Wrap Text
Investec plc and Investec Limited unaudited combined consolidated financial results for the year ended 31 March 2019
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
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE ordinary share code: INP
LSE ordinary share code: INVP
ISIN: GB00B17BBQ50
(combined results) Unaudited combined
consolidated financial results
for the year ended 31 March 2019
This announcement covers the statutory results of Investec plc and Investec Limited
(together "the Investec group" or "the group") for the year ended 31 March 2019.
Group operational performance supported by our client franchises
- The group has delivered a sound operational performance supported by
substantial net inflows, good loan book growth in home currency, and
a significantly improved performance from the UK Specialist Banking
business.
- This is against a challenging operating environment with weak economic
growth in both South Africa and the UK, the group's two core banking
markets, as well as mixed equity market performance over the year.
- The Asset Management business generated substantial net inflows
supporting higher average funds under management and annuity fees.
- The Bank and Wealth business benefitted from client acquisition and
growth in key earnings drivers.
- The Specialist Banking business performance was supported by loan
book growth. A reduction in impairments was partly offset by a weak
performance from the investment portfolio.
- The Wealth & Investment business generated positive discretionary net
inflows. Reported results were affected by certain non-recurring items.
- Operating costs grew faster than revenue. Revenue growth and cost
containment remain priorities as outlined over the past year.
- ROE improved from 12.1% to 12.9%.
Overview of results
Group adjusted operating profit increased 9.4% year-on-year to
GBP664.5 million. The combined South African businesses reported
adjusted operating profit 1.8% ahead of the prior period in Rands, whilst
the combined UK and Other businesses posted a 36.1% increase in
adjusted operating profit in Pounds Sterling. Overall group results have
been negatively impacted by the depreciation of the average Rand: Pound
Sterling exchange rate of 4.8% over the year. Key earnings drivers have been
negatively impacted by the depreciation of the closing Rand: Pound Sterling
exchange rate of 13.1% over the year.
Neutral
31 March 31 March % Currency
Salient features(1) 2019 2018 change % change
Adjusted operating profit
(GBP'm) 664.5 607.5 9.4% 12.6%
Adjusted earnings attributable
to shareholders (GBP'm) 519.3 491.1 5.8% 9.2%
Adjusted basic earnings per
share (pence) 55.1 53.2 3.6% 7.0%
Basic earnings per share
(pence) 52.0 51.2 1.6% 4.9%
Dividend per share (pence) 24.5 24.0 2.1%
Dividend cover (times) 2.2 2.2
Dividend payout ratio 44.5% 45.1%
Annuity income as a % of total
operating income 76.9% 76.2%
Credit loss ratio 0.31% 0.61%
Cost to income ratio (net of
non-controlling interests)2 69.9% 68.3%
Return on adjusted average
shareholders' equity 12.9% 12.1%
Third party assets under
management (GBP'bn) 167.2 160.6 4.1% 8.3%
Customer accounts (deposits)
(GBP'bn) 31.3 31.0 1.0% 8.7%
Core loans and advances
(GBP'bn) 24.9 25.1 (0.8%) 6.8%
Cash and near cash (GBP'bn) 13.3 12.8 3.6% 10.0%
(1) Refer to definitions in the Notes.
(2) The group has changed its cost to income ratio definition to exclude operating
profits or losses attributable to other non-controlling interests. Refer to definitions in
the Notes for further detail.
- The group maintained a sound capital position with common equity
tier one (CET1) ratios of 10.8% for Investec plc and 10.5% for Investec
Limited. Investec Limited has received regulatory permission to adopt
the Foundation Internal Ratings Based (FIRB) approach, effective
1 April 2019, resulting in a pro-forma CET1 ratio of 11.6% had the FIRB
approach been applied as of 31 March 2019. Leverage ratios are robust
and remain comfortably ahead of the group's target of 6%.
- The proposed demerger and separate listing of Investec Asset
Management (still subject to regulatory and shareholder approvals) is
progressing well.
Fani Titi and Hendrik du Toit, Joint Chief Executive Officers of Investec said:
"We are implementing our strategy to simplify, focus and grow with discipline.
We are committed to the demerger and listing of the Asset Management
business and the positioning of the Bank and Wealth business for long-term
growth. In spite of a challenging operating environment, these results speak
to strong support from our clients."
Enquiries
Investec Investor Relations
Results: Carly Newton: +44 (0) 20 7597 4493 / +44 (0) 77 3046 4908 (mobile)
General enquiries: +27 (0) 11 286 7070 or +44 (0) 20 7597 5546
Brunswick (SA PR advisers)
Marina Bidoli
Tel: +27 (0) 11 502 7405 / +27 (0) 83 253 0478 (mobile)
Lansons (UK PR advisers)
Tom Baldock
Tel: +44 (0) 20 7566 9716 / +44 (0) 78 6010 1715 (mobile)
Presentation/conference call details
A presentation on the results will commence at 9:00 UK time/10:00 SA time
on 16 May 2019. Viewing and telephone conference 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: 011 535 3500
- UK participants: 0808 143 3720
- rest of Europe and other participants: +27 11 535 3500
- Australian participants: 0 280 152 168
- USA participants: 1 855 242 3083
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 10 500 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.
- IAM: A leading global asset manager with GBP111 billion in assets under
management (as at 31 March 2019), well diversified by asset class and
region.
- Wealth & Investment Business: One of the leading UK and South
African private client investment managers with over GBP55 billion in
assets under management as at 31 March 2019.
- Specialist Banking Business: Market-leading specialist corporate and
institutional banking, investment and private banking activities in South
Africa and the UK with GBP25 billion in core loans and advances and
GBP31 billion in customer deposits as at 31 March 2019.
In July 2002 the Investec group implemented a dual listed company structure
with listings on the London and Johannesburg Stock Exchanges. On
14 September 2018, the board of directors of the Investec group announced
the proposed demerger and separate listing of the Investec Asset
Management business subject to regulatory and shareholder approvals.
The combined group's current market capitalisation is approximately
GBP4.9 billion.
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated financial results for
the year ended 31 March 2019
Business unit review
Asset Management
Assets under management have increased by 7.3% to GBP111.4 billion
as at 31 March 2019. Substantial net inflows of GBP6.1 billion supported
higher average assets under management, together with favourable market
and currency movements. Asset Management adjusted operating profit
increased by 0.7% to GBP179.4 million (2018: GBP178.0 million). Earnings
were impacted by lower performance fees in South Africa and higher costs
in the UK, including ongoing investment in the business, Markets in Financial
Instruments Directive II (MiFID II) and new premises costs.
Bank and Wealth
Adjusted operating profit from the combined Bank and Wealth business
increased by 13.0% to GBP485.2 million (2018: GBP429.5 million).
Specialist Banking - adjusted operating profit increased by 18.0% to
GBP448.9 million (2018: GBP380.5 million).
The South African business reported an increase in adjusted operating
profit in Rands of 2.3%. Earnings were supported by growth in private
client interest and fee income and an increase in associate earnings from a
realisation in the IEP Group. This was partially offset by subdued corporate
activity levels and a weaker performance from the equity and investment
property portfolios; impacted by a weak domestic economy. Overall net core
loans grew 5.6% to R271.2 billion at 31 March 2019. Costs increased ahead
of revenue, impacted by the prior-year rental provision release. The credit
loss ratio amounted to 0.28%, remaining flat at the lower end of its long term
average, despite the business reporting an increase in impairments.
