Wrap Text
Unaudited combined consolidated financial results for the year ended 31 March 2016
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE share code: INP
LSE share code: INVP
ISIN: GB00B17BBQ50
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06)
JSE share code: INL
NSX share code: IVD
BSE share code: INVESTEC
ISIN: ZAE000081949
INVESTEC PLC AND
INVESTEC LIMITED
(COMBINED RESULTS)
Unaudited combined
consolidated financial
results for the year to
31 March 2016
Unaudited combined consolidated financial results for the year ended 31 March 2016
This announcement covers the results of the Investec group for the year ended 31 March 2016.
BASIS OF PRESENTATION
Statutory basis
Statutory information is set out in a separate section in this announcement.
The sale of businesses during the previous financial year (further detail is
provided in the "Notes to the commentary section") has had a significant
effect on the comparability of the group's financial position and results.
Consequently, comparison on a statutory basis of these full year results with
the prior year would be less meaningful.
Ongoing basis
In order to present a more meaningful view of the group's performance,
the results are presented on an ongoing basis excluding items that in
management's view could distort the comparison of performance between
periods. Based on this principle, the following items are excluded from
underlying profit:
- the results of the businesses sold in the prior year i.e. Investec Bank
(Australia) Limited, the UK Kensington business and the Start (Irish)
mortgage business;
- the remaining legacy business in the UK.
This basis of presentation is consistent with the approach adopted for the
prior year ended 31 March 2015. A reconciliation between the statutory and
ongoing income statement is provided.
Unless the context indicates otherwise, all comparatives included in the
commentary relate to the year ended 31 March 2015. Group results have
been negatively impacted by the 16.3% depreciation of the average Rand:
Pounds Sterling exchange rate over the period. Amounts represented on a
currency neutral basis for income statement items assume that the relevant
average exchange rates remain the same for the year to 31 March 2016
when compared to the prior year. Amounts represented on a currency
neutral basis for balance sheet items assume that the relevant closing
exchange rates remain the same as at 31 March 2016 when compared to
31 March 2015.
OVERVIEW OF RESULTS
SOUND PERFORMANCE NOTWITHSTANDING CHALLENGING OPERATING
ENVIRONMENTS
- Macro uncertainty and volatility in the group's key operating geographies
during the financial year impacted overall results.
- Net new fund inflows and reasonable levels of activity in the group's
banking businesses supported sound performance.
- The Specialist Banking business reported results ahead of the prior year.
Strong loan growth was supported by client activity in both the corporate
and private banking businesses and the investment and debt securities
portfolios delivered good results.
- The Asset Management and Wealth & Investment businesses reported
solid net inflows of GBP5.3 billion.
- The group has successfully leveraged its ability to provide clients an
international offering, increasing its client base and deepening its core
franchise.
- Continued investment in infrastructure, digital platforms and increased
headcount are supporting growth initiatives in the overall business.
- Geographical and operational diversity continues to support a stable
recurring income base and earnings through varying market conditions.
STATUTORY OPERATING PROFIT SALIENT FEATURES
- Statutory operating profit before goodwill, acquired intangibles, non-
operating items and taxation and after other non-controlling interests
("operating profit") increased 2.5% to GBP505.6 million (2015:
GBP493.2 million) – an increase of 13.5% on a currency neutral basis.
- Statutory adjusted earnings per share (EPS) before goodwill, acquired
intangibles and non-operating items increased 4.8% from 39.4 pence to
41.3 pence – an increase of 15.7% on a currency neutral basis.
SATISFACTORY PERFORMANCE FROM THE ONGOING BUSINESS
- Ongoing operating profit increased 0.6% to GBP583.9 million (2015:
GBP580.7 million) – an increase of 9.9% on a currency neutral basis.
- Ongoing adjusted EPS before goodwill, acquired intangibles and
non-operating items increased 2.3% from 47.5 pence to 48.6 pence –
an increase of 11.4% on a currency neutral basis.
- Third party assets under management decreased 2.0% to
GBP121.7 billion (31 March 2015: GBP124.1 billion) – an increase of
3.8% on a currency neutral basis.
- Customer accounts (deposits) increased 6.3% to GBP24.0 billion
(31 March 2015: GBP22.6 billion) - an increase of 16.6% on a currency
neutral basis.
- Core loans and advances increased 6.3% to GBP17.5 billion
(31 March 2015: GBP16.5 billion) - an increase of 17.3% on a currency
neutral basis.
THE UK LEGACY PORTFOLIO CONTINUES TO BE ACTIVELY MANAGED
DOWN
- The legacy portfolio reduced from GBP695 million at 31 March 2015 to
GBP583 million through redemptions and write-offs.
- The legacy business reported a loss before taxation of GBP78.3 million
(2015:GBP107.7 million) with impairments on the legacy portfolio
reducing 18.4% from GBP83.5 million to GBP68.1 million.
MAINTAINED A SOUND BALANCE SHEET
- Capital remained well in excess of current regulatory requirements.
The common equity tier 1 ratios of Investec Limited and Investec plc
are slightly below the group's 2016 target of 10% as a consequence
of strong growth in credit risk weighted assets. Current leverage ratios
remain sound at approximately 7% for both Investec Limited and
Investec plc.
- Liquidity remained strong with cash and near cash balances amounting
to GBP11.0 billion.
DIVIDEND INCREASE OF 5.0%
- The board proposes a final dividend of 11.5 pence per ordinary share
equating to a full year dividend of 21.0 pence (2015: 20.0 pence)
resulting in a dividend cover based on the group's adjusted EPS before
goodwill and non-operating items of 2.0 times (2015: 2.0 times),
consistent with the group's dividend policy.
Stephen Koseff, Chief Executive Officer of Investec said:
"The decisive action we took within the Specialist Bank in prior years,
supported by continued penetration of our target client base, has achieved
strong results. Wealth and Investment's increased collaboration with the
Private Banking business is proving successful. Asset Management have
continued to see good net inflows across their client groups. Overall a good
performance in a challenging environment reinforces our strategy of building
a diversified business model."
Bernard Kantor, Managing Director of Investec said:
"These results demonstrate our ability to deliver a good and consistent
performance even when faced with uncertain economic conditions. The
growth of our loan book in both the UK and South Africa and net new fund
inflows of over GBP5 billion is testament to the quality of our people and the
strength of our client franchises."
FOR FURTHER INFORMATION PLEASE CONTACT:
Investec +27 (0) 11 286 7070 or +44 (0) 20 7597 5546
Stephen Koseff, Chief Executive Officer
Bernard Kantor, Managing Director
Ursula Nobrega, Investor Relations (mobile:+27 (0) 82 552 8808)
Carly Lunz, Investor Relations (+44 (0) 20 7597 4493)
Brunswick (SA PR advisers)
Marina Bidoli
Tel: +2711 502 7405 / +2783 253 0478
Cecilia de Almeida
Tel: +2711 502 7418 / +2783 325 9169
Newgate (UK PR advisers)
Jonathan Clare/Jason Nisse/Alistair Kellie/Andy Jones
Tel: +44 (0)20 7680 6550
PRESENTATION/CONFERENCE CALL DETAILS
A presentation on the results will commence at 9:00 UK time/10:00 SA time.
Viewing options as below:
- Live on South African TV (Business Day TV channel 412 DSTV)
- A live and delayed video webcast at www.investec.com
- Toll free numbers for the telephone conference facilities
– SA participants: 0800 200 648
- UK participants: 0808 162 4061
- rest of Europe and other participants: +800 246 78 700
- Australian participants: 1800 350 100
- USA participants: 1855 481 6362
ABOUT INVESTEC
Investec is an international specialist bank and asset manager that provides
a diverse range of financial products and services to a niche client base in
three principal markets – the UK and Europe, South Africa and Asia/Australia
as well as certain other countries. The group was established in 1974 and
currently has approximately 9 000 employees.
Investec focuses on delivering distinctive profitable solutions for its clients in
three core areas of activity namely, Asset Management, Wealth & Investment
and Specialist Banking.
In July 2002 the Investec group implemented a dual listed company
structure with listings on the London and Johannesburg Stock Exchanges.
The combined group's current market capitalisation is approximately
GBP4.3 billion.
INVESTEC PLC AND INVESTEC LIMITED (COMBINED RESULTS)
UNAUDITED COMBINED CONSOLIDATED FINANCIAL RESULTS FOR THE
YEAR ENDED 31 MARCH 2016
The commentary below largely focuses on the results of the ongoing
business.
OVERALL GROUP PERFORMANCE – ONGOING BASIS
Operating profit before goodwill, acquired intangibles, non-operating items
and taxation and after other non-controlling interests ("operating profit")
increased 0.6% to GBP583.9 million (2015: GBP580.7 million) – an increase
of 9.9% on a currency neutral basis. Group results have been negatively
impacted by the 16.3% depreciation of the average Rand: Pounds Sterling
exchange rate over the period.
