Interim Management Statement

RNS Number : 2486A

Investec PLC

31 July 2008

 

Investec Limited Incorporated in the Republic of South Africa Registration number 1925/002833/06 JSE share code: INL ISIN: ZAE000081949

Investec plc Incorporated in England and Wales Registration number 3633621 JSE share code: INP ISIN: GB00B17BBQ50

As part of the dual listed company ('DLC') structure, Investec plc and Investec Limited notify both the London Stock Exchange and the JSE Limited of matters which are required to be disclosed under the Disclosure and Listing Rules of the United Kingdom Listing Authority (the 'UKLA') and/or the JSE Listing Requirements.

Accordingly we advise of the following:

Investec plc - Interim Management Statement

31 July 2008

This Interim Management Statement is issued by Investec in accordance with the UK Listing Authority's Disclosure and Transparency rules. Unless stated otherwise, key trends and figures highlighted below refer to the three months ended 30 June 2008 and the corresponding period last year.

Overview of operating fundamentals

Trading conditions and markets have remained volatile during the first three months of the group's 2009 financial year. The group has, however, continued to benefit from its strong recurring revenue base driving operating profit before tax ahead of that in the corresponding period in the prior year, with the South African and UK operations recording an increase and the Australian operations a decline in operating profit. 

Since 31 March 2008 core loans and advances grew by 7% to GBP13.7 billion, customer deposits grew by 4% to GBP12.6 billion and third party assets under management increased by 4% to GBP54.7 billion supporting the group's growing base of recurring income. 

Disciplined risk and financial management remain important elements of Investec's sustainable growth strategy. The group continues to maintain a high level of liquidity and capital well in excess of minimum regulatory requirements. As at 30 June 2008 the capital adequacy ratio of Investec plc (applying UK Financial Services Authority rules to its capital base) was 15.2% and the capital adequacy ratio of Investec Limited (applying South African Reserve Bank rules to its capital base) was 14.2%. Furthermore, the group currently has approximately GBP5.4 billion of cash and near cash available to support its activities. As a result of the weaker credit cycle we have seen a marginal decline in the performance of the loan portfolio. Impairment losses on loans and advances have thus increased year on year, although at a lower level than that recorded in the second half of the 2008 financial year. 

Outlook and strategy 

Although the group has traded ahead of  the equivalent period last year, the operating environment remains challenging and the outlook uncertain. The group's strategy remains to build a diversified and balanced portfolio of businesses. The group will continue to leverage off its existing platforms, seeking to create additional operational efficiencies and organic growth opportunities across all geographies. The scale and diversity of the group's business and earnings should support its long-term growth objectives and enable it to navigate through this period of continued uncertainty. 

As in prior years the group will be holding a pre-close briefing on 18 September 2008 at which it will provide further detail on the performance of its businesses. 

On behalf of the board

Hugh Herman (Chairman), Stephen Koseff (Chief Executive Officer) and Bernard Kantor (Managing Director)

Notes: 

1.      Please note that matters highlighted above may contain forward looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to:

–         the further development of standards and interpretations under International Financial Reporting Standards (IFRS) applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS.

–         domestic and global economic and business conditions.

–         market related risks.

•          A number of these factors are beyond the group’s control.

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

•          Any forward looking statements made are based on the knowledge of the group at 31 July 2008.

 

2.      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 the group’s individual companies are reported in the local currencies in which they are domiciled, including Rands, Australian Dollars and Euros. These results are then translated into Pounds Sterling at the applicable foreign currency exchange rates for inclusion in our 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:

	30 June 2008		31 March 2008		30 June 2007
Currency per GBP1.00	Period end	Average	Period end	Average	Period end	Average
South African Rand	15.62	15.26	16.17	14.31	14.12	14.10
Australian Dollar	2.07	2.10	2.18	2.32	2.36	2.38
Euro	1.26	1.27	1.25	1.42	1.49	1.48
US Dollar	1.99	1.98	1.99	2.01	2.01	1.99

3.       The following disclosures are made with respect to Basel II quarterly disclosure requirements.

	Investec plc	IBUK*	IBAL*	Investec Limited	IBL*
As at 30 June 2008	GBP mn	GBP mn	AUD mn	ZAR mn	ZAR mn
Primary capital (Tier 1)	1,033	830	635	14,497	13,335
Other capital (Tier 2 and 3)	752	624	120	5,649	5,372
	1,785	1,454	755	20,146	18,706
Less: impairments	(230)	(182)	(207)	(722)	(483)
Net qualifying capital	1,555	1,272	548	19,424	18,224
Risk-weighted assets (banking and trading)	10,217	8,560	3,047	136,932	122,880
Capital requirements	817	685	457	13,009	11,674
Credit risk	675	576	393	11,175	10,361
Equity risk	16	15	15	410	397
Market risk	29	29	4	163	66
Operational risk	97	65	45	1,261	850
Capital adequacy ratio	15.2%	14.9%	18.0%	14.2%	14.8%
Tier 1 ratio	9.3%	9.3%	15.0%	10.2%	10.6%
Capital adequacy ratio - pre operational risk	17.3%	16.4%	20.0%	15.7%	16.0%
Tier 1 ratio - pre operational risk	10.6%	10.3%	16.7%	11.3%	11.4%

*IBUK is Investec Bank (UK) Limited; IBAL is Investec Bank (Australia) Limited and IBL is Investec Bank Limited

Timetable:

Pre-close briefing: 18 September 2008

Half-year: 30 September 2008

Release of interim results: 13 November 2008

For further information please contact:

Investec Investor Relations                        

UK: [phone]                    

South Africa: [phone]

[e-mail]

About Investec

Investec is an international specialist banking group that provides a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia as well as certain other countries. The group was established in 1974 and currently has approximately 5 900 permanent employees.

Investec focuses on delivering distinctive profitable solutions for its clients in five core areas of activity namely, Private Client Activities, Capital Markets, Investment Banking, Asset Management and Property Activities.

In July 2002 the Investec group implemented a dual listed company structure with listings on the London and Johannesburg Stock Exchanges. The combined group's current market capitalisation is approximately GBP2.2 billion.

 

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