Results for the six months ended 30 September 2021

RNS Number : 7407S
Investec PLC
18 November 2021
 

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

NSX share code: IVD

BSE share code: INVESTEC

ISIN: ZAE000081949

LEI: 213800CU7SM6O4UWOZ70

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

JSE share code: INP
ISIN: GB00B17BBQ50
LEI: 2138007Z3U5GWDN3MY22

 

Reviewed combined consolidated financial  results for the six months ended 30 September 2021

 

Highlights for 30 September 2021 (1H2022) compared to 30 September 2020 (1H2021)

• Revenue grew 30.5% supported by the strength of our client franchises and improved market conditions.

• Adjusted earnings per share increased 134.8% to 26.3p (1H2021: 11.2p), ahead of comparable pre-COVID levels (September 2019).

• Wealth & Investment funds under management (FUM) increased 8.6% to £63.0 billion (31 March 2021: £58.0 billion) underpinned by net inflows of £1.5 billion, market recovery and good investment performance.

• Loan books within Specialist Banking grew 7.2% to £28.3 billion (31 March 2021: £26.4 billion) given increased activity levels and continued client acquisition in both geographies.

• The cost to income ratio improved to 64.0% (1H2021: 72.0%), with operating costs increasing 11.7%. Fixed operating expenditure increased 3.3% reflecting continued cost discipline.

• Pre-provision adjusted operating profit increased 61.2% to £336.0 million (1H2021: £208.5 million), 9.3% ahead of September 2019.

• Expected credit loss (ECL) impairment charges were 84.5% lower, resulting in a credit loss ratio (CLR) of 7bps (31 March 2021: 35bps; 1H2021: 47bps), reflecting strong asset quality and higher recoveries.

• Return on equity (ROE) was 11.2% for the period (1H2021: 5.3%) and return on tangible equity (ROTE) was 12.1% (1H2021: 5.8%).

• Tangible net asset value (TNAV) per share increased 10.2% (annualised) to 445.2p (31 March 2021: 423.6p). Net asset value (NAV) per share increased 9.3% (annualised) to 479.2p (31 March 2021: 458.0p).

• Maintained strong capital, funding, and liquidity positions.

• The Board has proposed an interim dividend of 11.0p (1H2021: 5.5p) resulting in a payout ratio of 41.8%.

• The Board has further resolved to distribute a 15% holding in Ninety One to shareholders.

 

Updated guidance for 31 March 2022 (FY2022)

• Updated FY2022 adjusted earnings per share guidance of between 48p and 53p (Range guided in May 2021: 36p - 41p).

 

Fani Titi, Group Chief Executive commented:

"The group delivered a strong first half result, underpinned by resilient client franchises, strong revenue momentum and sound asset quality - resulting in adjusted earnings per share of 26.3p, ahead of comparable pre-COVID levels.

I am pleased to share that the Board has proposed an interim dividend of 11.0p relative to 5.5p in 1H2021.

Further, in line with our strategy to optimise the allocation of capital, the Board has resolved to distribute a 15% holding in Ninety One to our shareholders.

I am grateful for the hard work and commitment of my colleagues, which has enabled us to deliver this solid result.

The strength of the relationships we have built with our clients is reflected in the trust they have continued to place in our people and our organisation. The changes made to simplify and focus the group are bearing fruit, positioning us well for the future. Our resilient business model and strong balance sheet will support our drive to achieve sustainable long-term value and growth for our colleagues, clients, shareholders, and societies in which we live."

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 six months ended 30 September 2021 (1H2022). Unless stated otherwise, comparatives relate to the group's operations for the six-month period ended 30 September 2020 (1H2021). The average Rand/Pound Sterling exchange rate appreciated by 9.6% relative to 1H2021.

Performance

1H2022

1H2021

Variance

%

change

Neutral currency

% change

Total operating income before expected credit losses (£'m)

951.1 

 

729.0 

 

222.1 

 

30.5 

%

24.8 

%

Operating costs (£'m)

598.5 

 

535.8 

 

62.7 

 

11.7 

%

7.8 

%

Adjusted operating profit (£'m)

325.7 

 

142.5 

 

183.2 

 

128.6 

%

116.9 

%

Adjusted earnings attributable to shareholders (£'m)

242.3 

 

104.4 

 

137.9 

 

132.2 

%

121.2 

%

Adjusted basic earnings per share (pence)

26.3 

 

11.2 

 

15.1 

 

134.8 

%

123.2 

%

Basic earnings per share (pence)

25.0 

 

9.6 

 

15.4 

 

160.4 

%

146.9 

%

Headline earnings per share (pence)

24.7 

 

9.2 

 

15.5 

 

168.5 

%

154.3 

%

Dividend per share (pence)

11.0 

 

5.5 

 

 

 

 

Dividend payout ratio

41.8 

%

49.1 

%

 

 

 

CLR (credit loss ratio)

0.07 

%

0.47 

%

 

 

 

Cost to income ratio

64.0 

%

72.0 

%

 

 

 

ROE (return on equity)

11.2 

%

5.3 

%

 

 

 

ROTE (return on tangible equity)

12.1 

%

5.8 

%

 

 

 

 

Balance sheet

1H2022

FY2021

Variance

% change

Neutral currency % change

Funds under management (£'bn)

63.4 

 

58.4 

 

5.0 

 

8.5 

%

8.4 

%

Customer accounts (deposits) (£'bn)

36.4 

 

34.4 

 

2.0 

 

5.5 

%

5.3 

%

Core loans and advances (£'bn)

28.3 

 

26.4 

 

1.9 

 

7.2 

%

7.0 

%

Cash and near cash (£'bn)

13.9 

 

13.2 

 

0.7 

 

5.4 

%

5.3 

%

NAV per share (pence)

479.2 

 

458.0 

 

21.2 

 

4.6 

%

4.3 

%

TNAV per share (pence)

445.2 

 

423.6 

 

21.6 

 

5.1 

%

4.8 

%

 

Performance, capital and leverage by geography

1H2022

1H2021

Variance

% change

Neutral currency % change

Investec Limited (Southern Africa)

 

 

 

 

 

Adjusted operating profit (£'m)

191.9 

 

99.1 

 

92.8 

 

93.6 

%

73.5 

%

Cost to income ratio

52.5 

%

58.7 

%

 

 

 

ROE

12.0 

%

8.1 

%

 

 

 

ROTE

12.0 

%

8.1 

%

 

 

 

CET1

13.9 

%

12.2 

%

 

 

 

Leverage

7.6 

%

7.6 

%

 

 

 

 

 

 

 

 

 

Investec plc (UK & Other)

 

 

 

 

 

Adjusted operating profit (£'m)

133.8 

 

43.4 

 

90.4 

 

208.6 

%

n/a

Cost to income ratio

73.3 

%

81.1 

%

 

 

 

ROE

10.5 

%

2.8 

%

 

 

 

ROTE

12.2 

%

3.3 

%

 

 

 

CET1

11.1 

%

11.2 

%

 

 

 

Leverage

7.8 

%

7.9 

%

 

 

 

 

Interim dividend

The Board has proposed an interim dividend of 11.0p (1H2021: 5.5p), translating to a 41.8% payout ratio, within the group's 30% to 50% payout range.

Distribution of 15% holding in Ninety One

Given the group's strong capital generation; capital optimisation strategy; and in line with previous communication that 15% of Ninety One is surplus to our capital requirements, the Board has resolved to distribute the 15% holding to shareholders whilst retaining an approximate 10% interest.

The distribution will be subject to regulatory, shareholder and other approvals.

Announcements will be made in due course updating shareholders on the distribution terms and process.

Outlook

Based on the group's performance to date, we have updated our FY2022 adjusted earnings per share guidance to between 48p - 53p (Range guided in May 2021: 36p - 41p). We will provide further guidance in our March 2022 pre-close briefing.

The macro-economic environment is improving; however, global recovery remains uneven. Underlying consumer and business confidence in our core markets will continue to be tested by the ongoing presence of COVID-19, along with the consequences of Brexit in the UK and the slow progress in implementing economic reforms in South Africa.

Enquiries

Investec Investor Relations

Results: Qaqambile Dwayi
Tel: +27 (0) 83 457 2134 (mobile)

General enquiries:
Tel: +27 (0) 11 286 7070 or investorrelations@investec.com

Brunswick (SA PR advisers)

Graeme Coetzee
Tel: +27 (0) 63 685 6053 (mobile)

Lansons (UK PR advisers)

Tom Baldock
Tel: +44 (0) 78 6010 1715 (mobile)

Presentation/conference call details

Investec management will host its interim results presentation on Thursday 18 November at 11:00 (SA) / 09:00 (UK).

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 8,200+ 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

Our performance reflects higher income levels and significantly lower impairment charges, partly offset by increased operating costs. The group's underlying client franchises showed resilience with continued momentum in client acquisition in both geographies which underpinned loan and deposit growth within banking, and net inflows in wealth management.

