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RNS
Investec PLC  -  INVP   

Results for the six months ended 30 September 2017

Released 07:00 16-Nov-2017

RNS Number : 6416W
Investec PLC
16 November 2017
 

 

Investec plc and Investec Limited (combined results)

Unaudited combined consolidated financial results for the six months ended 30 September 2017

This announcement covers the results of the Investec group for the six months ended 30 September 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 year ended 31 March 2017. A reconciliation between the statutory and ongoing income statement is provided.

 

Unless the context indicates otherwise, all comparatives included in the commentary relate to the six months ended 30 September 2016. Group results have benefited from a 14.7% 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 six month period to 30 September 2017 remain the same as those in the prior period. Balance sheet items have been negatively impacted by a 7.9% depreciation of the closing Rand:Pounds Sterling exchange rate since 31 March 2017. Amounts represented on a currency neutral basis for balance sheet items assume that the relevant closing exchange rates at 30 September 2017 remain the same as those at 31 March 2017.

 

Overview of results

 

Sound growth in key earnings drivers

·      The Asset Management and Wealth & Investment businesses have benefited from higher funds under management supported by favourable equity markets and combined net inflows of GBP3.6 billion.

·      The Specialist Banking businesses have continued to see good growth in loan portfolios and client activity, notwithstanding the persistent macro uncertainty in both geographies.

·      The group has continued to invest for growth with the increase in costs largely reflecting planned spend in   growing the client franchise businesses.

·      Digital and online innovation and enhancements across the group, coupled with a high touch client centric service model has further entrenched the strength of our franchises particularly in the private banking and wealth management businesses.

·      Geographical and operational diversity continues to support a sustainable recurring income base and earnings through varying market conditions.

 

Statutory operating profit salient features

·      Statutory operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests ("operating profit") increased 11.8% to GBP314.6 million (2016: GBP281.4 million) - an increase of 1.1% on a currency neutral basis.

·      Statutory adjusted earnings per share (EPS) before goodwill, acquired intangibles and non-operating items increased 17.2% from 22.7 pence to 26.6 pence - an increase of 5.7% on a currency neutral basis.

 

 

Satisfactory performance from the ongoing business

·      Ongoing operating profit increased 10.5% to GBP347.5 million (2016: GBP314.5 million) - an increase of 0.9% on a currency neutral basis.

·      Ongoing adjusted EPS before goodwill, acquired intangibles and non-operating items increased 14.8% from 25.7 pence to 29.5 pence - an increase of 4.7% on a currency neutral basis.

·      Recurring income as a percentage of total operating income amounted to 76.4% (2016: 72.4%).

·      The annualised credit loss charge as a percentage of average gross core loans and advances amounted to 0.28% (2016: 0.19%), remaining at the lower end of the group's long term range despite an increase in impairments.

·      Third party assets under management increased 2.4% to GBP154.3 billion (31 March 2017: GBP150.7 billion) - an increase of 5.1% on a currency neutral basis.

·      Customer accounts (deposits) decreased 3.9% to GBP28.0 billion (31 March 2017: GBP29.1 billion) - an increase of 0.7% on a currency neutral basis.

·      Core loans and advances increased 0.6% to GBP22.4 billion (31 March 2017: GBP22.2billion) - an increase of 5.6% on a currency neutral basis.

 

The UK legacy portfolio continues to be actively managed down

·      The legacy portfolio reduced from GBP476 million at 31 March 2017 to GBP425 million largely through asset sales, redemptions and write-offs.

·      The legacy business reported a loss before taxation of GBP32.9 million (2016: GBP33.0 million).

 

Maintained a sound balance sheet

·      Capital remained comfortably in excess of current regulatory requirements. Investec Limited ended the period in line with the group's common equity tier 1 ratio target, while Investec plc continued to report a ratio ahead of this target. 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 GBP10.7 billion.

 

Dividend increase of 5.0%

·      The board declared a dividend of 10.5 pence per ordinary share (2016: 10.0 pence) resulting in a dividend cover based on the group's adjusted EPS before goodwill and non-operating items of 2.5 times (2016: 2.3 times), consistent with the group's dividend policy.

 

 

Stephen Koseff, Chief Executive Officer of Investec said:

"We have continued to invest to grow our client franchise businesses.  We have improved and enhanced our digital and online services to complement our strong client centric service model.  This spending has further strengthened our franchises in private banking and wealth management. Our geographical and operational diversity supports a strong recurring income base and earnings which will help us weather an uncertain world."

 

Bernard Kantor, Managing Director of Investec said:

"Investec achieved a satisfactory operating performance in all its businesses despite macro-economic and political uncertainty in both South Africa and the UK. In particular, Asset Management and Wealth & Investment benefited from higher funds under management and favourable equity markets while the Specialist Banking businesses continued to see good growth in loan portfolios and client activity."

 

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: +27 (0)11 502 7405 / +2783 253 0478

 

Newgate (UK PR advisers)

Jonathan Clare/Alistair Kellie/Zoe Pocock/Charlotte Coulson

Tel: +44 (0)20 7680 6550

 

Presentation/conference call details

A presentation on the results will commence at 9:00 UK time/11:00 SA time. Viewing options as below:

·      Live on South African TV (Business day TV channel 412 DSTV)

·      A live and delayed video webcast at www.investec.com

·      Toll free numbers for the telephone conference facilities

‒    SA participants: 0800 200 648

‒    UK participants: 0808 162 4061

‒    rest of Europe and other participants: +800 246 78 700

‒    Australian participants: 1800 350 100

‒    USA participants: 1855 481 6362

 

 

About Investec

Investec is an international specialist bank and asset manager that provides a diverse range of financial products and services to a select client base in three principal markets - the UK and Europe, South Africa and Asia/Australia as well as certain other countries. The group was established in 1974 and currently has approximately 9 900 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 GBP5.0 billion.

 

Investec plc and Investec Limited (combined results)

Unaudited combined consolidated financial results for the six months ended 30 September 2016

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

Overall group performance - ongoing basis

Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests ("operating profit") increased 10.5% to GBP347.5 million (2016: GBP314.5 million) - an increase of 0.9% on a currency neutral basis.

The combined South African businesses reported operating profit 7.9% ahead of the prior period (in Rands), whilst the combined UK and Other businesses posted a 5.0% decrease in operating profit in Pounds Sterling.

