Wrap Text
Unaudited combined consolidated financial results for the six months ended 30 September 2018
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE ordinary share code: INP
LSE ordinary share code: INVP
ISIN: GB00B17BBQ50
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated
financial results for the six months ended 30 September 2018
Unaudited combined consolidated financial results
This announcement covers the statutory results of the Investec group for the six months ended 30 September 2018.
Overview of results
- The group has delivered a sound operational performance.
- This is notwithstanding a challenging operating environment. Rising US
interest rates, the threat of trade wars, concerns over global growth
prospects, weak economic growth in South Africa and Brexit-related
uncertainty in the UK have contributed to this.
- The Asset Management and Wealth & Investment businesses have
grown funds under management supported by strong net flows of
GBP4.8 billion.
- The Specialist Banking business saw a substantial reduction in
impairments as well as revenue growth supported by reasonable levels of
client activity.
- The cost to income ratio improved marginally. Revenue growth and cost
containment remain priorities.
- A solid base of annuity revenue has continued to support earnings
through varying market conditions.
Overall group performance
Operating profit before goodwill, acquired intangibles, non-operating items
and taxation and after other non-controlling interests (operating profit)
increased 14.2% to GBP359.3 million (2017: GBP314.6 million) - an
increase of 17.6% on a currency neutral basis. Overall group results have
been negatively impacted by the depreciation of the average Rand: Pounds
Sterling exchange rate of approximately 4.1% over the period. The combined
South African businesses reported operating profit 5.0% ahead of the prior
period (in Rands), whilst the combined UK and Other businesses posted a
40.2% increase in operating profit in Pounds Sterling.
Salient features of the period under review are:
- Adjusted earnings attributable to shareholders before goodwill, acquired
intangibles and non-operating items increased 8.2% to GBP265.3 million
(2017: GBP245.3 million) - an increase of 11.1% on a currency neutral
basis.
- Adjusted earnings per share (EPS) before goodwill, acquired intangibles
and non-operating items increased 6.4% from 26.6 pence to 28.3 pence
- an increase of 9.4% on a currency neutral basis.
- Annuity income as a percentage of total operating income amounted to
75.5% (2017: 76.4%).
- The total income statement impairment charge reduced materially to
GBP31.0 million (2017: GBP59.6 million). The annualised credit loss
charge as a percentage of average gross core loans and advances
subject to expected credit losses has improved to 0.34% (2017: 0.52%).
- The annualised return on adjusted average shareholders' equity increased
to 13.4% from 12.1% at 31 March 2018.
- Third party assets under management increased 3.7% to
GBP166.5 billion (31 March 2018: GBP160.6 billion) - an increase of
7.2% on a currency neutral basis.
- Customer accounts (deposits) decreased 2.1% to GBP30.3 billion
(31 March 2018: GBP31.0 billion) - an increase of 4.3% on a currency
neutral basis.
- Core loans and advances decreased 3.7% to GBP24.2 billion
(31 March 2018: GBP25.1 billion) - an increase of 2.4% on a currency
neutral basis.
- The group maintained a sound capital position with common equity tier
one (CET 1) ratios of 10.4% for Investec plc and 10.3% for Investec
Limited, ahead of the group's CET 1 ratio target. The group is comfortable
with its CET 1 ratio target at a 10% level, as its leverage ratios for both
Investec Limited and Investec plc are above 7%.
- Liquidity remains strong with cash and near cash balances amounting to
GBP12.5 billion.
- The board declared a dividend of 11.0 pence per ordinary share
(2017: 10.5 pence) resulting in a dividend cover based on the group's
adjusted EPS before goodwill and non-operating items of 2.6 times
(2017: 2.5 times), consistent with the group's dividend policy.
- The proposed demerger and separate listing of Investec Asset
Management (still subject to regulatory and shareholder approvals) is
progressing well.
Fani Titi and Hendrik du Toit, Joint Chief Executive Officers of
Investec said:
"The outgoing executives have handed over a resilient business with positive
momentum and good growth potential. It is now up to us to implement
our strategy of simplification and greater focus, involving the demerger and
separate listing of the Asset Management business and the positioning of the
Specialist Bank and Wealth & Investment businesses for sustainable long-
term growth. Revenue growth, capital allocation and cost discipline remain
high on our agenda."
For further information please contact:
Investec +27 (0) 11 286 7070 or +44 (0) 20 7597 5546
Fani Titi, Joint Chief Executive Officer
Hendrik du Toit, Joint Chief Executive Officer
Ursula Nobrega, Investor Relations (mobile: +27 (0) 82 552 8808)
Carly Newton, Investor Relations (+44 (0) 20 7597 4493)
Brunswick (SA PR advisers)
Marina Bidoli
Tel: +27 (0)11 502 7405 / +2783 253 0478
Lansons (UK PR advisers)
Tom Baldock
Tel: +44 (0)20 7566 9716
Presentation/conference call details
A presentation on the results will commence at 9:00 UK time/11:00 SA time.
Viewing options as below:
- Live on South African TV (Business day TV channel 412 DSTV)
- A live and delayed video webcast at www.investec.com
- Toll free numbers for the telephone conference facilities
- SA participants: 0800 200 648
- UK participants: 0808 162 4061
- rest of Europe and other participants: +800 246 78 700
- Australian participants: 1800 350 100
- USA participants: 1855 481 6362
About Investec
Investec is an international specialist bank and asset manager that provides
a diverse range of financial products and services to a select client base in
three principal markets - the UK and Europe, South Africa and Asia/Australia
as well as certain other countries. The group was established in 1974 and
currently has approximately 10 300 employees.
Investec focuses on delivering distinctive profitable solutions for its clients in
three core areas of activity namely, Asset Management, Wealth & Investment
and Specialist Banking.
In July 2002 the Investec group implemented a dual listed company
structure with listings on the London and Johannesburg Stock Exchanges.
The combined group's current market capitalisation is approximately
GBP5.0 billion.
Business unit review
Asset Management
Asset Management operating profit increased by 10.0% to GBP91.5 million
(2017: GBP83.2 million). Strong net inflows of GBP4.1 billion supported the
growth in total funds under management to GBP109.2 billion (31 March
2018: GBP103.9 billion). Flows were well spread across client regions.
Wealth & Investment
Wealth & Investment operating profit decreased by 6.3% to GBP46.4 million
(2017: GBP49.5 million). Earnings have been impacted by growth in
headcount for IT initiatives, compliance requirements, and continued
recruitment of experienced portfolio managers and financial planners
to support future revenue growth. The business generated net inflows
of GBP650 million. Total funds under management amounted to
GBP56.7 billion (31 March 2018: GBP56.0 billion).
Specialist Banking
Specialist Banking operating profit increased by 18.8% to GBP245.4 million
(2017: GBP206.5 million).
The South African business reported an increase in operating profit in Rands
of 4.2%. A combination of a weak domestic economy and political policy
uncertainty has resulted in subdued activity; reflecting in softer loan book
growth, client flow trading levels and a weaker performance from the equity
and investment property portfolios. We did however, report growth in net
interest income supported by higher net margins and continued activity from
our private client base. The annualised credit loss ratio on average core
loans and advances subject to expected credit losses amounted to 0.30%
(2017: 0.30% under the IAS 39 incurred impairment loss model), remaining
at the lower end of its long-term average trend.
