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RNS
Investec PLC  -  INVP   

Final Results for the year ended 31 March 2017

Released 07:00 18-May-2017

RNS Number : 4810F
Investec PLC
18 May 2017
 

Investec plc

Incorporated in England and Wales

(Registration number 3633621)

JSE ordinary share code: INP

LSE ordinary share code: INVP

ISIN: GB00B17BBQ50

 

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 and Investec Limited (combined results)

Unaudited combined consolidated financial results for the year ended 31 March 2017

This announcement covers the results of the Investec group for the year ended 31 March 2017.

 

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 prior 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 year ended 31 March 2016. Group results have benefited from an 11.1% appreciation 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 for the year to 31 March 2017 remain the same as those in the prior year. Amounts represented on a currency neutral basis for balance sheet items assume that the relevant closing exchange rates at 31 March 2017 remain the same as those at 31 March 2016.

 

 

Overview of results

 

Strong client activity levels supporting underlying performance

 

·      Strong performance against a backdrop of continued macro uncertainty and volatility in the group's key operating geographies.

·      The Asset Management and Wealth & Investment businesses have benefited from higher funds under management supported by rising market levels.

·      The Specialist Banking business reported results ahead of the prior year supported by sound levels of corporate and private client activity.

·      Growth in costs primarily reflects planned investment in growing the client franchise businesses.

·      The group has successfully leveraged its ability to provide clients an international offering, increasing its client base and deepening its core franchise.

 

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 18.5% to GBP599.1 million (2016: GBP505.6 million) - an increase of 8.0% on a currency neutral basis.

·      Statutory adjusted earnings per share (EPS) before goodwill, acquired intangibles and non-operating items increased 16.9% from 41.3 pence to 48.3 pence - an increase of 6.3% on a currency neutral basis.

 

 

Solid performance from the ongoing business

·      Ongoing operating profit increased 13.7% to GBP663.7 million (2016: GBP583.9 million) - an increase of 4.2% on a currency neutral basis.

·      Ongoing adjusted EPS before goodwill, acquired intangibles and non-operating items increased 11.3% from 48.6 pence to 54.1 pence - an increase of 1.9% on a currency neutral basis.

·      Recurring income as a percentage of total operating income amounted to 72.0% (2016: 71.8%).

·      The credit loss charge as a percentage of average gross core loans and advances amounted to 0.29% (2016: 0.26%), with impairments increasing by GBP15.8 million to GBP57.1 million.

·      Third party assets under management increased 23.9% to GBP150.7 billion (31 March 2016: GBP121.7 billion) - an increase of 14.8% on a currency neutral basis.

·      Customer accounts (deposits) increased 21.1% to GBP29.1 billion (31 March 2016: GBP24.0 billion) - an increase of 5.5% on a currency neutral basis.

·      Core loans and advances increased 26.8% to GBP22.2 billion (31 March 2016: GBP17.5 billion) - an increase of 8.5% 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 GBP476 million through asset sales, redemptions and write-offs.

·      The legacy business reported a loss before taxation of GBP64.6 million (2016: GBP78.3 million) with impairments on the legacy portfolio reducing 20.3% from GBP68.1 million to GBP54.3 million.

 

Maintained a sound balance sheet

 

·      Capital remained 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 GBP12.0 billion.

 

Dividend increase of 9.5%

 

·      The board proposes a final dividend of 13.0 pence per ordinary share equating to a full year dividend of 23.0 pence (2016: 21.0 pence) resulting in a dividend cover based on the group's adjusted EPS before goodwill and non-operating items of 2.1 times (2016: 2.0 times), consistent with the group's dividend policy.

 

 

Stephen Koseff, Chief Executive Officer of Investec said:

"For the first time our revenues have broken the GBP2 billion mark showing the strength and resilience of our businesses in the face of macro uncertainty in our two key markets. Our client focus, multiple income streams and long term investment strategy give us confidence for the future."

 

Bernard Kantor, Managing Director of Investec said:

"We have seen solid growth in all the core earnings drivers for our three business areas thanks to investment in our people, our infrastructure and our franchises. Strong, sustainable levels of corporate and private client activity are reaping rewards for the Specialist Bank while both Asset Management and Wealth & Investment are benefiting from higher funds under management."

 

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 Newton, 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/10:00 SA time on 18 May 2017. 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: 011 535 3600

‒    UK participants: 0 808 162 4062

‒    Rest of Europe and other participants: + 27 11 535 3600

‒    Australian participants: 1 800 350 100

‒    USA participants: 1 855 481 5362

 

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 9 700 employees.

 

Investec focuses on delivering distinctive profitable solutions for its clients in three core areas of activity namely, Asset Management, Wealth & Investment and Specialist Banking.

 

In July 2002 the Investec group implemented a dual listed company structure with listings on the London and Johannesburg Stock Exchanges. The combined group's current market capitalisation is approximately GBP5.8 billion.

 

Investec plc and Investec Limited (combined results)

Unaudited combined consolidated financial results for the year ended 31 March 2017

The commentary below largely focuses on the results of the ongoing business.

Overall group performance - ongoing basis

Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests ("operating profit") increased 13.7% to GBP663.7 million (2016: GBP583.9 million) - an increase of 4.2% on a currency neutral basis.

The combined South African businesses reported operating profit 0.4% ahead of the prior period (in Rands), whilst the combined UK and Other businesses posted a 10.8% increase in operating profit in Pounds Sterling.

Business unit review - ongoing basis

Asset Management

Asset Management operating profit increased by 22.3% to GBP164.8 million (2016: GBP134.8 million) benefiting from higher average funds under management largely driven by favourable market and currency movements. Total funds under management amount to GBP95.3 billion (31 March 2016: GBP75.7 billion).

Wealth & Investment

Wealth & Investment operating profit increased by 8.8% to GBP93.2 million (2016: GBP85.7 million). The business benefited from higher average funds under management supported by higher equity market levels and net inflows of GBP1.2 billion. Total funds under management amount to GBP54.8 billion (31 March 2016: GBP45.5 billion).

Specialist Banking

Specialist Banking operating profit increased by 11.0% to GBP454.4 million (2016: GBP409.2 million).

