.com
About Investec
Investec is an international specialist banking group that provides a
diverse range of financial products and services to a niche client base in
three principal markets, the United Kingdom, South Africa and Australia as
well as certain other countries. The group was established in 1974 and
currently has approximately 5 000 permanent employees.
Investec focuses on delivering distinctive profitable solutions for its
clients in five core areas of activity namely, Private Client Activities,
Treasury and Specialised Finance, Investment Banking, Asset Management and
Property Activities.
In July 2002 the Investec group implemented a dual listed company structure
with listings on the London and Johannesburg Stock Exchanges. Management
and staff own approximately 15% of the equity share capital of the group.
The combined group`s current market capitalisation is approximately
GBP3.9bn.
Date: 22/03/2007 10:59:53 Produced by the JSE SENS Department.
