Wrap Text
Unaudited combined consolidated financial results in Pounds Sterling for the six months to 30 September 2013
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 in Pounds Sterling for the six months to 30 September 2013
Investec, the international specialist bank and asset manager, announces today its results for the six months to 30 September 2013.
Highlights
- Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-
controlling interests ("operating profit") increased 13.8% in Rands to R3,394 million (2012: R2,982 million)
- Asset Management reported results in Rands 23.9% ahead of the prior year and Wealth & Investment's
results increased by 56.3% in Rands, with both divisions benefiting from higher levels of average funds under
management and combined net inflows in excess of R27 billion
- The Specialist Banking business reported an increase in operating profit of 2.0% in Rands
- The South African Specialist Bank posted a strong performance from the majority of businesses, with operating
profit increasing 45.4% in Rands
- In the UK Specialist Bank the ongoing business reported an operating profit of R1,144 million, whilst the legacy
business reported a loss of R740 million
- In Australia a review of the business was undertaken and a number of businesses subsequently, closed down.
Continuing operations reported an operating profit of R110 million
- Recurring income as a percentage of total operating income amounted to 72.1% (2012: 69.4%)
- Impairments have decreased by 16.6% in Rands, with the credit loss charge as a percentage of average gross
core loans and advances improving from 0.84% at 31 March 2013 to 0.71%
- The group maintained a sound capital position with core/common equity tier one ratios of 9.1% for Investec plc
(per Basel II) and 9.5% for Investec Limited (per Basel III).
- Liquidity remains strong with cash and near cash balances amounting to R140 billion
Financial features
As the group's results have been negatively impacted by the depreciation of the average Rand: Pounds Sterling exchange rate of approximately 16% over the
period, both Rand and Pound Sterling financial features are reflected in the table below:
Results in Pounds Sterling Results in Rand
Six months to Six months to
Six months to Six months to
30 September 30 September % 30 September 30 September %
2013 2012 change 2013 2012 change
Adjusted operating profit before taxation* (million) GBP223 GBP228 (2.3) R3 394 R2 982 13.8
Earnings attributable to shareholders (million) GBP164 GBP167 (1.8) R2 503 R2 187 14.4
Adjusted earnings attributable to shareholders** (million) GBP164 GBP167 (1.8) R2 499 R2 210 13.1
Adjusted earnings per share** 19.1p 19.5p (2.1) 291c 258c 12.8
Basic earnings per share 16.3p 16.6p (1.8) 249c 217c 14.7
Headline earnings per share 15.6p 15.8p (1.3) 238c 207c 15.0
Dividends per share 8.0p 8.0p – 131c 112c 17.0
Cost to income ratio 67.5% 64.8%
At At At At
30 September 31 March % 30 September 31 March %
2013 2013 change 2013 2013 change
Net asset value per share 374.0p 384.2p (2.7) 6 091c 5 362c 13.6
Total equity (million) GBP4 005 GBP3 942 1.6 R65 225 R55 008 18.6
Total assets (million) GBP47 530 GBP52 010 (8.6) R774 036 R725 861 6.6
Core loans and advances (million) GBP17 391 GBP18 415 (5.6) R283 215 R257 002 10.2
Cash and near cash balances (million) GBP8 619 GBP9 828 (12.3) R140 362 R137 161 2.3
Customer deposits (million) GBP23 231 GBP24 461 (5.3) R378 320 R341 377 10.8
Third party assets under management (million) GBP106 658 GBP110 678 3.6 R1 735 541 R1 544 639 12.4
Return on average adjusted shareholders' equity 10.0% 9.40%
Return on average risk-weighted assets 1.13% 1.06%
Defaults (net of impairments and before collateral) as a
percentage of net core loans 2.74% 2.73%
Loans and advances to customers as a percentage of
customer deposits 71.1% 71.5%
* Before goodwill, acquired intangibles, non-operating items and after other non-controlling interests.
** Before goodwill, acquired intangibles, non-operating items and after total non-controlling interests.
Stephen Koseff, Chief Executive Officer of
Investec said:
"We have delivered results at the top end of what we
anticipated, despite a sharp fall in the Rand without which
we would have shown a 13% increase in earnings.
We have worked hard to deal with many of the legacy
issues within the group and will continue to take decisive
action in order to ensure Investec is in the right shape to
take advantage of the recovery in the world economy and
markets."
Bernard Kantor, Managing Director of
Investec said:
"We are showing good growth in the vast majority of
our businesses, and where growth is not in line with our
expectations, we are tackling those issues head on.
Our aim is to ensure we focus, build and expand the areas
where we have core competencies that can generate
appropriate shareholder returns across our business.
As previously mentioned, we will effectively deal with those
businesses that cannot deliver decent returns."
Business highlights – operating profit in Rands
^ Asset Management: increase of 23.9% to R1,081 million (2012: R873 million)
^ Wealth & Investment: increase of 56.3% to R463 million (2012: R296 million)
^ Specialist Banking: increase of 2.0% to R1,849 million (2012:R1,813 million)
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 8 200 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 R61 billion.
For further information
Investec +27 (0) 11 286 7070 or +44 20 (0) 7597 5546
Stephen Koseff, Chief Executive Officer
Bernard Kantor, Managing Director
Ursula Nobrega, Investor Relations (mobile:+27 (0) 82 552 8808)
Brunswick (SA PR advisers)
Cecilia de Almeida
+27 (0) 11 502 7300
Presentation/conference call details
A presentation on the results will commence at 9:00 UK time/11:00 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: 0800 917 7042
– rest of Europe and other participants: +800 246 78 700
– Australian participants: 1800 350 100
– USA participants: 1866 752 6302
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE share code: INP
LSE 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#
Directors: Sir David J Prosser# (Joint Chairman), F Titi (Joint Chairman), S Koseff^ (Chief Executive),
B Kantor^ (Managing Director), G F O Alford#, G R Burger^, C A Carolus, P K O Crosthwaite#,
O C Dickson#, H J du Toit^, B Fried#, D Friedland, H Fukuda OBE#, I R Kantor, M P Malungani,
P R S Thomas ^Executive #British
S E Abrahams did not offer himself for re-election at the AGM held on 08 August 2013.
Sponsor: Investec Bank Limited
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
Registered office:
100 Grayston Drive
Sandown
Sandton, 2196
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
Company secretary:
B Coetsee
Combined consolidated income statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2013 2012* 2013*
Interest income 979 825 1 127 497 2 132 715
Interest expense (661 411) (777 731) (1 429 108)
Net interest income 318 414 349 766 703 607
Fee and commission income 561 079 534 981 1 110 398
Fee and commission expense (76 203) (73 270) (143 578)
Investment income 61 828 73 791 181 992
Trading income arising from
– customer flow 54 431 34 223 70 859
– balance sheet management and other trading activities 13 668 25 408 34 038
Other operating income 8 577 20 976 42 153
Total operating income before impairment losses on loans and advances 941 794 965 875 1 999 469
Impairment losses on loans and advances (83 087) (115 640) (251 012)
Operating income 858 707 850 235 1 748 457
Operating costs (633 526) (619 601) (1 303 033)
Depreciation on operating leased assets (3 856) (9 765) (16 072)
Operating profit before goodwill and acquired intangibles 221 325 220 869 429 352
Impairment of goodwill (854) (4 751) (15 175)
Amortisation of acquired intangibles (6 702) (6 631) (13 313)
Operating costs arising from integration, restructuring and partial disposal of subsidiaries (15 239) (9 462) (13 119)
Operating profit 198 530 200 025 387 745
Non-operational costs arising from acquisition of subsidiary – (1 903) (1 249)
Profit before taxation 198 530 198 122 386 496
Taxation on operating profit before goodwill and acquired intangibles (38 616) (42 222) (79 064)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries 5 827 4 022 5 977
Profit after taxation 165 741 159 922 313 409
Profit attributable to Asset Management non-controlling interests (2 950) (183) (243)
Losses/(profit) attributable to other non-controlling interests 1 493 7 201 (3 074)
Earnings attributable to shareholders 164 284 166 940 310 092
Earnings attributable to shareholders 164 284 166 940 310 092
Impairment of goodwill 854 4 751 15 175
Amortisation of acquired intangibles, net of taxation 875 4 907 9 852
Operating costs arising from integration, restructuring and partial disposal of subsidiaries 15 239 9 067 11 852
Preference dividends paid (23 961) (25 021) (39 104)
Additional earnings attributable to other equity holders 5 411 5 818 109
Currency hedge attributable to perpetual equity instruments 1 419 581 1 334
Earnings before goodwill impairment and non-operating items 164 121 167 043 309 310
Headline adjustments (29 783) (32 202) (44 083)
Headline earnings 134 338 134 841 265 227
Earnings per share (pence)
– Basic 16.3 16.6 31.7
– Diluted 15.4 15.7 29.8
Adjusted earnings per share (pence)
– Basic 19.1 19.5 36.1
– Diluted 18.1 18.5 34.0
Headline earnings per share (pence)
– Basic 15.6 15.8 31.0
– Diluted 14.8 14.9 29.2
Number of weighted average shares – (million) 859.6 855.2 856.0
*As restated for restatements detailed in the commentary section of this report.