The South African business reported a decrease in operating profit in Rands of 3.3% as a consequence of the change in accounting treatment related to the assets transferred to Investec Equity Partners in the prior year (refer to additional information). Excluding the impact of this transaction operating profit was considerably 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, sound corporate activity and an increase in the scale of the property fund business. Core loans and advances increased 8.4% to R236.2 billion (31 March 2016: R218.0 billion), with the credit loss ratio at 0.29% (2016: 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 an 8.2% increase in operating profit supported by robust levels of corporate client activity across the lending, advisory and client flow trading businesses. Costs grew ahead of revenue largely due to the investment in building out the private client banking offering. Core loans grew to GBP8.1 billion, an increase of 8.8% on a currency neutral basis. Impairments increased marginally with the credit loss ratio amounting to 0.27% (2016: 0.26%).

Further information on key developments within each of the business units is provided in a detailed report published on the group's website: http://www.investec.com

Group costs

These largely relate to group brand and marketing costs and a portion of executive and support functions which are associated with group level activities. These costs are not incurred by the operating divisions and are necessary to support the operational functioning of the group. These costs amounted to GBP48.8 million (2016: GBP45.8 million).

Financial statement analysis - ongoing basis

Total operating income

Total operating income before impairment losses on loans and advances increased by 18.1% to GBP2,285.9 million (2016: GBP1,934.8 million).  

 

Net interest income increased by 19.0% to GBP680.5 million (2016: GBP571.9 million) supported by sound levels of lending activity across the banking businesses.

 

Net fee and commission income increased by 20.1% to GBP1,271.6 million (2016: GBP1,058.3 million) as a result of higher average funds under management 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 a good performance in the corporate and advisory businesses, notably in the UK.

 

Investment income reduced by 20.2% to GBP135.6 million (2016: GBP169.9 million) primarily as a result of the change in accounting treatment from fair value to equity accounting for the assets transferred to Investec Equity Partners in South Africa in the prior year (refer to additional information). In the UK the group's unlisted investment portfolio delivered a sound performance; however, this was offset by the write down of an investment in the Hong Kong portfolio.

 

Share of post-taxation operating profit of associates of GBP18.9 million in the current period largely reflects earnings in relation to the group's investment in Investec Equity Partners (refer to additional information).

 

Trading income arising from customer flow increased considerably to GBP158.0 million (2016: GBP110.9 million) supported by robust client activity levels and market volatility. Trading income from other trading activities amounted to GBP8.1 million (2016: GBP11.6 million) predominantly impacted by currency volatility over the period.

 

Impairment losses on loans and advances

Impairments on loans and advances increased from GBP41.4 million to GBP57.1 million; however, the group's credit loss ratio remains at the lower end of its long term average at 0.29% (2016: 0.26%). Since 31 March 2016 gross defaults have increased to GBP249.8 million largely due to a few specific 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 0.69% (31 March 2016: 0.78%).

 

Operating costs

The ratio of total operating costs to total operating income remained at 65.8%. Total operating costs grew by 18.1% to GBP1,502.6 million (2016: GBP1,272.1 million) reflecting planned spend on IT infrastructure and headcount across divisions to support increased activity levels and growth initiatives, notably the build out of the UK private client offering. Costs are also impacted by additional premises expenses relating to the London office's future premises move and an increase in variable remuneration given improved profitability across the group.

 

Taxation

The effective tax rate amounts to 18.5% (2016: 19.1%).  

                                                                                                                                                                                                                                                                                                                                                                                          

Profit attributable to non-controlling interests

Profit attributable to non-controlling interests mainly comprises:

·      GBP20.3 million profit attributable to non-controlling interests in the Asset Management business.

·      GBP59.9 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 24.6% to GBP4.8 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 22.3% to 431.0 pence and net tangible asset value per share (which excludes goodwill and intangible assets) increased by 28.1% to 377.0 pence.

·      The return on adjusted average shareholders' equity increased from 11.5% to 12.5%.

·      The return on adjusted average shareholders' equity of the ongoing business increased from 13.9% to 14.2%.

 

Liquidity and funding

As at 31 March 2017 the group held GBP12.0 billion in cash and near cash balances (GBP5.0 billion in Investec plc and R117.6 billion in Investec Limited) which amounted to 41.4% of customer deposits. Loans and advances to customers as a percentage of customer deposits amounted to 76.2% (31 March 2016: 73.6%). Cash balances have been successfully managed down to more appropriate levels, reducing the surplus that was raised in anticipation of the EU referendum in the UK. The group will continue to focus on maintaining an optimal overall liquidity and funding profile. The group comfortably meets Basel liquidity requirements for the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). The LCR reported to the Prudential Regulatory Authority at 31 March 2017 was 829% for Investec plc and 885% for Investec Bank plc (solo basis). Investec Bank Limited (solo basis) ended the period to 31 March 2017 with the three-month average of its LCR at 130.0%, 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 1 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.


31 March 2017

31 March 2016

Investec plc^



Capital adequacy ratio

15.1%

15.1%

Tier 1 ratio

11.5%

10.7%

Common equity  tier 1 ratio

11.3%

9.7%




Common equity tier 1 ratio (anticipated Basel III "fully loaded"*)

11.3%

9.7%




Leverage ratio (current)

7.8%

7.0%

Leverage ratio (anticipated Basel III "fully loaded"*)

7.7%

6.3%




Investec Limited**



Capital adequacy ratio

14.1%

14.0%

Tier 1 ratio

10.7%

10.7%

Common equity tier 1 ratio

9.9%

9.6%




Common equity tier 1 ratio (anticipated Basel III "fully loaded"*)

9.9%

9.6%




Leverage ratio (current*)

7.3%

6.9%

Leverage ratio (anticipated Basel III "fully loaded"*)

6.8%

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 GBP60 million for Investec plc would be 45bps (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 24bps (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 GBP476 million through asset sales, redemptions and write-offs. The total legacy business over the period reported a loss before taxation of GBP64.6 million (2016: GBP78.3 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 GBP125 million (31 March 2016: GBP143 million).