 

 

 

Business unit review - ongoing basis

Asset Management

Asset Management operating profit increased 1.2% to GBP83.2 million (2016: GBP82.3 million). The business benefited from higher average funds under management supported by positive market movements and solid net inflows of GBP2.1 billion. Earnings were negatively impacted by lower performance fees in South Africa. Total funds under management amount to GBP98.2 billion (31 March 2017: GBP95.3 billion).

Wealth & Investment

Wealth & Investment operating profit increased by 14.7% to GBP49.5 million (2016: GBP43.2 million) supported by higher average funds under management and net inflows of GBP1.5 billion. The UK business had a strong performance while earnings in South Africa have been impacted by lower brokerage volumes. Total funds under management amount to GBP55.5 billion (31 March 2017: GBP54.8 billion).

Specialist Banking

Specialist Banking operating profit increased by 12.5% to GBP239.4 million (2016: GBP212.8million).

The South African business reported an increase in operating profit in Rands of 21.6%. Earnings were supported by a strong performance from the investment portfolio. Growth in the private banking franchise as well as a good performance from the corporate treasury and corporate advisory businesses resulted in an increase in fees. Core loans and advances increased 6.5% to R251.5 billion (31 March 2017: R236.2 billion). The credit loss ratio on average core loans and advances amounted to 0.30% (2016: 0.29%), remaining at the lower end of its long term average, despite the business reporting an increase in impairments.

The UK and Other businesses reported a 22.1% decrease in operating profit. Strong growth in net interest income was supported by loan book growth of 4.1% to GBP8.5 billion (31 March 2017: GBP8.1 billion) and a reduction in the cost of funding. This was offset by a decrease in non interest revenue following particularly strong investment banking and client flow trading activity levels in the prior period. In line with the division's current investment strategy to support franchise growth, IT infrastructure costs and headcount increased, notably for the continued build out of the private client banking offering. Costs are also impacted by the additional premises expenses relating to the London office move scheduled for the end of the 2018 calendar year. The credit loss ratio amounted to 0.22% (2016: 0.04%) as impairments increased off a particularly low base.

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 GBP24.7 million (2016: GBP23.8 million).

Financial statement analysis - ongoing basis

 

Total operating income

Total operating income before impairment losses on loans and advances increased by 13.2% to GBP1,190.9 million (2016: GBP1,052.3 million).  

 

Net interest income increased by 16.0% to GBP364.4 million (2016: GBP314.2 million) driven by sound levels of lending activity across the banking businesses and a reduction in the UK's cost of funding.

 

Net fee and commission income increased by 9.4% to GBP666.0 million (2016: GBP608.6 million) as a result of higher average funds under management over the period and net inflows in the Asset Management and Wealth Management businesses. In addition, the Specialist Banking business in South Africa benefited from growth in the private banking franchise and a good performance from the corporate treasury and corporate advisory businesses.

 

Investment income increased significantly to GBP61.9 million (2016: GBP28.8 million) driven by a strong performance from the South African investment portfolio partially offset by less realisations in the UK investment portfolios.

 

Share of post taxation operating profit of associates of GBP23.7 million (2016: GBP9.6 million) primarily reflects earnings in relation to the group's investment in the IEP Group.

 

Trading income arising from customer flow decreased by 12.7% to GBP64.2 million (2016: GBP73.5 million) as a consequence of lower volatility relative to the elevated levels experienced in the prior period following the Brexit vote. Trading income from other trading activities reflected a profit of GBP5.1 million (2016: GBP12.4 million).

 

Impairment losses on loans and advances

Impairments on loans and advances increased from GBP18.0 million to GBP31.1 million; however the group's annualised credit loss ratio remains at the lower end of its long term average at 0.28% (2016: 0.19%). Since 31 March 2017 gross defaults have reduced from GBP249.8 million to GBP218.9 million. The percentage of default loans (net of impairments but before taking collateral into account) to core loans and advances amounted to 0.56% (31 March 2017: 0.69%).

 

Operating costs

The ratio of total operating costs to total operating income improved marginally amounting to 66.5% (2016: 66.7%). Total operating costs grew by 12.9% to GBP792.5 million (2016: GBP701.8 million) reflecting continued planned spend on IT infrastructure and higher headcount across divisions to support increased activity 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.

 

Taxation

The effective tax rate amounts to 14.5% (2016: 19.4%) mainly impacted by the lower rate in South Africa following the release of provisions no longer required. 

                                                                                                                                                                                                                                                                                                                                                                                          

Profit attributable to non-controlling interests

Profit attributable to non-controlling interests mainly comprises:

·      GBP10.7 million profit attributable to non-controlling interests in the Asset Management business.

·      GBP19.9 million profit attributable to non-controlling interests in the Investec Property Fund Limited.

 

Balance sheet analysis

Since 31 March 2017:

·      Total shareholders' equity (including non-controlling interests) remained in line at GBP4.8 billion - an increase of 3.7% on a currency neutral basis. The weakening of the closing Rand exchange rate relative to Pounds Sterling has resulted in a reduction in total equity of GBP221 million.

·      Net asset value per share decreased 2.1% to 421.8 pence and net tangible asset value per share (which excludes goodwill and intangible assets) decreased 1.8% to 370.2 pence largely as a result of the depreciation of the Rand as described above. On a currency neutral basis net asset value per share and net tangible asset value per share increased by 1.8% and 2.5%, respectively. 

·      The annualised return on adjusted average shareholders' equity remained at 12.5%.

·      The annualised return on adjusted average shareholders' equity of the ongoing business reduced marginally from 14.2% to 14.1%.

 

Liquidity and funding

As at 30 September 2017 the group held GBP10.7 billion in cash and near cash balances (GBP5.0 billion in Investec plc and R102.6 billion in Investec Limited) which amounted to 38.2% of customer deposits. Loans and advances to customers as a percentage of customer deposits amounted to 79.9% (31 March 2017: 76.2%). The cost of funding in the UK has continued to be managed down. The group will continue to focus on maintaining an optimal overall liquidity and funding profile. Based on the group's own interpretations of the EU Delegated Act and in line with the BCBS' final recommendations, Investec plc and Investec Bank plc (solo basis) comfortably exceed the relevant regulatory liquidity requirements for the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). The LCR reported to the Prudential Regulatory Authority at 30 September 2017 was 610% for Investec plc and 520% for Investec Bank plc (solo basis). Investec Bank Limited (solo basis) ended the period to 30 September 2017 with the three-month average of its LCR at 127.0%, 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. The group's anticipated fully loaded Basel III common equity tier 1 capital adequacy ratios in both Investec plc and Investec Limited are reflected in the table below.


