Wrap Text
Unaudited combined consolidated financial results for the year ended 31 March 2015
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE share code: INP
LSE share code: INVP
ISIN: GB00B17BBQ50
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06)
JSE share code: INL
NSX share code: IVD
BSE share code: INVESTEC
ISIN: ZAE000081949
Investec plc and Investec Limited
(combined results)
Unaudited combined consolidated
financial results for the year ended
31 March 2015
Investec, the international specialist bank and asset manager, announces today its results
for the year ended 31 March 2015
This announcement covers the results of the Investec group for the year ended
31 March 2015.
BASIS OF PRESENTATION
Statutory basis
Statutory information is set out in a separate section in this announcement.
The sale of businesses during the financial year (further detail is provided in
the "Notes to the commentary section") have had a significant effect on the
comparability of the group's financial position and results. As a result, comparison
on a statutory basis of the 2015 results with 2014 would be less meaningful.
Ongoing basis
In order to present a more meaningful view of the group's performance, the results
are presented on an ongoing basis excluding items that in management's view
could distort the comparison of performance between periods. Based on this
principle, the following items are excluded from underlying profit:
- the results of the businesses sold i.e. Investec Bank (Australia) Limited, the
UK Kensington business and the Start (Irish) mortgage business;
- the remaining legacy business in the UK.
A reconciliation between the statutory and ongoing income statement is provided.
Unless the context indicates otherwise, all comparatives included in the
commentary relate to the year-ended 31 March 2014. Group results have been
negatively impacted by the depreciation of the Rand: Pounds Sterling exchange
rate of 10.5% over the period. Amounts represented on a currency neutral basis
for income statement items assume that the average exchange rates of the
group's relevant exchange rates, remain the same for the year to 31 March 2015
when compared to the year to 31 March 2014.
Overview of the results
DELIVERING ON THE GROUP'S STRATEGIC OBJECTIVES – CONTINUED TO
GROW CORE FRANCHISES AND SIMPLIFIED THE SPECIALIST BANKING
BUSINESS THROUGH RESTRUCTURING AND STRATEGIC SALES
- Continued investments in Asset Management and Wealth & Investment
platforms – supported net inflows in excess of GBP5.8 billion.
- The core corporate banking franchise in both the UK and South Africa
performed well, benefiting from increased client activity.
- The Private Banking and Wealth & Investment businesses in South Africa
further entrenched their position as one of the leading integrated private client
businesses in the country, successfully launching a number of new products,
broadening their client base and leveraging their global platform ("One Place").
- The UK Private Banking business enhanced its offering through the launch
of its Private Bank Account and the development of its online and digital
platforms.
- Geographical and operational diversity continued to support a high recurring
income base with a sound balance of earnings generated between capital
light businesses and capital intensive businesses.
STATUTORY OPERATING PROFIT SALIENT FEATURES
- Statutory operating profit before goodwill, acquired intangibles, non-operating
items and taxation and after other non-controlling interests ("operating profit")
increased 9.4% to GBP493.2 million (2014: GBP450.7 million) – an increase
of 18.0% on a currency neutral basis.
- Statutory adjusted earnings per share (EPS) before goodwill, acquired
intangibles and non-operating items increased 4.0% from 37.9 pence to
39.4 pence – an increase of 12.4% on a currency neutral basis.
- The group posted a non-operating net loss after tax of GBP113.7 million on
the sale of subsidiaries.
SOLID PERFORMANCE FROM THE ONGOING BUSINESS
- Ongoing operating profit increased 15.0% to GBP580.7 million
(2014: GBP504.9 million) – an increase of 22.6% on a currency neutral basis.
- Ongoing adjusted EPS before goodwill, acquired intangibles and non-
operating items increased 10.2% from 43.1 pence to 47.5 pence – an
increase of 17.9% on a currency neutral basis.
- Third party assets under management increased 13.7% to GBP124.1 billion
(2014: GBP109.2 billion).
- Customer accounts (deposits) increased 7.3% to GBP22.6 billion
(2014: GBP21.1 billion).
- Core loans and advances increased 15.4% to GBP16.5 billion
(2014: GBP14.3 billion).
CONTINUED TO ACTIVELY MANAGE DOWN THE UK LEGACY PORTFOLIO
- The legacy portfolio reduced from GBP3.4 billion at 31 March 2014
to GBP0.7 billion largely through strategic sales (mentioned above),
redemptions, write-offs and transfers to the ongoing book on the back
of improved performance in these loans.
- The legacy business reported a loss before taxation of GBP107.7 million
(2014: GBP69.1 million) as the group accelerated the clearance of the
portfolio, which resulted in an increase in impairments on these assets.
MAINTAINED A SOUND BALANCE SHEET
- Capital remained well in excess of current regulatory requirements. Investec
Limited should achieve a common equity tier 1 ratio target of above 10%
by March 2016 and Investec plc already achieves this target. The group is
comfortable with its common equity tier 1 ratio target at a 10% level, as its
leverage ratios for both Investec Limited and Investec plc are well above 7%.
- Liquidity remained strong with cash and near cash balances amounting to
GBP10.0 billion.
DIVIDEND INCREASE OF 5.3%
- The board proposes a final dividend of 11.5 pence per ordinary share
equating to a full year dividend of 20.0 pence (2014: 19.0 pence) resulting in a
dividend cover based on the group's adjusted EPS before goodwill and non-
operating items of 2.0 times (2014: 2.0 times), consistent with the group's
dividend policy.
Stephen Koseff, Chief Executive Officer of Investec said:
"The group is in the best position it has been since the mid-2000s. We have
delivered on all the strategic initiatives set out in 2013 and can now focus on
growing our three core businesses, Asset Management, Wealth & Investment and
Specialist Banking."
Bernard Kantor, Managing Director of Investec said:
"The ongoing results reflect a very satisfactory year. The performance of Wealth
& Investment and Asset Management continues to reflect the quality of the
businesses. Specialist Banking in South Africa had an excellent year while in
London, the corporate business is performing well and the private bank has dealt
with the over-riding majority of its legacy issues."
FOR FURTHER INFORMATION PLEASE CONTACT:
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
Marina Bidoli
+27 (0) 11 502 7405
Newgate (UK PR advisers)
Jonathan Clare/Jason Nisse/Alistair Kellie/Andy Jones
+44 (0) 20 7680 6551
PRESENTATION/CONFERENCE CALL DETAILS
A presentation on the results will commence at 9:00 UK time/10:00 SA time.
Viewing options as below:
- Live on South African TV (Business day TV channel 412 DSTV)
- A live and delayed video webcast at www.investec.com
- Toll free numbers for the telephone conference facilities
- SA participants: 0800 200 648
– UK participants: 0808 162 4061
– rest of Europe and other participants: +800 246 78 700
– Australian participants: 1800 350 100
– USA participants: 1855 481 6362
ABOUT INVESTEC
Investec is an international specialist bank and asset manager that provides a
diverse range of financial products and services to a niche client base in two
principal markets, the United Kingdom and South Africa 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 GBP5.4 billion.
The commentary below largely focuses on the results of the ongoing business.
OVERALL GROUP PERFORMANCE – ONGOING BASIS
Operating profit before goodwill, acquired intangibles, non-operating items and
taxation and after other non-controlling interests ("operating profit") increased
15.0% to GBP580.7 million (2014: GBP504.9 million) – an increase of 22.6% on
a currency neutral basis. Group results have been negatively impacted by the
depreciation of the average Rand: Pounds Sterling exchange rate of 10.5% over
the period. The combined South African businesses reported operating profit
28.7% ahead of the prior period in Rand, whilst the combined UK and Other
businesses posted a 11.7% increase in operating profit in Pounds Sterling.
Wealth & Investment's operating profit increased by 19.2%. Asset Management
reported operating profit 3.6% ahead of the prior period. Both divisions benefited
from higher levels of average funds under management and net inflows. Operating
profit in the Specialist Banking business increased 18.4% largely due to strong
performances from the South African banking business and the UK Corporate
and Institutional business, negatively impacted by a poor performance from the
Hong Kong investment portfolio.
Salient features of the year under review are:
- Adjusted earnings attributable to shareholders before goodwill, acquired
intangibles and non-operating items increased 10.2% to GBP409.9 million
(2014: GBP371.9 million) – an increase of 17.9% on a currency neutral basis.