Combined consolidated statement of comprehensive income
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2013 2012* 2013*
Profit after taxation 165 741 159 922 313 409
Other comprehensive (loss)/ income:
Fair value movements on cash flow hedges taken directly to other comprehensive income† (7 772) (9 535) (16 202)
Gains on realisation of available-for-sale assets recycled through the income statement† (3 123) (11 007) (1 713)
Fair value movements on available-for-sale assets recycled through other
comprehensive income† (17 588) 10 778 4 387
Foreign currency adjustments on translating foreign operations (276 215) (144 687) (182 532)
Pension fund actuarial losses^ – – (7 078)
Total comprehensive (loss)/income (138 957) 5 471 110 271
Total comprehensive loss attributable to non-controlling interests (16 188) (19 607) (15 815)
Total comprehensive (loss)/income attributable to ordinary shareholders (146 730) 57 86 982
Total comprehensive income attributable to perpetual preferred securities 23 961 25 021 39 104
Total comprehensive (loss)/income (138 957) 5 471 110 271
* As restated for restatements detailed in the commentary section of this report.
+ Net of taxation of six months to 30 September 2013: GBP2.4 million; (six months to September 2012: GBP3.1 million; Year to 31 March 2013: GBP8.2 million).
^Pension fund actuarial losses will not be reclassified to the income statement.
Summarised combined consolidated statement of changes in equity
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2013 2012* 2013*
Balance at the beginning of the period 3 941 515 3 958 125 3 958 125
Total comprehensive (loss)/income for the period (138 957) 5 471 110 271
Share-based payments adjustments 33 204 34 382 63 154
Dividends paid to ordinary shareholders (81 906) (78 622) (147 660)
Dividends paid to perpetual preference shareholders (23 961) (25 021) (39 104)
Dividends paid to non-controlling interests (265) (116) (230)
Issue of ordinary shares 31 650 34 685 34 685
Issue of perpetual preference shares – 24 263 24 263
Acquisition of non-controlling interests (254) (4 111) (3 814)
Non-controlling interest relating to disposal of subsidiaries – 220 220
Movement of treasury shares (46 614) (27 315) (58 395)
Capital conversion of subsidiary** 126 681 – –
Non-controlling interests relating to partial disposal of subsidiaries^ 164 067 – –
Balance at the end of the period 4 005 160 3 921 961 3 941 515
* As restated for restatements detailed in the commentary section of this report.
** On 16 August 2013 the Investec Property Fund converted subordinated debt in issue to equity.
^ The increase in equity of GBP164 million relates to the 15% disposal of Investec Asset Management
Combined consolidated balance sheet
At
GBP'000 30 September 2013 31 March 2013* 30 September 2012* 31 March 2012*
Assets
Cash and balances at central banks 1 943 845 1 782 447 1 964 616 2 593 851
Loans and advances to banks 2 420 703 3 136 051 2 554 623 2 725 471
Non-sovereign and non-bank cash placements 474 151 420 960 736 548 642 480
Reverse repurchase agreements and cash collateral on
securities borrowed 1 565 256 2 358 672 2 268 021 975 992
Sovereign debt securities 3 465 113 4 077 217 4 078 756 4 067 093
Bank debt securities 1 733 907 1 879 105 2 452 196 3 081 061
Other debt securities 574 285 449 216 379 491 377 832
Derivative financial instruments 2 001 005 1 983 132 1 941 073 1 913 650
Securities arising from trading activities 978 648 931 603 742 879 640 146
Investment portfolio 852 199 928 893 807 996 863 664
Loans and advances to customers 16 519 838 17 484 524 16 834 925 17 192 208
Own originated loans and advances to customers securitised 871 161 930 449 917 033 1 034 174
Other loans and advances 1 899 718 2 033 973 2 153 433 2 789 489
Other securitised assets 3 806 822 4 003 208 4 179 537 4 021 378
Interests in associated undertakings 25 728 27 950 27 425 27 506
Deferred taxation assets 132 750 165 457 153 849 150 381
Other assets 1 720 278 1 959 550 1 407 648 1 798 687
Property and equipment 124 398 134 101 137 550 175 773
Investment properties 395 277 451 975 395 202 407 295
Goodwill 456 284 466 906 470 716 468 320
Intangible assets 167 871 178 567 187 249 192 099
42 129 237 45 783 956 44 790 766 46 138 550
Other financial instruments at fair value through profit or loss
in respect of liabilities to customers 5 400 964 6 226 142 6 234 294 6 265 846
47 530 201 52 010 098 51 025 060 52 404 396
Liabilities
Deposits by banks 2 351 429 3 047 636 2 799 154 3 035 323
Derivative financial instruments 1 208 577 1 443 325 1 560 408 1 421 130
Other trading liabilities 850 068 851 939 676 970 612 884
Repurchase agreements and cash collateral on securities lent 1 333 388 1 940 158 1 936 204 1 864 137
Customer accounts (deposits) 23 231 372 24 460 666 24 621 676 25 275 876
Debt securities in issue 1 636 276 1 901 776 1 624 648 2 243 948
Liabilities arising on securitisation of own originated loans
and advances 892 173 926 335 922 347 1 036 674
Liabilities arising on securitisation of other assets 3 036 339 3 303 606 3 411 951 3 314 737
Current taxation liabilities 200 818 210 475 210 724 209 609
Deferred taxation liabilities 108 181 109 628 113 254 102 478
Other liabilities 1 865 756 1 895 091 1 337 263 1 570 853
36 714 377 40 090 635 39 214 599 40 687 649
Liabilities to customers under investment contracts 5 399 181 6 224 062 6 232 217 6 263 913
Insurance liabilities, including unit-linked liabilities 1 782 2 080 2 077 1 933
42 115 340 46 316 777 45 448 893 46 953 495
Subordinated liabilities 1 409 701 1 751 806 1 654 206 1 492 776
43 525 041 48 068 583 47 103 099 48 446 271
Equity
Ordinary share capital 224 223 223 221
Perpetual preference share capital 153 153 153 153
Share premium 2 490 408 2 494 618 2 502 909 2 457 019
Treasury shares (62 762) (89 545) (74 746) (72 820)
Other reserves (376 541) (93 537) (59 105) 82 327
Retained income 1 543 448 1 349 560 1 276 139 1 195 118
Shareholders' equity excluding non-controlling interests 3 594 930 3 661 472 3 645 573 3 662 018
Non-controlling interests 410 230 280 043 276 388 296 107
– Perpetual preferred securities issued by subsidiaries 261 425 279 041 273 880 291 769
– Non-controlling interests in partially held subsidiaries 148 805 1 002 2 508 4 338
Total equity 4 005 160 3 941 515 3 921 961 3 958 125
Total liabilities and equity 47 530 201 52 010 098 51 025 060 52 404 396
* As restated for restatements detailed in the commentary section of this report.