The UK and Other businesses reported a significant increase in adjusted
operating profit. A strong increase in net interest income was supported
by loan book growth of 8.5% (to GBP10.5 billion) driven by both corporate
client lending and Private Bank mortgage origination. This was largely offset
by a decrease in non-interest revenue with a weaker performance from
the investment portfolio and subdued levels of client trading. Impairments
decreased with no repeat of substantial legacy portfolio losses. The credit
loss ratio amounted to 0.38% (2018: 1.14% under the IAS 39 incurred
impairment loss model). Costs increased 2.0%, broadly in line with inflation,
as the investment phase in the Private Bank is now largely complete. Taken
together, the bank's cost to income ratio was 77.4% (2018: 76.7%).
Wealth & Investment - adjusted operating profit decreased by 16.2% to
GBP82.6 million (2018: GBP98.6 million).
The core global Wealth & Investment business performed in line with the prior
year. However, overall reported earnings were impacted by a non-recurring
investment gain realised in the prior year and the current year write-off of
capitalised software in the Click & Invest business as detailed below. The
underlying business generated annuity revenue growth, but lower transaction
based fees. Positive discretionary net inflows were partly offset by non-
discretionary outflows resulting in net inflows of GBP0.4 billion. Assets under
management decreased by 1.7% to GBP55.1 billion as at 31 March 2019,
primarily impacted by currency and market movements.
We have reviewed the Click & Invest online investment platform and decided
to discontinue the service in line with the group's commitment to manage
costs and allocate capital effectively. The underlying operating loss of Click &
Invest was circa GBP12.8 million (2018: GBP13.5 million). In addition a circa
GBP6 million write-off of capitalised software was taken in the current year.
The group remains committed to developing its digital initiatives and will look
to incorporate the technology into its offering.
Further information on key developments within each of the business units
is provided in the group results analyst booklet published on the group's
website: http://www.investec.com
Group costs
These largely relate to a portion of executive and support functions costs
associated with group level activities, group brand, marketing, and corporate
social responsibility initiatives. These costs are not incurred by the operating
divisions and are necessary to support the operational functioning of the
group. These costs decreased to GBP46.3 million (2018: GBP49.6 million).
Management is committed to bringing these costs down further over time.
Financial statement analysis
Total operating income
Total operating income before expected credit loss impairment charges
increased by 1.8% to GBP2,486.3 million (2018: GBP2,443.5 million).
Net interest income increased by 7.2% to GBP815.4 million
(2018: GBP760.4 million) driven by lending activity and endowment impact
from rate rises in the UK.
Net fee and commission income increased by 0.9% to GBP1,373.6 million
(2018: GBP1,361.2 million). Strong annuity fees from the asset and wealth
management businesses, as well as a good performance from the UK
investment banking business was offset by lower performance, brokerage
and deal fees in the South African businesses.
Investment income decreased to GBP50.0 million (2018: GBP130.0 million)
reflecting a weak performance from the group's listed and unlisted
investment portfolio, as well as from the investment property portfolio in
South Africa.
Share of post taxation profit of associates of GBP68.3 million (2018:
GBP46.8 million) reflects earnings in relation to the group's investment in
the IEP Group. The increase is largely driven by a realisation within the IEP
Group.
Trading income arising from customer flow decreased by 12.7% to
GBP120.7 million (2018: GBP138.2 million) reflecting subdued client flow
trading levels given the uncertainty in both geographies.
Trading income from balance sheet management and other trading activities
increased to GBP42.0 million (2018: GBP4.3 million loss). The increase is
largely reflective of translation gains on foreign currency equity investments
in South Africa (partially offsetting the related weaker investment income
performance) as well as the unwind of the UK subordinated debt fair value
adjustment (recognised on the adoption of IFRS 9) as the instrument pulls to
par over its remaining term.
Expected credit loss (ECL) impairment charges
The total ECL impairment charges amounted to GBP66.5 million, a
substantial reduction from GBP148.6 million (under the IAS 39 incurred loss
model) in the prior year, primarily reflecting a reduction in legacy impairments.
The group's credit loss ratio is within its long term average range at 0.31%
(2018: 0.61%). Since 1 April 2018 gross core loan Stage 3 exposures
have reduced by 29% to GBP521 million driven by a reduction of legacy
exposures. Net Stage 3 exposures as a percentage of net core loans subject
to ECL was 1.3% (1 April 2018: 2.0%).
Total operating costs
Operating costs increased 3.8% to GBP1,695.0 million
(2018: GBP1,632.7 million) primarily driven by higher premises costs given
the prior-year rental provision release in South Africa and headcount growth
to support business activity, regulatory requirements and information
technology development. The cost to income ratio (net of non-controlling
interests) amounted to 69.9% (2018: 68.3%).
Taxation
The effective tax rate amounted to 12.0% (2018: 9.6%) which remains below
the group's historical effective tax rate impacted by the utilisation of tax
losses and the release of provisions no longer required.
Non-operational costs
Non-operational costs amounted to GBP19.5 million (2018: GBP6.0 million)
and relate primarily to the restructure of the Irish branch as a consequence
of Brexit and costs incurred as part of the proposed demerger and separate
listing of the Investec Asset Management business.
Profit attributable to non-controlling interests
Profit attributable to non-controlling interests mainly comprises:
- GBP25.7 million (2018: GBP23.8 million) profit attributable to non-
controlling interests in the Asset Management business.
- GBP58.0 million (2018: GBP52.6 million) profit attributable to non-
controlling interests in the Investec Property Fund.
Balance sheet analysis
Since 31 March 2018:
- Shareholders' equity decreased by 2.8% to GBP4.3 billion primarily as
a result of the adoption of IFRS 9 on 1 April 2018 as well as from the
depreciation of the closing Rand: Pounds Sterling exchange rate.
- Net asset value per share decreased 4.1% to 434.1 pence and net
tangible asset value per share (which excludes goodwill and intangible
assets) decreased 3.9% to 386.0 pence, primarily as a result of the
adoption of IFRS 9 as well as from the depreciation of the closing Rand:
Pound Sterling exchange rate.
- The return on adjusted average shareholders' equity increased from
12.1% to 12.9%.
Liquidity and funding
As at 31 March 2019 the group held GBP13.3 billion in cash and near
cash balances (GBP7.0 billion in Investec plc and R118.4 billion in Investec
Limited) which amounted to 42.4% of customer deposits. Cash balances
increased in the UK largely driven by prefunding ahead of the restructure of
the Irish branch. As a result of Brexit, deposit raising in our Irish business
will no longer be undertaken and existing deposits are being unwound.
The group continues to focus on maintaining an optimal overall liquidity
and funding profile. Loans and advances to customers as a percentage
of customer deposits amounted to 78.4% (31 March 2018: 79.6%). The
group comfortably exceeds regulatory liquidity requirements for the Liquidity
Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). Investec Bank
Limited (solo basis) ended the period to 31 March 2019 with the three-
month average of its LCR at 135.6% and an NSFR of 115.6%. Further detail
with respect to the bank's LCR and NSFR in South Africa is provided on
the website. For Investec plc and Investec Bank plc (solo basis) the LCR
is calculated using our own interpretations of the EU Delegated Act. The
LCR reported to the PRA at 31 March 2019 was 313% for Investec plc and
291% for Investec Bank plc (solo basis). Ahead of the implementation of the
final NSFR rules, the group has applied its own interpretations of regulatory
guidance and definitions from the BCBS final guidelines to calculate the
NSFR which was 128% for Investec plc and 126% for Investec Bank plc
(solo basis). The reported NSFR and LCR may change over time with
regulatory developments and guidance.
