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Investor Day – Jefferies Group, Inc.

Jefferies Group, Inc. · Oct 9, 2014 · 60 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Investor Day – Jefferies Group, Inc. – slide 1
    Jefferies Group 2014 Investor Day October 9, 2014 Jefferies LLC Member SIPC
  2. Investor Day – Jefferies Group, Inc. – slide 2
    Agenda Section Jefferies Overview 1 Jefferies Operating Results 2 Jefferies Business Review 3 Investment Banking Equities Fixed Income, Futures & Commodities Risk Management 4 Capital and Liquidity Management 5 1
  3. Investor Day – Jefferies Group, Inc. – slide 3
    Jefferies Overview 2
  4. Investor Day – Jefferies Group, Inc. – slide 4
    Leucadia Jefferies Merger Leucadia Jefferies merger closed on March 1, 2013 Jefferies continues to operate in a manner consistent with its historical business model and remains a client-focused, conservatively capitalized and…
  5. Investor Day – Jefferies Group, Inc. – slide 5
    Leucadia Overview Common Equity 10.4 Billion (2) Leucadia National Corporation Preferred Equity 0.125 Billion Parent Capital 11.5 Billion (1) Parent Debt 1.0 Billion (1) Financial Services Merchant Banking Corporate / Liquidity…
  6. Investor Day – Jefferies Group, Inc. – slide 6
    Jefferies Group Full-Service Capital Markets Platform: expertise and depth across equities, fixed income, commodities and investment banking Client-Focused: providing investor and issuer clients with the highest quality advice and…
  7. Investor Day – Jefferies Group, Inc. – slide 7
    Global Full-Service Capabilities Fixed Income, Futures Investment Banking Equities & Commodities Equity Cash Electronic Leveraged Investment Listed Consumer Energy Capital Equities Trading Credit Grade Futures Markets Prime…
  8. Investor Day – Jefferies Group, Inc. – slide 8
    Global Footprint Over 3,800 employees in over 30 cities worldwide London (European Headquarters) (1) New York (Global Headquarters) Hong Kong (1) (Asian Headquarters) (1) (1) (1) (1) Jefferies distributes on a…
  9. Investor Day – Jefferies Group, Inc. – slide 9
    Revenue and Earnings Growth Post-Financial Crisis ( Millions) Net Revenues (1) Predecessor Successor Pre-Financial 4,000 Crisis 3,416 3,062 3,040 3,000 2,577 2,192 2,000 1,458 1,000 0 Net Earnings to Common Shareholders…
  10. Investor Day – Jefferies Group, Inc. – slide 10
    Revenue and Earnings Growth Since 1990 ( Millions) Net Revenues (1) Predecessor Successor 4,000 3,416 3,500 3,000 2,500 2,192 2,000 1,500 1,205 1,000 617 144 365 500 0 Net Earnings to Common Shareholders (1) Predecessor…
  11. Investor Day – Jefferies Group, Inc. – slide 11
    Consistent Tangible Common Equity Growth ( Millions) Jefferies has significantly and consistently grown tangible common equity Jefferies proactive equity capital raises helped the firm navigate the global financial crisis and…
  12. Investor Day – Jefferies Group, Inc. – slide 12
    Jefferies Momentum and Ongoing Opportunity Record revenues and earnings for the first nine months of the fiscal year demonstrate the strength of Jefferies' operating model: Significant growth across Investment Banking reflects the…
  13. Investor Day – Jefferies Group, Inc. – slide 13
    Jefferies Operating Results 12
  14. Investor Day – Jefferies Group, Inc. – slide 14
    Earnings Update Third Quarter 2014 ( Millions) Third quarter ending August 31, 2014 performance: Nine months ending August 31, 2014 performance: Net Revenues: 843 million Net Revenues: 2,465 million Pre-Tax Earnings: 136 million…
  15. Investor Day – Jefferies Group, Inc. – slide 15
    Earnings Update LTM Ending Q3 2014 ( Millions) Last twelve months ending August 31, 2014 performance: Net Revenues: 3,416 million Pre-Tax Earnings: 593 million Net Earnings: 367 million Revenues by Source: Investment…