Summarised combined consolidated cash flow statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2013 2012* 2013*
Cash inflows from operations 340 100 364 831 709 989
(Decrease)/increase in operating assets 300 556 (1 788 447) (4 262 373)
(Decrease)/increase in operating liabilities (104 398) 600 505 2 151 009
Net cash inflow/(outflow) from operating activities 536 258 (823 111) (1 401 375)
Net cash inflow/(outflow) from investing activities 128 257 (79 796) (25 733)
Net cash (outflow)/inflow from financing activities (254 137) 203 386 187 894
Effects of exchange rate changes on cash and cash equivalents (195 790) (118 413) (142 019)
Net increase/(decrease) in cash and cash equivalents 214 588 (817 934) (1 381 233)
Cash and cash equivalents at the beginning of the period 3 561 573 4 942 806 4 942 806
Cash and cash equivalents at the end of the period 3 776 161 4 124 872 3 561 573
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).
* As restated for restatements detailed in the commentary section of this report.
Segmental geographic and business analysis of operating profit before goodwill,
acquired intangibles, non-operating items, taxation and after other non-controlling
interests for the six months to 30 September 2013
GBP'000 UK and other Southern Africa Australia Total group
Asset Management 33 446 38 494 – 71 940
Wealth & Investment 20 690 10 151 – 30 841
Specialist Banking 26 881 107 081 (13 925) 120 037
ongoing business 76 159 107 081 7 848 191 088
legacy business (49 278) – (21 773) (71 051)
Total group 81 017 155 726 (13 925) 222 818
Non-controlling interest – equity (1 493)
Operating profit before goodwill and
acquired intangibles 221 325
Segmental geographic and business analysis of operating profit before goodwill,
acquired intangibles, non-operating items, taxation and after other non-controlling
interests for the six months to 30 September 2012*
GBP'000 UK and other Southern Africa Australia Total group
Asset Management 28 081 39 299 – 67 380
Wealth & Investment 14 223 8 628 – 22 851
Specialist Banking 47 328 85 756 4 755 137 839
ongoing business 82 415 85 756 17 020 185 191
legacy business (35 087) – (12 265) (47 352)
Total group 89 632 133 683 4 755 228 070
Non-controlling interest – equity (7 201)
Operating profit before goodwill and
acquired intangibles 220 869
* As restated for restatements detailed in the commentary section of this report.
Commentary
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated financial results for the six months to 30 September 2013
OVERALL GROUP PERFORMANCE
Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests ("operating profit")
decreased 2.3% to GBP222.8 million (2012: GBP228.1 million). Overall group results have been negatively impacted by the depreciation of the average
Rand: Pounds Sterling exchange rate of approximately 16% over the period.
Asset Management reported results 6.8% ahead of the prior year and Wealth & Investment's results increased 35.0%, with both divisions benefiting from
higher levels of average funds under management and net inflows of GBP1.4 billion and GBP400 million, respectively. Operating profit in the Specialist
Banking business declined 12.9% largely due to the depreciation of the Rand and lower investment and fee income earned in the UK and Australian
banking businesses, partially offset by a strong performance from the South African banking business and a substantial decline in impairments.
The combined South African business reported an increase in operating profit of 35.6% in Rand terms benefiting from growth in revenue and fixed cost
containment. The combined UK business reported results behind the prior period, but significantly ahead of the second half of the 2013 financial year. The
Australian business was strategically restructured with a focus on improving profitability and returns and enhancing operational efficiencies.
Salient features of the period under review are:
- Adjusted earnings attributable to shareholders before goodwill, acquired intangibles and non-operating items decreased 1.7% to GBP164.1 million
(2012: GBP167.0 million) – an increase of 13.2% on a currency neutral basis.
- Adjusted earnings per share (EPS) before goodwill, acquired intangibles and non-operating items decreased 2.1% from 19.5 pence to 19.1 pence – an
increase of 12.4% on a currency neutral basis.
- Recurring income as a percentage of total operating income amounted to 72.1% (2012: 69.4%).
- The annualised credit loss charge as a percentage of average gross core loans and advances has improved from 0.84% at 31 March 2013 to 0.71%,
with impairments decreasing by 28.2% to GBP83.1 million.
- Third party assets under management decreased 3.6% to GBP106.7 billion (31 March 2013: GBP110.7 billion) – an increase of 2.6% on a currency
neutral basis.
- Customer accounts (deposits) decreased 5.3% to GBP23.2 billion (31 March 2013: GBP24.5 billion) - an increase of 4.3% on a currency neutral basis.
- Core loans and advances decreased 5.6% to GBP17.4 billion (31 March 2013: GBP18.4 billion) - an increase of 4.7% on a currency neutral basis.
- The board declared a dividend of 8.0 pence per ordinary share (2012: 8.0 pence) resulting in a dividend cover based on the group's adjusted EPS
before goodwill and non-operating items of 2.4 times (2012: 2.5 times), consistent with the group's dividend policy.
BUSINESS UNIT REVIEW
The group's asset management and wealth management businesses have sound franchises and remain focused on broadening their client base and
generating net inflows. Further investment in distribution platforms, IT and online infrastructure and experienced portfolio managers is important for
supporting future revenue growth in these businesses. The challenge for the group remains to ensure its Specialist Banking businesses are in the best
possible shape to take advantage of the upturn in markets and generate the appropriate shareholder returns. The group has made progress in this regard
with the focus remaining on efficiency and balance sheet optimisation, whilst growing the business organically and managing down the legacy portfolios.
Asset Management
Asset Management increased operating profit 6.8% to GBP71.9 million (2012: GBP67.4 million) benefiting from higher average funds under management
and net inflows of GBP1.4 billion. Total funds under management amount to GBP66.2 billion (31 March 2013: GBP69.8 billion). Operating margin has
remained stable at 34.3%. The division's long-term investment performance remains solid with 88% of portfolios outperforming benchmarks on a 10-year
annualised basis. The sale of the 15% stake in the business to management was completed on 31 July 2013.
Wealth & Investment
Wealth & Investment operating profit increased by 35.0% to GBP30.8 million (2012: GBP22.9 million) supported by higher average funds under management,
net inflows of GBP0.4 billion and improved operating margins. Total funds under management amount to GBP40.0 billion (31 March 2013: GBP40.4 billion).
The business in the UK has expanded its footprint across the region, successfully completing the integration of the Williams de Broë business. In addition,
the business in South Africa has benefitted from greater co-operation with the Private Bank in leveraging the group's private client platform, and has made
progress in integrating and leveraging off the division's global investment platform.
Specialist Banking
Specialist Banking operating profit decreased by 12.9% to GBP120.0 million (2012: GBP137.8 million).
South Africa saw strong growth in net fee and commission income driven largely by an increase in corporate and property fund fees. Improved customer
flow activity has resulted in an increase in trading income. The unlisted private equity portfolio performed well during the period. The group continued to
grow its professional finance business and the investment and trading property portfolios delivered a sound performance.
In the UK the principal investment portfolios performed well and the division recorded good growth in its professional and specialised lending and asset
finance loan portfolios. Lower fee and commission income was recorded in the period however, deal pipelines remain sound. Investment and trading
income was negatively impacted by lower returns earned on the fixed income portfolio. The ongoing business reported operating profit of GBP76.1 million,
whilst the legacy business reported a loss of GBP49.2 million.
Following a review conducted in Australia, a number of businesses which lacked scale or alignment with the greater group were closed. The restructure
costs resulting from this action are included in the current period's results. Focus remains on building businesses in select niches which are strategically
aligned with the broader group. The continuing operations made an operating profit of A$11.9 million during the period.
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
FINANCIAL STATEMENT ANALYSIS
Total operating income
Total operating income before impairment losses on loans and advances decreased by 2.5% to GBP941.8 million (2012: GBP965.9 million).