Additional information - Investec Equity Partners

In South Africa an 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

Sound levels of activity supported performance as the group continued to strengthen its client franchise businesses.

Whilst macro uncertainty persists, which could impact activity levels going forward, the group believes that its balanced business model together with its strategic initiatives place it in a favourable position to continue the growth in its core markets.

 

 

On behalf of the boards of Investec plc and Investec Limited

 

Fani Titi

Stephen Koseff

Bernard Kantor

Chairman

Chief Executive Officer

Managing Director

 

17 May 2017

Notes to the commentary section above

·      Presentation of financial information

 

Investec operates under a Dual Listed Companies (DLC) structure with primary listings of Investec plc on the London Stock Exchange and Investec Limited on the JSE Limited.

In terms of the contracts constituting the DLC structure, Investec plc and Investec Limited effectively form a single economic enterprise in which the economic and voting rights of ordinary shareholders of the companies are maintained in equilibrium relative to each other. The directors of the two companies consider that for financial reporting purposes, the fairest presentation is achieved by combining the results and financial position of both companies.

Accordingly, the year-end results for Investec plc and Investec Limited present the results and financial position of the combined DLC group under International Financial Reporting Standards (IFRS), denominated in Pounds Sterling. In the commentary above, all references to Investec or the group relate to the combined DLC group comprising Investec plc and Investec Limited.

·      Foreign currency impact

 

The group's reporting currency is Pounds Sterling. Certain of the group's operations are conducted by entities outside the UK. The results of operations and the financial position of the individual companies are reported in the local currencies in which they are domiciled, including Rands, Australian Dollars, Euros and US Dollars. These results are then translated into Pounds Sterling at the applicable foreign currency exchange rates for inclusion in the group's combined consolidated financial statements. In the case of the income statement, the weighted average rate for the relevant period is applied and, in the case of the balance sheet, the relevant closing rate is used. 

The following table sets out the movements in certain relevant exchange rates against Pounds Sterling over the period:


Year to

31 March 2017

Year to

31 March 2016

Currency per

GBP1.00

Period end

Average

Period end

Average

South African Rand

16.77

18.42

21.13

20.72

Australian Dollar

1.64

1.75

1.87

2.04

Euro

1.17

1.19

1.26

1.37

US Dollar

1.25

1.31

1.44

1.50

 

Exchange rates between local currencies and Pounds Sterling have fluctuated over the period. The most significant impact arises from the volatility of the Rand. The average exchange rate over the period has appreciated by 11.1% and the closing rate has appreciated by 20.6% since 31 March 2016.

·      Accounting policies and disclosures

 

These unaudited summarised combined consolidated financial results have been prepared in terms of the recognition and measurement criteria of International Financial Reporting Standards, and the presentation and disclosure requirements of IAS 34, (Interim Financial Reporting).

The accounting policies applied in the preparation of the results for the year ended 31 March 2017 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 year ended 31 March 2017 will be posted to stakeholders on 30 June 2017. These accounts will be available on the group's website on the same date.

 

·      Proviso

§ Please note that matters discussed in this announcement may contain forward looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to:

-      the further development of standards and interpretations under IFRS applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS.

-      domestic and global economic and business conditions.

-      market related risks.

§ A number of these factors are beyond the group's control.

§ These factors may cause the group's actual future results, performance or achievements in the markets in which it operates to differ from those expressed or implied.

§ Any forward looking statements made are based on the knowledge of the group at 17 May 2017.

§ The information in the announcement for the year ended 31 March 2017, which was approved by the board of directors on 17 May 2017, 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

 

Audit committee chairman

In compliance with section 3.59(c) of the Listings Requirements of the JSE Limited, shareholders are advised that Zarina Bassa, an independent non-executive director of Investec Limited and Investec plc since 1 November 2014, has been appointed as the chairman of the DLC Audit Committee with effect from 1 April 2017.

Financial assistance

Shareholders are referred to the Special Resolution number 3, which was approved at the annual general meeting held on 4 August 2016, 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 board of directors of Investec Limited provided such financial assistance during the period 1 October 2016 to 31 March 2017.

 

Investec plc and Investec Limited (combined results)

 

Unaudited combined consolidated financial results for the year to 31 March 2017

 

Unaudited combined consolidated financial results for the year ended 31 March 2017

 

Ongoing financial information

 

Consolidated summarised ongoing income statement

 

For the year to

31 March

31 March



GBP'000

2017

2016

Variance

% change






Net interest income

680 539

571 929

108 610

19.0%

Net fee and commission income

1 271 591

1 058 340

213 251

20.1%

Investment income

135 631

169 915

(34 284)

(20.2%)

Share of post taxation operating profit of associates

18 890

1 811

17 079

>100.0%

Trading income arising from





- customer flow

158 006

110 879

47 127

42.5%

- balance sheet management and other trading activities

8 078

11 617

(3 539)

(30.5%)

Other operating income

13 158

10 279

2 879

28.0%

Total operating income before impairment losses on loans and advances

2 285 893

1 934 770

351 123

18.1%

Impairment losses on loans and advances

(57 149)

(41 368)

(15 781)

38.1%

Operating income

2 228 744

1 893 402

335 342

17.7%

Operating costs

(1 502 623)

(1 272 108)

(230 515)

18.1%

Depreciation on operating leased assets

(2 169)

(2 165)

(4)

0.2%

Operating profit before goodwill, acquired intangibles and non-operating items

723 952

619 129

104 823

16.9%

Profit attributable to other non-controlling interests

(60 239)

(35 201)

(25 038)

71.1%

Profit attributable to Asset Management non-controlling interests

(20 291)

(16 529)

(3 762)

22.8%

Operating profit before taxation

643 422

567 399

76 023

13.4%

Taxation

(130 438)

(118 151)

(12 287)

10.4%

Preference dividends accrued

(25 838)

(26 130)

292

(1.1%)

Adjusted attributable earnings to ordinary shareholders

487 146

423 118

64 028

15.1%

Adjusted earnings per share (pence)

54.1

48.6


11.3%

Number of weighted average shares (million)

900.4

870.5



Cost to income ratio

65.8%

65.8%



 