The combined South African businesses operating profit rose 8.0% in Rand,
whilst the combined UK and Other businesses posted a 12.8% increase in
operating profit in Pounds Sterling.
Salient features of the year under review are:
- Adjusted earnings attributable to shareholders before goodwill, acquired
intangibles and non-operating items increased 3.2% to GBP423.1 million
(2015: GBP409.9 million) – an increase of 12.4% on a currency neutral
basis.
- Adjusted earnings per share (EPS) before goodwill, acquired intangibles
and non-operating items increased 2.3% from 47.5 pence to 48.6 pence
– an increase of 11.4% on a currency neutral basis.
- Recurring income as a percentage of total operating income amounted
to 71.8% (2015: 71.9%).
- The credit loss charge as a percentage of average gross core loans
and advances amounted to 0.26% (2015: 0.22%), with impairments
increasing by 5.1% to GBP41.4 million.
- Third party assets under management decreased 2.0% to
GBP121.7 billion (31 March 2015: GBP124.1 billion) – an increase of
3.8% on a currency neutral basis.
- Customer accounts (deposits) increased 6.3% to GBP24.0 billion
(31 March 2015: GBP22.6 billion) - an increase of 16.6% on a currency
neutral basis.
- Core loans and advances increased 6.3% to GBP17.5 billion
(31 March 2015: GBP16.5 billion) - an increase of 17.3% on a currency
neutral basis.
BUSINESS UNIT REVIEW – ONGOING BASIS
Asset Management
Asset Management operating profit decreased by 9.5% to GBP134.8 million
(2015: GBP149.0 million). The business benefited from solid net inflows of
GBP3.2 billion. Earnings were impacted by market and currency weakness.
Total funds under management amount to GBP75.7 billion (31 March 2015:
GBP77.5 billion).
Wealth & Investment
Wealth & Investment operating profit increased by 8.8% to GBP85.7 million
(2015: GBP78.8 million). The business benefited from higher average funds
under management and solid net inflows of GBP2.1 billion. Total funds under
management amount to GBP45.5 billion (31 March 2015: GBP46.1 billion).
Specialist Banking
Specialist Banking operating profit increased by 4.3% to GBP409.2 million
(2015: GBP392.3 million).
The South African business reported an increase in operating profit in Rands
of 12.7%. Net interest income was driven by loan book growth of 19.7% to
R218.0 billion. The unlisted investment portfolio performed well during the
year. The corporate and private banking businesses benefited from positive
business momentum and franchise growth. The credit loss ratio on average
core loans and advances amounted to 0.26% (2015: 0.28%), the lower end
of its long term average trend, despite the business reporting a moderate
increase in impairments.
The UK and Other businesses reported a 20.9% increase in operating profit.
Good levels of activity supported strong loan growth and increased net
interest income. The debt securities portfolio performed well during the year
and the Hong Kong investment portfolio results improved. Core loans grew
13.4% to GBP7.2 billion and impairments increased, with the credit loss ratio
amounting to 0.26% (2015: 0.12%).
Further information on key developments within each of the business units is
provided in a detailed report published on the group's website:
http://www.investec.com
Group costs
These largely relate to group brand and marketing costs and a portion of
executive and support functions which are associated with group level
activities. These costs are not incurred by the operating divisions and are
necessary to support the operational functioning of the group. These costs
amounted to GBP45.8 million (2015: GBP39.3 million).
FINANCIAL STATEMENT ANALYSIS – ONGOING BASIS
Total operating income
Total operating income before impairment losses on loans and advances
increased by 2.5% to GBP1,934.8 million (2015: GBP1,887.1 million).
Net interest income increased by 6.1% to GBP571.9 million (2015:
GBP539.0 million) due to strong book growth and an increase in margin
earned on early redemption of loans, reflecting higher activity levels.
Net fee and commission income decreased by 2.9% to GBP1,058.3 million
(2015: GBP1,090.4 million) largely as a result of lower fees earned in the
UK corporate business following a strong prior year. The deal pipeline has
however remained sound. This was partially offset by a good performance
from the corporate treasury, corporate structuring and property fund
management businesses in South Africa as well as the acquisition of Blue
Strata (rebranded Investec Import Solutions). In addition, growth in fees in the
global private banking business was supported by increased client activity.
Investment income increased by 11.9% to GBP169.9 million (2015:
GBP151.8 million) as a result of higher earnings from the UK debt securities
portfolio, improved results from the Hong Kong portfolio and a sound
performance from the group's unlisted investment portfolio.
Trading income arising from customer flow increased by 4.0% to
GBP110.9 million (2015: GBP106.6 million) whilst trading income from
other trading activities reflected a profit of GBP11.6 million (2015: loss of
GBP13.0 million) largely due to foreign currency gains (these are largely offset
in non-controlling interests as further detailed below).
Other operating income includes associate income and income earned on
operating lease rentals.
Impairment losses on loans and advances
Impairments on loans and advances increased from GBP39.4 million to
GBP41.4 million with an increase in the group's credit loss ratio to 0.26%
(2015: 0.22%). Since 31 March 2015 gross defaults have decreased from
GBP247.1 million to GBP201.9 million. The percentage of default loans (net
of impairments but before taking collateral into account) to core loans and
advances amounted to 0.78% (31 March 2015: 1.04%).
Operating costs
The ratio of total operating costs to total operating income was 65.8%
(2015: 66.5%). Total operating costs grew by 1.4% to GBP1,272.1 million
(2015: GBP1,254.0 million) reflecting: an increase in headcount and business
infrastructure expenses across divisions to support increased activity and
growth initiatives; an increase in variable remuneration given increased
profitability in certain businesses.
Taxation
The effective tax rate amounts to 19.1% (2015:19.6%).
Profit attributable to non-controlling interests
Profit attributable to non-controlling interests mainly comprises:
- GBP16.5 million profit attributable to non-controlling interests in the
Asset Management business.
- GBP37.6 million profit attributable to non-controlling interests in the
Investec Property Fund Limited.
- A reduction of GBP2.5 million relating to Euro denominated preferred
securities issued by a subsidiary of Investec plc which were reflected on
the balance sheet as part of non-controlling interests. The transaction
was hedged and a forex transaction loss arising on the hedge is reflected
in operating profit before goodwill with the equal and opposite impact
reflected in earnings attributable to non-controlling interests. These
securities were redeemed on 24 June 2015.
BALANCE SHEET ANALYSIS
Since 31 March 2015:
- Total shareholders' equity (including non-controlling interests) decreased
by 4.5% to GBP3.9 billion largely due to the depreciation of the Rand
against Pounds Sterling.
- Net asset value per share decreased 3.4% to 352.3 pence and net
tangible asset value per share (which excludes goodwill and intangible
assets) decreased by 4.5% to 294.3 pence.
- The return on adjusted average shareholders' equity of the ongoing
business increased from 13.8% to 13.9%.
LIQUIDITY AND FUNDING
As at 31 March 2016 the group held GBP11.0 billion in cash and near
cash balances (GBP5.1 billion in Investec plc and R124.9 billion in Investec
Limited) which amounted to 38.7% of its liability base. Loans and advances
to customers as a percentage of customer deposits amounted to 73.5%
(31 March 2015: 74.0%). The group has continued to diversify and improve
the quality of its funding sources and remains very liquid. The group
comfortably meets Basel liquidity requirements for the Liquidity Coverage
Ratio (LCR) and Net Stable Funding Ratio (NSFR) in the UK. In South
Africa the group has continued to see good progress from Investec Cash
Investments leading to higher cash balances. Basel III LCR regulations have
been implemented from 1 January 2015. Investec Bank Limited (Solo basis)
ended the period to 31 March 2016 with the three-month average of its
LCR at 117.3%, which is well ahead of the minimum levels required. Further
detail with respect to the bank's LCR ratio in South Africa is provided on the
website.
Capital adequacy and leverage ratios
The group is targeting a minimum common equity tier one capital ratio
above 10% and a total capital adequacy ratio range of 14% to 17% on a
consolidated basis for each of Investec plc and Investec Limited respectively.
The group's anticipated fully loaded Basel III common equity tier 1 capital
adequacy ratios in both Investec plc and Investec Limited are reflected in the
table below.
31 March 31 March
2016 2015
Investec plc^
Capital adequacy ratio 15.1% 16.7%
Tier 1 ratio 10.7% 11.9%
Common equity tier 1 ratio 9.7% 10.2%
Common equity tier 1 ratio
(anticipated Basel III "fully loaded"*) 9.7% 10.2%
Leverage ratio (current) 7.0% 7.7%
Leverage ratio (anticipated Basel III "fully
loaded"*) 6.3% 6.6%
Investec Limited
Capital adequacy ratio 14.0% 14.7%
Tier 1 ratio 10.7% 11.3%
Common equity tier 1 ratio 9.6% 9.6%
Common equity tier 1 ratio
(anticipated Basel III "fully loaded"*) 9.6% 9.5%
Leverage ratio (current*) 6.9% 8.1%
Leverage ratio (anticipated Basel III
"fully loaded"*) 6.3% 7.2%
* Based on the group's understanding of current and draft regulations, "fully
loaded" is based on Basel III capital requirements as fully phased in by 2022.