The prior period was negatively impacted by the effects of general economic contraction brought on by COVID-19 related lockdowns which affected transactional levels, net interest margins, valuations, and impairments. In this reporting period, we have experienced the positive effects of higher client activity, favourable liability repricing and sustained market improvement. Additionally, risk management and risk reduction costs associated with the UK structured products book were immaterial in the current period.

Pre-provision adjusted operating profit increased 61.2% to £336.0 million (1H2021: £208.5 million).

 

Revenue increased 30.5% to £951.1 million (1H2021: £729.0 million)

Net interest income increased 29.7% to £459.8 million (1H2021: £354.4 million) driven by higher average lending books and lower funding costs across the group as liabilities repriced and as the UK business grew into the elevated liquidity built up in the early months of the pandemic.

Non-interest revenue (NIR) increased by 31.2% to £491.4 million (1H2021: £374.6 million).

• Net fee and commission income increased by 18.6% to £391.2 million (1H2021: £329.8 million) driven by improved client activity across the specialist bank and higher average FUM in Wealth & Investment.

• Investment income decreased by 79.3% to £3.5 million (1H2021: £16.9 million) due to the non-repeat of realisations in the prior period.

• Share of post-taxation profit of associates and joint venture holdings increased 155.1% to £41.5 million (1H2021: £16.3 million) due to improved performance across the Group Investments' portfolio.

• Trading income arising from customer flow was £65.1 million compared to a loss of £8.5 million in the prior period as risk management and risk reduction costs associated with the UK structured products book were c.£52 million lower than the prior period (underpinned by risk mitigation strategies implemented on the book and improving markets). We expect these costs to remain immaterial should markets remain stable.

• Trading income arising from balance sheet management and other trading activities cost £18.5 million compared to income of £8.1 million in the prior period, mainly resulting from currency and interest rate hedges on the balance sheet.

• Other operating income of £8.5 million (1H2021: £12.0 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 84.5% to £10.2 million (1H2021: £66.0 million) resulting in a credit loss ratio of 7bps (31 March 2021: 35bps; 2H2021: 24bps; 1H2021: 47bps)

Overall, the group has maintained prior period post-model adjustments and in certain instances, introduced further adjustments following model driven provision releases given improved macro-economic factors. The post-model adjustments account for risks which management believe are not reflected in the models.

Operating costs increased 11.7% to £598.5 million (1H2021: £535.8 million) driven by higher variable remuneration

The cost to income ratio improved to 64.0% from 72.0% in the prior period. Operating costs increased by 11.7%, with fixed costs increasing 3.3% in the period.

Taxation

The taxation charge on adjusted operating profit was £63.7 million (1H2021: £20.9 million), resulting in an effective tax rate of 21.2% (1H2021: 18.8%).

In the UK, the lower effective tax rate of 11.0% (1H2021: 18.5%) was driven by higher deferred tax assets arising from enacted higher tax rates. We anticipate this effect to reduce in the second half as the enacted bank surcharge reduces from 8% to 3%. The surcharge is levied on bank profits in addition to the UK corporation tax.

In SA, the higher rate of 27.1% (1H2021: 18.9%) was influenced by one-off adjustments to certain deferred tax assets.

The effects of the above largely offset each other.

Profit or loss attributable to other non-controlling interests

The profit attributable to other non-controlling interests was £16.7 million compared to a loss of £15.3 million in the prior period. This relates to the profit and loss attributable to non-controlling interests in the Investec Property Fund (IPF).

Funding and liquidity

Customer deposits grew 5.5% to £36.4 billion (31 March 2021: £34.5 billion). Cash and near cash of £13.9 billion (£7.3 billion in Investec plc and R134.6 billion in Investec Limited) at 30 September 2021 represents 38.4% of customer deposits.

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 period to 30 September 2021 with the three-month average of its LCR at 158.0% and an NSFR of 110.6%.

• For Investec plc, the LCR and NSFR are calculated using the relevant EU regulation, applying our own interpretations where required. The LCR reported to the PRA at 30 September 2021 was 284% and the internally calculated NSFR was 127% at 30 September 2021.

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 13.9% and 7.6% for Investec Limited (partial AIRB) and 11.1% and 7.8% for Investec plc (standardised approach) respectively.

Segmental performance

 

Wealth & Investment

Adjusted operating profit from the Wealth & Investment business increased by 41.4% to £57.7 million (1H2021: £40.8 million).

Wealth & Investment

Southern Africa

UK & Other

 

1H2022

1H2021

Variance

1H2022

1H2021

Variance

 

£'m

£'m

£'m

%

% in Rands

£'m

£'m

£'m

%

Operating income

49.4 

 

36.5 

 

12.9 

 

35.4 

%

22.6 

%

173.9 

 

155.1 

 

18.8 

 

12.1 

%

Operating costs

(33.8)

 

(24.5)

 

(9.3)

 

38.0 

%

24.9 

%

(131.7)

 

(126.2)

 

(5.5)

 

4.4 

%

Adjusted operating profit

15.6 

 

12.0 

 

3.6 

 

30.1 

%

17.8 

%

42.2 

 

28.9 

 

13.3 

 

46.1 

%

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 17.8% (1H2021: R264 million).

The SA business reported 11.7% growth in FUM to R372.1 billion (31 March 2021: R333.0 billion) supported by R10.1 billion of discretionary and annuity net inflows (non-discretionary net inflows of R6.8 billion), strong investment performance and favourable market conditions.

Revenue grew by 22.6% supported by sustained inflows into our offshore product range and higher average discretionary and annuity assets.

Operating costs increased 24.9%, driven by higher variable remuneration and increased average headcount of investment specialists, wealth managers and information technology (IT) personnel. The cost to income ratio increased to 68.5% (1H2021: 67.2%).

UK & Other Wealth & Investment

Adjusted operating profit for UK & Other Wealth & Investment increased 46.1% to £42.2 million (1H2021: £28.9 million).

The business achieved record FUM during the period, reporting £44.7 billion at 30 September 2021 (31 March 2021: £41.7 billion), supported by net inflows of £627 million.

Revenue grew by 12.1% supported by higher market levels, positive net organic growth in FUM of 3.0%, as well as favourable investment performance. Commission income returned to normalised levels as the exceptionally high trading volumes seen at the onset of COVID-19 were not repeated.

Operating costs were higher by 4.4% driven by continued investment in technology, increased discretionary expenditure as COVID-19 related restrictions eased and the normalisation of variable staff compensation in line with business performance. One-off costs in the base of c.£3.5 million (relating to headcount reduction) were not repeated.

The UK domestic business (which accounts for 97.1% of FUM) reported an operating margin of 26.0% (1H2021: 20.5%), while a combined operating margin for UK & Other of 24.3% (1H2021: 18.6%) was achieved.

Specialist Banking

Adjusted operating profit from Specialist Banking increased 143.8% to £257.9 million (1H2021: £105.8 million).

Specialist Banking

Southern Africa

UK & Other

 

1H2022

1H2021

Variance

1H2022

1H2021

Variance

 

£'m

£'m

£'m

%

% in Rands

£'m

£'m

£'m

%

Operating income

352.7 

 

262.8 

 

89.9 

 

34.2 

%

21.6 

%

328.7 

 

273.8 

 

55.0 

 

20.1 

%

ECL impairment charges

(4.0)

 

(24.2)

 

20.2 

 

(83.5 

%)

(84.8 

%)

(4.9)

 

(39.9)

 

35.0 

 

(87.8 

%)

Operating costs

(175.6)

 

(145.6)

 

(29.9)

 

20.5 

%

9.1 

%

(239.4)

 

(221.5)

 

(17.9)

 

8.1 

%

Loss attributable to NCI

0.3 

 

- 

 

0.3 

 

100.0 

%

100.0 

%

- 

 

0.5 

 

(0.5)

 

(100.0 

%)

Adjusted operating profit

173.4 

 

92.9 

 

80.5 

 

86.7 

%

69.1 

%

84.5 

 

12.9 

 

71.6 

 

554.8 

%

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 69.1% to R3 460 million (1H2021: R2 046 million).

Strong revenue growth of 21.6%, was positively impacted by recovery in NIR as the bank saw increased client activity levels across the board, liability repricing, lower impairments, higher average loan balances and good client acquisition. This was partly offset by higher investment write-downs on certain portfolios in the current period, mark-to-market (MTM) losses in balance sheet management and the non-repeat of prior period gains from hedging non-ZAR investments. 

Net interest income increased 17.4% driven by lower funding costs and higher average lending books (particularly within the private bank).

Non-interest revenue increased 33.1% driven primarily by higher fee income on the back of higher lending and forex (FX) turnover, increased structuring fees and recovery in point-of-sale relative to the prior period. Client flow trading income increased as equity derivatives, FX and interest rate trading desks took advantage of favourable market movements in a more predictable trading environment.