The UK and Other businesses reported a 96.0% increase in operating
profit, reflecting a material decrease in impairment charges due to no longer
incurring substantial losses on the legacy portfolio. In addition, earnings
were supported by strong growth in net interest income and fee income
largely driven by the corporate business. With the investment phase in the
private bank largely complete, the business has strengthened its focus on
client acquisition and has seen sound growth in mortgage lending activity.
The bank's overall cost to income ratio improved, notwithstanding an
increase in costs driven largely by headcount growth in relation to increased
business activity and regulatory requirements. The annualised credit loss
ratio on average core loans and advances subject to expected credit losses
amounted to 0.41% (2017: 0.84% under the IAS 39 incurred impairment loss
model).
Further information on key developments within each of the business
units is provided in a detailed report published on the group's website:
https://www.investec.com
Group costs
These largely relate to group brand and marketing costs and a portion of
executive and support functions which are associated with group level
activities. These costs are not incurred by the operating divisions and are
necessary to support the operational functioning of the group. These costs
amounted to GBP24.0 million (2017: GBP24.7 million).
Financial statement analysis
Total operating income
Total operating income before expected credit loss impairment charges
increased by 7.6% to GBP1 281.3 million (2017: GBP1 191.1 million).
Net interest income increased by 11.2% to GBP405.0 million
(2017: GBP364.3 million) driven by lending activity and endowment impact
from rate rises in the UK.
Net fee and commission income increased by 5.7% to GBP703.7 million
(2017: GBP666.0 million) as a result of higher average funds under
management and net inflows in the Asset Management and Wealth
Management businesses as well as a good performance from the corporate
advisory business in the UK.
Investment income amounted to GBP41.5 million (2017: GBP62.1 million)
reflecting a weaker performance from the group's listed and unlisted
investment portfolio, as well as from the investment property portfolio in
South Africa.
Share of post taxation profit of associates of GBP20.8 million
(2017: GBP23.7 million) reflects earnings in relation to the group's
investment in the IEP Group.
Trading income arising from customer flow increased by 1.4% to
GBP65.1 million (2017: GBP64.2 million) reflecting subdued client flow
trading levels given the uncertainty in both geographies.
Trading income from balance sheet management and other trading activities
increased significantly to GBP39.0 million (2017: GBP5.1 million). The
increase is largely reflective of translation gains on foreign currency equity
investments in South Africa (partially offsetting the related weaker investment
income performance) as well as the unwind of the UK subordinated debt fair
value adjustment (recognised on the adoption of IFRS 9) as the instrument
pulls to par over its remaining term.
Expected credit loss (ECL) impairment charges
The total ECL impairment charges amounted to GBP31.0 million, a
substantial reduction from GBP59.6 million (under the IAS 39 incurred
loss model) in the prior period, primarily reflecting a reduction in legacy
impairments. The group's annualised credit loss ratio is now within its long
term average range at 0.34% (2017: 0.52%). Since 1 April 2018 gross core
loan Stage 3 assets have reduced by GBP141 million to GBP595.0 million
largely driven by a reduction of legacy exposures. Stage 3 assets (net of ECL
impairment charges) as a percentage of net core loans subject to ECL was
1.7% (1 April 2018: 2.0%).
Operating costs
The cost to income ratio improved marginally, amounting to 66.6%
(2017: 66.9%). Total operating costs grew by 7.2% to GBP854.2 million
(2017: GBP797.1 million) largely driven by growth in headcount to support
both activity levels and increased regulatory requirements.
Taxation
The effective tax rate amounted to 16.1% (2017: 14.5%), which remains
below the group's historical effective tax rate mainly impacted by the
utilisation of tax losses.
Profit attributable to non-controlling interests
Profit attributable to non-controlling interests mainly comprises:
- GBP12.8 million profit attributable to non-controlling interests in the Asset
Management business.
- GBP36.4 million profit attributable to non-controlling interests in the
Investec Property Fund.
Balance sheet analysis
Since 31 March 2018:
- Shareholders equity decreased by 5.9% to GBP4.2 billion primarily as
a result of the adoption of IFRS 9 on 1 April 2018 as well as from the
depreciation of the closing Rand: Pounds Sterling exchange rate.
- Net asset value per share decreased 6.7% to 422.0 pence and net
tangible asset value per share (which excludes goodwill and intangible
assets) decreased 7.2% to 372.7 pence, primarily as a result of the
adoption of IFRS 9 as well as from the depreciation of the closing Rand:
Pounds Sterling exchange rate.
- The annualised return on adjusted average shareholders' equity increased
from 12.1% to 13.4%.
Liquidity and funding
As at 30 September 2018 the group held GBP12.5 billion in cash and
near cash balances (GBP6.5 billion in Investec plc and R110.8 billion in
Investec Limited) which amounted to 41.1% of customer deposits. The
group continues to focus on maintaining an optimal overall liquidity and
funding profile. Loans and advances to customers as a percentage of
customer deposits amounted to 78.2% (31 March 2018: 79.6%). The group
comfortably exceeds Basel liquidity requirements for the Liquidity Coverage
Ratio (LCR) and Net Stable Funding Ratio (NSFR). Investec Bank Limited
(solo basis) ended the period to 30 September 2018 with the three-month
average of its LCR at 137.4% and an NSFR of 111.3%. Further detail with
respect to the bank's LCR and NSFR in South Africa is provided on the
website. For Investec plc and Investec Bank plc (solo basis) the LCR is
calculated using our own interpretations of the EU Delegated Act. The LCR
reported to the PRA at 30 September 2018 was 332% for Investec plc and
339% for Investec Bank plc (solo basis). Ahead of the implementation of the
final NSFR rules, the group has applied its own interpretations of regulatory
guidance and definitions from the BCBS final guidelines to calculate the
NSFR which was 140% for Investec plc and 134% for Investec Bank plc
(solo basis). The reported NSFR and LCR may change over time with
regulatory developments and guidance.
Capital adequacy and leverage ratios
The group is targeting a minimum common equity tier 1 capital ratio
above 10% and a total capital adequacy ratio range of 14% to 17% on
a consolidated basis for each of Investec plc and Investec Limited. The
group's anticipated fully loaded Basel III common equity tier 1 (CET 1) ratios
in both Investec plc and Investec Limited are reflected in the following table.
The group expects to implement the Foundation Internal Ratings-Based
(FIRB) approach in South Africa by the end of the 2019 financial year, subject
to final regulatory approval.
30 Sept 1 April 31 March
2018 2018 2018
Investec plc^
Capital adequacy ratio 15.4% 15.0% 15.4%
Tier 1 ratio 12.2% 12.4% 12.9%
Common equity tier 1 ratio 10.4% 10.5% 11.0%
Common equity tier 1 ratio ('fully
loaded'*) 10.0% 10.3% 11.0%
Leverage ratio (current) 7.7% 8.3% 8.5%
Leverage ratio ('fully loaded'*) 7.3% 8.0% 8.4%
Investec Limited**
Capital adequacy ratio 14.7% 14.5% 14.6%
Tier 1 ratio 11.1% 10.8% 11.0%
Common equity tier 1 ratio 10.3% 10.0% 10.2%
Common equity tier 1 ratio ('fully
loaded'*) 10.2% 9.8% 10.2%
Leverage ratio (current) 7.5% 7.4% 7.5%
Leverage ratio ('fully loaded'*) 7.1% 6.9% 7.1%
^ The capital adequacy disclosures follow Investec's normal basis of presentation so
as to show a consistent basis of calculation across the jurisdictions in which the
group operates. For Investec plc this does not include the deduction of foreseeable
charges and dividends when calculating CET 1 capital as required under the
Capital Requirements Regulation and European Banking Authority technical
standards. The impact of this deduction totalling GBP45 million for Investec plc
would lower the CET 1 ratio by 30bps (31 March 2018: 45bps).