^ The capital adequacy disclosures follow Investec's normal basis of presentation
so as to show a consistent basis of calculation across the jurisdictions in which
the group operates. For Investec plc this does not include the deduction of
foreseeable dividends when calculating CET1 capital as now required under the
CRR and EBA technical standards. The impact of the final proposed ordinary
and preference dividends totalling GBP46 million for Investec plc would be
40bps lower. Investec Limited's capital information includes unappropriated
profits. If unappropriated profits are excluded from the capital information,
Investec Limited's common equity tier 1 ratio would be 16 bps lower.
LEGACY BUSINESS – OVERVIEW OF RESULTS
Since 31 March 2015 the group's legacy portfolio in the UK has continued to
be actively managed down from GBP695 million to GBP583 million largely
through redemptions and write-offs. The total legacy business over the year
reported a loss before taxation of GBP78.3 million (2015:GBP107.7 million).
The remaining legacy portfolio will continue to be managed down as the
group sees opportunities to clear the portfolio. Management believe that
the remaining legacy book will take a further two to four years to clear. Total
net defaults in the legacy book amount to GBP143 million (31 March 2015:
GBP185 million).
ADDITIONAL INFORMATION - SOUTH AFRICAN INVESTMENT VEHICLE
In South Africa a new investment vehicle, Investec Equity Partners (IEP),
was created on 11 January 2016 in which Investec holds a 45% stake
alongside other strategic investors who hold the remaining 55%. Investec
Principal Investments transferred certain portfolio investments to the value
of R7.6 billion to IEP. In exchange Investec received R2.5 billion in cash
and 45% of the shares in IEP (R5.1 billion), reflected as an associate on the
balance sheet.
ADDITIONAL INFORMATION - ACQUISITION OF THE BLUE STRATA GROUP
On 1 July 2015, Investec Bank Limited concluded transaction agreements
with the management and shareholders of the Blue Strata group for the
acquisition of the remaining 51.5% of the Blue Strata group, not already
owned by it. Investec and Blue Strata have had a fruitful partnership over the
past 13 years since Blue Strata's founding in 2002.
As import regulations and complexities increase, Blue Strata offers a
compelling value proposition to clients by simplifying the import process, and
Investec foresees exciting benefits unfolding in offering Blue Strata's services
to more of Investec's existing client base. The full integration of the business
into Investec offers the opportunity to unlock substantial benefits and will
allow Blue Strata to accelerate its growth.
For the post-acquisition period, 1 July 2015 to 31 March 2016, the operating
income of Blue Strata was GBP9.5 million and the profit before taxation
amounted to GBP3.2 million.
OUTLOOK
Investec is positioned to maintain sustainable growth in its principal markets
as the businesses develop with a strong client and operational focus. The
macro environment remains volatile due to uncertainty in global markets, the
pending EU membership referendum in the UK, and economic, political and
social challenges in South Africa. Current levels of activity are, nevertheless,
supporting group performance and Investec remains committed to providing
shareholder value and exceptional client experience.
On behalf of the boards of Investec plc and Investec Limited
Fani Titi Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
18 May 2016
NOTES TO THE COMMENTARY SECTION ABOVE
PRESENTATION OF FINANCIAL INFORMATION
Investec operates under a Dual Listed Companies (DLC) structure with
primary listings of Investec plc on the London Stock Exchange and Investec
Limited on the JSE Limited.
In terms of the contracts constituting the DLC structure, Investec plc and
Investec Limited effectively form a single economic enterprise in which
the economic and voting rights of ordinary shareholders of the companies
are maintained in equilibrium relative to each other. The directors of the
two companies consider that for financial reporting purposes, the fairest
presentation is achieved by combining the results and financial position of
both companies.
Accordingly, the year-end results for Investec plc and Investec Limited
present the results and financial position of the combined DLC group under
International Financial Reporting Standards (IFRS), denominated in Pounds
Sterling. In the commentary above, all references to Investec or the group
relate to the combined DLC group comprising Investec plc and Investec
Limited.
FOREIGN CURRENCY IMPACT
The group's reporting currency is Pounds Sterling. Certain of the group's
operations are conducted by entities outside the UK. The results of
operations and the financial position of the individual companies are
reported in the local currencies in which they are domiciled, including Rands,
Australian Dollars, Euros and US Dollars. These results are then translated
into Pounds Sterling at the applicable foreign currency exchange rates for
inclusion in the group's 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:
Year to Year to
Currency per 31 March 2016 31 March 2015
Period Period
GBP1.00 end Average end Average
South African Rand 21.13 20.72 17.97 17.82
Australian Dollar 1.87 2.04 1.95 1.85
Euro 1.26 1.37 1.38 1.28
US Dollar 1.44 1.50 1.49 1.62
Exchange rates between local currencies and Pounds Sterling have
fluctuated over the period. The most significant impact arises from the
volatility of the Rand. The average exchange rate over the period has
depreciated by 16.3% and the closing rate has depreciated by 17.6% since
31 March 2015.
SALE OF INVESTEC BANK (AUSTRALIA) LIMITED
The sale of Investec Bank (Australia) Limited's Professional Finance and
Asset Finance and Leasing businesses and its deposit book to Bank
of Queensland Limited was effective 31 July 2014 for cash proceeds
of GBP122 million. This resulted in the derecognition of approximately
GBP1.7 billion of assets and approximately GBP1.7 billion of liabilities
associated with the businesses sold. The group continues to have a
presence in Australia, focusing on its core activities of Specialised Finance,
Corporate Advisory, Property Fund Management and Asset Management.
The remaining business operates as a non-banking subsidiary of the Investec
group. As a result, the group no longer reports the activities of its Australian
businesses separately with these activities reported under the "UK and
Other" geographical segment and the "UK and Other" Specialist Banking
segment.
SALES OF KENSINGTON GROUP PLC AND START MORTGAGE HOLDINGS
LIMITED
On 9 September 2014 the group announced the sale of its UK intermediated
mortgage business Kensington Group plc ("Kensington") together with
certain other Investec mortgage assets to funds managed by Blackstone
Tactical Opportunities Advisors L.L.C. and TPG Special Situations Partners
for GBP180 million in cash based on a tangible net asset value of the
business of GBP165 million at 31 March 2014. This transaction became
effective on 30 January 2015.
On 15 September 2014 the group announced the sale of its Irish
intermediated mortgage business Start Mortgage Holdings Limited ("Start")
together with certain other Irish mortgage assets to an affiliate of Lone Star
Funds. This transaction became effective on 4 December 2014.
This resulted in the derecognition of approximately GBP4.1 billion of assets
and approximately GBP2 billion of external liabilities associated with these
businesses sold.
As part of the sale of Kensington, a final net settlement amount was paid
after the 31 March 2015 year end. As a result of this payment, a further loss
before taxation of GBP4.8 million was recognised during the current year.
ACCOUNTING POLICIES AND DISCLOSURES
These unaudited summarised combined consolidated financial results
have been prepared in terms of the recognition and measurement criteria
of International Financial Reporting Standards, and the presentation and
disclosure requirements of IAS 34, (Interim Financial Reporting).
The accounting policies applied in the preparation of the results for the year
ended 31 March 2016 are consistent with those adopted in the financial
statements for the year ended 31 March 2015.
The financial results have been prepared under the supervision of Glynn
Burger, the Group Risk and Finance Director. The financial statements for the
year ended 31 March 2016 will be posted to stakeholders on 30 June 2016.
These accounts will be available on the group's website on the same date.
PROVISO
- Please note that matters discussed in this announcement 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 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 group's control.
- These factors may cause the group'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 group at 18 May 2016.
- The information in the announcement for the year ended 31 March 2016,
which was approved by the board of directors on 18 May 2016, does
not constitute statutory accounts as defined in Section 435 of the UK
Companies Act 2006. The 31 March 2015 financial statements were filed
with the registrar and were unqualified with the audit report containing no
statements in respect of sections 498(2) or 498(3) of the UK Companies
Act.
