Final Results
|
Investec Limited NSX share code: IVD BSE share code: INVESTEC ISIN: ZAE000081949 LEI: 213800CU7SM6O4UWOZ70 |
Investec plc
JSE share code: INP |
Investec (comprising Investec plc and Investec Limited) - Unaudited combined consolidated financial results for the year ended 31 March 2022
Group results summary for the year ended 31 March 2022 (FY2022) compared to 31 March 2021 (FY2021)
• Adjusted earnings per share increased 90.7% to 55.1p (FY2021: 28.9p) at the top end of previous guidance and ahead of comparable pre-COVID levels.
• Funds under management (FUM) increased 9.2% to £63.8 billion (31 March 2021: £58.4 billion) underpinned by net inflows of £1.9 billion and improved market levels. Market volatility in the last quarter negatively impacted FUM at year end.
• Net core loans grew 13.2% to £29.9 billion (31 March 2021: £26.4 billion) driven largely by residential mortgage and corporate lending growth in both geographies.
• Revenue grew 21.3% as our franchises effectively supported our clients and benefitted from post-pandemic economic recovery.
• The cost to income ratio improved to 63.3% (FY2021: 70.9%) with the increase in fixed operating expenditure well contained at 1.1%. Operating costs increased 6.0% overall, largely driven by higher variable remuneration.
• Pre-provision adjusted operating profit increased 50.1% to £716.2 million (FY2021: £477.0 million), 15.7% ahead of March 2019 (pre-COVID).
• The credit loss ratio improved to 8bps (FY2021: 35bps). Expected credit loss impairment charges were 71.0% lower, due to limited default experience in both geographies, and good recoveries in South Africa. The Group has maintained a level of post-model overlays given the uncertain economic outlook.
• Return on equity (ROE) was 11.4% (FY2021: 6.6%) and return on tangible equity (ROTE) was 12.3% (FY2021: 7.2%).
• Tangible net asset value (TNAV) per share increased 12.5% to 476.6p (31 March 2021: 423.6p). Net asset value (NAV) per share increased 11.4% to 510.0p (31 March 2021: 458.0p).
• Maintained strong capital and liquidity positions to support growth. On full adoption of the advanced internal ratings based (AIRB) approach, Investec Limited's CET1 ratio at 31 March 2022 would on a pro forma basis increase by 200bps to c.16%, expanding capital optionality.
• Shareholders approved the distribution of 15% of Ninety One.
• The Board has proposed a final dividend of 14.0p per share, resulting in a full year dividend of 25.0p per share (FY2021: 13.0p). The payout ratio of 45.4% is within the Group's 30% to 50% payout range.
Fani Titi, Group Chief Executive commented:
"The Group's performance for the 2022 financial year is testament to the strength of our client franchises, disciplined strategic execution, and the commitment of our people to support our clients. We achieved adjusted earnings per share of 55.1p which is at the top end of previous guidance and ahead of comparable pre-COVID levels. Post-pandemic economic recovery supported these results.
With the pending distribution of 15% of Ninety One to shareholders, Investec would have returned an aggregate value of approximately £1.6 billion or c.R32 billion (per Ninety One closing share price on 16 May 2022) to shareholders through the demerger and distribution on successful completion.
I am also pleased that the Board has proposed a final divided of 14p per share resulting in a full year dividend of 25p per share.
We have strong liquidity and capital to support growth, with significant capital optionality in South Africa. We remain committed to our medium-term targets.
The Group is well positioned to serve its carefully chosen client base and continues to navigate the uncertain outlook emanating from ongoing inflationary pressures and the economic effects of the invasion of Ukraine."
Key financial data
This announcement covers the results of Investec plc and Investec Limited (together "the Investec Group" or "Investec" or "the Group") for the year ended 31 March 2022 (FY2022). Unless stated otherwise, comparatives relate to the Group's operations for the year ended 31 March 2021 (FY2021). The average Rand/Pound Sterling exchange rate appreciated by c.5% relative to FY2021.
|
Performance |
FY2022 |
FY2021 |
Variance |
% change |
Neutral currency % change |
|
Total operating income before expected credit losses (£'m) |
1 990.4 |
1 641.1 |
349.3 |
21.3% |
18.6% |
|
Operating costs (£'m) |
(1 233.9) |
(1 164.5) |
(69.4) |
6.0% |
4.0% |
|
Adjusted operating profit (£'m) |
687.4 |
377.6 |
309.8 |
82.1% |
77.0% |
|
Adjusted earnings attributable to shareholders (£'m) |
505.2 |
268.3 |
236.9 |
88.3% |
84.0% |
|
Adjusted basic earnings per share (pence) |
55.1 |
28.9 |
26.2 |
90.7% |
85.8% |
|
Basic earnings per share (pence) |
52.0 |
25.2 |
26.8 |
106.3% |
101.2% |
|
Headline earnings per share (pence) |
53.3 |
26.6 |
26.7 |
100.4% |
95.1% |
|
Dividend per share (pence) |
25.0 |
13.0 |
|
|
|
|
Dividend payout ratio |
45.4% |
45.0% |
|
|
|
|
CLR (credit loss ratio) |
0.08% |
0.35% |
|
|
|
|
Cost to income ratio |
63.3% |
70.9% |
|
|
|
|
ROE (return on equity) |
11.4% |
6.6% |
|
|
|
|
ROTE (return on tangible equity) |
12.3% |
7.2% |
|
|
|
|
Balance sheet |
FY2022 |
FY2021 |
Variance |
% change |
Neutral currency % change |
|
Funds under management (£'bn) |
63.8 |
58.4 |
5.4 |
9.2% |
7.4% |
|
Customer accounts (deposits) (£'bn) |
40.1 |
34.4 |
5.7 |
16.5% |
12.9% |
|
Net core loans and advances (£'bn) |
29.9 |
26.4 |
3.5 |
13.2% |
10.0% |
|
Cash and near cash (£'bn) |
17.2 |
13.2 |
4.0 |
29.7% |
|
|
NAV per share (pence) |
510.0 |
458.0 |
52.0 |
11.4% |
|
|
TNAV per share (pence) |
476.6 |
423.6 |
53.0 |
12.5% |
|
|
Salient features by geography |
FY2022 |
FY2021 |
Variance |
% change |
Neutral currency % change |
|
Investec Limited (Southern Africa) |
|
|
|
|
|
|
Adjusted operating profit (£'m) |
387.5 |
251.6 |
135.9 |
54.0% |
46.7% |
|
Cost to income ratio |
53.9% |
58.7% |
|
|
|
|
ROE |
11.7% |
9.4% |
|
|
|
|
ROTE |
11.7% |
9.5% |
|
|
|
|
CET1 |
14.0% |
12.2% |
|
|
|
|
Leverage |
7.4% |
7.6% |
|
|
|
|
|
|
|
|
|
|
|
Investec plc (UK & Other) |
|
|
|
|
|
|
Adjusted operating profit (£'m) |
299.9 |
126.0 |
173.9 |
138.0% |
n/a |
|
Cost to income ratio |
70.5% |
79.5% |
|
|
|
|
ROE |
11.2% |
4.0% |
|
|
|
|
ROTE |
12.9% |
4.8% |
|
|
|
|
CET1 |
11.7% |
11.2% |
|
|
|
|
Leverage |
9.2% |
7.9% |
|
|
|
Distribution of 15% holding in Ninety One
On 28 April 2022, shareholders approved the proposed distribution of 15% of Ninety One (34p per share, per Ninety One closing share price on 16 May 2022). The distribution is expected to be effective on 30 May 2022, subject to final scheme approval by the court.
Outlook
The Group continues to successfully navigate the uncertain macro backdrop that has persisted since the onset of the pandemic and has made significant progress against the strategic goals outlined at the 2019 Capital Markets Day. We have a strong balance sheet and robust liquidity levels, firmly committed to our medium-term targets, and are well positioned to pursue growth opportunities in our chosen markets.
The expected slowdown in global growth given high levels of global inflation and increased geopolitical tensions present a downside risk to current economic forecasts.
FY2023 guidance:
Based on financial performance for FY2022, current business momentum and a macro-economic outlook with elevated forecast risk in the short term, the Group currently expects:
• The revenue outlook to be underpinned by higher average interest rates supporting margins, higher average lending books and increased activity levels given expected GDP growth.
• The cost to income ratio to be within the Group target of <63%, notwithstanding inflationary pressures and continued investment in technology.
• Normalisation of expected credit loss impairment charges and consequent credit loss ratio increase towards the Group's revised through-the-cycle (TTC) range of 25-35bps, with South Africa's TTC range calibrated between 20bps and 30bps, and the UK between 30bps and 40bps.
• The distribution of Ninety One to result in a 65bps reduction in Investec Limited's CET1 ratio and to have an immaterial impact on Investec plc. The attributable contribution to adjusted earnings per share was c.3.4p for FY2022.
• South Africa to continue to operate with a surplus capital position given excess capital generation and the anticipated CET1 uplift on full implementation of AIRB.
• Improvement in ROE towards the 12-16% Group target range, which we expect to achieve by FY2024. This will be aided by capital management initiatives.
Enquiries
Investec Investor Relations
Results: Qaqambile Dwayi
Tel: +27 (0) 11 291 0129
Carly Newton
Tel: +44 (0) 20 7597 4493
General enquiries:
Tel: +27 (0) 11 286 7070 or investorrelations@investec.com
Brunswick (SA PR advisers)
Graeme Coetzee
Tel: +27 (0) 63 685 6053
Lansons (UK PR advisers)
Tom Baldock
Tel: +44 (0) 78 6010 1715
Presentation/conference call details
Investec management will host its year-end results presentation live from London on Thursday 19 May at 10h00 (SA) / 9h00 (UK) time.
Please register for the presentation at: www.investec.com/investorrelations
A live video webcast of the presentation will be available on www.investec.com
About Investec
Investec partners with private, institutional, and corporate clients, offering international banking, investments, and wealth management services in two principal markets, South Africa, and the UK, as well as certain other countries. The Group was established in 1974 and currently has 8,300+ employees.
Investec has a dual listed company structure with primary listings on the London and Johannesburg Stock Exchanges.
Johannesburg and London
Sponsor: Investec Bank Limited
Group financial performance
Overview
Pre-provision adjusted operating profit for FY2022 increased, supported by continued client acquisition, increased client activity, growth in FUM and higher average advances.
The revenue momentum experienced in the first half of the financial year continued into the second half. Net interest income benefitted from higher average interest earning assets and lower funding costs. Increased client activity, higher lending turnover and supportive market conditions underpinned the growth in non-interest revenue over the year. Fixed operating expenditure was well contained in line with the Group's focus on cost efficiencies, while variable remuneration increased given improved business performance. Impairments were significantly lower given limited default experience and the minimal impact from updated forward looking macroeconomic scenarios since 1H2022.
The prior year results reflected the effects of severe economic contraction and rate cuts associated with COVID-19 which negatively affected client activity, net interest margins, valuations, and impairments. Additionally, risk management and risk reduction costs associated with the UK structured products book were elevated in FY2021.
Pre-provision adjusted operating profit increased 50.1% to £716.2 million (FY2021: £477.0 million).
Revenue increased 21.3% to £1 990.4 million (FY2021: £1 641.1 million).