Expected credit loss impairment charges decreased 84.8% to R81 million, resulting in a CLR of 4bps (31 March 2021: 18bps; 1H2021: 35bps). The decline was mainly driven by higher recoveries in the period and lower specific impairments. Modelled impairments (stage 1 and 2) reduced given the improved economic outlook. Post-model overlays were retained given the uncertainty that remains.

The cost to income ratio was lower at 49.7% (1H2021: 55.4%) given continued cost discipline and higher revenues. Total operating costs increased 9.1%, with fixed costs increasing by 3.7%.

Net core loans grew by 3.4% to R297.1 billion (31 March 2021: R287.3 billion) driven primarily by the private clients' loan book. Strong growth in corporate lending turnover was offset by elevated repayment rates as clients used excess liquidity to pay down facilities.

UK & Other Specialist Banking

Adjusted operating profit for the UK bank increased substantially to £84.5 million (1H2021: £12.9 million).

Revenue grew by 20.1% influenced by lower cost of funds, increased loan origination, FX flows, reduced structured products book costs, and client acquisition within Private Banking. Corporate lending activity increased across portfolios supported by new client acquisition.

Net interest income increased 24.6% driven by lower cost of funding and higher average lending books, partially offset by the impact of the disposal of the Australian corporate book in March 2021.

Non-interest revenue increased 10.9% mainly attributable to:

• Lower risk management and risk reduction costs associated with the UK structured products book (£1.2 million in 1H2022 vs £53.0 million in 1H2021), offset by

• Decreased investment income due to lower net realisations in the current period, and

• Reduced balance sheet management and other trading activities, driven by costs associated with the early redemption of a senior bond and interest rate hedges on the balance sheet.

Expected credit loss impairment charges decreased 87.8% to £4.9 million, resulting in a credit loss ratio of 9bps (31 March 2021: 56bps; 1H2021: 60bps). Specific impairments in the period and run-rate ECL charges on the performing book totalled £8.1 million and the effect of updated macro-economic scenarios together with the new management overlay and in-model adjustments resulted in an ECL release of £3.2 million.  This includes an increase in post-model ECL overlay provisions of £5.0 million to £21.0 million, taking into consideration the uncertainties that management believe remain in the environment.

Operating costs increased 8.1% driven by higher variable remuneration and discretionary spend in line with revenue growth. The increase was offset by cost savings from reduced headcount across the business. Fixed costs were well contained, declining 3.5% over the period. The cost to income ratio reduced to 72.8% (1H2021: 80.7%).

Net core loans grew by 11.0% (12.4% excluding Australia) to £13.7 billion (31 March 2021: £12.3 billion) driven by strong private clients book growth (up 19.6%) in the period and continued client acquisition. Demand for corporate credit was strong across several portfolios with book growth of 7.8% (9.5% excluding Australia) since year end.

Group Investments

Group Investments includes the group's 25% holding in Ninety One, 47.4% stake in the IEP Group, 24.31% held in the Investec Property Fund (IPF) and some other equity investments.

 

Group Investments

Southern Africa

UK & Other

 

1H2022

1H2021

Variance

1H2022

1H2021

Variance

 

£'m

£'m

£'m

%

% in Rands

£'m

£'m

£'m

%

Operating income (net of ECL charges)

28.6 

 

(12.7)

 

41.3 

 

325.1 

%

306.3 

%

16.5 

 

11.8 

 

4.7 

 

39.9 

%

Operating costs

(0.9)

 

(0.6)

 

(0.3)

 

60.8 

%

44.6 

%

- 

 

- 

 

- 

 

- 

 

(Profit) /loss attributable to NCI

(17.0)

 

14.7 

 

(31.7)

 

(215.5 

%)

(206.8 

%)

- 

 

- 

 

- 

 

- 

 

Adjusted operating profit

10.7 

 

1.4 

 

9.2 

 

647.5 

%

643.7 

%

16.5 

 

11.8 

 

4.7 

 

39.9 

%

Totals and variance determined in £'000 which may result in rounding differences.

Adjusted operating profit from Group Investments increased by 105.5% to £27.2 million (1H2021: £13.2 million) driven by:

• improved performance in the underlying investee companies within IEP,

• growth in earnings from Ninety One in the period under review, and

• lower negative fair value adjustments in the property portfolio and the non-repeat of prior period losses in IPF's UK associate investment.

Group Costs

Group Costs decreased by 1.7% to £17.0 million (1H2021: £17.3 million).

Further information

Additional information on each of the business units is provided in the group interim report 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

17 November 2021

 

 

 

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 interim 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 including the ongoing impact of the COVID-19 pandemic, 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 six month period ended 30 September 2021 has accordingly been prepared on the going concern basis.

Unless the context indicates otherwise, all comparatives included in the commentary above relate to the period ended 30 September 2020.

Amounts represented on a neutral currency basis for income statement items assume that the relevant average exchange rates for the period ended 30 September 2021 remain the same as those in the prior period. Amounts represented on a neutral currency basis for balance sheet items assume that the relevant closing exchange rates at 30 September 2021 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 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:

 

Six months to

Year ended

Six months to

30 September 2021

31 March 2021

30 September 2020

Currency

Closing

Average

Closing

Average

Closing

Average

per GBP1.00

South African Rand

20.29

19.94

20.36

21.33

21.58

22.05

Australian Dollar

1.86

1.85

1.81

1.82

1.80

1.85

Euro

1.16

1.16

1.17

1.12

1.10

1.12

US Dollar

1.35

1.39

1.38

1.31

1.29

1.27

Profit Forecast

The following matters highlighted in this announcement contain forward-looking statements:

• Adjusted EPS is expected to be between 48p and 53p in FY2022

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 17 November 2021.

This forward looking statement represents a profit forecast under the Listing Rules. The Profit Forecast relates to the year ending 31 March 2022.

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 30 September 2021 reviewed interim 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 COVID-19 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.

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 reviewed 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 30 September 2021, 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 six months ended 30 September 2021 are consistent with those adopted in the financial statements for year ended 31 March 2021.

The combined consolidated financial results for the period ended 30 September 2021 have been reviewed by Ernst & Young LLP and Ernst & Young Inc., who expressed an unmodified review conclusion. A copy of the auditors review opinion is available for inspection at the company's registered office together with the financial statements identified in the auditors report or on our website.

The financial results have been prepared under the supervision of Nishlan Samujh, the Group Finance Director. The interim financial statements for the six months ended 30 September 2021 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 17 November 2021.

• The information in the group's announcement for the six months ended 30 September 2021, which was approved by the board of directors on 17 November 2021, 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 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.

• 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 30 September 2021 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 9.6% against the comparative six-month period ended 30 September 2020, and the closing rate has appreciated by 0.3% 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

 

Six months to 30 Sept 2021

Six months to 30 Sept 2020

%

change

Neutral currency^ Six months to 30 Sept 2021

Neutral

currency

%

change

Six months to 30 Sept 2021

Six months to 30 Sept 2020

%

change

Adjusted operating profit before taxation (million)

£326 

 

£142

128.6 

%

116.9 

%

R3 143

106.7 

%

Earnings attributable to shareholders (million)

£250 

 

£109 

 

129.4 

%

117.4 

%

R2 405

106.9 

%

Adjusted earnings attributable to shareholders (million)

£242 

 

£104 

 

132.2 

%

121.2 

%

R2 309

109.3 

%

Adjusted earnings per share

26.3 

p

11.2 

p

134.8 

%

25.0p

123.2 

%

524c

248c

111.3 

%

Basic earnings per share

25.0 

p

9.6 

p

160.4 

%

23.7p

146.9 

%

499c

212c

135.4 

%

Headline earnings per share

24.7 

p

9.2 

p

168.5 

%

23.4p

154.3 

%

494c

213c

131.9 

%

 

 

Results in Pounds Sterling

Results in Rands

 

At 30 Sept 2021

At 31 March 2021

%

change

Neutral currency^^ At 30 Sept 2021

Neutral

currency

%

change

At 30 Sept 2021

At 31 March 2021

%

change

Net asset value per share

479.2 

p

458.0 

p

4.6 

%

477.9p

4.3 

%

9 723c

9 326c

4.3 

%

Tangible net asset value per share

445.2 

p

423.6 

p

5.1 

%

443.9p

4.8 

%

9 033c

8 624c

4.7 

%

Total equity (million)

£5 514 

 

£5 312 

 

3.8 

%

£5 503

3.6 

%

R111 880

R108 161

3.4 

%

Total assets (million)

£53 454 

 

£51 512 

 

3.8 

%

£53 356

3.6 

%

 R1 084 593

R1 048 867

3.4 

%

Core loans (million)

£28 336 

 

£26 438 

 

7.2 

%

£28 284

7.0 

%

R574 951

R538 320

6.8 

%

Cash and near cash balances (million)

£13 949 

 

£13 229 

 

5.4 

%

5.3 

%

R269 364

5.1 

%

Customer accounts (deposits) (million)

£36 353 

 

£34 449 

 

5.5 

%

£36 284

5.3 

%

R737 610

R701 446

5.2 

%

Funds under management (million)

£63 419 

 

£58 436 

 

8.5 

%

£63 352

8.4 

%

R1 286 775

R1 189 872

8.1 

%

^   For income statement items we have used the average Rand: Pound Sterling exchange rate that was applied in the prior period, i.e. 22.05.

