Last checked at 21 May 2015 07:00
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE share code: INP
LSE share code: INVP
ISIN: GB00B17BBQ50
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06)
JSE share code: INL
NSX share code: IVD
BSE share code: INVESTEC
ISIN: ZAE000081949
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated financial results for the year ended 31 March 2015
This announcement covers the results of the Investec group for the year ended 31 March 2015. |
Basis of presentation
Statutory basis Statutory information is set out in a separate section in this announcement. The sale of businesses during the financial year (further detail is provided in the "Notes to the commentary section") have had a significant effect on the comparability of the group's financial position and results. As a result, comparison on a statutory basis of the 2015 results with 2014 would be less meaningful.
Ongoing basis In order to present a more meaningful view of the group's performance, the results are presented on an ongoing basis excluding items that in management's view could distort the comparison of performance between periods. Based on this principle, the following items are excluded from underlying profit: · the results of the businesses sold i.e. Investec Bank (Australia) Limited, the UK Kensington business and the Start (Irish) mortgage business; · the remaining legacy business in the UK.
A reconciliation between the statutory and ongoing income statement is provided.
Unless the context indicates otherwise, all comparatives included in the commentary relate to the year-ended 31 March 2014. Group results have been negatively impacted by the depreciation of the Rand: Pounds Sterling exchange rate of 10.5% over the period. Amounts represented on a currency neutral basis for income statement items assume that the average exchange rates of the group's relevant exchange rates remain the same for the year to 31 March 2015 when compared to the year to 31 March 2014.
Overview of results
Delivering on the group's strategic objectives - continued to grow core franchises and simplified the Specialist Banking business through restructuring and strategic sales · Continued investments in Asset Management and Wealth & Investment platforms - supported net inflows in excess of GBP5.8 billion. · The core corporate banking franchise in both the UK and South Africa performed well, benefiting from increased client activity. · The Private Banking and Wealth & Investment businesses in South Africa further entrenched their position as one of the leading integrated private client businesses in the country, successfully launching a number of new products, broadening their client base and leveraging their global platform ("One Place"). · The UK Private Banking business enhanced its offering through the launch of its Private Bank Account and the development of its on-line and digital platforms. · Geographical and operational diversity continued to support a high recurring income base with a sound balance of earnings generated between capital light businesses and capital intensive businesses.
Statutory operating profit salient features · Statutory operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests ("operating profit") increased 9.4% to GBP493.2 million (2014: GBP450.7 million) - an increase of 18.0% on a currency neutral basis. · Statutory adjusted earnings per share (EPS) before goodwill, acquired intangibles and non-operating items increased 4.0% from 37.9 pence to 39.4 pence - an increase of 12.4% on a currency neutral basis. · The group posted a non-operating net loss after tax of GBP113.7 million on the sale of subsidiaries.
Solid performance from the ongoing business · Ongoing operating profit increased 15.0% to GBP580.7 million (2014: GBP504.9 million) - an increase of 22.6% on a currency neutral basis. · Ongoing adjusted EPS before goodwill, acquired intangibles and non-operating items increased 10.2% from 43.1 pence to 47.5 pence - an increase of 17.9% on a currency neutral basis. · Third party assets under management increased 13.7% to GBP124.1 billion (2014: GBP109.2 billion). · Customer accounts (deposits) increased 7.3% to GBP22.6 billion (2014: GBP21.1 billion). · Core loans and advances increased 15.4% to GBP16.5 billion (2014: GBP14.3 billion)
Continued to actively manage down the UK legacy portfolio · The legacy portfolio reduced from GBP3.4 billion at 31 March 2014 to GBP0.7 billion largely through strategic sales (mentioned above), redemptions, write-offs and transfers to the ongoing book on the back of improved performance in these loans. · The legacy business reported a loss before taxation of GBP107.7 million (2014:GBP69.1 million) as the group accelerated the clearance of the portfolio, which resulted in an increase in impairments on these assets.
Maintained a sound balance sheet · Capital remained well in excess of current regulatory requirements. Investec Limited should achieve a common equity tier 1 ratio target of above 10% by March 2016 and Investec plc already achieves this target. The group is comfortable with its common equity tier 1 ratio target at a 10% level, as its leverage ratios for both Investec Limited and Investec plc are well above 7%. · Liquidity remained strong with cash and near cash balances amounting to GBP10.0 billion.
