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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Investec Plc | LSE:INVP | London | Ordinary Share | GB00B17BBQ50 | ORD GBP0.0002 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.00 | -0.20% | 508.00 | 504.00 | 505.00 | 512.50 | 499.40 | 511.50 | 565,682 | 16:35:09 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Commercial Banks, Nec | 1.3B | 292.79M | 0.3267 | 15.46 | 4.53B |
TIDMINVP
RNS Number : 7986F
Investec PLC
19 November 2020
Investec Limited Investec plc Incorporated in the Republic of South Incorporated in England and Wales Africa Registration number 3633621 Registration number 1925/002833/06 LSE share code: INVP JSE share code: INL JSE share code: INP NSX share code: IVD ISIN: GB00B17BBQ50 BSE share code: INVESTEC ISIN: ZAE000081949
Investec plc and Investec Limited - Reviewed combined consolidated financial results for the six months ended 30 September 2020
Basis of presentation
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 2020 (1H2021). Following the group's demerger of Investec Asset Management (now Ninety One) in March 2020, the group's results for the six months ended 30 September 2019 have been restated to reflect the asset management business as a discontinued operation. Unless stated otherwise, comparatives relate to the group's continuing operations for the six-month period ended 30 September 2019 (1H2020). The comparability of 1H2021 to the prior period is impacted by the economic effects of COVID-19 which prevailed over the period under review.
Fani Titi, Chief Executive commented:
"The first half of the financial year has been characterised by difficult and volatile market and economic conditions attributed primarily to COVID-19. As a result, group adjusted operating profit of GBP142.5 million was 48.4% behind the prior period and adjusted basic earnings per share of 11.2p was 50.0% behind the prior period, albeit ahead of pre-close guidance. We are encouraged by the resilience of our loan book, the performance of our core franchises against a tough backdrop and progress made on our strategic objectives. Tangible net asset value per share increased by an annualised 10.4% and a dividend of 5.5p has been declared .
I would like to thank my Investec colleagues for their commitment through the first half of an unprecedented year - all have risen to the challenge, shown resilience, and continued to deliver the same high level of client engagement and service for which Investec is well known. We also thank our clients for their continued support as well the members of our communities on the frontlines for their efforts in curtailing the impact of the pandemic.
We entered this crisis from a position of strength and continue to have a strong capital, funding and liquidity position, leaving us well placed, both operationally and financially, to navigate this evolving environment for the benefit of our clients and other stakeholders."
Financial performance
Over the period, we operated within a challenging economic backdrop, impacted by COVID-19 and associated lockdowns particularly in the first three months. This resulted in reduced economic activity and increased market volatility. Interest rates were sharply lower, client activity declined, and the average Rand against the Pound Sterling depreciated 20.6% compared to the prior period.
-- Resilient client franchises: Wealth & Investment reported net inflows of GBP336 million and growth in funds under management (FUM) of 14.9% since 31 March 2020 to GBP51.1 billion. The Specialist Banking business saw good client acquisition in both geographies. Net core loans grew 1.0% since 31 March 2020 to GBP25.2 billion, with strong loan book growth in the UK Private Banking business offset by subdued corporate lending activity in both geographies and higher repayments. Our client engagement has been consistent and proactive, leveraging off the various digital platforms at our disposal.
-- Operating income: Total revenue declined by 24.0% (17.8% in neutral currency) compared to 1H2020. Net interest income decreased by 15.6% impacted primarily by lower interest rates. Non-interest revenue declined by 30.7% impacted by lower lending fees, subdued client transactional activity, and lower investment and associate income. Risk management and risk reduction costs related to hedging our structured products book resulted in trading income declining by 100.6%. We have and will continue to take active steps to de-risk the profile of this book.
-- Costs: Operating costs decreased by 14.0% (8.1% in neutral currency) driven by headcount containment, lower variable remuneration and a reduction in discretionary expenditure. Notwithstanding this reduction in costs, we continued to invest in growth initiatives and in technology.
-- Asset quality: The group's annualised credit loss ratio (CLR) increased from 0.23% (1H2020) to 0.47% (1H2021), below the annualised 2H2020 CLR of 0.74%. Increased CLRs were largely model-driven with an absolute expected credit loss (ECL) impairment charge of GBP66.0 million (1H2020: GBP31.0 million).
-- Operating profit: Adjusted operating profit was down 48.4% to GBP142.5 million (1H2020: GBP276.3 million).
-- Earnings per share: Adjusted basic earnings per share decreased by 50.0% to 11.2p (1H2020: 22.4p) and basic earnings per share declined by 49.5% to 9.6p (1H2020: 19.0p).
-- Return on Equity (ROE): The group generated an ROE of 5.3% (1H2020: 10.7%) and a return on tangible equity (ROTE) of 5.8% (1H2020: 11.8%).
-- Robust capital and liquidity: At 30 September 2020, the common equity tier 1 (CET1) capital and leverage ratios were 11.6% and 7.0% respectively for Investec Limited (FIRB approach) and 10.7% and 7.8% respectively for Investec plc (standardised approach). Cash and near cash was GBP12.9 billion at 30 September 2020, representing 39.5% of customer deposits. Capital, leverage and liquidity ratios remain ahead of both internal board-approved minimum targets and regulatory requirements.
-- Growth in net asset value: At 30 September 2020, net asset value (NAV) per share increased by 4.6% to 433.5p (31 March 2020: 414.3p) and tangible NAV (TNAV) per share increased by 5.2% to 397.4p (31 March 2020: 377.6p).
Supporting our people, clients and communities
As a group, we have taken decisive action in supporting our stakeholders through the economic and social impact of the pandemic.
With a large proportion of staff continuing to work from home, we are prioritising staff wellbeing and encouraging a flexible approach to working.
We have provided various forms of relief to our clients. Currently 6.3% of UK and 2.2% of South Africa's loans are under some form of relief. At the peak, this was 13.7% and 23.0% respectively. In addition, through the income generated in our Private Client Charitable Trusts, we have facilitated over R20 million in donations on behalf of clients.
For our communities, we have committed GBP3.6 million (64% allocated to date) to support the communities we live in with food security, economic continuity, healthcare, education and anti-gender-based violence-related assistance.
Dividend
The group endorses the objectives of guidance note G4/2020 from the Prudential Authority (PA) in South Africa and the recommendations of the UK Prudential Regulation Authority (PRA) in relation to the preservation of capital. The group did not declare a final divided in relation to the March 2020 financial year. Having considered the objectives of guidance note G4/2020 and ensuring prudence in terms of capital retention in our banking businesses, the group has declared an interim dividend of 5.5p (49.1% payout ratio).
Outlook and guidance
We expect the overall performance in 2H2021 to be ahead of the first half; underpinned by improving revenue trends relative to 1H2021 as client activity levels improve and liability repricing aids net interest income. Trading income from client flow will continue to be negatively impacted by risk management and risk reduction costs on hedging our structured products book. Costs are expected to decline by mid to high single digits for the full 2021 financial year compared to the prior year. Assuming no further deterioration in the macro-economic variables applied, we expect to report lower ECL provisions for the remaining six months of the year.
This guidance is subject to assumptions, which if altered, may result in a different financial performance compared to management expectations.
While the impact of COVID-19 has been felt across our business and the outlook is still uncertain, we remain confident in the fundamentals of our business and in our long-established client relationships. We have continued to make progress against our strategic objectives, positioning the business for growth in the long term, and expect to substantially complete our simplification process by the end of the financial year. As previously communicated, FY2022 targets remain under review.
Hot Features
Premium
Neutral
Financial highlights - % currency
continuing operations(1) 1H2021 1H2020 Variance change % change
------------------------------- --------- --------- -------- --------- -----------
Total operating income
before expected credit
losses 729.0 959.3 (230.3) (24.0%) (17.8%)
Operating costs 535.8 623.1 (87.3) (14.0%) (8.1%)
Adjusted operating profit
(GBP'm) 142.5 276.3 (133.8) (48.4%) (40.9%)
Adjusted earnings attributable
to shareholders (GBP'm) 104.4 212.3 (107.9) (50.8%) (43.4%)
Adjusted basic earnings
per share (pence) 11.2 22.4 (11.2) (50.0%) (42.4%)
Basic earnings per share
(pence) 9.6 19.0 (9.4) (49.5%) (41.1%)
Dividend per share (pence)(2) 5.5 11.0
Dividend payout ratio(2) 49.1% 38.1%
Annualised CLR (credit
loss ratio) 0.47% 0.23%
Cost to income ratio 72.0% 67.0%
ROE (return on equity) 5.3% 10.7%
ROTE (return on tangible
equity) 5.8% 11.8%
------------------------------- ----- ----- -------- --------- -----------
Neutral
30 September 31 March currency
2020 2020 Variance % change % change
------------------------------ -------------- ---------- -------- ---------- -----------
Third party funds under
management (GBP'bn) 52.0 45.0 7.0 15.5% 14.6%
Customer accounts (deposits)
(GBP'bn) 32.6 32.2 0.4 1.0% (0.3%)
Core loans and advances
(GBP'bn) 25.2 24.9 0.3 1.0% (0.4%)
Cash and near cash (GBP'bn) 12.9 12.7 0.2 1.4% -%
CET1 ratio - Investec Limited 11.6% 10.9%
Leverage ratio(3) - Investec
Limited 7.0% 6.4%
CET1 ratio - Investec plc 10.7% 10.7%
Leverage ratio(3) - Investec
plc 7.8% 7.8%
NAV per share (pence) 433.5 414.3 19.2 4.6% 4.7%
TNAV per share (pence) 397.4 377.6 19.8 5.2% 5.3%
------------------------------ --------- --- ------ -------- ------ ------
1. Refer to the Notes for definitions. Continuing operations excludes the results of the asset management business (which was demerged in March 2020) from the comparative period, but includes the equity accounted earnings of the group's 25% retained stake in 1H2021.
2. The 1H2020 dividend per share and dividend payout ratio reflected above were prior to the demerger of the asset management business (Ninety One).
3. Current Leverage ratios calculated on an end quarter basis.
Enquiries
Investec Investor Relations
Results: Carly Newton: +44 (0) 20 7597 4493
General enquiries: +27 (0) 11 286 7070 or +44 (0) 20 7597 5546
Brunswick (SA PR advisers)
Graeme Coetzee
Tel: +27 11 502 7419 / +27 63 685 6053 (mobile)
Lansons (UK PR advisers)
Tom Baldock
Tel: +44 (0) 20 7566 9716 / +44 (0) 78 6010 1715 (mobile)
Presentation/conference call details
A presentation on the results will commence at 9:00 UK time/11:00 SA time on 19 November 2020. Viewing and telephone conference options as below:
-- A live and delayed video webcast at www.investec.com -- Telephone conference: -- SA participants: 010 201 6700/011 535 3500/0 800 203 599 -- UK participants: 0 333 300 1417 -- Rest of Europe and other participants: +27 11 535 3500/+27 10 201 6700 -- Australian participants: 02 8015 2168 -- North American participants: 1 508 924 4325
Alternatively, participants can pre-register for the conference call using the following link: www.investec.com/call
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 approximately 8,500 employees.
In 2002, Investec implemented a dual listed company structure with listings on the London and Johannesburg Stock Exchanges. In March 2020, the group successfully completed the demerger of Ninety One (formerly known as Investec Asset Management), which became separately listed on 16 March 2020. Investec's current market capitalisation is approximately GBP2.0 billion.