Net interest income decreased by 9.0% to GBP318.4 million (2012: GBP349.8 million) largely due to a lower return earned on the group's liquid asset and
cash portfolio in South Africa following a decrease in interest rates, and less interest earned on the legacy portfolios which are running down. This was
partially offset by loan book growth and lower cost of funding, notably in the UK and Australia.
Net fee and commission income increased by 5.0% to GBP484.9 million (2012: GBP461.7 million) as a result of higher average funds under management
and net inflows in the asset management and wealth management businesses. The Specialist Banking business recorded a decrease in net fees and
commissions due to lower corporate fees earned in the UK and Australia, with the South African business benefiting from increased client activity.
Investment income decreased by 16.2% to GBP61.8 million (2012: GBP73.8 million). The group's private equity investment portfolios performed well,
however, results were offset by lower income earned on the fixed income portfolio in the UK.
Trading income arising from customer flow increased 59.0% to GBP54.4 million (2012:GBP34.2 million) whilst trading income from other trading activities
decreased by 46.2% to GBP13.7 million (2012: GBP25.4 million) due to gains arising from the sale of bonds not repeated in the current period.
Other operating income includes associate income and income earned on an operating lease portfolio.
Impairment losses on loans and advances
Impairments on loans and advances decreased from GBP115.6 million to GBP83.1 million. Australia reported an increase whilst impairments in the UK
and South Africa were much improved.
Since 31 March 2013 gross defaults have improved from GBP792.2 million to GBP757.5 million. The percentage of default loans (net of impairments but
before taking collateral into account) to core loans and advances amounted to 2.74% (31 March 2013: 2.73%). The ratio of collateral to default loans (net
of impairments) remains satisfactory at 1.17 times (31 March 2013: 1.26 times).
Operating costs
The ratio of total operating costs to total operating income was 67.5% (2012:64.8%).
Total operating costs grew by 2.2% to GBP633.5 million (2012: GBP619.6 million) as a result of growth in the asset management and wealth management
businesses. Costs in the Specialist Bank have remained flat to marginally higher in home currencies.
Impairment of goodwill
The current period's goodwill impairment largely relates to Asset Management businesses acquired in prior years.
Amortisation of acquired intangibles
Amortisation of acquired intangibles relates to the Wealth & Investment business and mainly comprises amortisation of amounts attributable to client
relationships.
Operating costs arising from restructuring and partial disposal of subsidiaries
Operating costs arising from restructuring and partial disposal of subsidiaries includes costs associated with the restructuring of the Australian business,
as mentioned above, and operational costs associated with the implementation of the Asset Management transaction.
Taxation
The effective tax rate amounts to 17.4% (2012:19.1%).
Profit attributable to non-controlling interests
Profit attributable to non-controlling interests mainly comprises:
- GBP2.9 million profit attributable to non-controlling interests in the asset management business.
- GBP0.4 million profit attributable to other non-controlling interests.
- A loss of GBP1.9 million relating to Euro denominated preferred securities issued by a subsidiary of Investec plc which are reflected on the balance
sheet as part of non-controlling interests. (The transaction is 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).
Balance sheet analysis
Since 31 March 2013:
- Total shareholders' equity (including non-controlling interests) increased by 1.6% to GBP4.0 billion – an increase of 8.6% on a currency neutral
basis. The weakening of the closing Rand and Australian exchange rates relative to Pounds Sterling has resulted in a reduction in total equity of
GBP276 million.
- Net asset value per share decreased 2.7% to 374.0 pence and net tangible asset value per share (which excludes goodwill and intangible assets)
decreased by 2.2% to 304.1 pence largely as a result of the depreciation of the Rand as described above. On a currency neutral basis net asset value
per share and net tangible asset value per share increased by 5.1% and 7.0%, respectively.
- The return on adjusted average shareholders' equity increased from 9.4% to 10.0%.
Liquidity and funding
Diversifying funding sources has been a key element in improving the resilience of the group's balance sheet and reducing its reliance on wholesale funding.
As at 30 September 2013 the group held GBP8.6 billion in cash and near cash balances (GBP4.0 billion in Investec plc and R74.5 billion in Investec Limited)
which amounted to 31.0% of its liability base. Loans and advances to customers as a percentage of customer deposits amounted to 71.1% (31 March
2013: 71.3%).
Capital adequacy and leverage ratios
The group is targeting a minimum core/common equity tier one capital ratio above 10% by March 2016 and a total capital adequacy ratio range of 14% to 17% on
a consolidated basis for each of Investec plc and Investec Limited respectively. Basel lll was implemented on 1 January 2013 in South Africa and Australia
and this had a moderate effect on capital ratios. The group's anticipated fully loaded Basel III core tier 1 capital adequacy ratios in both Investec plc and
Investec Limited are reflected in the table below.
30 Sep 2013 31 Mar 2013
Investec plc
Capital adequacy ratio (as reported in terms of Basel II) 16.7% 16.7%
Tier 1 ratio (as reported in terms of Basel II) 11.2% 11.0%
Core tier 1 ratio (as reported in terms of Basel II) 9.1% 8.8%
Core tier 1 ratio (anticipated Basel III "fully loaded"*) 8.7%
Leverage ratio (current) 7.7%
Leverage ratio (anticipated Basel III "fully loaded"*) 6.0%
Investec Limited
Capital adequacy ratio (as reported in terms of Basel III) 15.4% 15.6%
Tier 1 ratio (as reported in terms of Basel III) 11.2% 10.8%
Common equity tier 1 ratio (as reported in terms of Basel III) 9.5% 8.9%
Common equity tier 1 ratio (anticipated Basel III "fully loaded"*) 9.4%
Leverage ratio (current) 7.5%
Leverage ratio (anticipated Basel III "fully loaded"*) 6.5%
*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.
OUTLOOK
Whilst economic conditions remain mixed, the overall group is improving in shape and capability. Significant progress has been made in identifying and
addressing the drag on overall performance. The group will continue to realign the business model to position the business appropriately for future growth
and development and the achievement of its financial targets.
On behalf of the boards of Investec plc and Investec Limited
Sir David J Prosser Fani Titi Stephen Koseff Bernard Kantor
Joint Chairman Joint Chairman Chief Executive Officer Managing Director
20 November 2013
NOTES TO THE COMMENTARY SECTION ABOVE
- Presentation of financial information
Investec operates under a Dual Listed Companies (DLC) structure with premium/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 interim 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.
Unless the context indicates otherwise, all comparatives included in the commentary above relate to the six months ended 30 September 2012.
Amounts represented on a currency neutral basis for balance sheet items assume that the closing exchange rates of the group's relevant exchange rates,
as reflected below, remain the same as at 30 September 2013 when compared to 31 March 2013. Amounts represented on a currency neutral basis
for income statement items assume that the average exchange rates of the group's relevant exchange rates, as reflected below, remain the same as at
30 September 2013 when compared to 30 September 2012.
- 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:
Six months to Year to Six months to
Currency per 30 Sep 2013 31 Mar 2013 30 Sep 2012
GBP1.00 Period end Average Period end Average Period end Average
South African Rand 16.29 15.03 13.96 13.44 13.39 12.96
Australian Dollar 1.73 1.63 1.46 1.53 1.55 1.54
Euro 1.20 1.17 1.18 1.23 1.26 1.24
US Dollar 1.62 1.54 1.52 1.58 1.61 1.58
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 16.0% and the closing rate has depreciated by 16.7% since 31 March 2013.
- 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 period to 30 September 2013 are consistent with those adopted in the financial
statements for the year ended 31 March 2013 except as noted below.
The group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards:
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 13 Fair Value Measurement, Presentation of other comprehensive income
(Amendments to IAS 1), IAS19 Employee Benefits.
The financial results have been prepared under the supervision of Glynn Burger, the Group Risk and Finance Director. The financial statements for the
six months to 30 September 2013 will be posted to stakeholders on 29 November 2013. These accounts will be available on the group's website at
the same date.