Segmental geographical and business analysis of operating profit before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests - ongoing business

 

UK and

Southern

Total

GBP'000

Other

Africa

group





Asset Management

91 262

73 562

164 824

Wealth & Investment

65 190

28 053

93 243

Specialist Banking

169 196

285 226

454 422


325 648

386 841

712 489

Group costs

(36 163)

(12 613)

(48 776)

Total group

289 485

374 228

663 713

Other non-controlling interest - equity



60 239

Operating profit



723 952





For the year to 31 March 2016

UK and

Southern

Total

GBP'000

Other

Africa

group





Asset Management

76 853

57 930

134 783

Wealth & Investment

63 127

22 608

85 735

Specialist Banking

156 378

252 837

409 215


296 358

333 375

629 733

Group costs

(35 160)

(10 645)

(45 805)

Total group

261 198

322 730

583 928

Other non-controlling interest - equity



35 201

Operating profit



619 129

 

Reconciliation from statutory summarised income statement to ongoing summarised income statement

 

Statutory  



For the year to 31 March 2017

as

UK legacy

Ongoing

GBP'000

disclosed

business

business

       




Net interest income

679 895

(644)

680 539

Net fee and commission income

1 271 524

(67)

1 271 591

Investment income

136 203

572

135 631

Share of post taxation operating profit of associates

18 890

-

18 890

Trading income arising from       




- customer flow

158 001

(5)

158 006

- balance sheet management and other trading activities

8 218

140

8 078

Other operating income

13 483

325

13 158

Total operating income before impairment losses on loans and advances

2 286 214

321

2 285 893

Impairment losses on loans and advances

(111 454)

(54 305)

(57 149)

Operating income/(loss)

2 174 760

(53 984)

2 228 744

Operating costs

(1 513 231)

(10 608)

(1 502 623)

Depreciation on operating leased assets

(2 169)

-

(2 169)

Operating profit/(loss) before goodwill, acquired intangibles and non-operating items

659 360

(64 592)

723 952

Profit attributable to other non-controlling interests

(60 239)

-

(60 239)

Profit attributable to Asset Management non-controlling interests

(20 291)

-

(20 291)

Operating profit/(loss) before taxation

578 830

(64 592)

643 422

Taxation*

(118 488)

11 950

(130 438)

Preference dividends accrued

(25 838)

-

(25 838)

Adjusted attributable earnings to ordinary shareholders

434 504

(52 642)

487 146

Adjusted earnings per share (pence)

48.3


54.1

Number of weighted average shares (million)

900.4


900.4

Cost to income ratio

66.3%


65.8%

* Applying the group's effective taxation rate of 18.5%.

 

Statutory

UK legacy

Ongoing

GBP'000

as disclosed

business

business

       




Net interest income

573 769

1 840

571 929

Net fee and commission income

1 061 625

3 285

1 058 340

Investment income

170 408

493

169 915

Share of post taxation operating profit of associates

1 811

-

1 811

Trading income arising from       




- customer flow

110 227

(652)

110 879

- balance sheet management and other trading activities

11 377

(240)

11 617

Other operating income

10 279

-

10 279

Total operating income before impairment losses on loans and advances

1 939 496

4 726

1 934 770

Impairment losses on loans and advances

(109 516)

(68 148)

(41 368)

Operating income/(loss)

1 829 980

(63 422)

1 893 402

Operating costs

(1 287 021)

(14 913)

(1 272 108)

Depreciation on operating leased assets

(2 165)

-

(2 165)

Operating profit/(loss) before goodwill, acquired intangibles and non-operating items

540 794

(78 335)

619 129

Profit attributable to other non-controlling interests

(35 201)

-

(35 201)

Profit attributable to Asset Management non-controlling interests

(16 529)

-

(16 529)

Operating profit/(loss) before taxation

489 064

(78 335)

567 399

Taxation on operating profit before goodwill and acquired intangibles*

(103 202)

14 949

(118 151)

Preference dividends accrued

(26 130)

-

(26 130)

Adjusted attributable earnings to ordinary shareholders

359 732

(63 386)

423 118

Adjusted earnings per share (pence)

41.3


48.6

Number of weighted average shares (million)

870.5


870.5

Cost to income ratio

66.4%


65.8%

* Applying the group's effective statutory taxation rate of 19.1%.   

 

 

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

%


2017

2016

change

2017

change

  






Operating profit before taxation* (million)

599

506

18.5%

546

8.0%

Earnings attributable to shareholders (million)

442

368

20.1%

401

8.8%

Adjusted earnings attributable to shareholders** (million)

435

360

20.8%

395

9.9%

Adjusted earnings per share**

48.3p

41.3p

16.9%

43.9p

6.3%

Basic earnings per share

50.8p

38.5p

31.9%

46.4p

20.5%

Dividends per share

23.0

21.0p

9.5%

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. 17.82. 

 


Results in Pounds Sterling 


Actual as

Actual as


Neutral 



reported

reported

Actual as

currency^^

Neutral


At

At

reported

At

currency


31 March

31 March

%

31 March

%


2017

2016

change

2017

change

 






Net asset value per share

431.0p

352.3p

22.3%

395.0p

12.1%

Net tangible asset value per share

377.0p

294.3p

28.1%

341.6p

16.1%

Total equity (million)

4 809

3 859

24.6%

4 252

10.2%

Total assets (million)

53 535

45 352

18.0%

46 338

2.2%

Core loans and advances (million)

22 707

18 119

25.3%

19 501

7.6%

Cash and near cash balances (million)

12 038

10 962

9.8%

10 591

(3.4%)

Customer deposits (million)

29 109

24 044

21.1%

25 376

5.5%

Third party assets under management (million)

150 735

121 683

23.9%

139 664

14.8%

Return on average adjusted shareholders' equity

12.5%

11.5%




Return on average risk-weighted assets

1.45%

1.34%




Defaults (net of impairments and before collateral) as a percentage of net






core loans

1.22%

1.54%




Loans and advances to customers as a percentage of customer deposits

76.2%

73.6%




Credit loss ratio (income statement impairment charge as a % of average






gross core loans and advances)

0.54%

0.62%




 

^ For balance sheet items we have assumed that the Rand: Pounds Sterling closing exchange rate has remained neutral since 31 March 2016.