  16. Investor Day – Jefferies Group, Inc. – slide 16
    Balance Sheet ( Millions) Jefferies Group LLC Balance Sheet as of 08/31/14 Assets Liabilities and Equity Cash & Cash Equivalents 4,035 Short-term Borrowing 92 Cash & Securities Segregated 3,301 Financial Instruments Sold, Not Yet…
  17. Investor Day – Jefferies Group, Inc. – slide 17
    Compensation Overview Jefferies has taken advantage of the challenges faced by our competitors by upgrading talent across our firm Our new professionals have been a key driver of growth Lag between hiring senior employees and their…
  18. Investor Day – Jefferies Group, Inc. – slide 18
    Jefferies Business Review 17
  19. Investor Day – Jefferies Group, Inc. – slide 19
    Investment Banking 18
  20. Investor Day – Jefferies Group, Inc. – slide 20
    Investment Banking Revenues Since 1990 ( Millions) Net Revenues (1) Predecessor Successor 1,750 1,630 1,500 1,250 1,000 890 750 495 500 250 72 91 9 0 Note: All results as reported in Jefferies public…
  21. Investor Day – Jefferies Group, Inc. – slide 21
    Investment Banking Overview Jefferies Investment Banking is a leading advisor and underwriter to our clients globally 741 investment bankers with deep sector expertise and extensive experience across all major industry verticals On…
  22. Investor Day – Jefferies Group, Inc. – slide 22
    Investment Banking Performance Update ( Millions) Net revenues have grown at a compounded rate of 15% per year since 2010 Recent performance strong across all major products, sectors and regions Well balanced mix across advisory,…
  23. Investor Day – Jefferies Group, Inc. – slide 23
    Jefferies Finance Update ( Millions) Jefferies Finance, our corporate lending joint venture with Massachusetts Mutual Life Insurance Company, has grown rapidly since 2010 Established in 2004, Jefferies Finance has demonstrated…
  24. Investor Day – Jefferies Group, Inc. – slide 24
    Selected Milestones in 2014 Increased the average size of both our bookrun leveraged finance and equity transactions for the third consecutive year, now at approximately 474 million and 218 million, respectively Continued to…
  25. Investor Day – Jefferies Group, Inc. – slide 25
    Selected Milestones in 2014 (Continued) Our track record in winning M&A transactions exceeding 1 billion continued, with 19 transactions completed in the last twelve months, including marquis transactions for Deutsche Telekom and…
  26. Investor Day – Jefferies Group, Inc. – slide 26
    Select Jefferies Investment Banking Clients Deutsche Telekom Enterprise Value: 240bn Enterprise Value: 70bn Enterprise Value: 115bn Enterprise Value: 190bn Enterprise Value: 235bn Total Liabilities : 30bn Enterprise Value: 130bn…
  27. Investor Day – Jefferies Group, Inc. – slide 27
    Top 20 Reported Investment Banking Revenues Since 2010, our revenue growth has significantly exceeded the composite revenue growth of our nine largest competitors IB Revenue for Top 20 LTM Rev. Total Assets (mm) (bn) 1 Goldman…
  28. Investor Day – Jefferies Group, Inc. – slide 28
    Our Business Today Compared to Other Former Major Independent Investment Banking Firms ( Millions) Investment Banking Net Revenues (1) 2,118 1,820 1,824 1,257 862 LTM 6/30/97 LTM 2/29/08 LTM 8/31/14 LTM 12/31/00 LTM…
  29. Investor Day – Jefferies Group, Inc. – slide 29
    Investment Banking Growth Initiatives Continue to increase productivity Furtherincreases in revenue per Managing Director expected as senior hires from 2011 through 2013 reach targeted productivity levels and as recent hires begin to…
  30. Investor Day – Jefferies Group, Inc. – slide 30
    Equities 29
  31. Investor Day – Jefferies Group, Inc. – slide 31
