22nd Mar 2007 09:00
Investec PLC22 March 2007 Investec Limited Investec plcIncorporated in the Republic of South Africa Incorporated in England and WalesRegistration number 1925/002833/06 Registration number 3633621JSE share code: INL JSE share code: INPISIN: ZAE000081949 ISIN: GB00B17BBQ50 Investec plc and Investec Limited ("Investec" or "the group") - Pre-closestatement 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-closebriefing at 9:00 (GMT) (11:00 South African time) which will focus ondevelopments within the group's core business areas in the second half of thecurrent financial year ending 31 March 2007. Overall group performance commentary Operating fundamentals across the group have continued the trends seen in thefirst half and as reported at the interim results announcement on 16 November2006. As we have outlined previously, our strategy of maintaining a balanced businessmodel remains an important focus, particularly in the context of a more volatileoperating environment. In this regard, our advances and third party assets undermanagement (as reported in domestic currencies) have continued to grow over thereporting period, the result of which is we have experienced strong growth innet interest income, fees and commissions. Contributions are well spread acrossour 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 andare on track to deliver a strong performance for the financial year. We haveseen the momentum continue in the majority of our businesses and are well placedto once again deliver on our financial targets and objectives. Whilst financialmarket conditions remain volatile we are continuing to benefit from increasedbrand 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 continuesto support the operational performance of the group. We are delighted with thequality of our business flows and we remain committed to delivering value forall our stakeholders." Business commentary Salient features of the operating performance of our core business areas arelisted below and further details will be provided in the briefing presentationwhich 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 £6.6bn • 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 £7.9bn 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 £20.4bn • 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 £22.7bn 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 £3.3bn • 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 £3.8bn 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 £29.4bn • 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 £34.8bn 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 £1.7bn • 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 £2.3bn 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 ratesagainst Pounds Sterling over the period: 28 Feb 2007 30 Sept 2006 31 March 2006Currency per £1.00 Period end Average Period end Average Period end AverageSouth African Rand 14.20 13.31 14.49 12.66 10.72 11.43Australian Dollar 2.49 2.48 2.50 2.46 2.44 2.37Euro 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 bebroadcast live via video conference from the group's offices in Johannesburg toLondon. The briefing will also be available via a live and recorded telephoneconference call, a live and delayed video webcast, a delayed podcast and adelayed Mp3. Further details in this regard can be found on the website at:www.investec.com Timetable: Year end: 31 March 2007Release of year end results: 17 May 2007 For further information please contact: Investec Investor RelationsUK: +44 (0) 207 597 5546South Africa: +27 (0) 11 286 [email protected] About Investec Investec is an international specialist banking group that provides a diverserange of financial products and services to a niche client base in threeprincipal markets, the United Kingdom, South Africa and Australia as wellas certain other countries. The group was established in 1974 and currently hasapproximately 5 000 permanent employees. Investec focuses on delivering distinctive profitable solutions for its clientsin five core areas of activity namely, Private Client Activities, Treasury andSpecialised Finance, Investment Banking, Asset Management and PropertyActivities. In July 2002 the Investec group implemented a dual listed company structure withlistings on the London and Johannesburg Stock Exchanges. Management and staffown approximately 15% of the equity share capital of the group. The combinedgroup's current market capitalisation is approximately £3.9bn. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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