30 Sep 2017

31 March 2017

Investec plc^



Capital adequacy ratio

14.5%

15.1%

Tier 1 ratio

11.4%

11.5%

Common equity  tier 1 ratio

11.2%

11.3%




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

11.2%

11.3%




Leverage ratio (current)

8.0%

7.8%

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

7.9%

7.7%




Investec Limited**



Capital adequacy ratio

14.3%

14.1%

Tier 1 ratio

10.8%

10.7%

Common equity tier 1 ratio

10.0%

9.9%




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

10.0%

9.9%




Leverage ratio (current)

7.6%

7.3%

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

7.2%

6.8%

 

*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 GBP43 million for Investec plc would be 31bps (31 March 2017: 45bps) 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 15bps (31 March 2017: 24bps) lower.

Legacy business - overview of results

Since 31 March 2017 the group's legacy portfolio in the UK has continued to be actively managed down from GBP476 million to GBP425 million largely through asset sales, redemptions and write-offs. The total legacy business over the period reported a loss before taxation of GBP32.9 million (2016: GBP33.0 million). The remaining legacy portfolio will continue to be managed down. Total net defaults in the legacy book amount to GBP106 million (31 March 2017: GBP125 million).

Outlook

Whilst the global economy has improved our two key geographies suffer from continued political uncertainty.

Notwithstanding this, the group has continued to improve in shape and capability. Further progress has been made in dealing with the UK legacy book and the development of the private bank in the UK is gaining traction, as are the various digital initiatives. The continued investment in infrastructure and people across the group is indicative of the group's confidence in the franchise and will position the businesses appropriately for future growth and development.

On behalf of the boards of Investec plc and Investec Limited

 

Fani Titi

Stephen Koseff

Bernard Kantor

Chairman

Chief Executive Officer

Managing Director

 

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

 

·      Foreign currency impact

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

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


Six months to

30 Sep 2017

Year to

31 Mar 2017

Six months to

30 Sep 2016

Currency per

GBP1.00

Period end

Average

Period end

Average

Period end

Average

South African Rand

18.10

17.06

16.77

18.42

17.88

19.99

Australian Dollar

1.71

1.69

1.64

1.75

1.70

1.83

Euro

1.13

1.14

1.17

1.19

1.16

1.23

US Dollar

1.34

1.30

1.25

1.31

1.30

1.38

 

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 14.7% and the closing rate has depreciated by 7.9% since 31 March 2017.

·      Accounting policies and disclosures

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

The accounting policies applied in the preparation of the results for the period to 30 September 2017 are consistent with those adopted in the financial statements for the year ended 31 March 2017.

Standards and interpretations issued but not yet effective

The following significant standards and interpretations, which have been issued but are not yet effective, are applicable to the group.

IFRS 9 Financial Instruments

The group will adopt IFRS 9 Financial Instruments on 1 April 2018.

The group expects that the recognition and measurement basis of the majority of the group's financial assets will be largely unchanged on application of IFRS 9, based on the analysis performed to date.

The impairment requirements will lead to significant changes in the accounting treatment for certain financial instruments as a result of a shift from an incurred loss to an expected loss impairment methodology. Credit risk methodologies have been defined and model build has significantly been completed. Approval, testing and validation of the models is ongoing.

 

IFRS 9 includes an accounting policy choice to remain with IAS 39 hedge accounting. The group intends to continue applying IAS 39's hedge accounting.

The classification and measurement and impairment requirements are applied retrospectively by adjusting the opening balance sheet at the date of initial application, with no requirement to restate comparative periods. The group does not intend to restate comparatives.

The regulatory capital impact of IFRS 9 has been proposed by regulatory bodies with transitional capital arrangements being announced for 1 January 2018 which would allow a phase in of the Day 1 capital impact over a number of years.

It will not be practical to disclose reliable financial impact estimates until the implementation programme and validation and testing is further advanced.

IFRS 15 Revenue from contracts with customers

The group's current measurement and recognition principles are aligned to the standard and the group does not expect an impact to measurement principles currently applied. The impact of the disclosure requirements of the standard is currently being assessed.

The financial results have been prepared under the supervision of Glynn Burger, the Group Risk and Finance Director. The financial statements for the six months to 30 September 2017 will be posted to stakeholders on 30 November 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 15 November 2017.

§ The information in the announcement for the six months ended 30 September 2017, which was approved by the board of directors on 15 November 2017, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. The 31 March 2017 financial statements were filed with the registrar and were unqualified with the audit report containing no statements in respect of Sections 498(2) or 498(3) of the UK Companies Act.

§ This announcement is available on the group's website: www.investec.com

 

Financial assistance

Shareholders are referred to the Special Resolution number 3, which was approved at the annual general meeting held on 10 August 2017, 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 April 2017 to 30 September 2017.

 

Ongoing financial information

Ongoing summarised income statement

GBP'000

Six months to

 30 September

 2017

Six months to

 30 September

 2016

Year to

 31 March

 2017

Net interest income

 364 374

314 151

 680 539

Net fee and commission income

 666 010

608 564

 1 271 591

Investment income

 61 899

28 800

 135 631

Share of post taxation operating profit of associates

 23 677

9 639

 18 890

Trading income arising from




- customer flow

 64 163

73 479

 158 006

- balance sheet management and other trading activities

 5 143

12 370

 8 078

Other operating income

 5 671

5 298

13 158

Total operating income before impairment losses on loans and advances

 1 190 937

1 052 301

 2 285 893

Impairment losses on loans and advances

 (31 101)

 (18 004)

 (57 149)

Operating income

 1 159 836

1 034 297

 2 228 744

Operating costs

 (791 330)

 (701 801)

 (1 502 623)

Depreciation on operating leased assets

 (1 177)

-

 (2 169)

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

 367 329

332 496

 723 952

Profit attributable to other non-controlling interests

 (19 800)

 (18 033)

 (60 239)

Profit attributable to Asset Management non-controlling interests

 (10 663)

 (9 924)

 (20 291)

Operating profit before taxation

 336 866

304 539

 643 422

Taxation on operating profit before goodwill and acquired intangibles

 (50 960)

 (62 696)

 (130 438)

Preference dividends accrued

 (13 665)

 (11 925)

 (25 838)

Adjusted attributable earnings to ordinary shareholders

 272 241

229 918

 487 146

Adjusted earnings per share (pence)

29.5

25.7

54.1

Number of weighted average shares (million)