Capital adequacy and leverage ratios
The group maintained a sound capital position with a CET1 ratio of 10.8% for
Investec plc and 10.5% for Investec Limited. Investec Limited has received
regulatory permission to adopt the FIRB approach, effective 1 April 2019,
resulting in a pro-forma CET1 ratio of 11.6% had the FIRB approach
been applied as of 31 March 2019. Leverage ratios are robust and remain
comfortably ahead of the group's target of 6%.
31 March 1 April 31 March
2019 2018 2018
Investec plc(1)
Capital adequacy ratio 15.7% 15.0% 15.4%
Tier 1 ratio 12.6% 12.4% 12.9%
Common equity tier 1 ratio 10.8% 10.5% 11.0%
Common equity tier 1 ratio ('fully loaded'(3)) 10.4% 10.3% 11.0%
Leverage ratio (current) 7.9% 8.3% 8.5%
Leverage ratio ('fully loaded'(3)) 7.5% 8.0% 8.4%
Investec Limited(2)
Capital adequacy ratio 14.9% 14.5% 14.6%
Tier 1 ratio 11.2% 10.8% 11.0%
Common equity tier 1 ratio 10.5% 10.0% 10.2%
Common equity tier 1 ratio ('fully loaded'(3)) 10.5% 9.8% 10.2%
Leverage ratio (current) 7.6% 7.4% 7.5%
Leverage ratio ('fully loaded'(3)) 7.3% 6.9% 7.1%
(1) 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
charges and dividends when calculating CET1 capital as required under the Capital
Requirements Regulation and European Banking Authority technical standards. The
impact of this deduction totalling GBP63 million for Investec plc would lower the
CET1 ratio by 41bps (31 March 2018: 45bps).
(2) Investec Limited's capital information includes unappropriated profits. If
unappropriated profits are excluded from the capital information, Investec Limited's
CET1 ratio would be 27bps (31 March 2018: 25bps) lower.
(3) The CET 1 fully loaded ratio and the fully loaded leverage ratio assume full adoption
of IFRS 9 and full adoption of all CRD IV rules or South African Prudential Authority
regulations, as applicable in the relevant jurisdictions. As a result of the adoption
of IFRS 9 Investec plc elected to designate its subordinated fixed rate medium-
term notes due in 2022 at fair value. By the time of full adoption of IFRS 9 in 2023,
these subordinated liabilities will have reached final maturity and will be redeemed
at par value. The remaining interest rate portion of the fair value adjustment at
31 March 2019 of GBP18 million (post-taxation), has therefore been excluded from
the fully loaded ratios as it will be released into profit and loss over the remaining life
of the instrument.
Additional information - proposed demerger and listing
of Investec Asset Management business
On 14 September 2018, the board of directors of Investec plc and Investec
Limited announced that the Investec Asset Management business would
become a separately listed entity. The demerger and the listing of Investec
Asset Management is subject to regulatory and shareholder approvals, and is
expected to be completed during the second half of 2019.
Outlook
The past year has seen a smooth leadership transition combined with a
strategic review of the group. We are on track with the proposed demerger
and separate listing of Investec Asset Management which should enhance
the long-term prospects of both businesses. We are confident that we have
positioned the businesses to ensure they meet their growth objectives and
deliver long-term shareholder returns.
On behalf of the boards of Investec plc and Investec Limited
Perry Crosthwaite Fani Titi Hendrik du Toit
Chairman Joint Chief Executive Joint Chief Executive
Officer Officer
15 May 2019
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.
Unless the context indicates otherwise, all comparatives included in the
commentary above relate to the year ended 31 March 2018.
Amounts represented on a neutral currency basis for income statement
items assume that the relevant average exchange rates for the year to
31 March 2019 remain the same as those in the prior year. Amounts
represented on a neutral currency basis for balance sheet items assume that
the relevant closing exchange rates at 31 March 2019 remain the same as
those at 31 March 2018.
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 March 2019 31 March 2018
Currency per Period Period
GBP1.00 end Average end Average
South African Rand 18.80 18.04 16.62 17.21
Australian Dollar 1.83 1.80 1.83 1.72
Euro 1.16 1.13 1.14 1.14
US Dollar 1.30 1.31 1.40 1.33
Exchange rates between local currencies and Pounds Sterling have
fluctuated over the year. The most significant impact arises from the volatility
of the Rand. The average exchange rate over the period has depreciated by
4.8% and the closing rate has depreciated by 13.1% since 31 March 2018.
Accounting policies and disclosures
These unaudited condensed 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 2019 are consistent with those adopted in the financial
statements for the year ended 31 March 2018 except as noted below.
On 1 April 2018 the group adopted IFRS 9 'Financial Instruments' which
replaced IAS 39 'Financial Instruments: Recognition and Measurement'
and sets out the new requirements for the recognition and measurement of
financial instruments. These requirements focus primarily on the classification
and measurement of financial instruments and measurement of impairment
losses based on an ECL model as opposed to an incurred loss methodology
under IAS 39. Disclosure related to the initial application and the impact of
the transition from IAS 39 to IFRS 9 were included in the group's transition
disclosures published on 15 June 2018 which can be accessed via the
Investec website at www.investec.com.
Additionally, on 1 April 2018 the group adopted IFRS 15 'Revenue from
contracts with customers' which replaced IAS 18 'Revenue'. IFRS 15
provides a principles-based approach for revenue recognition and introduces
the concept of recognising revenue for obligations as they are satisfied.
It applies to all contracts with customers except leases, financial instruments
and insurance contracts. The group's measurement and recognition
principles were aligned to the new standard and hence there has been no
material impact on measurement and recognition principles or on disclosure
requirements from the adoption of IFRS 15.
The financial results have been prepared under the supervision of
Nishlan Samujh, the Group Finance Director. The financial statements for the
year ended 31 March 2019 will be posted to stakeholders on 28 June 2019.
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:
- changes in the political and/or economic environment that would
materially affect the Investec group
- changes in legislation or regulation impacting on the Investec group's
operations or its accounting policies
- changes in business conditions that will have a significant impact on
the Investec group's operations
- changes in exchange rates and/or tax rates from the prevailing rates
outlined in this announcement
- changes in the structure of the markets, client demand or the
competitive environment.
- 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 15 May 2019.
- The information in the announcement for the year ended 31 March 2019,
which was approved by the board of directors on 15 May 2019, does
not constitute statutory accounts as defined in Section 435 of the
UK Companies Act 2006. The 31 March 2018 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
Definitions
- Adjusted operating profit refers to net profit before tax, goodwill, acquired
intangibles and non-operating items but after adjusting for earnings
attributable to other non-controlling interests and before non-controlling
interests relating to Asset Management. Trends within the divisional
sections relate to adjusted operating profit before group costs. Adjusted
operating profit is considered an important measure by Investec of
the profit realised by the group in the ordinary course of operations. In
addition, it forms the basis of the dividend pay-out policy. Non-IFRS
measures such as adjusted operating profit are considered as pro forma
financial information as per the JSE Listing Requirements. The pro forma
financial information is the responsibility of the group's Board of Directors.
- Adjusted earnings attributable to shareholders is defined as earnings
attributable to shareholders before goodwill, acquired intangibles and
non-operating items but after non-controlling interests and the deduction
of preference dividends.
- Adjusted basic earnings per share is calculated as adjusted earnings
attributable to shareholders divided by the weighted average number of
ordinary shares in issue during the year
- Dividend cover is calculated as adjusted earnings per share divided by
the dividend per share
- Annuity income is defined as net interest income plus net annuity fees
and commissions expressed as a percentage of total operating income.