Johannesburg and London
Sponsor: Investec Bank Limited
Business overview
The commentary and trends that follow relate to Investec's continuing operations for the six months ended 30 September 2020 (1H2021). Unless stated otherwise, comparatives relate to the group's continuing operations for the six-month period ended 30 September 2019 (1H2020). The comparability of 1H2021 to the prior period is impacted by the economic effects of COVID-19 which prevailed over the period under review.
Giving consideration to the group's investment in Ninety One and other significant investments (previously included as a subset of the Specialist Bank) and in an effort to provide enhanced disclosure, the group's business segments have been revised to reflect each of the following as reportable segments across the UK & Other and Southern African geographies: Specialist Banking, Wealth & Investment, Group Investments and Group Costs.
Operating environment
At the onset of the COVID-19 crisis, we witnessed a proactive response from the South African government including the decision to implement one of the strictest lockdowns globally. This, coupled with decades-low interest rates (300bps rate cuts since January 2020), had a considerable impact on the South African business' financial performance. The South African economy also saw little equity capital market activity relative to its developed counterparts. In addition, rising debt to GDP, lack of structural reform, policy uncertainty, and resultant depressed business confidence continue to be headwinds, making for a challenging operating environment.
In the UK, at the group's financial year end we reported that Brexit, heightened UK political uncertainty and geopolitical tensions sparked by US trade wars had adversely impacted activity levels, making the operating environment very challenging. In addition, at that time, the UK was in the grips of a national lockdown imposed because of the COVID-19 global pandemic. Over the past six months, these difficulties have persisted; exacerbated by the economic crisis resulting from COVID-19 containment measures.
Segmental performance
Specialist Banking
Adjusted operating profit from the Specialist Banking business decreased by 52.9% to GBP105.8 million (1H2020: GBP224.8 million).
Specialist Banking Southern Africa UK & Other
----------------------------------------------
1H2021 1H2020 Variance 1H2021 1H2020 Variance
---------------------------- -----------------
% in
GBP'm GBP'm GBP'm % Rands GBP'm GBP'm GBP'm %
------------------- ------- ------- ------ --------- --------- ------- ------- ------
Operating income 262.8 346.8 (84.1) (24.2%) (8.7%) 273.8 347.1 (73.3) (21.1%)
ECL impairment
charges (24.2) (14.9) (9.3) 62.3% 95.8% (39.9) (16.1) (23.8) >100.0%
Operating costs (145.6) (186.6) 40.9 (21.9%) (6.0%) (221.5) (251.6) 30.1 (12.0%)
(Profit)/loss
attributable
to NCI - - - - - 0.5 0.1 0.5 >100.0%
Adjusted operating
profit 92.9 145.3 (52.5) (36.1%) (22.9%) 12.9 79.4 (66.5) (83.8%)
------------------- ------- ------- ------ ----- ----- ------- ------- ------ -----
Totals and variance determined in GBP'000.
Southern Africa Specialist Banking
The South African business reported a decrease in adjusted operating profit of 22.9% in Rands. Client engagement has been proactive, resulting in good client acquisition across both our private and corporate client business over the period. While client activity was significantly impacted in the first quarter during the hard lockdown, in the second quarter, as lockdown measures eased, we saw increased point of sale and stockbroking activity along with a marked pick-up in demand for residential mortgages.
Notwithstanding this, net interest income decreased by 6.9% in Rands driven by the 300bps rate cut since January 2020 and assets repricing at a faster rate than liabilities. Non-interest revenue declined 13.7% in Rands. An increase in trading income was offset by subdued lending and transactional activity compared to the prior period and lower investment income as a result of lower realisations, dividend income and negative fair value adjustments given the prevailing economic backdrop.
ECL impairment charges increased, resulting in an annualised CLR of 0.35% (1H2020: 0.18%), below the annualised 2H2020 CLR of 0.55%. The increase since 31 March 2020 was driven primarily by updated assumptions applied in our models to capture the deterioration in macro-economic variables since year end.
Operating costs reduced by 6.0% in Rands period on period reflecting lower variable remuneration and cost containment across the business. However, a decline in revenues resulted in a cost to income ratio of 55.4% (1H2020: 53.8%).
Net core loans decreased by 1.6% since year end to R284.4 billion (31 March 2020: R288.9 billion). Private client lending held steady compared to 31 March 2020 while the corporate client lending book declined due to higher repayments and lower net new originations as corporates remained cautious.
Against this challenging backdrop, the business achieved an ROE and ROTE of 9.1% and 9.2% respectively relative to 13.5% and 13.6% at 30 September 2019.
UK & Other Specialist Banking
Adjusted operating profit for the overall UK & Other Specialist Bank declined by 83.8% to GBP12.9 million (1H2020: GBP79.4 million). Increased equity capital markets activity and good levels of lending turnover across private client and certain corporate client lending areas was offset by hedging costs related to our structured products book. These hedging costs contributed GBP53 million to the profit reduction of GBP66.5 million.
Our client franchises have shown resilience notwithstanding the two months of hard lockdown at the start of the reporting period. The private client banking business saw good origination and client acquisition. The mortgage book ended the half year on GBP2.8 billion, an increase of 10.8% since 31 March 2020. Net new client origination was c.8%, moving us closer to our target of at least 6,500 high net worth clients by March 2022 (c.5,400 clients at 30 September 2020).
Net interest income declined by 2.1% with growth in average core loans offset by lower interest rates. Non-interest revenue decreased by 43.5% as the recovery in equity capital market fees and an improvement in investment income was offset by lower lending fees and risk management and risk reduction costs associated with hedging our structured products book following market dislocation and dividend cancellations. We anticipate a similar level of risk management and risk reduction costs in the second half of the 2021 financial year in particular, as we continue to reduce the risk on the book. Risk reduction costs include the purchase of protection against a repeat of the severe market moves experienced in March and April 2020. For the 2022 financial year we expect risk management and risk reduction costs to be less than half of that anticipated in the current financial year, and progressively reducing in the 2023 financial year. This guidance is subject to assumptions, which if altered, may result in a different outcome to management expectations.
ECL impairment charges increased, resulting in an annualised CLR of 0.60% (1H2020: 0.28%), below the annualised 2H2020 CLR of 0.97%. The increase since 31 March 2020 was driven primarily by updated assumptions applied in our models to capture the deterioration in macro-economic variables since year end.
Operating costs decreased by 12.0% period on period primarily reflecting lower variable remuneration and a strong focus on cost discipline. As indicated in our pre-close trading announcement, we are enhancing efficiencies by more closely integrating business-enabling functions, resulting in a proposed headcount reduction in the UK banks' London office by approximately 210 roles or 13%.
Net core loans grew by 0.9% to GBP12.0 billion (31 March 2020: GBP11.9 billion) with strong growth in mortgages and other high net worth lending offset by a net book reduction in corporate and other lending. While there was good activity in some parts of the corporate space, particularly in fund finance, redemptions largely offset this.
The cost to income ratio of 80.7% (1H2020: 72.5%), ROE of 0.7% (1H2020: 9.0%) and ROTE of 0.8% (1H2020: 9.1%) were impacted by the foregoing factors.
Wealth & Investment
Adjusted operating profit from the Wealth & Investment business decreased by 8.2% to GBP40.8 million (1H2020: GBP44.5 million).
Wealth & Investment Southern Africa UK & Other
1H2021 1H2020 Variance 1H2021 1H2020 Variance
% in
GBP'm GBP'm GBP'm % Rands GBP'm GBP'm GBP'm %
-------------------- ------ ------ ----- --------- -------- ------- ------- -----
Operating income 36.5 43.4 (7.0) (16.1%) 1.0% 155.1 162.3 (7.2) (4.4%)
Operating costs (24.5) (29.4) 4.9 (16.6%) 0.4% (126.2) (131.8) 5.6 (4.3%)
Adjusted operating
profit 12.0 14.1 (2.1) (14.9%) 2.3% 28.9 30.5 (1.6) (5.2%)
-------------------- ------ ------ ----- ----- ---- ------- ------- ----- ----
Totals and variance determined in GBP'000.
Southern Africa Wealth & Investment
Adjusted operating profit increased by 2.3% in Rands.
The South African business achieved net inflows of R478 million (R3.0 billion of discretionary and annuity inflows and non-discretionary custody asset outflows of R2.5 billion), which, together with favourable market movements, contributed to a 16.2% growth (in Rands) in FUM since year end. Revenue was supported by higher average discretionary and annuity FUM and increased levels of trading activity in the first quarter. Operating costs remained flat period on period translating to a lower cost to income ratio of 67.2% (1H2020: 67.7%).
UK & Other Wealth & Investment
Adjusted operating profit declined 5.2% to GBP28.9 million (1H2020: GBP30.5 million).
The UK Wealth & Investment business continued to report positive net organic growth in FUM over the period, with an annualised rate of growth of 1.9% - in line with the first half of the prior period. Net inflows of GBP315 million, along with favourable market movements and investment performance, contributed to FUM increasing by 13.4% since the start of the financial year. Operating income, down 4.4% on the prior period, was impacted by lower FUM at key billing dates relative to the prior period, the sale of the Irish wealth business in 2H2020 as well as lower interest rates; partly offset by an increase in transaction volumes.
Operating costs reduced by 4.3% or GBP5.6 million to GBP126.2 million, despite incurring once-off headcount reduction related costs and a GBP2.3 million increase in the Financial Services Compensation Scheme (FSCS) levy (1H2020: GBP3.8 million). The cost to income ratio was 81.4% (1H2020: 81.2%).
Group Investments
Group Investments represents assets held by Investec to create value over the medium term as opposed to trading assets. We have separated these assets from our core banking activities in order to make a more meaningful assessment of the underlying performance and value of the franchise businesses, and at the same time providing transparency of the standalone values of the assets classified as Group Investments.
They include the group's 25% holding in Ninety One, 47.4% stake in the IEP Group, 24.31% held in the Investec Property Fund (IPF), 9.1% holding in the Investec Australia Property Fund (IAPF) and some historical unlisted equity investments.
Adjusted operating profit from Group Investments decreased 56.3% to GBP13.2 million (1H2020: GBP30.3 million).
Group Investments Southern Africa UK & Other
1H2021 1H2020 Variance 1H2021 1H2020 Variance
GBP'm GBP'm GBP'm % % in Rands GBP'm GBP'm GBP'm %
--------------------- ------ ------ ------ ----------- ------------ ------ ------ -----
Operating income
(net of ECL charges) (12.7) 59.6 (72.4) (>100.0%) (>100.0%) 11.8 - 11.8 100.0%
Operating costs (0.6) (0.4) (0.2) 34.9% 62.5% - - - -
(Profit)/loss
attributable
to NCI 14.7 (28.9) 43.7 (>100.0%) (>100.0%) - - - -
Adjusted operating
profit 1.4 30.3 (28.8) (95.3%) (94.5%) 11.8 - 11.8 100.0%
--------------------- ------ ------ ------ ------- -------- ------ ------ ----- -----
Totals and variance determined in GBP'000.