922.9

895.7

900.4

Cost to income ratio

66.5%

66.7%

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

For the six months to 30 September

GBP'000

UK

and Other

Southern

Africa

Total

group

2017




Asset Management

49 949

33 284

83 233

Wealth & Investment

35 441

14 087

49 528

Specialist Banking

74 133

165 291

239 424


159 523

212 662

372 185

Group costs

(17 295)

(7 361)

(24 656)

Total group

142 228

205 301

347 529

Other non-controlling interest - equity



19 800

Operating profit



367 329





2016




Asset Management

43 116

39 138

82 254

Wealth & Investment

29 192

14 005

43 197

Specialist Banking

95 211

117 623

212 834


167 519

170 766

   338 285

Group costs

(17 758)

(6 064)

(23 822)

Total group

149 761

164 702

314 463

Other non-controlling interest - equity



18 033

Operating profit



332 496

 

 

Reconciliation from statutory summarised income statement to
ongoing summarised income statement

For the six months to 30 September 2017
GBP'000

Statutory

as

disclosed

UK legacy

 business

Ongoing

 business

Net interest income

 364 321

 (53)

 364 374

Net fee and commission income

 666 010

 - 

 666 010

Investment income

 62 074

 175

 61 899

Share of post taxation operating profit of associates

 23 677

 -  

 23 677

Trading income arising from




- customer flow

 64 160

 (3)

 64 163

- balance sheet management and other trading activities

 5 146

 3

 5 143

Other operating income

 5 669

 (2)

 5 671

Total operating income before impairment losses on loans and advances

 1 191 057

 120

 1 190 937

Impairment losses on loans and advances

 (59 593)

 (28 492)

 (31 101)

Operating income/(loss)

 1 131 464

 (28 372)

 1 159 836

Operating costs

 (795 883)

 (4 553)

 (791 330)

Depreciation on operating leased assets

 (1 177)

-   

 (1 177)

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

 334 404

 (32 925)

 367 329

Profit attributable to other non-controlling interests

 (19 800)

 -  

 (19 800)

Profit attributable to Asset Management non-controlling interests

 (10 663)

 -  

 (10 663)

Operating profit/(loss) before taxation

 303 941

 (32 925)

 336 866

Taxation on operating profit before goodwill and acquired intangibles

 (44 996)

 5 964^

 (50 960)

Preference dividends accrued

 (13 665)

 -  

 (13 665)

Adjusted attributable earnings to ordinary shareholders

 245 280

 (26 961)

 272 241

Adjusted earnings per share (pence)

26.6


29.5

Number of weighted average shares (million)

 922.9


 922.9

Cost to income ratio

66.9%


66.5%

^   Applying the UK's effective statutory taxation rate of 18.1%.

 

For the six months to 30 September 2016

GBP'000

Statutory

as disclosed

UK legacy

business

 Ongoing

business

Net interest income

 313 465

 (686)

 314 151

Net fee and commission income

 608 488

 (76)

 608 564

Investment income

 29 024

 224

 28 800

Share of post taxation operating profit of associates

 9 639

 -  

 9 639

Trading income arising from




- customer flow

 73 438

 (41)

 73 479

- balance sheet management and other trading activities

 12 370

 -  

 12 370

Other operating income

 5 298

 -  

 5 298

Total operating income/(loss) before impairment losses on loans and advances

 1 051 722

 (579)

 1 052 301

Impairment losses on loans and advances

(46 591)

(28 587)

(18 004)

Operating income/(loss)

 1 005 131

 (29 166)

 1 034 297

Operating costs

 (705 680)

 (3 879)

 (701 801)

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

 299 451

 (33 045)

 332 496

Profit attributable to other non-controlling interests

 (18 033)

 -  

 (18 033)

Profit attributable to Asset Management non-controlling interests

 (9 924)

 -  

 (9 924)

Operating profit/(loss) before taxation

 271 494

 (33 045)

 304 539

Taxation on operating profit before goodwill and acquired intangibles

 (56 279)

 6 417*

 (62 696)

Preference dividends accrued

 (11 925)

 -  

 (11 925)

Adjusted attributable earnings to ordinary shareholders

 203 290

 (26 628)

 229 918

Adjusted earnings per share (pence)

 22.7


 25.7

Number of weighted average shares (million)

 895.7


 895.7

Cost to income ratio

67.1%


66.7%

*  Applying the group's effective statutory taxation rate of 19.4%.

 

 

Statutory financial information

Salient financial features

 


Results in Pounds Sterling

Results in Rand











Six months to

30 September

2017

Six months to

30 September

2016

%

change

Neutral

 currency^

Six months to

30 September

2017

Neutral

currency

%

change

Six months to

 30 September

2017

Six months to

 30 September

2016

%

change

Operating profit before taxation* (million)

314.6

281.4

11.8%

284.5

1.1%

5 378

5 592

Earnings attributable to shareholders (million)

252.4

208.6

21.0%

227.1

8.8%

4 321

4 132

4.6%

Adjusted earnings attributable to shareholders** (million)

245.3

203.3

  20.7%

221.7

9.1%

4 199

4 027

4.3%

Adjusted earnings per share**

26.6p

22.7p

17.2%

24.0p

5.7%

455c

450c

1.1%

Basic earnings per share

25.8p

26.5p

(2.6%)

23.3p

(12.1%)

443c

524c

(15.5%)

Dividends per share

10.5p

10.0p

5.0%

n/a

n/a

200c

178c

12.4%

 

*  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:Pound Sterling exchange rate that was applied in the prior year, i.e. 19.99.

 


Results in Pounds Sterling

Results in Rand











Actual as

reported

At

 30 September

2017

Actual as

reported

At

31 March

2017

Actual as

reported

%

change

Neutral

currency

At

 30 September

2017

Neutral

 currency

%

change

At

30 September

2017

At

 31 March

2017

%

change

Net asset value per share

421.8p

431.0p

(2.1%)

438.6p

1.8%

7 635c

7 228c

5.6%

Net tangible asset value per share

370.2p

377.0p

(1.8%)

386.6p

2.5%

6 701c

6 322c

6.0%

Total equity (million)

4 766

4 809

(0.9%)

4 987

3.7%

86 271

80 638

7.0%

Total assets (million)

51 818

53 535

(3.2%)

54 442

1.7%

937 939

897 749

4.5%

Core loans and advances (million)

22 797

22 707

0.4%

23 900

5.3%

412 624

380 786

8.4%

Cash and near cash balances (million)

10 683

12 038

(11.3%)

11 133

(7.5%)

193 360

201 877

(4.2%)

Customer deposits (million)

27 966

29 109

(3.9%)

29 325

0.7%

506 201

488 149

3.7%

Third party assets under management (million)

154 338

150 735

2.4%

158 475

5.1%

2 793 517

2 527 826

10.5%

Return on average adjusted shareholders' equity

12.5%

12.5%







Return on average risk-weighted assets

1.50%

1.45%







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

1.01%

1.22%







Loans and advances to customers as a percentage of customer deposits

79.9%

76.2%







Credit loss ratio (income statement impairment charge as a % of average gross core loans and advances)

0.52%

0.54%







 

For balance sheet items we have assumed that the Rand:Pound Sterling exchange rate has remained neutral since March 2017.