- This announcement is available on the group's website: www.investec.com
Ongoing financial information
Ongoing summarised income statement
Year to Year to
31 March 31 March
GBP'000 2016 2015 Variance % change
Net interest income 571 929 539 041 32 888 6.1%
Net fee and commission income 1 058 340 1 090 435 (32 095) (2.9%)
Investment income 169 915 151 848 18 067 11.9%
Trading income arising from
– customer flow 110 879 106 588 4 291 4.0%
– balance sheet management and other trading activities 11 617 (13 041) 24 658 > 100.0%
Other operating income 12 090 12 188 (98) (0.8%)
Total operating income before impairment losses on loans and advances 1 934 770 1 887 059 47 711 2.5%
Impairment losses on loans and advances (41 368) (39 352) (2 016) 5.1%
Operating income 1 893 402 1 847 707 45 695 2.5%
Operating costs (1 272 108) (1 254 009) (18 099) 1.4%
Depreciation on operating leased assets (2 165) (1 294) (871) 67.3%
Operating profit before goodwill, acquired intangibles and non-operating items 619 129 592 404 26 725 4.5%
Profit attributable to Asset Management non-controlling interests (16 529) (18 184) 1 655 (9.1%)
Profit attributable to other non-controlling interests (35 201) (11 701) (23 500) (> 100.0%)
Operating profit before taxation 567 399 562 519 4 880 0.9%
Taxation on operating profit before goodwill and acquired intangibles (118 151) (116 182) (1 969) 1.7%
Preference dividends accrued (26 130) (36 427) 10 297 (28.3%)
Adjusted attributable earnings to ordinary shareholders 423 118 409 910 13 208 3.2%
Adjusted earnings per share (pence) 48.6 47.5 2.3%
Cost to income ratio 65.8% 66.5%
Number of weighted average shares (million) 870.5 862.7
Segmental geographical and business analysis of operating profit before goodwill, acquired
intangibles, non-operating items, taxation and after other non-controlling interests – ongoing
business
For the year to 31 March 2016 UK Southern Total
GBP'000 and Other Africa group
2016
Asset Management 76 853 57 930 134 783
Wealth & Investment 63 127 22 608 85 735
Specialist Banking 156 378 252 837 409 215
296 358 333 375 629 733
Group costs (35 160) (10 645) (45 805)
Total group 261 198 322 730 583 928
Other non-controlling interest – equity 35 201
Operating profit 619 129
2015
Asset Management 75 491 73 484 148 975
Wealth & Investment 56 871 21 910 78 781
Specialist Banking 129 341 262 918 392 259
261 703 358 312 620 015
Group costs (30 048) (9 264) (39 312)
Total group 231 655 349 048 580 703
Other non-controlling interest – equity 11 701
Operating profit 592 404
Reconciliation from statutory summarised income statement to ongoing summarised income
statement
Removal of:**
UK legacy
business Sale Sale
For the year to 31 March 2016 Statutory excluding assets assets Ongoing
GBP'000 as disclosed sale assets UK Australia business
Net interest income 573 769 1 840 – – 571 929
Net fee and commission income 1 061 625 3 285 – – 1 058 340
Investment income 170 408 493 – – 169 915
Trading income arising from
– customer flow 110 227 (652) – – 110 879
– balance sheet management and other trading activities 11 377 (240) – – 11 617
Other operating income 12 090 – – – 12 090
Total operating income before impairment losses on loans and
advances 1 939 496 4 726 – – 1 934 770
Impairment losses on loans and advances (109 516) (68 148) (41 368)
Operating income 1 829 980 (63 422) – – 1 893 402
Operating costs (1 287 021) (14 913) – – (1 272 108)
Depreciation on operating leased assets (2 165) – – – (2 165)
Operating profit before goodwill, acquired intangibles and non-
operating items 540 794 (78 335) – – 619 129
Profit attributable to other non-controlling interests (35 201) – – – (35 201)
Profit attributable to Asset Management non-controlling interests (16 529) – – – (16 529)
Operating profit before taxation 489 064 (78 335) – – 567 399
Taxation on operating profit before goodwill and acquired intangibles* (103 202) 14 949 – – (118 151)
Preference dividends accrued (26 130) – – – (26 130)
Adjusted attributable earnings to ordinary shareholders 359 732 (63 386) – – 423 118
Adjusted earnings per share (pence) 41.3 48.6
Cost to income ratio 66.4% 65.8%
Number of weighted average shares (million) 870.5 870.5
* Applying the group's effective taxation rate of 19.1%.
Removal of:**
UK legacy
business Sale Sale
For the year to 31 March 2015 Statutory excluding assets assets Ongoing
GBP'000 as disclosed sale assets UK Australia business
Net interest income 634 977 12 526 71 143 12 267 539 041
Net fee and commission income 1 089 043 756 (4 876) 2 728 1 090 435
Investment income 128 334 (16 204) (5 443) (1 867) 151 848
Trading income arising from
- customer flow 106 313 350 (415) (210) 106 588
- balance sheet management and other trading activities (13 424) 19 (248) (154) (13 041)
Other operating income 12 236 – – 48 12 188
Total operating income before impairment losses on loans and
advances 1 957 479 (2 553) 60 161 12 812 1 887 059
Impairment losses on loans and advances (128 381) (83 468) (4 085) (1 476) (39 352)
Operating income 1 829 098 (86 021) 56 076 11 336 1 847 707
Operating costs (1 322 705) (21 648) (34 245) (12 803) (1 254 009)
Depreciation on operating leased assets (1 535) – (241) – (1 294)
Operating profit before goodwill, acquired intangibles
and non-operating items 504 858 (107 669) 21 590 (1 467) 592 404
Profit attributable to other non-controlling interests (11 701) – – – (11 701)
Profit attributable to Asset Management non-controlling interests (18 184) – – – (18 184)
Operating profit before taxation 474 973 (107 669) 21 590 (1 467) 562 519
Taxation on operating profit before goodwill and acquired intangibles* (99 023) 21 103 (4 232) 288 (116 182)
Preference dividends accrued (36 427) – – – (36 427)
Adjusted attributable earnings to ordinary shareholders 339 523 (86 566) 17 358 (1 179) 409 910
Adjusted earnings per share (pence) 39.4 47.5
Cost to income ratio 67.6% 66.5%
Number of weighted average shares (million) 862.7 862.7
* Applying the group's effective statutory taxation rate of 19.6%.
** - The remaining legacy business in the UK.
- The result of the businesses sold in the prior year i.e. Investec Bank (Australia) Limited, the UK Kensington business and the Start (Irish) mortgage business.
Statutory financial information
Salient financial features
Results in Pounds Sterling Results in Rand
Neutral
currency Neutral
Year to Year to Year to currency Year to Year to
31 March 31 March % 31 March % 31 March 31 March %
2016 2015 change 2016 change 2016 2015 change
Operating profit before
taxation* (million) 506 493 2.5% 560 13.5% 10 494 8 817 19.0%
Earnings attributable to
shareholders (million) 368 246 50.0% 409 66.3% 7 635 3 970 92.3%
Adjusted earnings
attributable to
shareholders** (million) 360 340 6.0% 397 16.8% 7 459 6 076 22.8%
Adjusted earnings per
share** 41.3p 39.4p 4.8% 45.6p 15.7% 857c 704c 21.7%
Basic earnings per share 38.5p 24.4p 57.8% 42.8p 75.4% 798c 387c > 100.0%
Headline earnings per
share 38.5p 35.8p 7.5% 41.3p 15.4% 796c 640c 24.4%
Dividends per share 21.0p 20.0p 5.0% n/a n/a 473c 362c 30.7%
Cost to income ratio 66.4% 67.6% 65.5% 66.4% 67.6%
Results in Pounds Sterling Results in Rand
Neutral
currency Neutral
At At At currency At At
31 March 31 March % 31 March % 31 March 31 March %
2016 2015 change 2016 change 2016 2015 change
Net asset value per share 352.3p 364.9p (3.5%) 370.6p 1.6% 7 444c 6 559c 13.5%
Net tangible asset value
per share 294.3p 308.1p (4.5%) 312.1p 1.3% 6 218c 5 538c 12.3%
Total equity (million) 3 859 4 040 (4.5%) 4 217 4.4% 81 543 72 625 12.3%
Total assets (million) 45 352 44 353 2.3% 50 066 12.9% 958 221 797 218 20.2%
Core loans and advances
(million) 18 119 17 189 5.4% 19 929 15.9% 382 826 308 957 23.9%
Cash and near cash
balances (million) 10 962 9 975 9.9% 12 001 20.3% 231 616 179 242 29.2%
Customer accounts
(deposits) (million) 24 044 22 615 6.3% 26 369 16.6% 508 024 406 485 25.0%
Third party assets under
management (million) 121 683 124 106 (2.0%) 128 791 3.8% 2 571 141 2 230 197 15.3%
Return on average adjusted
shareholders' equity 11.5% 10.6%
Return on average risk-
weighted assets 1.34% 1.25%
Defaults (net of
impairments and before
collateral) as a percentage
of net core loans 1.54% 2.07%
Loans and advances to
customers as a percentage
of customer deposits 73.6% 74.0%
Credit loss ratio (income
statement impairment
charge as a % of average
gross core loans and
advances) 0.62% 0.68%
* Before goodwill, acquired intangibles, non-operating items and after other non-controlling interests.