ACCOUNTING RESTATEMENTS AND ADOPTION OF IFRS 13
The group has adopted the following new or revised standards from 1 April 2013:
IFRS 10 – Consolidations
The revised standard on consolidation has been applied retrospectively, with the impact to prior reported periods disclosed in the restatement tables
below. The application of the single definition of control contained in the standard has resulted in the consolidation of certain special purpose vehicles in
which the group has exposure to variable returns (not necessarily the majority thereof) and has the ability to affect such returns by exercising control over
the activities of the entity.
IFRS 13 – Fair value
The new accounting standard has been applied prospectively from 1 April 2013. The standard defines fair value as being a market-based measurement
and sets out in a single IFRS a framework for the measurement of fair value. Application of the standard has not had a material impact on the recognition
and measurement of assets and liabilities of the group.
IAS 19 – Employee Benefits
The revisions to the standard have been applied retrospectively. For the group the standard has revised the basis on which the return on assets is
determined, with a relatively immaterial impact.
The impact to the comparative balance sheets and income statements are provided in the tables below:
Combined consolidated balance sheet
31 March 2013 31 March 2013
GBP'000 As reported IFRS 10 Restated
Assets
Cash and balances at central banks 1 782 447 – 1 782 447
Loans and advances to banks 3 129 646 6 405 3 136 051
Non-sovereign and non-bank cash placements 420 960 – 420 960
Reverse repurchase agreements and cash collateral on securities borrowed 2 358 672 – 2 358 672
Sovereign debt securities 4 077 217 – 4 077 217
Bank debt securities 1 879 105 – 1 879 105
Other debt securities 457 652 (8 436) 449 216
Derivative financial instruments 1 982 571 561 1 983 132
Securities arising from trading activities 931 603 – 931 603
Investment portfolio 960 364 (31 471) 928 893
Loans and advances to customers 17 484 524 – 17 484 524
Own originated loans and advances to customers securitised 930 449 – 930 449
Other loans and advances 2 117 743 (83 770) 2 033 973
Other securitised assets 2 882 592 1 120 616 4 003 208
Interests in associated undertakings 27 950 – 27 950
Deferred taxation assets 165 457 – 165 457
Other assets 1 960 438 (888) 1 959 550
Property and equipment 126 538 7 563 134 101
Investment properties 451 975 – 451 975
Goodwill 466 906 – 466 906
Intangible assets 178 567 – 178 567
44 773 376 1 010 580 45 783 956
Other financial instruments at fair value through profit or loss in respect of
liabilities to customers 6 226 142 – 6 226 142
50 999 518 1 010 580 52 010 098
Liabilities
Deposits by banks 2 976 464 71 172 3 047 636
Derivative financial instruments 1 443 325 – 1 443 325
Other trading liabilities 851 939 – 851 939
Repurchase agreements and cash collateral on securities lent 1 940 158 – 1 940 158
Customer accounts (deposits) 24 531 838 (71 172) 24 460 666
Debt securities in issue 1 901 776 – 1 901 776
Liabilities arising on securitisation of own originated loans and advances 926 335 – 926 335
Liabilities arising on securitisation of other assets 2 237 581 1 066 025 3 303 606
Current taxation liabilities 210 475 – 210 475
Deferred taxation liabilities 109 628 – 109 628
Other liabilities 1 887 402 7 689 1 895 091
39 016 921 1 073 714 40 090 635
Liabilities to customers under investment contracts 6 224 062 – 6 224 062
Insurance liabilities including unit-linked liabilities 2 080 – 2 080
45 243 063 1 073 714 46 316 777
Subordinated liabilities 1 751 806 – 1 751 806
46 994 869 1 073 714 48 068 583
Equity
Ordinary share capital 223 – 223
Perpetual preference share capital 153 – 153
Share premium 2 494 618 – 2 494 618
Treasury shares (89 545) – (89 545)
Other reserves (93 082) (455) (93 537)
Retained income 1 412 239 (62 679) 1 349 560
Shareholders' equity excluding non-controlling interests 3 724 606 (63 134) 3 661 472
Non-controlling interests 280 043 – 280 043
– Perpetual preferred securities issued by subsidiaries 279 041 – 279 041
– Non controlling interests in partially held subsidiaries 1 002 – 1 002
Total equity 4 004 649 (63 134) 3 941 515
Total liabilities and equity 50 999 518 1 010 580 52 010 098
Combined consolidated balance sheet
30 September 2012 30 September 2012
GBP'000 As reported IFRS 10 Restated
Assets
Cash and balances at central banks 1 964 616 – 1 964 616
Loans and advances to banks 2 548 691 5 932 2 554 623
Non-sovereign and non-bank cash placements 736 548 – 736 548
Reverse repurchase agreements and cash collateral on securities borrowed 2 268 021 – 2 268 021
Sovereign debt securities 4 078 756 – 4 078 756
Bank debt securities 2 452 196 – 2 452 196
Other debt securities 379 491 – 379 491
Derivative financial instruments 1 941 073 – 1 941 073
Securities arising from trading activities 742 879 – 742 879
Investment portfolio 835 136 (27 140) 807 996
Loans and advances to customers 16 834 925 – 16 834 925
Own originated loans and advances to customers securitised 917 033 – 917 033
Other loans and advances 2 193 571 (40 138) 2 153 433
Other securitised assets 3 303 116 876 421 4 179 537
Interests in associated undertakings 27 425 – 27 425
Deferred taxation assets 153 849 – 153 849
Other assets 1 410 455 (2 807) 1 407 648
Property and equipment 132 491 5 059 137 550
Investment properties 395 202 – 395 202
Goodwill 470 716 – 470 716
Intangible assets 187 249 – 187 249
43 973 439 817 327 44 790 766
Other financial instruments at fair value through profit or loss in respect of
liabilities to customers 6 234 294 – 6 234 294
50 207 733 817 327 51 025 060
Liabilities
Deposits by banks 2 732 271 66 883 2 799 154
Derivative financial instruments 1 560 408 – 1 560 408
Other trading liabilities 676 970 – 676 970
Repurchase agreements and cash collateral on securities lent 1 936 204 – 1 936 204
Customer accounts (deposits) 24 688 559 (66 883) 24 621 676
Debt securities in issue 1 624 648 – 1 624 648
Liabilities arising on securitisation of own originated loans and advances 922 347 – 922 347
Liabilities arising on securitisation of other assets 2 541 900 870 051 3 411 951
Current taxation liabilities 210 724 – 210 724
Deferred taxation liabilities 113 254 – 113 254
Other liabilities 1 335 279 1 984 1 337 263
38 342 564 872 035 39 214 599
Liabilities to customers under investment contracts 6 232 217 – 6 232 217
Insurance liabilities including unit-linked liabilities 2 077 – 2 077
44 576 858 872 035 45 448 893
Subordinated liabilities 1 654 206 – 1 654 206
46 231 064 872 035 47 103 099
Equity
Ordinary share capital 223 – 223
Perpetual preference share capital 153 – 153
Share premium 2 502 909 – 2 502 909
Treasury shares (74 746) – (74 746)
Other reserves (60 326) 1 221 (59 105)
Retained income 1 332 068 (55 929) 1 276 139
Shareholders' equity excluding non-controlling interests 3 700 281 (54 708) 3 645 573
Non-controlling interests 276 388 – 276 388
– Perpetual preferred securities issued by subsidiaries 273 880 – 273 880
– Non controlling interests in partially held subsidiaries 2 508 – 2 508
Total equity 3 976 669 (54 708) 3 921 961
Total liabilities and equity 50 207 733 817 327 51 025 060
Combined consolidated balance sheet
31 March 2012 31 March 2012
GBP'000 As reported IFRS 10 Restated
Assets
Cash and balances at central banks 2 593 851 – 2 593 851
Loans and advances to banks 2 725 347 124 2 725 471
Non-sovereign and non-bank cash placements 642 480 – 642 480
Reverse repurchase agreements and cash collateral on securities borrowed 975 992 – 975 992
Sovereign debt securities 4 067 093 – 4 067 093
Bank debt securities 3 081 061 – 3 081 061
Other debt securities 377 832 – 377 832
Derivative financial instruments 1 913 650 – 1 913 650
Securities arising from trading activities 640 146 – 640 146
Investment portfolio 890 702 (27 038) 863 664
Loans and advances to customers 17 192 208 – 17 192 208
Own originated loans and advances to customers securitised 1 034 174 – 1 034 174
Other loans and advances 2 829 189 (39 700) 2 789 489
