Wrap Text
Unaudited combined consolidated financial results for the six months ended 30 September 2016
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
2016
INVESTEC PLC AND
INVESTEC LIMITED
(COMBINED RESULTS)
Unaudited combined
consolidated financial
results for the six months
ended 30 September 2016
Investec, the International specialist bank and asset manager, announces its results
for the six months ended 30 September 2016
This announcement covers the results of the Investec group for the six
months ended 30 September 2016.
Basis of presentation
Statutory basis
Statutory information is set out in a separate section in this announcement. In
order to present a more meaningful view of the group's performance the results
continue to be presented on an ongoing basis as explained further below.
Ongoing basis
The results presented on an ongoing basis exclude items that in
management's view could distort the comparison of performance between
periods. Based on this principle, the remaining legacy business in the UK
continues to be excluded from underlying profit.
This basis of presentation is consistent with the approach adopted for the
year ended 31 March 2016. 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 six months ended 30 September 2015. Group
results have been marginally impacted by the 3.4% depreciation of the
average Rand: Pounds Sterling exchange rate over the period. Amounts
represented on a currency neutral basis for income statement items assume
that the relevant average exchange rates remain the same for the six month
period to 30 September 2016 when compared to the prior period. Balance
sheet items have been impacted by a 15.4% appreciation of the average
Rand: Pounds Sterling exchange rate since 31 March 2016. Amounts
represented on a currency neutral basis for balance sheet items assume that
the relevant closing exchange rates remain the same at 30 September 2016
when compared to 31 March 2016.
Overview of results
Sound growth in underlying client franchise businesses
- The first half of the group's financial year continued to see high levels of
macro uncertainty in its key operating geographies.
- Nevertheless, the group's businesses have been resilient, with continued
target market penetration reflected in growth in key earnings drivers and
client driven revenue lines.
- The Asset Management and Wealth & Investment businesses have
benefited from higher funds under management supported by a recovery
in equity markets and net inflows of GBP1.8 billion.
- Operating fundamentals in the Specialist Banking business were
supported by sound levels of corporate and private client activity. Results
were however behind the prior year as a result of a change in accounting
treatment from fair value to equity accounting for the assets transferred
to Investec Equity Partners. In addition the group reported a write down
on an investment in the Hong Kong portfolio.
- Growth in costs reflects planned investment in growing the client
franchise businesses.
- Geographical and operational diversity continues to support a
sustainable recurring income base and earnings through varying market
conditions.
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 0.7% to GBP281.4 million (2015:
GBP279.4 million) - an increase of 1.6% on a currency neutral basis.
- Statutory adjusted earnings per share (EPS) before goodwill, acquired
intangibles and non-operating items increased 1.8% from 22.3 pence to
22.7 pence - an increase of 2.2% on a currency neutral basis.
Sound growth in key earnings drivers in the ongoing business
- Ongoing operating profit decreased 0.2% to GBP314.5million (2015:
GBP315.0 million) - an increase of 0.6% on a currency neutral basis.
- Ongoing adjusted EPS before goodwill, acquired intangibles and non-
operating items increased 0.8% from 25.5 pence to 25.7 pence - an
increase of 1.2% on a currency neutral basis.
- Recurring income as a percentage of total operating income amounted
to 72.4% (2015: 71.6%).
- The annualised credit loss charge as a percentage of average gross
core loans and advances amounted to 0.19% (2015: 0.22%), with
impairments increasing marginally.
- Third party assets under management increased 16.5% to GBP141.8
billion (31 March 2016: GBP121.7billion) - an increase of 10.3% on a
currency neutral basis.
- Customer accounts (deposits) increased 17.7% to GBP28.3 billion
(31 March 2016: GBP24.0 billion) - an increase of 7.3% on a currency
neutral basis.
- Core loans and advances increased 16.1% to GBP20.4 billion (31 March
2016: GBP17.5 billion) - an increase of 4.0% on a currency neutral basis.
The UK legacy portfolio continues to be actively managed down
- The legacy portfolio reduced from GBP583 million at 31 March 2016 to
GBP535 million largely through asset sales, redemptions and write-offs.
- The legacy business reported a loss before taxation of GBP33.0 million
(2015:GBP35.5 million).
Maintained a sound balance sheet
- Capital remained well in excess of current regulatory requirements. The
group is comfortable with its common equity tier 1 ratio target at a 10%
level, as its current leverage ratios for both Investec Limited and Investec
plc are above 7%.
- Liquidity remained strong with cash and near cash balances amounting
to GBP13.1 billion.
Dividend increase of 5.3%
The board declared a dividend of 10.0 pence per ordinary share (2015:
9.5 pence) resulting in a dividend cover based on the group's adjusted EPS
before goodwill and non-operating items of 2.3 times (2015: 2.3 times),
consistent with the group's dividend policy.
Stephen Koseff, Chief Executive Officer of Investec said:
"These results show the long term strength and diversity of our business,
delivering sustainable recurring client-driven income streams amidst high
levels of macro uncertainty. We are pleased with the growth in net interest
income and fees and commissions, as well as good fund management
inflows. We continue to invest with confidence in our business to build even
stronger franchises."
Bernard Kantor, Managing Director of Investec said:
"We have built a highly regarded asset management and wealth
management business as well as a leading specialist banking business in
South Africa. We are making good progress in the development of our UK
specialist banking franchise. We continue to focus on enhancing our returns
on capital invested."
For further information please contact:
Investec +27 (0) 11 286 7070 or +44 (0) 20 7597 5546
Stephen Koseff, Chief Executive Officer
Bernard Kantor, Managing Director
Ursula Nobrega, Investor Relations (mobile:+27 (0) 82 552 8808)
Carly Lunz, Investor Relations (+44 (0) 20 7597 4493)
Brunswick (SA PR advisers)
Marina Bidoli
Tel: +2711 502 7405 / +2783 253 0478
Newgate (UK PR advisers)
Jonathan Clare/Jason Nisse/Alistair Kellie/Charlotte Coulson
Tel: +44 (0)20 7680 6550
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: 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 select client base in
three principal markets - the UK and Europe, South Africa and Asia/Australia
as well as certain other countries. The group was established in 1974 and
currently has approximately 9 300 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
GBP4.7 billion.
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated financial results for the six months ended
30 September 2016
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")
decreased 0.2% to GBP314.5 million (2015: GBP315.0 million) - an increase
of 0.8% on a currency neutral basis.
The combined South African businesses reported operating profit 0.5%
behind the prior period (in Rands), whilst the combined UK and Other
businesses posted a 1.3% increase in operating profit in Pounds Sterling.
Business unit review - ongoing basis
Asset Management
Asset Management operating profit increased by 16.6% to GBP82.3 million
(2015: GBP70.6 million). The business benefited from higher average funds
under management supported by a recovery in equity markets and net
inflows of GBP1.1 billion; as well as higher performance fees in South Africa.
Total funds under management amount to GBP89.8 billion (31 March 2016:
GBP75.7 billion).
Wealth & Investment
Wealth & Investment operating profit increased by 14.1% to GBP43.2 million
(2015: GBP37.9 million) supported by higher average funds under
management and net inflows of GBP0.7 billion. Total funds under
management amount to GBP51.3 billion (31 March 2016: GBP45.5 billion).