Net interest income increased 21.5% to £945.3 million (FY2021: £778.1 million) driven by higher average interest earning assets and lower funding costs.
Non-interest revenue (NIR) increased 21.1% to £1 045.1 million (FY2021: £863.0 million).
• Net fee and commission income increased 9.3% to £818.2 million (FY2021: £748.9 million) driven by improved client activity across the board and higher average FUM in Wealth & Investment. The increase was partially offset by the prior year wind down of Australia and lower equity capital markets activity in the UK off a higher base.
• Investment income decreased to £28.0 million (FY2021: £32.0 million). The positive impact of the recovery of dividends and positive fair value (FV) adjustments on certain investments (given improved markets) was offset by the non-repeat of larger realisations and FV gains in the prior year.
• Share of post-taxation profit of associates and joint venture holdings increased to £79.6 million (FY2021: £42.5 million) driven by improved performance from underlying investee companies post hard lockdowns in the prior year and earnings growth from Ninety One.
• Trading income arising from customer flow increased to £128.3 million from £35.6 million in the prior year, primarily driven by £87.3 million lower risk management and risk reduction costs associated with the UK structured products book (underpinned by risk mitigation strategies implemented on the book and improving markets) and strong growth in SA trading from increased client activity.
• Net trading losses arising from balance sheet management and other trading activities were £21.1 million compared to £18.9 million in the prior year due to currency and interest rate hedges on the balance sheet.
• Other operating income of £12.2 million (FY2021: £23.0 million) reflects the fair value movements of the Ninety One shares held in the Group's staff share scheme. These shares are reflected on the Group's balance sheet in other assets. The corresponding liability is reflected in other liabilities with changes in the value of the liability expensed through staff costs in operating costs.
Expected credit loss (ECL) impairment charges decreased by 71.0% to £28.8 million (FY2021: £99.4 million) resulting in a credit loss ratio of 8bps (31 March 2021: 35bps; 1H2022: 7bps)
Asset quality remains strong, with exposures to a carefully defined target market and well covered by collateral. Limited default experience, good recoveries, and reversals of certain Stage 3 ECLs raised in prior year as exposures cured, drove the decrease in ECL. Given the uncertain economic outlook, the Group has maintained a level of post-model management overlays to account for risks assessed as inadequately reflected in the models. There was a net release of management overlays during the year of £2.9 million.
Operating costs increased 6.0% to £1 233.9 million (FY2021: £1 164.5 million)
Fixed operating expenditure was well contained, increasing by 1.1%. The increase was primarily driven by higher variable remuneration given improved business performance, partly offset by the non-repeat of one-off costs associated with restructures (including related redundancies) and the closure of operations in Australia in the prior year. The cost to income ratio improved to 63.3% from 70.9% in the prior year.
Taxation
The taxation charge on adjusted operating profit was £143.3 million (FY2021: £74.5 million), resulting in an effective tax rate of 22.1% (FY2021: 22.3%).
In the UK, the lower effective tax rate of 14.9% (FY2021: 27.2%) was driven by higher deferred tax assets on the back of higher enacted tax rates. In SA, the higher rate of 26.7% (FY2021: 20.5%) was largely driven by the impairment of certain deferred tax assets.
Profit or loss attributable to non-controlling interests
The profit attributable to other non-controlling interests was £40.2 million compared to a loss of £0.5 million in the prior year and is attributable to the non-controlling interests in the Investec Property Fund (IPF).
Funding and liquidity
Customer deposits grew 16.5% to £40.1 billion (31 March 2021: £34.4 billion) at 31 March 2022.
Over the same period, cash and near cash increased 30.3% to £17.2 billion (£8.9 billion in Investec plc and R159.5 billion in Investec Limited).
The Group comfortably exceeds Basel liquidity requirements for the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).
Investec Bank Limited (consolidated Group) ended the year to 31 March 2022 with the three-month average of its LCR at 138.9% and an NSFR of 112.6%. Investec plc reported a LCR of 457% and a NSFR of 145% at 31 March 2022.
Capital adequacy and leverage ratios
Capital and leverage ratios remain sound, ahead of Board-approved minimum targets and regulatory requirements. The CET1 and leverage ratio were 14.0% and 7.4% for Investec Limited (increased AIRB scope) and 11.7% and 9.2% for Investec plc (Standardised approach) respectively.
Investec Limited made progress in the application to adopt AIRB for the measurement of capital on certain portfolios currently on the Foundation Internal Ratings Based (FIRB) approach. On full adoption of AIRB, the pro-forma CET1 ratio would increase by 200bps at 31 March 2022. Investec plc is in the early stages of a process to migrate from the Standardised approach to the Internal Ratings Based (IRB) approach.
Segmental performance
Wealth & Investment
Adjusted operating profit from the Wealth & Investment business increased 22.6% to £123.1 million (FY2021: £100.5 million).
|
Wealth & Investment |
Southern Africa |
UK & Other |
Total |
||||||||
|
|
FY2022 |
FY2021 |
Variance |
FY2022 |
FY2021 |
Variance |
FY2022 |
FY2021 |
|||
|
|
£'m |
£'m |
£'m |
% |
% in Rands |
£'m |
£'m |
£'m |
% |
£'m |
£'m |
|
Operating income |
106.6 |
83.6 |
23.0 |
27.5% |
21.7% |
347.2 |
319.5 |
27.7 |
8.7% |
453.8 |
403.2 |
|
Operating costs |
(71.2) |
(57.5) |
(13.6) |
23.7% |
17.9% |
(259.5) |
(245.2) |
(14.3) |
5.8% |
(330.7) |
(302.7) |
|
Adjusted operating profit |
35.5 |
26.1 |
9.3 |
35.7% |
30.0% |
87.7 |
74.3 |
13.3 |
17.9% |
123.1 |
100.5 |
Totals and variance determined in £'000 which may result in rounding differences.
Southern Africa Wealth & Investment (in Rands)
Adjusted operating profit for SA Wealth & Investment increased by 30.0% to R720 million (FY2021: R554 million).
The business reported 9.5% growth in FUM to R364.6 billion (31 March 2021: R333.0 billion) supported by positive investment performance, R12.1 billion of discretionary and annuity net inflows (non-discretionary net inflows of R1.2 billion) and improved markets. The market volatility in the final quarter of the financial year (driven by global inflationary concerns exacerbated by the invasion of Ukraine), negatively impacted closing FUM at 31 March 2022.
Revenue grew by 21.7% supported by sustained inflows into the offshore investment range and higher average discretionary and annuity FUM. Non-discretionary brokerage also increased year-on-year, particularly in March 2022 given increased market volatility.
Operating costs increased 17.9%, driven by higher variable remuneration given strong business performance, and an increased headcount of investment specialists, wealth managers and information technology (IT) personnel. Operating margins improved to 33.2% from 31.2% in FY2021.
UK & Other Wealth & Investment
Adjusted operating profit for UK & Other Wealth & Investment increased 17.9% to £87.7 million (FY2021: £74.3 million).
For the first three quarters of the financial year to 31 December 2021, market recovery and continued net inflows resulted in record FUM of £46.1 billion. However, the final quarter of the financial year was impacted by global market volatility, resulting in closing FUM of £44.4 billion (FY2021: £41.7 billion). Net inflows for the year were £1.2 billion.
Revenue grew by 8.7% given supportive market conditions and net organic growth in FUM of 2.9%. Commission income returned to normalised levels following the exceptional transaction volumes seen in the prior year, resulting in a lower average income yield year-on-year.
Operating costs were up 5.8% due to investment in technology, increased discretionary expenditure as COVID-19 related restrictions eased, as well as higher variable remuneration in line with business performance.
The UK domestic business (which accounts for 96.6% of FUM) reported an operating margin of 27.0% (FY2021: 25.2%), while a combined operating margin for UK & Other of 25.3% (FY2021: 23.3%) was achieved.
Specialist Banking
Adjusted operating profit from Specialist Banking increased 96.6% to £543.0 million (FY2021: £276.3 million).
|
Specialist Banking |
Southern Africa |
UK & Other |
Total |
||||||||
|
|
FY2022 |
FY2021 |
Variance |
FY2022 |
FY2021 |
Variance |
FY2022 |
FY2021 |
|||
|
|
£'m |
£'m |
£'m |
% |
% in Rands |
£'m |
£'m |
£'m |
% |
£'m |
£'m |
|
Operating income (before ECL) |
721.7 |
580.3 |
141.4 |
24.4% |
18.7% |
720.4 |
618.0 |
102.3 |
16.6% |
1 442.0 |
1 198.3 |
|
ECL impairment charges |
(3.1) |
(25.9) |
22.8 |
(88.1%) |
(91.2%) |
(25.2) |
(71.2) |
46.0 |
(64.6%) |
(28.2) |
(97.1) |
|
Operating costs |
(369.0) |
(323.3) |
(45.7) |
14.1% |
8.9% |
(501.6) |
(502.9) |
1.4 |
0.3% |
(870.5) |
(826.2) |
|
(Profit) /loss attributable to NCI |
(0.3) |
0.3 |
(0.6) |
(>100%) |
(>100%) |
- |
0.9 |
(0.9) |
(100.0%) |
(0.3) |
0.6 |
|
Adjusted operating profit |
349.4 |
231.5 |
117.9 |
50.9% |
45.0% |
193.7 |
44.8 |
148.9 |
332.4% |
543.0 |
276.3 |
Totals and variance determined in £'000 which may result in rounding differences.
Southern Africa Specialist Banking (in Rands)
Adjusted operating profit for the SA bank increased 45.0% to R7 104 million (FY2021: R4 898 million).
Revenue growth of 18.7% was positively impacted by recovery in NIR as the bank saw increased client activity levels across the board, higher average interest earning assets, lower funding costs and good client acquisition. This was partly offset by investment write-downs on certain portfolios in the current year and lower deal fees in Investec Property.
Net interest income increased 13.2% driven by higher average interest earning assets and lower funding costs.
Non-interest revenue increased 33.0% driven by:
• Increased fee income on the back of higher lending and forex (FX) turnover, and recovery of point-of-sale activity relative to the prior year.
• Higher dividend income and certain realisations off a low base.
• Trading income increased, driven by market share gains in select markets, increased client flows and benefits arising from increased market volatility. Balance sheet management and other trading income saw mark-to-market (MTM) gains on certain interest rate and currency swaps.
- offset by
• Lower deal fees from Investec Property and negative FV adjustments on certain investments.
ECL impairment charges decreased 91.2% to R51 million resulting in an approximately zero percent CLR (FY2021: 18bps). The decline was due to limited default experience, good recoveries, specific ECL impairment reversals and the release of R71 million post-model overlays given credit performance and a stable to improved macro-economic outlook relative to FY2021. The management overlay at year end of R219 million (31 March 2021: R290 million) reflects heightened uncertainty given inflationary pressures, and second-order economic impacts from the invasion of Ukraine.
Operating costs increased 8.9% driven by higher personnel expenses due to salary increases and higher variable remuneration given improved business performance. Discretionary expenditure also increased as COVID-19 related restrictions eased. Fixed costs were well managed increasing 4.2%. The cost to income ratio was lower at 51.1% (FY2021: 55.7%).
