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INL/INP - Investec - Investec (comprising Investec plc and Investec Limited) -
Interim Management Statement released on 30 July 2010
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06
JSE share code: INL
ISIN: ZAE000081949
Investec plc
Incorporated in England and Wales
Registration number 3633621
JSE share code: INP
ISIN: GB00B17BBQ50
Investec (comprising Investec plc and Investec Limited) - Interim Management
Statement released on 30 July 2010
This Interim Management Statement is issued by Investec in accordance with the
UK Listing Authority`s Disclosure and Transparency Rules. Unless stated
otherwise, key trends and figures highlighted below refer to the three months
ended 30 June 2010 and the corresponding period in the previous year.
Performance overview
The group`s diversified business model and solid recurring income base continued
to support a satisfactory performance for the first quarter of the financial
year. The UK business performed well with particularly strong results recorded
by the Asset Management and Capital Markets divisions. The South African and
Australian operations were affected by weak equity markets and low levels of
economic activity posting results behind the prior year.
Salient features of the three month period to 30 June 2010 compared to the three
month period to 30 June 2009:
* Net operating income (after expenses and minorities but before impairments
on loans and advances) increased by 11%.
* Impairments remain at elevated levels with the credit loss charge as a
percentage of average gross loans and advances annualised for the period
amounting to 0.83% (31 March 2010: 1.16%).
* The effective tax rate increased from 22.5% to 26.3%.
* The above mentioned factors have resulted in attributable earnings (see
note 2) increasing by 2%.
* Recurring income as a percentage of total operating income amounts to
approximately 66%.
* As at 30 June 2010 the capital adequacy ratio of Investec plc (applying UK
Financial Services Authority rules to its capital base) was 16.1% and the
capital adequacy ratio of Investec Limited (applying South African Reserve
Bank rules to its capital base) was 15.6%.
* The group maintained a strong liquidity position and currently has
approximately GBP9.8 billion of cash and near cash available to support its
activities.
* Since 31 March 2010 (the end of the group`s financial year) core loans and
advances decreased by 2% to GBP17.5 billion, customer deposits increased by
1% to GBP22.2 billion and third party assets under management decreased by
4% to GBP70.9 billion.
* Core advances (excluding own originated securitised assets) as a percentage
of customer deposits were 74.2% (31 March 2010:76.2%)
Additional information
On 30 March 2010, it was announced that Investec plc and Rensburg Sheppards plc
had reached agreement on the terms of a recommended all share offer under which
Investec plc would acquire the entire issued and to be issued ordinary share
capital of Rensburg Sheppards plc not already owned by it. Following shareholder
and regulatory approvals and the sanction of the court, the scheme of
arrangement became effective on 25 June 2010. Rensburg Sheppards plc continued
to be accounted for as an associate for the three month period ended 30 June
2010.
Outlook
Investec`s initiatives to build its private wealth and investment platforms
remain on course with the completion of the Rensburg Sheppard`s transaction.
Increased savings levels in the developed world should continue to underpin
growth in both the wealth and asset management businesses whilst the banking and
advisory revenue streams remain dependent on the sustainability of economic
recovery and the normalisation of economic activity.
The group will be holding a pre-close briefing on 16 September 2010 at which it
will provide further detail on the performance of its businesses.
On behalf of the board
Hugh Herman (Chairman), Stephen Koseff (Chief Executive Officer) and Bernard
Kantor (Managing Director)
Notes:
1 The financial information on which this statement is based has not been
reviewed and reported on by the group`s auditors.
2 Attributable earnings refer to net profit before goodwill and non-operating
items but after taxation and adjusting for earnings attributable to
minorities and preference shareholders.
3 Please note that matters highlighted above may contain forward looking
statements which are subject to various risks and uncertainties and other
factors, including, but not limited to:
- the further development of standards and interpretations under
International Financial Reporting Standards (IFRS) applicable to
past, current and future periods, evolving practices with regard
to the interpretation and application of standards under IFRS.