Specialist Banking
Specialist Banking operating profit decreased by 7.1% to GBP212.8 million
(2015: GBP229.2 million). The business continued to experience good levels
of client activity supported by a deepening of the franchise; however results
were impacted by a decline in investment income.
The South African business reported a decrease in operating profit in Rands
of 9.2% as a consequence of the change in accounting treatment related
to the assets transferred to Investec Equity Partners (refer to additional
information). Excluding the impact of this transaction operating profit was
comfortably ahead of the prior period. The division reported solid growth in net
interest income and net fee and commission income supported by continued
growth in the Private Banking client base, reasonable corporate activity and an
increase in the scale of the property fund business. Core loans and advances
increased 3.4% to R225.3 billion (31 March 2016: R218.0 billion). The credit
loss ratio on average core loans and advances amounted to 0.29% (2015:
0.26%), remaining at the lower end of its long term average, despite the
business reporting a moderate increase in impairments.
The UK and Other businesses reported a 3.6% decrease in operating
profit. Notwithstanding Brexit-driven volatility, the division recorded a
strong performance in its customer flow trading business and robust
levels of activity across its lending and advisory businesses. Results were
negatively impacted by the write down of an investment in the Hong Kong
portfolio. Costs increased as the group continued to deliberately invest in IT
infrastructure and headcount to grow the franchise, notably the build out of
the private client banking offering. Core loans amounted to GBP7.8 billion,
an increase of 4.8% on a currency neutral basis, and impairments declined
marginally over 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:
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. These costs
amounted to GBP23.8million (2015: GBP22.6 million).
Financial statement analysis - ongoing basis
Total operating income
Total operating income before impairment losses on loans and advances
increased by 6.1% to GBP1,052.3 million (2015: GBP992.1 million).
Net interest income increased by 10.6% to GBP314.2 million (2015:
GBP284.1 million) driven by strong book growth in the 2016 financial year as
well as sound levels of lending activity in the current period.
Net fee and commission income increased by 14.7% to GBP608.6 million
(2015: GBP530.6 million) as a result of higher average funds under
management over the period and net inflows in the Asset Management and
Wealth Management businesses. In addition, the Specialist Banking business
benefited from an increase in the scale of the property fund business in South
Africa and from the corporate and advisory businesses, notably in the UK.
Investment income reduced materially to GBP28.8 million (2015:
GBP112.4 million) as a consequence of the change in accounting treatment
related to the assets transferred to Investec Equity Partners (refer to
additional information). In addition the group reported a write down on an
investment in the Hong Kong portfolio.
Share of post-taxation operating profit of associates of GBP9.6 million in the
current period largely reflects earnings in relation to the group's investment in
Investec Equity Partners.
Trading income arising from customer flow increased by 28.2% to
GBP73.5 million (2015: GBP57.3 million) benefiting from franchise growth
and good client activity levels. Trading income from other trading activities
reflected a profit of GBP12.4 million (2015: GBP4.3 million) largely due to
favourable balance sheet management.
Impairment losses on loans and advances
Impairments on loans and advances increased marginally from
GBP17.7 million to GBP18.0 million; however the annualised credit loss ratio
on core loans and advances remains low at 0.19% (2015: 0.22%). Since
31 March 2016 gross defaults have increased from GBP201.9 million to
GBP272.3 million largely due to an increase in defaults in the South African
banking business. The percentage of default loans (net of impairments but
before taking collateral into account) to core loans and advances amounted
to 0.90% (31 March 2016: 0.78%).
Operating costs
The ratio of total operating costs to total operating income was 66.7%
(2015: 65.4%). Total operating costs grew by 8.2% to GBP701.8 million
(2015: GBP648.6 million) reflecting planned spend on IT infrastructure
and higher headcount across divisions to support increased activity and
growth initiatives; and an increase in variable remuneration given improved
profitability in certain businesses.
Taxation
The effective tax rate amounts to 19.4% (2015:21.2%).
Profit attributable to non-controlling interests
Profit attributable to non-controlling interests mainly comprises:
GBP9.9 million profit attributable to non-controlling interests in the Asset
Management business.
GBP17.7 million profit attributable to non-controlling interests in the Investec
Property Fund Limited.
Balance sheet analysis
Since 31 March 2016:
- Total shareholders' equity (including non-controlling interests) increased
by 16.2% to GBP4.5 billion due to foreign currency translation gains,
an increase in retained earnings and the issuance of shares during the period.
- Net asset value per share increased 14.5% to 403.5 pence and net
tangible asset value per share (which excludes goodwill and intangible
assets) increased by 18.4% to 348.5 pence.
- The annualised return on adjusted average shareholders' equity
increased from 11.5% to 12.1%.
- The annualised return on adjusted average shareholders' equity of the
ongoing business remained at 13.9%.
Liquidity and funding
As at 30 September 2016 the group held GBP13.1 billion in cash and
near cash balances (GBP6.2 billion in Investec plc and R123.9 billion in
Investec Limited) which amounted to 39.7% of its liability base. The group
defensively increased cash balances in anticipation of the EU referendum in
the UK and remains very liquid given global volatility and uncertainty in the
markets. The group continues to manage its excess liquidity and funding
profile accordingly. Loans and advances to customers as a percentage of
customer deposits amounted to 72.0% (31 March 2016: 73.6%). The group
comfortably exceeds Basel liquidity requirements for the Liquidity Coverage
Ratio (LCR) and Net Stable Funding Ratio (NSFR) in the UK. The LCR
reported to the Prudential Regulatory Authority at 30 September 2016 was
819% for Investec plc and 901% for Investec Bank plc (solo basis). Investec
Bank Limited (solo basis) ended the period to 30 September 2016 with
the three-month average of its LCR at 138.4%, which is well ahead of the
minimum levels required. Further detail with respect to the bank's LCR ratio
in the UK and 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% 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.
30 September 31 March
2016 2016
Investec plc^
Capital adequacy ratio 15.0% 15.1%
Tier 1 ratio 11.1% 10.7%
Common equity tier 1 ratio 10.9% 9.7%
Common equity tier 1 ratio (anticipated
Basel III "fully loaded"*) 10.9% 9.7%
Leverage ratio (current) 7.1% 7.0%
Leverage ratio (anticipated Basel III
"fully loaded"*) 7.0% 6.3%
Investec Limited^
Capital adequacy ratio 14.4% 14.0%
Tier 1 ratio 10.8% 10.7%
Common equity tier 1 ratio 9.8% 9.6%
Common equity tier 1 ratio
(anticipated Basel III "fully loaded"*) 9.8% 9.6%
Leverage ratio (current*) 7.3% 6.9%
Leverage ratio (anticipated Basel III
"fully loaded"*) 6.7% 6.3%
* 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 capital as now required under the
CRR and EBA technical standards. The impact of the final proposed ordinary
and preference dividends totalling GBP64 million for Investec plc would be
48bps (31 March 2016: 40bps) lower on this basis.