** Before goodwill, acquired intangibles, non-operating items and after non-controlling interests.
Combined consolidated income statement
Year to Year to
31 March 31 March
GBP'000 2016 2015
Interest income 1 705 640 1 790 867
Interest expense (1 131 871) (1 155 890)
Net interest income 573 769 634 977
Fee and commission income 1 188 012 1 226 257
Fee and commission expense (126 387) (137 214)
Investment income 170 408 128 334
Trading income arising from
– customer flow 110 227 106 313
– balance sheet management and other trading activities 11 377 (13 424)
Other operating income 12 090 12 236
Total operating income before impairment losses on loans and advances 1 939 496 1 957 479
Impairment losses on loans and advances (109 516) (128 381)
Operating income 1 829 980 1 829 098
Operating costs (1 287 021) (1 322 705)
Depreciation on operating leased assets (2 165) (1 535)
Operating profit before goodwill and acquired intangibles 540 794 504 858
Impairment of goodwill (1 577) (5 337)
Amortisation of acquired intangibles (16 248) (14 497)
Operating profit 522 969 485 024
Net loss on disposal of subsidiaries (4 778) (93 033)
Profit before taxation 518 191 391 991
Taxation on operating profit before goodwill and acquired intangibles (103 202) (99 023)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries 5 197 (17 574)
Profit after taxation 420 186 275 394
Profit attributable to Asset Management non-controlling interests (16 529) (18 184)
Profit attributable to other non-controlling interests (35 201) (11 701)
Earnings attributable to shareholders 368 456 245 509
Impairment of goodwill 1 577 5 337
Amortisation of acquired intangibles, net of taxation 16 248 14 497
Net loss on disposal of subsidiaries 4 778 93 033
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries (5 197) 17 574
Preference dividends paid (33 192) (34 803)
Accrual adjustment on earnings attributable to other equity holders 7 062 (1 211)
Currency hedge attributable to perpetual equity instruments – (413)
Adjusted earnings 359 732 339 523
Headline adjustments* (25 012) (30 753)
Headline earnings 334 720 308 770
Earnings per share (pence)
– Basic 38.5 24.4
– Diluted 36.7 23.1
Adjusted earnings per share (pence)
– Basic 41.3 39.4
– Diluted 39.4 37.3
Dividends per share (pence)
– Interim 9.5 8.5
– Final 11.5 11.5
Headline earnings per share (pence)
– Basic 38.5 35.8
– Diluted 36.7 33.9
Number of weighted average shares – (million) 870.5 862.7
* The headline earnings adjustments are made up of property revaluations, loss on disposal of subsidiaries, the impairment of goodwill and non-current assets held for sale and gains
on available for sale instruments recycled through the income statement. This line represents the reconciling items from adjusted earnings to headling earnings.
Summarised combined consolidated statement of comprehensive income
Year to Year to
31 March 31 March
GBP'000 2016 2015
Profit after taxation 420 186 275 394
Other comprehensive income
Items that may be reclassified to the income statement
Fair value movements on cash flow hedges taken directly to other comprehensive income* (31 934) (32 816)
Gains on realisation of available-for-sale assets recycled to the income statement* (1 961) (4 660)
Fair value movements on available-for-sale assets taken directly to other comprehensive income* (37 153) 1 037
Foreign currency adjustments on translating foreign operations* (240 875) (58 318)
Items that will never be reclassified to the income statement
Re-measurement of net defined benefit pension liability 4 738 6 340
Total comprehensive income 113 001 186 977
Total comprehensive income attributable to ordinary shareholders 84 932 32 050
Total comprehensive (loss)/income attributable to non-controlling interests (5 123) 120 124
Total comprehensive income attributable to perpetual preferred securities 33 192 34 803
Total comprehensive income 113 001 186 977
* Net of taxation of GBP26.2 million (year to 31 March 2015: GBP1.3 million).
Summarised combined consolidated cash flow statement
Year to Year to
31 March 31 March
GBP'000 2016 2015
Cash inflows from operations 596 621 617 363
Increase in operating assets (4 580 570) (2 312 292)
Increase in operating liabilities 4 602 620 2 291 132
Net cash inflow from operating activities 618 671 596 203
Net cash (outflow)/inflow from investing activities (11 760) 193 737
Net cash outflow from financing activities (347 741) (259 012)
Effects of exchange rate changes on cash and cash equivalents (171 718) (17 091)
Net increase in cash and cash equivalents 87 452 513 837
Cash and cash equivalents at the beginning of the year 4 562 848 4 049 011
Cash and cash equivalents at the end of the year 4 650 300 4 562 848
Cash and cash equivalents is defined as including cash and balances at central banks, on demand loans and advances to banks and non-sovereign and non-bank cash placements
(all of which have a maturity profile of less than three months).
Combined consolidated balance sheet
31 March 31 March
GBP'000 2016 2015
Assets
Cash and balances at central banks 3 007 269 2 529 562
Loans and advances to banks 2 498 585 3 045 864
Non-sovereign and non-bank cash placements 466 573 586 400
Reverse repurchase agreements and cash collateral on securities borrowed 2 497 125 1 812 156
Sovereign debt securities 3 208 862 2 958 641
Bank debt securities 896 855 1 161 055
Other debt securities 949 950 627 373
Derivative financial instruments 1 580 949 1 580 681
Securities arising from trading activities 1 119 074 1 086 349
Investment portfolio 660 795 947 846
Loans and advances to customers 17 681 572 16 740 263
Own originated loans and advances to customers securitised 437 243 448 647
Other loans and advances 321 617 574 830
Other securitised assets 160 295 780 596
Interests in associated undertakings 267 099 25 244
Deferred taxation assets 112 135 99 301
Other assets 2 092 661 1 741 713
Property and equipment 90 888 102 354
Investment properties 938 879 617 898
Goodwill 368 039 361 527
Intangible assets 148 280 147 227
Non-current assets classified as held for sale – 40 726
39 504 745 38 016 253
Other financial instruments at fair value through profit or loss in respect of liabilities to customers 5 847 036 6 337 149
45 351 781 44 353 402
Liabilities
Deposits by banks 2 397 403 1 908 294
Derivative financial instruments 1 582 847 1 544 168
Other trading liabilities 957 418 885 003
Repurchase agreements and cash collateral on securities lent 971 646 1 284 945
Customer accounts (deposits) 24 044 281 22 614 868
Debt securities in issue 2 299 751 1 709 369
Liabilities arising on securitisation of own originated loans and advances 85 650 109 953
Liabilities arising on securitisation of other assets 120 851 616 909
Current taxation liabilities 192 255 201 790
Deferred taxation liabilities 55 486 76 481
Other liabilities 1 802 967 1 845 679
34 510 555 32 797 459
Liabilities to customers under investment contracts 5 845 503 6 335 326
Insurance liabilities, including unit-linked liabilities 1 533 1 823
40 357 591 39 134 608
Subordinated liabilities 1 134 883 1 178 299
41 492 474 40 312 907
Equity
Ordinary share capital 228 226
Perpetual preference share capital 153 153
Share premium 2 239 364 2 258 148
Treasury shares (125 717) (68 065)
Other reserves (784 051) (563 985)
Retained income 2 030 310 1 874 360
Shareholders' equity excluding non-controlling interests 3 360 287 3 500 837
Other Additional Tier 1 securities in issue 26 031 30 599
Non-controlling interests 472 989 509 059
– Perpetual preferred securities issued by subsidiaries 72 615 229 957
– Non-controlling interests in partially held subsidiaries 400 374 279 102
Total equity 3 859 307 4 040 495
Total liabilities and equity 45 351 781 44 353 402
Summarised combined consolidated statement of changes in equity
Year to Year to
31 March 31 March
GBP'000 2016 2015
Balance at the beginning of the year 4 040 495 4 015 878
Total comprehensive income for the year 113 001 186 977
Share-based payments adjustments 56 216 63 475
Dividends paid to ordinary shareholders (180 009) (168 486)
Dividends declared to perpetual preference shareholders (14 519) (16 101)
Dividends paid to perpetual preference shareholders included in non-controlling interests (18 673) (18 702)
Dividends paid to non-controlling interests (39 835) (29 466)
Issue of ordinary shares 54 720 38 896
Issue of Other Additional Tier 1 securities in issue – 30 012
Issue of equity by subsidiaries 153 299 19 725
Buy-back of non-controlling interests (142 111) –
Acquisition of non-controlling interests – 39
Non-controlling interest relating to partial disposal of subsidiaries – 43 129
Partial sale of subsidiary – (2 244)
Movement of treasury shares (163 277) (122 637)
Balance at the end of the year 3 859 307 4 040 495
Combined consolidated segmental analysis
Year to 31 March UK and Southern Total
GBP'000 Other Africa group
Segmental geographical and business analysis of operating profit before goodwill, acquired
intangibles, non-operating items, taxation and after other non-controlling interests
2016
Asset Management 76 853 57 930 134 783
Wealth & Investment 63 127 22 608 85 735
Specialist Banking 78 043 252 837 330 880