- domestic and global economic and business conditions.
- market related risks.
* A number of these factors are beyond the 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 30 July 2010.
4 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 condition of the group`s individual companies
are reported in the local currencies in which they are domiciled, including
Rands, Australian Dollars, Euros and Dollars. These results are then
translated into Pounds Sterling at the applicable foreign currency exchange
rates for inclusion in our combined consolidated financial statements. In
the case of the income statement, the weighted average rate for the
relevant period is applied and, in the case of the balance sheet, the
relevant closing rate is used. The following table sets out the movements
in certain relevant exchange rates against Pounds Sterling over the period:
Three months to Year to Three months to
30 Jun 2010 31 Mar 2010 30 Jun 2009
Currency Period end Average Period end Average Period end Average
per
GBP1.00
South 11.48 11.24 11.11 12.38 12.74 12.83
African
Rand
Australian 1.77 1.69 1.66 1.88 2.04 2.03
Dollar
Euro 1.22 1.17 1.12 1.13 1.17 1.13
US Dollar 1.50 1.50 1.52 1.59 1.65 1.54
5. Following disclosures are made with respect to Basel II quarterly
disclosure requirements:
The group holds capital in excess of regulatory requirements targeting a
minimum tier one capital ratio of 11% and a total capital adequacy ratio
range of 14% to 17% on a consolidated basis for each of Investec plc and
Investec Limited. As per the table below, all regulated entities met these
targets at the reporting date.
Investec IBP* IBAL* Investec IBL*
plc Limited
As at 30 June 2010 GBP `mn GBP `mn A$`mn ZAR `mn ZAR `mn
Primary capital (Tier 1) 1,326 555 19,463 16,822
1,112
Other capital (Tier 2) 620 525 82 5,723 5,723
1,946 1,637 637 25,186 22,545
Less: deductions -134 -115 -86 -668 -667
Net qualifying capital 1,812 1,522 551 24,518 21,878
Risk-weighted assets 11,276 9,045 2,999 157,006 142,574
(banking and trading)
Capital requirements
903 723 390 14,916 13,544
Credit risk 720 588 337 12,001 11,271
Securitisation exposures 25 25 0 358 358
Equity risk 18 17 8 679 664
Market risk 22 22 2 156 88
Operational risk 118 71 43 1,722 1163
Capital adequacy ratio 16.1% 16.8% 18.4% 15.6% 15.3%
Tier 1 ratio 11.5% 12.1% 16.0% 12.2% 11.6%
Capital adequacy ratio - 18.5% 18.7% 20.7% 17.7% 16.8%
pre operational risk
Tier 1 ratio - pre 13.2% 13.5% 18.0% 13.8% 12.7%
operational risk
*IBP is Investec Bank plc; IBAL is Investec Bank (Australia) Limited and
IBL is Investec Bank Limited. Investec plc includes IBP. IBP includes IBAL.
Investec Limited includes IBL.
Timetable:
Pre-close briefing: 16 September 2010
Interim period: 30 September 2010
Release of interim results: 18 November 2010
For further information please contact:
Investec Investor Relations
UK: +44 (0) 207 597 5546
South Africa: +27 (0) 11 286 7070
investorrelations@investec.com
About Investec
Investec is an international specialist bank and asset manager that provides a
diverse range of financial products and services to a niche client base in three
principal markets, the United Kingdom, South Africa and Australia as well as
certain other countries. The group was established in 1974 and currently has
approximately 6 100 employees.
Investec focuses on delivering distinctive profitable solutions for its clients
in six core areas of activity namely, Asset Management, Private Wealth, Property
Activities, Private Banking, Investment Banking and Capital Markets.
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 GBP3.9 billion.
30 July 2010
Sponsor: Investec Bank Limited
Date: 30/07/2010 08:00:03 Supplied by www.sharenet.co.za
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