** Investec Limited's capital information includes unappropriated profits. If
unappropriated profits are excluded from the capital information, Investec Limited's
common equity tier 1 ratio would be 13bps (31 March 2016: 16bps) lower.
Legacy business - overview of results
Since 31 March 2016 the group's legacy portfolio in the UK has continued
to be actively managed down from GBP583 million to GBP535 million
largely through asset sales, redemptions and write-offs. The total legacy
business over the period reported a loss before taxation of GBP33.0 million
(2015:GBP35.5 million). The remaining legacy portfolio will continue
to be managed down. Given the uncertainty in the UK following the
EU referendum, the legacy book could take longer to wind down than
management's original expectation of two to four years. Total net
defaults in the legacy book amount to GBP126 million (31 March 2016:
GBP143 million).
Additional information - Investec Equity Partners
In South Africa a new investment vehicle, Investec Equity Partners,
was created on 11 January 2016 in which Investec holds a 45% stake
alongside other strategic investors who hold the remaining 55%. Investec
Principal Investments transferred certain portfolio investments to the value
of R7.6 billion to Investec Equity Partners. In exchange Investec received
R2.5 billion in cash and 45% of the shares in Investec Equity Partners
(R5.1 billion), reflected as an associate on the balance sheet. Since the date
of the transaction Investec has applied the equity accounting method to
account for its investment in the new vehicle as opposed to the fair value
accounting method previously applied to the underlying investments held.
Outlook
Uncertainty persists in the macro environment as the UK prepares for
Brexit, the US adopts a new presidential administration and South Africa
deals with economic, political and social volatility. While Investec is mindful
of the potentially challenging external circumstances, its operational and
geographic diversity is supporting a recurring income base which has proved
resilient notwithstanding fluctuating market conditions. The group remains
committed to providing value for shareholders balanced by appropriate
outcomes for stakeholders and an exceptional experience for clients.
On behalf of the boards of Investec plc and Investec Limited
Fani Titi Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
16 November 2016
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 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.
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 2016 31 Mar 2016 30 Sep 2015
Period Period Period
GBP1.00 end Average end Average end Average
South African
Rand 17.88 19.99 21.13 20.72 20.95 19.33
Australian Dollar 1.70 1.83 1.87 2.04 2.15 2.05
Euro 1.16 1.23 1.26 1.37 1.35 1.39
US Dollar 1.30 1.38 1.44 1.50 1.51 1.54
Exchange rates between local currencies and Pounds Sterling have
fluctuated over the period.
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 2016 are consistent with those adopted in the
financial statements for the year ended 31 March 2016.
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 2016 will be posted to stakeholders on
30 November 2016. 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 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 16 November 2016.
- The information in the announcement for the six months ended
30 September 2016, which was approved by the board of directors on
16 November 2016, does not constitute statutory accounts as defined
in Section 435 of the UK Companies Act 2006. The 31 March 2016
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
Financial assistance
Shareholders are referred to the Special Resolution number 3 relating to the
provision of direct or indirect financial assistance in terms of Section 45 of
the South African Companies Act, No 71 of 2008 to related or inter-related
companies, which was approved at the annual general meeting held on
4 August 2016. Shareholders are hereby notified that in terms of S45(5)
(a) of the South African Companies Act, the board of directors of Investec
Limited provided such financial assistance during the period 1 April 2016 to
30 September 2016.
Ongoing financial information
Ongoing summarised income statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2016 2015 2016
Net interest income 314 151 284 142 571 929
Net fee and commission income 608 564 530 590 1 058 340
Investment income 28 800 112 373 169 915
Share of post taxation operating profit of associates 9 639 491* 1 811*
Trading income arising from
- customer flow 73 479 57 318 110 879
- balance sheet management and other trading activities 12 370 4 304 11 617
Other operating income 5 298 2 854* 10 279*
Total operating income before impairment losses on loans and advances 1 052 301 992 072 1 934 770
Impairment losses on loans and advances (18 004) (17 741) (41 368)
Operating income 1 034 297 974 331 1 893 402
Operating costs (701 801) (648 630) (1 272 108)
Depreciation on operating leased assets - (220) (2 165)
Operating profit before goodwill, acquired intangibles and non-operating items 332 496 325 481 619 129
Profit attributable to other non-controlling interests (18 033) (10 518) (35 201)
Profit attributable to Asset Management non-controlling interests (9 924) (8 647) (16 529)
Operating profit before taxation 304 539 306 316 567 399
Taxation (62 696) (69 018) (118 151)
Preference dividends accrued (11 925) (14 708) (26 130)
Adjusted attributable earnings to ordinary shareholders 229 918 222 590 423 118
Number of weighted average shares (million) 895.7 871.8 870.5
Adjusted earnings per share (pence) 25.7 25.5 48.6
Cost to income ratio 66.7% 65.4% 65.8%
* Share of post taxation operating profit of associates shown separately from other operating income.
Segmental geographical and business analysis of operating profit before goodwill, acquired intangibles,
non-operating items, taxation and after other non-controlling interests - ongoing business
for the six months to 30 September UK Southern Total
GBP'000 and Other Africa group
2016
Asset Management 43 116 39 138 82 254
Wealth & Investment 29 192 14 005 43 197
Specialist Banking 95 211 117 623 212 834
167 519 170 766 338 285
Group costs (17 758) (6 064) (23 822)
Total group 149 761 164 702 314 463
Other non-controlling interest - equity 18 033
Operating profit 332 496
2015
Asset Management 40 127 30 427 70 554
Wealth & Investment 25 896 11 954 37 850
Specialist Banking 98 786 130 389 229 175
164 809 172 770 337 579
Group costs (17 036) (5 580) (22 616)
Total group 147 773 167 190 314 963
Other non-controlling interest - equity 10 518
Operating profit 325 481
Reconciliation from statutory summarised income statement to ongoing summarised income
statement
Removal of:**
for the six months to 30 September 2016 Statutory UK legacy Ongoing
GBP'000 as disclosed business business
Net interest income 313 465 (686) 314 151
Net fee and commission income 608 488 (76) 608 564
Investment income 29 024 224 28 800
Share of post taxation operating profit of associates 9 639 - 9 639
Trading income arising from
- customer flow 73 438 (41) 73 479
- balance sheet management and other trading activities 12 370 - 12 370
Other operating income 5 298 - 5 298
Total operating income/(loss) before impairment losses on loans and advances 1 051 722 (579) 1 052 301
Impairment losses on loans and advances (46 591) (28 587) (18 004)
Operating income/(loss) 1 005 131 (29 166) 1 034 297
Operating costs (705 680) (3 879) (701 801)
Operating profit/(loss) before goodwill, acquired intangibles and non-operating items 299 451 (33 045) 332 496
Profit attributable to other non-controlling interests (18 033) - (18 033)
Profit attributable to Asset Management non-controlling interests (9 924) - (9 924)
Operating profit/(loss) before taxation 271 494 (33 045) 304 539
Taxation (56 279) 6 417(#) (62 696)
Preference dividends accrued (11 925) - (11 925)
Adjusted attributable earnings to ordinary shareholders 203 290 (26 628) 229 918
Number of weighted average shares (million) 895.7 895.7
Adjusted earnings per share (pence) 22.7 25.7
Cost to income ratio 67.1% 66.7%
(#) Applying the group's effective statutory taxation rate of 19.4%.