Dividend increase of 5.3% · The board proposes a final dividend of 11.5 pence per ordinary share equating to a full year dividend of 20.0 pence (2014: 19.0 pence) resulting in a dividend cover based on the group's adjusted EPS before goodwill and non-operating items of 2.0 times (2014: 2.0 times), consistent with the group's dividend policy.
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Stephen Koseff, Chief Executive Officer of Investec said: "The group is in the best position it has been since the mid-2000s. We have delivered on all the strategic initiatives set out in 2013 and can now focus on growing our three core businesses, Asset Management, Wealth & Investment and Specialist Banking."
Bernard Kantor, Managing Director of Investec said: "The ongoing results reflect a very satisfactory year. The performance of Wealth & Investment and Asset Management continues to reflect the quality of the businesses. Specialist Banking in South Africa had an excellent year while in London, the corporate business is performing well and the private bank has dealt with the over-riding majority of its legacy issues."
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For further information please contact:
Investec +27 (0) 11 286 7070 or +44 20 (0) 7597 5546 Stephen Koseff, Chief Executive Officer Bernard Kantor, Managing Director Ursula Nobrega, Investor Relations (mobile:+27 (0) 82 552 8808)
Brunswick (SA PR advisers) Marina Bidoli Tel: +2711 502 7405 / +2783 253 0478 Cecilia de Almeida Tel: +2711 502 7418 / +2783 325 9169
Newgate (UK PR advisers) Jonathan Clare/Jason Nisse/Alistair Kellie/Andy Jones Tel: +44 (0)20 7680 6550
Presentation/conference call details
A presentation on the results will commence at 9:00 UK time/10:00 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 niche client base in two principal markets, the United Kingdom and South Africa as well as certain other countries. The group was established in 1974 and currently has approximately 8 200 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 GBP5.4 billion. |
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated financial results for the year ended 31 March 2015
The commentary below largely focuses on the results of the ongoing business.
Overall group performance - ongoing basis
Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests ("operating profit") increased 15.0% to GBP580.7 million (2014: GBP504.9 million) - an increase of 22.6% on a currency neutral basis. Group results have been negatively impacted by the depreciation of the average Rand: Pounds Sterling exchange rate of 10.5% over the period. The combined South African businesses reported operating profit 28.7% ahead of the prior period in Rand, whilst the combined UK and Other businesses posted a 11.7% increase in operating profit in Pounds Sterling.
Wealth & Investment's operating profit increased by 19.2%. Asset Management reported operating profit 3.6% ahead of the prior period. Both divisions benefited from higher levels of average funds under management and net inflows. Operating profit in the Specialist Banking business increased 18.4% largely due to strong performances from the South African banking business and the UK Corporate and Institutional business, negatively impacted by a poor performance from the Hong Kong investment portfolio.
Salient features of the year under review are:
· Adjusted earnings attributable to shareholders before goodwill, acquired intangibles and non-operating items increased 10.2% to GBP409.9 million (2014: GBP371.9 million) - an increase of 17.9% on a currency neutral basis.
· Adjusted earnings per share (EPS) before goodwill, acquired intangibles and non-operating items increased 10.2% from 43.1 pence to 47.5 pence - an increase of 17.9% on a currency neutral basis.
· Recurring income as a percentage of total operating income amounted to 71.9% (2014: 67.9%).
· The credit loss charge as a percentage of average gross core loans and advances amounted to 0.26% (2014: 0.42%), with impairments decreasing by 38.8% to GBP39.4 million.
· Third party assets under management increased 13.7% to GBP124.1 billion (2014: GBP109.2 billion).
· Customer accounts (deposits) increased 7.3% to GBP22.6 billion (2014: GBP21.1 billion).
· Core loans and advances increased 15.4% to GBP16.5 billion (2014: GBP14.3 billion)
Business unit review - ongoing basis
Asset Management
Asset Management increased operating profit by 3.6% to GBP149.0 million (2014: GBP143.8 million) benefiting from higher average funds under management and net inflows of GBP3.1 billion. Total funds under management amount to GBP77.5 billion (2014: GBP68.0 billion). Operating margin has remained in line with the prior year at 34.2%.