The positive impact from the inclusion of the equity accounted earnings from the group's 25% stake in Ninety One and the mark-to-market on the group's holding in IAPF was offset by:
-- muted rental collections and a decline in investment property valuations (particularly in the South African portfolio) experienced by IPF
-- a reduction in the share of post taxation profit from IEP as some of its subsidiaries were unable to trade during the COVID-19 hard lockdown and a realisation in the prior period was not repeated
-- negative mark-to-market adjustments on interest rate hedge positions in IPF and currency hedges related to the group's investment in IAPF.
Group Investments reported an ROE of 5.6% (1H2020: 13.5%).
Group Costs
Group costs decreased by 25.5% to GBP17.3 million (1H2020: GBP23.3 million). As indicated at year end, we expect group costs in FY2021 to be below GBP35 million.
Further information on key developments within each of the business units is provided in the group interim report published on the group's website: http://www.investec.com.
Performance by geography
Neutral
currency
1H2021 1H2020 % change % change
-------- -------- ---------- -----------
Investec Limited (Southern Africa)
Adjusted operating profit (GBP'm) 99.1 182.2 (45.6%) (34.3%)
Cost to income ratio 58.7% 53.2%
ROE 8.1% 13.5%
ROTE 8.1% 13.7%
Investec plc (UK & Other)
Adjusted operating profit (GBP'm) 43.4 94.1 (53.9%) n/a
Cost to income ratio 81.1% 78.3%
ROE 2.8% 7.5%
ROTE 3.3% 9.2%
----------------------------------- ---- ---- ---------- -----------
Overview of financial performance
Total operating income before expected credit loss impairment charges
Total operating income before expected credit losses decreased 24.0% to GBP729.0 million (1H2020: GBP959.3 million) pointing to the impact of the economic challenges driven by COVID-19.
-- Net interest income decreased 15.6% to GBP359.4 million (1H2020: GBP425.6 million) impacted by the endowment effect from interest rate cuts, assets repricing ahead of liabilities and limited loan book growth which remains below pre-COVID-19 levels. This resulted in a reduction in net interest margin of 41bps to 1.60% for the South African business and 25bps to 1.77% for the UK business.
-- Net fee and commission income declined 17.9% to GBP324.8 million (1H2020: GBP395.7 million). Fees in the Wealth & Investment business declined moderately by 3.5% impacted by the sale of the Irish wealth business in 2H2020, lower UK FUM at key billing dates and Rand weakness (fees in the South African business were up in Rands but down in Pounds Sterling on the prior period). Fees in the Specialist Banking business were impacted primarily by lower lending and transactional activity, while Group Investment fees reflected lower rental income from IPF.
-- Investment income decreased 70.5% to GBP16.9 million (1H2020: GBP57.1 million) primarily reflecting the negative impact of COVID-19 on investment property valuations in IPF.
-- Share of post taxation profit of associates and joint venture holdings of GBP16.3 million (1H2020: GBP17.8 million) was positively impacted by the inclusion of associate earnings from the group's 25% holding in Ninety One, offset by lower earnings from the IEP Group due to lockdown and the non-repeat of a realisation in the prior period, as well as negative fair value adjustments in IPF's UK associate investment.
-- Trading income arising from customer flow netted a loss of GBP8.5 million relative to a profit in the prior period of GBP62.8 million. Risk management and risk reduction costs on hedging our structured products book following the market dislocation and dividend cancellations was the major driver of the loss.
-- Trading income arising from balance sheet management and other trading activities increased from a loss of GBP2.3 million in 1H2020 to a profit of GBP8.1 million for the period under review. The gain was driven primarily by the UK Specialist Bank where asset values improved following the extreme COVID-19 related volatility in the last quarter of FY2020.
-- Other operating income of GBP12.0 million (1H2020: GBP2.6 million) primarily reflects the fair value movements of the Ninety One shares held in the group's staff share scheme as a result of the demerger and separate listing of Ninety One, whereby shareholders received one Ninety One share for every two Investec shares held. These shares are reflected on the group's balance sheet in Other assets. The equal and 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
Impairments increased to GBP66.0 million (1H2020: GBP31.0 million) and the annualised CLR was up from 0.23% for 1H2020 to 0.47% in the current period. The increase was primarily driven by updated macro-economic scenarios applied in our models. The group revised its macro-economic assumptions during the period with material downward revisions to key forecasted economic variables.
As mentioned earlier in the announcement, we have provided various forms of relief on request from some of our clients. At 30 September 2020, 9.0% of UK and 3.3% of South Africa's loan book was under some form of relief.
In South Africa, the Stage 1 coverage ratio increased to 0.5% (31 March 2020: 0.4%) driven by a higher forward-looking IFRS 9 provision build. Stage 2 and Stage 3 coverage ratios declined to 2.4% (31 March 2020: 2.8%) and 33.0% (31 March 2020: 42.1%) respectively. The decrease in Stage 2 coverage was driven primarily by certain counterparties with a high coverage ratio which migrated to Stage 3, while the decrease in Stage 3 coverage relates to the mix impact of some deals written off and some highly secured counters moving into Stage 3.
In the UK, the Stage 1 coverage ratio reduced to 0.3% (31 March 2020: 0.4%). The Stage 2 coverage ratio reduced to 3.4% (31 March 2020: 5.4%) as a significant proportion of the exposures that migrated into Stage 2 were from lower risk exposures, transferred into Stage 2 based on the deteriorating forward-looking view on their credit performance under current macro-economic expectations rather than specific credit concerns. The Stage 3 coverage ratio also declined to 26.7% (31 March 2020: 28.2%), and similarly to South Africa, related to the mix impact of deals written off relative to a few new highly collateralised deals migrating from Stage 2.
Operating costs
In line with our strategic objective to contain costs, management reduced the cost base for the six months ended 30 September 2020 by 14.0% to GBP535.8 million (1H2020: GBP623.1 million), driven by headcount containment, lower variable remuneration and a reduction in discretionary expenditure. However, due to lower revenues the cost to income ratio increased to 72.0% (1H2020: 67.0%).
Taxation
The taxation charge on adjusted operating profit from continuing operations was GBP20.9 million (1H2020: GBP41.5 million), resulting in an effective tax rate of 18.8% (1H2020: 14.4%). The increase was due to normalisation of the effective tax rate in South Africa.
Profit or loss attributable to other non-controlling interests
The loss attributable to other non-controlling interests of GBP15.3 million (1H2020: profit of GBP28.9 million) relates to the loss attributable to non-controlling interests in IPF.
Discontinued operations
There were no discontinued operations in the first half of the 2021 financial year. Discontinued operations in the comparative period reflect the asset management business which was demerged and separately listed as Ninety One in March 2020.
Basic EPS from continuing and discontinued operations was 9.6p, down 61.1% on the prior period (1H2020: 24.7p).
Earnings from the group's 25% holding in Ninety One in the current period have been equity accounted and included in share of post taxation profit of associates and joint venture holdings within continuing operations.
Balance sheet analysis
Since 31 March 2020:
-- Ordinary shareholders' equity increased by 4.7% to GBP4.0 billion, mainly due to an increase in retained earnings.
-- NAV per share increased 4.6% to 433.5 pence and TNAV per share (which excludes goodwill, software, and other intangible assets) increased 5.2% to 397.4 pence.
-- The group's ROE decreased from 10.7% in 1H2020 to 5.3% and ROTE from 11.8% in 1H2020 to 5.8%.
-- Net core loans and advances growth was muted, up 1.0% to GBP25.2 billion since year end. The South African book declined 1.6% in Rands to R284.4 billion, while in the UK, net core loans grew 0.9% to GBP12.0 billion.
Funding and liquidity
Customer deposits grew 1.0% to GBP32.6 billion (31 March 2020: GBP32.2 billion). Cash and near cash of GBP12.9 billion (GBP6.2 billion in Investec plc and R143.2 billion in Investec Limited) at 30 September 2020 represents 39.5% of customer deposits. Loans and advances to customers as a percentage of customer deposits remained at 76.4%.
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 2020 with the three-month average of its LCR at 164.1% and an NSFR of 113.9%. 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 2020 was 335% and the internally calculated NSFR was 126% at 30 September 2020.
Capital adequacy and leverage ratios
The group maintained capital and leverage ratios ahead of both internal board-approved minimum targets and regulatory requirements. Capital ratios for Investec plc and Investec Limited are summarised in the table below.
The group targets a minimum CET1 ratio above 10%, a tier 1 ratio above 11% and a total capital adequacy ratio range of 14% to 17% on a consolidated basis for each of Investec plc and Investec Limited, respectively.
Investec Limited's application for conversion to the Advanced Internal Ratings Based (AIRB) approach remains under review by the South African Prudential Authority. Approval has been granted for Investec Limited to commence with its six month parallel run for certain AIRB models. Full conversion to AIRB is expected to result in a circa 2% uplift to the CET1 ratio.
30 September 2020 31 March 2020
-----------------------
Investec plc(1) Standardised approach Standardised
approach
------------------------------------- -----------------------
Total capital ratio 14.8% 14.9%
Tier 1 ratio 12.4% 12.4%
Common equity tier 1 ratio 10.7% 10.7%
Common equity tier 1 ratio ('fully
loaded'(3) ) 10.2% 10.3%
Leverage ratio (current) 7.8% 7.8%
Leverage ratio ('fully loaded'(3)
) 7.3% 7.4%
Leverage ratio - current UK leverage
ratio framework(4) 8.7% 8.9%
Investec Limited(2) FIRB approach FIRB approach
-----------------------
Total capital adequacy ratio 15.5% 15.0%
Tier 1 ratio 12.2% 11.5%
Common equity tier 1 ratio 11.6% 10.9%
Common equity tier 1 ratio ('fully
loaded'(3) ) 11.6% 10.9%
Leverage ratio (current) 7.0% 6.4%
Leverage ratio ('fully loaded'(3)
) 6.9% 6.3%
------------------------------------- ----------------------- -------------
1 The capital adequacy disclosures follow Investec's normal basis of presentation to show a consistent basis of calculation across the jurisdictions in which the group operates. For Investec plc this does not include the deduction of foreseeable charges and dividends when calculating CET1 capital as required under the Capital Requirements Regulation and European Banking Authority technical standards. The impact of this deduction totalling GBP18 million for Investec plc (31 March 2020: GBP0) would lower the CET1 ratio by 12bps (31 March 2020: 0bps).
2 Investec Limited's capital information includes unappropriated profits. If unappropriated profits are excluded from the capital information, Investec Limited's CET1 ratio would be 36bps (31 March 2020: 24bps) lower.
3 The CET 1 fully loaded ratio and the fully loaded leverage ratio assume full adoption of IFRS 9 and full adoption of all CRD IV rules or South African Prudential Authority regulations, as applicable in the relevant jurisdictions. As a result of the adoption of IFRS 9 Investec plc and IBP elected to designate its subordinated fixed rate medium-term notes due in 2022 at fair value. By the time of full adoption of IFRS 9 in 2023, these subordinated liabilities will have reached final maturity and will be redeemed at par value. The remaining interest rate portion of the fair value adjustment at 30 September 2020 of GBP6 million (post-taxation), has therefore been excluded from the fully loaded ratios as it will be released into profit and loss over the remaining life of the instrument.
4 Investec plc is not subject to the UK leverage ratio framework, however for comparative purposes this ratio has been disclosed. This framework excludes qualifying central bank balances from the calculation of the leverage exposure measure.