218 023 333 375 551 398
Unallocated group costs (35 160) (10 645) (45 805)
Total group 182 863 322 730 505 593
Other non-controlling interest – equity 35 201
Operating profit 540 794
2015
Asset Management 75 491 73 484 148 975
Wealth & Investment 56 871 21 910 78 781
Specialist Banking 41 795 262 918 304 713
174 157 358 312 532 469
Unallocated group costs (30 048) (9 264) (39 312)
Total group 144 109 349 048 493 157
Other non-controlling interest – equity 11 701
Operating profit 504 858
Analysis of financial assets and liabilities by category of financial instrument
Insurance
Total Total related linked
At 31 March 2016 instruments instruments at instruments Non-financial
GBP'000 at fair value amortised cost at fair value instruments Total
Assets
Cash and balances at central banks 1 123 3 006 146 – – 3 007 269
Loans and advances to banks 149 478 2 349 107 – – 2 498 585
Non-sovereign and non-bank cash placements 158 466 415 – – 466 573
Reverse repurchase agreements and cash collateral on securities borrowed 1 438 209 1 058 916 – – 2 497 125
Sovereign debt securities 3 032 909 175 953 – – 3 208 862
Bank debt securities 348 318 548 537 – – 896 855
Other debt securities 691 655 258 295 – – 949 950
Derivative financial instruments 1 580 949 – – – 1 580 949
Securities arising from trading activities 1 119 074 – – – 1 119 074
Investment portfolio 660 795 – – – 660 795
Loans and advances to customers 666 610 17 014 962 – – 17 681 572
Own originated loans and advances to customers securitised – 437 243 – – 437 243
Other loans and advances – 321 617 – – 321 617
Other securitised assets 147 590 12 705 – – 160 295
Interests in associated undertakings – – – 267 099 267 099
Deferred taxation assets – – – 112 135 112 135
Other assets 381 210 1 215 965 – 495 486 2 092 661
Property and equipment – – – 90 888 90 888
Investment properties – – – 938 879 938 879
Goodwill – – – 368 039 368 039
Intangible assets – – – 148 280 148 280
10 218 078 26 865 861 – 2 420 806 39 504 745
Other financial instruments at fair value through profit or loss in respect of
liabilities to customers – – 5 847 036 – 5 847 036
10 218 078 26 865 861 5 847 036 2 420 806 45 351 781
Liabilities
Deposits by banks – 2 397 403 – – 2 397 403
Derivative financial instruments 1 582 847 – – – 1 582 847
Other trading liabilities 957 418 – – – 957 418
Repurchase agreements and cash collateral on securities lent 272 908 698 738 – – 971 646
Customer accounts (deposits) 570 751 23 473 530 – – 24 044 281
Debt securities in issue 591 925 1 707 826 – – 2 299 751
Liabilities arising on securitisation of own originated loans and advances – 85 650 – – 85 650
Liabilities arising on securitisation of other assets 120 851 – – – 120 851
Current taxation liabilities – – – 192 255 192 255
Deferred taxation liabilities – – – 55 486 55 486
Other liabilities 80 906 1 199 976 – 522 085 1 802 967
4 177 606 29 563 123 – 769 826 34 510 555
Liabilities to customers under investment contracts – – 5 845 503 – 5 845 503
Insurance liabilities, including unit-linked liabilities – – 1 533 – 1 533
4 177 606 29 563 123 5 847 036 769 826 40 357 591
Subordinated liabilities – 1 134 883 – – 1 134 883
4 177 606 30 698 006 5 847 036 769 826 41 492 474
Financial instruments carried at fair value
The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into
different levels in the fair value hierarchy based on the inputs to the valuation technique used. The different levels are identified as follows:
Level 1 – quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived
from prices)
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Assets and liabilities related to the long-term assurance business attributable to policyholders have been excluded from the analysis as the change in fair value
of related assets is attributable to policyholders. These are all classified as level 1.
Fair value category
Total
At 30 March 2016 instruments
GBP'000 at fair value Level 1 Level 2 Level 3
Assets
Cash and balances at central banks 1 123 1 123 – –
Loans and advances to banks 149 478 149 478 – –
Non-sovereign and non-bank cash placements 158 – 158 –
Reverse repurchase agreements and cash collateral on securities borrowed 1 438 209 137 409 1 300 800 –
Sovereign debt securities 3 032 909 3 032 909 – –
Bank debt securities 348 318 214 665 133 653 –
Other debt securities 691 655 500 583 180 142 10 930
Derivative financial instruments 1 580 949 – 1 530 790 50 159
Securities arising from trading activities 1 119 074 1 088 384 23 234 7 456
Investment portfolio 660 795 120 075 31 250 509 470
Loans and advances to customers 666 610 – 579 340 87 270
Other securitised assets 147 590 – – 147 590
Other assets 381 210 381 210 – –
10 218 078 5 625 836 3 779 367 812 875
Liabilities
Derivative financial instruments 1 582 847 – 1 581 492 1 355
Other trading liabilities 957 418 918 165 39 253 –
Repurchase agreements and cash collateral on securities lent 272 908 – 272 908 –
Customer accounts (deposits) 570 751 – 570 751 –
Debt securities in issue 591 925 – 591 925 –
Liabilities arising on securitisation of other assets 120 851 234 – 120 617
Other liabilities 80 906 48 712 32 194 –
4 177 606 967 111 3 088 523 121 972
Net assets 6 040 472 4 658 725 690 844 690 903
Transfers between level 1 and level 2
During the year derivative financial assets and liabilities to the value of GBP116.9 million and GBP210.3 million respectively were transferred from level 1 to level
2 to reflect the level of modelling which is now being used to arrive at the fair value.
Level 2 financial assets and financial liabilities
The following table sets out the group's principal valuation techniques as at 31 March 2016 used in determining the fair value of its financial assets and financial
liabilities that are classified within level 2 of the fair value hierarchy.
Valuation basis/techniques Main assumptions
Assets
Non-sovereign and non-bank cash
placements Discounted cash flow model Yield curves
Reverse repurchase agreements and
cash collateral on securities borrowed Discounted cash flow model, Hermite interpolation, Yield curves
Black-Scholes Volatilities
Bank debt securities Discounted cash flow model Yield curves
NCD curves
Other debt securities Discounted cash flow model Yield curves and NCD curves, external prices,
broker quotes
Derivative financial instruments Discounted cash flow model, Hermite interpolation, Yield curves, risk free rate, volatilities, forex forward
industry standard derivative pricing models including points and spot rates, interest rate swap curves and
Black-Scholes credit curves
Securities arising from trading activities Standard industry derivative pricing model Interest rate curves, implied bond spreads,
equity volatilities
Investment portfolio Discounted cash flow model, relative valuation model Discount rate and fund unit price,
Comparable quoted inputs net assets
Loans and advances to customers Discounted cash flow model Yield curves
Valuation basis/techniques Main assumptions
Liabilities
Derivative financial instruments Discounted cash flow model, Hermite interpolation, Yield curves, risk free rate, volatilities, forex forward
industry standard derivative pricing models including points and spot rates, interest rate swap curves and
Black-Scholes credit curves
Other trading liabilities Discounted cash flow model Yield curves
Repurchase agreements and cash
collateral on securities lent Discounted cash flow model, Hermite interpolation Yield curves
Customer accounts (deposits) Discounted cash flow model Yield curves
Debt securities in issue Discounted cash flow model Yield curves
Other liabilities Discounted cash flow model Yield curves
Fair value
Total level through profit Available-
For the year to 31 March 3 financial or loss for-sale
GBP'000 instruments instruments instruments
The following table is a reconciliation of the opening balances to the closing balances for fair value
measurements in level 3 of the fair value hierarchy:
Balance as at 1 April 2015* 851 703 800 933 50 770
Total gains or losses 26 006 22 841 3 165
In the income statement 26 278 22 841 3 437
In the statement of comprehensive income (272) – (272)
Purchases 172 555 163 611 8 944
Sales (863 789) (861 332) (2 457)
Issues 3 475 3 475 –
Settlements 505 707 516 570 (10 863)
Transfers into level 3 31 362 28 626 2 736
Transfers out of level 3 11 520 11 520 –
Foreign exchange adjustments (47 636) (50 860) 3 224
Balance as at 31 March 2016 690 903 635 384 55 519
* Opening balances for fair value through profit or loss instruments and available-for-sale instruments have been adjusted by (GBP60) million and GBP60 million
respectively.
For the year ended 31 March 2016, GBP16.1 million of assets were transferred from level 3 into level 2. The valuation methodologies were reviewed and observable
inputs are used to determine the fair value. In addition, (GBP4.6) million has been transferred into level 2 as a result of the inputs to the valuation methods becoming
more observable.
There were transfers from level 2 to the level 3 category to the value of GBP31.3 million because the significance of the unobservable inputs used to determine the
fair value increased significantly to warrant a transfer.