** Investec Limited's capital information includes unappropriated profits. If
unappropriated profits are excluded from the capital information, Investec
Limited's CET 1 ratio would be 27bps (31 March 2018: 25bps) lower.
* 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 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 2018 of GBP18 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.
Additional information - proposed demerger and listing
of Investec Asset Management business
On 14 September 2018, the board of directors of Investec plc and Investec
Limited announced that the Investec Asset Management business would
become a separately listed entity. The demerger and the listing of Investec
Asset Management is subject to regulatory, shareholder and other approvals,
and is expected to be completed during the second half of 2019.
Outlook
Notwithstanding macro challenges, we believe that our current business
momentum and our drive to simplify and focus the business, together
with our commitment to cost discipline, will support our long-term growth
aspirations.
On behalf of the boards of Investec plc and Investec Limited
Perry Crosthwaite Fani Titi Hendrik du Toit
Chairman Joint Chief Executive Joint Chief Executive
Officer Officer
14 November 2018
Notes to the commentary section above
Presentation of financial information
Investec operates under a Dual Listed Companies (DLC) structure with
primary listings of Investec plc on the London Stock Exchange and Investec
Limited on the JSE Limited.
In terms of the contracts constituting the DLC structure, Investec plc and
Investec Limited effectively form a single economic enterprise in which
the economic and voting rights of ordinary shareholders of the companies
are maintained in equilibrium relative to each other. The directors of the
two companies consider that for financial reporting purposes, the fairest
presentation is achieved by combining the results and financial position of
both companies.
Accordingly, the interim results for Investec plc and Investec Limited
present the results and financial position of the combined DLC group under
International Financial Reporting Standards (IFRS), denominated in Pounds
Sterling. In the commentary above, all references to Investec or the group
relate to the combined DLC group comprising Investec plc and Investec
Limited.
Unless the context indicates otherwise, all comparatives included in the
commentary above relate to the six months ended 30 September 2017.
Amounts represented on a currency neutral basis for income statement
items assume that the relevant average exchange rates for the six months to
30 September 2018 remain the same as those in the prior period. Amounts
represented on a currency neutral basis for balance sheet items assume that
the relevant closing exchange rates at 30 September 2018 remain the same
as those at 31 March 2018.
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 Sep 2018 31 Mar 2018 30 Sep 2017
Currency per Period Period Period
GBP1.00 end Average end Average end Average
South African
Rand 18.44 17.76 16.62 17.21 18.10 17.06
Australian Dollar 1.80 1.79 1.83 1.72 1.71 1.69
Euro 1.12 1.13 1.14 1.14 1.13 1.14
US Dollar 1.30 1.33 1.40 1.33 1.34 1.30
Exchange rates between local currencies and Pounds Sterling have
fluctuated over the period. The most significant impact arises from the
volatility of the Rand. The average exchange rate over the period has
depreciated by 4.1% and the closing rate has depreciated by 11.0% since
31 March 2018.
Accounting policies and disclosures
These unaudited summarised combined consolidated financial results
have been prepared in terms of the recognition and measurement criteria
of International Financial Reporting Standards, and the presentation and
disclosure requirements of IAS 34, (Interim Financial Reporting).
The accounting policies applied in the preparation of the results for the period
to 30 September 2018 are consistent with those adopted in the financial
statements for the year ended 31 March 2018 except as noted below.
On 1 April 2018 the group adopted IFRS 9 'Financial Instruments' which
replaced IAS 39 and sets out the new requirements for the recognition
and measurement of financial instruments. These requirements focus
primarily on the classification and measurement of financial instruments
and measurement of impairment losses based on an expected credit loss
(ECL) model as opposed to an incurred loss methodology under IAS 39.
Disclosure related to the initial application and the impact of the transition
from IAS 39 to IFRS 9 were included in the group's transition disclosures
published on 15 June 2018 which can be accessed via the Investec website
at www.investec.com.
Additionally, on 1 April 2018 the group adopted IFRS 15 'Revenue from
contracts with customers' which replaced IAS 18 'Revenue'. IFRS 15
provides a principles-based approach for revenue recognition and introduces
the concept of recognising revenue for obligations as they are satisfied. It
applies to all contracts with customers except leases, financial instruments
and insurance contracts. The group's measurement and recognition
principles were aligned to the new standard and hence there has been no
material impact on measurement and recognition principles or on disclosure
requirements from the adoption of IFRS 15.
The financial results have been prepared under the supervision of
Glynn Burger, the Group Risk and Finance Director. The financial statements
for the six months to 30 September 2018 will be posted to stakeholders on
30 November 2018. These financial results will be available on the group's
website on the same date.
Proviso
- Please note that matters discussed in this announcement may contain
forward looking statements which are subject to various risks and
uncertainties and other factors, including, but not limited to:
- the further development of standards and interpretations under
IFRS applicable to past, current and future periods, evolving
practices with regard to the interpretation and application of
standards under IFRS.
- domestic and global economic and business conditions.
- market related risks.
- A number of these factors are beyond the group's control.
- These factors may cause the group's actual future results,
performance or achievements in the markets in which it operates to
differ from those expressed or implied.
- Any forward looking statements made are based on the knowledge
of the group at 14 November 2018.
- The information in the announcement for the six months ended
30 September 2018, which was approved by the board of directors
on 14 November 2018, does not constitute statutory accounts
as defined in Section 435 of the UK Companies Act 2006. The
31 March 2018 financial statements were filed with the registrar and were
unqualified with the audit report containing no statements in respect of
Sections 498(2) or 498(3) of the UK Companies Act.
- This announcement is available on the group's website:
www.investec.com
Financial assistance
Shareholders are referred to Special Resolution number 3, which was
approved at the annual general meeting held on 8 August 2018, 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 2018 to 30 September 2018 to various group subsidiaries.
Financial information
Salient financial features
Results in Pounds Sterling Results in Rand
Neutral
currency^ Neutral
Six months to Six months to Six months to currency Six months to Six months to
30 September 30 September % 30 September % 30 September 30 September %
2018 2017 change 2018 change 2018 2017 change
Operating profit before
taxation* (million) 359.3 314.6 14.2% 370.1 17.6% 6 415 5 378 19.3%
Earnings attributable to
shareholders (million) 279.9 252.4 10.9% 287.5 13.9% 4 983 4 321 15.3%
Adjusted earnings
attributable to
shareholders** (million) 265.3 245.3 8.2% 272.5 11.1% 4 725 4 199 12.5%
Adjusted earnings
per share** 28.3p 26.6p 6.4% 29.1p 9.4% 504c 455c 10.8%
Basic earnings per share 27.6p 25.8p 7.0% 28.4p 10.1% 492c 443c 11.1%
Headline earnings
per share 27.4p 24.6p 11.4% 28.1p 14.2% 487c 422c 15.4 %
Dividends per share 11.0p 10.5p 4.8% n/a n/a 206c 200c 3.0%
* Before goodwill, acquired intangibles, non-operating items and after other non-controlling interests.