Remuneration targets
Investec remains committed to setting stretching yet attainable targets, particularly in the current economic environment. In the group's 2020 integrated annual report it was noted that the group intended publishing the remuneration targets for the 2020 Long-Term Incentive award and the 2021 Short-Term Incentive ahead of the group's 2020 annual general meeting (AGM).
However, given the continuing uncertainty at that time, and in line with the guidance from the Investment Association, on 24 July 2020 the group announced its intention to delay the setting and disclosing of remuneration incentive targets until its interim results announcement for the six months ending 30 September 2020. The group consulted with shareholders on this matter.
Whilst there is still a high level of uncertainty relating to the full impact of COVID-19, the Committee has set what it believes are stretching yet attainable targets as outlined in the group's 2020 interim report.
On behalf of the boards of Investec plc and Investec Limited
Perry Crosthwaite Fani Titi Chairman Chief Executive 18 November 2020
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 International Financial Reporting Standards (IFRS), denominated in Pounds Sterling. In the commentary above, all references to Investec or the group relate to the combined DLC group comprising Investec plc and Investec Limited.
Unless the context indicates otherwise, all comparatives included in the commentary above relate to the six months ended 30 September 2019.
Amounts represented on a neutral currency basis for income statement items assume that the relevant average exchange rates for the six months to 30 September 2020 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 2020 remain the same as those at 31 March 2020.
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 issued a limited assurance report in respect of the neutral currency information. The report 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 position of the individual companies are reported in the local currencies in which they are domiciled, including Rands, Australian Dollars, Euros and US Dollars. These results are then translated into Pounds Sterling at the applicable foreign currency exchange rates for inclusion in the group's combined consolidated financial statements. In the case of the income statement, the weighted average rate for the relevant period is applied and, in the case of the balance sheet, the relevant closing rate is used.
The following table sets out the movements in certain relevant exchange rates against Pounds Sterling over the period:
Six months to Year to Six months to
30 Sept 2020 31 Mar 2020 30 Sept 2019
Currency
------
per GBP1.00 Period Period Period
end Average end Average end Average
------------------- ------
South African Rand 21.58 22.05 22.15 18.78 18.69 18.28
Australian Dollar 1.80 1.85 2.03 1.87 1.82 1.82
Euro 1.10 1.12 1.13 1.15 1.13 1.13
US Dollar 1.29 1.27 1.24 1.27 1.23 1.26
------------------- ------ ------- ------ ------- ------ -------
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 International Financial Reporting Standards, and the presentation and disclosure requirements of IAS 34, "Interim Financial Reporting".
The accounting policies applied in the preparation of the results for the six months to 30 September 2020 are consistent with those adopted in the financial statements for year ended 31 March 2020.
The effective date of the demerger of the asset management business was 13 March 2020 and admission of the Ninety One Limited shares and the Ninety One plc shares to the Johannesburg Stock Exchange and London Stock Exchange was effected on 16 March 2020. The global asset management business has been disclosed as a discontinued operation and the income statement for the prior period has been appropriately re-presented. Refer to the discontinued operations note for further detail.
Interest Rate Benchmark Reform (IBOR reform) Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Phase 2 of the IASB's IBOR project addresses the wider accounting issues arising from the IBOR reform. This was published in August 2020 and is awaiting endorsement. The amendments are effective for annual reporting periods beginning on or after 1 January 2021 with early application permitted. Conversion from LIBOR to alternative risk-free rates (RFRs) is expected to increase as RFR-based products become more widely available and key market-driven conversion events occur.
The combined consolidated financial results for the period ended 30 September 2020 have been reviewed by Ernst & Young LLP &
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 at www.investec.com
The financial results have been prepared under the supervision of Nishlan Samujh, the Group Finance Director. The financial statements for the six months ended 30 September 2020 are available on the group's website: http://www.investec.com
Proviso
-- Please note that matters discussed in this announcement may contain forward-looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to:
- changes in the political and/or economic environment that would materially affect the Investec group
- changes in the economic environment caused by the resulting lockdowns and government programmes aimed to stimulate the economy
- changes in legislation or regulation impacting the Investec group's operations or its accounting policies
- changes in business conditions that will have a significant impact on the Investec group's operations
- changes in exchange rates and/or tax rates from the prevailing rates outlined in this announcement.
- changes in the structure of the markets, client demand or the competitive environment. -- A number of these factors are beyond the group's control.
-- These factors may cause the group's actual future results, performance or achievements in the markets in which it operates to differ from those expressed or implied.
-- Any forward-looking statements made are based on the knowledge of the group at 18 November 2020.
-- The information in the group's announcement for the six months ended 30 September 2020, which was approved by the board of directors on 18 November 2020, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. The 31 March 2020 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:
http://www.investec.com
Definitions
-- Total group represents the group's results including the results of discontinued operations in the prior period.
-- 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. Trends within the divisional sections relate to adjusted operating profit before group costs. Adjusted operating profit is considered an important measure by Investec of the profit realised by the group in the ordinary course of operations. In addition, it forms the basis of the dividend payout policy. Non-IFRS measures such as adjusted operating profit are considered as pro-forma financial information as per the JSE Listings 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 issued a limited assurance report in respect of the pro-forma financial information. The report is available for inspection at the registered office of Investec upon request.
-- Adjusted earnings attributable to shareholders is defined as earnings attributable to shareholders before goodwill, acquired intangibles and strategic actions and after the deduction of 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.
-- 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 and advances as a percentage of average gross core loans and advances 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 and advances is defined as net loans and advances to customers plus net own originated securitised assets.
-- NCI is non-controlling interests.
Financial assistance
Shareholders are referred to Special Resolution number 3, which was approved at the annual general meeting held on 6 August 2020, 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 2020 to 30 September 2020 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 depreciated by 20.6% against the comparative six month period ended 30 September 2019, and the closing rate has appreciated by 2.6% since 31 March 2020. The following tables provide an analysis of the impact of the Rand on our reported numbers.
Results in Pounds Sterling Results in Rands
Neutral
currency^
Six months Six months Neutral Six months
Six months to 30 to 30 currency Six months to 30
Continuing to 30 Sept % Sept % to 30 Sept %
operations Sept 2020 2019* change 2020 change Sept 2020 2019* change
-------------------- ------------ --------- ----------- ----------
Adjusted operating
profit before
taxation (million) GBP142 GBP276 (48.4%) GBP163 (40.9%) R3 143 R5 045 (37.7%)
Earnings
attributable
to shareholders
(million) GBP109 GBP202 (46.2%) GBP126 (40.0%) R2 405 R3 692 (34.9%)
Adjusted earnings
attributable to
shareholders
(million) GBP104 GBP212 (50.8%) GBP120 (43.4%) R2 309 R3 877 (40.4%)
Adjusted earnings
per share 11.2p 22.4 p (50.0%) 12.9p (42.4%) 248c 409c (39.4%)
Basic earnings
per share 9.6p 19.0 p (49.5%) 11.2p (41.1%) 212c 346c (38.7%)
Diluted basic
earnings per share 9.5p 18.3 p (48.1%) 11.1p (41.1%) 211c 333c (36.3%)
-------------------- ---------- -------- ----- ----------- ------- ---------- ---------- -----
Results in Pounds Sterling Results in Rands
Neutral
currency^
Six months Six months Neutral Six months
Six months to 30 to 30 currency Six months to 30
to 30 Sept % Sept % to 30 Sept %
Total group Sept 2020 2019* change 2020 change Sept 2020 2019* change
---------------------- ---------- --------- ----------- ----------
Adjusted operating
profit before
taxation (million) GBP142 GBP374 (61.9%) GBP163 (56.4%) R3 143 R6 823 (53.9%)
Earnings attributable
to shareholders
(million) GBP109 GBP256 (57.4%) GBP126 (50.8%) R2 405 R4 678 (48.6%)
Adjusted earnings
attributable to
shareholders
(million) GBP104 GBP274 (62.0%) GBP120 (56.2%) R2 309 R4 997 (53.8%)
Adjusted earnings
per share 11.2p 28.9p (61.2%) 12.9p (55.4%) 248c 527c (52.9%)
Basic earnings
per share 9.6p 24.7p (61.1%) 11.2p (54.7%) 212c 450c (52.9%)
Diluted basic
earnings per share 9.5p 23.8p (60.1%) 11.1p (53.4%) 211c 434c (51.4%
Interim dividend
per share 5.5p 11.0p (50.0%) n/a n/a 112c 211c (46.9%)
---------------------- ---------- ---------- ----- ----------- ----------- ---------- ---------- -----
Results in Pounds Sterling Results in Rands
Neutral
currency^^ Neutral
At 31 At 30 currency At 31
At 30 March % Sept % At 30 March %
Sept 2020 2020 change 2020 change Sept 2020 2020 change
----------------------- ------ --------- ----------- --------
Net asset value
per share 433.5 p414.3 p 4.6% 433.7p 4.7% 9 355c 9 178c 1.9%
Net tangible asset
value per share 397.4 p377.6 p 5.2% 397.6p 5.3% 8 575c 8 365c 2.5%
GBP4 GBP5
Total equity (million) GBP5 075 898 3.6% 007 2.2% R109 509 R108 495 0.9%
GBP50 GBP50 GBP49 R1 093 R1 122
Total assets (million) 665 656 -% 982 (1.3%) 199 162 (2.6%)
GBP25 GBP24 GBP24
Core loans (million) 160 911 1.0% 817 (0.4%) R542 955 R551 878 (1.6%) Cash and near cash balances GBP12 GBP12 GBP12 (million) 861 683 1.4% 688 -% R277 504 R280 960 (1.2%) Customer deposits GBP32 GBP32 GBP32 (million) 552 221 1.0% 112 (0.3%) R702 373 R713 774 (1.6%) Third party funds under management GBP51 GBP45 GBP51 R1 121 R1 043 (million) 988 018 15.5% 573 14.6% 753 735 7.5% ----------------------- ---------- ------ ----- ----------- ------ ---------- -------- ----- * Restated to reflect continuing operations.
^ For income statement items we have used the average Rand: Pound Sterling exchange rate that was applied in the prior period, i.e. 18.28.
^^ For balance sheet items we have assumed that the Rand: Pound Sterling closing exchange rate has remained neutral since 31 March 2020.