^^   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

Six months to
30 Sept 2021

Six months to

 30 Sept 2020^

Year to

 31 March 2021

Interest income

985 473 

 

1 009 374 

 

1 922 299 

 

Interest expense

(525 699)

 

(654 971)

 

(1 144 193)

 

Net interest income

459 774 

 

354 403 

 

778 106 

 

Fee and commission income

414 181 

 

349 668 

 

791 153 

 

Fee and commission expense

(22 966)

 

(19 842)

 

(42 275)

 

Investment income

3 491 

 

16 859 

 

32 002 

 

Share of post-taxation profit of associates and joint venture holdings

41 502 

 

16 272 

 

42 459 

 

Trading income/(loss) arising from

 

 

 

- customer flow

65 141 

 

(8 527)

 

35 566 

 

- balance sheet management and other trading activities

(18 452)

 

8 144 

 

(18 903)

 

Other operating income

8 461 

 

11 983 

 

22 953 

 

Total operating income before expected credit loss impairment charges

951 132 

 

728 960 

 

1 641 061 

 

Expected credit loss impairment charges

(10 237)

 

(65 974)

 

(99 438)

 

Operating income

940 895 

 

662 986 

 

1 541 623 

 

Operating costs

(598 453)

 

(535 755)

 

(1 164 513)

 

Operating profit before goodwill, acquired intangibles and strategic actions

342 442 

 

127 231 

 

377 110 

 

Impairment of goodwill

- 

 

- 

 

(11 599)

 

Impairment of associates and joint venture holdings

- 

 

- 

 

(16 773)

 

Amortisation of acquired intangibles

(7 773)

 

(7 603)

 

(15 287)

 

Amortisation of acquired intangibles of associates

(4 628)

 

(4 625)

 

(9 268)

 

Closure and rundown of the Hong Kong direct investments business

(596)

 

(2 158)

 

7 386 

 

Profit before taxation

329 445 

 

112 845 

 

331 569 

 

Taxation on operating profit before goodwill, acquired intangibles and strategic actions

(63 720)

 

(20 892)

 

(74 539)

 

Taxation on acquired intangibles and strategic actions

620 

 

1 558 

 

1 712 

 

Profit after taxation

266 345 

 

93 511 

 

258 742 

 

Loss/(profit) attributable to other non-controlling interests

(16 712)

 

15 255 

 

472 

 

Loss attributable to non-controlling interests relating to impairments of associates

- 

 

- 

 

9 126 

 

Earnings attributable to shareholders

249 633 

 

108 766 

 

268 340 

 

^  Restated as detailed below.

Earnings per share

 

Six months to
30 Sept 2021

Six months to

 30 Sept 2020

Year to

 31 March 2021

Earnings per share - pence

25.0 

 

9.6 

 

25.2 

 

Diluted earnings per share - pence

24.4 

 

9.5 

 

24.9 

 

 

Consolidated statement of total comprehensive income

£'000

Six months to
30 Sept 2021

Six months to

 30 Sept 2020

Year to

 31 March 2021

Profit after taxation

266 345 

 

93 511 

 

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^

(5 822)

 

(4 427)

 

242 

 

Fair value movements on debt instruments at FVOCI taken directly to other

comprehensive income^

4 004 

 

84 566 

 

152 355 

 

Gain on realisation of debt instruments at FVOCI recycled through the

income statement^

(847)

 

(1 446)

 

(717)

 

Foreign currency adjustments on translating foreign operations

14 903 

 

17 837 

 

111 779 

 

Items that will never be reclassified to the income statement

 

 

 

Effect of rate change on deferred taxation relating to adjustment for IFRS 9

1 049 

 

828 

 

380 

 

Fair value movements on equity instruments at FVOCI taken directly to other

comprehensive income^

1 043 

 

736 

 

1 778 

 

Remeasurement of net defined benefit pension liability

- 

 

(32)

 

(39)

 

Net gain/(loss) attributable to own credit risk^

4 928 

 

(1 725)

 

(850)

 

Total comprehensive income

285 603 

 

189 848 

 

523 670 

 

Total comprehensive income attributable to ordinary shareholders

247 456 

 

171 379 

 

448 637 

 

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

18 780 

 

(1 159)

 

37 846 

 

Total comprehensive income attributable to perpetual preferred securities

19 367 

 

19 628 

 

37 187 

 

Total comprehensive income

285 603 

 

189 848 

 

523 670 

 

^  Net of taxation of £3.4 million (30 September 2020: £22.3 million; 31 March 2021: £38.5 million).

 

Combined consolidated balance sheet

At

£'000

30 Sept 2021

31 March 2021

30 Sept 2020^

Assets

 

 

 

Cash and balances at central banks

3 957 654 

 

3 517 100 

 

2 477 636 

 

Loans and advances to banks

2 602 105 

 

2 699 317 

 

3 079 807 

 

Non-sovereign and non-bank cash placements

475 875 

 

439 841 

 

363 350 

 

Reverse repurchase agreements and cash collateral on securities borrowed

3 820 376 

 

3 575 713 

 

4 964 729 

 

Sovereign debt securities

3 837 115 

 

3 711 623 

 

4 264 692 

 

Bank debt securities

1 440 998 

 

1 121 730 

 

590 173 

 

Other debt securities

1 246 231 

 

1 364 235 

 

1 427 174 

 

Derivative financial instruments

1 206 299 

 

1 714 743 

 

1 885 399 

 

Securities arising from trading activities

1 085 375 

 

1 024 671 

 

658 552 

 

Investment portfolio

928 741 

 

909 050 

 

994 543 

 

Loans and advances to customers

27 966 330 

 

26 041 087 

 

24 855 877 

 

Own originated loans and advances to customers securitised

372 602 

 

401 912 

 

307 532 

 

Other loans and advances

109 006 

 

102 135 

 

100 659 

 

Other securitised assets

133 690 

 

140 087 

 

122 892 

 

Interests in associated undertakings and joint venture holdings

695 756 

 

679 157 

 

722 227 

 

Current taxation assets

38 141 

 

60 325 

 

61 523 

 

Deferred taxation assets

216 290 

 

246 622 

 

256 581 

 

Other assets

1 733 188 

 

2 165 438 

 

1 850 502 

 

Property and equipment

344 729 

 

329 972 

 

341 343 

 

Investment properties

788 540 

 

832 061 

 

799 588 

 

Goodwill

259 842 

 

259 805 

 

270 991 

 

Software

11 363 

 

12 574 

 

13 045 

 

Other acquired intangible assets

51 700 

 

58 968 

 

66 224 

 

Non-current assets classified as held for sale

75 752 

 

51 783 

 

87 248 

 

 

53 397 698 

 

51 459 949 

 

50 562 287 

 

Other financial instruments at fair value through profit

or loss in respect of liabilities to customers

56 662 

 

52 405 

 

37 178 

 

 

53 454 360 

 

51 512 354 

 

50 599 465 

 

Liabilities

 

 

 

Deposits by banks

2 294 873 

 

2 403 712 

 

3 319 727 

 

Derivative financial instruments

1 973 996 

 

2 190 487 

 

1 727 813 

 

Other trading liabilities

225 498 

 

326 189 

 

577 821 

 

Repurchase agreements and cash collateral on securities lent

1 179 581 

 

1 003 312 

 

1 692 050 

 

Customer accounts (deposits)

36 353 007 

 

34 449 430 

 

32 551 697 

 

Debt securities in issue

1 971 123 

 

1 892 319 

 

1 815 257 

 

Liabilities arising on securitisation of own originated loans and advances

155 200 

 

160 646 

 

73 042 

 

Liabilities arising on securitisation of other assets

104 215 

 

108 281 

 

109 107 

 

Current taxation liabilities

54 104 

 

78 790 

 

95 940 

 

Deferred taxation liabilities

19 448 

 

40 333 

 

50 727 

 

Other liabilities

2 116 098 

 

2 013 003 

 

2 025 931 

 

 

46 447 143 

 

44 666 502 

 

44 039 112 

 

Liabilities to customers under investment contracts

54 018 

 

49 798 

 

34 494 

 

Insurance liabilities, including unit-linked liabilities

2 644 

 

2 607 

 

2 684 

 