 

Combined consolidated income statement


Year to

Year to


31 March

31 March

GBP'000

2017

2016




Interest income

2 230 765

1 705 640

Interest expense

(1 550 870)

(1 131 871)

Net interest income

679 895

573 769

Fee and commission income

1 429 588

1 188 012

Fee and commission expense

(158 064)

(126 387)

Investment income

136 203

170 408

Share of post taxation operating profit of associates

18 890

1 811*

Trading income arising from



- customer flow

158 001

110 227

- balance sheet management and other trading activities

8 218

11 377

Other operating income

13 483

10 279*

Total operating income before impairment losses on loans and advances

2 286 214

1 939 496

Impairment losses on loans and advances

(111 454)

(109 516)

Operating income

2 174 760

1 829 980

Operating costs

(1 513 231)

(1 287 021)

Depreciation on operating leased assets

(2 169)

(2 165)

Operating profit before goodwill and acquired intangibles

659 360

540 794

Impairment of goodwill

(4 749)

(1 577)

Amortisation of acquired intangibles

(17 197)

(16 248)

Operating profit

637 414

522 969

Net loss on disposal of subsidiaries

-

(4 778)

Profit before taxation

637 414

518 191

Taxation on operating profit before goodwill and acquired intangibles

(118 488)

(103 202)

Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries

4 070

5 197

Profit after taxation

522 996

420 186

Profit attributable to other non-controlling interests

(60 239)

(35 201)

Profit attributable to Asset Management non-controlling interests

(20 291)

(16 529)

Earnings attributable to shareholders

442 466

368 456

Impairment of goodwill

4 749

1 577

Amortisation of acquired intangibles, net of taxation

17 197

16 248

Net loss on disposal of subsidiaries

-

4 778

Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries

(4 070)

(5 197)

Preference dividends paid

(25 658)

(33 192)

Accrual adjustment on earnings attributable to other equity holders

(180)

7 062

Adjusted earnings

434 504

359 732

Earnings per share (pence)



- Basic

50.8

38.5

- Diluted

48.8

36.7

Adjusted earnings per share (pence)



- Basic

48.3

41.3

- Diluted

46.4

39.4

Dividends per share (pence)



- Interim

10.0

9.5

- Final

13.0

11.5

Number of weighted average shares - (million)

900.4

870.5

 

*   Share of post taxation operating profit of associates is disclosed separately from other operating income.

 

Summarised combined consolidated statement of comprehensive income

 


Year to

Year to


31 March

31 March

GBP'000

2017

2016

     



Profit after taxation

522 996

420 186

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*

53 324

(31 934)

- Gains on realisation of available-for-sale assets recycled to the income statement*

(7 781)

(1 961)

- Fair value movements on available-for-sale assets taken directly to other comprehensive income*

54 863

(37 153)

- Foreign currency adjustments on translating foreign operations

540 534

(240 875)

Items that will never be reclassified to the income statement     



- Re-measurement of net defined benefit pension asset

(43 580)

4 738

Total comprehensive income

1 120 356

113 001

Total comprehensive income attributable to ordinary shareholders

892 201

84 932

Total comprehensive income/(loss) attributable to non-controlling interests

202 497

(5 123)

Total comprehensive income attributable to perpetual preferred securities

25 658

33 192

Total comprehensive income

1 120 356

113 001

* Net of taxation of GBP16.8 million (year to 31 March 2016: GBP26.2 million).

 

Summarised combined consolidated cash flow statement

 


Year to

Year to


31 March

31 March

GBP'000

2017

2016




Cash inflows from operations

708 719

598 786

Increase in operating assets

(415 028)

(4 580 570)

Increase in operating liabilities

498 146

4 602 620

Net cash inflow from operating activities

791 837

620 836

Net cash outflow from investing activities

(90 115)

(13 925)

Net cash inflow/(outflow) from financing activities

37 523

(347 741)

Effects of exchange rate changes on cash and cash equivalents

332 183

(171 718)

Net increase in cash and cash equivalents

1 071 428

87 452

Cash and cash equivalents at the beginning of the year

4 650 300

4 562 848

Cash and cash equivalents at the end of the year

5 721 728

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


31 March

31 March

GBP'000

2017

2016




Assets



Cash and balances at central banks

3 351 702

3 007 269

Loans and advances to banks

3 191 041

2 498 585

Non-sovereign and non-bank cash placements

536 259

466 573

Reverse repurchase agreements and cash collateral on securities borrowed

2 358 970

2 497 125

Sovereign debt securities

3 804 627

3 208 862

Bank debt securities

639 189

896 855

Other debt securities

1 115 558

949 950

Derivative financial instruments

1 185 848

1 580 949

Securities arising from trading activities

1 376 668

1 119 074

Investment portfolio

835 899

660 795

Loans and advances to customers

22 189 975

17 681 572

Own originated loans and advances to customers securitised

517 162

437 243

Other loans and advances

355 248

321 617

Other securitised assets

148 964

160 295

Interests in associated undertakings

392 213

267 099

Deferred taxation assets

133 972

112 135

Other assets

1 900 480

2 092 661

Property and equipment

105 939

90 888

Investment properties

1 128 930

938 879

Goodwill

367 579

368 039

Intangible assets

143 261

148 280

Non-current assets held for sale

27 218

-


45 806 702

39 504 745

Other financial instruments at fair value through profit or loss   



in respect of liabilities to customers

7 728 130

5 847 036


53 534 832

45 351 781

Liabilities  



Deposits by banks

2 736 066

2 397 403

Derivative financial instruments

1 296 206

1 582 847

Other trading liabilities

978 911

957 418

Repurchase agreements and cash collateral on securities lent

690 615

971 646

Customer accounts (deposits)