Condensed combined consolidated income statement
Six months Six months
to to
Year to
30 Sept 30 Sept 31 March
GBP'000 2020 2019* 2020
---------------------------------------------------- ---------- ----------
Interest income 1 014 392 1 379 676 2 698 420
(1 845
Interest expense (654 971) (954 027) 416)
---------- ---------- ---------
Net interest income 359 421 425 649 853 004
Fee and commission income 344 650 422 133 837 590
Fee and commission expense (19 842) (26 408) (47 118)
Investment income 16 859 57 079 39 268
Share of post taxation profit of associates
and joint venture holdings 16 272 17 754 27 244
Trading income/(loss) arising from
- customer flow (8 527) 62 771 63 254
- balance sheet management and other trading
activities 8 144 (2 318) 26 720
Other operating income 11 983 2 609 6 877
---------- ---------- ---------
Total operating income before expected
credit loss impairment charges 728 960 959 269 1 806 839
Expected credit loss impairment charges (65 974) (31 021) (133 301)
---------- ---------- ---------
Operating income 662 986 928 248 1 673 538
(1 186
Operating costs^ (535 755) (623 092) 427)
Operating profit before goodwill, acquired
intangibles and strategic actions 127 231 305 156 487 111
Impairment of goodwill - - (145)
Impairment of associates and joint venture
holdings - - (45 400)
Amortisation of acquired intangibles (7 603) (7 954) (16 104)
Amortisation of acquired intangibles of
associates (4 625) - -
Closure and rundown of the Hong Kong direct
investments business (2 158) (49 469) (89 257)
---------- ---------- ---------
Operating profit 112 845 247 733 336 205
Financial impact of group restructures - 12 757 (25 725)
---------- ---------- ---------
Profit before taxation from continuing
operations 112 845 260 490 310 480
Taxation on operating profit before goodwill,
acquired intangibles and strategic actions (20 892) (41 482) (54 690)
Taxation on acquired intangibles and strategic
actions 1 558 12 101 21 693
---------- ---------- ---------
Profit after taxation from continuing operations 93 511 231 109 277 483
Profit after taxation from discontinued
operations - 69 085 954 979
---------- ---------- ---------
Profit after taxation 93 511 300 194 1 232 462
Loss/(profit) attributable to other non-controlling
interests 15 255 (28 863) (67 952)
Profit attributable to non-controlling
interests of discontinued operations - (15 172) (29 347)
Earnings attributable to shareholders 108 766 256 159 1 135 163
---------------------------------------------------- ---------- ---------- ---------
* Restated to reflect continuing operations.
^ Depreciation on operating leased assets of GBP0.4 million (30 September 2019: GBP0.8 million; 31 March 2020: GBP1.4 million) which was previously reported as a separate line item, has been included in operating costs. The prior period has been restated to reflect the same basis.
Consolidated statement of total comprehensive income
Six months Six months
to to
Year
to 31
30 Sept 30 Sept March
GBP'000 2020 2019* 2020
----------------------------------------------------- ---------- ----------
Profit after taxation from continuing operations 93 511 231 109 277 483
Other comprehensive income/(loss) from continuing
operations:
Items that may be reclassified to the income
statement
Fair value movements on cash flow hedges taken
directly to other comprehensive income^ (4 427) (22 259) (40 304)
Fair value movements on debt instruments at
FVOCI taken directly to other comprehensive (139
income^ 84 566 (1 901) 977)
(Gain)/loss on realisation of debt instruments
at FVOCI recycled through the income statement^ (1 446) 9 502 (5 503)
Foreign currency adjustments on translating (314
foreign operations 17 837 39 948 078)
Items that will never be reclassified to the
income statement
Effect of rate change on deferred taxation
relating to adjustment for IFRS 9 828 (503) (1 761)
Fair value movements on equity instruments
at FVOCI taken directly to other comprehensive
income 736 - (3 931)
Remeasurement of net defined benefit pension
liability (32) 20 (1 217)
Movement in post retirement benefit liabilities - - 51
Net (loss)/gain attributable to own credit
risk (1 725) 1 451 9 515
Total comprehensive income/(loss) from continuing (219
operations 189 848 257 367 722)
Total comprehensive income/(loss) attributable (235
to ordinary shareholders from continuing operations 177 381 203 112 960)
Total comprehensive (loss)/income attributable
to non-controlling interests from continuing
operations (1 159) 31 902 (28 022)
Total comprehensive income attributable to
perpetual preferred securities from continuing
operations 13 626 22 353 44 260
Total comprehensive income/(loss) from continuing (219
operations 189 848 257 367 722)
Profit after taxation from discontinued operations - 69 085 954 979
Other comprehensive income from discontinued
operations:
Items that will never be reclassified to the
income statement
Foreign currency adjustments on translating
foreign operations - 337 (13 980)
Remeasurement of net defined benefit pension
liability - (1 217) -
Total comprehensive income from discontinued
operations - 68 205 940 999
Total comprehensive income attributable to
ordinary shareholders from discontinued operations - 53 033 914 448
Total comprehensive income attributable to
non-controlling interests from discontinued
operations - 15 172 26 551
Total comprehensive income from discontinued
operations - 68 205 940 999
1 232
Profit after taxation 93 511 300 194 462
Other comprehensive income:
Items that may be reclassified to the income
statement
Fair value movements on cash flow hedges taken
directly to other comprehensive income^ (4 427) (22 259) (40 304)
Fair value movements on debt instruments at
FVOCI taken directly to other comprehensive (139
income^ 84 566 (1 901) 977)
(Gain)/loss on realisation of debt instruments
at FVOCI recycled through the income statement^ (1 446) 9 502 (5 503)
Foreign currency adjustments on translating (328
foreign operations 17 837 40 285 058)
Items that will never be reclassified to the
income statement
Effect of rate change on deferred taxation
relating to adjustment for IFRS 9 828 (503) (1 761)
Fair value movements on equity instruments
at FVOCI taken directly to other comprehensive
income 736 - (3 931)
Re-measurement of net defined benefit pension
asset (32) (1 197) (1 217)
Movement in post retirement benefit liabilities - - 51
Net (loss)/gain attributable to own credit
risk (1 725) 1 451 9 515
Total comprehensive income 189 848 325 572 721 277
Total comprehensive income attributable to
ordinary shareholders 171 379 256 145 678 488
Total comprehensive income attributable to
non-controlling interests (1 159) 47 074 (1 471)
Total comprehensive income attributable to
perpetual preferred securities 19 628 22 353 44 260
Total comprehensive income 189 848 325 572 721 277
----------------------------------------------------- ---------- ---------- --------
* Restated to reflect continuing operations.
^ These amounts are net of taxation expense/(credit) of GBP22.3 million Six months to 30 September 2019: (GBP1.5 million); year to 31 March 2020: (GBP55.8 million).
Condensed combined consolidated balance sheet
At
GBP'000 30 Sept 31 March 30 Sept
2020 2020 2019
--------------------------------------------------
Assets
2 477 3 932 3 988
Cash and balances at central banks 636 048 832
3 079 2 666 2 242
Loans and advances to banks 807 851 874
Non-sovereign and non-bank cash placements 363 350 632 610 678 717
Reverse repurchase agreements and cash collateral 4 124 2 964 1 621
on securities borrowed 591 603 424
4 898 4 593 5 987
Sovereign debt securities 936 893 916
Bank debt securities 590 173 604 921 619 328
1 427 1 430 1 234
Other debt securities 174 419 781
1 885 2 034 1 256
Derivative financial instruments 922 399 794
1 044 1 762
Securities arising from trading activities 929 143 445 831
Investment portfolio 994 543 998 935 946 499
24 855 24 588 25 065
Loans and advances to customers 877 074 947
Own originated loans and advances to customers
securitised 307 532 324 638 378 171
Other loans and advances 100 659 132 486 145 034
Other securitised assets 122 892 134 865 133 523
Interests in associated undertakings and
joint venture holdings 722 227 701 311 407 743
Deferred taxation assets 256 581 265 896 260 766
1 912 1 934 2 393
Other assets 025 428 348
Property and equipment 341 343 356 573 484 359
1 000
Investment properties 799 588 863 864 603
Goodwill 270 991 270 625 360 128
Software* 13 045 14 643 18 467
Other acquired intangible assets* 66 224 71 657 80 799
Non-current assets classified as held for
sale 87 248 58 905 -
--------- --------- ---------
50 627 50 621 51 068
507 089 884
Other financial instruments at fair value
through profit or loss in respect of liabilities 8 657
to customers 37 178 35 227 879
50 664 50 656 59 726
685 316 763
Liabilities
3 319 3 498 2 929
Deposits by banks 727 254 180
1 793 2 248 1 729
Derivative financial instruments 033 849 053
Other trading liabilities 577 821 509 522 700 611
Repurchase agreements and cash collateral 1 692 1 577
on securities lent 050 346 983 895
32 551 32 220 32 039
Customer accounts (deposits) 697 976 291
1 815 1 737 2 936
Debt securities in issue 257 191 491
Liabilities arising on securitisation of
own originated loans and advances 73 042 76 696 79 667
Liabilities arising on securitisation of
other assets 109 107 110 679 116 544
Current taxation liabilities 95 940 51 308 166 482
Deferred taxation liabilities 50 727 44 788 23 194
2 025 2 211 2 399
Other liabilities 931 487 113
--------- --------- ---------
44 104 44 287 44 103
332 096 521
Liabilities to customers under investment 8 650
contracts 34 494 32 845 085
Insurance liabilities, including unit-linked
liabilities 2 684 2 382 7 794
--------- --------- ---------
44 141 44 322 52 761
510 323 400
1 447 1 436 1 594
Subordinated liabilities 948 361 961
45 589 45 758 54 356
458 684 361
Equity
Ordinary share capital 247 247 247
1 517 1 517 2 336
Ordinary share premium 852 852 194
Treasury shares (261 729) (272 881) (284 430)
Other reserves (910 668) (976 297) (557 009)
3 699 3 593 2 730
Retained income 652 384 044
--------- --------- ---------
4 045 3 862 4 225
Ordinary shareholders' equity 354 305 046
Perpetual preference share capital* 172 349 168 518 195 161
--------- --------- ---------
Shareholders' equity excluding non-controlling 4 217 4 030 4 420
interests 703 823 207
Other Additional Tier 1 securities in issue 296 809 295 593 304 047
Non-controlling interests 560 715 571 216 646 148
--------- --------- ---------
- Perpetual preferred securities issued by
subsidiaries 71 106 69 259 82 101
- Non-controlling interests in partially
held subsidiaries 489 609 501 957 564 047
--------- --------- ---------
5 075 4 897 5 370
Total equity 227 632 402
50 664 50 656 59 726
Total liabilities and equity 685 316 763
-------------------------------------------------- --------- --------- ---------
* Software of GBP13.0 million (31 March 2020: GBP14.6 million; 30 September 2019: GBP18.5 million), which was previously reported within intangible assets, is now reported as a separate line item. The prior periods have been re-presented to reflect the same basis. Perpetual preference share premium of GBP172.3 million (31 March 2020: GBP168.5 million; 30 September 2019: GBP195.1 million), which was previously reported within share premium, is now reported within perpetual preference share capital and premium. The prior periods have been re-presented to reflect the same basis.