Wealth & Investment
Wealth & Investment operating profit increased by 19.2% to GBP78.8 million (2014: GBP66.1 million) supported by higher average funds under management, net inflows of GBP2.7 billion and improved operating margins. Total funds under management amount to GBP46.1 billion (2014: GBP40.1 billion). The division in the UK has benefited from the investment in its platforms and the employment of additional professional investment managers. The business in South Africa has continued to successfully leverage off the division's global investment platform and the group's integrated Private Client offering ("One Place").
Specialist Banking
Specialist Banking operating profit increased by 18.4% to GBP392.3 million (2014: GBP331.4 million).
South Africa reported a strong increase in net interest income driven by loan book growth and a positive endowment impact. The unlisted investment portfolio performed well during the period. The group continued to grow its professional finance business and the investment and trading property portfolios delivered a sound performance. Corporate activity remained broadly in line with the prior period. The business reported a decline in impairments with the credit loss ratio on average core loans and advances improving to 0.28% (2014: 0.42%).
The UK and Other businesses reported an improvement in its cost of funding and experienced strong growth in corporate fees, notably in the corporate finance and corporate treasury teams. Loan book growth was solid and impairments declined over the year, with the credit loss ratio amounting to 0.20% (2014: 0.50%). Results were negatively impacted by lower returns earned on the Hong Kong investment portfolio.
Further information on key developments within each of the business units is provided in a detailed report published on the group's website: http://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. Historically, these numbers were reflected solely in the results of the Specialist Bank and the group has now decided to reflect these separately. These costs amounted to GBP39.3 million (2014: GBP:36.4 million).
Financial statement analysis - ongoing basis
Total operating income
Total operating income before impairment losses on loans and advances increased by 5.5% to GBP1,887.1 million (2014: GBP1,789.1 million).
Net interest income increased by 8.9% to GBP539.0 million (2014: GBP495.0 million) largely due to book growth, lower cost of funding in the UK and a positive endowment impact in South Africa.
Net fee and commission income increased by 12.5% to GBP1,090.4 million (2014: GBP969.5 million) as a result of higher average funds under management and net inflows in the asset management and wealth management businesses. The Specialist Banking business benefited from a solid performance from the corporate finance and corporate treasury businesses, notably in the UK, and the private banking business in South Africa continued to perform well.
Investment income decreased by 19.4% to GBP151.8 million (2014: GBP188.4 million). The group's unlisted investment portfolio in the UK and South Africa delivered a solid performance. This was offset however, by a poor performance from the Hong Kong portfolio.
Trading income arising from customer flow increased by 3.0% to GBP106.6 million (2014:GBP103.5 million) whilst trading income from other trading activities reflected a loss of GBP13.0 million (2014: profit of GBP14.2 million) due to foreign currency losses largely offset in non-controlling interests as discussed below.
Other operating income includes associate income and income earned on an operating lease portfolio.
Impairment losses on loans and advances
Impairments on loans and advances decreased from GBP64.3 million to GBP39.4 million. Since 31 March 2014 gross defaults have improved from GBP256.4 million to GBP247.1 million. The percentage of default loans (net of impairments but before taking collateral into account) to core loans and advances amounted to 0.84% (2014: 1.01%).
Operating costs
The ratio of total operating costs to total operating income was 66.5% (2014:67.5%). Total operating costs grew by 4.2% to GBP1,254.0 million (2014: GBP1,203.6 million) reflecting: an increase in headcount in the asset management and wealth management businesses to support growth initiatives; inflationary increases in fixed costs in the Specialist Bank in home currencies; an increase in variable remuneration given increased profitability in certain businesses; a reduction in costs arising from the restructure of the remaining Australian businesses.
Taxation
The effective tax rate amounts to 19.6 % (2014:17.1%).
Profit attributable to non-controlling interests
Profit attributable to non-controlling interests mainly comprises:
· GBP18.2 million profit attributable to non-controlling interests in the Asset Management business.
· GBP31.7 million profit attributable to non-controlling interests in the Investec Property Fund Limited.