- Adjusted earnings per share (EPS) before goodwill, acquired intangibles and
non-operating items increased 10.2% from 43.1 pence to 47.5 pence – an
increase of 17.9% on a currency neutral basis.
- Recurring income as a percentage of total operating income amounted to
71.9% (2014: 67.9%).
- The credit loss charge as a percentage of average gross core loans and
advances amounted to 0.26% (2014: 0.42%), with impairments decreasing
by 38.8% to GBP39.4 million.
- Third party assets under management increased 13.7% to GBP124.1 billion
(2014: GBP109.2 billion).
- Customer accounts (deposits) increased 7.3% to GBP22.6 billion
(2014: GBP21.1 billion).
- Core loans and advances increased 15.4% to GBP 16.5 billion (2014: GBP 14.3 billion).
BUSINESS UNIT REVIEW – ONGOING BASIS
Asset Management
Asset Management increased operating profit by 3.6% to GBP149.0 million (2014:
GBP143.8 million) benefiting from higher average funds under management
and net inflows of GBP3.1 billion. Total funds under management amount to
GBP77.5 billion (2014: GBP68.0 billion). Operating margin has remained in line
with the prior year at 34.2%.
Wealth & Investment
Wealth & Investment operating profit increased by 19.2% to GBP78.8 million
(2014: GBP66.1 million) supported by higher average funds under management,
net inflows of GBP2.7 billion and improved operating margins. Total funds under
management amount to GBP46.1 billion (2014: GBP40.1 billion). The division in
the UK has benefited from the investment in its platforms and the employment of
additional professional investment managers. The business in South Africa has
continued to successfully leverage off the division's global investment platform and
the group's integrated Private Client offering ("One Place").
Specialist Banking
Specialist Banking operating profit increased by 18.4% to GBP392.3 million
(2014: GBP331.4 million).
South Africa reported a strong increase in net interest income driven by loan
book growth and a positive endowment impact. The unlisted investment 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. Corporate activity remained broadly in line with the prior
period. The business reported a decline in impairments with the credit loss ratio
on average core loans and advances improving to 0.28% (2014: 0.42%).
The UK and Other businesses reported an improvement in cost of funding and
experienced strong growth in corporate fees, notably in the corporate finance and
corporate treasury teams. Loan book growth was solid and impairments declined
over the year, with the credit loss ratio amounting to 0.20% (2014: 0.50%).
Results were negatively impacted by lower returns earned on the Hong Kong
investment portfolio.
Further information on key developments within each of the business units is
provided in a detailed report published on the group's website:
http://www.investec.com
Group costs
These largely relate to group brand and marketing costs and a portion of
executive and support functions which are associated with group level activities.
These costs are not incurred by the operating divisions and are necessary to
support the operational functioning of the group. Historically, these numbers
were reflected solely in the results of the Specialist Bank and the group has now
decided to reflect these separately. These costs amounted to GBP39.3 million
(2014: GBP36.4 million).
FINANCIAL STATEMENT ANALYSIS – ONGOING BASIS
Total operating income
Total operating income before impairment losses on loans and advances
increased by 5.5% to GBP1,887.1 million (2014: GBP1,789.1 million).
Net interest income increased by 8.9% to GBP539.0 million (2014:
GBP495.0 million) largely due to book growth, lower cost of funding in the UK and
a positive endowment impact in South Africa.
Net fee and commission income increased by 12.5% to GBP1,090.4 million
(2014: GBP969.5 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 benefited from a solid performance from the
corporate finance and corporate treasury businesses, notably in the UK, and the
private banking business in South Africa continued to perform well.
Investment income decreased by 19.4% to GBP151.8 million (2014:
GBP188.4 million). The group's unlisted investment portfolio in the UK and
South Africa delivered a solid performance. This was offset however, by a poor
performance from the Hong Kong portfolio.
Trading income arising from customer flow increased by 3.0% to GBP106.6 million
(2014: GBP103.5 million) whilst trading income from other trading activities
reflected a loss of GBP13.0 million (2014: profit of GBP14.2 million) due to foreign
currency losses largely offset in non-controlling interests as discussed below.
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 GBP64.3 million to
GBP39.4 million. Since 31 March 2014 gross defaults have improved from
GBP256.4 million to GBP247.1 million. The percentage of default loans (net of
impairments but before taking collateral into account) to core loans and advances
amounted to 0.84% (2014: 1.01%).
Operating costs
The ratio of total operating costs to total operating income was 66.5%
(2014: 67.5%). Total operating costs grew by 4.2% to GBP1,254.0 million
(2014: GBP1,203.6 million) reflecting: an increase in headcount in the asset
management and wealth management businesses to support growth initiatives;
inflationary increases in fixed costs in the Specialist Bank in home currencies;
an increase in variable remuneration given increased profitability in certain
businesses; a reduction in costs arising from the restructure of the remaining
Australian businesses.
Taxation
The effective tax rate amounts to 19.6 % (2014:17.1%).
Profit attributable to non-controlling interests
Profit attributable to non-controlling interests mainly comprises:
- GBP18.2 million profit attributable to non-controlling interests in the Asset
Management business.
- GBP31.7 million profit attributable to non-controlling interests in the Investec
Property Fund Limited.
- A reduction of GBP20.7 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 2014:
- Total shareholders' equity (including non-controlling interests) increased by
0.6% to GBP4.0 billion.
- Net asset value per share decreased 3.0% to 364.9 pence and net tangible
asset value per share (which excludes goodwill and intangible assets)
decreased by 0.3% to 308.1 pence.
- The return on adjusted average shareholders' equity of the ongoing business
increased from 13.1% to 13.8%.
Liquidity and funding
As at 31 March 2015 the group held GBP10.0 billion in cash and near cash
balances (GBP5.0 billion in Investec plc and R88.7 billion in Investec Limited)
which amounted to 38.2% of its liability base. Loans and advances to customers
as a percentage of customer deposits amounted to 74.0% (2014: 72.0%).
The group has significant surplus cash in its UK business following the sale
of Kensington and the group is actively focusing on reducing both cash and
liquidity back to normalised levels through asset growth and further liability
management, while maintaining its overall conservative approach to liquidity risk
management. The group comfortably meets Basel liquidity requirements for the
Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) in the UK.
In South Africa, the group continued to build its structural liquidity cash resources
to improve its Basel III LCR in light of regulations which were implemented from
1 January 2015. Investec Bank Limited (Solo basis) ended the year with the
three-month average of its LCR at 100.3%, which is well ahead of the minimum
levels required. Further detail with respect to the bank's LCR ratio in South Africa
is provided on the website.
Capital adequacy and leverage ratios
The group is targeting a minimum common equity tier one capital ratio above
10% 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.
The group's anticipated fully loaded Basel III common equity tier 1 capital
adequacy ratios in both Investec plc and Investec Limited are reflected in the table
below.
31 Mar 2015 31 Mar 2014
Investec plc^
Capital adequacy ratio 16.7% 15.3%
Tier 1 ratio 12.0% 10.5%
Common equity tier 1 ratio 10.2% 8.8%
Common equity tier 1 ratio
(anticipated Basel III "fully loaded"*) 10.2% 8.8%
Leverage ratio (current) 7.7% 7.4%
Leverage ratio (anticipated Basel III
"fully loaded"*) 6.6% 6.2%
Investec Limited
Capital adequacy ratio 14.7% 14.9%
Tier 1 ratio 11.3% 11.0%
Common equity tier 1 ratio 9.6% 9.4%
Common equity tier 1 ratio
(anticipated Basel III "fully loaded"*) 9.5% 9.3%
Leverage ratio (current*) 8.1% 7.8%
Leverage ratio
(anticipated Basel III "fully loaded"*) 7.2% 6.7%
*Based on the group's understanding of current and draft regulations.
"Fully loaded" is based on Basel III capital requirements as fully phased in
by 2022.
^The capital adequacy disclosures follow Investec's normal basis of presentation
so as to show a consistent basis of calculation across the jurisdictions in
which the group operates. For Investec plc this does not include the deduction
of foreseeable dividends when calculating CET1 as now required under the
CRR and EBA technical standards. The impact of the final proposed ordinary and
preference dividends totalling GBP57 million for Investec plc would be around
50 bps.