- The credit loss ratio is calculated as expected credit loss (ECL)
impairment charges on gross core loans and advances as a percentage
of average gross core loans and advances subject to ECL.
- The group has changed its cost to income ratio definition to exclude
operating profits or losses attributable to other non-controlling interests.
As such, the cost to income ratio is calculated as: operating costs divided
by operating income (net of depreciation on operating leased assets and
net of operating profits or losses attributable to other non-controlling
interests).
- Return on adjusted average shareholders' equity is calculated as
adjusted earnings attributable to shareholders divided by average
adjusted shareholders' equity; where average adjusted shareholders'
equity is ordinary shareholders' equity less goodwill and intangible assets
(excluding software).
- Core loans and advances is defined as net loans and advances to
customers plus net own originated securitised assets.
Financial assistance
Shareholders are referred to Special Resolution number 3, which was
approved at the annual general meeting held on 8 August 2018, 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. Shareholders are hereby notified that in terms of S45(5)(a) of the
South African Companies Act, the boards of directors of Investec Limited
and Investec Bank Limited provided such financial assistance during the
period 1 October 2018 to 31 March 2019 to various group subsidiaries.
Johannesburg and London
Sponsor: Investec Bank Limited
Statutory financial information
Salient financial features
Results in Pounds Sterling
Actual as Actual as Neutral
reported reported Actual as currency^ Neutral
Year to Year to reported Year to currency
31 March 31 March % 31 March %
2019 2018 change 2019 change
Operating profit before taxation* (million) 665 608 9.4% 684 12.6%
Earnings attributable to shareholders (million) 531 506 5.1% 549 8.6%
Adjusted earnings attributable to shareholders** (million) 519 491 5.8% 536 9.2%
Adjusted earnings per share** 55.1p 53.2p 3.6% 56.9p 7.0%
Basic earnings per share 52.0p 51.2p 1.6% 53.7p 4.9%
Dividends per share 24.5p 24.0p 2.1% n/a n/a
* 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.
^ For income statement items we have used the average Rand: Pounds Sterling exchange rate that was applied in the prior year, i.e. 17.21.
Results in Pounds Sterling
Actual as Actual as Neutral
reported reported Actual as currency^^ Neutral
Year to at reported at currency
31 March 31 March % 31 March %
2019 2018 change 2019 change
Net asset value per share 434.1p 452.5p (4.1%) 456.5p 1.0%
Net tangible asset value per share 386.0p 401.5p (3.9%) 408.1p 1.6%
Total equity (million) 5 251 5 428 (3.3%) 5 554 2.3%
Total assets (million) 57 724 57 617 0.2% 62 331 8.2%
Core loans and advances (million) 24 941 25 132 (0.8%) 26 833 6.8%
Cash and near cash balances (million) 13 288 12 825 3.6% 14 113 10.0%
Customer deposits (million) 31 307 30 987 1.0% 33 688 8.7%
Third party assets under management (million) 167 172 160 576 4.1% 173 950 8.3%
Return on average adjusted shareholders' equity 12.9% 12.1%
Return on average risk-weighted assets 1.52% 1.45%
Stage 3/defaults net of ECL as a percentage of net core loans and
advances to customers subject to ECL 1.3% 1.17%
Loans and advances to customers as a percentage of customer deposits 78.4% 79.6%
Credit loss ratio (income statement impairment charge as a % of average
gross core loans and advances) 0.31% 0.61%
^^ For balance sheet items we have assumed that the Rand: Pounds Sterling closing exchange rate has remained neutral since 31 March 2018.
Condensed combined consolidated income statement
Year to Year to
31 March 31 March
GBP'000 2019 2018
Interest income 2 641 920 2 491 009
Interest expense (1 826 493) (1 730 611)
Net interest income 815 427 760 398
Fee and commission income 1 590 004 1 543 447
Fee and commission expense (216 452) (182 240)
Investment income 49 985 130 048
Share of post taxation profit of associates 68 317 46 823
Trading income/(loss) arising from
- customer flow 120 662 138 226
- balance sheet management and other trading activities 41 966 (4 307)
Other operating income 16 431 11 115
Total operating income before expected credit losses/impairment losses 2 486 340 2 443 510
Expected credit loss impairment charges* (66 452) -
Impairment losses on loans and advances* - (148 556)
Operating income 2 419 888 2 294 954
Operating costs (1 695 012) (1 632 740)
Depreciation on operating leased assets (2 157) (2 421)
Operating profit before goodwill and acquired intangibles 722 719 659 793
Impairment of goodwill (155) -
Amortisation of acquired intangibles (15 816) (16 255)
Operating profit after goodwill and acquired intangibles 706 748 643 538
Financial impact of group restructures and acquisition of subsidiaries (19 543) (6 039)
Profit before taxation 687 205 637 499
Taxation on operating profit before goodwill and acquired intangibles (78 210) (59 099)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries/restructurings 5 979 3 253
Profit after taxation 614 974 581 653
Profit attributable to other non-controlling interests (58 192) (52 288)
Profit attributable to Asset Management non-controlling interests (25 658) (23 817)
Earnings attributable to shareholders 531 124 505 548
Impairment of goodwill 155 -
Amortisation of acquired intangibles 15 816 16 255
Financial impact of group restructures and acquisition of subsidiaries 19 543 6 039
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries/restructurings (5 979) (3 253)
Preference dividends paid (41 560) (32 980)
Accrual adjustment on earnings attributable to other equity holders 243 (547)
Adjusted earnings 519 342 491 062
Headline earnings adjustments** (23 726) (41 415)
Headline earnings 495 616 449 647
Earnings per share (pence)
- Basic 52.0 51.2
- Diluted 50.9 49.8
Adjusted earnings per share (pence)
- Basic 55.1 53.2
- Diluted 54.0 51.7
Dividends per share (pence)
- Interim 11.0 10.5
- Final 13.5 13.5
Headline earnings per share (pence)
- Basic 52.6 48.7
- Diluted 51.5 47.4
Number of weighted average shares (million) 942.2 923.5
* On adoption of IFRS 9, there is a move from an incurred loss model to an expected credit loss methodology.
** The headline earnings adjustments are made up of property revaluations of GBP1.0 million loss (2018: GBP15.4 million gains), amortisation of
acquired intangibles of GBP15.8 million (2018: GBP16.2 million), gains on available-for-sale instruments recycled to the income statement
GBPnil (2018: GBP6.7 million), profit on realisation of associate company of GBPnil (2018: GBP0.8 million), taxation on acquired intangibles
on acquisition/disposal/integration of subsidiaries/restructurings of GBP6.0 million (2018: GBP3.3 million) and accrual adjustment of earnings
attributable to other equity holders of GBP0.2 million (2018: GBP0.5 million). This line represents the reconciling items from adjusted earnings
to headline earnings.