Other securitised assets 3 101 422 919 956 4 021 378
Interests in associated undertakings 27 506 – 27 506
Deferred taxation assets 150 381 – 150 381
Other assets 1 802 121 (3 434) 1 798 687
Property and equipment 171 685 4 088 175 773
Investment properties 407 295 – 407 295
Goodwill 468 320 – 468 320
Intangible assets 192 099 – 192 099
45 284 554 853 996 46 138 550
Other financial instruments at fair value through profit or loss in respect of
liabilities to customers 6 265 846 – 6 265 846
51 550 400 853 996 52 404 396
Liabilities
Deposits by banks 2 967 428 67 895 3 035 323
Derivative financial instruments 1 421 130 – 1 421 130
Other trading liabilities 612 884 – 612 884
Repurchase agreements and cash collateral on securities lent 1 864 137 – 1 864 137
Customer accounts (deposits) 25 343 771 (67 895) 25 275 876
Debt securities in issue 2 243 948 – 2 243 948
Liabilities arising on securitisation of own originated loans and advances 1 036 674 – 1 036 674
Liabilities arising on securitisation of other assets 2 402 043 912 694 3 314 737
Current taxation liabilities 209 609 – 209 609
Deferred taxation liabilities 102 478 – 102 478
Other liabilities 1 575 154 (4 301) 1 570 853
39 779 256 908 393 40 687 649
Liabilities to customers under investment contracts 6 263 913 – 6 263 913
Insurance liabilities including unit-linked liabilities 1 933 – 1 933
46 045 102 908 393 46 953 495
Subordinated liabilities 1 492 776 – 1 492 776
47 537 878 908 393 48 446 271
Equity
Ordinary share capital 221 – 221
Perpetual preference share capital 153 – 153
Share premium 2 457 019 – 2 457 019
Treasury shares (72 820) – (72 820)
Other reserves 82 327 – 82 327
Retained income 1 249 515 (54 397) 1 195 118
Shareholders' equity excluding non-controlling interests 3 716 415 (54 397) 3 662 018
Non-controlling interests 296 107 – 296 107
– Perpetual preferred securities issued by subsidiaries 291 769 – 291 769
– Non controlling interests in partially held subsidiaries 4 338 – 4 338
Total equity 4 012 522 (54 397) 3 958 125
Total liabilities and equity 51 550 400 853 996 52 404 396
Combined consolidated income statement
For the year to 31 March 2013 IFRS 10 IAS 19 31 March 2013
GBP'000 As reported Restated
Interest income 2 131 765 (301) 1 251 2 132 715
Interest expense (1 429 239) 131 – (1 429 108)
Net interest income 702 526 (170) 1 251 703 607
Fee and commission income 1 117 551 (7 153) – 1 110 398
Fee and commission expense (144 876) 1 298 – (143 578)
Investment income 182 889 (897) – 181 992
Trading income arising from –
– customer flow 70 859 – – 70 859
– balance sheet management and other trading activities 35 398 (1 360) – 34 038
Other operating income 42 153 – – 42 153
Total operating income before impairment on loans and advances 2 006 500 (8 282) 1 251 1 999 469
Impairment losses on loans and advances (251 012) – – (251 012)
Operating income 1 755 488 (8 282) 1 251 1 748 457
Operating costs (1 302 929) – (104) (1 303 033)
Depreciation on operating leased assets (16 072) – – (16 072)
Operating profit before goodwill and acquired intangibles 436 487 (8 282) 1 147 429 352
Impairment of goodwill (15 175) – – (15 175)
Amortisation of acquired intangibles (13 313) – – (13 313)
Cost arising from integration of acquired subsidiaries (13 119) – – (13 119)
Operating profit 394 880 (8 282) 1 147 387 745
Non-operational costs arising from acquisition of subsidiary (1 249) – – (1 249)
Profit before taxation 393 631 (8 282) 1 147 386 496
Taxation on operating profit before goodwill (78 800) – (264) (79 064)
Taxation on acquired intangibles and acquisition/disposal/integration of
subsidiaries 5 977 – – 5 977
Profit after taxation 320 808 (8 282) 883 313 409
Operating (income)/losses attributable to non-controlling interests (3 317) – – (3 317)
Earnings attributable to shareholders 317 491 (8 282) 883 310 092
Combined consolidated income statement
For the year to 30 September 2012 IFRS 10 30 September 2012
GBP'000 As reported Restated
Interest income 1 127 516 (19) 1 127 497
Interest expense (777 797) 66 (777 731)
Net interest income 349 719 47 349 766
Fee and commission income 534 981 – 534 981
Fee and commission expense (73 270) – (73 270)
Investment income 75 775 (1 984) 73 791
Trading income arising from
– customer flow 34 223 – 34 223
– balance sheet management and other trading activities 25 003 405 25 408
Other operating income 20 976 – 20 976
Total operating income before impairment on loans and advances 967 407 (1 532) 965 875
Impairment losses on loans and advances (115 640) – (115 640)
Operating income 851 767 (1 532) 850 235
Operating costs (619 601) – (619 601)
Depreciation on operating leased assets (9 765) – (9 765)
Operating profit before goodwill and acquired intangibles 222 401 (1 532) 220 869
Impairment of goodwill (4 751) – (4 751)
Amortisation of acquired intangibles (6 631) – (6 631)
Cost arising from integration of acquired subsidiaries (9 462) – (9 462)
Operating profit 201 557 (1 532) 200 025
Non-operational costs arising from acquisition of subsidiary (1 903) – (1 903)
Profit before taxation 199 654 (1 532) 198 122
Taxation on operating profit before goodwill (42 222) – (42 222)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries 4 022 – 4 022
Profit after taxation 161 454 (1 532) 159 922
Operating (income)/losses attributable to non-controlling interests 7 018 – 7 018
Earnings attributable to shareholders 168 472 (1 532) 166 940
Analysis of assets and liabilities at fair value and amortised cost
Non-financial
Total Total instruments
at 30 September 2013 instruments at instruments at and insurance
GBP'000 fair value amortised cost related Total
Assets
Cash and balances at central banks – 1 943 845 – 1 943 845
Loans and advances to banks 100 134 2 320 569 – 2 420 703
Non-sovereign and non-bank cash placements 899 473 252 – 474 151
Reverse repurchase agreements and cash collateral on securities borrowed 730 361 834 895 – 1 565 256
Sovereign debt securities 3 260 779 204 334 – 3 465 113
Bank debt securities 807 385 926 522 – 1 733 907
Other debt securities 466 512 107 773 – 574 285
Derivative financial instruments 2 001 005 – – 2 001 005
Securities arising from trading activities 978 648 – – 978 648
Investment portfolio 852 199 – – 852 199
Loans and advances to customers 917 223 15 602 615 – 16 519 838
Own originated loans and advances to customers securitised – 871 161 – 871 161
Other loans and advances – 1 899 718 – 1 899 718
Other securitised assets 1 375 283 2 431 539 – 3 806 822
Interests in associated undertakings – – 25 728 25 728
Deferred taxation assets – – 132 750 132 750
Other assets 385 961 886 956 447 361 1 720 278
Property and equipment – – 124 398 124 398
Investment properties – – 395 277 395 277
Goodwill – – 456 284 456 284
Intangible assets – – 167 871 167 871
11 876 389 28 503 179 1 749 669 42 129 237
Other financial instruments at fair value through profit or loss in respect of
liabilities to customers – – 5 400 964 5 400 964
11 876 389 28 503 179 7 150 633 47 530 201
Liabilities
Deposits by banks 185 2 351 244 – 2 351 429
Derivative financial instruments 1 208 577 – – 1 208 577
Other trading liabilities 850 068 – – 850 068
Repurchase agreements and cash collateral on securities lent 511 187 822 201 – 1 333 388
Customer accounts (deposits) 720 911 22 510 461 – 23 231 372
Debt securities in issue 176 518 1 459 758 – 1 636 276
Liabilities arising on securitisation of own originated loans and advances – 892 173 – 892 173
Liabilities arising on securitisation of other assets 1 240 617 1 795 722 – 3 036 339
Current taxation liabilities – – 200 818 200 818
Deferred taxation liabilities – – 108 181 108 181
Other liabilities 359 414 986 764 519 578 1 865 756
5 067 477 30 818 323 828 577 36 714 377
Liabilities to customers under investment contracts – – 5 399 181 5 399 181
Insurance liabilities including unit-linked liabilities – – 1 782 1 782
5 067 477 30 818 323 6 229 540 42 115 340
Subordinated liabilities – 1 409 701 – 1 409 701
5 067 477 32 228 024 6 229 540 43 525 041
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.