Net core loans grew by 3.9% to R298.4 billion (31 March 2021: R287.3 billion). Advances to private clients increased 4.2% driven by resi-mortgages, offset by flat year-on-year growth in commercial real estate. Corporate lending increased 3.3%, offset by elevated repayments and subdued credit demand given continued low business confidence.
UK & Other Specialist Banking
Adjusted operating profit for the UK bank increased to £193.7 million (FY2021: £44.8 million). The £148.9 million increase in profits was driven principally by strong net interest income growth, lower risk management and risk reduction costs related to the structured products book, reduced fixed operating expenditure and lower ECL charges given limited stage 3 ECLs. Client acquisition remained strong, with the Private Banking business growing its HNW clients to 6 982, surpassing the three-year target of 6 500 clients by 31 March 2022.
Net interest income increased 20.9% driven by higher average lending books and lower cost of funding, partially offset by the impact of the disposal of the Australian corporate book in March 2021.
Non-interest revenue increased 8.8% due to:
• Significantly lower risk management and risk reduction costs associated with the structured products book (£5.9 million for FY2022 vs £93.3 million for FY2021).
• Higher fees from the Private Equity franchise due to strong origination and distribution activities and higher advisory fees relative to prior year.
- offset by
• Lower fees and commissions due to the wind down of Australia and a reduction in equity capital markets activity off a high base.
• Reduced balance sheet management and other trading income due to costs associated with the early redemption of a senior bond, MTM losses on balance sheet management instruments and the non-repeat of MTM gains in the prior year.
ECL impairment charges decreased 64.6% to £25.2 million primarily due to lower specific impairments. The reduction in ECL resulted in a credit loss ratio of 17bps (FY2021: 56bps). The management overlay totals £16.8 million at 31 March 2022 (down £4.2million from £21 million at September 2021; up from £16 million at March 2021). This movement in the overlay reflects:
• Increased modelled ECL given greater downside weightings,
• The reducing impact that the COVID-19 pandemic has on management's underlying assumptions, and
• The increasing impact of greater global uncertainty given rising inflation and geopolitical concerns.
Operating costs were broadly flat, declining by 0.3% year on year. The 5.3% reduction in fixed costs was offset by an increase in variable remuneration in line with improved business performance. The base includes one-off costs associated with the implementation of restructures as part of the Group's strategy to simplify and focus the business, including related redundancies and the closure of operations in Australia. The cost to income ratio improved to 69.6% (FY2021: 81.3%).
Net core loans grew by 17.0% (18.5% excluding Australia) to £14.4 billion (31 March 2021: £12.3 billion) driven by residential mortgages (up 35.5%) and strong demand for corporate credit (up 10.2% (12.0% excluding Australia)) across several portfolios.
Group Investments
Group Investments includes the 25% holding in Ninety One*, 47.4% stake in the IEP Group, 24.31% held in the Investec Property Fund (IPF) and other equity investments.
|
Group Investments |
Southern Africa |
UK & Other |
Total |
||||||||
|
|
FY2022 |
FY2021 |
Variance |
FY2022 |
FY2021 |
Variance |
FY2022 |
FY2021 |
|||
|
|
£'m |
£'m |
£'m |
% |
% in Rands |
£'m |
£'m |
£'m |
% |
£'m |
£'m |
|
Operating income (net of ECL charges) |
60.5 |
12.0 |
48.5 |
>100% |
>100% |
33.4 |
25.1 |
8.2 |
32.8% |
93.9 |
37.2 |
|
Operating costs |
(1.9) |
(2.1) |
0.2 |
(7.2%) |
(8.5%) |
- |
- |
- |
- |
(1.9) |
(2.1) |
|
(Profit) attributable to NCI |
(39.9) |
(0.7) |
(39.2) |
(>100%) |
(>100%) |
- |
- |
- |
- |
(39.9) |
(0.7) |
|
Adjusted operating profit |
18.7 |
9.2 |
9.4 |
>100% |
92.7% |
33.4 |
25.1 |
8.2 |
32.8% |
52.1 |
34.4 |
Totals and variance determined in £'000 which may result in rounding differences.
*Post the 30 May 2022 distribution, the Group's holding in Ninety One will be c.10%..
Adjusted operating profit from Group Investments increased by 51.4% to £52.1 million (FY2021: £34.4 million) driven by:
• Better than expected performance in the underlying investee companies within IEP,
• Growth in earnings from Ninety One, and
• Lower negative FX adjustments on Euro-denominated investments in IPF, compared to the prior year.
Further information
Additional information on each of the business units is provided in the Group year-end results analyst book published on the Group's website: http://www.investec.com.
On behalf of the boards of Investec plc and Investec Limited
|
Philip Hourquebie |
|
Fani Titi |
|
Chair |
|
Group Chief Executive |
|
18 May 2022 |
|
|
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, these year-end results reflect the results and financial position of the combined DLC Group under UK adopted International Financial Reporting Standards (IFRS) which comply with IFRS as issued by the International Accounting Standards Board (IASB), 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.
Following a review of the liquidity, capital position, profitability, the business model and operational risks facing the business, the directors have a reasonable expectation that the Investec Group will be a going concern for a period of at least 12 months. The results for the year ended 31 March 2022 has accordingly been prepared on the going concern basis.
Unless the context indicates otherwise, all comparatives included in the commentary above relate to the year ended 31 March 2021.
Amounts represented on a neutral currency basis for income statement items assume that the relevant average exchange rates for the year ended 31 March 2022 remain the same as those in the prior year. Amounts represented on a neutral currency basis for balance sheet items assume that the relevant closing exchange rates at 31 March 2022 remain the same as those at 31 March 2021.
Neutral currency information is considered as pro-forma financial information as per the JSE Listings Requirements and is therefore the responsibility of the Group's Board of Directors. Pro-forma financial information was prepared for illustrative purposes and because of its nature may not fairly present the issuer's financial position, changes in equity, or results of operations. The external auditors of Investec Limited performed a review of the pro forma financial information and the opinion is available for inspection at the registered office of Investec upon request.
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 condition of these 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 ended |
Year ended |
||
|
31 March 2022 |
31 March 2021 |
|||
|
Currency |
Closing |
Average |
Closing |
Average |
|
per GBP1.00 |
||||
|
South African Rand |
19.24 |
20.28 |
20.36 |
21.33 |
|
Euro |
1.18 |
1.18 |
1.17 |
1.12 |
|
US Dollar |
1.31 |
1.37 |
1.38 |
1.31 |
Profit Forecast
The following matters highlighted in this announcement contain forward-looking statements:
• The cost to income ratio to be within the Group target of <63% notwithstanding inflationary pressures.
• Normalisation of expected credit loss impairment charges and consequent credit loss ratio increase towards the Group's revised through-the-cycle (TTC) range of 25-35bps, with South Africa's TTC range calibrated between 20bps and 30bps, and the UK between 30bps and 40bps.
• Improvement in ROE towards the 12-16% Group target range, which we expect to achieve by FY2024. This will be aided by capital management initiatives.
The basis of preparation of this statement and the assumptions upon which it was based are set out below. This statement is subject to various risks and uncertainties and other factors - 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 in this Profit Forecast.
Any forward-looking statements made are based on the knowledge of the Group at 18 May 2022.
This forward-looking statement represents a profit forecast under the Listing Rules. The Profit Forecast relates to the year ending 31 March 2023.
The financial information on which the Profit Forecast was based is the responsibility of the Directors of the Group and has not been reviewed and reported on by the Group's auditors.
Basis of preparation
The Profit Forecast has been properly compiled using the assumptions stated below, and on a basis consistent with the accounting policies adopted in the Group's 31 March 2022 unaudited preliminary financial statements, which are in accordance with IFRS.
Assumptions
The Profit Forecast has been prepared on the basis of the following assumptions during the forecast period:
Factors outside the influence or control of the Investec Board:
• There will be no material change in the political and/or economic environment that would materially affect the Investec Group.
• There will be no material change in legislation or regulation impacting on the Investec Group's operations or its accounting policies.
• There will be no business disruption that will have a significant impact on the Investec Group's operations, whether for the economic effects of increased geopolitical tensions or otherwise.
• The Rand/Pound Sterling and US Dollar/Pound Sterling exchange rates and the tax rates remain materially unchanged from the prevailing rates detailed above.
• There will be no material changes in the structure of the markets, client demand or the competitive environment.
• There will be no material change to the facts and circumstances relating to legal proceedings and uncertain tax matters.
Estimates and judgements
In preparation of the Profit Forecast, the Group makes estimations and applies judgement that could affect the reported amount of assets and liabilities within the reporting period. Key areas in which judgement is applied include:
• Valuation of unlisted investments primarily in the private equity, direct investments portfolios and embedded derivatives. Key valuation inputs are based on the most relevant observable market inputs, adjusted where necessary for factors that specifically apply to the individual investments and recognising market volatility.
• The determination of ECL against assets that are carried at amortised cost and ECL relating to debt instruments at fair value through other comprehensive income (FVOCI) involves the assessment of future cash flows which is judgmental in nature.
• Valuation of investment properties is performed by capitalising the budget net income of the property at the market related yield applicable at the time.
• The Group's income tax charge and balance sheet provision are judgmental in nature. This arises from certain transactions for which the ultimate tax treatment can only be determined by final resolution with the relevant local tax authorities. The Group recognises in its tax provision certain amounts in respect of taxation that involve a degree of estimation and uncertainty where the tax treatment cannot finally be determined until a resolution has been reached by the relevant tax authority. The carrying amount of this provision is often dependent on the timetable and progress of discussions and negotiations with the relevant tax authorities, arbitration processes and legal proceedings in the relevant tax jurisdictions in which the Group operates. Issues can take many years to resolve and assumptions on the likely outcome would therefore have to be made by the Group.
• Where appropriate, the Group has utilised expert external advice as well as experience of similar situations elsewhere in making any such provisions. Determination of interest income and interest expense using the effective interest rate method involves judgement in determining the timing and extent of future cash flows.
Accounting policies, significant judgements and disclosures
These unaudited condensed combined consolidated financial results have been prepared in terms of the recognition and measurement criteria of the presentation and disclosure requirements of IAS 34, "Interim Financial Reporting" and IFRS as adopted by the UK which comply with IFRS' as issued by the IASB. At 31 March 2022, UK adopted IFRS are identical in all material respects to current IFRS applicable to the Group, with differences only in the effective dates of certain standards.
The accounting policies applied in the preparation of the results for the year ended 31 March 2022 are consistent with those adopted in the financial statements for year ended 31 March 2021.
The financial results have been prepared under the supervision of Nishlan Samujh, the Group Finance Director. The annual financial statements for the year ended 31 March 2022 are available on the Group's website:
www.investec.com
Proviso
• Please note that matters discussed in this announcement may contain forward-looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to:
- changes in the political and/or economic environment that would materially affect the Investec Group
- changes in the economic environment caused by the resulting lockdowns and government programmes aimed to stimulate the economy
- changes in legislation or regulation impacting the Investec Group's operations or its accounting policies
- changes in business conditions that will have a significant impact on the Investec Group's operations
- changes in exchange rates and/or tax rates from the prevailing rates outlined in this announcement
- changes in the structure of the markets, client demand or the competitive environment.
• A number of these factors are beyond the Group's control.
• These factors may cause the Group's actual future results, performance or achievements in the markets in which it operates to differ from those expressed or implied.