LEGACY BUSINESS – OVERVIEW OF RESULTS
The group's legacy portfolio in the UK has been actively managed down from
GBP3.4 billion at 31 March 2014 to GBP0.7 billion largely through strategic
sales (mentioned above), redemptions, write-offs and transfers (at the end of
the period) to the ongoing book on the back of improved performance in these
loans. The total legacy business over the period reported a loss before taxation of
GBP107.7 million (2014: GBP69.1 million) as the group accelerated the clearance
of the portfolio, which resulted in an increase in impairments on these assets.
The remaining legacy portfolio will continue to be managed down as the group
sees opportunities to clear the portfolio. Management believe that the remaining
legacy book will still take three to five years to wind down. Total net defaults in the
legacy book amount to GBP218 million.
OUTLOOK
Investec has successfully executed on its key strategic initiatives embarked upon
over the past two years. The resultant simplification enables the group to enhance
the operational focus to grow and develop its core businesses, so that the right
outcomes can be delivered for clients and stakeholders including acceptable
returns for shareholders.
This combined with the opportunities in Investec's two principle markets, leads
the group to feel positive about the year ahead; notwithstanding the structural
challenges in the South African economy and the intensified regulatory landscape.
On behalf of the boards of Investec plc and Investec Limited
Fani Titi Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
20 May 2015
NOTES TO THE COMMENTARY SECTION ABOVE
PRESENTATION OF FINANCIAL INFORMATION
Investec operates under a Dual Listed Companies (DLC) structure with primary
listings of Investec plc on the London Stock Exchange and Investec Limited on
the JSE Limited.
In terms of the contracts constituting the DLC structure, Investec plc and Investec
Limited effectively form a single economic enterprise in which the economic
and voting rights of ordinary shareholders of the companies are maintained in
equilibrium relative to each other. The directors of the two companies consider
that for financial reporting purposes, the fairest presentation is achieved by
combining the results and financial position of both companies.
Accordingly, the year-end results for Investec plc and Investec Limited present
the results and financial position of the combined DLC group under International
Financial Reporting Standards (IFRS), denominated in Pounds Sterling. In the
commentary above, all references to Investec or the group relate to the combined
DLC group comprising Investec plc and Investec Limited.
FOREIGN CURRENCY IMPACT
The group's reporting currency is Pounds Sterling. Certain of the group's
operations are conducted by entities outside the UK. The results of operations
and the financial position of the individual companies are reported in the local
currencies in which they are domiciled, including Rands, Australian Dollars, Euros
and US Dollars. These results are then translated into Pounds Sterling at the
applicable foreign currency exchange rates for inclusion in the group's combined
consolidated financial statements. In the case of the income statement, the
weighted average rate for the relevant period is applied and, in the case of the
balance sheet, the relevant closing rate is used.
The following table sets out the movements in certain relevant exchange rates
against Pounds Sterling over the period:
Year to Year to
31 Mar 2015 31 Mar 2014
Currency per Period Period
GBP1.00 end Average end Average
South African Rand 17.97 17.82 17.56 16.12
Australian Dollar 1.95 1.85 1.80 1.72
Euro 1.38 1.28 1.21 1.19
US Dollar 1.49 1.62 1.67 1.59
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 10.5% and the
closing rate has depreciated by 2.3% since 31 March 2014.
SALE OF INVESTEC BANK (AUSTRALIA) LIMITED
The sale of Investec Bank (Australia) Limited's Professional Finance and Asset
Finance and Leasing businesses and its deposit book to Bank of Queensland
Limited was effective 31 July 2014 for cash proceeds of GBP122 million.
This has resulted in the derecognition of approximately GBP1.7 billion of assets
and approximately GBP1.7 billion of liabilities associated with the businesses
sold. The group continues to have a presence in Australia, focusing on its core
activities of Specialised Finance, Corporate Advisory, Property Fund Management
and Asset Management. The remaining business will operate as a non-banking
subsidiary of the Investec group. As a result, the group has decided to no longer
report the activities of its Australian businesses separately with these activities
now reported under the "UK and Other" geographical segment and the "UK and
Other" Specialist Banking segment.
SALES OF KENSINGTON GROUP PLC AND START MORTGAGE
HOLDINGS LIMITED
On 9 September 2014 the group announced the sale of its UK intermediated
mortgage business Kensington Group plc ("Kensington") together with
certain other Investec mortgage assets to funds managed by Blackstone
Tactical Opportunities Advisors L.L.C. and TPG Special Situations Partners for
GBP180 million in cash based on a tangible net asset value of the business
of GBP165 million at 31 March 2014. This transaction became effective on
30 January 2015.
On 15 September 2014 the group announced the sale of its Irish intermediated
mortgage business Start Mortgage Holdings Limited ("Start") together with certain
other Irish mortgage assets to an affiliate of Lone Star Funds. This transaction
became effective on 4 December 2014.
This has resulted in the derecognition of approximately GBP4.1 billion of assets
and approximately GBP2 billion of external liabilities associated with these
businesses sold.
A NET LOSS ON SALE OF THESE SUBSIDIARIES WAS RECORDED
The loss on sale of subsidiaries reflected in the statutory income statement
comprises a net profit on the sale of Investec Bank (Australia) Limited offset by a
net loss on the sale of the Kensington UK and Start Irish operations.
The net loss after taxation can be analysed further as follows:
GBP'million
Net loss before goodwill and taxation (28.1)
Goodwill (64.9)
Net loss on sale of subsidiaries (93.0)
Related tax expense (20.7)
Net loss after tax (113.7)
ACCOUNTING POLICIES AND DISCLOSURES
These unaudited summarised combined consolidated financial results have been
prepared in terms of the recognition and measurement criteria of International
Financial Reporting Standards, and the presentation and disclosure requirements
of IAS 34, (Interim Financial Reporting).
The accounting policies applied in the preparation of the results for the year ended
31 March 2015 are consistent with those adopted in the financial statements for
the year ended 31 March 2014 except as noted below.
IFRIC 21 ‘LEVIES'
The group has adopted IFRIC 21 ‘Levies' from 1 April 2014. The cumulative
impact of the restatement as at 31 March 2013 is a decrease in operating costs
and other liabilities of GBP4.7 million and an increase in taxation on operating
profit before goodwill and deferred taxation liabilities of GBP1.0 million. The net
impact on retained income at 31 March 2014 is an increase of GBP2.8 million.
The financial results have been prepared under the supervision of Glynn Burger,
the Group Risk and Finance Director. The financial statements for the year ended
31 March 2015 will be posted to stakeholders on 30 June 2015. These accounts
will be available on the group's website on the same date.
PROVISO
- Please note that matters discussed in this announcement may contain
forward looking statements which are subject to various risks and
uncertainties and other factors, including, but not limited to:
- the further development of standards and interpretations under IFRS
applicable to past, current and future periods, evolving practices with regard
to the interpretation and application of standards under IFRS.
- domestic and global economic and business conditions.
- market related risks.
- A number of these factors are beyond the group's control.
- These factors may cause the group's actual future results, performance
or achievements in the markets in which it operates to differ from those
expressed or implied.
- Any forward looking statements made are based on the knowledge of the
group at 20 May 2015.
- The information in the announcement for the year ended 31 March 2015,
which was approved by the board of directors on 20 May 2015, does not
constitute statutory accounts as defined in Section 435 of the UK Companies
Act 2006. The 31 March 2014 financial statements were filed with the
registrar and were unqualified with the audit report containing no statements
in respect of sections 498(2) or 498(3) of the UK Companies Act.