at 30 September 2013 Total instruments Fair value measurement
GBP'000 at fair value Level 1 Level 2 Level 3
2013
Assets
Loans and advances to banks 100 134 53 788 46 346 –
Non-sovereign and non-bank cash placements 899 – 899 –
Reverse repurchase agreements and cash collateral on securities borrowed 730 361 – 730 361 –
Sovereign debt securities 3 260 779 2 896 159 364 620 –
Bank debt securities 807 385 186 652 620 733 –
Other debt securities 466 512 312 588 119 138 34 786
Derivative financial instruments 2 001 005 508 729 1 428 937 63 339
Securities arising from trading activities 978 648 971 486 7 162 –
Investment portfolio 852 199 106 615 90 163 655 421
Loans and advances to customers 917 223 – 865 996 51 227
Other securitised assets 1 375 283 – 742 746 632 537
Other assets 385 961 385 145 – 816
11 876 389 5 421 162 5 017 101 1 438 126
Liabilities
Deposits by banks 185 – 185 –
Derivative financial instruments 1 208 577 263 869 942 353 2 355
Other trading liabilities 850 068 850 068 – –
Repurchase agreements and cash collateral on securities lent 511 187 – 511 187 –
Customer accounts (deposits) 720 911 – 720 911 –
Debt securities in issue 176 518 – 176 518 –
Liabilities arising on securitisation of other assets 1 240 617 35 111 674 768 530 738
Other liabilities 359 414 318 340 41 074 –
5 067 477 1 467 388 3 066 996 533 093
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:
Fair value
Fair value movements
Total level movements through other
3 financial through income comprehensive
GBP'000 instruments statement income
Balance as at 1 April 2013 522 716 493 792 28 924
Transfers due to application of IFRS 10 (33 645) (33 645) –
Transfers due to application of IFRS 13* 533 098 533 098 –
Restated opening balance 1 022 169 993 245 28 924
Total gains or losses 37 837 39 358 (1 521)
In the income statement 39 358 39 358 –
In the statement of other comprehensive income (1 521) – (1 521)
Purchases 7 190 7 190 –
Sales (50 024) (50 024) –
Issues (10 488) (10 488) –
Settlements (17 046) (17 046) –
Transfers into level 3 9 759 6 956 2 803
Transfers out of level 3 (2 366) (2 366) –
Foreign exchange adjustments (91 998) (91 964) (34)
Balance as at 30 September 2013 905 033 874 861 30 172
*All reclassifications occurred as a result of inputs to the valuation model being regarded as unobservable when applying IFRS 13. Observable inputs are
defined as inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the
assumptions that market participants would use when pricing the asset or liability. All other inputs have been considered to be unobservable.
The following table quantifies the gains or losses included in the income statement recognised on level 3 financial instruments:
for the six months to 30 September 2013
GBP'000
Total gains or losses included in the income statement
Net interest income 946
Fee and commission income 1 995
Fee and commission expense (5 113)
Investment income 40 369
Trading income arising from customer flow 3 115
Trading income arising from balance sheet management and other trading activities (1 890)
Other operating income (64)
39 358
Total gains or losses included in other comprehensive income comprises available-for-sale reserves.
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:
Reflected in the income statement
(GBP'000)
Range which
At 30 September 2013 Significant unobservable unobservable input Favourable Unfavourable
GBP'000 input changed has been stressed changes changes
Assets
Other debt securities Discount rates, credit spreads (24%)-24% 1 498 (1 068)
Derivative financial instruments Discount rates, credit spreads, volatilities,
cash flows, EBITDA, price earnings multiples (20%)-25% 32 708 (9 718)
Investment portfolio Discount rates, cash flows, EBITDA, price
earnings multiple,net asset value,WACC, (25%)-18% 101 608 (81 825)
Loans and advances to customers Cash flows (5%)-5% 2 888 (2 888)
Other securitised assets* Credit spreads, prices from illiquid markets (10%)-10% 9 575 (6 167)
Other assets Discount rates (5%)-5% 38 (71)
Liabilities
Derivative financial instruments Basis risk and yield curve (10 bps)-10bps 1 107 (1 332)
149 422 (103 069)
*The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets.
Fair value of financial instruments at amortised cost
at 30 September 2013 Carrying Fair
GBP'000 amount value
Assets
Cash and balances at central banks 1 943 845 1 943 845
Loans and advances to banks 2 320 569 2 320 437
Non-sovereign and non-bank cash placements 473 252 473 252
Reverse repurchase agreements and cash collateral on securities borrowed 834 895 834 895
Sovereign debt securities 204 334 210 888
Bank debt securities 926 522 959 509
Other debt securities 107 773 110 259
Loans and advances to customers 15 602 615 15 628 489
Own originated loans and advances to customers securitised 871 161 882 335
Other loans and advances 1 899 718 1 776 202
Other securitised assets 2 431 539 2 376 102
Other assets 886 956 881 012
28 503 179 28 397 225
Liabilities
Deposits by banks 2 351 244 2 365 111
Repurchase agreements and cash collateral on securities lent 822 201 826 277
Customer accounts (deposits) 22 510 461 22 530 649
Debt securities in issue 1 459 758 1 413 749
Liabilities arising on securitisation of own originated loans and advances 892 173 892 173
Liabilities arising on securitisation of other assets 1 795 722 1 766 796
Other liabilities 986 764 986 615
Subordinated liabilities 1 409 701 1 412 317
32 228 024 32 193 687
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 20 November 2013.
- The information in the announcement for the six months ended 30 September 2013, which was approved by the board of directors on 20 November
2013, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. The 31 March 2013 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.
- The interim financial statements for the six months ended 30 September 2013 will be posted to shareholders on 29 November 2013.
Investec plc
Ordinary dividend announcement
Registration number: 3633621
Share code: INP
ISIN: GB00BI7BBQ50
Declaration of dividend number 23
In terms of the DLC structure, Investec plc shareholders who are not South African resident shareholders 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 who are South African residents, 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.
Notice is hereby given that an interim dividend number 23 of 8 pence (2012: 8 pence) per ordinary share has been declared by the board in respect of
the six months ended 30 September 2013 payable to shareholders recorded in the members' register of the company at the close of business on Friday,
13 December 2013, which will be paid as follows:
- for non-South African resident Investec plc shareholders, through a dividend payment by Investec plc from income reserves of 8 pence per ordinary
share
- for South African resident shareholders of Investec plc, through a dividend payment by Investec Limited, on the SA DAS share, payable from income
reserves, equivalent to 8 pence per ordinary share
The relevant dates for the payment of dividend number 23 are as follows:
Last day to trade cum-dividend
On the London Stock Exchange (LSE) Tuesday, 10 December 2013
On the Johannesburg Stock Exchange (JSE) Friday, 06 December 2013
Shares commence trading ex-dividend
On the London Stock Exchange (LSE) Wednesday, 11 December 2013
On the Johannesburg Stock Exchange (JSE) Monday, 09 December 2013
Record date (on the JSE and LSE) Friday, 13 December 2013
Payment date (on the JSE and LSE) Friday, 27 December 2013
Share certificates on the South African branch register may not be dematerialised or rematerialised between Monday, 09 December 2013 and Friday,
13 December 2013, both dates inclusive, nor may transfers between the UK and SA registers take place between Monday, 09 December 2013 and
Friday, 13 December 2013, both dates inclusive.