Removal of:**
for the six months to 30 September 2015 Statutory UK legacy Ongoing
GBP'000 as disclosed business business
Net interest income 285 500 1 358 284 142
Net fee and commission income 533 906 3 316 530 590
Investment income 112 387 14 112 373
Share of post taxation operating profit of associates 491 - 491
Trading income arising from
- customer flow 56 895 (423) 57 318
- balance sheet management and other trading activities 4 004 (300) 4 304
Other operating income 2 854 - 2 854
Total operating income before impairment losses on loans and advances 996 037 3 965 992 072
Impairment losses on loans and advances (46 140) (28 399) (17 741)
Operating income/(loss) 949 897 (24 434) 974 331
Operating costs (659 719) (11 089) (648 630)
Depreciation on operating leased assets (220) - (220)
Operating profit/(loss) before goodwill, acquired intangibles and non-operating items 289 958 (35 523) 325 481
Profit attributable to other non-controlling interests (10 518) - (10 518)
Profit attributable to Asset Management non-controlling interests (8 647) - (8 647)
Operating profit/(loss) before taxation 270 793 (35 523) 306 316
Taxation (61 485) 7 533* (69 018)*
Preference dividends accrued (14 708) - (14 708)
Adjusted attributable earnings to ordinary shareholders 194 600 (27 990) 222 590
Number of weighted average shares (million) 871.8 871.8
Adjusted earnings per share (pence) 22.3 25.5
Cost to income ratio 66.2% 65.4%
* Applying the group's effective statutory taxation rate of 21.2%.
** The remaining legacy business in the UK.
Statutory financial information
Salient financial features
Results in Pounds Sterling Results in Rand
Neutral
currency Neutral
Six months to Six months to Six months to currency Six months to Six months to
30 September 30 September % 30 September % 30 September 30 September %
2016 2015 change 2016 change 2016 2015 change
Operating profit before
taxation* (million) GBP281.4 GBP279.4 0.7% GBP283.9 1.6% R5 592 R5 442 2.8%
Earnings attributable to
shareholders (million) GBP208.6 GBP197.6 5.6% GBP209.7 6.1% R4 132 R3 843 7.5%
Adjusted earnings
attributable to
shareholders** (million) GBP203.3 GBP194.6 4.5% GBP204.1 4.9% R4 027 R3 787 6.3%
Adjusted earnings per
share** 22.7p 22.3p 1.8% 22.8p 2.2% 449.6c 434.4c 3.5%
Basic earnings per share 26.5p 20.1p 31.8% 26.5p 31.8% 523.5c 391.6c 33.7%
Headline earnings per
share 24.8p 21.0p 18.1% 24.8p 18.1% 489.5c 410.5c 19.2%
Dividends per share 10.0p 9.5p 5.3% n/a n/a 178c 207c (14.0%)
Cost to income ratio 67.1% 66.2% 67.0%
Results in Pounds Sterling Results in Rand
Neutral
currency Neutral
At At At currency At At
30 September 31 March % 30 September % 30 September 31 March %
2016 2016 change 2016 change 2016 2016 change
Net asset value per share 403.5p 352.3p 14.5% 378.4p 7.4% 7 215c 7 444c (3.1%)
Net tangible asset value
per share 348.5p 294.3p 18.4% 323.5p 9.9% 6 232c 6 218c 0.2%
Total equity (million) GBP4 485 GBP3 859 16.2% GBP4 110 6.5% R80 198 R81 543 (1.6%)
Total assets (million) GBP52 479 GBP45 352 15.7% GBP48 078 6.0% R938 436 R958 221 (2.1%)
Core loans and advances
(million) GBP20 898 GBP18 119 15.3% GBP18 749 3.5% R373 703 R382 826 (2.4%)
Cash and near cash
balances (million) GBP13 114 GBP10 994 19.3% GBP11 926 8.8% R234 515 R232 290 1.0%
Customer (deposits)
(million) GBP28 305 GBP24 044 17.7% GBP25 803 7.3% R506 153 R508 024 (0.4%)
Third party assets under
management (million) GBP141 783 GBP121 683 16.5% GBP134 213 10.3% R2 535 391 R2 571 141 (1.4%)
Return on average
adjusted shareholders'
equity 12.1% 11.5%
Return on average risk-
weighted assets 1.40% 1.34%
Defaults (net of
impairments and before
collateral) as a percentage
of net core loans 1.48% 1.54%
Loans and advances
to customers as a
percentage of customer
deposits 72.0% 73.60%
Credit loss ratio (income
statement impairment
charge as a % of average
gross core loans and
advances) 0.48% 0.62%
* 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.
Combined consolidated income statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2016 2015 2016
Interest income 1 037 756 849 817 1 705 640
Interest expense (724 291) (564 317) (1 131 871)
Net interest income 313 465 285 500 573 769
Fee and commission income 670 816 591 037 1 188 012
Fee and commission expense (62 328) (57 131) (126 387)
Investment income 29 024 112 387 170 408
Share of post taxation operating profit of associate 9 639 491* 1 811*
Trading income arising from
- customer flow 73 438 56 895 110 227
- balance sheet management and other trading activities 12 370 4 004 11 377
Other operating income 5 298 2 854* 10 279*
Total operating income before impairment losses on loans and advances 1 051 722 996 037 1 939 496
Impairment losses on loans and advances (46 591) (46 140) (109 516)
Operating income 1 005 131 949 897 1 829 980
Operating costs (705 680) (659 719) (1 287 021)
Depreciation on operating leased assets - (220) (2 165)
Operating profit before goodwill and acquired intangibles 299 451 289 958 540 794
Impairment of goodwill (270) (717) (1 577)
Amortisation of acquired intangibles (8 469) (7 848) (16 248)
Operating profit 290 712 281 393 522 969
Net loss on disposal of subsidiaries - (4 746) (4 778)
Profit before taxation 290 712 276 647 518 191
Taxation on operating profit before goodwill and acquired intangibles (56 279) (61 485) (103 202)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries 2 122 1 610 5 197
Profit after taxation 236 555 216 772 420 186
Profit attributable to other non-controlling interests (18 033) (10 518) (35 201)
Profit attributable to Asset Management non-controlling interests (9 924) (8 647) (16 529)
Earnings attributable to shareholders 208 598 197 607 368 456
Impairment of goodwill 270 717 1 577
Amortisation of acquired intangibles 8 469 7 848 16 248
Net loss on disposal of subsidiaries - 4 746 4 778
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries (2 122) (1 610) (5 197)
Preference dividends paid (11 979) (22 434) (33 192)
Accrual adjustment on earnings attributable to other equity holders 54 7 726 7 062
Adjusted earnings 203 290 194 600 359 732
Headline adjustments** 18 627 (11 165) (25 012)
Headline earnings 221 917 183 435 334 720
Earnings per share (pence)
- Basic 26.5 20.1 38.5
- Diluted 25.4 19.1 36.7
Adjusted earnings per share (pence)
- Basic 22.7 22.3 41.3
- Diluted 21.8 21.2 39.4
Dividends per share (pence)
- Interim 10.0 9.5 9.5
- Final n/a n/a 11.5
Headline earnings per share (pence)
- Basic 24.8 21.0 38.5
- Diluted 23.8 20.0 36.7
Number of weighted average shares - (million) 895.7 871.8 870.5
* Share of post taxation operating profit of associates shown separately from other operating income.
