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Investec plc / Investec Limited – Interim Management Statement released on 31 July 2014
Investec Limited Investec plc
Incorporated in the Republic of South Africa Incorporated in England and Wales
Registration number 1925/002833/06 Registration number 3633621
JSE share code: INL LSE share code: INVP
NSX share code: IVD JSE share code: INP
BSE share code: INVESTEC ISIN: GB00B17BBQ50
ISIN: ZAE000081949
Investec (comprising Investec plc and Investec Limited) – Interim Management Statement released
on 31 July 2014
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 2014 and the corresponding period in the previous year.
Performance overview
Wealth & Investment reported strong growth in operating profit. Asset Management reported operating profit
marginally ahead of the prior year. Both divisions benefited from higher levels of average funds under
management and combined net inflows of GBP3.6 billion. The Specialist Banking business reported a solid
increase in operating profit with both the South African and UK businesses showing an improved
performance.
Whilst overall group results increased, they have been impacted by the depreciation of the Rand: Pounds
Sterling exchange rate of approximately 22% over the period.
Salient features of the three month period to 30 June 2014:
- Total operating income (excluding depreciation on operating leased assets) is 1% ahead of the prior
year. An increase of 11% on a currency neutral basis.
- Impairment losses on loans and advances decreased by 17%. A decrease of 10% on a currency
neutral basis.
- Operating costs increased by 1% compared to the prior year. An increase of 9% on a currency
neutral basis.
- Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after
total non-controlling interests is 10% ahead of the prior year. An increase of 25% on a currency
neutral basis.
- Recurring income as a percentage of total operating income amounted to approximately 78% (2013:
76%), supported by higher average funds under management.
- The group had approximately GBP8.0 billion of cash and near cash available to support its activities
(Investec Limited:R75.3 billion; Investec plc: GBP3.8 billion).
- Since 31 March 2014 (the end of the group’s financial year):
o Third party assets under management increased by 5% to GBP114.9 billion – an increase of
6% on a currency neutral basis.
o Customer accounts (deposits) decreased by 2% to GBP22.3 billion – flat on a currency
neutral basis.
o Core loans and advances remained flat at GBP17.2 billion - an increase of 2% on a currency
neutral basis.
- Loans and advances as a percentage of customer deposits were 73.6% (31 March 2014:72.0%).
Strategic review
Investec Bank (Australia) Limited
On 11 April 2014 the group announced that it had entered into an agreement with Bank of Queensland to
sell Investec Bank (Australia) Limited’s Professional Finance business, Asset Finance and Leasing
businesses and its deposit book. All conditions to the sale were met including the group and the buyer
obtaining all relevant regulatory approvals for this transaction, and the sale is effective today, 31 July 2014.
Kensington
The potential sale of the group's Kensington business remains on track and further information will be
provided in due course.
The group will hold a pre-close briefing on 18 September 2014.
On behalf of the board
Fani Titi (Joint Chairman), Sir David Prosser (Joint 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. 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 2014.
3. The neutral currency calculation for the core earnings drivers assumes the Rand:Pound and Australian
Dollar:Pound closing exchange rates remain the same as at 30 June 2014 when compared to 31 March
2014. The neutral currency calculation for operating profit assumes the Rand:Pound and Australian
Dollar:Pound average exchange rates for the 3 month period to 30 June 2014 remain the same as when
compared to the 3 month period to 30 June 2013.
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-14 31-Mar-14 30-Jun-13
Currency Period Average Period Average Period Average
end end end
per GBP1.00
South African Rand 18.19 17.80 17.56 16.12 15.09 14.56
Australian Dollar 1.81 1.81 1.80 1.72 1.66 1.55
Euro 1.25 1.23 1.21 1.19 1.17 1.18
US Dollar 1.71 1.68 1.67 1.59 1.52 1.54
5. The following disclosures are made with respect to Basel quarterly disclosure requirements:
The group holds capital in excess of regulatory requirements 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.
Investec Investec
plc^* IBP^* IBAL^* Limited^* IBL^*
As at 30 June 2014 GBP 'mn GBP 'mn A$'mn ZAR 'mn ZAR 'mn
Common equity tier 1 capital before deductions 1,832 1,848 551 25,197 25,386
Deductions (628) (479) (152) (842) (79)
Common equity tier 1 capital 1,204 1,369 399 24,355 25,307
Additional tier 1 capital 234 - - 3,756 1,227
Tier 1 capital 1,438 1,369 399 28,111 26,534
Tier 2 capital 659 638 113 9,924 10,778
Total regulatory capital 2,097 2,007 512 38,035 37,312
Risk-weighted assets 13,608 12,665 2,838 250,073 240,576
Capital ratios
Common equity tier 1 ratio 8.8% 10.8% 14.1% 9.7% 10.5%
Tier 1 ratio 10.6% 10.8% 14.1% 11.2% 11.0%
Total capital ratio 15.4% 15.8% 18.0% 15.2% 15.5%
^ The capital adequacy disclosures follow Investec's normal basis of presentation so as to show a consistent basis of calculation across
the jurisdictions in which the group operates. For Investec plc this does not include the deduction of foreseeable dividends when
calculating common equity tier 1 as now required under the Capital Requirements Regulation and European Banking Authority technical
standards. The impact of the proposed final ordinary dividend totaling £47 million for Investec plc for the year ended 31 March 2014
would be around 30bps.
* Where: IBP is Investec Bank plc consolidated. IBAL is Investec Bank (Australia) Limited and IBL is Investec Bank Limited. The
information for IBP includes IBAL. The information for Investec plc includes the information for IBP. The information for Investec Limited
includes the information for IBL.
Timetable:
Pre-close briefing: 18 September 2014
Interim results: 30 September 2014
Release of interim results: 20 November 2014
For further information please contact:
Investec Investor Relations
UK: +44 (0) 207 597 5546
South Africa: +27 (0) 11 286 7070
investorrelations@investec.com
Newgate Communications (UK PR advisers)
Jason Nisse / Alistair Kellie
+44 (0) 20 7680 6559
+44 (0) 7769 688 618
Brunswick (SA PR advisers)
Cecilia de Almeida
+27 (0) 11 502 7300
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 8 300 employees.
Investec focuses on delivering distinctive profitable solutions for its clients in three core areas of activity
namely, Asset Management, Wealth & Investment and Specialist Banking.
In July 2002 the Investec group implemented a dual listed company structure with listings on the London and
Johannesburg Stock Exchanges. The combined group’s current market capitalisation is approximately
GBP4.6 billion.
31 July 2014
Sponsor
Investec Bank Limited
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