• Any forward-looking statements made are based on the knowledge of the Group at 18 May 2022.
• The information in the Group's announcement for the year ended 31 March 2022, which was approved by the Board of Directors on 18 May 2022, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. The 31 March 2021 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.
• The financial information on which forward-looking statements are based is the responsibility of the Directors of the Group and has not been reviewed and reported on by the Group's auditors.
This announcement is available on the Group's website:
www.investec.com
Definitions
• Adjusted operating profit refers to operating profit before goodwill, acquired intangibles and strategic actions and after adjusting for earnings attributable to other non-controlling interests. Non-IFRS measures such as adjusted operating profit are considered as pro forma financial information as per the JSE Listing Requirements. The pro forma financial information is the responsibility of the Group's Board of Directors. Pro-forma financial information was prepared for illustrative purposes and because of its nature may not fairly present the issuer's financial position, changes in equity or results of operations. The external auditors of Investec Limited performed a review of the pro forma financial information and the opinion is available for inspection at the registered office of Investec upon request.
• Adjusted earnings is calculated by adjusting basic earnings attributable to shareholders for the amortisation of acquired intangible assets, non-operating items including strategic actions, and earnings attributable to perpetual preference shareholders and other additional tier 1 security holders.
• Adjusted basic earnings per share is calculated as adjusted earnings attributable to shareholders divided by the weighted average number of ordinary shares in issue during the year.
• Headline earnings is adjusted earnings plus the after tax financial effect of strategic actions and the amortisation of acquired intangible assets. Headline earnings is an earnings measure required to be calculated and disclosed by the JSE and is calculated in accordance with the guidance provided in Circular 1/2021.
• Headline earnings per share (HEPS) is calculated as headline earnings divided by the weighted average number of ordinary shares in issue during the year.
• Basic earnings is earnings attributable to ordinary shareholders as defined by IAS33 Earnings Per Share.
• Dividend payout ratio is calculated as the dividend per share divided by adjusted earnings per share.
• Pre-provision adjusted operating profit is calculated as: Total operating income before expected credit loss impairment charges, net of operating costs and net of operating profits or losses attributable to other non-controlling interests.
• The credit loss ratio is calculated as expected credit loss (ECL) impairment charges on gross core loans as a percentage of average gross core loans subject to ECL.
• The cost to income ratio is calculated as: operating costs divided by operating income before expected credit loss impairment charges (net of operating profits or losses attributable to other non-controlling interests).
• Return on average ordinary shareholders' equity (ROE) is calculated as adjusted earnings attributable to ordinary shareholders divided by average ordinary shareholders' equity.
• Return on average tangible ordinary shareholders' equity (ROTE) is calculated as adjusted earnings attributable to ordinary shareholders divided by average tangible ordinary shareholders' equity.
• Core loans is defined as net loans to customers plus net own originated securitised assets.
• NCI is non-controlling interests.
Financial assistance
Shareholders are referred to Special Resolution number 30, which was approved at the annual general meeting held on 5 August 2021, relating to the provision of direct or indirect financial assistance in terms of Section 45 of the South African Companies Act, No 71 of 2008 to related or inter-related companies. Shareholders are hereby notified that in terms of S45(5)(a) of the South African Companies Act, the Boards of Directors of Investec Limited and Investec Bank Limited provided such financial assistance during the period 1 April 2021 to 31 March 2022 to various Group subsidiaries.
Johannesburg and London
Sponsor: Investec Bank Limited
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 Rand: Pound Sterling exchange rate over the period has appreciated by 4.9% against the comparative 12-month period ended 31 March 2021, and the closing rate has appreciated by 5.5% since 31 March 2021. The following tables provide an analysis of the impact of the Rand on our reported numbers.
|
|
Results in Pounds Sterling |
Results in Rands |
||||||
|
|
Year to 31 March 2022 |
Year to 31 March 2021 |
% change |
Neutral currency^ Year to 31 March 2022 |
Neutral currency % change |
Year to 31 March 2022 |
Year to 31 March 2021 |
% change |
|
Adjusted operating profit before taxation (million) |
£687 |
£378 |
82.1% |
£669 |
77.0% |
R13 947 |
R8 202 |
70.0% |
|
Earnings attributable to shareholders (million) |
£516 |
£268 |
92.5% |
£503 |
87.7% |
R10 481 |
R5 715 |
83.4% |
|
Adjusted earnings attributable to shareholders (million) |
£505 |
£268 |
88.3% |
£493 |
84.0% |
R10 256 |
R5 710 |
79.6% |
|
Adjusted earnings per share |
55.1p |
28.9p |
90.7% |
53.7p |
85.8% |
1118c |
614c |
82.1% |
|
Basic earnings per share |
52.0p |
25.2p |
106.3% |
50.7p |
101.2% |
1055c |
538c |
96.1% |
|
Headline earnings per share |
53.3p |
26.6p |
100.4% |
51.9p |
95.1% |
1083c |
568c |
90.7% |
|
|
Results in Pounds Sterling |
Results in Rands |
||||||
|
|
At 31 March 2022 |
At 31 March 2021 |
% change |
Neutral currency^^ At 31 March 2022 |
Neutral currency % change |
At 31 March 2022 |
At 31 March 2021 |
% change |
|
Net asset value per share |
510.0p |
458.0p |
11.4% |
495.9p |
8.3% |
9 810c |
9 326c |
5.2% |
|
Tangible net asset value per share |
476.6p |
423.6p |
12.5% |
462.4p |
9.2% |
9 167c |
8 625c |
6.3% |
|
Total equity (million) |
£5 740 |
£5 312 |
8.1% |
£5 565 |
4.8% |
R110 410 |
R108 161 |
2.1% |
|
Total assets (million) |
£58 844 |
£51 450 |
14.4% |
£57 127 |
11.0% |
R1 131 872 |
R1 047 605 |
8.0% |
|
Core loans (million) |
£29 934 |
£26 438 |
13.2% |
£29 081 |
10.0% |
R575 773 |
R538 320 |
7.0% |
|
Cash and near cash balances (million) |
£17 161 |
£13 229 |
29.7% |
£16 702 |
26.3% |
R330 089 |
R269 364 |
22.5% |
|
Customer accounts (deposits) (million) |
£40 118 |
£34 449 |
16.5% |
£38 911 |
12.9% |
R771 675 |
R701 446 |
10.0% |
|
Funds under management (million) |
£63 800 |
£58 436 |
9.2% |
£62 743 |
7.4% |
R1 227 209 |
R1 189 872 |
3.1% |
^ For income statement items we have used the average Rand: Pound Sterling exchange rate that was applied in the prior period, i.e. 21.33.
^^ For balance sheet items we have assumed that the Rand: Pound Sterling closing exchange rate has remained neutral since 31 March 2021.
Condensed combined consolidated income statement
|
£'000 |
Year to
|
Year to 31 March 2021 |
|
Interest income |
1 951 209 |
1 922 299 |
|
Interest expense |
(1 005 939) |
(1 144 193) |
|
Net interest income |
945 270 |
778 106 |
|
Fee and commission income |
864 639 |
791 153 |
|
Fee and commission expense |
(46 423) |
(42 275) |
|
Investment income |
27 974 |
32 002 |
|
Share of post-taxation profit of associates and joint venture holdings |
79 556 |
42 459 |
|
Trading income/(loss) arising from |
|
|
|
- customer flow |
128 277 |
35 566 |
|
- balance sheet management and other trading activities |
(21 128) |
(18 903) |
|
Other operating income |
12 190 |
22 953 |
|
Total operating income before expected credit loss impairment charges |
1 990 355 |
1 641 061 |
|
Expected credit loss impairment charges |
(28 828) |
(99 438) |
|
Operating income |
1 961 527 |
1 541 623 |
|
Operating costs |
(1 233 948) |
(1 164 513) |
|
Operating profit before goodwill, acquired intangibles and strategic actions |
727 579 |
377 110 |
|
Impairment of goodwill |
(1 962) |
(11 599) |
|
Impairment of associates and joint venture holdings |
- |
(16 773) |
|
Amortisation of acquired intangibles |
(15 477) |
(15 287) |
|
Amortisation of acquired intangibles of associates |
(9 249) |
(9 268) |
|
Closure and rundown of the Hong Kong direct investments business |
(1 203) |
7 386 |
|
Operating profit |
699 688 |
331 569 |
|
Implementation costs on distribution of associate to shareholders |
(2 427) |
- |
|
Profit before taxation |
697 261 |
331 569 |
|
Taxation on operating profit before goodwill, acquired intangibles and strategic actions |
(143 309) |
(74 539) |
|
Taxation on acquired intangibles and strategic actions |
2 422 |
1 712 |
|
Profit after taxation |
556 374 |
258 742 |
|
(Profit)/loss attributable to non-controlling interests |
(40 170) |
472 |
|
Loss attributable to non-controlling interests relating to impairments of associates |
- |
9 126 |
|
Earnings attributable to shareholders |
516 204 |
268 340 |
|
Earnings attributable to ordinary shareholders |
475 469 |
231 153 |
|
Earnings attributable to perpetual preferred securities and other Additional Tier 1 security holders |
40 735 |
37 187 |
Earnings per share
|
|
Year to
|
Year to 31 March 2021 |
|
Earnings per share - pence |
52.0 |
25.2 |
|
Diluted earnings per share - pence |
50.2 |
24.9 |
Combined consolidated statement of total comprehensive income
|
£'000 |
Year to
|
Year to 31 March 2021 |
|
Profit after taxation |
556 374 |
258 742 |
|
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^ |
(4 311) |
242 |
|
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income^ |
(301) |
152 355 |
|
Gain on realisation of debt instruments at FVOCI recycled through the income statement^ |
(2 010) |
(717) |
|
Foreign currency adjustments on translating foreign operations |
173 160 |
111 779 |
|
Items that will not be reclassified to the income statement |
|
|
|
Effect of rate change on deferred taxation relating to adjustment for IFRS 9 |
617 |
380 |
|
Fair value movements on equity instruments at FVOCI taken directly to other comprehensive income^ |
3 420 |
1 778 |
|
Remeasurement of net defined benefit pension liability |
40 |
(39) |
|
Net gain/(loss) attributable to own credit risk^ |
11 095 |
(850) |
|
Total comprehensive income |
738 084 |
523 670 |
|
Total comprehensive income attributable to ordinary shareholders |
629 300 |
448 637 |
|
Total comprehensive income attributable to non-controlling interests |
68 049 |
37 846 |
|
Total comprehensive income attributable to perpetual preferred securities |
40 735 |
37 187 |
|
Total comprehensive income |
738 084 |
523 670 |
^ Net of taxation expense of £3.5 million (2021: £38.5 million).