 

46 503 805 

 

44 718 907 

 

44 076 290 

 

Subordinated liabilities

1 436 763 

 

1 480 951 

 

1 447 948 

 

 

47 940 568 

 

46 199 858 

 

45 524 238 

 

Equity

 

 

 

Ordinary share capital

247 

 

247 

 

247 

 

Ordinary share premium

1 517 852 

 

1 517 852 

 

1 517 852 

 

Treasury shares

(296 714)

 

(267 508)

 

(261 729)

 

Other reserves

(767 299)

 

(788 222)

 

(910 668)

 

Retained income

3 939 028 

 

3 772 628 

 

3 699 652 

 

Ordinary shareholders' equity

4 393 114 

 

4 234 997 

 

4 045 354 

 

Perpetual preference share capital and premium

174 579 

 

174 053 

 

172 349 

 

Shareholders' equity excluding non-controlling interests

4 567 693 

 

4 409 050 

 

4 217 703 

 

Other Additional Tier 1 securities in issue

373 705 

 

335 111 

 

296 809 

 

Non-controlling interests

572 394 

 

568 335 

 

560 715 

 

- Perpetual preferred securities issued by subsidiaries

73 006 

 

72 750 

 

71 106 

 

- Non-controlling interests in partially held subsidiaries

499 388 

 

495 585 

 

489 609 

 

Total equity

5 513 792 

 

5 312 496 

 

5 075 227 

 

Total liabilities and equity

53 454 360 

 

51 512 354 

 

50 599 465 

 

^  Restated as detailed below.

Condensed consolidated statement of changes in equity

£'000

Six months to
30 Sept 2021

Six months to

 30 Sept 2020

Year to

 31 March 2021

Balance at the beginning of the period

5 312 496 

 

4 897 632 

 

4 897 632 

 

Total comprehensive income

285 603 

 

189 848 

 

523 670 

 

Share-based payments adjustments

9 515 

 

18 353 

 

19 121 

 

Dividends paid to ordinary shareholders

(72 361)

 

- 

 

(53 346)

 

Dividends paid to perpetual preference shareholders included in non-controlling interests and Other Additional Tier 1 security holders

(19 367)

 

(19 628)

 

(37 187)

 

Dividends paid to non-controlling interests

(14 721)

 

(11 029)

 

(32 385)

 

Redemption of perpetual preference shares

- 

 

- 

 

(6 274)

 

Issue of Other Additional Tier 1 securities in issue

38 294 

 

- 

 

35 508 

 

Net equity impact of non-controlling interest movements

- 

 

1 687 

 

(6 128)

 

Movement of treasury shares

(26 718)

 

(1 861)

 

(10 161)

 

Net equity movements of interests in associated undertakings

1 051 

 

225 

 

(17 954)

 

Balance at the end of the period

5 513 792 

 

5 075 227 

 

5 312 496 

 

Condensed consolidated cash flow statement

£'000

Six months to
30 Sept 2021

Six months to

 30 Sept 2020^

Year to

 31 March 2021

Net cash inflow/(outflow) from operating activities

551 100 

 

(2 250 741)

 

(557 837)

 

Net cash inflow/(outflow) from investing activities

35 705 

 

(6 967)

 

1 414 

 

Net cash outflow from financing activities

(204 181)

 

(65 532)

 

(134 626)

 

Effects of exchange rates on cash and cash equivalents

6 554 

 

49 930 

 

146 030 

 

Net increase/(decrease) in cash and cash equivalents

389 178 

 

(2 273 310)

 

(545 019)

 

Cash and cash equivalents at the beginning of the period

6 551 511 

 

7 096 530 

 

7 096 530 

 

Cash and cash equivalents at the end of the period

6 940 689 

 

4 823 220 

 

6 551 511 

 

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).

^  Restated as detailed below.

 

Combined consolidated segmental analysis

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

 

 

Specialist Banking^

 

 

 

 

 

Private Client

 

 

 

 

 

 

For the six months to 30 September 2021

Wealth & Investment

Private Banking

Corporate, Investment Banking and Other

Group Investments

Group costs

Total group

% change

% of total

£'000

UK and Other

42 175 

 

11 290 

 

73 205 

 

16 490 

 

(9 339)

 

133 821 

 

208.6 

%

41.1 

%

Southern Africa

15 559 

 

100 735 

 

72 644 

 

10 674 

 

(7 703)

 

191 909 

 

93.6 

%

58.9 

%

Adjusted operating profit

57 734 

 

112 025 

 

145 849 

 

27 164 

 

(17 042)

 

325 730 

 

128.6 

%

100.0 

%

Non-controlling interest*

 

 

 

 

 

16 712 

 

 

 

Adjusted operating profit before non-controlling interests

 

 

 

 

 

342 442 

 

 

 

% change

41.4 

%

170.6 

%

126.6 

%

105.5 

%

(1.7 

%)

128.6 

%

 

% of total

17.7 

%

34.4 

%

44.8 

%

8.3 

%

(5.2)

%

100.0 

%

 

 

 

 

 

 

 

 

 

Total assets £'mn

1 369 

 

14 970 

 

35 293 

 

1 822 

 

- 

 

53 454 

 

 

 

 

 

 

Specialist Banking^

 

 

 

 

 

Private Client

 

 

 

 

 

 

For the six months to 30 September 2020^

Wealth & Investment

Private Banking

Corporate, Investment Banking and Other

Group Investments

Group costs

Total group

 

% of total

£'000

UK and Other

28 877 

 

(3 148)

 

16 051 

 

11 791 

 

(10 208)

 

43 363 

 

 

31.8 

%

Southern Africa

11 960 

 

44 550 

 

48 320 

 

1 428 

 

(7 135)

 

99 123 

 

 

68.2 

%

Adjusted operating profit

40 837 

 

41 402 

 

64 371 

 

13 219 

 

(17 343)

 

142 486 

 

 

100.0 

%

Non-controlling interest*

 

 

 

 

 

(15 255)

 

 

 

Adjusted operating profit before non-controlling interests

 

 

 

 

 

127 231 

 

 

 

% of total

28.7 

%

29.0 

%

45.2 

%

9.3 

%

(12.2)

%

100.0 

%

 

 

 

 

 

 

 

 

 

 

Total assets £'mn

1 332 

 

12 332 

 

34 941 

 

1 994 

 

- 

 

50 599 

 

 

 

 

 

 

 

 

 

 

 

 

*  Profit/(loss) attributable to other non-controlling interests predominantly relates to the Investec Property Fund Limited.

^  The results of Investec Private Banking and Investec Corporate, Investment Banking and Other were disclosed as separate segments for the first time in the 31 March 2021 results. Investec Private Banking and Investec Corporate, Investment Banking and Other were previously presented as components of the Investec Specialist Bank. Comparatives have been restated.

 

Net fee and commission income

For the six months to 30 September 2021

£'000

UK and

Other

Southern

Africa

Total

Wealth & Investment net fee and commission income

173 045 

 

47 494 

 

220 539 

 

Fund management fees/fees for funds under management

152 287 

 

 

179 641 

 

Private client transactional fees

21 103 

 

 

42 081 

 

Fee and commission expense

(345)

 

(838)

 

(1 183)

 

Specialist Banking net fee and commission income

57 982 

 

87 167 

 

145 149 

 

Specialist Banking fee and commission income^

64 916 

 

 

165 070 

 

Specialist Banking fee and commission expense

(6 934)

 

(12 987)

 

(19 921)

 

Group Investments net fee and commission income

- 

 

25 527 

 

25 527 

 

Group Investments fee and commission income

- 

 

 

27 389 

 

Group Investments fee and commission expense

- 

 

(1 862)

 

(1 862)

 

Net fee and commission income

231 027 

 

160 188 

 

391 215 

 

Annuity fees (net of fees payable)

159 969 

 

 

283 036 

 

Deal fees

71 058 

 

37 121 

 

108 179 

 

^  Included in Specialist Banking  is fee income of £40.2 million (2020: £32.7 million) for operating lease income which is out of the scope of IFRS 15 - Revenue from contracts with customers.

 

Income statement restatements

Interest income and fee and commission income restatement

For the six months to 30 September 2020, management identified that revenue relating to services rendered to customers (for the facilitation of import and export transactions) was previously reported within interest income rather than within fee and commission income.

As a result, interest income and fee and commission income for the prior period have been restated. The restatement has no impact on total operating income in the income statement, headline earnings, the statement of cash flows and the balance sheet.

The impact of the restatement on the 30 September 2020 income statement is:

 

 

Six months to

30 Sept 2020

as previously reported

Reclassification

 

Six months to

30 Sept 2020

restated

£'000

Interest income

1 014 392 

 

(5 018)

 

1 009 374 

 

Fee and commission income

344 650 

 

5 018 

 

349 668 

 

Balance sheet restatements

 

Current taxation assets and other assets

At 31 March 2021, current taxation assets,  which were previously reported within other assets, were reported as a separate line item in accordance with IAS 1 Presentation of Financial Statements. As at 30 September 2020, current taxation assets of 61.5 million have been re-presented to reflect the same basis.