** Before goodwill, acquired intangibles, non-operating items and after non-controlling interests.
^ For income statement items we have used the average Rand:Pound Sterling exchange rate that was applied in the prior year, i.e. 17.06.
Results in Pounds Sterling
Actual as Actual as Actual Neutral
reported reported as currency^^ Neutral
At At reported At currency
30 September 31 March % 30 September %
2018 2018 change 2018 change
Net asset value per share 422.0p 452.5p (6.7%) 440.9p (2.6%)
Net tangible asset value per share 372.7p 401.5p (7.2%) 391.2p (2.6%)
Total equity (million) 5 118 5 428 (5.7%) 5 429 0.0%
Total assets (million) 56 137 57 617 (2.6%) 59 918 4.0%
Core loans and advances (million) 24 190 25 132 (3.7%) 25 740 2.4%
Cash and near cash balances (million) 12 467 12 825 (2.8%) 13 125 2.3%
Customer deposits (million) 30 349 30 987 (2.1%) 32 317 4.3%
Third party assets under management (million) 166 512 160 576 3.7% 172 180 7.2%
Return on average adjusted shareholders' equity 13.4% 12.1%
Return on average risk-weighted assets 1.54% 1.45%
Loans and advances to customers as a % of customer deposits 78.2% 79.6%
Credit loss ratio (expected credit loss impairment charges on
gross core loans and advances as a % of average gross core
loans and advances) 0.34% 0.61%
For balance sheet items we have assumed that the Rand:Pound Sterling exchange rate has remained neutral since March 2018.
Condensed combined consolidated income statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2018 2017 2018
Interest income 1 285 916 1 225 130 2 491 009
Interest expense (880 902) (860 809) (1 730 611)
Net interest income 405 014 364 321 760 398
Fee and commission income 804 249 753 835 1 543 447
Fee and commission expense (100 540) (87 825) (182 240)
Investment income 41 472 62 074 130 048
Share of post taxation profit of associates 20 782 23 677 46 823
Trading income/(loss) arising from
- customer flow 65 078 64 160 138 226
- balance sheet management and other trading activities 39 031 5 146 (4 307)
Other operating income 6 238 5 669 11 115
Total operating income before expected credit losses/impairment losses 1 281 324 1 191 057 2 443 510
Expected credit loss impairment charges* (31 022) - -
Impairment losses on loans and advances* - (59 593) (148 556)
Operating income 1 250 302 1 131 464 2 294 954
Operating costs (852 982) (795 883) (1 632 740)
Depreciation on operating leased assets (1 207) (1 177) (2 421)
Operating profit before goodwill and acquired intangibles 396 113 334 404 659 793
Amortisation of acquired intangibles (7 861) (8 142) (16 255)
Operating profit 388 252 326 262 643 538
Additional costs on acquisition of subsidiary - - (6 039)
Profit before taxation 388 252 326 262 637 499
Taxation on operating profit before goodwill and acquired intangibles (60 301) (44 996) (59 099)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries 1 577 1 631 3 253
Profit after taxation 329 528 282 897 581 653
Profit attributable to other non-controlling interests (36 846) (19 800) (52 288)
Profit attributable to Asset Management non-controlling interests (12 828) (10 663) (23 817)
Earnings attributable to shareholders 279 854 252 434 505 548
Amortisation of acquired intangibles 7 861 8 142 16 255
Additional costs on acquisition of subsidiary - - 6 039
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries (1 577) (1 631) (3 253)
Preference dividends paid (21 086) (14 101) (32 980)
Accrual adjustment on earnings attributable to other equity holders 271 436 (547)
Adjusted earnings 265 323 245 280 491 062
Headline adjustments** (8 724) (18 010) (41 415)
Headline earnings 256 599 227 270 449 647
Earnings per share (pence)
- Basic 27.6 25.8 51.2
- Diluted 26.8 24.9 49.8
Adjusted earnings per share (pence)
- Basic 28.3 26.6 53.2
- Diluted 27.5 25.7 51.7
Dividends per share (pence)
- Interim 11.0 10.5 10.5
- Final n/a n/a 13.5
Headline earnings per share (pence)
- Basic 27.4 24.6 48.7
- Diluted 26.6 23.8 47.4
Number of weighted average shares (million) 937.2 922.9 923.5
* On adoption of IFRS 9, there is a move from an incurred loss model to an expected credit loss methodology.
** The headline earnings adjustments are made up of property revaluations of GBP2.2 million (2017: GBP5.5 million), amortisation of
acquired intangibles of GBP7.9 million (2017: GBP8.1 million), gains on available-for-sale instruments recycled to the income
statement GBPnil (2017: GBP4.8 million), profit on realisation of associate company of GBPnil (2017: GBP0.8 million), taxation
on acquired intangibles and acquisition/disposal/integration of subsidiaries GBP1.6 million (2017: GBP1.6 million) and accrual
adjustment on earnings attributable to other equity holders of GBP0.3 million (2017: GBP0.4 million). This line represents the
reconciling items from adjusted earnings to headline earnings.
Summarised combined consolidated statement of comprehensive income
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2018 2017 2018
Profit after taxation 329 528 282 897 581 653
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* (788) (1 824) (5 746)
Gains on debt instruments at FVOCI recycled to the income statement*^ (1 999) - -
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive
income*^ (12 023) - -
Gains on realisation of available-for-sale assets recycled to the income statement*^ - (4 760) (6 676)
Fair value movements on available-for-sale assets taken directly to other
comprehensive income*^ - 13 816 20 051
Foreign currency adjustments on translating foreign operations (249 312) (220 844) (25 300)
Items that will never be reclassified to the income statement
Remeasurement of net defined pension liability 69 - 3 938
Gains and losses attributable to own credit risk 10 318 - -
Total comprehensive income 75 793 69 285 567 920
Total comprehensive income attributable to ordinary shareholders 70 757 72 485 451 913
Total comprehensive (loss)/income attributable to non-controlling interests (16 050) (17 301) 83 027
Total comprehensive income attributable to perpetual preferred securities 21 086 14 101 32 980
Total comprehensive income 75 793 69 285 567 920
* Net of taxation of (GBP2.1 million) [six months to 30 September 2017: GBP3.0 million, year to 31 March 2018: GBP11.7 million].
^ On adoption of IFRS 9 on 1 April 2018, the fair value reserve was introduced, replacing the available-for-sale reserve.
Summarised combined consolidated cash flow statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP'000 2018 2017 2018
Cash inflows from operations 404 278 357 998 732 242
Increase in operating assets (1 926 505) (1 009 683) (3 352 869)
Increase in operating liabilities 1 845 075 705 103 3 075 779
Net cash inflow from operating activities 322 848 53 418 455 152
Net cash inflow/(outflow) from investing activities 58 190 5 292 (37 799)
Net cash (outflow)/inflow from financing activities (203 047) (121 852) 45 383
Effects of exchange rates on cash and cash equivalents (106 538) (144 595) (54 085)
Net increase/(decrease) in cash and cash equivalents 71 453 (207 737) 408 651
Cash and cash equivalents at the beginning of the period 6 130 379 5 721 728 5 721 728
Cash and cash equivalents at the end of the period 6 201 832 5 513 991 6 130 379
Cash and cash equivalents is defined as including; cash and balances at central banks, on demand loans and advances to banks and cash
equivalent loans and advances to customers (all of which have a maturity profile of less than three months).