Combined consolidated balance sheet
|
At £'000 |
31 March 2022 |
31 March 2021^ |
|
Assets |
|
|
|
Cash and balances at central banks |
5 998 270 |
3 517 100 |
|
Loans and advances to banks |
2 552 061 |
2 637 436 |
|
Non-sovereign and non-bank cash placements |
684 983 |
439 841 |
|
Reverse repurchase agreements and cash collateral on securities borrowed |
4 609 778 |
3 575 713 |
|
Sovereign debt securities |
4 148 867 |
3 711 623 |
|
Bank debt securities |
1 515 210 |
1 121 730 |
|
Other debt securities |
1 229 287 |
1 364 235 |
|
Derivative financial instruments |
1 617 240 |
1 714 743 |
|
Securities arising from trading activities |
683 329 |
1 024 671 |
|
Investment portfolio |
912 872 |
909 050 |
|
Loans and advances to customers |
29 561 088 |
26 041 087 |
|
Own originated loans and advances to customers securitised |
375 763 |
401 912 |
|
Other loans and advances |
128 284 |
102 135 |
|
Other securitised assets |
123 888 |
140 087 |
|
Interests in associated undertakings and joint venture holdings |
734 434 |
679 157 |
|
Current taxation assets |
33 653 |
60 325 |
|
Deferred taxation assets |
259 370 |
246 622 |
|
Other assets |
2 068 615 |
2 165 438 |
|
Property and equipment |
335 420 |
329 972 |
|
Investment properties |
820 555 |
832 061 |
|
Goodwill |
258 404 |
259 805 |
|
Software |
9 443 |
12 574 |
|
Other acquired intangible assets |
44 152 |
58 968 |
|
Non-current assets classified as held for sale |
79 229 |
51 783 |
|
|
58 784 195 |
51 398 068 |
|
Other financial instruments at fair value through profit or loss in respect of liabilities to customers |
59 549 |
52 405 |
|
|
58 843 744 |
51 450 473 |
|
Liabilities |
|
|
|
Deposits by banks |
3 178 668 |
2 403 712 |
|
Derivative financial instruments |
2 537 303 |
2 190 487 |
|
Other trading liabilities |
275 589 |
326 189 |
|
Repurchase agreements and cash collateral on securities lent |
863 285 |
1 003 312 |
|
Customer accounts (deposits) |
40 118 412 |
34 449 430 |
|
Debt securities in issue |
2 043 640 |
1 892 319 |
|
Liabilities arising on securitisation of own originated loans and advances |
238 370 |
160 646 |
|
Liabilities arising on securitisation of other assets |
95 885 |
108 281 |
|
Current taxation liabilities |
41 631 |
78 790 |
|
Deferred taxation liabilities |
19 624 |
40 333 |
|
Other liabilities |
2 315 841 |
1 951 122 |
|
|
51 728 248 |
44 604 621 |
|
Liabilities to customers under investment contracts |
56 475 |
49 798 |
|
Insurance liabilities, including unit-linked liabilities |
3 074 |
2 607 |
|
|
51 787 797 |
44 657 026 |
|
Subordinated liabilities |
1 316 191 |
1 480 951 |
|
|
53 103 988 |
46 137 977 |
|
Equity |
|
|
|
Ordinary share capital |
247 |
247 |
|
Ordinary share premium |
1 516 024 |
1 517 852 |
|
Treasury shares |
(318 987) |
(267 508) |
|
Other reserves |
(650 228) |
(788 222) |
|
Retained income |
4 069 776 |
3 772 628 |
|
Ordinary shareholders' equity |
4 616 832 |
4 234 997 |
|
Perpetual preference share capital and premium |
174 869 |
174 053 |
|
Shareholders' equity excluding non-controlling interests |
4 791 701 |
4 409 050 |
|
Other Additional Tier 1 securities in issue |
411 683 |
335 111 |
|
Non-controlling interests |
536 372 |
568 335 |
|
- Perpetual preferred securities issued by subsidiaries |
- |
72 750 |
|
- Non-controlling interests in partially held subsidiaries |
536 372 |
495 585 |
|
Total equity |
5 739 756 |
5 312 496 |
|
Total liabilities and equity |
58 843 744 |
51 450 473 |
^ Restated as detailed below.
Condensed consolidated statement of changes in equity
|
£'000 |
Year to
|
Year to 31 March 2021 |
|
Balance at the beginning of the year |
5 312 496 |
4 897 632 |
|
Total comprehensive income |
738 084 |
523 670 |
|
Share-based payments adjustments |
23 932 |
19 121 |
|
Dividends paid to ordinary shareholders |
(178 418) |
(53 346) |
|
Dividends paid to perpetual preference shareholders included in non-controlling interests and Other Additional Tier 1 security holders |
(40 735) |
(37 187) |
|
Dividends paid to non-controlling interests |
(29 287) |
(32 385) |
|
Share buyback of ordinary share capital |
(36 150) |
- |
|
Repurchase of perpetual preference shares |
(77 835) |
(6 274) |
|
Issue of Other Additional Tier 1 security instruments |
67 552 |
35 508 |
|
Net equity impact of non-controlling interest movements |
443 |
(6 128) |
|
Movement of treasury shares |
(47 114) |
(10 161) |
|
Net equity movements of interests in associated undertakings |
6 788 |
(17 954) |
|
Balance at the end of the year |
5 739 756 |
5 312 496 |
Condensed consolidated cash flow statement
|
£'000 |
Year to
|
Year to
|
|
Net cash inflow/(outflow) from operating activities |
3 071 540 |
(606 625) |
|
Net cash inflow from investing activities |
35 565 |
1 414 |
|
Net cash outflow from financing activities |
(587 923) |
(134 626) |
|
Effects of exchange rates on cash and cash equivalents |
90 928 |
146 030 |
|
Net increase/(decrease) in cash and cash equivalents |
2 610 110 |
(593 807) |
|
Cash and cash equivalents at the beginning of the year |
6 489 630 |
7 083 437 |
|
Cash and cash equivalents at the end of the year |
9 099 740 |
6 489 630 |
^ Restated as detailed below.
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 segmental analysis
Segmental geographical and business analysis of adjusted operating profit before goodwill, acquired intangibles, non-operating items, taxation and after non-controlling interests.
|
|
Private Client |
|
|
|
|
|
|
|
|
|
|
Specialist Banking |
|
|
|
|
||
|
For the year to 31 March 2022 |
Wealth & Investment |
Private Banking |
Corporate, Investment Banking and Other |
Group Investments |
Group Costs |
Total Group |
% change |
% of total |
|
£'000 |
||||||||
|
UK and Other |
87 681 |
30 828 |
162 825 |
33 387 |
(14 819) |
299 902 |
138.0% |
43.6% |
|
Southern Africa |
35 454 |
198 827 |
150 549 |
18 670 |
(15 993) |
387 507 |
54.0% |
56.4% |
|
Adjusted operating profit |
123 135 |
229 655 |
313 374 |
52 057 |
(30 812) |
687 409 |
82.1% |
100.0% |
|
Non-controlling interest* |
|
|
|
|
|
40 170 |
|
|
|
Adjusted operating profit before non-controlling interests |
|
|
|
|
|
727 579 |
|
|
|
% change |
22.6% |
90.7% |
101.1% |
51.4% |
(8.1%) |
82.1% |
|
|
|
% of total |
17.9% |
33.4% |
45.6% |
7.6% |
(4.5)% |
100.0% |
||
|
|
|
|
|
|
|
|
|
|
|
Total assets £'mn |
1 267 |
16 157 |
39 518 |
1 902 |
- |
58 844 |
|
|
|
|
Private Client |
|
|
|
|
|
|
|
|
|
|
Specialist Banking |
|
|
|
|
||
|
For the year to 31 March 2021 |
Wealth & Investment |
Private Banking |
Corporate, Investment Banking and Other |
Group Investments |
Group Costs |
Total Group |
|
% of total |
|
£'000 |
||||||||
|
UK and Other |
74 340 |
(3 012) |
47 799 |
25 142 |
(18 286) |
125 983 |
|
33.4% |
|
Southern Africa |
26 119 |
123 434 |
108 049 |
9 243 |
(15 246) |
251 599 |
|
66.6% |
|
Adjusted operating profit |
100 459 |
120 422 |
155 848 |
34 385 |
(33 532) |
377 582 |
|
100.0% |
|
Non-controlling interest* |
|
|
|
|
|
(472) |
|
|
|
Adjusted operating profit before non-controlling interests |
|
|
|
|
|
377 110 |
|
|
|
% of total |
26.6% |
31.9% |
41.3% |
9.1% |
(8.9)% |
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets^ £'mn |
1 271 |
13 673 |
34 645 |
1 861 |
- |
51 450 |
|
|
* Profit/(loss) attributable to non-controlling interests predominantly relates to the Investec Property Fund Limited.
^ Restated as detailed below.
Net fee and commission income
|
For the year to 31 March 2022 £'000 |
UK and Other |
Southern Africa |
Total |
|
Wealth & Investment net fee and commission income |
344 029 |
101 286 |
445 315 |
|
Fund management fees/fees for funds under management |
301 950 |
55 697 |
357 647 |
|
Private client transactional fees |
42 735 |
47 351 |
90 086 |
|
Fee and commission expense |
(656) |
(1 762) |
(2 418) |
|
Specialist Banking net fee and commission income |
151 286 |
171 555 |
322 841 |
|
Specialist Banking fee and commission income* |
165 543 |
197 544 |
363 087 |
|
Specialist Banking fee and commission expense |
(14 257) |
(25 989) |
(40 246) |
|
Group Investments net fee and commission income |
- |
50 060 |
50 060 |
|
Group Investments fee and commission income |
- |
53 819 |
53 819 |
|
Group Investments fee and commission expense |
- |
(3 759) |
(3 759) |
|
Net fee and commission income |
495 315 |
322 901 |
818 216 |
|
Annuity fees (net of fees payable) |
318 389 |
253 049 |
571 438 |
|
Deal fees |
176 926 |
69 852 |
246 778 |
** Included in Specialist Banking is fee and commission income of £72.1 million (2021: £63.7 million) for operating lease income which is out of the scope of IFRS 15 - Revenue from contracts with customers.
Balance sheet restatements
Loans and advances to banks and other liabilities
As at 31 March 2021, there was a gross up on balance sheet in loans and advances to banks and other liabilities as a result of client funds being recorded on balance sheet. The prior year balance sheet has been restated to correct the gross up previously reported. This change has no impact on the income statement.
The impact of this change on the 31 March 2021 and 31 March 2020 balance sheet is:
|
|
At 31 March 2021 as previously reported |
Restatement |
At 31 March 2021 restated |
|
£'000 |
|||
|
Assets |
|
|
|
|
Loans and advances to banks |
2 699 317 |
(61 881) |
2 637 436 |
|
Total assets |
51 512 354 |
(61 881) |
51 450 473 |
|
Liabilities |
|
|
|
|
Other liabilities |
2 013 003 |
(61 881) |
1 951 122 |
|
Total liabilities |
46 199 858 |
(61 881) |
46 137 977 |
|
|
At 31 March 2020 as previously reported |
Restatement |
At 31 March 2020 restated |
|
£'000 |
|||
|
Assets |
|
|
|
|
Loans and advances to banks |
2 666 851 |
(13 093) |
2 653 758 |
|
Total assets |
50 557 732 |
(13 093) |
50 544 639 |
|
Liabilities |
|
|
|
|
Other liabilities |
2 211 487 |
(13 093) |
2 198 394 |
|
Total liabilities |
45 660 100 |
(13 093) |
45 647 007 |
The impact of this change on the 31 March 2021 cash flow statement is:
|
|
Year to 31 March 2021 as previously reported |
Restatement |
Year to 31 March 2021 restated |
|
£'000 |
|||
|
Net cash outflow from operating activities |
(557 837) |
(48 788) |
(606 625) |
|
Cash and cash equivalents at the beginning of the year |
7 096 530 |
(13 093) |
7 083 437 |
|
Cash and cash equivalents at the end of the year |
6 551 511 |
(61 881) |
6 489 630 |
Contingent liabilities
Investec Bank plc ("Investec") has been notified by the Office of the Public Prosecutor in Cologne, Germany, that it and certain of its current and former employees may be involved in possible charges relating to historical involvement in German dividend tax arbitrage transactions (known as cum-ex transactions). Investigations are ongoing and no formal proceeding have been issued against Investec by the Office of the Public Prosecutor. Whilst no formal proceedings have been issued against Investec by the Office of the Public Prosecutor, a provision was previously raised to reflect the potential financial outflows that could arise as a result of this matter. In addition, subsequent to the year end date, Investec received certain enquiries in respect of client tax reclaims for the periods 2010-2011 relating to the historical German dividend arbitrage transactions from the German Federal Tax Office (FTO) in Bonn. The FTO has provided limited information and Investec has sought further information and clarification. Given the lack of information, it is not possible for Investec to reliably estimate the potential liability, if any, in relation to this matter.