29 109 428

24 044 281

Debt securities in issue

2 386 180

2 299 751

Liabilities arising on securitisation of own originated loans and advances

90 125

85 650

Liabilities arising on securitisation of other assets

128 838

120 851

Current taxation liabilities

227 828

192 255

Deferred taxation liabilities

40 408

55 486

Other liabilities

1 910 830

1 802 967


39 595 435

34 510 555

Liabilities to customers under investment contracts

7 725 604

5 845 503

Insurance liabilities, including unit-linked liabilities

2 526

1 533


47 323 565

40 357 591

Subordinated liabilities

1 402 638

1 134 883


48 726 203

41 492 474

Equity



Ordinary share capital

237

228

Perpetual preference share capital

31

153

Share premium

2 341 228

2 239 364

Treasury shares

(126 879)

(125 717)

Other reserves

(310 275)

(784 051)

Retained income

2 226 751

2 030 310

Shareholders' equity excluding non-controlling interests

4 131 093

3 360 287

Other Additional Tier 1 securities in issue

32 798

26 031

Non-controlling interests

644 738

472 989

- Perpetual preferred securities issued by subsidiaries

91 492

72 615

- Non-controlling interests in partially held subsidiaries

553 246

400 374

Total equity

4 808 629

3 859 307

Total liabilities and equity

53 534 832

45 351 781

 

Summarised combined consolidated statement of changes in equity


Year to

Year to


31 March

31 March

GBP'000

2017

2016




Balance at the beginning of the year

3 859 307

4 040 495

Total comprehensive income for the year

1 120 356

113 001

Share-based payments adjustments

55 961

56 216

Dividends paid to ordinary shareholders

(216 602)

(180 009)

Dividends declared to perpetual preference shareholders

(15 279)

(14 519)

Dividends paid to perpetual preference shareholders included in non-controlling interests

(10 379)

(18 673)

Dividends paid to non-controlling interests

(48 195)

(39 835)

Issue of ordinary shares

228 086

54 720

Redemption of perpetual preference shares

(81 743)

-

Issue of equity by subsidiaries

17 042

153 299

Acquisition/(reduction) of non-controlling interests

12 500

(142 111)

Other equity movements

(80)

-

Movement of treasury shares

(112 345)

(163 277)

Balance at the end of the year

4 808 629

3 859 307

 

Combined consolidated segmental analysis

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      








2017      




Asset Management

91 262

73 562

164 824

Wealth & Investment

65 190

28 053

93 243

Specialist Banking

104 604

285 226

389 830


261 056

386 841

647 897

Unallocated group costs

(36 163)

(12 613)

(48 776)

Total group

224 893

374 228

599 121

Other non-controlling interest - equity



60 239

Operating profit



659 360





2016      




Asset Management

76 853

57 930

134 783

Wealth & Investment

63 127

22 608

85 735

Specialist Banking

78 043

252 837

330 880


218 023

333 375

551 398

Unallocated group costs

(35 160)

(10 645)

(45 805)

Total group

182 863

322 730

505 593

Other non-controlling interest - equity



35 201

Operating profit



540 794

 

 

Analysis of financial assets and liabilities by category of financial instrument





Non-financial




Total

Insurance

instruments



Total

instruments

related linked

or scoped


At 31 March 2017

instruments

at amortised

instruments

out of


GBP'000

at fair value

cost

at fair value

IAS 39

Total







2017






Assets






Cash and balances at central banks

2 497

3 349 205

-

-

3 351 702

Loans and advances to banks

200 364

2 990 677

-

-

3 191 041

Non-sovereign and non-bank cash placements

10

536 249

-

-

536 259

Reverse repurchase agreements and cash collateral on






securities borrowed

1 167 255

1 191 715

-

-

2 358 970

Sovereign debt securities

3 605 985

198 642

-

-

3 804 627

Bank debt securities

327 888

311 301

-

-

639 189

Other debt securities

737 058

378 500

-

-

1 115 558

Derivative financial instruments

1 185 848

-

-

-

1 185 848

Securities arising from trading activities

1 376 668

-

-

-

1 376 668

Investment portfolio

835 899

-

-

-

835 899

Loans and advances to customers

921 991

21 267 984

-

-

22 189 975

Own originated loans and advances to customers securitised

-

517 162

-

-

517 162

Other loans and advances

-

355 248

-

-

355 248

Other securitised assets

138 628

10 336

-

-

148 964

Interests in associated undertakings

-

-

-

392 213

392 213

Deferred taxation assets

-

-

-

133 972

133 972

Other assets

283 212

1 165 779

-

451 489

1 900 480

Property and equipment

-

-

-

105 939

105 939

Investment properties

-

-

-

1 128 930

1 128 930

Goodwill

-

-

-

367 579

367 579

Intangible assets

-

-

-

143 261

143 261

Non-current assets held for sale

27 218

-

-

-

27 218


10 810 521

32 272 798

-

2 723 383

45 806 702

Other financial instruments at fair value through profit






or loss in respect of liabilities to customers

-

-

7 728 130

-

7 728 130


10 810 521

32 272 798

7 728 130

2 723 383

53 534 832

Liabilities






Deposits by banks

-

2 736 066

-

-

2 736 066

Derivative financial instruments

1 296 206

-

-

-

1 296 206

Other trading liabilities

978 911

-

-

-

978 911

Repurchase agreements and cash collateral on securities lent

137 861

552 754

-

-

690 615

Customer accounts (deposits)

2 046 340

27 063 088

-

-

29 109 428

Debt securities in issue

640 557

1 745 623

-

-

2 386 180

Liabilities arising on securitisation of own originated






loans and advances

-

90 125

-

-

90 125

Liabilities arising on securitisation of other assets

128 838

-

-

-

128 838

Current taxation liabilities

-

-

-

227 828

227 828

Deferred taxation liabilities

-

-

-

40 408

40 408

Other liabilities

43 813

1 135 721


731 296

1 910 830


5 272 526

33 323 377

-

999 532

39 595 435

Liabilities to customers under investment contracts

-

-

7 725 604

-

7 725 604

Insurance liabilities, including unit-linked liabilities

-

-

2 526

-

2 526


5 272 526

33 323 377

7 728 130

999 532

47 323 565

Subordinated liabilities

-

1 402 638

-

-

1 402 638


5 272 526

34 726 015

7 728 130

999 532

48 726 203

 

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)

 