Condensed combined consolidated balance sheet
At 30 September 1 April 31 March 30 September
GBP'000 2018 2018* 2018* 2017
Assets
Cash and balances at central banks 4 402 571 4 040 010 4 040 512 3 356 259
Loans and advances to banks 2 194 184 2 164 598 2 165 533 2 308 618
Non-sovereign and non-bank cash placements 566 221 599 982 601 243 574 521
Reverse repurchase agreements and cash collateral on securities borrowed 1 641 435 2 207 137 2 207 477 1 690 036
Sovereign debt securities 4 483 385 4 907 624 4 910 027 3 608 316
Bank debt securities 609 522 591 428 587 164 604 511
Other debt securities 1 109 942 898 122 903 603 968 597
Derivative financial instruments 1 098 812 1 345 744 1 352 408 1 201 602
Securities arising from trading activities 1 921 010 1 434 391 1 434 391 1 395 766
Investment portfolio 950 455 956 560 885 499 911 480
Loans and advances to customers 23 739 734 24 410 334 24 673 009 22 351 228
Own originated loans and advances to customers securitised 452 341 458 814 459 088 445 672
Other loans and advances 207 251 345 742 347 809 367 401
Other securitised assets 142 884 148 387 148 387 153 786
Interests in associated undertakings 421 139 467 852 467 852 371 294
Deferred taxation assets 215 388 242 239 157 321 123 435
Other assets 2 006 480 1 875 357 1 876 116 2 016 057
Property and equipment 269 174 233 340 233 340 100 910
Investment properties 1 041 323 1 184 097 1 184 097 1 063 771
Goodwill 367 480 368 803 368 803 366 969
Intangible assets 120 333 125 389 125 389 132 692
47 961 064 49 005 950 49 129 068 44 112 921
Other financial instruments at fair value through profit or loss in respect
of liabilities to customers 8 176 040 8 487 776 8 487 776 7 705 206
56 137 104 57 493 726 57 616 844 51 818 127
Liabilities
Deposits by banks 3 011 094 2 931 267 2 931 267 2 246 115
Derivative financial instruments 1 402 260 1 471 563 1 471 563 1 169 314
Other trading liabilities 1 006 572 960 166 960 166 968 917
Repurchase agreements and cash collateral on securities lent 488 271 655 840 655 840 730 170
Customer accounts (deposits) 30 348 761 30 985 251 30 987 173 27 966 006
Debt securities in issue 2 734 128 2 717 187 2 717 187 2 549 264
Liabilities arising on securitisation of own originated loans and advances 120 161 136 812 136 812 133 307
Liabilities arising on securitisation of other assets 121 161 127 853 127 853 131 740
Current taxation liabilities 170 794 185 486 185 486 197 244
Deferred taxation liabilities 30 507 32 158 32 158 38 304
Other liabilities 1 812 573 2 019 906 2 012 268 1 827 251
41 246 282 42 223 489 42 217 773 37 957 632
Liabilities to customers under investment contracts 8 172 496 8 484 296 8 484 296 7 702 724
Insurance liabilities, including unit-linked liabilities 3 544 3 480 3 480 2 482
49 422 322 50 711 265 50 705 549 45 662 838
Subordinated liabilities 1 596 958 1 619 878 1 482 987 1 389 091
51 019 280 52 331 143 52 188 536 47 051 929
Equity
Ordinary share capital 245 240 240 240
Perpetual preference share capital 31 31 31 31
Share premium 2 490 403 2 416 736 2 416 736 2 404 171
Treasury shares (210 912) (160 132) (160 132) (196 198)
Other reserves (530 880) (406 718) (345 606) (460 907)
Retained income 2 430 803 2 326 212 2 530 825 2 385 707
Shareholders' equity excluding non-controlling interests 4 179 690 4 176 369 4 442 094 4 133 044
Other Additional Tier 1 securities in issue 298 808 304 150 304 150 30 386
Non-controlling interests 639 326 682 064 682 064 602 768
- Perpetual preferred securities issued by subsidiaries 83 204 92 312 92 312 84 763
- Non-controlling interests in partially held subsidiaries 556 122 589 752 589 752 518 005
Total equity 5 117 824 5 162 583 5 428 308 4 766 198
Total liabilities and equity 56 137 104 57 493 726 57 616 844 51 818 127
* The 1 April 2018 balance sheet has been presented on an IFRS 9 basis and the comparative as at 31 March 2018 on an IAS 39 basis.
Summarised combined consolidated statement of changes in equity
Six months to Year to Six months to
30 September 31 March 30 September
GBP'000 2018 2018 2017
Balance at the beginning of the period 5 428 308 4 808 629 4 808 629
Adoption of IFRS 9 (265 725) - -
Total comprehensive income for the period 75 793 567 920 69 285
Share-based payments adjustments 33 084 69 218 34 688
Dividends paid to ordinary shareholders (127 943) (227 908) (123 230)
Dividends declared to perpetual preference shareholders (7 528) (15 736) (8 160)
Dividends paid to perpetual preference shareholders included in non-controlling interests (13 558) (17 244) (5 941)
Dividends paid to non-controlling interests (27 378) (63 688) (29 272)
Issue of ordinary shares 103 141 125 240 105 206
Issue of Other Additional Tier 1 security instruments - 271 058 -
Issue of equity by subsidiaries - 12 695 -
Net equity impact of non-controlling interest movements - 20 057 4 518
Net equity movement of interest in associate undertakings (5 671) - -
Movement of treasury shares (74 699) (121 933) (89 525)
Balance at the end of the period 5 117 824 5 428 308 4 766 198
Combined consolidated segmental analysis
For the six months to 30 September UK and Southern Total
GBP'000 Other Africa group
Segmental geographical and business analysis of operating profit before goodwill,
acquired intangibles, non-operating items, taxation and after other non-controlling
interests
2018
Asset Management 56 840 34 686 91 526
Wealth & Investment 32 864 13 544 46 408
Specialist Banking 80 756 164 625 245 381
170 460 212 855 383 315
Group costs (17 227) (6 821) (24 048)
Total group 153 233 206 034 359 267
Other non-controlling interest - equity 36 846
Operating profit 396 113
2017
Asset Management 49 949 33 284 83 233
Wealth & Investment 35 441 14 087 49 528
Specialist Banking 41 208 165 291 206 499
126 598 212 662 339 260
Group costs (17 295) (7 361) (24 656)
Total group 109 303 205 301 314 604
Other non-controlling interest - equity 19 800
Operating profit 334 404
Analysis of financial assets and liabilities by category of financial instrument
Total
Total financial Non-financial
financial instruments instruments
At 30 September 2018 instruments at amortised or scoped
GBP'000 at fair value cost out of IFRS 9 Total
Assets
Cash and balances at central banks 695 4 401 876 - 4 402 571
Loans and advances to banks - 2 194 184 - 2 194 184
Non-sovereign and non-bank cash placements 47 613 518 608 - 566 221
Reverse repurchase agreements and cash collateral on securities borrowed 527 934 1 113 501 - 1 641 435
Sovereign debt securities 4 200 240 283 145 - 4 483 385
Bank debt securities 274 025 335 497 - 609 522
Other debt securities 698 726 411 216 - 1 109 942
Derivative financial instruments 1 098 812 - - 1 098 812
Securities arising from trading activities 1 921 010 - - 1 921 010
Investment portfolio 950 455 - - 950 455
Loans and advances to customers 2 443 852 21 295 882 - 23 739 734
Own originated loans and advances to customers securitised - 452 341 - 452 341