Gilts and total return swaps reclassification

As at 31 March 2021, amounts previously reported within sovereign debt securities, derivative financial instruments and securities arising from trading were corrected to present them as reverse repurchase agreements and cash collateral on securities borrowed. This change in accounting treatment has been made where sovereign debt securities have been purchased at the same time as total return swaps with the same counterparty, such that the combined position has the economic substance of secured lending. The prior year balance sheet has been restated to reflect the same basis.  This change has no impact on the income statement.

The impact of this change on the 30 September 2020 balance sheet is:

 

At 30 Sept 2020

as previously reported

Reclassification

At 30 Sept 2020

restated

£'000

Assets

 

 

 

Reverse repurchase agreements and cash collateral on securities borrowed

4 124 591

840 138 

 

4 964 729 

 

Sovereign debt securities

4 898 936

(634 244)

 

4 264 692 

 

Derivative financial instruments

1 885 922

(523)

 

1 885 399 

 

Securities arising from trading activities

929 143

(270 591)

 

658 552 

 

Total assets

50 664 685

(65 220)

 

50 599 465 

 

Liabilities

 

 

 

Derivative financial instruments

1 793 033 

 

(65 220)

 

1 727 813 

 

Total liabilities

45 589 458

(65 220)

 

45 524 238 

 
             

 

Cash flow statement restatements

As at 31 March 2021, amounts previously reported within loans and advances to banks were correctly presented as cash and cash equivalents. This change has been made to include items previously reported as loans and advances to banks identified as short term in nature, with a maturity date of less than three months, which therefore meet the definition of cash and cash equivalents.

The prior year has been restated as follows:

 

Six months to

30 Sept 2020

as previously reported

Restatement

Six months to

30 Sept 2020

restated

£'000

Net cash outflow from operating activities

(3 038 706)

 

787 965 

 

(2 250 741)

 

Net cash outflow from investing activities

(6 967)

 

- 

 

(6 967)

 

Net cash outflow from financing activities

(59 855)

 

(5 677)

 

(65 532)

 

Effects of exchange rate changes on cash and cash equivalents

41 935 

 

7 995 

 

49 930 

 

Net (decrease)/increase in cash and cash equivalents

(3 063 593)

 

790 283 

 

(2 273 310)

 

Cash and cash equivalents at the beginning of the period

6 193 708 

 

902 822 

 

7 096 530 

 

Cash and cash equivalents at the end of the period

3 130 115 

 

1 693 105 

 

4 823 220 

 

In addition to the above, we have also re-presented the operating section of the cash flow statement in our preliminary financial results as the disaggregation between operating assets and operating liabilities does not provide additional meaningful information to users.

Contingent liabilities

The group assessed its exposure to legal proceedings and the appropriateness of related provisions recognised on the balance sheet as at 30 September 2021. It was concluded that the provisions held as at 31 March 2021, in relation to the matters set out in Note 54 of the Annual Financial Statements, continue to reflect our best estimate of the potential financial outflows that may arise.

 

 

Analysis of assets and liabilities by measurement category

At 30 September 2021

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

- 

 

3 957 654 

 

- 

 

3 957 654 

 

Loans and advances to banks

- 

 

2 602 105 

 

- 

 

2 602 105 

 

Non-sovereign and non-bank cash placements

11 747 

 

464 128 

 

- 

 

475 875 

 

Reverse repurchase agreements and cash collateral on securities borrowed

829 570 

 

2 990 806 

 

- 

 

3 820 376 

 

Sovereign debt securities

3 249 220 

 

587 895 

 

- 

 

3 837 115 

 

Bank debt securities

852 836 

 

588 162 

 

- 

 

1 440 998 

 

Other debt securities

654 361 

 

591 870 

 

- 

 

1 246 231 

 

Derivative financial instruments

1 206 299 

 

- 

 

- 

 

1 206 299 

 

Securities arising from trading activities

1 085 375 

 

- 

 

- 

 

1 085 375 

 

Investment portfolio

928 741 

 

- 

 

- 

 

928 741 

 

Loans and advances to customers

2 402 915 

 

25 563 415 

 

- 

 

27 966 330 

 

Own originated loans and advances to customers securitised

- 

 

372 602 

 

- 

 

372 602 

 

Other loans and advances

- 

 

109 006 

 

- 

 

109 006 

 

Other securitised assets

101 851 

 

31 839 

 

- 

 

133 690 

 

Interests in associated undertakings and joint venture holdings

- 

 

- 

 

695 756 

 

695 756 

 

Current taxation assets

- 

 

- 

 

38 141 

 

38 141 

 

Deferred taxation assets

- 

 

- 

 

216 290 

 

216 290 

 

Other assets

272 394 

 

991 181 

 

469 613 

 

1 733 188 

 

Property and equipment

- 

 

- 

 

344 729 

 

344 729 

 

Investment properties

- 

 

- 

 

788 540 

 

788 540 

 

Goodwill

- 

 

- 

 

259 842 

 

259 842 

 

Software

- 

 

- 

 

11 363 

 

11 363 

 

Other acquired intangible assets

- 

 

- 

 

51 700 

 

51 700 

 

Non-current assets classified as held for sale

23 373 

 

- 

 

52 379 

 

75 752 

 

 

11 618 682 

 

38 850 663 

 

2 928 353 

 

53 397 698 

 

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

56 662 

 

- 

 

- 

 

56 662 

 

 

11 675 344 

 

38 850 663 

 

2 928 353 

 

53 454 360 

 

 

 

 

 

 

Liabilities

 

 

 

 

Deposits by banks

- 

 

2 294 873 

 

- 

 

2 294 873 

 

Derivative financial instruments

1 973 996 

 

- 

 

- 

 

1 973 996 

 

Other trading liabilities

225 498 

 

- 

 

- 

 

225 498 

 

Repurchase agreements and cash collateral on securities lent

50 237 

 

1 129 344 

 

- 

 

1 179 581 

 

Customer accounts (deposits)

1 358 492 

 

34 994 515 

 

- 

 

36 353 007 

 

Debt securities in issue

89 476 

 

1 881 647 

 

- 

 

1 971 123 

 

Liabilities arising on securitisation of own originated loans

and advances

- 

 

155 200 

 

- 

 

155 200 

 

Liabilities arising on securitisation of other assets

104 215 

 

- 

 

- 

 

104 215 

 

Current taxation liabilities

- 

 

- 

 

54 104 

 

54 104 

 

Deferred taxation liabilities

- 

 

- 

 

19 448 

 

19 448 

 

Other liabilities

99 214 

 

1 249 058 

 

767 826 

 

2 116 098 

 

 

3 901 128 

 

41 704 637 

 

841 378 

 

46 447 143 

 

Liabilities to customers under investment contracts

54 018 

 

- 

 

- 

 

54 018 

 

Insurance liabilities, including unit-linked liabilities

2 644 

 

- 

 

- 

 

2 644 

 

 

3 957 790 

 

41 704 637 

 

841 378 

 

46 503 805 

 

Subordinated liabilities

336 750 

 

1 100 013 

 

- 

 

1 436 763 

 

 

4 294 540 

 

42 804 650 

 

841 378 

 

47 940 568 

 

 

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 30 September 2021

Total instruments at fair value

Level 1

Level 2

Level 3

£'000

Assets

 

 

 

 

Non-sovereign and non-bank cash placements

11 747 

 

- 

 

11 747 

 

- 

 

Reverse repurchase agreements and cash collateral on securities borrowed

829 570 

 

- 

 

829 570 

 

- 

 

Sovereign debt securities

3 249 220 

 

3 249 220 

 

- 

 

- 

 

Bank debt securities

852 836 

 

338 939 

 

513 897 

 

- 

 

Other debt securities

654 361 

 

76 211 

 

489 081 

 

89 069 

 

Derivative financial instruments

1 206 299 

 

4 897 

 

1 156 603 

 

44 799 

 

Securities arising from trading activities

1 085 375 

 

1 075 735 

 

4 628 

 

5 012 

 

Investment portfolio

928 741 

 

30 692 

 

11 319 

 

886 730 

 

Loans and advances to customers

2 402 915 

 

- 

 

1 058 205 

 

1 344 710 

 

Other securitised assets

101 851 

 

- 

 

- 

 

101 851 

 

Other assets

272 394 

 

272 394 

 

- 

 

- 

 

Non-current assets classified as held for sale

23 373 

 

- 

 

- 

 

23 373 

 

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

56 662 

 

56 662 

 

- 

 

- 

 

 

11 675 344 

 

5 104 750 

 

4 075 050 

 