Combined consolidated statement of total comprehensive income
Year to Year to
31 March 31 March
GBP'000 2019 2018
Profit after taxation 614 974 581 653
Other comprehensive income:
Items that may be reclassified to the income statement
Fair value movements on cash flow hedges taken directly to other comprehensive income* 1 797 (5 746)
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income^* (12 918) -
Gains on realisation of debt instruments at FVOCI recycled to the income statement^* (7 116) -
Gains on realisation of available-for-sale assets recycled to the income statement^* - (6 676)
Fair value movements on available-for-sale assets taken directly to other comprehensive income^* - 20 051
Foreign currency adjustments on translating foreign operations (302 598) (25 300)
Items that will never be reclassified to the income statement
Effect of rate change on deferred taxation relating to adjustment for IFRS 9* (1 572) -
Remeasurement of net defined pension asset (1 924) 3 938
Gains and losses attributable to own credit risk* 8 887 -
Total comprehensive income 299 530 567 920
Total comprehensive income attributable to ordinary shareholders 252 677 451 913
Total comprehensive income attributable to non-controlling interests 5 293 83 027
Total comprehensive income attributable to perpetual preferred securities 41 560 32 980
Total comprehensive income 299 530 567 920
* Net of taxation of GBP17.5 million (year to 31 March 2018: GBP11.7 million), except for the impact of rate changes on deferred tax as separately shown above.
^ On adoption of IFRS 9 on 1 April 2018, the fair value reserve was introduced, replacing the available-for-sale reserve.
Condensed combined consolidated cash flow statement
Year to Year to
31 March 31 March
GBP'000 2019 2018
Cash inflows from operations 697 877 732 242
Increase in operating assets (3 283 153) (3 352 869)
Increase in operating liabilities 3 990 382 3 075 779
Net cash inflow from operating activities 1 405 106 455 152
Net cash outflow from investing activities (65 425) (37 799)
Net cash (outflow)/inflow from financing activities (218 027) 45 383
Effects of exchange rate changes on cash and cash equivalents (136 927) (54 085)
Net increase in cash and cash equivalents 984 727 408 651
Cash and cash equivalents at the beginning of the year 6 130 379 5 721 728
Cash and cash equivalents at the end of the year 7 115 106 6 130 379
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 At At
31 March 1 April 31 March
GBP'000 2019 2018* 2018
Assets
Cash and balances at central banks 4 992 820 4 040 010 4 040 512
Loans and advances to banks 2 322 821 2 164 598 2 165 533
Non-sovereign and non-bank cash placements 648 547 599 982 601 243
Reverse repurchase agreements and cash collateral on securities borrowed 1 768 748 2 207 137 2 207 477
Sovereign debt securities 4 538 223 4 907 624 4 910 027
Bank debt securities 717 313 591 428 587 164
Other debt securities 1 220 651 898 122 903 603
Derivative financial instruments 1 034 166 1 345 744 1 352 408
Securities arising from trading activities 1 859 254 1 434 391 1 434 391
Investment portfolio 1 028 976 956 560 885 499
Loans and advances to customers 24 534 753 24 410 334 24 673 009
Own originated loans and advances to customers securitised 407 869 458 814 459 088
Other loans and advances 195 693 345 742 347 809
Other securitised assets 133 804 148 387 148 387
Interests in associated undertakings 387 750 467 852 467 852
Deferred taxation assets 248 893 242 239 157 321
Other assets 1 735 956 1 875 357 1 876 116
Property and equipment 261 650 233 340 233 340
Investment properties 994 645 1 184 097 1 184 097
Goodwill 366 870 368 803 368 803
Intangible assets 107 237 125 389 125 389
49 506 639 49 005 950 49 129 068
Other financial instruments at fair value through profit or loss in
respect of liabilities to customers 8 217 573 8 487 776 8 487 776
57 724 212 57 493 726 57 616 844
Liabilities
Deposits by banks 3 016 306 2 931 267 2 931 267
Derivative financial instruments 1 277 233 1 471 563 1 471 563
Other trading liabilities 672 405 960 166 960 166
Repurchase agreements and cash collateral on securities lent 1 105 063 655 840 655 840
Customer accounts (deposits) 31 307 107 30 985 251 30 987 173
Debt securities in issue 3 073 320 2 717 187 2 717 187
Liabilities arising on securitisation of own originated loans and advances 91 522 136 812 136 812
Liabilities arising on securitisation of other assets 113 711 127 853 127 853
Current taxation liabilities 162 448 185 486 185 486
Deferred taxation liabilities 23 590 32 158 32 158
Other liabilities 1 765 649 2 019 906 2 012 268
42 608 354 42 223 489 42 217 773
Liabilities to customers under investment contracts 8 214 634 8 484 296 8 484 296
Insurance liabilities, including unit-linked liabilities 2 939 3 480 3 480
50 825 927 50 711 265 50 705 549
Subordinated liabilities 1 647 271 1 619 878 1 482 987
52 473 198 52 331 143 52 188 536
Equity
Ordinary share capital 245 240 240
Perpetual preference share capital 31 31 31
Share premium 2 471 506 2 416 736 2 416 736
Treasury shares (189 134) (160 132) (160 132)
Other reserves (577 491) (406 718) (345 606)
Retained income 2 611 256 2 326 212 2 530 825
Shareholders' equity excluding non-controlling interests 4 316 413 4 176 369 4 442 094
Other Additional Tier 1 securities in issue 303 728 304 150 304 150
Non-controlling interests 630 873 682 064 682 064
- Perpetual preferred securities issued by subsidiaries 81 616 92 312 92 312
- Non-controlling interests in partially held subsidiaries 549 257 589 752 589 752
Total equity 5 251 014 5 162 583 5 428 308
Total liabilities and equity 57 724 212 57 493 726 57 616 844
* The 1 April 2018 balance sheet has been presented on an IFRS 9 basis and the comparative as at 31 March 2018 on a IAS 39 basis.
Condensed combined consolidated statement of changes in equity
Year to Year to
31 March 31 March
GBP'000 2019 2018
Balance at the beginning of the year 5 428 308 4 808 629
Adoption of IFRS 9 (265 725) -
Total comprehensive income for the year 299 530 567 920
Share-based payments adjustments 72 714 69 218
Dividends paid to ordinary shareholders (238 072) (227 908)
Dividends declared to perpetual preference shareholders and Other Additional Tier 1 security holders (14 742) (15 736)
Dividends paid to perpetual preference shareholders included in non-controlling interests and Other
Additional Tier 1 security holders (26 818) (17 244)
Dividends paid to non-controlling interests (63 897) (63 688)
Issue of ordinary shares 108 414 125 240
Issue of Other Additional Tier 1 security instruments 5 852 271 058
Issue of equity by subsidiaries 4 319 12 695
Net equity impact of non-controlling interest movements 50 643 20 057
Movement of treasury shares (103 841) (121 933)
Net equity movements of interest in associated undertakings (5 671) -
Balance at the end of the year 5 251 014 5 428 308
Combined consolidated segmental analysis
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 2019 UK and Southern Total
GBP'000 Other Africa group
Wealth & Investment 56 363 26 250 82 613
Specialist Banking 138 566 310 329 448 895
Group costs (31 518) (14 825) (46 343)
Specialist Bank and Wealth 163 411 321 754 485 165
Asset Management 107 835 71 527 179 362
Total group 271 246 393 281 664 527
Other non-controlling interest - equity 58 192
Operating profit 722 719
For the year to 31 March 2018 UK and Southern Total
GBP'000 Other Africa group
Wealth & Investment 69 269 29 296 98 565
Specialist Banking 59 958 320 535 380 493
Group costs (33 789) (15 809) (49 598)
Specialist Bank and Wealth 95 438 334 022 429 460
Asset Management 103 918 74 127 178 045
Total group 199 356 408 149 607 505
Other non-controlling interest - equity 52 288
Operating profit 659 793
Fees and commission income
For the year to 31 March
GBP'000 UK and Other Southern Africa Total Group
2019
Asset management and wealth management 683 621 257 736 941 357
Fund management fees/fees for assets under management 807 507 226 705 1 034 212
Private client transactional fees 47 771 36 612 84 383
Fee and commission expense (171 657) (5 581) (177 238)
Specialist Banking 205 610 226 585 432 195
Corporate and institutional transactional and advisory services 206 798 191 786 398 584
Private client transactional fees 10 691 62 134 72 825
Fee and commission expense (11 879) (27 335) (39 214)
Net fee and commission income 889 231 484 321 1 373 552
Annuity fees (net of fees payable) 675 619 422 176 1 097 795
Deal fees 213 612 62 145 275 757
Included in Specialist Banking corporate and institutional and advisory services is net fee income of GBP92 million (2018: GBP105 million) for operating lease
income which is out of the scope of IFRS 15 - Revenue from Contracts with Customers.