** The headline earnings adjustments are made up of property revaluations, loss on disposal of subsidiaries, the impairment of goodwill and
non-current assets held for sale, gains on available for sale instruments recycled through the income statement and other gains/(losses)
on preference shares recognised directly in equity. This line represents the reconciling items from adjusted earnings to headline earnings.
Summarised combined consolidated statement of comprehensive income
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2016 2015 2016
Profit after taxation 236 555 216 772 420 186
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* 19 912 (16 734) (31 934)
- Gains on realisation of available-for-sale assets recycled to the income statement* (8 132) (1 145) (1 961)
- Fair value movements on available-for-sale assets taken directly to other comprehensive income* 52 980 (13 757) (37 153)
- Foreign currency adjustments on translating foreign operations 375 148 (266 255) (240 875)
Items that will never be reclassified to the income statement
- Re-measurement of net defined pension liability - - 4 738
Total comprehensive income/(loss) 676 463 (81 119) 113 001
Total comprehensive income/(loss) attributable to ordinary shareholders 551 216 (67 075) 84 932
Total comprehensive income/(loss) attributable to non-controlling interests 113 268 (36 478) (5 123)
Total comprehensive income attributable to perpetual preferred securities 11 979 22 434 33 192
Total comprehensive income/(loss) 676 463 (81 119) 113 001
* Net of taxation of (GBP 19.5 million) [Six months to 30 September 2015: GBP 14.6 million, year to 31 March 2016: GBP 27.1 million].
Summarised combined consolidated cash flow statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2016 2015 2016
Cash inflows from operations 370 866 350 477 598 786
Increase in operating assets (652 118) (1 859 634) (4 580 570)
Increase in operating liabilities 1 829 100 1 220 550 4 602 620
Net cash inflow/(outflow) from operating activities 1 547 848 (288 607) 620 836
Net cash outflow from investing activities (30 229) (19 081) (13 925)
Net cash outflow from financing activities (32 265) (348 234) (347 741)
Effects of exchange rates on cash and cash equivalents 234 127 (181 554) (171 718)
Net increase/(decrease) in cash and cash equivalents 1 719 481 (837 476) 87 452
Cash and cash equivalents at the beginning of the period 4 650 300 4 562 848 4 562 848
Cash and cash equivalents at the end of the period 6 369 781 3 725 372 4 650 300
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
30 September 31 March 30 September
GBP'000 2016 2016 2015
Assets
Cash and balances at central banks 4 233 278 3 007 269 2 003 037
Loans and advances to banks 3 154 517 2 498 585 2 261 008
Non-sovereign and non-bank cash placements 571 405 466 573 545 878
Reverse repurchase agreements and cash collateral on securities borrowed 2 424 849 2 497 125 2 504 339
Sovereign debt securities 3 639 215 3 208 862 2 739 669
Bank debt securities 641 542 896 855 988 133
Other debt securities 1 079 256 949 950 832 494
Derivative financial instruments 1 636 619 1 580 949 1 331 618
Securities arising from trading activities 1 215 293 1 119 074 1 354 599
Investment portfolio 806 696 660 795 929 115
Loans and advances to customers 20 376 991 17 681 572 16 267 283
Own originated loans and advances to customers securitised 521 063 437 243 463 436
Other loans and advances 371 111 321 617 305 480
Other securitised assets 153 133 160 295 279 262
Interests in associated undertakings 331 294 267 099 23 809
Deferred taxation assets 98 641 112 135 94 023
Other assets 2 306 954 2 092 661 2 071 704
Property and equipment 98 632 90 888 94 231
Investment properties 1 013 204 938 879 531 835
Goodwill 370 969 368 039 368 319
Intangible assets 146 845 148 280 155 619
Non-current assets classified as held for sale 27 818 - 28 692
45 219 325 39 504 745 36 173 583
Other financial instruments at fair value through profit or loss in respect
of liabilities to customers 7 259 638 5 847 036 5 526 475
52 478 963 45 351 781 41 700 058
Liabilities
Deposits by banks 2 536 285 2 397 403 1 810 306
Derivative financial instruments 1 757 081 1 582 847 1 396 041
Other trading liabilities 983 407 957 418 1 312 201
Repurchase agreements and cash collateral on securities lent 1 048 993 971 646 877 301
Customer accounts (deposits) 28 304 921 24 044 281 21 658 505
Debt securities in issue 2 354 568 2 299 751 2 033 245
Liabilities arising on securitisation of own originated loans and advances 91 611 85 650 82 670
Liabilities arising on securitisation of other assets 112 754 120 851 197 900
Current taxation liabilities 200 390 192 255 193 243
Deferred taxation liabilities 63 586 55 486 87 040
Other liabilities 1 926 943 1 802 967 1 737 744
39 380 539 34 510 555 31 386 196
Liabilities to customers under investment contracts 7 257 222 5 845 503 5 524 800
Insurance liabilities, including unit-linked liabilities 2 416 1 533 1 675
46 640 177 40 357 591 36 912 671
Subordinated liabilities 1 353 958 1 134 883 1 121 679
47 994 135 41 492 474 38 034 350
Equity
Ordinary share capital 237 228 228
Perpetual preference share capital 38 153 153
Share premium 2 327 189 2 239 364 2 259 909
Treasury shares (138 609) (125 717) (104 395)
Other reserves (465 030) (784 051) (777 277)
Retained income 2 162 199 2 030 310 1 943 523
Shareholders' equity excluding non-controlling interests 3 886 024 3 360 287 3 322 141
Other Additional Tier 1 securities in issue 30 757 26 031 26 257
Non-controlling interests 568 047 472 989 317 310
- Perpetual preferred securities issued by subsidiaries 85 798 72 615 73 245
- Non controlling interests in partially held subsidiaries 482 249 400 374 244 065
Total equity 4 484 828 3 859 307 3 665 708
Total liabilities and equity 52 478 963 45 351 781 41 700 058
Summarised combined consolidated statement of changes in equity
Six months to Year to Six months to
30 September 31 March 30 September
GBP'000 2016 2016 2015
Balance at the beginning of the period 3 859 307 4 040 495 4 040 495
Total comprehensive income/(loss) for the period 676 463 113 001 (81 119)
Share-based payments adjustments 24 954 56 216 26 156