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 March 2017

instruments




GBP'000

at fair value

Level 1

Level 2

Level 3

  





Assets  





Cash and balances at central banks

2 497

2 497

-

-

Loans and advances to banks

200 364

200 364

-

-

Non-sovereign and non-bank cash placements

10

-

10

-

Reverse repurchase agreements and cash collateral on securities borrowed

1 167 255

176 189

991 066

-

Sovereign debt securities

3 605 985

3 605 985

-

-

Bank debt securities

327 888

245 015

82 873

-

Other debt securities

737 058

385 999

344 628

6 431

Derivative financial instruments

1 185 848

-

1 126 751

59 097

Securities arising from trading activities

1 376 668

1 341 112

26 485

9 071

Investment portfolio

835 899

209 584

39 988

586 327

Loans and advances to customers

921 991

-

835 509

86 482

Other securitised assets

138 628

-

-

138 628

Other assets

283 212

283 212

-

-

Non-current assets held for sale

27 218

-

-

27 218


10 810 521

6 449 957

3 447 310

913 254






Liabilities





Derivative financial instruments

1 296 206

1 676

1 293 482

1 048

Other trading liabilities

978 911

900 355

78 556

-

Repurchase agreements and cash collateral on securities lent

137 861

-

137 861

-

Customer accounts (deposits)

2 046 340

-

2 046 340

-

Debt securities in issue

640 557

-

627 875

12 682

Liabilities arising on securitisation of other assets

128 838

-

-

128 838

Other liabilities

43 813

-

43 813

-


5 272 526

902 031

4 227 927

142 568

Net financial assets/(liabilities) at fair value

5 537 995

5 547 926

(780 617)

770 686

       

Transfers between level 1 and level 2    

There were no transfers between level 1 and level 2 in the current year.

 

Level 2 financial assets and financial liabilities

 

The following table sets out the group's principal valuation techniques as at 31 March 2017 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 collateral on securities borrowed

Discounted cash flow model, Hermite interpolation,

Yield curves

Bank debt securities

Black-Scholes

Discounted cash flow model

Volatilities

Yield curves

NCD curves

Other debt securities

prices,

Discounted cash flow model

 

Yield curves and NCD curves, external

broker quotes

Derivative financial instruments

 

Discounted cash flow model, Hermite interpolation,

industry standard derivative pricing models including

Black-Scholes

Yield curves, risk free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves

Securities arising from trading

activities

Standard industry derivative pricing model

 

Interest rate curves, implied bond spreads, equity volatilities

Investment portfolio

Discounted cash flow model, relative valuation model

Comparable quoted inputs

Discount rate and fund unit price,

net assets

Loans and advances to customers

Discounted cash flow model

Yield curves

Liabilities  



Derivative financial instruments

Discounted cash flow model, Hermite interpolation,

industry standard derivative pricing models including

Black-Scholes

Yield curves, risk free rate, volatilities, forex forward points and spot rates, interest rate 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

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

 

 

 


Total level 3

For the year to 31 March

financial

GBP'000

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

Total gains or losses

                 74 898

 In the income statement

                 77 099

 In the statement of comprehensive income

(2 201)

Purchases

               170 894

Sales

(167 297)

Issues

(16 226)

Settlements

(51 847)

Transfers into level 3

                   6 168

Transfers out of level 3

(16 312)

Foreign exchange adjustments

                 79 505

Balance as at 31 March 2017

               770 686

 

During the year, a level 3 investment of GBP16.3 million has been transferred to level 2 due to the nature of asset changing, resulting in a change in valuation method. In addition GBP6.2 million has been transferred to level 3 due to valuation inputs becoming unobservable.

 

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 2017

 

GBP'000

Total

Realised

Unrealised

Total gains recognised in the income statement for the year             




Net interest income

1 831

1 831

-

Fee and commission income

11 732

11 443

289

Investment income

36 887

35 527

1 360

Trading income arising from customer flow

26 649

16

26 633


77 099

48 817

28 282

Total gains/(losses) recognised in other comprehensive income for the year             




Gains on realisation of available-for-sale assets recycled through the income statement

16 377

16 377

-

Fair value movements on available-for-sale assets taken directly to other comprehensive income

(2 201)

-

(2 201)


14 176

16 377

(2 201)

 

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 2017

GBP'000

input

input used

GBP'000

GBP'000

          






Assets          






Other debt securities

6 431

Reflected in income statement






Price earnings multiple

(10)%/10%

965

(129)

          






Derivative financial instruments

59 097

Reflected in income statement


6 692

(5 016)



Volatilities

4% - 9.5%

2 465

(1 537)



EBITDA

5% - 6 %

63

-



Cash flow adjustments

CPR 6.25% - 8.4%

648

(1 086)



Property values

(10%)/10%

60

(60)



Other^

^

3 456

(2 333)

          






Securities arising from trading activities


Reflected in income statement





9 071

Cash flow adjustments

CPR 9%

1 290

(1 074)

          






Investment portfolio

586 327

Reflected in income statement


81 819

(76 204)



Price Earnings multiple

3 x - 10.3 x

5 430

(5 788)



Precious and industrial






metal prices

(10)%/10%

15 403

(17 215)



EBITDA

**

20 862

(17 532)



Other^

^

40 124

(35 669)

          








Reflected in other






comprehensive income


6 228

(2 655)



Price Earnings multiple

4.0 x - 4.5 x

630

(301)



Other^

^

5 598

(2 354)

          






Loans and advances to customers

86 482

Reflected in income statement


9 825

(9 716)



EBITDA

10%

5 681

(5 681)



Other^

^

4 144

(4 035)

          






Other securitised assets*

138 628

Reflected in income statement






Cash flow adjustments

CPR 6.25%

48

(38)

          






Non current assets held for sale

27 218

Price earnings multiple

(10)%/10%

3 876

(3 459)

Liabilities          






Derivative financial instruments

1 048

Reflected in income statement






Cash flow adjustments

CPR 8.4%

983

(794)

          






Debt securities in issue


Reflected in income statement




          







12 682

Volatilities

7%

401

(608)

          






Liabilities arising on securitisation           






of other assets*


Reflected in income statement





128 838

Cash flow adjustments

CPR 6.25%

931

(847)

          






Net level 3 assets

770 686



113 058

(100 540)

 

* 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, other equity investments 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 EBITDA has been stressed 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:

 

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 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.