Analysis of financial assets and liabilities by category of financial instrument
Non-financial
Total instruments
Total instruments or scoped
At 31 March 2019 instruments at amortised out of
GBP'000 at fair value cost IFRS 9 Total
Assets
Cash and balances at central banks 1 4 992 819 - 4 992 820
Loans and advances to banks - 2 322 821 - 2 322 821
Non-sovereign and non-bank cash placements 32 471 616 076 - 648 547
Reverse repurchase agreements and cash collateral on securities borrowed 549 914 1 218 834 - 1 768 748
Sovereign debt securities 4 256 811 281 412 - 4 538 223
Bank debt securities 350 134 367 179 - 717 313
Other debt securities 741 834 478 817 - 1 220 651
Derivative financial instruments 1 034 166 - - 1 034 166
Securities arising from trading activities 1 859 254 - - 1 859 254
Investment portfolio 1 028 976 - - 1 026 976
Loans and advances to customers 2 025 679 22 509 074 - 24 534 753
Own originated loans and advances to customers securitised - 407 869 - 407 869
Other loans and advances - 195 693 - 195 693
Other securitised assets 118 169 15 635 - 133 804
Interests in associated undertakings - - 387 750 387 750
Deferred taxation assets - - 248 893 248 893
Other assets 131 853 1 041 116 562 987 1 735 956
Property and equipment - - 261 650 261 650
Investment properties - - 994 645 994 645
Goodwill - - 366 870 366 870
Intangible assets - - 107 237 107 237
12 129 262 34 447 345 2 930 032 49 506 639
Other financial instruments at fair value through profit or
loss in respect of liabilities to customers 8 217 573 - - 8 217 573
20 346 835 34 447 345 2 930 032 57 724 212
Liabilities
Deposits by banks - 3 016 306 - 3 016 306
Derivative financial instruments 1 277 233 - - 1 277 233
Other trading liabilities 672 405 - - 672 405
Repurchase agreements and cash collateral on securities lent 433 790 671 273 - 1 105 063
Customer accounts (deposits) 2 372 841 28 934 266 - 31 307 107
Debt securities in issue 520 806 2 552 514 - 3 073 320
Liabilities arising on securitisation of own originated loans and advances - 91 522 - 91 522
Liabilities arising on securitisation of other assets 113 711 - - 113 711
Current taxation liabilities - - 162 448 162 448
Deferred taxation liabilities - - 23 590 23 590
Other liabilities 47 676 1 029 239 688 734 1 765 649
5 438 462 36 295 120 874 772 42 608 354
Liabilities to customers under investment contracts 8 214 634 - - 8 214 634
Insurance liabilities, including unit-linked liabilities 2 939 - - 2 939
13 656 035 36 295 120 874 772 50 825 927
Subordinated liabilities 367 707 1 279 564 - 1 647 271
14 023 742 37 574 684 874 772 52 473 198
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
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Fair value category
Total
At 31 March 2019 instruments
GBP'000 at fair value Level 1 Level 2 Level 3
Assets
Cash and balances at central banks 1 1 - -
Non-sovereign and non-bank cash placements 32 471 - 32 471 -
Reverse repurchase agreements and cash collateral on securities borrowed 549 914 - 549 914 -
Sovereign debt securities 4 256 811 4 256 811 - -
Bank debt securities 350 134 148 918 201 216 -
Other debt securities 741 834 222 689 429 850 89 295
Derivative financial instruments 1 034 166 - 995 531 38 635
Securities arising from trading activities 1 859 254 1 827 306 24 830 7 118
Investment portfolio 1 028 976 173 587 25 418 829 971
Loans and advances to customers 2 025 679 - 816 099 1 209 580
Other securitised assets 118 169 - - 118 169
Other assets 131 853 131 853 - -
Other financial instruments at fair value through profit or loss in
respect of liabilities to customers 8 217 573 8 217 573 - -
20 346 835 14 978 738 3 075 329 2 292 768
Liabilities
Derivative financial instruments 1 277 233 5 857 1 254 750 16 626
Other trading liabilities 672 405 556 125 116 280 -
Repurchase agreements and cash collateral on securities lent 433 790 - 433 790 -
Customer accounts (deposits) 2 372 841 - 2 372 841 -
Debt securities in issue 520 806 - 520 806 -
Liabilities arising on securitisation of other assets 113 711 - - 113 711
Other liabilities 47 676 - 44 071 3 605
Liabilities to customers under investment contracts 8 214 634 - 8 214 634 -
Insurance liabilities, including unit-linked liabilities 2 939 - 2 939 -
Subordinated liabilities 367 707 367 707 - -
14 023 742 929 689 12 960 111 133 942
Net financial assets at fair value 6 323 093 14 049 049 (9 884 782) 2 158 826
Transfers between level 1 and level 2
During the current year, there were no transfers between level 1 and level 2.
Level 2 financial assets and financial liabilities
The following table sets out the group's principal valuation techniques as at 31 March 2019 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 Yield curves
Reverse repurchase agreements and cash Discounted cash flow model, Hermite interpolation, Yield curves, discount rates,volatilities
collateral on securities borrowed Black-Scholes
Bank debt securities Discounted cash flow model Yield curves
Other debt securities Discounted cash flow model Yield curves, NCD curves and swap curves,
discount rates, 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, discount rates
Securities arising from trading activities Standard industry derivative pricing model Interest rate curves, implied bond spreads,
Discounted cash flow model equity volatilities, yield curves
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, discount rates, risk free rate, volatilities,
industry standard derivative pricing models including forex forward points and spot rates, interest rate
Black-Scholes swap curves and credit curves
Other trading liabilities Discounted cash flow model Yield curves
Repurchase agreements and cash collateral on
securities lent Discounted cash flow model, Hermite interpolation Yield curves, discount rates
Customer accounts (deposits) Discounted cash flow model Yield curves, discount rates
Debt securities in issue Discounted cash flow model Yield curves
Other liabilities Discounted cash flow model Yield curves
The following is a reconciliation of the opening balances to the closing balances for fair value measurement in level 3 of the fair value hierarchy.
Loans and Other Other
Investment advances to securitised balance
GBP'000 portfolio customers assets sheet assets Total
Assets
Balance as at 31 March 2018 587 819 133 740 130 388 67 723 919 670
Adoption of IFRS 9 74 768 1 203 939 - 74 381 1 353 088
Balance as at 1 April 2018 662 587 1 337 679 130 388 142 104 2 272 758
Total gains or losses (175) 69 261 (2 834) 16 865 83 117
In the income statement (175) 69 056 (2 834) 16 865 82 912
In the statement of comprehensive income - 205 - - 205
Purchases 338 782* 1 268 572 - 6 909 1 614 263
Sales (95 646) (889 145) - (8 404) (993 195)
Settlements (60 095) (624 061) (9 385) (29 456) (722 997)
Transfers into level 3 12 211 3 499 - - 15 710
Foreign exchange adjustments (27 693) 43 775 - 7 026 23 108
Balance as at 31 March 2019 829 971 1 209 580 118 169 135 044 2 292 764
* Includes investments acquired by Investec Property Fund, a subsidiary of Investec Limited.