    Equities Overview Jefferies is a leading global institutional equities franchise Sales and trading across North America, EMEA and Asia Pacific, with major trading hubs in New York, London and Hong Kong 255 research professionals…
  32. Investor Day – Jefferies Group, Inc. – slide 32
    Equities Market Update Market Environment (1) Global equity turnover is up 4% YTD 2014, however, down 38% from its peak in 2008 Global turnover breakdown: Americas 52%, Asia 24% and Europe 24% Jefferies Change in Market Share (2) vs.…
  33. Investor Day – Jefferies Group, Inc. – slide 33
    Equities Performance Update ( Millions) Jefferies has significantly grown revenues and market share post-financial crisis Major ongoing growth opportunities: momentum in Europe and Asia; further client penetration and cross-selling…
  34. Investor Day – Jefferies Group, Inc. – slide 34
    Equities Strategic Priorities Continue to drive market share growth, leveraging Jefferies global capabilities Leading U.S. franchise Full service trading, research and capital markets offering across the Americas, EMEA and Asia…
  35. Investor Day – Jefferies Group, Inc. – slide 35
    Fixed Income, Futures & Commodities 34
  36. Investor Day – Jefferies Group, Inc. – slide 36
    Fixed Income, Futures & Commodities Overview Jefferies serves clients across all major cash and futures products in the U.S. and Europe 860 sales, trading, research and strategy professionals globally Primary Dealer or equivalent in…
  37. Investor Day – Jefferies Group, Inc. – slide 37
    Fixed Income Market Update Markets are currently being driven by central bank intervention and balance sheet deleveraging Since 1H 2013, global fixed income markets have seen low volatility, moderate secondary market volumes and…
  38. Investor Day – Jefferies Group, Inc. – slide 38
    Fixed Income Performance Update ( Millions) 2008 financial crisis and subsequent downturn across the financial sector allowed Jefferies to expand its fixed income capabilities significantly Pre-crisis, Jefferies Fixed Income was a…
  39. Investor Day – Jefferies Group, Inc. – slide 39
    Fixed Income, Futures & Commodities Strategic Priorities Continue to execute our proven strategy Client focused ideas and execution, providing leading solutions and service Continue to drive our performance by leveraging existing…
  40. Investor Day – Jefferies Group, Inc. – slide 40
    Risk Management 39
  41. Investor Day – Jefferies Group, Inc. – slide 41
    Risk Principles Jefferies' comprehensive risk management framework has been a foundation for our success across market cycles Culture We are all risk managers. Our firm is built on every individual taking responsibility for risk…
  42. Investor Day – Jefferies Group, Inc. – slide 42
    Risk Management Governance and Structure Jefferies has a comprehensive risk management approach, with a formal governance structure and processes to identify, assess, monitor, and manage risk Board of Directors and Audit Committee of…
  43. Investor Day – Jefferies Group, Inc. – slide 43
    Risk Management Summary Framework Jefferies Group Board of Directors Corporate Compensation Audit Governance and Firm Management Nominating Chief Risk Officer / Risk Operating Executive Global Treasurer Management…
  44. Investor Day – Jefferies Group, Inc. – slide 44
    Key Risk Areas Market Credit Liquidity and capital Operational Legal and compliance New business Reputational 43
  45. Investor Day – Jefferies Group, Inc. – slide 45
    Key Risk Practices Comprehensive risk framework across risk types and across the firm Sophistication and granularity of risk quantification Control through detailed limits and strong breach procedures Conservative limit setting…