- This announcement is available on the group's website: www.investec.com
Ongoing financial information
Ongoing summarised income statement
for the year to 31 March % Variance
GBP'000 2015 2014 change amount
Net interest income 539 041 495 043 8.9% 43 998
Net fee and commission income 1 090 435 969 517 12.5% 120 918
Investment income 151 848 188 366 (19.4%) (36 518)
Trading income arising from
– customer flow 106 588 103 514 3.0% 3 074
– balance sheet management and other trading activities (13 041) 14 158 (192.1%) (27 199)
Other operating income 12 188 18 464 (34.0%) (6 276)
Total operating income before impairment losses on loans and advances 1 887 059 1 789 062 5.5% 97 997
Impairment losses on loans and advances (39 352) (64 326) (38.8%) 24 974
Operating income 1 847 707 1 724 736 7.1% 122 971
Operating costs (1 254 009) (1 203 551) 4.2% (50 458)
Depreciation on operating leased assets (1 294) (5 446) (76.2%) 4 152
Operating profit before goodwill and acquired intangibles 592 404 515 739 14.9% 76 665
Profit attributable to other non-controlling interests (11 701) (10 849) 7.9% (852)
Profit attributable to Asset Management non-controlling interests (18 184) (11 031) 64.8% (7 153)
Operating profit before taxation 562 519 493 859 13.9% 68 660
Taxation (116 182) (88 181) 31.8% (28 001)
Preference dividends accrued (36 427) (33 812) 7.7% (2 615)
Adjusted attributable earnings to shareholders 409 910 371 866 10.2% 38 044
Number of weighted average shares – (million) 862.7 862.6
Adjusted earnings per share (pence) 47.5 43.1 10.2%
Cost to income ratio 66.5% 67.5%
Segmental geographical and business analysis of operating profit before goodwill, acquired intangibles,
non-operating items, taxation and after other non-controlling interests
for the year to 31 March UK Southern Total
GBP'000 and Other Africa group
2015
Asset Management 75 491 73 484 148 975
Wealth & Investment 56 871 21 910 78 781
Specialist Banking 129 341 262 918 392 259
261 703 358 312 620 015
Group costs (30 048) (9 264) (39 312)
Total group 231 655 349 048 580 703
Other non-controlling interest – equity 11 701
Operating profit 592 404
2014
Asset Management 67 585 76 234 143 819
Wealth & Investment 46 065 20 034 66 099
Specialist Banking 121 491 209 925 331 416
235 141 306 193 541 334
Group costs (27 672) (8 772) (36 444)
Total group 207 469 297 421 504 890
Other non-controlling interest – equity 10 849
Operating profit 515 739
Reconciliation from statutory summarised income statement to ongoing summarised income statement
Removal of:
UK legacy
business Sale Sale
for the year to 31 March 2015 Statutory excluding assets assets Ongoing
(GBP'000) as disclosed sale assets UK Australia business
Net interest income 634 977 12 526 71 143 12 267 539 041
Net fee and commission income 1 089 043 756 (4 876) 2 728 1 090 435
Investment income 128 334 (16 204) (5 443) (1 867) 151 848
Trading income arising from
– customer flow 106 313 350 (415) (210) 106 588
– balance sheet management and other trading activities (13 424) 19 (248) (154) (13 041)
Other operating income 12 236 – – 48 12 188
Total operating income before impairment losses on
loans and advances 1 957 479 (2 553) 60 161 12 812 1 887 059
Impairment losses on loans and advances (128 381) (83 468) (4 085) (1 476) (39 352)
Operating income 1 829 098 (86 021) 56 076 11 336 1 847 707
Operating costs (1 322 705) (21 648) (34 245) (12 803) (1 254 009)
Depreciation on operating leased assets (1 535) – (241) – (1 294)
Operating profit before goodwill and acquired intangibles 504 858 (107 669) 21 590 (1 467) 592 404
Profit attributable to other non-controlling interests (11 701) – – – (11 701)
Profit attributable to Asset Management non-controlling interests (18 184) – – – (18 184)
Operating profit before taxation 474 973 (107 669) 21 590 (1 467) 562 519
Taxation* (99 023) 21 103 (4 232) 288 (116 182)
Preference dividends accrued (36 427) – – – (36 427)
Adjusted attributable earnings to shareholders 339 523 (86 566) 17 358 (1 179) 409 910
Number of weighted average shares – (million) 862.7 862.7
Adjusted earnings per share (pence) 39.4 47.5
Cost to income ratio 67.6% 66.5%
*Applying the group effective taxation rate of 19.6%
Removal of:
UK legacy
business Sale Sale
for the year to 31 March 2014 Statutory excluding assets assets Ongoing
(GBP'000) as disclosed sale assets UK Australia business
Net interest income 651 679 19 355 94 715 42 566 495 043
Net fee and commission income 989 421 8 981 749 10 174 969 517
Investment income 166 809 (11 793) (9 764) – 188 366
Trading income arising from
– customer flow 103 914 695 (625) 330 103 514
– balance sheet management and other trading activities 10 587 (1 762) (875) (934) 14 158
Other operating income 18 554 – – 90 18 464
Total operating income before impairment losses on
loans and advances 1 940 964 15 476 84 200 52 226 1 789 062
Impairment losses on loans and advances (166 152) (59 157) (38 898) (3 771) (64 326)
Operating income 1 774 812 (43 681) 45 302 48 455 1 724 736
Operating costs (1 307 243) (25 370) (41 136) (37 186) (1 203 551)
Depreciation on operating leased assets (6 044) – (598) – (5 446)
Operating profit before goodwill and acquired intangibles 461 525 (69 051) 3 568 11 269 515 739
Profit attributable to other non-controlling interests (10 849) – – – (10 849)
Profit attributable to Asset Management non-controlling interests (11 031) – – – (11 031)
Operating profit before taxation 439 645 (69 051) 3 568 11 269 493 859
Taxation** (78 910) 11 808 (610) (1 927) (88 181)
Preference dividends accrued (33 812) – – – (33 812)
Adjusted attributable earnings to shareholders 326 923 (57 243) 2 958 9 342 371 866
Number of weighted average shares – (million) 862.6 862.6
Adjusted earnings per share (pence) 37.9 43.1
Cost to income ratio 67.6% 67.5%
**Applying the group effective taxation rate of 17.1%
Where:
- The UK legacy business is as described in the "Commentary section."
- Sale assets UK refer to the sale of Kensington and Start as discussed in the "Notes to the commentary section."
- Sale assets Australia refer to the sale of Investec (Bank) Australia Limited as discussed in the "Notes to the commentary section."
Statutory financial information
Salient financial features
Results in Pounds Sterling Results in Rand
Actual Actual Neutral Results Results
as reported as reported Actual currency Neutral in Rand in Rand
Year to Year to as reported Year to currency Year to Year to
31 March 31 March % 31 March % 31 March 31 March %
2015 2014 change 2015 change 2015 2014 change
Operating profit before
taxation* (million) 493 451 9.4% 532 18.0% 8 817 7 309 20.6%
Earnings attributable to
shareholders (million) 246 331 (25.7%) 273 (17.5%) 3 970 5 329 (25.5%)
Adjusted earnings
attributable to
shareholders** (million) 340 327 4.0% 368 12.5% 6 076 5 293 14.8%
Adjusted earnings
per share** 39.4 37.9 4.0% 42.6 12.4% 703.8 613.8 14.7%
Ongoing adjusted
earnings per share** 47.5 43.1 10.2% 51.1 18.6% 850.3 697.9 21.8%
Basic earnings per share 24.4 34.3 (28.9%) 27.3 (20.4%) 387.3 552.1 (29.8%)
Headline earnings
per share 35.8 33.8 5.9 38.5 13.6% 640.3 547.7 16.9%
Dividends per share 20.0p 19.0p 5.3% 362c 327c 10.7%
Cost to income ratio 67.6% 67.6%
Actual Actual Neutral Results Results
as reported as reported Actual currency Neutral in Rand in Rand
At At as reported At currency At At
31 March 31 March % 31 March % 31 March 31 March %
2015 2014 change 2015 change 2015 2014 change
Net asset value per share 364.9 376.0 (3.0%) 365.2 (2.9%) 6 559 6 602 (0.7%)
Net tangible asset value
per share 308.1 309.0 (0.3%) 308.4 (0.2%) 5 538 5 425 2.1%
Total equity (million) 4 040 4 016 0.6% 4 087 1.8% 72 625 70 505 3.0%
Total assets (million) 44 353 47 142 (5.9%) 44 981 (4.6%) 797 218 827 649 (3.7%)
Core loans and advances
(million) 17 189 17 157 0.2% 17 430 1.6% 308 957 301 224 2.6%
Cash and near cash
balances (million) 9 975 9 136 9.2% 10 090 10.4% 179 242 160 405 11.7%