Dividends paid to ordinary shareholders (123 344) (180 009) (97 896)
Dividends declared to perpetual preference shareholders (7 425) (14 519) (7 766)
Dividends paid to perpetual preference shareholders included in non-controlling interests (4 554) (18 673) (14 668)
Dividends paid to non-controlling interests (18 189) (39 835) (13 165)
Issue of ordinary shares 211 063 54 720 54 705
Redemption of perpetual preference shares (81 736) - -
Issue of equity by subsidiaries (21) - -
Buy-back of non-controlling interests 48 153 299 (142 134)
Acquisition of non-controlling interests - (142 111) 28
Movement of treasury shares (51 738) (163 277) (98 928)
Balance at the end of the period 4 484 828 3 859 307 3 665 708
Combined consolidated segmental analysis
For the six months to 30 September UK and Southern Total
GBP'000 Other Africa group
Segmental geographical and business analysis of operating profit before goodwill, acquired
intangibles, non-operating items, taxation and after other non-controlling interests
2016
Asset Management 43 116 39 138 82 254
Wealth & Investment 29 192 14 005 43 197
Specialist Banking 62 166 117 623 179 789
134 474 170 766 305 240
Group costs (17 758) (6 064) (23 822)
Total group 116 716 164 702 281 418
Other non-controlling interest - equity 18 033
Operating profit 299 451
2015
Asset Management 40 127 30 427 70 554
Wealth & Investment 25 896 11 954 37 850
Specialist Banking 63 263 130 389 193 652
129 286 172 770 302 056
Group costs (17 036) (5 580) (22 616)
Total group 112 250 167 190 279 440
Other non-controlling interest - equity 10 518
Operating profit 289 958
Analysis of financial assets and liabilities by category of financial instrument
Total Insurance
Total instruments related
At 30 September 2016 instruments at amortised instruments Non-financial
GBP'000 at fair value cost at fair value instruments Total
Assets
Cash and balances at central banks 1 672 4 231 606 - - 4 233 278
Loans and advances to banks 121 680 3 032 837 - - 3 154 517
Non-sovereign and non-bank cash placements 2 133 569 272 - - 571 405
Reverse repurchase agreements and cash collateral on securities borrowed 1 117 341 1 307 508 - - 2 424 849
Sovereign debt securities 3 424 066 215 149 - - 3 639 215
Bank debt securities 279 510 362 032 - - 641 542
Other debt securities 754 753 324 503 - - 1 079 256
Derivative financial instruments 1 636 619 - - - 1 636 619
Securities arising from trading activities 1 215 293 - - - 1 215 293
Investment portfolio 806 696 - - - 806 696
Loans and advances to customers 882 856 19 494 135 - - 20 376 991
Own originated loans and advances to customers securitised - 521 063 - - 521 063
Other loans and advances - 371 111 - - 371 111
Other securitised assets 140 436 12 697 - - 153 133
Interests in associated undertakings - - - 331 294 331 294
Deferred taxation assets - - - 98 641 98 641
Other assets 374 838 1 420 446 - 511 670 2 306 954
Property and equipment - - - 98 632 98 632
Investment properties - - - 1 013 204 1 013 204
Goodwill - - - 370 969 370 969
Intangible assets - - - 146 845 146 845
Non-current assets classified as held for sale - - - 27 818 27 818
10 757 893 31 862 359 - 2 599 073 45 219 325
Other financial instruments at fair value through profit or loss in respect of
liabilities to customers - - 7 259 638 - 7 259 638
10 757 893 31 862 359 7 259 638 2 599 073 52 478 963
Liabilities
Deposits by banks - 2 536 285 - - 2 536 285
Derivative financial instruments 1 757 081 - - - 1 757 081
Other trading liabilities 983 407 - - - 983 407
Repurchase agreements and cash collateral on securities lent 56 973 992 020 - - 1 048 993
Customer accounts (deposits) 512 256 27 792 665 - - 28 304 921
Debt securities in issue 632 781 1 721 787 - - 2 354 568
Liabilities arising on securitisation of own originated loans and advances - 91 611 - - 91 611
Liabilities arising on securitisation of other assets 112 754 - - - 112 754
Current taxation liabilities - - - 200 390 200 390
Deferred taxation liabilities - - - 63 586 63 586
Other liabilities 40 858 1 369 324 516 761 1 926 943
4 096 110 34 503 692 - 780 737 39 380 539
Liabilities to customers under investment contracts - - 7 257 222 - 7 257 222
Insurance liabilities, including unit-linked liabilities - - 2 416 - 2 416
4 096 110 34 503 692 7 259 638 780 737 46 640 177
Subordinated liabilities - 1 353 958 - - 1 353 958
4 096 110 35 857 650 7 259 638 780 737 47 994 135
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. These are all classified as level 1.
Fair value category
Total
At 30 September 2016 instruments
GBP'000 at fair value Level 1 Level 2 Level 3
Assets
Cash and balances at central banks 1 672 1 672 - -
Loans and advances to banks 121 680 121 680 - -
Non-sovereign and non-bank cash placements 2 133 - 2 133 -
Reverse repurchase agreements and cash collateral on securities borrowed 1 117 341 172 926 944 415 -
Sovereign debt securities 3 424 066 3 424 066 - -
Bank debt securities 279 510 158 458 121 052 -
Other debt securities 754 753 529 826 215 934 8 993
Derivative financial instruments 1 636 619 - 1 582 541 54 078
Securities arising from trading activities 1 215 293 1 185 651 22 077 7 565
Investment portfolio 806 696 154 099 19 494 633 103
Loans and advances to customers 882 856 - 802 218 80 638
Other securitised assets 140 436 - - 140 436
Other assets 374 838 374 838 - -
10 757 893 6 123 216 3 709 864 924 813
Liabilities
Derivative financial instruments 1 757 081 - 1 754 975 2 106
Other trading liabilities 983 407 921 958 61 449 -
Repurchase agreements and cash collateral on securities lent 56 973 - 56 973 -
Customer accounts (deposits) 512 256 - 512 256 -
Debt securities in issue 632 781 - 620 407 12 374
Liabilities arising on securitisation of other assets 112 754 - - 112 754
Other liabilities 40 858 - 40 858 -
4 096 110 921 958 3 046 918 127 234
Net financial assets at fair value 6 661 783 5 201 258 662 946 797 579
Transfers between level 1 and level 2
During the period derivative financial instrument assets and liabilities to the value of GBP116.9 million and GBP210.3 million respectively were transferred from
level 1 to level 2 to reflect the level of modelling which is now being used to arrive at the fair value.