Investec is cooperating with the German authorities and continues to conduct its own internal investigation into the matters in question. There are factual issues to be resolved which may have legal consequences including financial penalties. In relation to potential civil claims; whilst Investec is not a claimant nor a defendant to any civil claims in respect of cum ex transactions, Investec has received third party notices in relation to two civil proceedings in Germany and may elect to join the proceedings as a third party participant. Investec has itself served third party notices on various participants to these historic transactions in order to preserve statute of limitation on any potential future claims that Investec may seek to bring against those parties, should Investec incur any liability in the future. Investec has also entered into standstill agreements with some third parties in order to suspend the limitation period in respect of the potential civil claims. While Investec is not a claimant nor a defendant to any civil claims at this stage, it cannot rule out the possibility of civil claims by or against Investec in future in relation to the relevant transactions. The Group has not provided further disclosure with respect to these historical dividend arbitrage transactions because it has concluded that such disclosure may be expected to seriously prejudice its outcome.
Events after the reporting date
On 18 March 2022, a circular was published noting the proposed distribution of 15% of the issued Ninety One DLC shares to Investec ordinary shareholders reducing the Investec holding from 25% to 10%.
As at 31 March 2022, a Section 46 ruling was still to be obtained from the South African Revenue Service stipulating the tax consequences of the distribution in South Africa, as well as the outcome of the shareholder vote that was scheduled to take place on 28 April 2022.
The Section 46 ruling was obtained on 20 April 2022 and a SENS and RNS announcement was published to shareholders to inform them of the outcome of the ruling as it was considered information that could have an impact on the vote of an ordinary shareholder.
On 28 April 2022, the General meeting was concluded with a vote in favour of the distribution. The distribution is expected to be effective on 30 May 2022. The distribution was classified as a non-adjusting event after the reporting date as defined by IAS 10 Events after the Reporting Period.
Analysis of assets and liabilities by measurement category
|
At 31 March 2022 |
Total instruments at fair value |
Amortised cost |
Non-financial instruments or scoped out of IFRS 9 |
Total |
|
£'000 |
||||
|
Assets |
|
|
|
|
|
Cash and balances at central banks |
- |
5 998 270 |
- |
5 998 270 |
|
Loans and advances to banks |
- |
2 552 061 |
- |
2 552 061 |
|
Non-sovereign and non-bank cash placements |
29 321 |
655 662 |
- |
684 983 |
|
Reverse repurchase agreements and cash collateral on securities borrowed |
1 882 847 |
2 726 931 |
- |
4 609 778 |
|
Sovereign debt securities |
3 371 704 |
777 163 |
- |
4 148 867 |
|
Bank debt securities |
907 809 |
607 401 |
- |
1 515 210 |
|
Other debt securities |
720 269 |
509 018 |
- |
1 229 287 |
|
Derivative financial instruments |
1 617 240 |
- |
- |
1 617 240 |
|
Securities arising from trading activities |
683 329 |
- |
- |
683 329 |
|
Investment portfolio |
912 872 |
- |
- |
912 872 |
|
Loans and advances to customers |
2 374 500 |
27 186 588 |
- |
29 561 088 |
|
Own originated loans and advances to customers securitised |
- |
375 763 |
- |
375 763 |
|
Other loans and advances |
- |
128 284 |
- |
128 284 |
|
Other securitised assets |
93 087 |
30 801 |
- |
123 888 |
|
Interests in associated undertakings and joint venture holdings |
- |
- |
734 434 |
734 434 |
|
Current taxation assets |
- |
- |
33 653 |
33 653 |
|
Deferred taxation assets |
- |
- |
259 370 |
259 370 |
|
Other assets |
277 889 |
1 349 259 |
441 467 |
2 068 615 |
|
Property and equipment |
- |
- |
335 420 |
335 420 |
|
Investment properties |
- |
- |
820 555 |
820 555 |
|
Goodwill |
- |
- |
258 404 |
258 404 |
|
Software |
- |
- |
9 443 |
9 443 |
|
Other acquired intangible assets |
- |
- |
44 152 |
44 152 |
|
Non-current assets classified as held for sale |
25 880 |
- |
53 349 |
79 229 |
|
|
12 896 747 |
42 897 201 |
2 990 247 |
58 784 195 |
|
Other financial instruments at fair value through profit or loss in respect of liabilities to customers |
59 549 |
- |
- |
59 549 |
|
|
12 956 296 |
42 897 201 |
2 990 247 |
58 843 744 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Deposits by banks |
- |
3 178 668 |
- |
3 178 668 |
|
Derivative financial instruments |
2 537 303 |
- |
- |
2 537 303 |
|
Other trading liabilities |
275 589 |
- |
- |
275 589 |
|
Repurchase agreements and cash collateral on securities lent |
163 877 |
699 408 |
- |
863 285 |
|
Customer accounts (deposits) |
2 945 831 |
37 172 581 |
- |
40 118 412 |
|
Debt securities in issue |
46 192 |
1 997 448 |
- |
2 043 640 |
|
Liabilities arising on securitisation of own originated loans and advances |
- |
238 370 |
- |
238 370 |
|
Liabilities arising on securitisation of other assets |
95 885 |
- |
- |
95 885 |
|
Current taxation liabilities |
- |
- |
41 631 |
41 631 |
|
Deferred taxation liabilities |
- |
- |
19 624 |
19 624 |
|
Other liabilities |
106 987 |
1 330 695 |
878 159 |
2 315 841 |
|
|
6 171 664 |
44 617 170 |
939 414 |
51 728 248 |
|
Liabilities to customers under investment contracts |
56 475 |
- |
- |
56 475 |
|
Insurance liabilities, including unit-linked liabilities |
3 074 |
- |
- |
3 074 |
|
|
6 231 213 |
44 617 170 |
939 414 |
51 787 797 |
|
Subordinated liabilities |
- |
1 316 191 |
- |
1 316 191 |
|
|
6 231 213 |
45 933 361 |
939 414 |
53 103 988 |
Financial instruments at fair value
The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to the valuation technique used.
The different levels are identified as follows:
Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2
- inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
|
|
Fair value category |
|||
|
At 31 March 2022 |
Total instruments at fair value |
Level 1 |
Level 2 |
Level 3 |
|
£'000 |
||||
|
Assets |
|
|
|
|
|
Non-sovereign and non-bank cash placements |
29 321 |
- |
29 321 |
- |
|
Reverse repurchase agreements and cash collateral on securities borrowed |
1 882 847 |
- |
1 882 847 |
- |
|
Sovereign debt securities |
3 371 704 |
3 371 704 |
- |
- |
|
Bank debt securities |
907 809 |
330 177 |
577 632 |
- |
|
Other debt securities |
720 269 |
46 310 |
568 928 |
105 031 |
|
Derivative financial instruments |
1 617 240 |
19 |
1 573 271 |
43 950 |
|
Securities arising from trading activities |
683 329 |
664 422 |
14 127 |
4 780 |
|
Investment portfolio |
912 872 |
30 901 |
8 263 |
873 708 |
|
Loans and advances to customers |
2 374 500 |
- |
1 122 268 |
1 252 232 |
|
Other securitised assets |
93 087 |
- |
- |
93 087 |
|
Other assets |
277 889 |
277 889 |
- |
- |
|
Non-current assets classified as held for sale |
25 880 |
- |
- |
25 880 |
|
Other financial instruments at fair value through profit or loss in respect of liabilities to customers |
59 549 |
59 549 |
- |
- |
|
|
12 956 296 |
4 780 971 |
5 776 657 |
2 398 668 |
|
Liabilities |
|
|
|
|
|
Derivative financial instruments |
2 537 303 |
36 289 |
2 455 245 |
45 769 |
|
Other trading liabilities |
275 589 |
111 273 |
164 316 |
- |
|
Repurchase agreements and cash collateral on securities lent |
163 877 |
- |
163 877 |
- |
|
Customer accounts (deposits) |
2 945 831 |
- |
2 945 831 |
- |
|
Debt securities in issue |
46 192 |
- |
46 192 |
- |
|
Liabilities arising on securitisation of other assets |
95 885 |
- |
- |
95 885 |
|
Other liabilities |
106 987 |
- |
57 569 |
49 418 |
|
Liabilities to customers under investment contracts |
56 475 |
- |
56 475 |
- |
|
Insurance liabilities, including unit-linked liabilities |
3 074 |
- |
3 074 |
- |
|
|
6 231 213 |
147 562 |
5 892 579 |
191 072 |
|
Net financial assets/(liabilities) at fair value |
6 725 083 |
4 633 409 |
(115 922) |
2 207 596 |
Transfers between level 1 and level 2
There were no transfers between level 1 and level 2 in the current year.