  46. Investor Day – Jefferies Group, Inc. – slide 46
    VaR Report Quarterly VaR Average ( Millions) Avg. VaR related to KCG & HRG 20 Avg. Firmwide VaR Excl. KCG & HRG 15 10 5 0 Annual VaR Average ( Millions) Avg. VaR related to KCG & HRG 20 Avg. Firmwide VaR Excl. KCG &…
  47. Investor Day – Jefferies Group, Inc. – slide 47
    VaR Report and Trading Revenues Distribution of Daily Net Trading Revenues 140 2011 2012 2013 LTM 8/31/14 120 100 of Days 80 60 40 20…
  48. Investor Day – Jefferies Group, Inc. – slide 48
    Capital and Liquidity Management 47
  49. Investor Day – Jefferies Group, Inc. – slide 49
    Liquidity and Funding Principles Jefferies long-standing liquidity and funding principles have maintained the strength and soundness of our platform across market cycles Owning inventory that is composed of liquid assets that turn…
  50. Investor Day – Jefferies Group, Inc. – slide 50
    Limited Leverage Jefferies has a long-standing policy of carefully managing balance sheet leverage In periods of stress, Jefferies has demonstrated the ability to rapidly reduce leverage without unduly impacting our business…
  51. Investor Day – Jefferies Group, Inc. – slide 51
    Asset and Capital Growth Consistent capital growth to support business expansion Total Assets and Total Capital ( Millions) Predecessor Successor 50,000 6.0x 45,000 5.0x 40,000 35,000 4.0x 30,000 25,000 3.0x 20,000…
  52. Investor Day – Jefferies Group, Inc. – slide 52
    Level 3 Trading Assets Overview 97% of inventory is Levels 1 and 2, with a minimal amount of Level 3 Trading Assets Level 3 Trading Assets (1) represent only 13% of tangible common equity Level 3 Financial Instruments Owned (1) as a…
  53. Investor Day – Jefferies Group, Inc. – slide 53
    Stable Secured Funding Model Portion of Inventory Deemed Liquid (Fundable at Haircuts of 10% or Better) 85% Predecessor Successor 80% Mean: 76% 75% 80% 78% 70% 77% 77% 77% 76% 75% 73% 72% 73% 74% 65% 1Q 2012 2Q 2012 3Q 2012 4Q…
  54. Investor Day – Jefferies Group, Inc. – slide 54
    Liquidity Pool Jefferies maintains significant excess liquidity on hand Total Liquidity Pool ( Millions) Predecessor Successor 6,000 5,824 5,913 18.0% 5,574 5,187 5,282 5,000 4,726 15.0% 4,423 4,467 4,229 14.4% 4,000 13.3%…
  55. Investor Day – Jefferies Group, Inc. – slide 55
    Long-Term Debt Profile As of 8/31/14, our 6.2 billion notional of long-term debt had a weighted average maturity of 8.2 years No scheduled debt maturities until November 2015 (500 million) No maturity of long-term debt in a single year…
  56. Investor Day – Jefferies Group, Inc. – slide 56
    Credit Ratings Jefferies Group LLC Credit Ratings Agency Rating Outlook Standard & Poors BBB Stable Moodys Baa3 Stable Fitch BBB- Stable Note: As of October 8, 2014. 55
  57. Investor Day – Jefferies Group, Inc. – slide 57
    Appendix 56
  58. Investor Day – Jefferies Group, Inc. – slide 58
    Notes and Disclosures to Leucadia Overview Note: Dollar amounts are Leucadias net carrying amount for each investment, for consolidated subsidiaries equal to their assets less liabilities. 1) Adjusted for assumed maturity of 2015…
  59. Investor Day – Jefferies Group, Inc. – slide 59
    Leucadia Cash and Investments and Parent Debt GAAP Reconciliations Reconciliation of Cash and Investments ( millions) Available Cash and Investments (GAAP) at June 30, 2014 2,224.8 Structured Alpha classified with Asset Management…
  60. Investor Day – Jefferies Group, Inc. – slide 60
    Leverage Ratio GAAP Reconciliation Leverage Ratio - Excluding Merger Impacts May 31, August 31, November 30, February 28, May 31, August 31, ( Millions) 2013 2013 2013 2014 2014 2014 Total Assets 38,938 38,830 40,177 43,440 43,610…

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