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INL/INP - Investec Limited/Investec plc - Interim Management Statement released
on 3 February 2011
Investec Limited Investec plc
Incorporated in the Republic of South Incorporated in England
Africa and Wales
Registration number 1925/002833/06 Registration number
JSE share code: INL 3633621
ISIN: ZAE000081949 JSE share code: INP
ISIN: GB00B17BBQ50
Investec (comprising Investec plc and Investec Limited) - Interim Management
Statement released on 3 February 2011
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 nine months
ended 31 December 2010 and the corresponding period in the previous year.
Performance overview
Operating fundamentals across the group have continued the trends seen in the
first half and as reported at the interim results announcement on 18 November
2010. The group`s operational performance is underpinned by a solid recurring
income base and the majority of the group`s six core businesses areas have
recorded increased earnings. The asset and wealth management businesses have
benefitted from substantial inflows and a good investment performance. Operating
conditions within the group`s banking and advisory businesses, however, are
mixed and although improving, the demand for credit and levels of transactional
activity remain subdued.
Salient features of the nine month period to 31 December 2010 compared to the
nine month period to 31 December 2009:
* Operating profit before goodwill, acquired intangibles, non-operating
items and taxation and after minorities ("operating profit") increased
marginally. However, if the GPB47 million profit earned on the
repurchase of the group`s debt in the prior period is excluded
operating profit increased by 23%.
* The credit loss charge as a percentage of average gross loans and
advances annualised for the period amounted to 1.04%, in line with
guidance provided previously (31 March 2010: 1.16%).
* The effective tax rate decreased from 21.9% to 20.0%.
* The above mentioned factors have resulted in attributable earnings
(see note 2) increasing by 4%.
* Recurring income as a percentage of total operating income amounted to
approximately 66%.
* As at 31 December 2010 the capital adequacy ratio of Investec plc
(applying UK Financial Services Authority rules to its capital base)
was 15.6% and the capital adequacy ratio of Investec Limited (applying
South African Reserve Bank rules to its capital base) was 15.9%.
* The group had approximately GBP10.0 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 increased by 8% to GBP19.4 billion, customer deposits
increased by 14% to GBP25.0 billion and third party assets under
management increased by 19% to GBP88.0 billion.
* Core advances (excluding own originated securitised assets) as a
percentage of customer deposits were 73.0% (31 March 2010:76.2%).
Outlook
The pace of economic recovery varies across the geographies in which the group
operates and the regulatory environment remains challenging. The group`s non-
capital intensive asset and wealth management businesses have gained significant
momentum and the platform is in place for these businesses to continue to
increase their contribution to group earnings. Whilst some of the group`s
banking businesses are performing well, notably the Capital Markets division,
overall group results will remain constrained by the slow recovery of non-
performing loans and transactional activity levels. The group`s geographical and
operational diversity will, however, continue to support a sound operational
performance.
The group will be holding a pre-close briefing on 17 March 2011 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, acquired
intangibles 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 3 February 2011.
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:
Nine months to Year to Nine months to
31 Dec 2010 31 Mar 2010 31 Dec 2009
Currency Period Average Period Average Period Average
per GBP1.00 end end end
South African Rand 10.30 11.18 11.11 12.38 11.89 12.60
Australian Dollar 1.53 1.67 1.66 1.88 1.80 1.93
Euro 1.16 1.18 1.12 1.13 1.12 1.13
US Dollar 1.55 1.54 1.52 1.59 1.62 1.61
The 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 31 Dec GBP `mn GBP `mn A$`mn ZAR `mn ZAR `mn
2010
Primary 1,428 565 20,028 18,142
capital (Tier 1,243
1)
Other capital 624 534 105 7,132 7,132
(Tier 2)
2,052 1,777 670 27,160 25,274
Less: -122 -111 -78 -576 -576
deductions
Net qualifying 1,930 1,666 592 26,584 24,698
capital
Risk-weighted 12,402 10,285 3,353 167,422 159,598
assets
(banking and
trading)
Capital 15,904
requirements 992 823 436 15,162
Credit risk 11,891
792 672 378 11,795
Securitisation
exposures 32 32 - 270 270
Equity risk
21 20 7 1,747 1,711
Market risk
29 28 5 229 135
Operational
risk 118 71 46 1,767 1,251
Capital 15.6% 16.2% 17.6% 15.9% 15.5%
adequacy ratio
Tier 1 ratio 11.3% 11.9% 14.6% 11.8% 11.2%
*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: 17 March 2011
Year-end: 31 March 2011
Release of year-end results: 19 May 2011
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 6 600 permanent employees.
Investec focuses on delivering distinctive profitable solutions for its clients
in six core areas of activity namely, Asset Management, Wealth and Investment,
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 GBP4 billion.
Sponsor: Investec Bank Limited
Date: 03/02/2011 09:00:02 Supplied by www.sharenet.co.za
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