 

Combined consolidated income statement




GBP'000

Six months to

 30 September

2017

Six months to

 30 September

2016

Year to

31 March

2017

Interest income

1 225 130

1 037 756

2 230 765

Interest expense

(860 809)

(724 291)

(1 550 870)

Net interest income

364 321

313 465

679 895

Fee and commission income

753 835

670 816

1 429 588

Fee and commission expense

(87 825)

(62 328)

(158 064)

Investment income

62 074

29 024

136 203

Share of post taxation operating profit of associates

23 677

9 639

18 890

Trading income arising from




- customer flow

64 160

73 438

158 001

- balance sheet management and other trading activities

5 146

12 370

8 218

Other operating income

5 669

5 298

13 483

Total operating income before impairment losses on loans and advances

1 191 057

1 051 722

2 286 214

Impairment losses on loans and advances

(59 593)

(46 591)

(111 454)

Operating income

1 131 464

1 005 131

2 174 760

Operating costs

(795 883)

(705 680)

(1 513 231)

Depreciation on operating leased assets

(1 177)

-

(2 169)

Operating profit before goodwill and acquired intangibles

334 404

299 451

659 360

Impairment of goodwill

-

(270)

(4 749)

Amortisation of acquired intangibles

(8 142)

(8 469)

(17 197)

Profit before taxation

326 262

290 712

637 414

Taxation on operating profit before goodwill and acquired intangibles

(44 996)

(56 279)

(118 488)

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

1 631

2 122

4 070

Profit after taxation

282 897

236 555

522 996

Profit attributable to other non-controlling interests

(19 800)

(18 033)

(60 239)

Profit attributable to Asset Management non-controlling interests

(10 663)

(9 924)

(20 291)

Earnings attributable to shareholders

252 434

208 598

442 466

Impairment of goodwill

-

270

4 749

Amortisation of acquired intangibles

8 142

8 469

17 197

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

(1 631)

(2 122)

(4 070)

Preference dividends paid

(14 101)

(11 979)

(25 658)

Accrual adjustment on earnings attributable to other equity holders

436

54

(180)

Adjusted earnings

245 280

203 290

434 504

Earnings per share (pence)




- Basic

 25.8

26.5

 50.8

- Diluted

 24.9

25.4

 48.8

Adjusted earnings per share (pence)




- Basic

 26.6

 22.7

 48.3

- Diluted

 25.7

 21.8

 46.4

Dividends per share (pence)




- Interim

10.5

10.0

 10.0

- Final

 n/a

n/a

13.0

Number of weighted average shares (million)

922.9

 895.7

 900.4

 

Summarised combined consolidated statement of comprehensive income

GBP'000

Six months to

30 September

2017

Six months to

30 September

2016

Year to

31 March

2017

Profit after taxation

282 897

 236 555

 522 996

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*

(1 824)

 19 912

 53 324

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

(4 760)

 (8 132)

 (7 781)

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

13 816

 52 980

 54 863

Foreign currency adjustments on translating foreign operations

(220 844)

 375 148

540 534

Items that will never be reclassified to the income statement




Remeasurement of net defined pension liability

-

-

 (43 580)

Total comprehensive income

69 285

 676 463

 1 120 356

Total comprehensive income attributable to ordinary shareholders

72 485

 551 216

892 201

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

(17 301)

 113 268

202 497

Total comprehensive income attributable to perpetual preferred securities

14 101

 11 979

 25 658

Total comprehensive income

69 285

 676 463

1 120 356

*  Net of taxation of GBP3.0 million [Six months to 30 September 2016: GBP19.5 million, year to 31 March 2017: GBP16.8 million].

 

Summarised combined consolidated cash flow statement

GBP'000

Six months to

30 September

2017

Six months to

30 September

2016

Year to

31 March

2017

Cash inflows from operations

357 998

370 866

708 810

Increase in operating assets

(1 009 683)

(652 118)

(445 528)

Increase in operating liabilities

705 103

1 829 100

498 146

Net cash inflow from operating activities

53 418

1 547 848

761 428

Net cash inflow/(outflow) from investing activities

5 292

(30 229)

(59 615)

Net cash (outflow)/inflow from financing activities

(121 852)

(32 265)

37 523

Effects of exchange rates on cash and cash equivalents

(144 595)

234 127

332 092

Net (decrease)/increase in cash and cash equivalents

(207 737)

1 719 481

1 071 428

Cash and cash equivalents at the beginning of the period

5 721 728

4 650 300

4 650 300

Cash and cash equivalents at the end of the period

5 513 991

6 369 781

5 721 728

 

Cash and cash equivalents is defined as including; cash and balances at central banks, on demand loans and advances to banks and cash equivalent loans and advances to customers (all of which have a maturity profile of less than three months).