Level 2 financial assets and financial liabilities
The following table sets out the group's principal valuation techniques as at 30 September 2016 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 Discounted cash flow model Yield curves
placements
Reverse repurchase agreements and Discounted cash flow model, Hermite interpolation Yield curves
cash collateral on securities borrowed
Black-Scholes Volatilities
Bank debt securities Discounted cash flow model Yield curves
NCD curves
Other debt securities Discounted cash flow model Yield curves and NCD curves, external prices, broker
quotes
Derivative financial instruments Discounted cash flow model, Hermite interpolation, Yield curves, risk free rate, volatilities, forex forward
industry standard derivative pricing models including points and spot rates, interest rate swap curves and
Black-Scholes 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, relative valuation model Discount rate and fund unit price, net assets
Comparable quoted inputs
Loans and advances to customers Discounted cash flow model Yield curves
Liabilities
Derivative financial instruments Discounted cash flow model, Hermite interpolation, Yield curves, risk-free rate, volatilities, forex forward
industry standard derivative pricing models including points and spot rates, interest rate swap curves and
Black-Scholes credit curves
Other trading liabilities Discounted cash flow model Yield curves
Repurchase agreements and cash Discounted cash flow model, Hermite interpolation Yield curves
collateral on securities lent
Customer accounts (deposits) Discounted cash flow model Yield curves
Debt securities in issue Discounted cash flow model Yield curves
Other liabilities Discounted cash flow model Yield curves
Fair value
Total level through profit Available-
3 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 2016 690 903 635 384 55 519
Total gains or losses 5 867 (6 779) 12 646
In the income statement 6 672 (6 779) 13 451
In the statement of comprehensive income (805) - (805)
Purchases 105 372 105 143 229
Sales (30 537) (18 907) (11 630)
Issues (843) (843) -
Settlements (21 732) (10 266) (11 466)
Transfers into level 3 (9 740) (9 740) -
Foreign exchange adjustments 58 289 60 228 (1 939)
Balance as at 30 September 2016 797 579 754 220 43 359
For the period ended 30 September 2016, there were no significant transfers from level 3 into level 2. In the current and prior year the valuation methodologies
were reviewed and observable inputs are used to determine the fair value.
There were transfers from level 2 to the level 3 category to the value of GBP9.7 million because the significance of the unobservable inputs used to determine the
fair value increased sufficiently to warrant a transfer.
For the six months to 30 September 2016
GBP'000 Total Realised Unrealised
Total gains or (losses) included in the income statement for the period
Net interest income 1 091 1 091 -
Fee and commission income 4 513 - 4 513
Investment income (159) 11 700 (11 859)
Trading income arising from customer flow 1 227 (1 355) 2 582
6 672 11 436 (4 764)
Total gains or (losses) included in other comprehensive income for the period
Gains on realisation of available-for-sale assets recycled through the income statement 13 451 13 451 -
Fair value movements on available-for-sale assets taken directly to other comprehensive income (805) - (805)
12 646 13 451 (805)
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
Balance Significant which
sheet unobservable input unobservable Favourable Unfavourable
value changed in input has been changes changes
At 30 September 2016 GBP'000 valuation method stressed GBP'000 GBP'000
Assets
Other debt securities 8 993 Reflected in income statement 316 (436)
Cash flow adjustments CPR 5 - 9% 289 (433)
Other CDS spreads 27 (3)
Derivative financial instruments 54 078 Reflected in income statement 8 634 (6 491)
Volatilities 3.8 - 9% 3 632 (1 876)
Cash flow adjustments CPR 8% - 12% 753 (1 544)
Net asset value (10%) - 10% 56 (56)
Other^ ^ 4 193 (3 015)
Reflected in income statement
Securities arising from trading activities 7 565 Cash flow adjustments CPR 9.1 - 10% 717 (1 059)
Investment portfolio 633 103 Reflected in income statement 79 484 (66 406)
Cash flow adjustments CPR 9% 3 050 (3 050)
Price Earnings multiple ^^ 21 176 (4 785)
Price Earnings multiple 1x - 9.1x 3 116 (2 888)
Other^ ^ 52 142 (55 683)
Reflected in other
comprehensive income 3 633 (908)
EBITDA 3x 115 (21)
Other^ ^
3 518 (887)
Loans and advances to customers 80 638 Reflected in income statement 6 719 (15 203)
Discount rates 16% 1 633 (988)
EBITDA 10% 5 086 (5 086)
Other^ ^
- (9 129)
Other securitised assets* 140 436 Reflected in income statement 2 416 (2 434)
Cash flow adjustments CPR 6.25% 2 416 (2 434)
Other (1%) - 1% - -
Liabilities
Derivative financial instruments 2 106 Reflected in income statement 734 (1 580)
Cash flow adjustments CPR 8% 716 (1 510)
Volatilities 7- 8.5% 18 (70)
Reflected in income statement
Liabilities arising on securitisation of other
assets* 112 754 Cash flow adjustments CPR 6.25% 1 011 (1 104)
Reflected in income statement
Deposits by banks and other debt related
securities 12 374 Volatilities 7.0% 175 (828)
Net level 3 assets 797 579 103 839 (96 449)
* The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets
^ Other - The valuation sensitivity for the private equity and embedded derivatives (profit share) portfolios has been assessed by adjusting various inputs such as expected
cash flows, discount rates, earnings multiples rather than a single input. It is deemed appropriate to reflect the outcome on a portfolio basis for the purposes of this
analysis as the sensitivity of the investments cannot be determined through the adjustment of a single input.
^^ The price-earnings multiple has been determined on an investment by investment basis in order to obtain favourable and unfavourable valuations.
In determining the value of level 3 financial instruments, the following are the principal inputs that can require judgement: In determining the value of level
3 financial instruments, the following are the principal inputs that can require judgement:
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.
Cash flows
Cash flows relate to the future cash flows which can be expected from the instrument and requires judgement.
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 30 September 2016 Carrying Fair
GBP'000 amount value
Assets
Cash and balances at central banks 4 231 606 4 231 606
Loans and advances to banks 3 032 837 3 032 827
Non-sovereign and non-bank cash placements 569 272 569 272
Reverse repurchase agreements and cash collateral on securities borrowed 1 307 508 1 307 508
Sovereign debt securities 215 149 217 919
Bank debt securities 362 032 429 177
Other debt securities 324 503 314 763
Loans and advances to customers 19 494 135 19 524 212
Own originated loans and advances to customers securitised 521 063 521 063
Other loans and advances 371 111 356 233
Other securitised assets 12 697 12 697
Other assets 1 420 446 1 420 438
31 862 359 31 937 715
Liabilities
Deposits by banks 2 536 285 2 567 515
Repurchase agreements and cash collateral on securities lent 992 020 991 703
Customer accounts (deposits) 27 792 665 27 812 635
Debt securities in issue 1 721 787 1 734 325
Liabilities arising on securitisation of own originated loans and advances 91 611 91 611
Other liabilities 1 369 324 1 369 029
Subordinated liabilities 1 353 958 1 508 367
35 857 650 36 075 185
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 122
Notice is hereby given an interim dividend number 122, being a gross
dividend of 178.00000 cents (2015: 207.00000 cents) per ordinary share
has been declared by the Board from income reserves in respect of the six
months ended 30 September 2016 payable to shareholders recorded in the
shareholders' register of the company at the close of business on Friday,
09 December 2016.
The relevant dates for the payment of dividend number 122 are as
follows:
Last day to trade cum-dividend Tuesday, 06 December 2016
Shares commence trading ex-dividend Wednesday, 07 December 2016
Record date Friday, 09 December 2016
Payment date Wednesday, 21 December 2016
The interim gross dividend of 178.00000 cents per ordinary share has been
determined by converting the Investec plc distribution of 10.0 pence per
ordinary share into Rands using the Rand/Pounds Sterling average buy/sell
forward rate at 11h00 (SA time) on Wednesday, 16 November 2016.
Share certificates may not be dematerialised or rematerialised between
Wednesday, 07 December 2016 and Friday, 09 December 2016, both
dates inclusive.