2 495 544 

 

Liabilities

 

 

 

 

Derivative financial instruments

1 973 996 

 

34 526 

 

1 892 559 

 

46 911 

 

Other trading liabilities

225 498 

 

92 365 

 

133 133 

 

- 

 

Repurchase agreements and cash collateral on securities lent

50 237 

 

- 

 

50 237 

 

- 

 

Customer accounts (deposits)

1 358 492 

 

- 

 

1 358 492 

 

- 

 

Debt securities in issue

89 476 

 

- 

 

89 476 

 

- 

 

Liabilities arising on securitisation of other assets

104 215 

 

- 

 

- 

 

104 215 

 

Other liabilities

99 214 

 

- 

 

52 876 

 

46 338 

 

Liabilities to customers under investment contracts

54 018 

 

- 

 

54 018 

 

- 

 

Insurance liabilities, including unit-linked liabilities

2 644 

 

- 

 

2 644 

 

- 

 

Subordinated liabilities

336 750 

 

336 750 

 

- 

 

- 

 

 

4 294 540 

 

463 641 

 

3 633 435 

 

197 464 

 

Net financial assets at fair value

7 380 804 

 

4 641 109 

 

441 615 

 

2 298 080 

 

Transfers between level 1 and level 2

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

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 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

10 417 

 

29 787 

 

864 

 

20 974 

 

62 042 

 

In the income statement

10 417 

 

28 292 

 

864 

 

20 974 

 

60 547 

 

In the statement of comprehensive income

- 

 

1 495 

 

- 

 

- 

 

1 495 

 

Purchases

54 937 

 

1 102 958 

 

- 

 

18 962 

 

1 176 857 

 

Sales

(30 177)

 

(566 082)

 

- 

 

(18 892)

 

(615 151)

 

Settlements

(16 688)

 

(315 936)

 

(6 272)

 

(38 868)

 

(377 764)

 

Transfers into level 3

- 

 

34 095 

 

- 

 

- 

 

34 095 

 

Foreign exchange adjustments

5 713 

 

12 498 

 

- 

 

3 827 

 

22 038 

 

Balance at 30 September 2021

886 730 

 

1 344 710 

 

101 851 

 

162 253 

 

2 495 544 

 

For the period ended 30 September 2021, £34.1 million of loans and advances to customers measured at fair value has been transferred from level 2 to level 3, due to inputs related to the measurement of credit risk becoming unobservable in the market.

£'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 losses in the income statement

627 

 

20 664 

 

21 291 

 

Repayment

- 

 

(1 179)

 

(1 179)

 

Settlements

(4 693)

 

(803)

 

(5 496)

 

Foreign exchange adjustments

- 

 

975 

 

975 

 

Balance as at 30 September 2021

 

 

104 215 

 

93 249 

 

197 464 

 

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 recognised on level 3 financial instruments:

For the year to 30 September 2021

Total

Realised

Unrealised

£'000

Total gains or (losses) included in the income statement for the year

 

 

 

Net interest income

31 876 

 

21 955 

 

9 921 

 

Fee and commission (expense)

- 

 

- 

 

- 

 

Investment income*

8 534 

 

13 426 

 

(4 892)

 

Trading income arising from customer flow

(1 154)

 

- 

 

(1 154)

 

Trading income arising from balance sheet management and other trading activities

- 

 

- 

 

- 

 

 

39 256 

 

35 381 

 

3 875 

 

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

302 

 

302 

 

- 

 

Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income

1 495 

 

- 

 

1 495 

 

 

1 797 

 

302 

 

1 495 

 

*  Included within the investment income statement balance are unrealised gains of £0.3 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 pandemic of COVID-19 into consideration. The following table shows the sensitivity of these fair values to reasonably possible alternative assumptions, determined at a transactional level:

At 30 September 2021

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

89 069 

 

Potential impact on income statement

 

3 390 

 

(6 327)

 

 

 

Credit spreads

0.7%-1.0%

86 

 

(219)

 

 

 

Cash flow adjustments

CPR 6.1%

3 

 

(63)

 

 

 

Other^

^

3 301 

 

(6 045)

 

 

 

 

 

 

 

Derivative financial instruments

44 799 

 

Potential impact on income statement

 

3 839 

 

(4 309)

 

 

 

Volatilities

5.3% - 12.6%

4 

 

(8)

 

 

 

Underlying asset value^^

^^

3 363 

 

(3 363)

 

 

 

Cashflow adjustment

CPR 6.1%

7 

 

(7)

 

 

 

Other^

^

465 

 

(931)

 

 

 

 

 

 

 

Securities arising from trading activities

5 012 

 

Potential impact on income statement

 

 

 

 

 

Cash flow adjustments

CPR 9.8%

647 

 

(879)

 

Investment portfolio

886 730 

 

Potential impact on income statement

 

103 097 

 

(135 820)

 

 

 

Price earnings multiple

5.5x-15.5x

14 125 

 

(26 689)

 

 

 

Underlying asset value^^

^^

1 681 

 

(3 356)

 

 

 

EBITDA

**

19 278 

 

(19 188)

 

 

 

Discount rate

17.5%-18.5%

4 462 

 

(5 379)

 

 

 

Cash flows

**

1 857 

 

(1 379)

 

 

 

Underlying asset value^^

**

2 916 

 

(3 442)

 

 

 

Precious and industrial metal prices

(5%)-5%

1 350 

 

(1 350)

 

 

 

Property values

#

39 330 

 

(39 330)

 

 

 

Other^

^

18 098 

 

(35 707)

 

 

 

 

 

 

 

Loans and advances to customers

1 344 710 

 

Potential impact on income statement

 

31 560 

 

(50 142)

 

 

 

Credit spreads

0.2% -34.3%

8 390 

 

(16 486)

 

 

 

Price earnings multiple

3.5x-4.1x

8 158 

 

(6 011)

 

 

 

Underlying asset value^^

^^

4 380 

 

(8 457)

 

 

 

Property values

^

5 159 

 

(8 242)

 

 

 

Other^

^

5 473 

 

(10 946)

 

 

 

Potential impact on other comprehensive income

 

 

 

 

 

Credit spreads

0.3% -3.4%

5 740 

 

(12 345)

 

 

 

 

 

 

 

Other securitised assets

101 851 

 

Potential impact on income statement

 

 

 

 

 

Cash flow adjustments

CPR 6.1%

1 344 

 

(1 247)

 

Non-current assets classified as held for sale

23 373 

 

Potential impact on income statement

 

 

 

 

 

Discount rates

13%-15%

657 

 

(780)

 

Total level 3 assets

2 495 544 

 

 

 

150 274 

 

(211 849)

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Derivative financial instruments

46 911 

 

Potential impact on income statement

 

(3 400)

 

3 436 

 

 

 

Volatilities

5.3% -20.5%

(37)

 

73 

 

 

 

Underlying asset value^^

^^

(3 363)

 

3 363 

 

Liabilities arising on securitisation of other assets

104 215 

 

Potential impact on income statement

 

 

 

 

 

Cash flow adjustments

CPR 6.1%

(131)

 

225 

 

Other liabilities

46 338 

 

Potential impact on income statement

 

 

 

 

 

Property values

#

(5 462)

 

5 462 

 

Total level 3 liabilities

197 464 

 

 

 

(8 993)

 

9 123 

 

Net level 3 assets

2 298 080 

 

 

 

 

 

*  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 30 September 2021

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

3 957 654 

 

3 957 654 

 

- 

 

- 

 

Loans and advances to banks

2 602 105 

 

2 596 469 

 

5 636 

 

5 349 

 

Non-sovereign and non-bank cash placements

464 128 

 

464 128 

 

- 

 

- 

 

Reverse repurchase agreements and cash collateral on securities borrowed

2 990 806 

 

1 155 867 

 

1 834 939 

 

1 836 036 

 

Sovereign debt securities

587 895 

 

4 297 

 

583 598 

 

589 101 

 

Bank debt securities

588 162 

 

54 779 

 

533 383 

 

546 062 

 

Other debt securities

591 870 

 

160 542 

 

431 328 

 

434 595 

 

Loans and advances to customers

25 563 415 

 

12 968 122 

 

12 595 293 

 

12 571 064 

 

Own originated loans and advances to customers securitised

372 602 

 

372 602 

 

- 

 

- 

 

Other loans and advances

109 006 

 

61 954 

 

47 052 

 

46 845 

 

Other securitised assets

31 839 

 

31 839 

 

- 

 

- 

 

Other assets

991 181 

 

991 011 

 

170 

 

165 

 

 

38 850 663 

 

22 819 264 

 

16 031 399 

 

16 029 217 

 

Liabilities

 

 

 

 

Deposits by banks

2 294 873 

 

283 588 

 

2 011 285 

 

2 042 693 

 

Repurchase agreements and cash collateral on securities lent

1 129 344 

 

384 937 

 

744 407 

 

744 730 

 

Customer accounts (deposits)

34 994 515 

 

16 954 659 

 

18 039 856 

 

18 110 720 

 

Debt securities in issue

1 881 647 

 

291 594 

 

1 590 053 

 

1 617 229 

 

Liabilities arising on securitisation of own originated loans and advances

155 200 

 

155 200 

 

- 

 

- 

 

Other liabilities

1 249 058 

 

1 245 124 

 

3 934 

 

2 999 

 

Subordinated liabilities

1 100 013 

 

78 132 

 

1 021 881 

 

1 145 770 

 

 

42 804 650 

 

19 393 234 

 

23 411 416 

 

23 664 141 

 

This note has been restated to separately present those items where fair value approximates the carrying value.