 

Combined consolidated balance sheet


At

GBP'000

30 September

2017

31 March

2017

30 September

2016

Assets




Cash and balances at central banks

3 356 259

3 351 702

4 233 278

Loans and advances to banks

2 308 618

3 191 041

3 154 517

Non-sovereign and non-bank cash placements

574 521

536 259

571 405

Reverse repurchase agreements and cash collateral on securities borrowed

1 690 036

2 358 970

2 424 849

Sovereign debt securities

3 608 316

3 804 627

3 639 215

Bank debt securities

604 511

639 189

641 542

Other debt securities

968 597

1 115 558

1 079 256

Derivative financial instruments

1 201 602

1 185 848

1 636 619

Securities arising from trading activities

1 395 766

1 376 668

1 215 293

Investment portfolio

911 480

835 899

806 696

Loans and advances to customers

22 351 228

22 189 975

20 376 991

Own originated loans and advances to customers securitised

445 672

517 162

521 063

Other loans and advances

367 401

355 248

371 111

Other securitised assets

153 786

148 964

153 133

Interests in associated undertakings

371 294

392 213

331 294

Deferred taxation assets

123 435

133 972

98 641

Other assets

2 016 057

1 900 480

2 306 954

Property and equipment

100 910

105 939

98 632

Investment properties

1 063 771

1 128 930

1 013 204

Goodwill

366 969

367 579

370 969

Intangible assets

132 692

143 261

146 845

Non-current assets held for sale

-

27 218

27 818


44 112 921

45 806 702

45 219 325

Other financial instruments at fair value through profit or loss in respect of liabilities to customers

7 705 206

7 728 130

7 259 638


51 818 127

53 534 832

52 478 963

Liabilities




Deposits by banks

2 246 115

2 736 066

2 536 285

Derivative financial instruments

1 169 314

1 296 206

1 757 081

Other trading liabilities

968 917

978 911

983 407

Repurchase agreements and cash collateral on securities lent

730 170

690 615

1 048 993

Customer accounts (deposits)

27 966 006

29 109 428

28 304 921

Debt securities in issue

2 549 264

2 386 180

2 354 568

Liabilities arising on securitisation of own originated loans and advances

133 307

90 125

91 611

Liabilities arising on securitisation of other assets

131 740

128 838

112 754

Current taxation liabilities

197 244

227 828

200 390

Deferred taxation liabilities

38 304

40 408

63 586

Other liabilities

1 827 251

1 910 830

1 926 943


37 957 632

39 595 435

39 380 539

Liabilities to customers under investment contracts

7 702 724

7 725 604

7 257 222

Insurance liabilities, including unit-linked liabilities

2 482

2 526

2 416


45 662 838

47 323 565

46 640 177

Subordinated liabilities

1 389 091

1 402 638

1 353 958


47 051 929

48 726 203

47 994 135

Equity




Ordinary share capital

240

237

237

Perpetual preference share capital

31

31

38

Share premium

2 404 171

2 341 228

2 327 189

Treasury shares

(196 198)

(126 879)

(138 609)

Other reserves

(460 907)

(310 275)

(465 030)

Retained income

2 385 707

2 226 751

2 162 199

Shareholders' equity excluding non-controlling interests

4 133 044

4 131 093

3 886 024

Other Additional Tier 1 securities in issue

30 386

32 798

30 757

Non-controlling interests

602 768

644 738

568 047

- Perpetual preferred securities issued by subsidiaries

84 763

91 492

85 798

- Non controlling interests in partially held subsidiaries

518 005

553 246

482 249

Total equity

4 766 198

4 808 629

4 484 828

Total liabilities and equity

51 818 127

53 534 832

52 478 963

 

Summarised combined consolidated statement of changes in equity

GBP'000

Six months to

 30 September

2017

Year to

31 March

2017

Six months to

 30 September

2016

Balance at the beginning of the period

4 808 629

3 859 307

3 859 307

Total comprehensive income for the period

69 285

1 120 356

676 463

Share-based payments adjustments

34 688

55 961

24 954

Dividends paid to ordinary shareholders

(123 230)

(216 602)

(123 344)

Dividends declared to perpetual preference shareholders

(8 160)

(15 279)

(7 425)

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

(5 941)

(10 379)

(4 554)

Dividends paid to non-controlling interests

(29 272)

(48 195)

(18 189)

Issue of ordinary shares

105 206

228 086

211 063

Redemption of perpetual preference shares

-

(81 743)

(81 736)

Net equity impact of non-controlling interest movements

4 518

29 542

27

Other equity movements

-

(80)

-

Movement of treasury shares

(89 525)

(112 345)

(51 738)

Balance at the end of the period

4 766 198

4 808 629

4 484 828

 

 

Combined consolidated segmental analysis




For the six months to 30 September

GBP'000

UK and

Other

Southern

 Africa

Total

group

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




2017




Asset Management

49 949

33 284

83 233

Wealth & Investment

35 441

14 087

49 528

Specialist Banking

41 208

165 291

206 499


126 598

212 662

339 260

Group costs

(17 295)

(7 361)

(24 656)

Total group

109 303

205 301

314 604

Other non-controlling interest - equity



19 800

Operating profit



334 404

2016




Asset Management

43 116

39 138

82 254

Wealth & Investment

29 192

14 005

43 197

Specialist Banking

62 166

117 623

179 789


134 474

170 766

305 240

Group costs

(17 758)

(6 064)

(23 822)

Total group

116 716

164 702

281 418

Other non-controlling interest - equity



18 033

Operating profit



299 451

 

Analysis of financial assets and liabilities by category of financial instrument

At 30 September 2017

GBP'000

Total

instruments

at fair value

Total

instruments

at amortised

cost

Insurance

 related

linked

instruments

at fair value

Non-financial

 instruments

or scoped

out of IAS 39

Total

Assets






Cash and balances at central banks

1 325

3 354 934

-

-

3 356 259

Loans and advances to banks

121 318

2 187 300

-

-

2 308 618

Non-sovereign and non-bank cash placements

2 842

571 679

-

-

574 521

Reverse repurchase agreements and cash collateral on securities borrowed

698 118

991 918

-

-

1 690 036

Sovereign debt securities

3 419 214

189 102

-

-

3 608 316

Bank debt securities

334 722

269 789

-

-

604 511

Other debt securities

674 651

293 946

-

-

968 597

Derivative financial instruments

1 201 602

-

-

-

1 201 602

Securities arising from trading activities

1 395 766

-

-

-

1 395 766

Investment portfolio

911 480

-

-

-

911 480

Loans and advances to customers

1 057 465

21 293 763

-

-

22 351 228

Own originated loans and advances to customers securitised

-

445 672

-

-

445 672

Other loans and advances

-

367 401

-

-

367 401

Other securitised assets

135 580

18 206

-

-

153 786

Interests in associated undertakings

-

-

-

371 294

371 294

Deferred taxation assets

-

-

-

123 435

123 435

Other assets

266 935

1 256 123

-

492 999

2 016 057

Property and equipment

-

-

-

100 910

100 910

Investment properties

-

-

-

1 063 771

1 063 771

Goodwill

-

-

-

366 969

366 969

Intangible assets

-

-

-

132 692

132 692


10 221 018

31 239 833

-

2 652 070

44 112 921

Other financial instruments at fair value through profit or loss in respect of liabilities to customers