Additional information to take note of:
- Investec Limited South African tax reference number: 9800/181/71/2
- The issued ordinary share capital of Investec Limited is 298 173 370
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 178.00000 cents per ordinary share
- Shareholders who are not exempt from paying the Dividend Tax will
receive a net dividend of 151.30000 cents per ordinary share (gross
dividend of 178.00000 cents per ordinary share less Dividend Tax of
26.70000 cents per ordinary share).
By order of the board
N van Wyk
Company Secretary
16 November 2016
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 24
Notice is hereby given that preference dividend number 24 has
been declared from income reserves for the period 01 April 2016 to
30 September 2016 amounting to a gross preference dividend of 409.41111
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, 02 December 2016.
The relevant dates for the payment of dividend number 24 are as
follows:
Last day to trade cum-dividend Tuesday, 29 November 2016
Shares commence trading ex-dividend Wednesday, 30 November 2016
Record date Friday, 02 December 2016
Payment date Monday, 12 December 2016
Share certificates may not be dematerialised or rematerialised between
Wednesday, 30 November 2016 and Friday, 02 December 2016, both dates
inclusive.
Additional information to take note of:
- Investec Limited South African 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 347.99944 cents per preference
share for preference shareholders liable to pay the Dividend Tax and
409.41111 cents per preference share for preference shareholders
exempt from paying the Dividend Tax.
By order of the board
N van Wyk
Company Secretary
16 November 2016
Investec plc
Incorporated in England and Wales
Registration number: 3633621
LSE ordinary share code: INVP
JSE ordinary share code: INP
ISIN: GB00B17BBQ50
Ordinary share dividend announcement
In terms of the DLC structure, Investec plc shareholders registered on the
United Kingdom share register 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 registered on the South African branch register 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.
Declaration of dividend number 29
Notice is hereby given that an interim dividend number 29, being a gross
dividend of 10.0 pence (2015: 9.5 pence) per ordinary share has been
declared by the Board from income reserves in respect of the six months
ended 30 September 2016 payable to shareholders recorded in the
members' register of the company at the close of business on Friday,
09 December 2016.
The relevant dates for the payment of dividend number 29 are as
follows:
Last day to trade cum-dividend
On the Johannesburg Stock
Exchange (JSE) Tuesday, 06 December 2016
On the London Stock Exchange (LSE) Wednesday, 07 December 2016
Shares commence trading ex-dividend
On the Johannesburg Stock
Exchange (JSE) Wednesday, 07 December 2016
On the London Stock Exchange (LSE) Thursday, 08 December 2016
Record date (on the JSE and LSE) Friday, 09 December 2016
Payment date (on the JSE and LSE) Wednesday, 21 December 2016
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Wednesday, 07 December 2016
and Friday, 09 December 2016, both dates inclusive, nor may transfers
between the United Kingdom share register and the South African branch
register take place between Wednesday, 07 December 2016 and Friday,
09 December 2016, both dates inclusive.
Additional information for South African resident shareholders of
Investec plc
- Shareholders registered on the South African branch register are advised
that the distribution of 10.0 pence, equivalent to a gross dividend of
178.00000 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, 16 November 2016
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued ordinary share capital of Investec plc is 656 424 689 ordinary
shares
- The dividend paid by Investec plc to South African resident shareholders
registered on the South African branch register and the dividend paid by
Investec Limited to Investec plc shareholders on the SA DAS share are
subject to South African Dividend Tax (Dividend Tax) of 15% (subject to
any available exemptions as legislated)
- Shareholders registered on the South African branch register who are
exempt from paying the Dividend Tax will receive a net dividend of
178.00000 cents per share
- Shareholders registered on the South African branch register who are
not exempt from paying the Dividend Tax will receive a net dividend of
151.30000 cents per share (gross dividend of 178.00000 cents per
share less Dividend Tax of 26.70000 cents per share)
By order of the board
D Miller
Company Secretary
16 November 2016
Investec plc
Incorporated in England and Wales
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 21
Notice is hereby given that preference dividend number 21 has
been declared from income reserves for the period 01 April 2016 to
30 September 2016 amounting to a gross preference dividend of 7.12329
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, 02 December 2016.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend
of 7.12329 pence per preference share is equivalent to a gross dividend of
126.40563 cents per share, which has been determined using the Rand/
Pound Sterling average buy/sell forward rate as at 11h00 (SA Time) on
Wednesday, 16 November 2016.
The relevant dates relating to the payment of dividend number 21 are
as follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Tuesday, 29 November 2016
On the Channel Islands Stock Exchange (CISX) Wednesday,
30 November 2016
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Wednesday,
30 November 2016
On the Channel Islands Stock Exchange (CISX) Thursday,
01 December 2016
Record date (on the JSE and CISX) Friday, 02 December 2016
Payment date (on the JSE and CISX) Monday, 12 December 2016
Share certificates may not be dematerialised or rematerialised between
Wednesday, 30 November 2016 and Friday, 02 December 2016 both dates
inclusive, nor may transfers between the United Kingdom share register
and the South African branch register take place between Wednesday,
30 November 2016 and Friday, 02 December 2016 both dates inclusive.
Additional information for South African resident shareholders of
Investec plc
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued preference share capital of Investec plc is 2 754 587
preference shares
- The dividend paid by Investec plc to shareholders recorded on the
South African branch register is subject to South African Dividend Tax
(Dividend Tax) of 15% (subject to any available exemptions as legislated)
- The net dividend amounts to 107.44479 cents per preference
share for preference shareholders liable to pay the Dividend Tax and
126.40563 cents per preference share for preference shareholders
exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
16 November 2016
Investec plc
Incorporated in England and Wales
Registration number: 3633621
JSE 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 11
Notice is hereby given that preference dividend number 11 has been declared
from income reserves for the period 01 April 2016 to 30 September 2016
amounting to a gross preference dividend of 500.11644 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, 02 December 2016.
The relevant dates relating to the payment of dividend number 11 are
as follows:
Last day to trade cum-dividend Tuesday, 29 November 2016
Shares commence trading ex-dividend Wednesday, 30 November 2016
Record date Friday, 02 December 2016
Payment date Monday, 12 December 2016
Share certificates may not be dematerialised or rematerialised between
Wednesday, 30 November 2016 and Friday, 02 December 2016, both dates
inclusive.
Additional information for South African resident shareholders of
Investec plc
- Investec plc United Kingdom tax reference number:2683967322360
- The issued rand denominated preference share capital of Investec plc is
131 447 preference shares
- The dividend paid by Investec plc to shareholders recorded on the South
African register is subject to South African Dividend Tax (Dividend Tax) of
15% (subject to any available exemptions as legislated)
- The net dividend amounts to 425.09897 cents per preference share for
preference shareholders liable to pay the Dividend Tax and 500.11644
cents per preference share for preference shareholders exempt from
paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
16 November 2016
Investec plc
Incorporated in England and Wales
(Registration number: 3633621)
JSE ordinary share code: INP
LSE ordinary 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 ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary 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+,
D Friedland,
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 **Dutch ^Irish
Sponsor:
Investec Bank Limited
www.investec.com
Date: 17/11/2016 09:01:00 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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