Additional information for South African resident shareholders of Investec plc
- Shareholders registered on the South African register are advised that the distribution of 8 pence, equivalent to a gross dividend of 131 cents
per share, has been arrived at using the Rand/Pound Sterling average buy/sell forward rate, as determined at 11h00 (SA time) on Wednesday,
20 November 2013.
- Investec plc UK tax reference number: 2683967322360
- The issued ordinary share capital of Investec plc is 608 756 343 ordinary shares.
- The dividend paid by Investec Limited to South African resident shareholders on the SA DAS share is subject to South African Dividend Tax ("Dividend
Tax") of 15% (subject to any available exemptions as legislated).
- No Secondary Tax on Companies ("STC") credits have been utilised in respect of the ordinary share dividend declarations.
- Shareholders registered on the South African register who are exempt from paying the Dividend Tax will receive a net dividend of 131 cents per share
paid by Investec Limited on the SA DAS share.
- Shareholders registered on the South African register who are not exempt from paying the Dividend Tax will receive a net dividend of 111.35 cents per
share paid by Investec Limited on the SA DAS share (gross dividend of 131 cents per share less Dividend Tax of 19.65 cents per share).
By order of the board
D Miller
Company Secretary 20 November 2013
Investec Limited
Ordinary share dividend announcement
Registration number: 1925/002833/06
Share code: INL
ISIN: ZAE000081949
Declaration of dividend number 116
Notice is hereby given that an interim dividend number 116 of 131 cents (2012: 112 cents) per ordinary share has been declared by the board from
income reserves in respect of the six months ended 30 September 2013 payable to shareholders recorded in the shareholder's register of the company
at the close of business on Friday, 13 December 2013.
The relevant dates for the payment of dividend number 116 are as follows:
Last day to trade cum-dividend Friday, 06 December 2013
Shares commence trading ex-dividend Monday, 09 December 2013
Record date (on the JSE) Friday, 13 December 2013
Payment date (on the JSE) Friday, 27 December 2013
The interim gross dividend of 131 cents per ordinary share has been determined by converting the Investec plc distribution of 8 pence per ordinary share
into Rands using the Rand/Pounds Sterling average buy/sell forward rate at 11h00 (SA time) on Wednesday, 20 November 2013.
Share certificates may not be dematerialised or rematerialised between Monday, 09 December 2013 and Friday, 13 December 2013, both dates inclusive.
Additional information to take note of:
- The Investec Limited company tax reference number: 9800/181/71/2
- The issued ordinary share capital of Investec Limited is 282 934 529 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).
- No Secondary Tax on credits ("STC") have been utilised in respect of this ordinary share dividend declaration
- Shareholders who are exempt from paying the Dividend Tax will receive a net dividend of 131 cents per ordinary share.
- Shareholders who are not exempt from paying the Dividend Tax will receive a net dividend of 111.35 cents per ordinary share (gross dividend of
131 cents per ordinary share less Dividend Tax of 19.65 cents per ordinary share).
By order of the board
B Coetsee
Company Secretary 20 November 2013
Investec plc
Preference share dividend announcement
Registration number: 3633621
Share code: INPP
ISIN: GB00B19RX541
Non-redeemable non-cumulative non-participating preference shares ("preference shares")
Declaration of dividend number 15
Notice is hereby given that preference dividend number 15 has been declared for the period 01 April 2013 to 30 September 2013 amounting to
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, 06 December 2013.
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 123.56264 cents per share, which has been determined using the Rand/Pound Sterling average buy/sell forward rate as at 11h00 (SA Time) on
Wednesday, 20 November 2013.
The relevant dates relating to the payment of dividend number 15 are as follows:
Last day to trade cum-dividend
On the Channel Islands Stock Exchange (CISX) Tuesday, 03 December 2013
On the Johannesburg Stock Exchange (JSE) Friday, 29 November 2013
Shares commence trading ex-dividend
On the Channel Islands Stock Exchange (CISX) Wednesday, 04 December 2013
On the Johannesburg Stock Exchange (JSE) Monday, 02 December 2013
Record date (on the JSE and CISX) Friday, 06 December 2013
Payment date (on the JSE and CISX) Tuesday, 17 December 2013
Share certificates may not be dematerialised or rematerialised between Monday, 02 December 2013 and Friday, 06 December 2013 both dates
inclusive, nor may transfers between the UK and SA registers may take place between Monday, 02 December 2013 and Friday, 06 December 2013
both dates inclusive.
For SA resident preference shareholders, additional information to take note of:
- Investec plc 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 South African resident shareholders is subject to South African Dividend Tax (Dividend Tax) of 15% (subject
to any available exemptions as legislated).
- No Secondary Tax on Companies ("STC") Credits have been utilised in respect of this preference share dividend declaration.
- The net dividend amounts to 105.02824 cents per preference share for preference shareholders liable to pay the Dividend Tax and 123.56264 cents
per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary 20 November 2013
Investec plc
Rand denominated preference share dividend announcement
Registration number: 3633621
Share code: INPPR
ISIN: GB00B4B0Q974
Rand denominated non-redeemable, non-cumulative, non-participating perpetual preference shares ("preference shares")
Declaration of dividend number 5
Notice is hereby given that preference dividend number 5 has been declared for the period 01 April 2013 to 30 September 2013 amounting to
404.85616 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, 06 December 2013.
The relevant dates relating to the payment of dividend number 5 are as follows:
Last day to trade cum-dividend Friday, 29 November 2013
Shares commence trading ex-dividend Monday, 02 December 2013
Record date Friday, 06 December 2013
Payment date Tuesday, 17 December 2013
Share certificates may not be dematerialised or rematerialised between Monday, 02 December 2013 and Friday, 06 December 2013, both dates
inclusive.
For SA resident preference shareholders, additional information to take note of:
- Investec plc tax reference number: 2683967322360
- The issued preference share capital of Investec plc is 2 275 940 preference shares.
- The dividend paid by Investec plc to South African resident shareholders is subject to South African Dividend Tax (Dividend Tax) of 15% (subject
to any available exemptions as legislated).
- No Secondary Tax on Companies ("STC") Credits have been utilised in respect of this preference share dividend declaration.
- The net dividend amounts to 344.12774 cents per preference share for preference shareholders liable to pay the Dividend Tax and 404.85616
cents per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary 20 November 2013
Investec Limited
Preference share dividend announcement
Registration number: 1925/002833/06
Share code: INPR
ISIN: ZAE000063814
Non-redeemable non-cumulative non-participating preference shares ("preference shares")
Declaration of dividend number 18
Notice is hereby given that preference dividend number 18 has been declared for the period 01 April 2013 to 30 September 2013 amounting to
331.42804 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, 06 December 2013.
The relevant dates for the payment of dividend number 18 are as follows:
Last day to trade cum-dividend Friday, 29 November 2013
Shares commence trading ex-dividend Monday, 02 December 2013
Record date Friday, 06 December 2013
Payment date Tuesday, 17 December 2013
Share certificates may not be dematerialised or rematerialised between Monday, 02 December 2013 and Friday, 06 December 2013, both dates
inclusive.
Additional information to take note of:
- The Investec Limited company 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).
- No Secondary Tax on Companies ("STC") credits have been utilised in respect of this preference share dividend declaration.
- The net dividend amounts to 281.71383 cents per preference share for shareholders liable to pay the Dividend Tax and 331.42804 cents per
preference share for preference shareholders exempt from paying the dividend tax.
By order of the board
B Coetsee
Company Secretary 20 November 2013
Date: 21/11/2013 09:00:00 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.
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