Customer deposits (million) 22 615 22 610 0.0% 22 908 1.3% 406 485 396 951 2.4%
Third party assets under
management (million) 124 106 109 189 13.7% 125 149 14.6% 2 230 197 1 917 347 16.3%
Recurring income as a %
of total operating income 74.2% 70.7%
Return on average adjusted
shareholders' equity 10.6% 10.0%
Return on average risk-
weighted assets 1.25% 1.14%
Credit loss ratio 0.68% 0.68%
Defaults (net of
impairments and before
collateral) as a percentage
of net core loans 2.07% 2.30%
Loans and advances to
customers as a
percentage of customer
deposits 74.0% 72.0%
* Before goodwill, acquired intangibles non-operating items and after other non-controlling interests
* *Before goodwill, acquired intangibles non-operating items and after non-controlling interests
Statutory financial information
Combined consolidated income statement
for the year to 31 March
GBP'000 2015 2014*
Interest income 1 790 867 1 905 383
Interest expense (1 155 890) (1 253 704)
Net interest income 634 977 651 679
Fee and commission income 1 226 257 1 136 902
Fee and commission expense (137 214) (147 481)
Investment income 128 334 166 809
Trading income arising from
– customer flow 106 313 103 914
– balance sheet management and other trading activities (13 424) 10 587
Other operating income 12 236 18 554
Total operating income before impairment losses on loans and advances 1 957 479 1 940 964
Impairment losses on loans and advances (128 381) (166 152)
Operating income 1 829 098 1 774 812
Operating costs (1 322 705) (1 307 243)
Depreciation on operating leased assets (1 535) (6 044)
Operating profit before goodwill and acquired intangibles 504 858 461 525
Impairment of goodwill (5 337) (12 797)
Amortisation of acquired intangibles (14 497) (13 393)
Operating costs arising from integration, restructuring and partial disposals of subsidiaries – (20 890)
Operating profit 485 024 414 445
Net (loss)/gain on disposal of subsidiaries (93 033) 9 821
Profit before taxation 391 991 424 266
Taxation on operating profit before goodwill and acquired intangibles (99 023) (78 910)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries (17 574) 7 289
Profit after taxation 275 394 352 645
Profit attributable to Asset Management non-controlling interests (18 184) (11 031)
Profit attributable to other non-controlling interests (11 701) (10 849)
Earnings attributable to shareholders 245 509 330 765
Impairment of goodwill 5 337 12 797
Amortisation of acquired intangibles, net of taxation 14 497 13 393
Operating cost arising from integration, restructuring and partial disposals of subsidiaries – 20 890
Net loss/(gain) on disposal of subsidiaries 93 033 (9 821)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries 17 574 (7 289)
Preference dividends paid (34 803) (35 268)
Accrual adjustment on earnings attributable to other equity holders (1 211) (386)
Currency hedge attributable to perpetual equity instruments (413) 1 842
Adjusted earnings 339 523 326 923
Headline adjustments (30 753) (35 362)
Headline earnings 308 770 291 561
Earnings per share (pence)
– Basic 24.4 34.3
– Diluted 23.1 32.3
Statutory adjusted earnings per share (pence)
– Basic 39.4 37.9
– Diluted 37.3 35.8
Dividends per share (pence)
– Interim 8.5 8.0
– Final 11.5 11.0
Headline earnings per share (pence)
– Basic 35.8 33.8
– Diluted 33.9 32.3
Number of weighted average shares – (million) 862.7 862.6
*Restated for IFRIC 21 detailed in commentary section
Summarised combined consolidated statement of comprehensive income
for the year to 31 March
GBP'000 2015 2014*
Profit after taxation 275 394 352 645
Other comprehensive income/(loss):
Items that may be reclassified to the income statement
Fair value movements on cash flow hedges taken directly to other comprehensive income^ (32 816) (3 582)
Gains on realisation of available-for-sale assets recycled through the income statement^ (4 660) (2 972)
Fair value movements on available-for-sale assets taken directly to other comprehensive income^ 1 037 347
Foreign currency adjustments on translating foreign operations (58 318) (407 479)
Items that will never be reclassified to the income statement
Remeasurement of net defined benefit pension liability/(asset) 6 340 (5 870)
Total comprehensive income/(loss) 186 977 (66 911)
Total comprehensive income/(loss) attributable to non-controlling interests 32 050 (12 724)
Total comprehensive income/(loss) attributable to ordinary shareholders 120 124 (89 455)
Total comprehensive income attributable to perpetual preferred securities 34 803 35 268
Total comprehensive income/(loss) 186 977 (66 911)
*Restated for IFRIC 21 detailed in commentary section
^Net of taxation of GBP4.0million (31 March 2014: GBP7.8million)
Summarised combined consolidated cash flow statement
for the year to 31 March
GBP'000 2015 2014*
Cash inflows from operations 617 363 668 725
Increase in operating assets (2 312 161) (979 947)
Increase in operating liabilities 2 291 132 1 290 173
Net cash inflow from operating activities 596 334 978 951
Net cash inflow from investing activities^ 192 347 24 313
Net cash outflow from financing activities (257 753) (234 601)
Effects of exchange rate changes on cash and cash equivalents (17 091) (281 225)
Net increase in cash and cash equivalents 513 837 487 438
Cash and cash equivalents at the beginning of the year 4 049 011 3 561 573
Cash and cash equivalents at the end of the year 4 562 848 4 049 011
*Restated for IFRIC 21 detailed in commentary section
^Includes the cash flow effects on the sale of subsidiaries detailed in the commentary section of this report.
Cash and cash equivalents is defined as including cash and balances at central banks, on demand loans and advances to banks and non-sovereign and non-bank cash
placements (all of which have a maturity profile of less than three months).
Combined consolidated balance sheet
At 31 March
GBP'000 2015 2014*
Assets
Cash and balances at central banks 2 529 562 2 080 190
Loans and advances to banks 3 045 864 3 280 179
Non-sovereign and non-bank cash placements 586 400 515 189
Reverse repurchase agreements and cash collateral on securities borrowed 1 812 156 1 388 980
Sovereign debt securities 2 958 641 3 215 432
Bank debt securities 1 161 055 1 568 097
Other debt securities 627 373 605 378
Derivative financial instruments 1 580 681 1 619 415
Securities arising from trading activities 1 086 349 870 088
Investment portfolio 947 846 825 745
Loans and advances to customers 16 740 263 16 281 612
Own originated loans and advances to customers securitised 448 647 875 755
Other loans and advances 574 830 1 693 569
Other securitised assets 780 596 3 576 526
Interests in associated undertakings 25 244 24 316
Deferred taxation assets 99 301 131 142
Other assets 1 741 713 1 474 992
Property and equipment 102 354 108 738
Investment properties 617 898 509 228
Goodwill 361 527 433 571
Intangible assets 147 227 159 169
Non-current assets classified as held for sale 40 726 41 637
38 016 253 41 278 948
Other financial instruments at fair value through profit or loss in respect of liabilities to customers 6 337 149 5 862 959
44 353 402 47 141 907
Liabilities
Deposits by banks 1 908 294 2 721 170
Derivative financial instruments 1 544 168 1 170 232
Other trading liabilities 885 003 861 412
Repurchase agreements and cash collateral on securities lent 1 284 945 1 316 087
Customer accounts (deposits) 22 614 868 22 609 784
Debt securities in issue 1 709 369 1 596 630
Liabilities arising on securitisation of own originated loans and advances 109 953 729 534
Liabilities arising on securitisation of other assets 616 909 3 041 435
Current taxation liabilities 201 790 208 041
Deferred taxation liabilities 76 481 97 116
Other liabilities 1 845 679 1 572 877
32 797 459 35 924 318
Liabilities to customers under investment contracts 6 335 326 5 861 389
Insurance liabilities, including unit-linked liabilities 1 823 1 570
39 134 608 41 787 277