The group transfers between levels within the fair value hierarchy when the significance of the unobservable inputs change or if the valuation methods change.
The following table quantifies the gains or (losses) included in the income statement and other comprehensive income recognised on level 3 financial instruments:
For the year to 31 March 2016
GBP'000 Total Realised Unrealised
Total gains or (losses) included in the income statement for the year
Net interest income 238 238 –
Fee and commission income 4 938 4 938 –
Investment income 30 261 158 002 (127 741)
Trading income arising from customer flow (9 159) (9 863) 704
26 278 153 315 (127 037)
Total gains included in other comprehensive income for the year
Gains on realisation of available-for-sale assets recycled through the income statement 3 437 3 437 –
Fair value movements on available-for-sale assets taken directly to other comprehensive income (272) – (272)
3 165 3 437 (272)
Sensitivity of fair values to reasonably possible alternative assumptions by level 3 instrument type
The fair value of financial instruments in level 3 are measured using valuation techniques that incorporate assumptions that are not evidenced by prices
from observable market data. The following table shows the sensitivity of these fair values to reasonably possible alternative assumptions, determined at a
transactional level:
Significant Range over Reflected in
unobservable which the income statement
Balance input unobservable
sheet changed in input has Favourable Unfavourable
value valuation been changes changes
At 31 March 2016 GBP'000 method changed GBP'000 GBP'000
Assets
Other debt securities 10 930 525 (796)
Cash flow
adjustments (1%) – 1% 525 (472)
Other (5%) – 5% – (324)
Derivative financial instruments 50 159 8 305 (5 501)
Volatilities (2%) – 2% 2 471 (1 015)
Cash flow
adjustments (1%) – 1% 834 (1 701)
Net asset
value (10%) – 10% 47 (47)
Other (10%) – 10% 4 953 (2 738)
Cash flow
Securities arising from trading activities 7 456 adjustments (1%) – 1% 1 380 (1 050)
Investment portfolio 477 854 64 695 (49 344)
Price Earnings
multiple (10%) – 10% 232 (355)
Price Earnings
multiple ^^ 5 084 (4 006)
EBITDA (10%) – 10% 3 971 (3 917)
Other^ ^ 55 408 (41 066)
Loans and advances to customers 87 270 1 550 (9 400)
Discount rates (5%) – 5% 1 550 (987)
Other (5%) – 5% – (8 413)
Other securitised assets* 147 590 2 825 (2 876)
Cash flow
adjustments (1%) – 1% 1 569 (1 727)
Other (1%) – 1% 1 256 (1 149)
Liabilities
Derivative financial instruments 1 355 1 667 (797)
Cash flow
adjustments (1%) – 1% 1 661 (790)
Volatilities (2%) – 2% 6 (7)
Cash flow
Liabilities arising on securitisation of other assets* 120 617 adjustments (1%) – 1% 1 356 (1 254)
903 231 82 303 (71 018)
Reflected in
Significant Range over other comprehensive
unobservable which income
Balance input unobservable
sheet changed in input has Favourable Unfavourable
value valuation been changes changes
At 31 March 2016 GBP'000 method stressed GBP'000 GBP'000
Assets 5 668 (2 300)
Investment portfolio 31 616 EBITDA (10%) – 10% 2 418 (1 340)
Other (10%) – 10% 3 250 (960)
Total comprehensive income 934 847 87 971 (73 318)
* The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets.
^ Other – The valuation sensitivity for the private equity and embedded derivatives (profit share) portfolios has been assessed by adjusting various inputs such as
expected cash flows, discount rates, earnings multiples rather than a single input. It is deemed appropriate to reflect the outcome on a portfolio basis for the
purposes of this analysis as the sensitivity of the investments cannot be determined through the adjustment of a single input.
^^ The price earnings multiple has been determined on an investment by investment basis in order to obtain an favourable and unfavourable valuation.
In determining the value of level 3 financial instruments, the following are the
principal inputs that can require judgement:
Credit spreads
Credit spreads reflect the additional yield that a market participant would
demand for taking exposure to the credit risk of an instrument. The credit
spread for an instrument forms part of the yield used in a discounted cash
flow calculation. In general a significant increase in a credit spread in isolation
will result in a movement in fair value that is unfavourable for the holder of a
financial instrument.
Discount rates
Discount rates are the interest rates used to discount future cash flows in a
discounted cash flow valuation method. The discount rate takes into account
time value of money and uncertainty of cash flows.
Volatilities
Volatility is a key input in the valuation of derivative products containing
optionality. Volatility is a measure of the variability or uncertainty in returns
for a given derivative underlying. It represents an estimate of how much a
particular underlying instrument, parameter or index will change in value over
time.
Cash flows
Cash flows relate to the future cash flows which can be expected from the
instrument and requires judgement.
EBITDA
A company's earnings before interest, taxes, depreciation and amortisation.
This is the main input into a price earnings multiple valuation method.
Price earnings multiple
The price-to-earnings ratio is an equity valuation multiple. It is a key driver in
the valuation of unlisted investments.
Fair value of financial assets and liabilities at amortised cost
At 31 March 2016
Carrying
GBP'000 amount Fair value
Assets
Cash and balances at central banks 3 006 146 3 006 146
Loans and advances to banks 2 349 107 2 349 096
Non-sovereign and non-bank cash placements 466 415 466 415
Reverse repurchase agreements and cash collateral on securities borrowed 1 058 916 1 058 916
Sovereign debt securities 175 953 179 778
Bank debt securities 548 537 608 219
Other debt securities 258 295 245 060
Loans and advances to customers 17 014 962 17 042 997
Own originated loans and advances to customers securitised 437 243 437 243
Other loans and advances 321 617 297 611
Other securitised assets 12 705 12 705
Other assets 1 215 965 1 215 735
26 865 861 26 919 921
Liabilities
Deposits by banks 2 397 403 2 418 497
Repurchase agreements and cash collateral on securities lent 698 738 700 875
Customer accounts (deposits) 23 473 530 23 512 040
Debt securities in issue 1 707 826 1 682 986
Liabilities arising on securitisation of own originated loans and advances 85 650 85 650
Other liabilities 1 199 976 1 199 487
Subordinated liabilities 1 134 883 1 272 087
30 698 006 30 871 622
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
Ordinary share dividend announcement
Declaration of dividend number 121
Notice is hereby given that a final dividend number 121, being a gross
dividend of 266.00000 cents (2015: 216.00000 cents) per ordinary share
has been recommended by the board from income reserves in respect of
the financial year ended 31 March 2016 payable to shareholders recorded in
the shareholders' register of the company at the close of business on Friday,
29 July 2016.
The relevant dates for the payment of dividend number 121 are as
follows:
Last day to trade cum-dividend Tuesday, 26 July 2016
Shares commence trading ex-dividend Wednesday, 27 July 2016
Record date Friday, 29 July 2016
Payment date Wednesday, 10 August 2016
The final gross dividend of 266.00000 cents per ordinary share has been
determined by converting the Investec plc distribution of 11.5 pence per
ordinary share into Rands using the Rand/Pounds Sterling average buy/sell
forward rate at 11h00 (SA time) on Wednesday, 18 May 2016.
Share certificates may not be dematerialised or rematerialised between
Wednesday, 27 July 2016 and Friday, 29 July 2016, both dates inclusive.
Additional information to take note of:
- Investec Limited South African tax reference number: 9800/181/71/2
- The issued ordinary share capital of Investec Limited is 291 363 706
ordinary shares
- The dividend paid by Investec Limited is subject to South African
Dividend Tax (Dividend Tax) of 15% (subject to any available exemptions
as legislated)
- Shareholders who are exempt from paying the Dividend Tax will receive
a net dividend of 266.00000 cents per ordinary share
- Shareholders who are not exempt from paying the Dividend Tax will
receive a net dividend of 226.10000 cents per ordinary share (gross
dividend of 266.00000 cents per ordinary share less Dividend Tax of
39.90000 cents per ordinary share).
By order of the board
N van Wyk
Company secretary
18 May 2016
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE share code: INPR
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000063814
Preference share dividend announcement
Non-redeemable, non-cumulative, non-participating preference shares
(preference shares)
Declaration of dividend number 23
Notice is hereby given that preference dividend number 23 has been
declared from income reserves for the period 01 October 2015 to
31 March 2016 amounting to a gross preference dividend of 384.96150
cents per share payable to holders of the non-redeemable, non-cumulative,
non-participating preference shares as recorded in the books of the
company at the close of business on Friday, 10 June 2016.
The relevant dates for the payment of dividend number 23 are as
follows:
Last day to trade cum-dividend Friday, 03 June 2016
Shares commence trading ex-dividend Monday, 06 June 2016
Record date Friday, 10 June 2016
Payment date Monday, 20 June 2016
Share certificates may not be dematerialised or rematerialised between
Monday, 06 June 2016 and Friday, 10 June 2016, both dates inclusive.