Liabilities
arising on
securitisation Other
For the year to 31 March 2019 of other balance
GBP'000 assets sheet liabilities Total
Liabilities
Balance as at 1 April 2018 127 853 15 641 143 494
Total gains or losses (5 084) (12 653) (17 737)
In the income statement (5 084) (12 653) (17 737)
In the statement of comprehensive income - - -
Purchases - 27 561 27 561
Sales - (11 800) (11 800)
Settlements (9 058) - (9 058)
Transfers into level 3 - 2 854 2 854
Foreign exchange adjustments - (1 372) (1 372)
Balance as at 31 March 2019 113 711 20 231 133 942
During the year GBP15.7 million of level 2 instruments have been transferred into level 3 as a result of inputs to valuation models becoming unobservable in
the market.
The group transfers between levels within the fair value hierarchy when the significance of the unobservable inputs change or if the valuation methods changes.
The following table quantifies the gains or (losses) included in the income statement and other comprehensive income recognised on level 3 financial instruments:
For the year to 31 March 2019
GBP'000 Total Realised Unrealised
Total gains or (losses) included in the income statement for the year
Net interest income 100 041 86 118 13 923
Investment income (11 000) 9 675 (20 675)
Trading loss arising from customer flow (3 272) 1 348 (4 620)
Trading income arising from balance sheet management and other trading activities 14 880 - 14 880
100 649 97 141 3 508
Total gains or losses recognised in other comprehensive income for the year
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income 205 - 205
205 - 205
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:
Balance Range of Favourable Unfavourable
sheet value Significant unobservable unobservable changes changes
31 March 2019 GBP'000 input input used GBP'000 GBP'000
Assets
Other debt securities 89 295 Potential impact on income statement 8 047 (7 849)
Credit spreads 5.8% 117 (114)
EBITDA (5%)/5% 306 (306)
Other^ ^ 7 624 (7 429)
Derivative financial instruments 38 635 Potential impact on income statement 22 720 (5 882)
Volatilities 4.0% - 9.0% 129 (129)
Credit spreads 7.1% 6 (9)
Cash flow adjustments CPR 6.2% - 10.2% 134 (124)
Underlying asset value ^^ 7 731 (3 731)
Other^ ^ 14 720 (1 889)
Securities arising from trading activities 7 118 Potential impact on income statement
Cash flow adjustments CPR 9.2% 1 119 (1 480)
Investment portfolio 829 971 Potential impact on income statement 158 957 (134 600)
Price earnings multiple 3.2 x - 9.0 x 8 852 (8 563)
Underlying asset value^^ ^^ 17 229 (11 739)
Other^ ^ 83 729 (60 072)
EBITDA * 21 470 (21 043)
Precious and industrial metals prices (10%)/6% 2 186 (2 186)
Cash flows (50%)/50% 10 568 (9 552)
Property values (5%)/5% 10 151 (10 151)
Various ** 4 772 (11 294)
Loans and advances to customers 1 209 580 Potential impact on income statement 75 262 (91 448)
Credit spreads 0.1% - 6.2% 6 327 (9 089)
Price earnings multiple 4.9 x 703 (493)
Underlying asset value^^ ^^ 2 778 (2 347)
Cash flows (50%)/50% 16 053 (16 053)
EBITDA * 335 (335)
Property values (5%)/5% 100 (100)
Other^ ^ 48 966 (63 031)
Potential impact on other
comprehensive income
Credit spreads 0.03% - 2.1% 1 673 (2 933)
Other securitised assets 118 169 Potential impact on income statement
Cash flow adjustments CPR 6.2% 496 (473)
Total level 3 assets 2 292 768 268 274 (244 665)
Liabilities
Derivative financial instruments 16 626 Potential impact on income statement (8 035) 8 045
Cash flow adjustments CPR 6.2% - 10.2% (107) 116
Volatilities 5.0% - 9.0% (174) 174
Underlying asset value^^ ^^ (7 754) 7 755
Liabilities arising on securitisation of 113 711 Potential impact on income statement
other assets
Cash flow adjustments CPR 6.2% (365) 344
Other liabilities 3 605 Potential impact on income statement
Property values (5%)/5% (505) 505
Total level 3 liabilities 133 942 (8 905) 8 894
Net level 3 assets 2 158 826
* The EBITDA and cash flows has been stressed on an investment-by-investment basis in order to obtain favourable and unfavourable valuations
** The valuation sensitivity for certain equity investments and fair value loans have 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 purpose of
this analysis as the sensitivity of the investments cannot be determined through the adjustment of a single input.
* 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 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
assets cannot be determined through the adjustment of a single input.
^^ Underlying asset values are calculated by reference to a tangible asset, for example property, aircraft or shares.
Within the Hong Kong portfolio there is a connected exposure across the investment portfolio, loans and advances to customers and derivatives financial
instruments lines with a balance sheet value of GBP69 million. The consideration of reasonably possible alternative assumptions with respect to the fair value of
this exposure results in a favourable change of GBP95 million and a unfavourable change of GBP69 million, included within the above table.
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.
Discount rates
Discount rates (including WACC) are used to adjust for the time value
of money when using a discounted cash flow valuation method. Where
relevant, the discount rate also accounts for illiquidity, market conditions and
uncertainty of future 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.
Price earnings multiple
The price-to-earnings ratio is an equity valuation multiple. It is a key driver in
the valuation of unlisted investments.
Property value and precious and industrial metals
The property value and price of precious and industrial metals is a key driver
of future cash flows on these investments.
Underlying asset value
In instances where cash flows have links to referenced assets, the underlying
asset value is used to determine the fair value. The underlying asset valuation
is derived using observable market prices sourced from broker quotes,
specialist valuers or other reliable pricing sources.
Fair value of financial assets and liabilities at amortised cost
The following table sets out the fair value of financial instruments held at amortised cost where the carrying value
is not a reasonable approximation of fair value.
Carrying
GBP'000 amount Fair value
2019
Assets
Reverse repurchase agreements and cash collateral on securities borrowed 1 218 834 1 218 958
Sovereign debt securities 281 412 271 125
Bank debt securities 367 179 366 845
Other debt securities 478 817 467 820
Loans and advances to customers 22 509 074 22 561 179
Other loans and advances 195 693 197 587
Other assets 1 041 116 1 041 759
Liabilities
Deposits by banks 3 016 306 3 049 306
Repurchase agreements and cash collateral on securities lent 671 273 668 870
Customer accounts (deposits) 28 934 266 28 934 451
Debt securities in issue 2 552 514 2 588 218
Other liabilities 1 029 239 1 027 905
Subordinated liabilities 1 279 564 1 361 823
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 127
Notice is hereby given that final dividend number 127, being a gross dividend
of 251 cents (2018: 232 cents) per ordinary share has been recommended
by the Board from income reserves in respect of the financial year ended
31 March 2019 payable to shareholders recorded in the shareholders'
register of the company at the close of business on Friday, 26 July 2019.