Measurement of financial assets and liabilities at level 2
The table below sets out information about the valuation techniques used at the end of the reporting period in measuring financial instruments categorised as level 2 in the fair value hierarchy:
|
|
Valuation basis/techniques |
Main inputs |
|
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, discount rates, volatilities |
|
Bank debt securities |
Discounted cash flow model |
Yield curves |
|
Other debt securities |
Discounted cash flow model |
Yield curves, NCD curves and swap curves, discount rates, external prices, broker quotes |
|
Derivative financial instruments |
Discounted cash flow model, Hermite interpolation, industry standard derivative pricing models including Black-Scholes and Local Volatility |
Discount rate, 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 Discounted cash flow model |
Interest rate curves, implied bond spreads, equity volatilities, yield curves |
|
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 and Local Volatility |
Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves |
|
Other trading liabilities |
Discounted cash flow model, Hermite interpolation, industry standard derivative pricing models including Local Volatility |
Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves |
|
Repurchase agreements and cash collateral on securities lent |
Discounted cash flow model, Hermite interpolation |
Yield curves, discount rates |
|
Customer accounts (deposits) |
Discounted cash flow model |
Yield curves, discount rates |
|
Debt securities in issue |
Discounted cash flow model, Hermite interpolation, industry standard derivative pricing models including Local Volatility |
Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves |
|
Other liabilities |
Discounted cash flow model |
Yield curves |
|
Liabilities to customers under investment contracts |
Current price of underlying unitised assets |
Listed prices |
|
Insurance liabilities, including unit-linked liabilities |
Current price of underlying unitised assets |
Listed prices |
Level 3 financial instruments
The following tables show a reconciliation of the opening balances to the closing balances for level 3 financial instruments. All instruments are at fair value through profit or loss.
|
£'000 |
Investment portfolio |
Loans and advances to customers |
Other securitised assets |
Other balance sheet assets |
Total |
|
Assets |
|
|
|
|
|
|
Balance at 1 April 2021 |
862 528 |
1 047 390 |
107 259 |
176 250 |
2 193 427 |
|
Total gains/(losses) |
(1 434) |
63 202 |
(657) |
22 116 |
83 227 |
|
In the income statement |
(1 434) |
63 768 |
(657) |
22 116 |
83 793 |
|
In the statement of comprehensive income |
- |
(566) |
- |
- |
(566) |
|
Purchases |
65 547 |
1 845 044 |
- |
59 165 |
1 969 756 |
|
Sales |
(69 620) |
(1 079 005) |
- |
(38 836) |
(1 187 461) |
|
Issues |
197 |
- |
- |
- |
197 |
|
Settlements |
(20 544) |
(696 114) |
(13 515) |
(49 391) |
(779 564) |
|
Transfers into level 3 |
621 |
37 262 |
- |
- |
37 883 |
|
Foreign exchange adjustments |
36 413 |
34 453 |
- |
10 337 |
81 203 |
|
Balance at 31 March 2022 |
873 708 |
1 252 232 |
93 087 |
179 641 |
2 398 668 |
For the year to 31 March 2022, investment portfolio of £0.6 million was transferred from level 2 to level 3. The valuation methodologies were reviewed and unobservable inputs were used to determine the fair value. For the year ended 31 March 2022, £37.3 million of loans and advances to customers has been transferred from level 2 to level 3, due to inputs related to the measurement of credit risk to the valuation model becoming unobservable.
|
£'000 |
Liabilities arising on securitisation of other assets |
Other balance sheet liabilities |
Total |
|
Liabilities |
|
|
|
|
Balance at 1 April 2021 |
108 281 |
73 592 |
181 873 |
|
Total (gains)/losses in the income statement |
(2 094) |
18 461 |
16 367 |
|
Settlements |
(10 303) |
(1 451) |
(11 754) |
|
Foreign exchange adjustments |
1 |
4 585 |
4 586 |
|
Balance at 31 March 2022 |
95 885 |
95 187 |
191 072 |
The Group transfers between levels within the fair value hierarchy when the significance of the unobservable inputs change or if the valuation methods change.
The following table quantifies the gains or (losses) included in the income statement and statement of other comprehensive income recognised on level 3 financial instruments:
|
For the year to 31 March 2022 |
Total |
Realised |
Unrealised |
|
£'000 |
|||
|
Total gains or (losses) included in the income statement for the year |
|
|
|
|
Net interest income |
66 069 |
58 038 |
8 031 |
|
Investment income* |
4 901 |
47 671 |
(42 770) |
|
Trading income arising from customer flow |
(2 194) |
(491) |
(1 703) |
|
Trading income arising from balance sheet management and other trading activities |
(1 350) |
- |
(1 350) |
|
|
67 426 |
105 218 |
(37 792) |
|
Total gains or (losses) included in other comprehensive income for the year |
|
|
|
|
Gains on realisation on debt instruments at FVOCI recycled through the income statement |
440 |
440 |
- |
|
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income |
(566) |
- |
(566) |
|
|
(126) |
440 |
(566) |
* Included within the investment income statement balance are unrealised gains of £0.7 million presented within operational items in the income statement.
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 below valuations have been considered taking the ongoing global COVID-19 pandemic into consideration. The following table shows the sensitivity of these fair values to reasonably possible alternative assumptions, determined at a transactional level:
|
At 31 March 2022 |
Balance sheet value |
Significant unobservable input changed |
Range which unobservable input has been changed |
Favourable changes |
Unfavourable changes |
|
£'000 |
£'000 |
£'000 |
|||
|
Assets |
|
|
|
|
|
|
Other debt securities |
105 031 |
Potential impact on income statement |
|
3 199 |
(5 851) |
|
|
|
Credit spreads |
0.74%-2.75% |
141 |
(286) |
|
|
|
Cash flow adjustments |
CPR 8.4% |
6 |
(8) |
|
|
|
Other^ |
^ |
3 052 |
(5 557) |
|
Derivative financial instruments |
43 950 |
Potential impact on income statement |
|
4 643 |
(5 266) |
|
|
|
Volatilities |
5%-18.9% |
15 |
(29) |
|
|
|
Underlying asset value^^ |
^^ |
4 026 |
(4 028) |
|
|
|
Cash flow adjustment |
CPR 8.4% |
- |
(6) |
|
|
|
Other^ |
^ |
602 |
(1 203) |
|
Securities arising from trading activities |
4 780 |
Potential impact on income statement |
|
|
|
|
|
|
Cash flow adjustments |
CPR 11% |
481 |
(635) |
|
Investment portfolio |
873 708 |
Potential impact on income statement |
|
104 279 |
(137 434) |
|
|
|
Price earnings multiple |
5.5x-15x |
9 505 |
(18 206) |
|
|
|
Underlying asset value^^ |
^^ |
9 636 |
(20 897) |
|
|
|
EBITDA |
** |
12 530 |
(9 459) |
|
|
|
Discount rate |
17.5 % |
620 |
(623) |
|
|
|
Cash flows |
** |
1 703 |
(1 370) |
|
|
|
Underlying asset value^^ |
^^ |
1 614 |
(3 214) |
|
|
|
Precious and industrial metal prices |
(5%)-5% |
1 424 |
(1 424) |
|
|
|
Property prices |
# |
51 361 |
(51 361) |
|
|
|
Other^ |
^ |
15 886 |
(30 880) |
|
Loans and advances to customers |
1 252 232 |
Potential impact on income statement |
|
32 727 |
(52 588) |
|
|
|
Credit spreads |
0.15%-34.3% |
10 656 |
(27 586) |
|
|
|
Property value |
** |
7 776 |
(12 428) |
|
|
|
Price earnings multiple |
3.5x-4.2x |
7 824 |
(1 136) |
|
|
|
Underlying asset value^^ |
^^ |
3 641 |
(5 778) |
|
|
|
Other^ |
^ |
2 830 |
(5 660) |
|
|
|
|
|
|
|
|
|
|
Potential impact on other comprehensive income |
|
|
|
|
|
|
Credit spreads |
0.14%-6.17% |
8 440 |
(15 725) |
|
Other securitised assets* |
93 087 |
Potential impact on income statement |
|
|
|
|
|
|
Cash flow adjustments |
CPR 8.4% |
988 |
(1 057) |
|
Non-current assets classified as held for sale |
25 880 |
Potential impact on income statement |
|
|
|
|
|
|
Discount rate |
13%-16% |
567 |
(1 973) |
|
Total level 3 assets |
2 398 668 |
|
|
155 324 |
(220 529) |
|
Liabilities |
|
|
|
|
|
|
Derivative financial instruments |
45 769 |
Potential impact on income statement |
|
(4 046) |
4 060 |
|
|
|
Volatilities |
5%-18.9% |
(21) |
35 |
|
|
|
Underlying asset value^^ |
^^ |
(4 025) |
4 025 |
|
Liabilities arising on securitisation of other assets* |
95 885 |
Potential impact on income statement |
|
|
|
|
|
|
Cash flow adjustments |
CPR 4.4% |
(292) |
299 |
|
Other liabilities |
49 418 |
Potential impact on income statement |
|
|
|
|
|
|
Property prices |
# |
(7 103) |
7 103 |
|
Total level 3 liabilities |
191 072 |
|
|
(11 441) |
11 462 |
|
Net level 3 assets |
2 207 596 |
|
|
143 883 |
(209 067) |
* The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets.
^ Other - The valuation sensitivity has been assessed by adjusting various inputs such as expected cash flows, discount rates, earnings multiples rather than a single input. It is deemed appropriate to reflect the outcome on a portfolio basis for the purposes of this analysis as the sensitivity of the assets cannot be determined through the adjustment of a single input.
^^ Underlying asset values are calculated by reference to a tangible asset, for example property, aircraft or shares.
∗ The EBITDA, cash flows and property values have been stressed on an investment-by-investment and loan-by-loan basis in order to obtain favourable and unfavourable valuations.
# Property values are the underlying input for the valuations where the capitalisation rate when valuing these properties has been stressed by 0.25bps.
In determining the value of level 3 financial instruments, the following are the principal input that can require judgement:
Credit spreads
Credit spreads reflect the additional yield that a market participant would demand for taking exposure to the credit risk of an instrument. The credit spread for an instrument forms part of the yield used in a discounted cash flow calculation. In general a significant increase in a credit spread in isolation will result in a movement in fair value that is unfavourable for the holder of a financial instrument.
Discount rates
Discount rates (including WACC) are used to adjust for the time value of money when using a discounted cash flow valuation method. Where relevant, the discount rate also accounts for illiquidity, market conditions and uncertainty of future cash flows.
Volatilities
Volatility is a key input in the valuation of derivative products containing optionality. Volatility is a measure of the variability or uncertainty in returns for a given derivative underlying. It represents an estimate of how much a particular underlying instrument, parameter or index will change in value over time.
Cash flows
Cash flows relate to the future cash flows which can be expected from the instrument and requires judgement.
EBITDA
The company's earnings before interest, taxes, depreciation and amortisation. This is the main input into a price earnings multiple valuation method.
Price-earnings multiple
The price earnings ratio is an equity valuation multiple. It is a key driver in the valuation of unlisted investments.
Property value and precious and industrial metals
The property value and precious and industrial metals is a key driver of future cash flows on these investments.
Underlying asset value
In instances where cash flows have links to referenced assets, the underlying asset value is used to determine the fair value. The underlying asset valuation is derived using observable market prices sourced from broker quotes, specialist valuers or other reliable pricing sources.