Additional information to take note of:
- Investec Limited South African tax reference number: 9800/181/71/2
- The issued preference share capital of Investec Limited is 32 214 499
preference shares in this specific class
- The dividend paid by Investec Limited is subject to South African
Dividend Tax (Dividend Tax) of 15% (subject to any available exemptions
as legislated)
- The net dividend amounts to 327.21728 cents per preference share for
shareholders liable to pay the Dividend Tax and 384.96150 cents per
preference share for preference shareholders exempt from paying the
dividend tax.
By order of the board
N van Wyk
Company secretary
18 May 2016
Investec plc
Incorporated in England and Wales
Registration number 3633621
LSE ordinary share code: INVP
JSE ordinary share code: INP
ISIN: GB00B17BBQ50
Ordinary share dividend announcement
In terms of the DLC structure, Investec plc shareholders registered on the
United Kingdom share register may receive all or part of their dividend
entitlements through dividends declared and paid by Investec plc on their
ordinary shares and/or through dividends declared and paid on the SA DAN
share issued by Investec Limited.
Investec plc shareholders registered on the South African branch register
may receive all or part of their dividend entitlements through dividends
declared and paid by Investec plc on their ordinary shares and/or through
dividends declared and paid on the SA DAS share issued by Investec
Limited.
Declaration of dividend number 28
Notice is hereby given that a final dividend number 28, being a gross
dividend of 11.5 pence (2015: 11.5 pence) per ordinary share has been
recommended by the board from income reserves in respect of the
financial year ended 31 March 2016 payable to shareholders recorded in
the members' register of the company at the close of business on Friday,
29 July 2016.
- for Investec plc shareholders, registered on the United Kingdom share
register, through a dividend payment by Investec plc from income
reserves of 11.5 pence per ordinary share
- for Investec plc shareholders, registered on the South African branch
register, through a dividend payment by Investec plc from income
reserves of 2.0 pence per ordinary share and through a dividend paid by
Investec Limited, on the SA DAS share, payable from income reserves,
equivalent to 9.5 pence per ordinary share.
The relevant dates for the payment of dividend number 28 are as
follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Tuesday, 26 July 2016
On the London Stock Exchange (LSE) Wednesday, 27 July 2016
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Wednesday, 27 July 2016
On the London Stock Exchange (LSE) Thursday, 28 July 2016
Record date (on the JSE and LSE) Friday, 29 July 2016
Payment date (on the JSE and LSE) Wednesday, 10 August 2016
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Wednesday, 27 July 2016 and
Friday, 29 July 2016, both dates inclusive, nor may transfers between the
United Kingdom share register and the South African branch register take
place between Wednesday, 27 July 2016 and Friday, 29 July 2016, both
dates inclusive.
Additional information for South African resident shareholders of Investec plc:
- Shareholders registered on the South African branch register are advised
that the distribution of 11.5 pence, equivalent to a gross dividend of
266.00000 cents per share, has been arrived at using the Rand/Pounds
Sterling average buy/sell forward rate, as determined at 11h00 (SA time)
on Wednesday, 18 May 2016
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued ordinary share capital of Investec plc is 617 418 864 ordinary
shares
- The dividend paid by Investec plc to South African resident shareholders
registered on the South African branch register and the dividend paid by
Investec Limited to Investec plc shareholders on the SA DAS share are
subject to South African Dividend Tax (Dividend Tax) of 15% (subject to
any available exemptions as legislated)
- Shareholders registered on the South African branch register who are
exempt from paying the Dividend Tax will receive a net dividend of
266.00000 cents per share, comprising 219.73913 cents per share
paid by Investec Limited on the SA DAS share and 46.26087 cents per
ordinary share paid by Investec plc
- Shareholders registered on the South African branch register who are
not exempt from paying the Dividend Tax will receive a net dividend of
226.10000 cents per share (gross dividend of 266.00000 cents per
share less Dividend Tax of 39.90000 cents per share)
By order of the board
D Miller
Company secretary
18 May 2016
Investec plc
Incorporated in England and Wales
Registration number: 3633621
Share code: INPP
ISIN: GB00B19RX541
Preference share dividend announcement
Non-redeemable, non-cumulative, non-participating preference shares
(preference shares)
Declaration of dividend number 20
Notice is hereby given that preference dividend number 20 has been
declared from income reserves for the period 01 October 2015 to
31 March 2016 amounting to a gross preference dividend of 7.52055 pence
per preference share payable to holders of the non-redeemable, non-
cumulative, non-participating preference shares as recorded in the books of
the company at the close of business on Friday, 10 June 2016.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend
of 7.52055 pence per preference share is equivalent to a gross dividend of
172.35822 cents per share, which has been determined using the Rand/
Pounds Sterling average buy/sell forward rate as at 11h00 (SA Time) on
Wednesday, 18 May 2016.
The relevant dates relating to the payment of dividend number 20 are
as follows:
Last day to trade cum-dividend
On the Channel Islands Stock Exchange (CISX) Wednesday, 08 June 2016
On the Johannesburg Stock Exchange (JSE) Friday, 03 June 2016
Shares commence trading ex-dividend
On the Channel Islands Stock Exchange (CISX) Thursday, 09 June 2016
On the Johannesburg Stock Exchange (JSE) Monday, 06 June 2016
Record date (on the JSE and CISX) Friday, 10 June 2016
Payment date (on the JSE and CISX) Monday, 20 June 2016
Share certificates may not be dematerialised or rematerialised between
Monday, 06 June 2016 and Friday, 10 June 2016, both dates inclusive, nor
may transfers between the United Kingdom share register and the South
African branch register take place between Monday, 06 June 2016 and
Friday, 10 June 2016, both dates inclusive.
Additional information for South African resident shareholders of Investec plc:
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued preference share capital of Investec plc is 15 081 149
preference shares
- The dividend paid by Investec plc to shareholders recorded on the South
African branch register is subject to South African Dividend Tax (Dividend
Tax) of 15% (subject to any available exemptions as legislated)
- The net dividend amounts to 146.50449 cents per preference share for
preference shareholders liable to pay the Dividend Tax and 172.35822
cents per preference share for preference shareholders exempt from
paying the Dividend Tax.
By order of the board
D Miller
Company secretary
18 May 2016
Investec plc
Incorporated in England and Wales
Registration number: 3633621
JSE share code: INPPR
ISIN: GB00B4B0Q974
Rand-denominated preference share dividend announcement
Rand-denominated non-redeemable, non-cumulative, non-participating
perpetual preference shares (preference shares)
Declaration of dividend number 10
Notice is hereby given that preference dividend number 10 has been declared
from income reserves for the period 01 October 2015 to 31 March 2016
amounting to a gross preference dividend of 470.25000 cents per preference
share payable to holders of the Rand-denominated non-redeemable, non-
cumulative, non-participating perpetual preference shares as recorded in the
books of the company at the close of business on Friday, 10 June 2016.
The relevant dates relating to the payment of dividend number 10 are
as follows:
Last day to trade cum-dividend Friday, 03 June 2016
Shares commence trading ex-dividend Monday, 06 June 2016
Record date Friday, 10 June 2016
Payment date Monday, 20 June 2016
Share certificates may not be dematerialised or rematerialised between
Monday, 06 June 2016 and Friday, 10 June 2016, both dates inclusive.
Additional information for South African resident shareholders of Investec plc:
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued Rand-denominated preference share capital of Investec plc is
2 275 940 preference shares
- The dividend paid by Investec plc to shareholders recorded on the South
African register is subject to South African Dividend Tax (Dividend Tax) of
15% (subject to any available exemptions as legislated)
- The net dividend amounts to 399.71250 cents per preference share for
preference shareholders liable to pay the Dividend Tax and 470.25000
cents per preference share for preference shareholders exempt from
paying the Dividend Tax.
By order of the board
D Miller
Company secretary
18 May 2016
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE ordinary share code: INP
LSE ordinary share code: INVP
ISIN: GB00B17BBQ50
Registered office:
2 Gresham Street, London
EC2V 7QP, United Kingdom
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
Company Secretary:
D Miller•
Investec Limited
Incorporated in the Republic of South Africa
(Registration number 1925/002833/06)
JSE ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
Registered office:
100 Grayston Drive
Sandown, Sandton, 2196
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
Company Secretary:
N van Wyk
Directors:
F Titi (Chairman),
S Koseff# (Chief Executive),
B Kantor# (Managing Director),
GR Burger#, CA Carolus,
PKO Crosthwaite•, HJ du Toit#,
D Friedland, IR Kantor##,
PRS Thomas, ZBM Bassa,
LC Bowden•, CR Jacobs^,
Lord Malloch – Brown KCMG•,
KL Shuenyane
#Executive •British ##Dutch ^Irish
* B Fried resigned effective 01 April 2016 and H Fukuda OBE resigned
effective 06 August 2015.
Sponsor:
Investec Bank Limited
Date: 19/05/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