Other loans and advances - 207 251 - 207 251
Other securitised assets 125 814 17 070 - 142 884
Interests in associated undertakings - - 421 139 421 139
Deferred taxation assets - - 215 388 215 388
Other assets 228 394 1 160 686 617 400 2 006 480
Property and equipment - - 269 174 269 174
Investment properties - - 1 041 323 1 041 323
Goodwill - - 367 480 367 480
Intangible assets - - 120 333 120 333
12 517 570 32 391 257 3 052 237 47 961 064
Other financial instruments at fair value through profit or loss in respect
of liabilities to customers 8 176 040 - - 8 176 040
20 693 610 32 391 257 3 052 237 56 137 104
Liabilities
Deposits by banks - 3 011 094 - 3 011 094
Derivative financial instruments 1 402 260 - - 1 402 260
Other trading liabilities 1 006 572 - - 1 006 572
Repurchase agreements and cash collateral on securities lent 175 187 313 084 - 488 271
Customer accounts (deposits) 2 300 787 28 047 974 - 30 348 761
Debt securities in issue 390 098 2 344 030 - 2 734 128
Liabilities arising on securitisation of own originated loans and advances - 120 161 - 120 161
Liabilities arising on securitisation of other assets 121 161 - - 121 161
Current taxation liabilities - - 170 794 170 794
Deferred taxation liabilities - - 30 507 30 507
Other liabilities 37 059 1 167 966 607 548 1 812 573
5 433 124 35 004 309 808 849 41 246 282
Liabilities to customers under investment contracts 8 172 496 - - 8 172 496
Insurance liabilities, including unit-linked liabilities 3 544 - - 3 544
13 609 164 35 004 309 808 849 49 422 322
Subordinated liabilities 385 060 1 211 898 - 1 596 958
13 994 224 36 216 207 808 849 51 019 280
Financial instruments carried at fair value
The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements
are categorised into different levels in the fair value hierarchy based on the inputs to the valuation technique used. The different
levels are identified as follows:
Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Fair value category
Total financial
At 30 September 2018 instruments
GBP'000 at fair value Level 1 Level 2 Level 3
Assets
Cash and balances at central banks 695 695 - -
Non-sovereign and non-bank cash placements 47 613 4 495 43 118 -
Reverse repurchase agreements and cash collateral on securities borrowed 527 934 - 527 934 -
Sovereign debt securities 4 200 240 4 200 240 - -
Bank debt securities 274 025 266 206 7 819 -
Other debt securities 698 726 194 776 411 716 92 234
Derivative financial instruments 1 098 812 - 1 060 819 37 993
Securities arising from trading activities 1 921 010 1 917 605 3 405 -
Investment portfolio 950 455 182 062 31 590 736 803
Loans and advances to customers 2 443 852 - 970 182 1 473 670
Other securitised assets 125 814 - - 125 814
Other assets 228 394 228 394 - -
Other financial instruments at fair value through profit or loss in respect
of liabilities to customers 8 176 040 8 176 040 - -
20 693 610 15 170 513 3 056 583 2 466 514
Liabilities
Derivative financial instruments 1 402 260 - 1 382 215 20 045
Other trading liabilities 1 006 572 883 181 123 391 -
Repurchase agreements and cash collateral on securities lent 175 187 - 175 187 -
Customer accounts (deposits) 2 300 787 - 2 300 787 -
Debt securities in issue 390 098 - 390 098 -
Liabilities arising on securitisation of other assets 121 161 - - 121 161
Other liabilities 37 059 - 37 059 -
Subordinated liabilities 385 060 385 060 - -
Liabilities to customers under investment contracts 8 172 496 8 172 496 - -
Insurance liabilities, including unit-linked liabilities 3 544 3 544 - -
13 994 224 9 444 281 4 408 737 141 206
Net financial assets at fair value 6 699 386 5 726 232 (1 352 154) 2 325 308
Transfers between level 1 and level 2
There were no significant transfers between level 1 and level 2 in the current period.
The group transfers between levels within the fair value hierarchy when the significance of the unobservable inputs change or if the valuation
methods change.
Level 2 financial assets and financial liabilities
The following table sets out the group's principal valuation techniques as at 30 September 2018 used in determining the fair value of its
financial assets and financial liabilities that are classified within level 2 of the fair value hierarchy.
Valuation basis/techniques Main assumptions
Assets
Non-sovereign and non-bank cash Discounted cash flow model Yield curves
placements
Reverse repurchase agreements and Discounted cash flow model, Hermite interpolation Yield curves
cash collateral on securities borrowed
Bank debt securities Discounted cash flow model Yield curves
NCD curves
Other debt securities Discounted cash flow model Yield curves and NCD curves, external prices, broker
quotes
Derivative financial instruments Discounted cash flow model, Hermite interpolation, Yield curves, risk free rate, volatilities, forex forward
industry standard derivative pricing models including points and spot rates, interest rate swap curves and
Black-Scholes credit curves
Securities arising from trading activities Interest rate curves, implied bond spreads, equity
Standard industry derivative pricing model volatilities
Adjusted quoted price Liquidity adjustments
Investment portfolio Discounted cash flow model, relative valuation model Discount rate and fund unit price, net assets
Comparable quoted inputs
Loans and advances to customers Discounted cash flow model Yield curves
Liabilities
Derivative financial instruments Discounted cash flow model, Hermite interpolation, Yield curves, risk-free rate, volatilities, forex forward
industry standard derivative pricing models including points and spot rates, interest rate swap curves and
Black-Scholes credit curves
Other trading liabilities Discounted cash flow model Yield curves
Repurchase agreements and cash Discounted cash flow model, Hermite interpolation Yield curves
collateral on securities lent
Customer accounts (deposits) Discounted cash flow model Yield curves
Debt securities in issue Discounted cash flow model Yield curves
Other liabilities Discounted cash flow model Yield curves
Net level 3
For the six months to 30 September 2018 financial
GBP'000 instruments
The following table is a reconciliation of the opening balances to
the closing balances for fair value measurements in level 3
of the fair value hierarchy:
Balance as at 31 March 2018 776 176
Adoption of IFRS 9 1 341 810
Balance as at 1 April 2018 2 117 986
Total gains or losses 73 464
In the income statement 73 206
In the statement of comprehensive income 258
Purchases 800 061
Sales (348 240)
Issues 16 616
Settlements (391 874)
Transfers into level 3 12 123
Foreign exchange adjustments 45 172
Balance as at 30 September 2018 2 325 308
For the period ended 30 September 2018, GBP12.1 million has been transferred out of level 2 into level 3 as a result of the inputs to the
valuation method becoming unobservable in the market.