-

-

7 705 206

-

7 705 206


10 221 018

31 239 833

7 705 206

2 652 070

51 818 127







Liabilities






Deposits by banks

-

2 246 115

-

-

2 246 115

Derivative financial instruments

1 169 314

-

-

-

1 169 314

Other trading liabilities

968 917

-

-

-

968 917

Repurchase agreements and cash collateral on securities lent

69 117

661 053

-

-

730 170

Customer accounts (deposits)

1 704 590

26 261 416

-

-

27 966 006

Debt securities in issue

494 137

2 055 127

-

-

2 549 264

Liabilities arising on securitisation of own originated loans and advances

-

133 307

-

-

133 307

Liabilities arising on securitisation of other assets

131 740

-

-

-

131 740

Current taxation liabilities

-

-

-

197 244

197 244

Deferred taxation liabilities

-

-

-

38 304

38 304

Other liabilities

22 309

1 185 869

-

619 073

1 827 251


4 560 124

32 542 887

-

854 621

37 957 632

Liabilities to customers under investment contracts

-

-

7 702 724

-

7 702 724

Insurance liabilities, including unit-linked liabilities

-

-

2 482

-

2 482


4 560 124

32 542 887

7 705 206

854 621

45 662 838

Subordinated liabilities

-

1 389 091

-

-

1 389 091


4 560 124

33 931 978

7 705 206

854 621

47 051 929

 

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






At 30 September 2017

GBP'000

Total

instruments

at fair value

Level 1

Level 2

Level 3

Assets





Cash and balances at central banks

1 325

1 325

-

-

Loans and advances to banks

121 318

121 318

-

-

Non-sovereign and non-bank cash placements

2 842

-

2 842

-

Reverse repurchase agreements and cash collateral on securities borrowed

698 118

-

698 118

-

Sovereign debt securities

3 419 214

3 419 214

-

-

Bank debt securities

334 722

263 275

71 447

-

Other debt securities

674 651

370 063

295 093

9 495

Derivative financial instruments

1 201 602

-

1 146 705

54 897

Securities arising from trading activities

1 395 766

1 357 063

38 703

-

Investment portfolio

911 480

226 617

42 254

642 609

Loans and advances to customers

1 057 465

-

960 785

96 680

Other securitised assets

135 580

-

-

135 580

Other assets

266 935

266 935

-

-


10 221 018

6 025 810

3 255 947

939 261

Liabilities





Derivative financial instruments

1 169 314

-

1 168 031

1 283

Other trading liabilities

968 917

887 834

81 083

-

Repurchase agreements and cash collateral on securities lent

69 117

-

69 117

-

Customer accounts (deposits)

1 704 590

-

1 704 590

-

Debt securities in issue

494 137

-

479 361

14 776

Liabilities arising on securitisation of other assets

131 740

-

-

131 740

Other liabilities

22 309

-

22 309

-


4 560 124

887 834

3 524 491

147 799

Net financial assets/(liabilities) at fair value

5 660 894

5 137 976

(268 544)

791 462

 

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

The group transfers between levels within the fair value hierarchy when the significance of the unobservable inputs change or if the valuation methods change.

 

Level 2 financial assets and financial liabilities

The following table sets out the group's principal valuation techniques as at 30 September 2017 used in determining the fair value of its financial as sets 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

Black-Scholes

Yield curves

Volatilities

Bank debt securities

Discounted cash flow model

Yield curves

NCD curves

Other debt securities

Discounted cash flow model

Yield curves and NCD curves, external prices, broker quotes

Derivative financial instruments

Discounted cash flow model, Hermite interpolation, 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

Adjusted quoted price

Interest rate curves, implied bond spreads, equity volatilities

Liquidity adjustments

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

 

For the six months to 30 September 2017

GBP'000

Net level

3 financial

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 2017    

 770 686

Total gains or losses

25 458

In the income statement

23 350

In the statement of comprehensive income

2 108

Purchases

82 881

Sales

(41 381)

Settlements

(14 865)

Transfers out of level 3

(6 189)

Foreign exchange adjustments

(25 127)

Balance as at 30 September 2017

791 462

 

For the period ended 30 September 2017, GBP6.2 million has been transferred out of level 3 into level 2 as a result of the inputs to the valuation method becoming observable in the market as a selling price became available.

For the six months to 30 September 2017

GBP'000

Total

gains or

losses

Realised

Unrealised

Total gains/(losses) included in the income statement for the period




Net interest income

60

60

-

Fee and commission income

1 000

-

1 000

Investment income

24 188

4 574

19 614

Trading loss arising from customer flow

(1 898)

919

(2 817)


23 350

5 553

17 797

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




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

2 418

2 418

-

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

2 108

-

2 108


4 526

2 418

2 018

 

 

 

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

sheet

value

GBP'000

Significant
unobservable 
input

Range of unobservable
input used

Favourable

changes

GBP'000

Unfavourable

changes

GBP'000

30 September 2017






Assets



 



Other debt securities

9 495

Potential impact on income statement


 1 316

 (460)



Price earnings multiple

(10%)/10%

 925

 (123)



Cash flow adjustments

CPR 7.5% - 8.5%

 391

 (337)













Derivative financial instruments

54 897

Potential impact on income statement


 4 844

 (5 889)



Volatilities

4% - 10.5%

 1 180

 (2 483)



Property value

(10%)/10%

 55

 (55)



Cash flow adjustments

CPR 7.5% - 8.5%

 614

 (1 347)



Other

^

 2 995

 (2 004)













Investment portfolio

642 609

Potential impact on income statement


 108 474

 (120 628)



EBITDA

3%

 437

 (437)



EBITDA

^^

 51 361

 (48 770)



Precious and industrial metal prices

(10%)/6%

 7 050

 (18 763)



Price earnings multiple

4x - 10.3x

 5 133

 (5 254)



Other

^

44 493

(47 404)









Potential impact on other comprehensive income


5 003

(1 576)



Price earnings multiple

4x

79

(167)



Other

^

4 924

(1 409)













Loans and advances to customers

 96 680

Potential impact on income statement






Other

^

 10 292

 (10 187)













Other securitised assets*

 135 580

Potential impact on income statement






Cash flow adjustments

CPR 7.5%

 493

 (649)







Total level 3 assets

 939 261

 


130 422

 (139 389)







Liabilities






Derivative financial instruments

1 283

Potential impact on income statement


 (1 325)

 591



Cash flow adjustments

CPR 7.5% - 8.5%

 (1 321)

 587



Volatilities

8.5%

 (4)

 4













Debt securities in issue

14 776

Potential impact on income statement






Volatilities

7%

 (617)

 229













Liabilities arising on securitisation of other assets*

131 740

Potential impact on income statement






Cash flow adjustments

CPR 6.25%

 (350)

 325













Total level 3 liabilities

147 799



(2 292)

1 145

Net level 3 assets

791 462





 

*     The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets.