Subordinated liabilities 1 178 299 1 338 752
40 312 907 43 126 029
Equity
Ordinary share capital 226 224
Perpetual preference share capital 153 153
Share premium 2 258 148 2 473 131
Treasury shares (68 065) (85 981)
Other reserves (563 985) (467 247)
Retained income 1 874 360 1 652 016
Shareholders' equity excluding non-controlling interests 3 500 837 3 572 296
Other Additional Tier 1 securities in issue 30 599 –
Non-controlling interests 509 059 443 582
– Perpetual preferred securities issued by subsidiaries 229 957 252 713
– Non-controlling interests in partially held subsidiaries 279 102 190 869
Total equity 4 040 495 4 015 878
Total liabilities and equity 44 353 402 47 141 907
*Restated for IFRIC 21 detailed in commentary section
Summarised combined consolidated statement of changes in equity
for the year ended 31 March
GBP'000 2015 2014*
Balance at the beginning of the year 4 015 878 3 945 253
Total comprehensive income for the year 186 977 (66 911)
Share-based payments adjustments 63 475 66 905
Dividends paid to ordinary shareholders (168 486) (150 053)
Dividends declared to perpetual preference shareholders (16 101) (16 566)
Dividends paid to perpetual preference shareholders included in non-controlling interests (18 702) (18 702)
Dividends paid to non-controlling interests (29 466) (5 838)
Issue of ordinary shares 38 896 31 650
Issue of Other Additional Tier 1 securities in issue 30 012 –
Issue of equity by subsidiaries 19 725 35 477
Acquisition of non-controlling interests 39 (270)
Non-controlling interest relating to partial disposal of subsidiaries 43 129 166 940
Partial sale of subsidiary (2 244) –
Capital conversion of subsidiary – 126 681
Movement of treasury shares (122 637) (98 688)
Balance at the end of the year 4 040 495 4 015 878
*Restated for IFRIC 21 detailed in commentary section
Combined consolidated segmental analysis
for the year to 31 March
GBP'000 UK and Other Southern Africa Total group
Segmental geographical and business analysis of operating profit before
goodwill, acquired intangibles, non-operating items, taxation and after
other non-controlling interests
2015
Asset Management 75 491 73 484 148 975
Wealth & Investment 56 871 21 910 78 781
Specialist Banking 41 795 262 918 304 713
174 157 358 312 532 469
Group costs (30 048) (9 264) (39 312)
Total group 144 109 349 048 493 157
Other non-controlling interest – equity 11 701
Operating profit 504 858
GBP'000 UK and Other Southern Africa Total group
Segmental geographical and business analysis of operating profit before
goodwill, acquired intangibles, non-operating items, taxation and after
other non-controlling interests
2014*
Asset Management 67 585 76 234 143 819
Wealth & Investment 46 065 20 034 66 099
Specialist Banking 67 277 209 925 277 202
180 927 306 193 487 120
Group costs (27 672) (8 772) (36 444)
Total group 153 255 297 421 450 676
Other non-controlling interest – equity 10 849
Operating profit 461 525
*Restated for IFRIC 21, inclusion of Australia in "UK and Other" and group costs detailed in the commentary section
ADDITIONAL STATUTORY INFORMATION RELATING TO THE CONSOLIDATED INCOME STATEMENT
Impairment of goodwill
The goodwill impairment largely relates to the restructure of the Australian business.
Amortisation of acquired intangibles
Amortisation of acquired intangibles largely relates to the Wealth & Investment business and mainly comprises amortisation of amounts attributable to client relationships.
Analysis of financial assets and liabilities by category of financial instrument
Financial
Financial instruments Insurance
At 31 March 2015 instruments at amortised related Non-financial
GBP'000 at fair value cost at fair value instruments Total
Assets
Cash and balances at central banks 1 302 2 528 260 – – 2 529 562
Loans and advances to banks 178 907 2 866 957 – – 3 045 864
Non-sovereign and non-bank cash placements 160 586 240 – – 586 400
Reverse repurchase agreements and cash collateral on securities borrowed 959 361 852 795 – – 1 812 156
Sovereign debt securities 2 760 898 197 743 – – 2 958 641
Bank debt securities 485 530 675 525 – – 1 161 055
Other debt securities 495 527 131 846 – – 627 373
Derivative financial instruments 1 580 681 – – – 1 580 681
Securities arising from trading activities 1 086 349 – – – 1 086 349
Investment portfolio 947 846 – – – 947 846
Loans and advances to customers 707 376 16 032 887 – – 16 740 263
Own originated loans and advances to customers securitised – 448 647 – – 448 647
Other loans and advances – 574 830 – – 574 830
Other securitised assets 627 928 152 668 – – 780 596
Interests in associated undertakings – – – 25 244 25 244
Deferred taxation assets – – – 99 301 99 301
Other assets 81 977 1 305 644 – 354 092 1 741 713
Property and equipment – – – 102 354 102 354
Investment properties – – – 617 898 617 898
Goodwill – – – 361 527 361 527
Intangible assets – – – 147 227 147 227
Non-current assets held for resale – – – 40 726 40 726
9 913 842 26 354 042 – 1 748 369 38 016 253
Other financial instruments at fair value through profit or loss in respect of
liabilities to customers – – 6 337 149 – 6 337 149
9 913 842 26 354 042 6 337 149 1 748 369 44 353 402
Liabilities
Deposits by banks – 1 908 294 – – 1 908 294
Derivative financial instruments 1 544 168 – – – 1 544 168
Other trading liabilities 885 003 – – – 885 003
Repurchase agreements and cash collateral on securities lent 553 730 731 215 – – 1 284 945
Customer accounts (deposits) 924 083 21 690 785 – – 22 614 868
Debt securities in issue 473 037 1 236 332 – – 1 709 369
Liabilities arising on securitisation of own originated loans and advances – 109 953 – – 109 953
Liabilities arising on securitisation of other assets 616 909 – – – 616 909
Current taxation liabilities – – – 201 790 201 790
Deferred taxation liabilities – – – 76 481 76 481
Other liabilities 135 268 1 239 985 – 470 426 1 845 679
5 132 198 26 916 564 – 748 697 32 797 459
Liabilities to customers under investment contracts – – 6 335 326 – 6 335 326
Insurance liabilities, including unit-linked liabilities – – 1 823 – 1 823
5 132 198 26 916 564 6 337 149 748 697 39 134 608
Subordinated liabilities – 1 178 299 – – 1 178 299
5 132 198 28 094 863 6 337 149 748 697 40 312 907
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.
Fair value category
Total
At 31 March 2015 instruments
GBP'000 at fair value Level 1 Level 2 Level 3
Assets
Cash and balances at central banks 1 302 1 302 – –
Loans and advances to banks 178 907 178 907 – –
Non-sovereign and non-bank cash placements 160 – 160 –
Reverse repurchase agreements and cash collateral on securities borrowed 959 361 – 959 361 –
Sovereign debt securities 2 760 898 2 759 792 1 106 –
Bank debt securities 485 530 192 469 293 061 –
Other debt securities 495 527 379 690 97 793 18 044
Derivative financial instruments 1 580 681 204 626 1 332 534 43 521
Securities arising from trading activities 1 086 349 1 083 956 2 393 –
Investment portfolio 947 846 131 783 70 278 745 785
Loans and advances to customers 707 376 – 671 376 36 000
Other securitised assets 627 928 – – 627 928
Other assets 81 977 81 910 67 –
9 913 842 5 014 435 3 428 129 1 471 278
Liabilities
Derivative financial instruments 1 544 168 328 214 1 213 288 2 666
Other trading liabilities 885 003 840 647 44 356 –
Repurchase agreements and cash collateral on securities lent 553 730 – 553 730 –
Customer accounts (deposits) 924 083 – 924 083 –
Debt securities in issue 473 037 – 473 037 –
Liabilities arising on securitisation of other assets 616 909 – – 616 909
Other liabilities 135 268 96 865 38 403 –
5 132 198 1 265 726 3 246 897 619 575
Net assets 4 781 644 3 748 709 181 232 851 703
Level 2 financial assets and financial liabilities
The following table sets out the group's principal valuation techniques as at 31 March 2015 used in determining the fair value of its financial assets and financial liabilities
that are classified within level 2 of the fair value hierarchy.