For the six months to 30 September 2018
GBP'000 Total Realised Unrealised
Total gains/(losses) included in the income statement for the period
Net interest income 51 731 40 662 11 069
Fee and commission income 9 600 11 512 (1 912)
Investment income 7 071 1 334 5 737
Trading income arising from customer flow 4 804 3 734 1 070
73 206 57 242 15 964
Total gains/(losses) included in other comprehensive income for the period
Gains on realisation on debt instruments at FVOCI recycled through the income statement 19 757 19 757 -
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive
income 258 - 258
20 015 19 757 258
Sensitivity of fair values to reasonably possible alternative assumptions by level 3 instrument type
The fair value of financial instruments in level 3 are measured using valuation techniques that incorporate assumptions that are not evidenced by
prices from observable market data. The following table shows the sensitivity of these fair values to reasonably possible alternative assumptions,
determined at a transactional level:
Balance
sheet Significant Range of Favourable Unfavourable
value unobservable unobservable changes changes
GBP'000 input input used GBP'000 GBP'000
30 September 2018
Assets
Other debt securities 92 234 Potential impact on income statement 7 975 (7 887)
Cash flow adjustments CPR 8.6% - (68)
Credit spreads 5.1% 140 (136)
EBITDA (5%)/5% 348 (348)
Other^ ^ 7 487 (7 335)
Derivative financial instruments 37 993 Potential impact on income statement 6 964 (9 205)
Volatilities 4.0% - 9.0% 212 (212)
Cash flow adjustments CPR 7.6% - 11.2% 110 (101)
Underlying asset value 5 684 (8 029)
EBIDTA (5%)/20% 128 (32)
Other^ ^ 830 (831)
Investment portfolio 736 803 Potential impact on income statement 122 097 (124 731)
Price earnings multiple 4.0 x - 10.3 x 6 117 (5 828)
WACC 20.0% 29 594 (35 004)
Underlying asset value 9 472 (3 029)
EBITDA ^^ 23 602 (19 226)
Cash flow adjustments (15%)/25% 3 151 (2 638)
Precious and industrial metals prices (10%)/6% 1 139 (1 898)
Property values (5%)/5% 9 339 (9 339)
Other^ ^ 39 683 (47 769)
Loans and advances to customers 1 473 670 Potential impact on income statement 41 750 (54 993)
Credit spreads 0.2% - 29.0% 4 202 (6 048)
Cash flow adjustments (15%)/5% 1 637 (4 910)
Underlying asset value 2 130 (1 715)
Other^ ^ 33 781 (42 320)
Potential impact on other
comprehensive income
Credit spreads 0.1% - 5.1% 1 135 (1 615)
Other securitised assets* 125 814 Potential impact on income statement
Cash flow adjustments CPR 7.7% 723 (728)
Total level 3 assets 2 466 514 180 644 (199 159)
Liabilities
Derivative financial instruments 20 045 Potential impact on income statement (9 085) 7 268
Cash flow adjustments CPR 7.6% - 11.2% (81) 89
Volatilities 8.5% (2) 2
Underlying asset value (9 002) 7 177
Liabilities arising on securitisation of other 121 161 Potential impact on income statement
assets* Cash flow adjustments CPR 8.0% (244) 205
Total level 3 liabilities 141 206 (9 329) 7 473
Net level 3 assets 2 325 308
* 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.
^^ The EBITDA has been stressed on an investment by investment basis to obtain a favourable and unfavourable valuation.
Underlying asset values calculated by reference to a tangible asset, for example property, aircraft or shares.
In determining the value of level 3 financial instruments, the following are the
principal inputs that do 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 (including WACC)
Discount rates 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 for 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 group'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-to-earnings ratio is an equity valuation multiple. It is a key driver in
the valuation of unlisted investments.
Precious and industrial metals and property value
The price of precious and industrial metals and property value is a key driver
of future cash flows on certain investments.
Underlying asset value
In instances where cash flows have links to referenced assets, the underlying
asset value is used to determine the fair value. The underlying asset valuation
is derived using observable market prices sourced from broker quotes,
specialist valuers or other reliable pricing sources.
Fair value of financial assets and liabilities at amortised cost
The following table sets out the fair value of financial instruments held at amortised cost
where the carrying value is not a reasonable approximation of fair value.
At 30 September 2018 Carrying Fair
GBP'000 amount value
Assets
Loans and advances to banks 2 194 184 2 194 749
Reverse repurchase agreements and cash collateral on securities borrowed 1 113 501 1 113 413
Sovereign debt securities 283 145 274 120
Bank debt securities 335 497 334 171
Other debt securities 411 216 406 266
Loans and advances to customers 21 295 882 21 275 003
Other loans and advances 207 251 240 619
Other assets 1 160 686 1 159 535
Liabilities
Deposits by banks 3 011 094 3 039 929
Repurchase agreements and cash collateral on securities lent 313 084 309 554
Customer accounts (deposits) 28 047 974 28 035 101
Debt securities in issue 2 344 030 2 372 763
Other liabilities 1 167 966 1 169 085
Subordinated liabilities 1 211 898 1 282 250
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
Ordinary share dividend announcement
Declaration of dividend number 126
Notice is hereby given an interim dividend number 126, being a gross
dividend of 206 cents (2017: 200 cents) per ordinary share has been
declared by the board from income reserves in respect of the six
months ended 30 September 2018 payable to shareholders recorded
in the shareholders' register of the company at the close of business on
Friday, 7 December 2018.
The relevant dates for the payment of dividend number 126 are as
follows:
Last day to trade cum-dividend Tuesday, 4 December 2018
Shares commence trading ex-dividend Wednesday, 5 December 2018
Record date Friday, 7 December 2018
Payment date Wednesday, 19 December 2018
The interim gross dividend of 206 cents per ordinary share has been
determined by converting the Investec plc distribution of 11 pence per
ordinary share into Rands using the Rand/Pounds Sterling average buy/sell
forward rate at 11:00 (SA time) on Wednesday, 14 November 2018.
Share certificates may not be dematerialised or rematerialised between
Wednesday, 5 December 2018 and Friday, 7 December 2018, both
dates inclusive.
Additional information to take note of:
- Investec Limited South African tax reference number: 9800/181/71/2
- The issued ordinary share capital of Investec Limited is 318 904 709
ordinary shares
- The dividend paid by Investec Limited is subject to South African Dividend
Tax (Dividend Tax) of 20% (subject to any available exemptions as
legislated)
- Shareholders who are exempt from paying the Dividend Tax will receive a
net dividend of 206 cents per ordinary share
- Shareholders who are not exempt from paying the Dividend Tax will
receive a net dividend of 164.8 cents per ordinary share (gross dividend
of 206 cents per ordinary share less Dividend Tax of 41.200 cents per
ordinary share).
By order of the board
N van Wyk
Company Secretary
14 November 2018
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE share Code: INPR
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000063814
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference shares
("preference shares")
Declaration of dividend number 28
Notice is hereby given that preference dividend number 28 has been
declared by the board from income reserves for the period 1 April 2018 to
30 September 2018 amounting to a gross preference dividend of 389.91534
cents per 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, 14 December 2018.