Condensed consolidated statement of changes in equity
Six months Six months
to to Year to
30 Sept 30 Sept 31 March
GBP'000 2020 2019 2020
------------------------------------------------ ---------- ---------- -----------
Balance at the beginning of the period 4 897 632 5 251 014 5 251 014
Total comprehensive income 189 848 325 572 721 277
Share-based payments adjustments 18 353 29 770 39 336
Dividends paid to ordinary shareholders - (134 778) (244 323)
Dividends paid to perpetual preference
shareholders and Other Additional Tier
1 security holders - (7 511) (14 857)
Dividends paid to perpetual preference
shareholders included in non-controlling
interests and Other Additional Tier 1 security
holders (19 628) (14 842) (29 403)
Dividends paid to non-controlling interests (11 028) (34 003) (79 106)
Issue of ordinary shares - 64 647 64 647
Issue of equity by subsidiaries - - 45 256
Net equity impact of non-controlling interest
movements 1 687 1 966 (27 100)
Employee benefit liability recognised - - (7 570)
Movement of treasury shares (1 861) (109 046) (121 298)
Net equity movements of interests in associated
undertakings 225 (2 387) (2 387)
Distribution to shareholders - - (697 854)
Balance at the end of the period 5 075 228 5 370 402 4 897 632
------------------------------------------------ ---------- ---------- ---------
Condensed consolidated cash flow statement
Six months Six months
to to Year to
30 Sept 30 Sept 31 March
GBP'000 2020 2019 2020
--------------------------------------------- ---------- ---------- -----------
Cash inflow from operating activities 178 552 376 031 547 812
(2 457 (2 328 (5 795
Increase in operating assets 502) 228) 856)
(Decrease)/increase in operating liabilities (759 756) 1 553 483 5 715 897
---------- ---------- ---------
Net cash (outflow)/inflow from operating (3 038
activities 706) (398 714) 467 853
Net cash outflow from investing activities (6 967) (20 885) (350 855)
Net cash outflow from financing activities (59 855) (367 773) (603 247)
Effects of exchange rates on cash and cash
equivalents 41 935 22 834 (435 149)
(3 063
Net decrease in cash and cash equivalents 593) (764 538) (921 398)
Cash and cash equivalents at the beginning
of the period 6 193 708 7 115 106 7 115 106
Cash and cash equivalents at the end of
the period 3 130 115 6 350 568 6 193 708
--------------------------------------------- ---------- ---------- ---------
Cash and cash equivalents is defined as including: cash and balances at central banks, on demand loans and advances to banks and non-sovereign and non-bank cash placements (all of which have a maturity profile of less than three months).
Combined consolidated segmental analysis
Segmental geographical and business analysis of adjusted operating profit before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests.
For the six months to 30 September UK and Southern Total GBP'000 Other Africa group -------------------------------------------------- -------- -------- 2020 Wealth & Investment 28 877 11 960 40 837 Specialist Banking 12 903 92 870 105 773 Group Investments^ 11 791 1 428 13 219 Group costs (10 208) (7 135) (17 343) Continuing operations adjusted operating profit 43 363 99 123 142 486 Discontinued operations - - - Total group adjusted operating profit 43 363 99 123 142 486 Other non-controlling interests^ (15 255) Operating profit before non-controlling interests 127 231 2019* Wealth & Investment 30 455 14 053 44 508 Specialist Banking 79 448 145 339 224 787 Group Investments - 30 270 30 270 Group costs (15 839) (7 433) (23 272) Continuing operations adjusted operating profit 94 064 182 229 276 293 Discontinued operations 58 974 38 355 97 329 Total group adjusted operating profit 153 038 220 584 373 622 Other non-controlling interests** 28 863 Operating profit before non-controlling interests 402 485 -------------------------------------------------- -------- -------- -------- * Restated to reflect continuing operations.
** (Profit)/loss attributable to other non-controlling interests predominantly relates to the Investec Property Fund Limited.
^ In terms of IFRS 8 Operating segments, management concluded that key operating decision makers of Investec currently reviewed the operating results of the following operating segments:
-- Investec Specialist Bank -- Investec Wealth & Investment -- Group Investments -- Group costs
Accordingly, the results of Group Investments have been disclosed as a separate segment for the first time in the 30 September 2020 half year results. Group Investments was previously presented as a subset component of the Investec Specialist Bank.
Net fee and commission income
For the six months to 30 September 2020 UK and Southern
GBP'000 Other Africa Total
--------------------------------------------------------- ------- --------
Wealth & Investment net fee and commission
income 153 004 36 236 189 240
------- -------- --------
Fund management fees/fees for funds under management 129 086 20 484 149 570
Private client transactional fees 24 303 16 384 40 687
Fee and commission expense (385) (632) (1 017)
------- -------- --------
Specialist Banking net fee and commission income 66 883 45 655 112 538
------- -------- --------
Corporate and institutional transactional and
advisory services 66 785 33 749 100 534
Private client transactional fees 6 226 24 603 30 829
Fee and commission expense (6 128) (12 697) (18 825)
------- -------- --------
Group Investments net fee and commission income - 23 030 23 030
Net fee and commission income 219 887 104 921 324 808
------- -------- --------
Annuity fees (net of fees payable) 137 486 94 011 231 497
Deal fees 82 401 10 910 93 311
--------------------------------------------------------- ------- -------- --------
Included in Specialist Banking corporate and institutional and advisory services is net fee income of GBP32.7 million (2019: GBP36.2 million) for operating lease income which is out of the scope of IFRS 15 - Revenue from contracts with customers.
Discontinued operations
Asset Management business
During the prior financial year on 13 March 2020, the group successfully completed the demerger of Ninety One (formerly known as Investec Asset Management), which became separately listed on 16 March 2020. The loss of control of Investec Asset Management was effected through the distribution of Ninety One shares to shareholders.
The table below presents the income statement from discontinued operations included in the total group income statement for the six months to 30 September 2019 and the year to 31 March 2020.
Combined consolidated income statement of discontinued operations
Six months to 30 September
2019 Year to 31 March 2020
UK and Southern UK and Southern
GBP'000 Other Africa Total Other Africa Total
--------------------------------------- -------- --------- -------- --------
Net interest income (1 207) 2 202 995 (2 235) 3 962 1 727
Net fee and commission
income 204 392 94 983 299 375 392 591 191 388 583 979
Investment income (158) 8 (150) (2 042) 35 (2 007)
Trading income/(loss) arising
from
- balance sheet management
and other
trading activities 4 054 (95) 3 959 1 634 (76) 1 558
Other operating income 3 822 584 4 406 4 697 745 5 442
-------- --------- --------- -------- -------- --------
Total operating income
before expected credit
loss impairment charges 210 903 97 682 308 585 394 645 196 054 590 699
Expected credit loss impairment
charges - - - - - -
-------- --------- --------- -------- -------- --------
Operating income 210 903 97 682 308 585 394 645 196 054 590 699
(151 (211 (285 (115 (400
Operating costs 929) (59 327) 256) 542) 398) 940)
-------- --------- --------- -------- -------- --------
Operating profit before
strategic actions and non-controlling
interests 58 974 38 355 97 329 109 103 80 656 189 759
Profit attributable to
non-controlling interests
from discontinued operations (9 743) (5 429) (15 172) (18 106) (11 241) (29 347)
-------- --------- --------- -------- -------- --------
Operating profit 49 231 32 926 82 157 90 997 69 415 160 412
Gain on distribution net
of implementation costs (4 125) (4 454) (8 579) 549 263 270 970 820 233
-------- --------- --------- -------- -------- --------
Profit before taxation 45 106 28 472 73 578 640 260 340 385 980 645
Taxation on operating profit
before strategic actions (9 961) (10 931) (20 892) (19 112) (22 088) (41 200)
Taxation on strategic actions 645 582 1 227 1 253 (15 066) (13 813)
Earnings attributable to
shareholders from discontinued
operations 35 790 18 123 53 913 622 401 303 231 925 632
--------------------------------------- -------- --------- --------- -------- -------- --------
Restatements
The group remains committed to its objective to simplify and focus the business in pursuit of disciplined growth over the long-term.
In this regard the following strategic actions were effected in the prior financial year ended 31 March 2020:
-- Demerger of the asset management business -- Closure of Click & Invest which formed part of the UK wealth management business -- Sale of the Irish Wealth & Investment business -- Restructure of the Irish branch -- Sale of UK Property Fund -- Closure and rundown of the Hong Kong direct investments business.
We elected to separately disclose the financial impact of these strategic actions as the financial impact from group restructures and the rundown of portfolios where operations have ceased.
The effective date of the Asset Management business demerger was 13 March 2020 and admission of the Ninety One Limited shares and the Ninety One plc shares to the Johannesburg Stock Exchange and London Stock Exchange was effected on 16 March 2020. The global asset management business has been disclosed as a discontinued operation and the income statement for the prior period has been appropriately re-presented.
Depreciation on operating leased assets of GBP0.4 million (30 September 2019: GBP0.8 million; 31 March 2020: GBP1.4 million), which was previously reported as a separate line item on the income statement, has been included in operating costs. The prior period has been restated to reflect the same basis.
Software of GBP13.0 million (31 March 2020: GBP14.6 million; 30 September 2019: GBP18.5 million), which was previously reported within Intangible assets, is now reported as a separate line item. The prior periods have been re-presented to reflect the same basis.
Perpetual preference share premium of GBP172.3 million (31 March 2020: GBP168.5 million; 30 September 2019: GBP195.1 million), which was previously reported within share premium, is now reported within Perpetual preference share capital and premium. The prior periods have been re-presented to reflect the same basis.
The re-presentation of software and the perpetual preference share premium was done to provide users enhanced clarity on the values used to calculate net asset values and the various ROE ratios .
Financial impact of strategic actions
Six months Six months Year to
to 30 to 30 31 March
GBP'000 Sept 2020 Sept 2019 2020
--------------------------------------------------- ---------- ---------- -----------
Closure and rundown of the Hong Kong direct
investments business* (2 158) (49 469) (89 257)
Financial impact of group restructures - 12 757 (25 725)
---------- ---------- ---------
Closure of Click & Invest - (4 020) (4 309)
Sale of the Irish Wealth & Investment business - 18 959 19 741
Restructure of the Irish branch - (1 265) (41 110)
Other - (917) (47)
---------- ---------- ---------
Financial impact of strategic actions - continuing (114
operations (2 158) (36 712) 982)
Taxation on financial impact of strategic
actions from continuing operations 381 10 497 19 856
---------- ---------- ---------
Net financial impact of strategic actions
- continuing operations (1 777) (26 215) (95 126) Gain on distribution of Ninety One shares net of taxation and implementation costs - (8 579) 806 420 Net financial impact of strategic actions - Total group (1 777) (34 794) 711 294 --------------------------------------------------- ---------- ---------- ---------
* Included within the balance are fair value losses of GBP0.1 million (September 2019: GBP44.6 million, March 2020: GBP83.2 million).