 

Investec plc
Incorporated in England and Wales
Registration number: 3633621
LSE ordinary share code: INVP
JSE share code: INP
ISIN: GB00B17BBQ50
LEI: 2138007Z3U5GWDN3MY22

Ordinary share dividend announcement

Shareholders are referred to the company's unaudited combined consolidated financial results for the year ended 31 March 2021 and the accompanying dividend announcements released on SENS on 20 May 2021 and are advised that the dividend number stated in the announcement was incorrectly disclosed as dividend number 38 and should have referred to dividend number 37.

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 38

Notice is hereby given that a final dividend number 38, being a gross dividend of 11.00000 pence (2020: 5.50000 pence) per ordinary share has been declared by the Board from income reserves in respect of the six months ended 30 September 2021 payable to shareholders recorded in the shareholders' register of the company at the close of business on Friday,
10 December 2021.

• For Investec plc shareholders, registered on the United Kingdom share register, through a dividend payment by Investec plc from income reserves of 11.00000 pence per ordinary share

• For Investec plc shareholders, registered on the South African branch register, through a dividend payment by
Investec plc of 1.00000 pence per ordinary share and through a dividend paid by Investec Limited, on the SA DAS share, payable from income reserves, equivalent to 10.00000 pence per ordinary share.

The relevant dates relating to the payment of dividend number 38 are as follows:

Last day to trade cum-dividend

On the Johannesburg Stock Exchange (JSE)

Tuesday, 7 December 2021

 

On the London Stock Exchange (LSE)

Wednesday, 8 December 2021

Shares commence trading ex-dividend

On the Johannesburg Stock Exchange

Wednesday, 8 December 2021

 

On the London Stock Exchange

Thursday, 9 December 2021

Record date (on the JSE and LSE)

Friday, 10 December 2021

Payment date (on the JSE and LSE)

Wednesday, 22 December 2021

Share certificates on the South African branch register may not be dematerialised or rematerialised between Wednesday, 8 December 2021 and Friday, 10 December 2021, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday, 8 December 2021 and Friday, 10 December 2021, 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 11.00000 pence, equivalent to a gross dividend of 230.00000 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, 17 November 2021

• 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 230.00000 cents per share on the SA DAS share, comprising 209.09091 cents per share paid by Investec Limited on the SA DAS share and 20.90909 cents per ordinary share paid by Investec plc.

• Shareholders registered on the South African branch register who are not exempt from paying the Dividend Tax will receive a net dividend of 184.00000 cents per share (gross dividend of 230.00000 cents per share less Dividend Tax of 46.00000 cents per share) comprising 167.27273 cents per share paid by Investec Limited on the SA DAS share and 16.72727 cents per ordinary share paid by Investec plc.

By order of the board

David Miller

Company Secretary

17 November 2021

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

Ordinary share dividend announcement

Declaration of dividend number 131

Notice is hereby given that interim dividend number 131, being a gross dividend of 230.00000 cents (2020: 112.00000 cents) per ordinary share has been declared by the board from income reserves in respect of the six months ended 30 September 2021 payable to shareholders recorded in the shareholders' register of the company at the close of business on Friday, 10 December 2021.

The relevant dates relating to the payment of dividend number 131 are as follows:

Last day to trade cum-dividend

Tuesday, 7 December 2021

Shares commence trading ex-dividend

Wednesday, 8 December 2021

Record date

Friday, 10 December 2021

Payment date

Wednesday, 22 December 2021

The interim gross dividend of 230.00000 cents per ordinary share has been determined by converting the Investec plc distribution of 11.00000 pence per ordinary share into Rands using the Rand/Pound Sterling average buy/sell forward rate at 11h00 (SA time) on Wednesday, 17 November 2021.

Share certificates may not be dematerialised or rematerialised between Wednesday, 8 December 2021 and Friday,  10 December 2021, both dates inclusive.

Additional information to take note of

• Investec Limited South African tax reference number: 9800/181/71/2

• The issued ordinary share capital of Investec Limited is 318 904 709 ordinary shares

• The dividend paid by Investec Limited is subject to South African Dividend Tax (Dividend Tax) of 20% (subject to any available exemptions as legislated)

• Shareholders who are exempt from paying the Dividend Tax will receive a net dividend of 230.00000 cents per ordinary share

• Shareholders who are not exempt from paying the Dividend Tax will receive a net dividend of 184.00000 cents per ordinary share (gross dividend of 230.00000 cents per ordinary share less Dividend Tax of 46.00000 cents per ordinary share).

By order of the board

Niki van Wyk

Company Secretary

17 November 2021

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 31

Notice is hereby given that preference dividend number 31 has been declared by the board from income reserves for the period 1 April 2021 to 30 September 2021 amounting to a gross preference dividend of 5.51508 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, 03 December 2021.

For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of 5.51508 pence per preference share is equivalent to a gross dividend of 115.02306 cents per share, which has been determined using the Rand/Pound Sterling average buy/sell forward rate as at 11h00 (SA time) on Wednesday, 17 November 2021.

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

Last day to trade cum-dividend

On the Johannesburg Stock Exchange (JSE)

Tuesday, 30 November 2021

On the International Stock Exchange (TISE)

Wednesday, 1 December 2021

Shares commence trading ex-dividend

On the Johannesburg Stock Exchange (JSE)

Wednesday, 1 December 2021

On the International Stock Exchange (TISE)

Thursday, 2 December 2021

Record date (on the JSE and TISE)

Friday, 3 December 2021

Payment date (on the JSE and TISE)

Monday, 13 December 2021

 

 

Share certificates may not be dematerialised or rematerialised between Wednesday, 1 December 2021 and Friday, 3 December 2021, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday, 1 December 2021 and Friday, 3 December 2021 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 92.01845 cents per preference share for preference shareholders liable to pay the Dividend Tax and 115.02306 cents per preference share for preference shareholders exempt from paying the Dividend Tax.

By order of the board

David Miller

Company Secretary

17 November 2021

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 21

Notice is hereby given that preference dividend number 21 has been declared by the board from income reserves for the period 1 April 2021 to 30 September 2021 amounting to a gross preference dividend of 333.41097 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 December 2021.

The relevant dates relating to the payment of dividend number 21  are as follows:

Last day to trade cum-dividend

Tuesday, 7 December 2021

Shares commence trading ex-dividend

Wednesday, 8 December 2021

Record date

Friday, 10 December 2021

Payment date

Monday, 13 December 2021

Share certificates may not be dematerialised or rematerialised between Wednesday, 8 December 2021 and Friday,  10 December 2021, 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 266.72878 cents per preference share for preference shareholders liable to pay the Dividend Tax and 333.41097 cents per preference share for preference shareholders exempt from paying the Dividend Tax.

By order of the board

David Miller

Company Secretary

17 November 2021

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 34

Notice is hereby given that preference dividend number 34 has been declared by the board from income reserves for the period 1 April 2021 to 30 September 2021 amounting to a gross preference dividend of 272.94074 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 December 2021.

The relevant dates for the payment of dividend number 34 are as follows:

Last day to trade cum-dividend

Tuesday, 7 December 2021

Shares commence trading ex-dividend

Wednesday, 8 December 2021

Record date

Friday, 10 December 2021

Payment date

Monday, 13 December 2021

Share certificates may not be dematerialised or rematerialised between Wednesday, 8 December 2021 and Friday,  10 December 2021, 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 30 756 461 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 218.35259 cents per preference share for shareholders liable to pay the Dividend Tax and 272.94074 cents per preference share for preference shareholders exempt from paying the Dividend Tax.

By order of the board

Niki van Wyk

Company Secretary

17 November 2021

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*
Khumo Shuenyane2
Philisiwe Sibiya2
Brian Stevenson1^

1  British

2  South African

3   Irish

*  Appointed 21 May 2021

^  Appointed 22 June 2021

 

Charles Jacobs resigned 30 June 2021
Perry Crosthwaite and Lord Malloch-Brown resigned 5 August 2021

Sponsor:

Investec Bank Limited

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR DKOBBOBDDCDD

Companies

Investec (INVP)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today