Valuation basis/techniques Main assumptions
Assets
Non-sovereign and non-bank cash
placements Discounted cash flow model Discount rates
Reverse repurchase agreements and cash Discounted cash flow model, Hermite interpolation,
collateral on securities borrowed Black-Scholes Discount rates
Sovereign debt securities Discounted cash flow model Discount rates
Bank debt securities Black-Scholes Volatilities
Discounted cash flow model Discount rates, swap curves and
NCD curves
Other debt securities Discounted cash flow model Discount rates, swap curves and NCD curves, external
prices, broker quotes
Derivative financial instruments Discounted cash flow model, Hermite interpolation, industry Discount rate, risk free rate, volatilities, forex forward points
standard derivative pricing models including Black-Scholes and spot rates, interest rate swap curves and credit curves
Securities arising from trading activities Standard industry derivative pricing model Interest rate curves, implied bond spreads, equity volatilities
Investment portfolio Discounted cash flow model, net asset value model Discount rate and fund unit price
Comparable quoted inputs Net assets
Loans and advances to customers Discounted cash flow model Discount rates
Other assets Discounted cash flow model Discount rates
Liabilities
Derivative financial instruments Discounted cash flow model, Hermite interpolation, industry Discount rate, risk free rate, volatilities, forex forward points
standard derivative pricing models including Black-Scholes and spot rates, interest rate swap curves and credit curves
Other trading liabilities Discounted cash flow model Discount rates
Repurchase agreements and cash
collateral on securities lent Discounted cash flow model, Hermite interpolation Discount rates
Customer accounts (deposits) Discounted cash flow model Discount rates
Debt securities in issue Discounted cash flow model Discount rates
Other liabilities Discounted cash flow model Discount rates
Total Fair value
level 3 through profit Available-
For the year to 31 March financial and loss for-sale
GBP'000 instruments instruments instruments
The following table is a reconciliation of the opening balances to the closing balances for fair value
measurements in level 3 of the fair value hierarchy:
Balance as at 1 April 2014 869 172 904 089 (34 917)
Total gains or losses 122 239 120 412 1 827
In the income statement 121 813 120 412 1 401
In the statement of comprehensive income 426 – 426
Purchases 152 975 123 092 29 883
Sales (290 650) (253 447) (37 203)
Issues (6 996) (6 996) –
Settlements (68 982) (52 553) (16 429)
Transfers into level 3 63 545 21 416 42 129
Transfers out of level 3 545 545 –
Foreign exchange adjustments 9 855 4 437 5 418
Balance as at 31 March 2015 851 703 860 995 (9 292)
For the year ended 31 March 2015, there were transfers from the level 2 to the level 3 category to the value of GBP62.7 million because the significance of the
unobservable inputs used to determine the fair value increased sufficiently to warrant a transfer.
For the remaining transfers, the group transfers between levels within the fair value hierarchy when the observability of inputs change or if the valuation methods
change.
The following table quantifies the gains or (losses) included in the income statement and statement of other comprehensive income recognised on level 3
financial instruments:
For the year to 31 March 2015
GBP'000 Total Realised Unrealised
Total gains or (losses) included in the income statement for the year
Fee and commission income 7 859 (51) 7 910
Investment income 101 304 81 979 19 325
Trading income arising from customer flow 13 999 – 13 999
Trading income arising from balance sheet management and other trading activities (97) 877 (974)
Other operating loss (1 252) – (1 252)
121 813 82 805 39 008
Total gains included in other comprehensive income for the year
Gains on realisation of available-for-sale assets recycled through the income statement 1 401 1 401 –
Fair value movements on available-for-sale assets taken directly to other comprehensive income 426 – 426
1 827 1 401 426
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:
Range over Reflected in
Balance Significant which income statement
sheet unobservable input unobservable Favourable Unfavourable
value changed in input has been changes changes
GBP'000 valuation method stressed GBP'000 GBP'000
2015
Assets
Other debt securities 18 044 156 (205)
Discount rates (5%) – 5% 14 (60)
Credit spreads (2%) – 3% 114 (128)
Other (6%) – 5% 28 (17)
Derivative financial instruments 43 521 16 685 (11 121)
Discount rates (5%) – 5% 358 (283)
Volatilities (4%) – 3% 626 (1 536)
Volatilities (25%)/40% 3 227 (1 363)
Credit spreads (50bps)/50bps 1 279 (692)
Cash flow adjustments (3%) – 8% 7 (6)
Price-earnings multiple ** 3 816 (4 074)
Other ^
2 505 (457)
Other (11%) – 10% 4 867 (2 710)
Investment portfolio 706 843 173 264 (85 332)
Price-earnings multiple (10%) – 10% 1 517 (1 210)
Price-earnings multiple ** 100 880 (54 829)
EBITDA 5x EBITDA 6 958 (2 640)
Other ^
18 296 (17 988)
Other (10%) – 10% 45 613 (8 665)
Loans and advances to customers 36 000 6 500 (1 347)
Cash flows (5%) – 5% 5 407 –
Other (9%) – 3% 1 093 (1 347)
Other securitised assets* 627 928 16 556 (11 495)
– 6 months/
+12 month
adjustment to
Credit spreads CDR curve 5 228 (167)
Other 11 328 (11 328)
Liabilities
Derivative financial instruments (2 666) 1 830 (1 442)
Cash flow adjustments (2%) – 1% 1 830 (1 442)
Liabilities arising on securitisation of other assets* (616 909) 19 021 (13 749)
Credit default rates. Loss
severity, prepayment rates (5%) – 5% 5 228 (167)
Other 13 793 (13 582)
812 761 234 012 (124 691)
* The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets.
** The price-earnings multiple has been stressed on an investment by investment basis in order to obtain the aggressive and conservative valuations.
^ These valuation sensitivities have been stressed individually using varying scenario based techniques to obtain the aggressive and conservative valuations
Reflected in other
Balance Range which comprehensive income
sheet Significant unobservable Favourable Unfavourable
value unobservable input input has been changes changes
GBP'000 changed stressed GBP'000 GBP'000
2015
Assets
Investment portfolio 38 942 2 658 (2 058)
EBITDA (10%) – 10% or 2 658 (2 058)
5x EBITDA
In determining the value of level 3 financial instruments, the following are the
principal inputs that can require judgement:
Credit spreads
Credit spreads reflect the additional yield that a market participant would
demand for taking exposure to the credit risk of an instrument. The credit
spread for an instrument forms part of the yield used in a discounted cash
flow calculation. In general a significant increase in a credit spread in isolation
will result in a movement in fair value that is unfavourable for the holder of a
financial instrument. It is an unobservable input into a discounted cash flow
valuation.
Discount rates
Discount rates are the interest rates used to discount future cash flows in a
discounted cash flow valuation method. The discount rate takes into account
time value of money and uncertainty of cash flows.
Volatilities
Volatility is a key input in the valuation of derivative products containing
optionality. Volatility is a measure of the variability or uncertainty in returns
for a given derivative underlying. It represents an estimate of how much a
particular underlying instrument, parameter or index will change in value over
time. Volatilities are a key input into Black Scholes valuation method.
Cash flows
Cash flows relate to the future cash flows which can be expected from the
instrument and requires judgement. Cash flows are inputs into a discounted
cash flow valuation.
EBITDA
A company's earnings before interest, taxes, depreciation and amortisation.
This is the main input into a price earnings multiple valuation method.
Price earnings multiple
The price-to-earnings ratio is an equity valuation multiple. It is a key driver in
the valuation of unlisted investments.
Fair value of financial assets and liabilities at amortised cost
at 31 March 2015 Carrying Fair
GBP'000 amount value
Assets
Cash and balances at central banks 2 528 260 2 528 260
Loans and advances to banks 2 866 957 2 866 957
Non-sovereign and non-bank cash placements 586 240 586 580
Reverse repurchase agreements and cash collateral on securities borrowed 852 795 852 795
Sovereign debt securities 197 743 202 949
Bank debt securities 675 525 709 768
Other debt securities 131 846 130 147
Loans and advances to customers 16 032 887 16 082 898
Own originated loans and advances to customers securitised 448 647 448 647
Other loans and advances 574 830 620 569
Other securitised assets 152 668 152 668
Other assets 1 305 644 1 305 519
26 354 042 26 487 757
Liabilities
Deposits by banks 1 908 294 1 920 130
Repurchase agreements and cash collateral on securities lent 731 215 730 508
Customer accounts (deposits) 21 690 785 21 739 660
Debt securities in issue 1 236 332 1 266 315
Liabilities arising on securitisation of own originated loans and advances 109 953 109 953
Other liabilities 1 239 985 1 237 888
Subordinated liabilities 1 178 299 1 180 558
28 094 863 28 185 012
Investec plc
Incorporated in England and Wales
Registration number: 3633621
LSE share code: INVP
JSE share code: INP
ISIN: GB00B17BBQ50
Ordinary share dividend announcement
Declaration of dividend number 26
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 a final dividend number 26 being a gross dividend
of 11.5 pence (2014: 11 pence) per ordinary share has been recommended
by the board from income reserves in respect of the financial year ended
31 March 2015 payable to shareholders recorded in the members' register of
the company at the close of business on Friday, 31 July 2015, 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 11.5 pence
per ordinary share
- for South African resident shareholders of Investec plc, through a dividend
payment by Investec plc from income reserves of 2.5 pence per ordinary
share and through a dividend paid by Investec Limited, on the SA DAS
share, payable from income reserves, equivalent to 9.0 pence per
ordinary share.