The relevant dates for the payment of dividend number 28 are as
follows:
Last day to trade cum-dividend Tuesday, 11 December 2018
Shares commence trading ex-dividend Wednesday, 12 December 2018
Record date Friday, 14 December 2018
Payment date Tuesday, 18 December 2018
Share certificates may not be dematerialised or rematerialised between
Wednesday, 12 December 2018 and Friday, 14 December 2018, both dates
inclusive.
Additional information to take note of:
- Investec Limited South African tax reference number: 9800/181/71/2
- The issued preference share capital of Investec Limited is 32 214 499
preference shares in this specific class
- The dividend paid by Investec Limited is subject to South African Dividend
Tax (Dividend Tax) of 20% (subject to any available exemptions as
legislated)
- The net dividend amounts to 311.93227 cents per preference share for
shareholders liable to pay the Dividend Tax and 389.91534 cents per
preference share for preference shareholders exempt from paying the
Dividend Tax.
By order of the board
N van Wyk
Company Secretary
14 November 2018
Investec plc
Incorporated in England and Wales
Registration number 3633621
LSE ordinary share code: INVP
JSE ordinary share code: INP
ISIN: GB00B17BBQ50
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 33
Notice is hereby given that an interim dividend number 33, being a
gross dividend of 11 pence (2017: 10.5 pence) per ordinary share has
been declared by the board from income reserves in respect of the six
months ended 30 September 2018 payable to shareholders recorded
in the shareholders' register of the company at the close of business on
Friday, 7 December 2018.
- for Investec plc shareholders, registered on the United Kingdom share
register, through a dividend payment by Investec plc from income
reserves of 11 pence per ordinary share
- for Investec plc shareholders, registered on the South African branch
register, through a dividend payment by Investec plc from income
reserves of 3 pence per ordinary share and through a dividend paid by
Investec Limited, on the SA DAS share, payable from income reserves,
equivalent to 8 pence per ordinary share
The relevant dates for the payment of dividend number 33 are as
follows:
Last day to trade cum-dividend
On the Johannesburg
Stock Exchange (JSE) Tuesday, 4 December 2018
On the London Stock Exchange (LSE) Wednesday, 5 December 2018
Shares commence trading ex-dividend
On the Johannesburg
Stock Exchange (JSE) Wednesday, 5 December 2018
On the London Stock Exchange (LSE) Thursday, 6 December 2018
Record date (on the JSE and LSE) Friday, 7 December 2018
Payment date (on the JSE and LSE) Wednesday, 19 December 2018
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Wednesday, 5 December 2018
and Friday, 7 December 2018, both dates inclusive, nor may transfers
between the United Kingdom share register and the South African branch
register take place between Wednesday, 5 December 2018 and Friday,
7 December 2018, both dates inclusive.
Additional information for South African resident shareholders of
Investec plc
- Shareholders registered on the South African branch register are advised
that the distribution of 11 pence, equivalent to a gross dividend of
206 cents per share, has been arrived at using the Rand/Pound Sterling
average buy/sell forward rate, as determined at 11:00 (SA time) on
Wednesday, 14 November 2018
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued ordinary share capital of Investec plc is 681 051 512 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
206 cents per share, comprising 149.81818 cents per share paid by
Investec Limited on the SA DAS share and 56.18182 cents per ordinary
share paid by Investec plc
- Shareholders registered on the South African branch register who are
not exempt from paying the Dividend Tax will receive a net dividend
of 164.8 cents per share (gross dividend of 206 cents per share less
Dividend Tax of 41.2 cents per share) comprising 119.85455 cents per
share paid by Investec Limited on the SA DAS share and 44.94545 cents
per ordinary share paid by Investec plc.
By order of the board
D Miller
Company Secretary
14 November 2018
Investec plc
Incorporated in England and Wales
Registration number: 3633621
Share code: INPP
ISIN: GB00B19RX541
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference shares
("preference shares")
Declaration of dividend number 25
Notice is hereby given that preference dividend number 25 has been
declared by the board from income reserves for the period 1 April 2018 to
30 September 2018 amounting to a gross preference dividend of 7.93150
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, 7 December 2018.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend
of 7.93150 pence per preference share is equivalent to a gross dividend of
148.73149 cents per share, which has been determined using the Rand/
Pound Sterling average buy/sell forward rate as at 11:00 (SA Time) on
Wednesday, 14 November 2018.
The relevant dates relating to the payment of dividend number 25 are
as follows:
Last day to trade cum-dividend
On the Johannesburg
Stock Exchange (JSE) Tuesday, 4 December 2018
On The International
Stock Exchange (TISE) Wednesday, 5 December 2018
Shares commence trading ex-dividend
On the Johannesburg
Stock Exchange (JSE) Wednesday, 5 December 2018
On The International
Stock Exchange (TISE) Thursday, 6 December 2018
Record date (on the JSE and TISE) Friday, 7 December 2018
Payment date (on the JSE and TISE) Tuesday, 18 December 2018
Share certificates may not be dematerialised or rematerialised between
Wednesday, 5 December 2018 and Friday, 7 December 2018, both dates
inclusive, nor may transfers between the United Kingdom share register
and the South African branch register take place between Wednesday,
5 December 2018 and Friday, 7 December 2018, 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 118.98519 cents per preference
share for preference shareholders liable to pay the Dividend Tax and
148.73149 cents per preference share for preference shareholders
exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
14 November 2018
Investec plc
Incorporated in England and Wales
Registration number: 3633621
JSE share code: INPPR
ISIN: GB00B4B0Q974
Rand-denominated preference share dividend announcement
Rand-denominated non-redeemable non-cumulative non-
participating perpetual preference shares ("preference shares")
Declaration of dividend number 15
Notice is hereby given that preference dividend number 15 has been
declared by the board from income reserves for the period 1 April 2018 to
30 September 2018 amounting to a gross preference dividend of 476.30137
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, 7
December 2018.
The relevant dates relating to the payment of dividend number 15 are
as follows:
Last day to trade cum-dividend Tuesday, 4 December 2018
Shares commence trading ex-dividend Wednesday, 5 November 2018
Record date Friday, 7 December 2018
Payment date Tuesday, 18 December 2018
Share certificates may not be dematerialised or rematerialised between
Wednesday, 5 December 2018 and Friday, 7 December 2018, 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 381.04110 cents per preference
share for preference shareholders liable to pay the Dividend Tax and
476.30137 cents per preference share for preference shareholders
exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
14 November 2018
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE ordinary share code: INP
LSE ordinary share code: INVP
ISIN: GB00B17BBQ50
Registered office:
30 Gresham Street, London
EC2V 7QP, United Kingdom
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Company Secretary:
D Miller
Investec Limited
Incorporated in the Republic of South Africa
(Registration number 1925/002833/06)
JSE ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
Registered office:
100 Grayston Drive
Sandown, Sandton, 2196
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Company Secretary:
N van Wyk
Directors:
PKO Crosthwaite* (Chairman),
HJ du Toit## (Joint Chief Executive Officer)
F Titi## (Joint Chief Executive Officer)
ZBM Bassa, LC Bowden*, GR Burger##,
CA Carolus, D Friedland, PA Hourquebie,
CR Jacobs^, B Kantor##, IR Kantor^^, S Koseff##,
Lord Malloch-Brown KCMG*, KM McFarland##
KL Shuenyane
## Executive *British ^^ Dutch ^Irish
Sponsor:
Investec Bank Limited
Date: 15/11/2018 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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