Restatements continued
Six months
to
30 Sept Representation Six months
2019 as a to 30
as previously discontinued Sept 2019
GBP'000 reported operation restated
--------------------------------------------------- ---------------------- --------------
1 379
Interest income 1 382 062 (2 386) 676
Interest expense (955 418) 1 391 (954 027)
---------------------- -------------- ----------
Net interest income 426 644 (995) 425 649
Fee and commission income 818 827 (396 694) 422 133
Fee and commission expense (123 727) 97 319 (26 408)
Investment income 56 929 150 57 079
Share of post taxation profit of associates
and joint venture holdings 17 754 - 17 754
Trading income arising from
- customer flow 62 771 - 62 771
- balance sheet management and other trading
activities 1 641 (3 959) (2 318)
Other operating income 7 015 (4 406) 2 609
---------------------- -------------- ----------
Total operating income before expected credit
loss impairment charges 1 267 854 (308 585) 959 269
Expected credit loss impairment charges (31 021) - (31 021)
---------------------- -------------- ----------
Operating income 1 236 833 (308 585) 928 248
Operating costs (834 348) 211 256 (623 092)
Operating profit before goodwill, acquired
intangibles and strategic actions 402 485 (97 329) 305 156
Amortisation of acquired intangibles (7 954) - (7 954)
Closure and rundown of the Hong Kong direct
investments business (49 469) - (49 469)
---------------------- -------------- ----------
Operating profit 345 062 (97 329) 247 733
Financial impact of group restructures 4 178 8 579 12 757
---------------------- -------------- ----------
Profit before taxation 349 240 (88 750) 260 490
Taxation on operating profit before goodwill,
acquired intangibles and strategic actions (62 374) 20 892 (41 482)
Taxation on acquired intangibles and strategic
actions 13 328 (1 227) 12 101
---------------------- -------------- ----------
Profit after taxation from continuing operations 300 194 (69 085) 231 109
Profit after taxation from discontinued operations - 69 085 69 085
---------------------- -------------- ----------
Profit after taxation 300 194 - 300 194
Profit attributable to other non-controlling
interests (28 863) - (28 863)
Profit attributable to non-controlling interests
of discontinued operations (15 172) - (15 172)
Earnings attributable to shareholders 256 159 - 256 159
Earnings per share (pence)
- Basic 24.7 24.7
- Diluted 23.8 23.8
- Basic for continuing operations n/a 19.0
- Diluted for continuing operations n/a 18.3
Adjusted earnings per share (pence)
- Basic 28.9 28.9
- Diluted 27.8 27.8
- Basic for continuing operations n/a 22.4
- Diluted for continuing operations n/a 21.6
--------------------------------------------------- ---------------------- -------------- ----------
Analysis of assets and liabilities by measurement category
At 30 September 2020
Non-financial
instruments
Total or
instruments scoped
at Amortised out of
GBP'000 fair value cost IFRS 9 Total
----------------------------------------
Assets
Cash and balances at central banks - 2 477 636 - 2 477 636
Loans and advances to banks - 3 079 807 - 3 079 807
Non-sovereign and non-bank cash
placements 11 159 352 191 - 363 350
Reverse repurchase agreements and
cash collateral on securities borrowed 991 402 3 133 189 - 4 124 591
Sovereign debt securities 4 573 107 325 829 - 4 898 936
Bank debt securities 402 812 187 361 - 590 173
Other debt securities 578 762 848 412 - 1 427 174
Derivative financial instruments 1 885 922 - - 1 885 922
Securities arising from trading
activities 929 143 - - 929 143
Investment portfolio 994 543 - - 994 543
22 742 24 855
Loans and advances to customers 2 112 911 966 - 877
Own originated loans and advances
to customers securitised - 307 532 - 307 532
Other loans and advances - 100 659 - 100 659
Other securitised assets 110 370 12 522 - 122 892
Interests in associated undertakings - - 722 227 722 227
Deferred taxation assets - - 256 581 256 581
Other assets 177 037 1 008 152 726 836 1 912 025
Property and equipment - - 341 343 341 343
Investment properties - - 799 588 799 588
Goodwill - - 270 991 270 991
Software - - 13 045 13 045
Other acquired intangible assets - - 66 224 66 224
Non-current assets classified as
held for sale - - 87 248 87 248
------------ --------- ------------- ---------
12 767 34 576 50 627
168 256 3 284 083 507
Other financial instruments at
fair value through profit or loss
in respect of liabilities to customers 37 178 - - 37 178
12 804 34 576 50 664
346 256 3 284 083 685
Liabilities
Deposits by banks 313 3 319 414 - 3 319 727
Derivative financial instruments 1 793 033 - - 1 793 033
Other trading liabilities 577 821 - - 577 821
Repurchase agreements and cash
collateral on securities lent 437 204 1 254 846 - 1 692 050
30 955 32 551
Customer accounts (deposits) 1 596 301 396 - 697
Debt securities in issue 241 175 1 574 082 - 1 815 257
Liabilities arising on securitisation
of own originated loans and advances - 73 042 - 73 042
Liabilities arising on securitisation
of other assets 109 107 - - 109 107
Current taxation liabilities - - 95 940 95 940
Deferred taxation liabilities - - 50 727 50 727
Other liabilities 97 581 1 153 822 774 528 2 025 931
------------ --------- ------------- ---------
38 330 44 104
4 852 535 602 921 195 332
Liabilities to customers under
investment contracts 34 494 - - 34 494
Insurance liabilities, including
unit-linked liabilities 2 684 - - 2 684
------------ --------- ------------- ---------
38 330 44 141
4 889 713 602 921 195 510
Subordinated liabilities 355 364 1 092 584 - 1 447 948
39 423 45 589
5 245 077 186 921 195 458
---------------------------------------- ------------ --------- ------------- ---------
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 2020
Total instruments
at fair
GBP'000 value Level 1 Level 2 Level 3
----------------------------------------
Assets
Non-sovereign and non-bank cash
placements 11 159 - 11 159 -
Reverse repurchase agreements and
cash collateral on securities borrowed 991 402 7 991 395 -
Sovereign debt securities 4 573 107 4 573 107 - -
Bank debt securities 402 812 241 995 160 817 -
Other debt securities 578 762 140 226 304 201 134 335
Derivative financial instruments 1 885 922 3 037 1 852 971 29 914
Securities arising from trading
activities 929 143 904 633 19 203 5 307
Investment portfolio 994 543 95 624 8 961 889 958
Loans and advances to customers 2 112 911 - 1 076 157 1 036 754
Other securitised assets 110 370 - 3 017 107 353
Other assets 177 037 177 037 - -
Other financial instruments at
fair value through profit or loss
in respect of liabilities to customers 37 178 37 178 - -
12 804
346 6 172 844 4 427 881 2 203 621
Liabilities
Deposits by banks 313 - - 313
Derivative financial instruments 1 793 033 1 482 1 760 034 31 517
Other trading liabilities 577 821 324 851 252 970 -
Repurchase agreements and cash
collateral on securities lent 437 204 3 437 201 -
Customer accounts (deposits) 1 596 301 11 1 596 290 -
Debt securities in issue 241 175 - 241 175 -
Liabilities arising on securitisation
of other assets 109 107 - - 109 107
Other liabilities 97 581 - 56 257 41 324
Liabilities to customers under
investment contracts 34 494 - 34 494 -
Insurance liabilities, including
unit-linked liabilities 2 684 - 2 684 -
Subordinated liabilities 355 364 355 364 - -
5 245 077 681 711 4 381 105 182 261
Net financial assets at fair value 7 559 269 5 491 133 46 776 2 021 360
---------------------------------------- ----------------- --------- --------- ---------
Transfers between level 1 and level 2
There were no transfers between level 1 and level 2 in the current and prior year.
Measurement of financial assets and liabilities at level 2
The table below sets out information about the valuation techniques used at the end of the reporting period in measuring financial instruments categorised as level 2 in the fair value hierarchy:
Valuation basis/techniques Main inputs
------------------------------ --------------------------
Assets
-----------------------------------------------------------------------------------------
Non-sovereign and non-bank Discounted cash flow Yield curves
cash placements model
----------------------------- ------------------------------ --------------------------
Reverse repurchase agreements Discounted cash flow Yield curves, discount
and cash collateral model, Hermite interpolation, rates, volatilities
on securities borrowed Black-Scholes
----------------------------- ------------------------------ --------------------------
Bank debt securities Discounted cash flow Yield curves
model
----------------------------- ------------------------------ --------------------------
Other debt securities Discounted cash flow Yield curves, NCD curves
model and swap curves, discount
rates, external prices,
broker quotes
----------------------------- ------------------------------ --------------------------
Derivative financial Discounted cash flow Yield curves, risk free
instruments model, Hermite interpolation, rate, volatilities,
industry standard derivative forex forward points
pricing models including and spot rates, interest
Black-Scholes rate swap curves and
credit curves, discount
rates
----------------------------- ------------------------------ --------------------------
Securities arising from Standard industry derivative Interest rate curves,
trading activities pricing model Discounted implied bond spreads,
cash flow model equity volatilities,
yield curves
----------------------------- ------------------------------ --------------------------
Investment portfolio Discounted cash flow Discount rate and fund
model, relative valuation unit price, net assets
model Comparable quoted
inputs
----------------------------- ------------------------------ --------------------------
Loans and advances to Discounted cash flow Yield curves
customers model
----------------------------- ------------------------------ --------------------------
Other securitised assets Discounted cash flow Yield curves
model
----------------------------- ------------------------------ --------------------------
Liabilities
-----------------------------------------------------------------------------------------
Derivative financial Discounted cash flow Yield curves, discount
instruments model, Hermite interpolation, rates, risk free rate,
industry standard derivative volatilities, forex
pricing models including forward points and spot
Black-Scholes rates, interest rate
swap curves and credit
curves
----------------------------- ------------------------------ --------------------------
Other trading liabilities Discounted cash flow Yield curves
model
----------------------------- ------------------------------ --------------------------
Repurchase agreements Discounted cash flow Yield curves, discount
and cash collateral model, Hermite interpolation rates
on securities lent
----------------------------- ------------------------------ --------------------------
Customer accounts (deposits) Discounted cash flow Yield curves, discount
model rates
----------------------------- ------------------------------ --------------------------
Debt securities in issue Discounted cash flow Yield curves
model
----------------------------- ------------------------------ --------------------------
Other liabilities Discounted cash flow Yield curves
model
----------------------------- ------------------------------ --------------------------
Liabilities to customers Current price of underlying Listed prices
under investment contracts unitised assets
----------------------------- ------------------------------ --------------------------
Insurance liabilities, Current price of underlying Listed prices
including unit-linked unitised assets
liabilities
----------------------------- ------------------------------ --------------------------
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.
Loans and
advances Other balance
Investment to Other securitised sheet
GBP'000 portfolio customers assets assets Total
-------------------------------------- ---------- ---------- ----------------- -------------
Assets
Balance at 1 April 2020 848 670 1 101 666 106 218 178 840 2 235 394
Total gains or losses in
the income statement (6 431) 19 257 4 401 6 954 24 181
---------- ---------- ----------------- ------------- ---------
In the income statement (6 431) 18 834 4 401 6 954 23 758
In the statement of comprehensive
income - 423 - - 423
---------- ---------- ----------------- ------------- ---------
Purchases 47 125 364 392 - 265 411 782
Sales (13 387) (216 725) - (1 424) (231 536)
Settlements (1 363) (231 773) (3 266) (10 680) (247 082)
Transfers into level 3 - 7 802 - 141 7 943
Transfers out of level
3 - - - (156) (156)
Foreign exchange adjustments 15 344 (7 865) - (4 384) 3 095
Balance at 30 September
2020 889 958 1 036 754 107 353 169 556 2 203 621
-------------------------------------- ---------- ---------- ----------------- ------------- ---------
For the six months to 30 September 2020, following a review of the valuation methodology of a number of financial instruments, the following reclassifications were made during the period: loans and advances to customers of GBP7.8 million from level 2 to level 3; other assets of GBP0.1 million from level 2 to level 3; and derivative assets of GBP0.1 million and derivative liabilities of GBP0.1 million from level 3 to level 2.