Fair value of financial assets and liabilities at amortised cost
|
At 31 March 2022 |
Carrying amount |
Fair value approximates carrying amount |
Balances where fair values do not approximate carrying amounts |
Fair value of balances that do not approximate carrying amounts |
|
£'000 |
||||
|
Assets |
|
|
|
|
|
Cash and balances at central banks |
5 998 270 |
5 998 270 |
- |
- |
|
Loans and advances to banks |
2 552 061 |
2 180 047 |
372 014 |
371 682 |
|
Non-sovereign and non-bank cash placements |
655 662 |
655 662 |
- |
- |
|
Reverse repurchase agreements and cash collateral on securities borrowed |
2 726 931 |
1 240 798 |
1 486 133 |
1 485 172 |
|
Sovereign debt securities |
777 163 |
- |
777 163 |
789 650 |
|
Bank debt securities |
607 401 |
31 105 |
576 296 |
575 241 |
|
Other debt securities |
509 018 |
193 284 |
315 734 |
316 570 |
|
Loans and advances to customers |
27 186 588 |
13 773 367 |
13 413 221 |
13 400 546 |
|
Own originated loans and advances to customers securitised |
375 763 |
375 763 |
- |
- |
|
Other loans and advances |
128 284 |
67 032 |
61 252 |
61 253 |
|
Other securitised assets |
30 801 |
30 801 |
- |
- |
|
Other assets |
1 349 259 |
1 349 259 |
- |
- |
|
|
42 897 201 |
25 895 388 |
17 001 813 |
17 000 114 |
|
Liabilities |
|
|
|
|
|
Deposits by banks |
3 178 668 |
487 580 |
2 691 088 |
2 622 320 |
|
Repurchase agreements and cash collateral on securities lent |
699 408 |
460 130 |
239 278 |
241 930 |
|
Customer accounts (deposits) |
37 172 581 |
22 996 023 |
14 176 558 |
16 393 583 |
|
Debt securities in issue |
1 997 448 |
342 119 |
1 655 329 |
1 654 527 |
|
Liabilities arising on securitisation of own originated loans and advances |
238 370 |
238 370 |
- |
- |
|
Other liabilities |
1 330 695 |
1 327 371 |
3 324 |
2 419 |
|
Subordinated liabilities |
1 316 191 |
245 670 |
1 070 521 |
1 132 335 |
|
|
45 933 361 |
26 097 263 |
19 836 098 |
22 047 114 |
Investec plc
Incorporated in England and Wales
Registration number: 3633621
LSE ordinary share code: INVP
JSE ordinary share code: INP
ISIN: GB00B17BBQ50
LEI: 2138007Z3U5GWDN3MY22
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 39
Notice is hereby given that a final dividend number 39, being a gross dividend of 14.00000 pence (2021: 7.50000 pence) per ordinary share has been declared by the Board from income reserves in respect of the year ended 31 March 2022, payable to shareholders recorded in the shareholders' register of the Company at the close of business on Friday 22 July 2022.
• For Investec plc shareholders, registered on the United Kingdom share register, through a dividend payment by Investec plc from income reserves of 14.00000 pence per ordinary share
• For Investec plc shareholders, registered on the South African branch register, through a dividend payment by
Investec Limited, on the SA DAS share, payable from income reserves, equivalent to 14.00000 pence per ordinary share.
|
The relevant dates relating to the payment of dividend number 39 are as follows: |
|
|
Last day to trade cum-dividend On the Johannesburg Stock Exchange (JSE) On the London Stock Exchange (LSE) Shares commence trading ex-dividend On the Johannesburg Stock Exchange (JSE) On the London Stock Exchange (LSE) Record date (on the JSE and LSE) Payment date (on the JSE and LSE) |
Tuesday 19 July 2022 Wednesday 20 July 2022
Wednesday 20 July 2022 Thursday 21 July 2022 Friday 22 July 2022 Monday 8 August 2022 |
|
Share certificates on the South African branch register may not be dematerialised or rematerialised between Wednesday 20 July 2022 and Friday 22 July 2022, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday 20 July 2022 and Friday 22 July 2022, 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 14.00000 pence, equivalent to a gross dividend of 279.00000 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 18 May 2022
• Investec plc United Kingdom tax reference number: 2683967322360
• The issued ordinary share capital of Investec plc is 696 082 618 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 279.00000 cents per share paid by Investec Limited on the SA DAS share
• Shareholders registered on the South African branch register who are not exempt from paying the Dividend Tax will receive a net dividend of 223.20000 cents per share (gross dividend of 279.00000 cents per share less Dividend Tax of 55.80000 cents per share) per share paid by Investec Limited on the SA DAS share.
By order of the Board
David Miller
Company Secretary
18 May 2022
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
LEI: 213800CU7SM6O4UWOZ70
Ordinary share dividend announcement
Declaration of dividend number 132
Notice is hereby given that final dividend number 132, being a gross dividend of 279.00000 cents (2021: 150.00000 cents) per ordinary share has been declared by the Board from income reserves in respect of the financial year ended 31 March 2022 payable to shareholders recorded in the shareholders' register of the Company at the close of business on Friday 22 July 2022.
|
The relevant dates relating to the payment of dividend number 132 are as follows: |
|
|
Last day to trade cum-dividend Shares commence trading ex-dividend Record date Payment date |
Tuesday 19 July 2022 Wednesday 20 July 2022 Friday 22 July 2022 Monday 8 August 2022 |
|
The final gross dividend of 279.00000 cents per ordinary share has been determined by converting the Investec plc distribution of 14.00000 pence per ordinary share into Rands using the Rand/Pound Sterling average buy/sell forward rate at 11h00 (SA time) on Wednesday 18 May 2022. |
|
|
Share certificates may not be dematerialised or rematerialised between Wednesday 20 July 2022 and Friday 22 July 2022 both dates inclusive. |
|
Additional information to take note of
• Investec Limited South African tax reference number: 9800/181/71/2
• The issued ordinary share capital of Investec Limited is 310 407 870 ordinary shares
• The dividend paid by Investec Limited is subject to South African Dividend Tax (Dividend Tax) of 20% (subject to any available exemptions as legislated)
• Shareholders who are exempt from paying the Dividend Tax will receive a net dividend of 279.00000 cents per ordinary share
• Shareholders who are not exempt from paying the Dividend Tax will receive a net dividend of 223.20000 cents per ordinary share (gross dividend of 279.00000 cents per ordinary share less Dividend Tax of 55.80000 cents per ordinary share).
By order of the Board
Niki van Wyk
Company Secretary
18 May 2022
Investec plc
Incorporated in England and Wales
Registration number: 3633621
Share code: INPP
ISIN: GB00B19RX541
LEI: 2138007Z3U5GWDN3MY22
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference shares ("preference shares")
Declaration of dividend number 32
Notice is hereby given that preference dividend number 32 has been declared by the Board from income reserves for the period 1 October 2021 to 31 March 2022 amounting to a gross preference dividend of 6.41369 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 10 June 2022 .
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of 6.41369 pence per preference share is equivalent to a gross dividend of 127.01800 cents per share, which has been determined using the Rand/Pound Sterling average buy/sell forward rate as at 11h00 (SA time) on Wednesday 18 May 2022.
|
The relevant dates relating to the payment of dividend number 32 are as follows: |
|
|
Last day to trade cum-dividend On the Johannesburg Stock Exchange (JSE) On the International Stock Exchange (TISE) |
Tuesday 7 June 2022 Wednesday 8 June 2022 |
|
Shares commence trading ex-dividend On the Johannesburg Stock Exchange (JSE) On the International Stock Exchange (TISE) |
Wednesday 8 June 2022 Thursday 9 June 2022 |
|
Record date (on the JSE and TISE) Payment date (on the JSE and TISE) |
Friday 10 June 2022 Monday 20 June 2022 |
|
Share certificates may not be dematerialised or rematerialised between Wednesday 8 June 2022 and Friday 10 June 2022 , both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday 8 June 2022 and Friday 10 June 2022 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 101.61440 cents per preference share for preference shareholders liable to pay the Dividend Tax and 127.01800 cents per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the Board
David Miller
Company Secretary
18 May 2022
Investec plc
Incorporated in England and Wales
Registration number: 3633621
JSE share code: INPPR
ISIN: GB00B4B0Q974
LEI: 2138007Z3U5GWDN3MY22
Rand-denominated preference share dividend announcement
Rand-denominated non-redeemable non-cumulative non-participating perpetual preference shares ("preference shares")
Declaration of dividend number 22
Notice is hereby given that preference dividend number 22 has been declared by the Board from income reserves for the period 1 October 2021 to 31 March 2022 amounting to a gross preference dividend of 344.99315 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 10 June 2022.
|
The relevant dates relating to the payment of dividend number 22 are as follows: |
|
|
Last day to trade cum-dividend Shares commence trading ex-dividend Record date Payment date |
Tuesday 7 June 2022 Wednesday 8 June 2022 Friday 10 June 2022 Monday 13 June 2022 |
|
Share certificates may not be dematerialised or rematerialised between Wednesday 8 June 2022 and Friday 10 June 2022, both dates inclusive. |
|
Additional information for South African resident shareholders of Investec plc
• Investec plc United Kingdom tax reference number: 2683967322360
• The issued Rand-denominated preference share capital of Investec plc is 131 447 preference shares
• The dividend paid by Investec plc to shareholders recorded on the South African branch register is subject to South African Dividend Tax (Dividend Tax) of 20% (subject to any available exemptions as legislated)
• The net dividend amounts to 275.99452 cents per preference share for preference shareholders liable to pay the Dividend Tax and 344.99315 cents per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the Board
David Miller
Company Secretary
18 May 2022
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE share code: INPR
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000063814
LEI: 213800CU7SM6O4UWOZ70
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference shares ("preference shares")
Declaration of dividend number 35
Notice is hereby given that preference dividend number 35 has been declared by the Board from income reserves for the period 1 October 2021 to 31 March 2022 amounting to a gross preference dividend of 282.26249 cents per preference share payable to holders of the non-redeemable non-cumulative non-participating preference shares as recorded in the books of the Company at the close of business on Friday 10 June 2022.
|
The relevant dates for the payment of dividend number 35 are as follows: |
|
|
Last day to trade cum-dividend Shares commence trading ex-dividend Record date Payment date |
Tuesday 7 June 2022 Wednesday 8 June 2022 Friday 10 June 2022 Monday 13 June 2022 |
|
Share certificates may not be dematerialised or rematerialised between Wednesday 8 June 2022 and Friday 10 June 2022 both dates inclusive. |
|
Additional information to take note of
• Investec Limited South African tax reference number: 9800/181/71/2
• The issued preference share capital of Investec Limited is 28 968 863 preference shares
• The dividend paid by Investec Limited is subject to South African Dividend Tax (Dividend Tax) of 20% (subject to any available exemptions as legislated)
• The net dividend amounts to 225.80999 cents per preference share for shareholders liable to pay the Dividend Tax and 282.26249 cents per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the Board
Niki van Wyk
Company Secretary
18 May 2022
Investec plc
Incorporated in England and Wales
Registration number 3633621
JSE ordinary share code: INP
LSE ordinary share code: INVP
ISIN: GB00B17BBQ50
LEI: 2138007Z3U5GWDN3MY22
Registered office:
30 Gresham Street, London
EC2V 7QP, United Kingdom
Registrars in the United Kingdom:
Computershare Investor Services PLC
The Pavilions, Bridgwater Road, Bristol
BS99 6ZZ, United Kingdom
Company Secretary:
David Miller
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06
JSE ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
LEI: 213800CU7SM6O4UWOZ70
Registered office:
100 Grayston Drive
Sandown, Sandton
2196 South Africa
Transfer secretaries in South Africa:
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank
2196 South Africa
Company Secretary:
Niki van Wyk
Directors:
Philip Hourquebie1 (Chair)
Fani Titi2 (Chief Executive)
Nishlan Samujh2 (Finance Director)
Richard Wainwright2* (Executive Director)
Ciaran Whelan3 (Executive Director)
Henrietta Baldock1
Zarina Bassa2 (Senior Independent Director)
David Friedland2
Stephen Koseff2
Nicky Newton-King2*
Jasandra Nyker2*
Vanessa Olver2#
Khumo Shuenyane2
Philisiwe Sibiya2
Brian Stevenson1^
1 British
2 South African
3 Irish
* Appointed 21 May 2021
^ Appointed 22 June 2021
# Appointed 18 May 2022
Charles Jacobs resigned 30 June 2021
Perry Crosthwaite and Lord Malloch-Brown resigned 5 August 2021
Sponsor:
Investec Bank Limited
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