The relevant dates for the payment of dividend number 127 are as follows:
Last day to trade cum-dividend Tuesday, 23 July 2019
Shares commence trading ex-dividend Wednesday, 24 July 2019
Record date Friday, 26 July 2019
Payment date Monday, 12 August 2019
The final gross dividend of 251 cents per ordinary share has been
determined by converting the Investec plc distribution of 13.5 pence per
ordinary share into Rands using the Rand/Pounds Sterling average buy/sell
forward rate at 11h00 (SA time) on Wednesday, 15 May 2019.
Share certificates may not be dematerialised or rematerialised between
Wednesday, 24 July 2019 and Friday, 26 July 2019, 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 318 904 709
ordinary shares
- The dividend paid by Investec Limited is subject to South African
Dividend Tax (Dividend Tax) of 20% (subject to any available
exemptions as legislated)
- Shareholders who are exempt from paying the Dividend Tax will receive
a net dividend of 251 cents per ordinary share
- Shareholders who are not exempt from paying the Dividend Tax will
receive a net dividend of 200.8 cents per ordinary share (gross dividend
of 251 cents per ordinary share less Dividend Tax of 50.2 cents per
ordinary share).
By order of the board
N van Wyk
Company Secretary
15 May 2019
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 29
Notice is hereby given that preference dividend number 29 has been
declared by the Board from income reserves for the period 01 October 2018
to 31 March 2019 amounting to a gross preference dividend of 394.65612
cents 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, 07 June 2019.
The relevant dates for the payment of dividend number 29 are as follows:
Last day to trade cum-dividend Tuesday, 04 June 2019
Shares commence trading ex-dividend Wednesday, 05 June 2019
Record date Friday, 07 June 2019
Payment date Tuesday, 18 June 2019
Share certificates may not be dematerialised or rematerialised between
Wednesday, 05 June 2019 and Friday, 07 June 2019, 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
- The dividend paid by Investec Limited is subject to South African
Dividend Tax (Dividend Tax) of 20% (subject to any available
exemptions as legislated)
- The net dividend amounts to 315.7249 cents per preference share for
shareholders liable to pay the Dividend Tax and 394.65612 cents per
preference share for preference shareholders exempt from paying the
Dividend Tax.
By order of the board
N van Wyk
Company Secretary
15 May 2019
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 34
Notice is hereby given that the final dividend number 34, being a gross dividend
of 13.5 pence (2018: 13.5 pence) per ordinary share has been recommended
by the Board from income reserves in respect of the financial year ended
31 March 2019 payable to shareholders recorded in the shareholders' register
of the company at the close of business on Friday, 26 July 2019.
- for Investec plc shareholders, registered on the United Kingdom share
register, through a dividend payment by Investec plc from income
reserves of 13.5 pence per ordinary share
- for Investec plc shareholders, registered on the South African branch
register, through a dividend payment by Investec plc from income
reserves of 5.5 pence per ordinary share and through a dividend paid by
Investec Limited, on the SA DAS share, payable from income reserves,
equivalent to 8 pence per ordinary share.
The relevant dates for the payment of dividend number 34 are as follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Tuesday, 23 July 2019
On the London Stock Exchange (LSE) Wednesday, 24 July 2019
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Wednesday, 24 July 2019
On the London Stock Exchange (LSE) Thursday, 25 July 2019
Record date (on the JSE and LSE) Friday, 26 July 2019
Payment date (on the JSE and LSE) Monday, 12 August 2019
Share certificates on the South African branch register may not be dematerialised
or rematerialised between Wednesday, 24 July 2019 and Friday, 26 July 2019,
both dates inclusive, nor may transfers between the United Kingdom share
register and the South African branch register take place between Wednesday,
24 July 2019 and Friday, 26 July 2019, 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 13.5 pence, equivalent to a gross dividend of
251 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, 15 May 2019
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued ordinary share capital of Investec plc is 682 121 211 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 20% (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
251 cents per share, comprising 148.74074 cents per share paid by
Investec Limited on the SA DAS share and 102.25926 cents per ordinary
share paid by Investec plc
- Shareholders registered on the South African branch register who are
not exempt from paying the Dividend Tax will receive a net dividend
of 200.8 cents per share (gross dividend of 251 cents per share less
Dividend Tax of 50.2 cents per share) comprising 118.99259 cents per
share paid by Investec Limited on the SA DAS share and 81.80741 cents
per ordinary share paid by Investec plc.
By order of the board
D Miller
Company Secretary
15 May 2019
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 26
Notice is hereby given that preference dividend number 26 has
been declared by the Board from income reserves for the period
01 October 2018 to 31 March 2019 amounting to a gross preference
dividend of 8.72603 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,
07 June 2019.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend
of 8.72603 pence per preference share is equivalent to a gross dividend of
160.82597 cents per share, which has been determined using the Rand/
Pound Sterling average buy/sell forward rate as at 11h00 (SA time) on
Wednesday, 15 May 2019.
The relevant dates for the payment of dividend number 26 are as follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Tuesday, 04 June 2019
On The International Stock Exchange (TISE) Wednesday, 05 June 2019
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Wednesday, 05 June 2019
On The International Stock Exchange (TISE) Thursday, 06 June 2019
Record date (on the JSE and TISE) Friday, 07 June 2019
Payment date (on the JSE and TISE) Tuesday, 18 June 2019
Share certificates may not be dematerialised or rematerialised between
Wednesday, 05 June 2019 and Friday, 07 June 2019, both dates inclusive,
nor may transfers between the United Kingdom share register and the South
African branch register take place between Wednesday, 05 June 2019 and
Friday, 07 June 2019, 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 20% (subject to any available exemptions as legislated)
- The net dividend amounts to 128.66078 cents per preference
share for preference shareholders liable to pay the Dividend Tax and
160.82597 cents per preference share for preference shareholders
exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
15 May 2019
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 16
Notice is hereby given that preference dividend number 16 has been
declared by the Board from income reserves for the period 01 October 2018
to 31 March 2019 amounting to a gross preference dividend of 482.09247
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, 07 June 2019.
The relevant dates for the payment of dividend number 16 are as follows:
Last day to trade cum-dividend Tuesday, 04 June 2019
Shares commence trading ex-dividend Wednesday, 05 June 2019
Record date Friday, 07 June 2019
Payment date Monday, 18 June 2019
Share certificates may not be dematerialised or rematerialised between
Wednesday, 05 June 2019 and Friday, 07 June 2019, 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 branch register is subject to South African Dividend Tax (Dividend
Tax) of 20% (subject to any available exemptions as legislated)
- The net dividend amounts to 385.67398 cents per preference share for
preference shareholders liable to pay the Dividend Tax and 482.09247
cents per preference share for preference shareholders exempt from
paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
15 May 2019
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE ordinary share code: INP
LSE ordinary share code: INVP
ISIN: GB00B17BBQ50
Registered office:
30 Gresham Street, London
EC2V 7QP, United Kingdom
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
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
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Company Secretary:
N van Wyk
Directors:
PKO Crosthwaite# (Chairman)
HJ du Toit (Joint Chief Executive Officer)
F Titi (Joint Chief Executive Officer)
NA Samujh (Finance Director)
S Koseff (Executive)
B Kantor (Executive)
K McFarland (Executive)
ZBM Bassa
LC Bowden#
CA Carolus
D Friedland
PA Hourquebie
CR Jacobs^
IR Kantor*
Lord Malloch-Brown KCMG#
KL Shuenyane
#British *Dutch ^Irish
K McFarland appointed 01 October 2018
GR Burger retired 31 March 2019
NA Samujh appointed 01 April 2019
Sponsor:
Investec Bank Limited
Date: 16/05/2019 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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