Liabilities
arising
on securitisation Other balance
of other sheet
GBP'000 assets liabilities Total
---------------------------------------------- ------------------ -------------
Liabilities
Balance at 1 April 2020 110 679 27 602 138 281
Total gains or losses in the income statement 3 191 6 867 10 058
------------------ ------------- -------
In the income statement 3 191 6 867 10 058
In the statement of comprehensive income - - -
------------------ ------------- -------
Purchases - 39 893 39 893
Settlements (4 763) (937) (5 700)
Transfers into level 3 - - -
Transfers out of level 3 - (153) (153)
Foreign exchange adjustments - (118) (118)
Balance as at 30 September 2020 109 107 73 154 182 261
---------------------------------------------- ------------------ ------------- -------
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 six months to 30 September 2020
GBP'000 Total Realised Unrealised
------------------------------------------------
Total gains or (losses) included in the
income statement for the year
Net interest income/(expense) 31 652 20 435 11 217
Fee and commission (expense) - - -
Investment income (13 390) 14 006 (27 396)
Trading income arising from customer flow (4 562) - (4 562)
13 700 34 441 (20 741)
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 (1 031) (1 031) -
Fair value movements on debt instruments
at FVOCI taken directly to other comprehensive
income 423 - 423
(608) (1 031) 423
------------------------------------------------ -------- -------- ----------
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 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:
Potential impact
on the
income statement
Balance
sheet Favourable Unfavourable
value changes changes
Range
which
unobservable
input
At 30 September Significant unobservable has been
2020 GBP'000 input changed changed GBP'000 GBP'000
--------- ----------
Assets
Potential impact
Other debt securities 134 335 on income statement 4 971 (11 884)
---------- ------------
Credit spreads 0.29%-0.89% 15 (97)
Cash flow adjustments CPR 5.3% 984 (984)
Discount rate 0.0605 1 (7)
Underlying asset
value^^ ^^ 437 (194)
Other^ ^ 3 534 (10 602)
---------- ------------
Derivative financial Potential impact
instruments 29 914 on income statement 5 053 (5 929)
---------- ------------
3.6% -
Volatilities 21.6% 236 (708)
Underlying asset
value^^ ^^ 4 661 (4 753)
Other^ ^ 156 (468)
---------- ------------
Securities arising Potential impact
from trading activities 5 307 on income statement
Cash flow adjustments CPR 9.8% 891 (1 514)
Potential impact
Investment portfolio 889 958 on income statement 108 106 (176 998)
---------- ------------
Price earnings multiple 4.2x -11.92x 6 045 (12 564)
Underlying asset
value^^ ^^ 8 053 (9 814)
EBITDA ** 25 874 (22 648)
Discount rate (0.6%)/1.4% 985 (1 044)
Cash flows ** 1 920 (1 426)
Property values (10%)/10% 32 812 (32 812)
Precious and industrial
metal prices (6%)/6% 762 (1 270)
Underlying asset
value # 2 013 (5 145)
Other^ ^ 29 642 (90 275)
---------- ------------
Loans and advances Potential impact
to customers 1 036 754 on income statement 32 496 (61 423)
---------- ------------
0.04%
Credit spreads -5.3% 10 288 (16 908)
Price earnings multiple 3.5x-7x 3 955 (502)
Discount rate 0.05 75 (220)
Underlying asset
value^^ ^^ 1 211 (2 945)
Property values (5%)/5% 232 (232)
Cash flows * 1 954 (3 229)
Underlying asset
value # 249 (249)
Other^ ^ 14 532 (37 138)
---------- ------------
Potential impact
on other comprehensive
income
0.082%
Credit spreads -37.86% 9 387 (18 622)
Other securitised Potential impact
assets 107 353 on income statement
Cash flow adjustments CPR 5.3% 53 (78)
Total level 3 assets 2 203 621 160 957 (276 448)
-------------------------- --------- ------------------------ ------------- ---------- ------------
Liabilities
Deposits by banks Potential impact
313 on income statement
Underlying asset
value^^ ^^ (31) 94
Derivative financial Potential impact
instruments 31 517 on income statement (4 837) 5 278
Volatilities 3.6% -21.6% (221) 662
Underlying asset
value^^ ^^ (4 616) 4 616
Liabilities arising
on securitisation Potential impact
of other assets 109 107 on income statement
Cash flow adjustments CPR 5.3% (435) 380
Potential impact
Other liabilities 41 324 on income statement
Property values (10%)/10% (4 681) 4 681
Total level 3 liabilities 182 261 (9 984) 10 433
---------- ------------
Net level 3 assets 2 021 360
-------------------------- --------- ------------------------ ------------- ----------
* 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 and cash flows have been stressed on an investment-by-investment basis in order to obtain favourable and unfavourable valuations.
# Net asset asset values are calculated by reference to the fair value of the assets and liabilities within the entity.
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 values 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
The following table sets out the fair value of financial instruments held at amortised cost when the carrying value is not a reasonable approximation of fair value.
At 30 September 2020
Carrying
GBP'000 amount Fair value
--------------------------------------------------------
Assets
Cash and balances at central banks 2 477 636 2 477 632
Loans and advances to banks 3 079 807 3 078 702
Non-sovereign and non-bank cash placements 352 191 352 188
Reverse repurchase agreements and cash collateral
on securities borrowed 3 133 189 3 133 275
Sovereign debt securities 325 829 331 453
Bank debt securities 187 361 194 421
Other debt securities 848 412 842 159
22 742 22 750
Loans and advances to customers 966 272
Own originated loans and advances to customers
securitised 307 532 307 530
Other loans and advances 100 659 98 422
Other assets 1 008 152 1 007 996
Liabilities
Deposits by banks 3 319 414 3 336 577
Repurchase agreements and cash collateral on securities
lent 1 254 846 1 259 412
30 955 31 012
Customer accounts (deposits) 396 834
Debt securities in issue 1 574 082 1 600 818
Liabilities arising on securitisation of own originated
loans and advances 73 042 73 042
Other liabilities 1 153 821 1 152 726
Subordinated liabilities 1 092 585 1 172 099
-------------------------------------------------------- --------- ----------
Events after the reporting date
The significant judgements and estimates applied to prepare the interim financial statements as at 30 September 2020 reflected the impact of COVID-19 and the resulting impact on the economy as at the balance sheet date. These judgements, specifically those relating to the impairment of loans and advances and valuation of fair value instruments, were determined by considering a range of economic scenarios including the adverse impact of COVID-19 and by applying the guidance issued by various international regulators and standard setting bodies.
The action of various governments and central banks, in particular in the United Kingdom and South Africa, provides an indication of the potential severity of the downturn and that the recovery environment could be significantly different from past crises with a duration which is also difficult to predict. Subsequent to the balance sheet date, it was announced that various vaccine trials proved to be more than 90% effective and resultingly had a very positive impact on global markets. It still remains very difficult to predict when a full scale role out of the vaccine will take place. In South Africa various government and social programmes were launched, aimed at reducing the impact of COVID-19 and to stimulate the economy and in the UK previously launched schemes have been extended in an attempt to mitigate the economic impact of COVID-19.
The group believes that the significant judgements and estimates made at the balance sheet date took account of the impact of COVID-19 and the results of subsequent event procedures performed by management up to 18 November 2020 did not identify additional information that requires these judgements and estimates to be updated. Management is satisfied that there were no such items of sufficient significance to warrant additional disclosure. However, should the COVID-19 crisis cause disruption to global economic activity for a longer period than forecasted, this could put additional upward pressure on the group ECLs and downward pressure on other valuations.
Investec Bank plc owns the appointed asset manager of Investec Australia Property Fund (IAPF). On 18 November 2020, the IAPF shareholders voted to purchase the asset management company for an amount of AUD$40m subject to certain conditions.
The group is further not aware of any other events after the reporting date as defined by IAS 10 Events after the Reporting Period, that would require the financial statements to be adjusted or which would require additional disclosures.
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
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 36
Notice is hereby given that an interim dividend number 36, being a gross dividend of 5.5 pence (2019: 11 pence) per ordinary share has been declared by the Board from income reserves in respect of the six months ended 30 September 2020 payable to shareholders recorded in the shareholders' register of the company at the close of business on Friday, 11 December 2020.
-- For Investec plc shareholders, registered on the United Kingdom share register, through a dividend payment by Investec plc from income reserves of 5.5 pence per ordinary share
-- For Investec plc shareholders, registered on the South African branch register, through a dividend payment by Investec Limited, on the SA DAS share, payable from income reserves, equivalent to 5.5 pence per ordinary share.
The relevant dates relating to the payment of dividend number 36 are as follows: --------------------------------------------------------------------- Last day to trade cum-dividend On the Johannesburg Stock Tuesday, 08 December 2020 Exchange (JSE) Wednesday, 09 December 2020 On the London Stock Exchange Shares commence trading ex-dividend Wednesday, 09 December 2020 On the Johannesburg Stock Thursday, 10 December 2020 Exchange Friday, 11 December 2020 On the London Stock Exchange Monday, 04 January 2021 Record date (on the JSE and LSE) Payment date (on the JSE and LSE) Share certificates on the South African branch register may not be dematerialised or rematerialised between Wednesday, 09 December 2020 and Friday, 11 December 2020, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday, 09 December 2020 and Friday, 11 December 2020, 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 5.5 pence, equivalent to a gross dividend of 112 cents per share, has been arrived at using the Rand/Pound Sterling average buy/sell forward rate, as determined at 11h00 (SA time) on Wednesday, 18 November 2020
-- 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 112 cents per share paid by Investec Limited on the SA DAS share
-- Shareholders registered on the South African branch register who are not exempt from paying the Dividend Tax will receive a net dividend of 89.6 cents per share (gross dividend of 112 cents per share less Dividend Tax of 22.4 cents per share) paid by Investec Limited on the SA DAS share.
By order of the board
D Miller
Company Secretary
18 November 2020
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 29
Notice is hereby given that preference dividend number 29 has been declared by the board from income reserves for the period 01 April 2020 to 30 September 2020 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, 11 December 2020.
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 112.42435 cents per share, which has been determined using the Rand/Pound Sterling average buy/sell forward rate as at 11h00 (SA time) on Wednesday, 18 November 2020.
The relevant dates for the payment of dividend number 29 are as follows: --------------------------------------------------------------------------- Last day to trade cum-dividend On the Johannesburg Stock Exchange Tuesday, 08 December 2020 (JSE) Wednesday, 09 December2020 On the International Stock Exchange (TISE) Shares commence trading ex-dividend On the Johannesburg Stock Exchange Wednesday, 09 December 2020 (JSE) Thursday, 10 December 2020 On the International Stock Exchange (TISE) Record date (on the JSE and TISE) Friday,11 December 2020 Payment date (on the JSE and TISE) Wednesday, 23 December 2020 Share certificates may not be dematerialised or rematerialised between Wednesday,09 December 2020 and Friday, 11 December 2020, both dates inclusive, nor may transfers between the United Kingdom share register and the South African branch register take place between Wednesday, 09 December 2020 and Friday, 11 December 2020, 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 89.93948 cents per preference share for preference shareholders liable to pay the Dividend Tax and 112.42435 cents per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
18 November 2020
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 19
Notice is hereby given that preference dividend number 19 has been declared by the board from income reserves for the period 01 April 2020 to 30 September 2020 amounting to a gross preference dividend of 350.65412 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,11 December 2020.
The relevant dates relating to the payment of dividend number 18 are as follows: ---------------------------------------------------------------------- Last day to trade cum-dividend Tuesday, 08 December 2020 Shares commence trading ex-dividend Wednesday, 09 December 2020 Record date Friday, 11 December 2020 Payment date Wednesday, 23 December 2020 Share certificates may not be dematerialised or rematerialised between Wednesday, 09 December 2020 and Friday, 11 December 2020, 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 280.52330 cents per preference share for preference shareholders liable to pay the Dividend Tax and 350.65412 cents per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
18 November 2020
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END
IR EANFPFLNEFFA
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November 19, 2020 02:00 ET (07:00 GMT)
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