^     Other - The valuation sensitivity for the private equity and embedded derivatives (profit share) portfolios has been assessed by adjusting various inputs such as expected cash flows, discount rates, earnings multiples rather than a single input. It is deemed appropriate to reflect the outcome on a portfolio basis for the purposes of this analysis as the sensitivity of the investments cannot be determined through the adjustment of a single input.

^^ The EBITDA has been stressed on an investment by investment basis to obtain a favourable and unfavourable valuation.

 

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.

At 30 September 2017

GBP'000

Carrying

amount

Fair

value

Assets



Reverse repurchase agreements and cash collateral on securities borrowed

991 918

991 804

Sovereign debt securities

189 102

184 518

Bank debt securities

269 789

289 694

Other debt securities

293 946

293 586

Loans and advances to customers

21 293 763

21 290 251

Other loans and advances

367 401

361 021

Liabilities



Deposits by banks

2 246 115

2 250 180

Repurchase agreements and cash collateral on securities lent

661 053

683 669

Customer accounts (deposits)

26 261 416

26 267 846

Debt securities in issue

2 055 127

2 102 130

Other liabilities

1 185 869

1 185 559

Subordinated liabilities

1 389 091

1 561 706

 

 

 

 

 

 

 

 

Incorporated in England and Wales
Registration number 3633621
LSE ordinary share code: INVP

JSE ordinary share code: INP
ISIN: GB00B17BBQ50

Investec plc 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 31

Notice is hereby given that an interim dividend number 31, being a gross dividend of 10.5 pence     (2016: 10 pence) per ordinary share has been declared by the Board from income reserves in respect of the six months ended 30 September 2017 payable to shareholders recorded in the shareholders' register of the company at the close of business on Friday, 08 December 2017.

·      for Investec plc shareholders, registered on the United Kingdom share register, through a dividend payment by Investec plc from income reserves of 10.5 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 2.5 pence per ordinary share and through a dividend paid by Investec Limited, on the SA DAS share, payable from income reserves, equivalent to 8 pence per ordinary share

 

The relevant dates for the payment of dividend number 31 are as follows:

Last day to trade cum-dividend

On the Johannesburg Stock Exchange (JSE)                                             Tuesday, 05 December 2017 

On the London Stock Exchange (LSE)                                                 Wednesday, 06 December 2017 

Shares commence trading ex-dividend                                                                   

On the Johannesburg Stock Exchange (JSE)                                       Wednesday, 06 December 2017

On the London Stock Exchange (LSE)                                                     Thursday, 07 December 2017

Record date (on the JSE and LSE)                                                            Friday, 08 December 2017

Payment date (on the JSE and LSE)                                                 Wednesday, 20 December 2017

 

Share certificates on the South African branch register may not be dematerialised or rematerialised between Wednesday, 06 December 2017 and Friday, 08 December 2017, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday, 06 December 2017 and Friday, 08 December 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 10.5 pence, equivalent to a gross dividend of 200.00000 cents per share, has been arrived at using the Rand/Pound Sterling average buy/sell forward rate, as determined at 11h00 (SA time) on Wednesday, 15 November 2017

·       Investec plc United Kingdom tax reference number: 2683967322360

·       The issued ordinary share capital of Investec plc is 668 441 206 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 200.00000 cents per share, comprising 152.38095 cents per share paid by Investec Limited on the SA DAS share and 47.61905 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 160.00000 cents per share (gross dividend of 200.00000 cents per share less Dividend Tax of 40.00000 cents per share) comprising 121.90476 cents per share paid by Investec Limited on the SA DAS share and 38.09524 cents per ordinary share paid by Investec plc.

 

By order of the board

D Miller                                                                   

Company Secretary      

15 November 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 23

 

Notice is hereby given that preference dividend number 23 has been declared from income reserves for the period 01 April 2017 to 30 September 2017 amounting to a gross preference dividend of 6.26712 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, 01 December 2017.

 

For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of 6.26712 pence per preference share is equivalent to a gross dividend of 119.21629 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 November 2017.

 

The relevant dates relating to the payment of dividend number 23 are as follows:

 

Last day to trade cum-dividend           

On the Johannesburg Stock Exchange (JSE)                                        Tuesday, 28 November 2017

On The International Stock Exchange (TISE)                                    Wednesday, 29 November 2017

Shares commence trading ex-dividend

On the Johannesburg Stock Exchange (JSE)                                   Wednesday, 29 November 2017

On The International Stock Exchange (TISE)                                        Thursday, 30 November 2017

Record date (on the JSE and TISE)                                                     Friday, 01 December 2017

Payment date (on the JSE and TISE)                                                Monday, 11 December 2017

 

Share certificates may not be dematerialised or rematerialised between Wednesday, 29 November 2017 and Friday, 01 December 2017, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday, 29 November 2017 and Friday, 01 December 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 95.37303 cents per preference share for preference shareholders liable to pay the Dividend Tax and 119.21629 cents per preference share for preference shareholders exempt from paying the Dividend Tax.

 

By order of the board

 

 

D Miller

Company Secretary

 

15 November 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 13

Notice is hereby given that preference dividend number 13 has been declared from income reserves for the period 01 April 2017 to 30 September 2017 amounting to a gross preference dividend of 495.43151 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, 01 December 2017.

The relevant dates relating to the payment of dividend number 13 are as follows:

 

Last day to trade cum-dividend

 

Tuesday, 28 November 2017 

Shares commence trading ex-dividend

Wednesday, 29 November 2017

Record date

Friday, 01 December 2017 

Payment date

Monday, 11 December 2017

 

Share certificates may not be dematerialised or rematerialised between Wednesday, 29 November 2017 and Friday, 01 December 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 396.34521 cents per preference share for preference shareholders liable to pay the Dividend Tax and 495.43151 cents per preference share for preference shareholders exempt from paying the Dividend Tax.

 

By order of the board

D Miller

Company Secretary

15 November 2017


This information is provided by RNS
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Results for the six months ended 30 September 2017 - RNS