The relevant dates for the payment of dividend number 26 are as follows:
Last day to trade cum-dividend
On the London Stock Exchange (LSE) Wednesday, 29 July 2015
On the Johannesburg Stock Exchange (JSE) Friday, 24 July 2015
Shares commence trading ex-dividend
On the London Stock Exchange (LSE) Thursday, 30 July 2015
On the Johannesburg Stock Exchange (JSE) Monday, 27 July 2015
Record date (on the JSE and LSE) Friday, 31 July 2015
Payment date (on the JSE and LSE) Friday, 14 August 2015
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Monday, 27 July 2015 and Friday,
31 July 2015, both dates inclusive, nor may transfers between the UK
and SA registers take place between Monday, 27 July 2015 and Friday,
31 July 2015, 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 11.5 pence, equivalent to a gross dividend of 216 cents
per share, has been arrived at using the Rand/Pounds Sterling average
buy/sell forward rate, as determined at 11h00 (SA time) on Wednesday,
20 May 2015
- Investec plc UK tax reference number: 2683967322360
- The issued ordinary share capital of Investec plc is 613 609 642 ordinary
shares
- The dividend paid by Investec plc to South African resident shareholders
and the dividend paid by Investec Limited on the SA DAS share are
subject to South African Dividend Tax of 15% (subject to any available
exemptions as legislated)
- Shareholders registered on the South African register who are exempt
from paying the Dividend Tax will receive a net dividend of 216 cents per
share, comprising 169.04348 cents per share paid by Investec Limited
on the SA DAS share and 46.95652 cents per ordinary share paid by
Investec plc
- Shareholders registered on the South African register who are not exempt
from paying the Dividend Tax will receive a net dividend of 183.60 cents
per share, (gross dividend of 216 cents per share less Dividend Tax of
32.4 cents per share).
By order of the board
D Miller
Company secretary
20 May 2015
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
Ordinary share dividend announcement
Declaration of dividend number 119
Notice is hereby given that a final dividend number 119 being a gross
dividend of 216 cents (2014: 196 cents) per ordinary share has been
recommended by the board from income reserves in respect of the financial
year ended 31 March 2015 payable to shareholders recorded in the
shareholders' register of the company at the close of business on Friday,
31 July 2015.
The relevant dates for the payment of dividend number 119 are as follows:
Last day to trade cum-dividend Friday, 24 July 2015
Shares commence trading ex-dividend Monday, 27 July 2015
Record date (on the JSE) Friday, 31 July 2015
Payment date (on the JSE) Friday, 14 August 2015
The final gross dividend of 216 cents per ordinary share has been
determined by converting the Investec plc distribution of 11.5 pence per
ordinary share into Rands using the Rand/Pounds Sterling average buy/sell
forward rate at 11h00 (SA time) on Wednesday, 20 May 2015.
Share certificates may not be dematerialised or rematerialised between
Monday, 27 July 2015 and Friday, 31 July 2015, both dates inclusive.
Additional information to take note of:
- Investec Limited company tax reference number: 9800/181/71/2
- The issued ordinary share capital of Investec Limited is 285 748 623
ordinary shares
- The dividend paid by Investec Limited is subject to South African
Dividend Tax (Dividend Tax) of 15% (subject to any available exemptions
as legislated)
- Shareholders who are exempt from paying the Dividend Tax will receive a
net dividend of 216 cents per ordinary share
- Shareholders who are not exempt from paying the Dividend Tax will
receive a net dividend of 183.6 cents per ordinary share (gross dividend
of 216 cents per ordinary share less Dividend Tax of 32.4 cents per
ordinary share).
By order of the board
N van Wyk
Company secretary
20 May 2015
Investec plc
Registration number: 3633621
Share code: INPP
ISIN: GB00B19RX541
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference shares
(preference shares)
Declaration of dividend number 18
Notice is hereby given that preference dividend number 18 has been
declared for the period 01 October 2014 to 31 March 2015, amounting to a
gross preference dividend of 7.47945 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, 12 June 2015.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend
of 7.47945 pence per preference share is equivalent to a gross dividend
of 139.126 cents per share, which has been determined using the Rand/
Pounds Sterling average buy/sell forward rate as at 11h00 (SA Time) on
Wednesday, 20 May 2015.
The relevant dates relating to the payment of dividend number 18 are as
follows:
Last day to trade cum-dividend
On the Channel Islands Stock Exchange (CISX) Wednesday, 10 June 2015
On the Johannesburg Stock Exchange (JSE) Friday, 05 June 2015
Shares commence trading ex-dividend
On the Channel Islands Stock Exchange (CISX) Thursday, 11 June 2015
On the Johannesburg Stock Exchange (JSE) Monday, 08 June 2015
Record date (on the JSE and CISX) Friday, 12 June 2015
Payment date (on the JSE and CISX) Monday, 22 June 2015
Share certificates may not be dematerialised or rematerialised between
Monday, 08 June 2015 and Friday, 12 June 2015, both dates inclusive, nor
may transfers between the UK and SA registers take place between Monday,
08 June 2015 and Friday, 12 June 2015, 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)
- The net dividend amounts to 118.25710 cents per preference share for
preference shareholders liable to pay the Dividend Tax and 139.126 cents
per preference share for preference shareholders exempt from paying the
Dividend Tax.
By order of the board
D Miller
Company secretary
20 May 2015
Investec plc
Registration number: 3633621
Share code: INPPR
ISIN: GB00B4B0Q974
Rand-denominated preference share dividend announcement
Rand-denominated non-redeemable non-cumulative non-participating
perpetual preference shares (preference shares)
Declaration of dividend number 8
Notice is hereby given that preference dividend number 8 has been declared
for the period 01 October 2014 to 31 March 2015, amounting to a gross
preference dividend of 438.17123 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, 12 June 2015.
The relevant dates relating to the payment of dividend number 8 are as
follows:
Last day to trade cum-dividend Friday, 05 June 2015
Shares commence trading ex-dividend Monday, 08 June 2015
Record date Friday, 12 June 2015
Payment date Monday, 22 June 2015
Share certificates may not be dematerialised or rematerialised between
Monday, 08 June 2015 and Friday, 12 June 2015, 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)
- The net dividend amounts to 372.44555 cents per preference
share for preference shareholders liable to pay the Dividend Tax and
438.17123 cents per preference share for preference shareholders
exempt from paying the Dividend Tax.
By order of the board
D Miller
Company secretary
20 May 2015
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE share code: INPR
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000063814
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference shares
(preference shares)
Declaration of dividend number 21
Notice is hereby given that preference dividend number 21 has been declared
from income reserves for the period 01 October 2014 to 31 March 2015,
amounting to a gross preference dividend of 358.70081 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, 12 June 2015.
The relevant dates for the payment of dividend number 21 are as follows:
Last day to trade cum-dividend Friday, 05 June 2015
Shares commence trading ex-dividend Monday, 08 June 2015
Record date Friday, 12 June 2015
Payment date Monday, 22 June 2015
Share certificates may not be dematerialised or rematerialised between
Monday, 08 June 2015 and Friday, 12 June 2015, both dates inclusive.
Additional information to take note of:
- 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)
- The net dividend amounts to 304.89569 cents per preference share for
shareholders liable to pay the Dividend Tax and 358.70081 cents per
preference share for preference shareholders exempt from paying the
dividend tax.
By order of the board
N van Wyk
Company secretary
20 May 2015
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•
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:
N van Wyk
Directors:
F Titi (Chairman),
S Koseff# (Chief Executive),
B Kantor# (Managing Director),
G R Burger#, C A Carolus,
P K O Crosthwaite•, H J du Toit#,
B Fried•, D Friedland,
H Fukuda OBE•, I R Kantor,
P R S Thomas, Z B M Bassa,
L C Bowden*, C R Jacobs,
Lord Malloch – Brown,
K L Shuenyane
# Executive •British
*Appointed with effect 1 January 2015
Sponsor:
Investec Bank Limited
Date: 21/05/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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