 

Price earnings multiple

The price-to-earnings ratio is an equity valuation multiple. It is a key driver in the valuation of unlisted investments.

 

Precious and industrial metals

The price of precious and industrial metals is a key driver of future cash flows on these investments.

 

 

Fair value of financial assets and liabilities at amortised cost

At 31 March 2017


Carrying


GBP'000

amount

Fair value

          



Assets          



Cash and balances at central banks

3 349 205

3 349 205

Loans and advances to banks

2 990 677

2 990 677

Non-sovereign and non-bank cash placements

536 249

536 249

Reverse repurchase agreements and cash collateral on securities borrowed

1 191 715

1 191 744

Sovereign debt securities

198 642

193 693

Bank debt securities

311 301

326 488

Other debt securities

378 500

373 209

Loans and advances to customers

21 267 984

21 262 727

Own originated loans and advances to customers securitised

517 162

517 162

Other loans and advances

355 248

337 419

Other securitised assets

10 336

10 336

Other assets

1 165 779

1 165 721


32 272 798

32 254 630




Liabilities



Deposits by banks

2 736 066

2 771 467

Repurchase agreements and cash collateral on securities lent

552 754

554 915

Customer accounts (deposits)

27 063 088

27 157 559

Debt securities in issue

1 745 623

1 777 485

Liabilities arising on securitisation of own originated loans and advances

90 125

90 125

Other liabilities

1 135 721

1 135 426

Subordinated liabilities

1 402 638

1 575 574


34 726 015

35 062 551

 

 

Sponsor:

Investec Bank Limited

 

 

 

 

 

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 30

Notice is hereby given that final dividend number 30, being a gross dividend of 13 pence (2016: 11.5 pence) per ordinary share has been recommended by the Board from income reserves in respect of the financial year ended 31 March 2017 payable to shareholders recorded in the shareholder' register of the company at the close of business on Friday, 28 July 2017.

·      for Investec plc shareholders, registered on the United Kingdom share register, through a dividend payment by Investec plc from income reserves of 13 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 6 pence per ordinary share and through a dividend paid by Investec Limited, on the SA DAS share, payable from income reserves, equivalent to 7 pence per ordinary share

 

The relevant dates for the payment of dividend number 30 are as follows:

Last day to trade cum-dividend

On the Johannesburg Stock Exchange (JSE)                                                      Tuesday, 25 July 2017 

On the London Stock Exchange (LSE)                                                          Wednesday, 26 July 2017 

Shares commence trading ex-dividend                                                                   

On the Johannesburg Stock Exchange (JSE)                                                Wednesday, 26 July 2017

On the London Stock Exchange (LSE)                                                              Thursday, 27 July 2017

Record date (on the JSE and LSE)                                                                     Friday, 28 July 2017

Payment date (on the JSE and LSE)                                                           Monday, 14 August 2017

Share certificates on the South African branch register may not be dematerialised or rematerialised between Wednesday, 26 July 2017 and Friday, 28 July 2017, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday, 26 July 2017 and Friday, 28 July 2017, 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 pence, equivalent to a gross dividend of 225 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, 17 May 2017

·       Investec plc United Kingdom tax reference number: 2683967322360

·       The issued ordinary share capital of Investec plc is 657 105 625 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 225 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 180 cents per share (gross dividend of 225 cents per share less Dividend Tax of 45 cents per share)

 

By order of the board

D Miller                                                                  

Company Secretary

17 May 2017

 

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 22

 

Notice is hereby given that preference dividend number 22 has been declared from income reserves for the period 01 October 2016 to 31 March 2017 amounting to a gross preference dividend of 6.23288 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, 09 June 2017.

 

For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of 6.23288 pence per preference share is equivalent to a gross dividend of 106.63149 cents per share, which has been determined using the Rand/Pound Sterling average buy/sell forward rate as at 11h00 (SA Time) on Wednesday, 17 May 2017.

 

The relevant dates relating to the payment of dividend number 22 are as follows:

 

Last day to trade cum-dividend           

On the Johannesburg Stock Exchange (JSE)                                                Tuesday, 06 June 2017

On The International Stock Exchange (TISE)                                           Wednesday, 07 June 2017

Shares commence trading ex-dividend

On the Johannesburg Stock Exchange (JSE)                                           Wednesday, 07 June 2017

On The International Stock Exchange (TISE)                                               Thursday, 08 June 2017

Record date (on the JSE and TISE)                                                             Friday, 09 June 2017

Payment date (on the JSE and TISE)                                                        Monday, 19 June 2017

Share certificates may not be dematerialised or rematerialised between Wednesday, 07 June 2017 and Friday, 09 June 2017, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday, 07 June 2017 and Friday, 09 June 2017, 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 85.30519 cents per preference share for preference shareholders liable to pay the Dividend Tax and 106.63149 cents per preference share for preference shareholders exempt from paying the Dividend Tax.

 

By order of the board

 

 

D Miller

Company Secretary

 

17 May 2017

 

 

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 12

Notice is hereby given that preference dividend number 12 has been declared from income reserves for the period 01 October 2016 to 31 March 2017 amounting to a gross preference dividend of 497.38356 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, 09 June 2017.

The relevant dates relating to the payment of dividend number 12 are as follows:

 

Last day to trade cum-dividend

 

Tuesday, 06 June 2017 

Shares commence trading ex-dividend

Wednesday, 07 June 2017

Record date

Friday, 09 June 2017 

Payment date

Monday, 19 June 2017

Share certificates may not be dematerialised or rematerialised between Wednesday, 07 June 2017 and Friday, 09 June 2017, 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 20% (subject to any available exemptions as legislated)

·       The net dividend amounts to 397.90685 cents per preference share for preference shareholders liable to pay the Dividend Tax and 497.38356 cents per preference share for preference shareholders exempt from paying the Dividend Tax.

 

By order of the board

D Miller

Company Secretary

17 May 2017

 

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
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