· A reduction of GBP20.7 million relating to Euro denominated preferred securities issued by a subsidiary of Investec plc which are reflected on the balance sheet as part of non-controlling interests. (The transaction is hedged and a forex transaction loss arising on the hedge is reflected in operating profit before goodwill with the equal and opposite impact reflected in earnings attributable to non-controlling interests).
Balance sheet analysis
Since 31 March 2014:
· Total shareholders' equity (including non-controlling interests) increased by 0.6% to GBP4.0 billion.
· Net asset value per share decreased 3.0% to 364.9 pence and net tangible asset value per share (which excludes goodwill and intangible assets) decreased by 0.3% to 308.1 pence.
· The return on adjusted average shareholders' equity of the ongoing business increased from 13.1% to 13.8%.
Liquidity and funding
As at 31 March 2015 the group held GBP10.0 billion in cash and near cash balances (GBP5.0 billion in Investec plc and R88.7 billion in Investec Limited) which amounted to 38.2% of its liability base. Loans and advances to customers as a percentage of customer deposits amounted to 74.0% (2014: 72.0%). The group has significant surplus cash in its UK business following the sale of Kensington and the group is actively focusing on reducing both cash and liquidity back to normalised levels through asset growth and further liability management, while maintaining its overall conservative approach to liquidity risk management. The group comfortably meets Basel liquidity requirements for the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) in the UK. In South Africa, the group continued to build its structural liquidity cash resources to improve its Basel III LCR in light of regulations which were implemented from 1 January 2015. Investec Bank Limited (Solo basis) ended the year with the three-month average of its LCR at 100.3%, which is well ahead of the minimum levels required. Further detail with respect to the bank's LCR ratio in South Africa is provided on the website.
Capital adequacy and leverage ratios
The group is targeting a minimum common equity tier one capital ratio above 10% by March 2016 and a total capital adequacy ratio range of 14% to 17% on a consolidated basis for each of Investec plc and Investec Limited respectively. The group's anticipated fully loaded Basel III common equity tier 1 capital adequacy ratios in both Investec plc and Investec Limited are reflected in the table below.
31 Mar 2015 | 31 Mar 2014 | |
Investec plc^ | ||
Capital adequacy ratio | 16.7% | 15.3% |
Tier 1 ratio | 11.9% | 10.5% |
Common equity tier 1 ratio | 10.2% | 8.8% |
Common equity tier 1 ratio (anticipated Basel III "fully loaded"*) | 10.2% | 8.8% |
Leverage ratio (current) | 7.7% | 7.4% |
Leverage ratio (anticipated Basel III "fully loaded"*) | 6.6% | 6.2% |
Investec Limited | ||
Capital adequacy ratio | 14.7% | 14.9% |
Tier 1 ratio | 11.3% | 11.0% |
Common equity tier 1 ratio | 9.6% | 9.4% |
Common equity tier 1 ratio (anticipated Basel III "fully loaded"*) | 9.5% | 9.3% |
Leverage ratio (current*) | 8.1% | 7.8% |
Leverage ratio (anticipated Basel III "fully loaded"*) | 7.2% | 6.7% |
*Based on the group's understanding of current and draft regulations. "Fully loaded" is based on Basel III capital requirements as fully phased in by 2022.
^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 dividends when calculating CET1 as now required under the CRR and EBA technical standards. The impact of the final proposed ordinary and preference dividends totalling GBP57 million for Investec plc would be around 50 bps.
Legacy business - overview of results
The group's legacy portfolio in the UK has been actively managed down from GBP3.4 billion at 31 March 2014 to GBP0.7 billion largely through strategic sales (mentioned above), redemptions, write-offs and transfers (at the end of the period) to the ongoing book on the back of improved performance in these loans. The total legacy business over the period reported a loss before taxation of GBP107.7 million (2014:GBP69.1 million) as the group accelerated the clearance of the portfolio, which resulted in an increase in impairments on these assets. The remaining legacy portfolio will continue to be managed down as the group sees opportunities to clear the portfolio. Management believe that the remaining legacy book will still take three to five years to wind down. Total net defaults in the legacy book amount to GBP218 million.
Outlook
Investec has successfully executed on its key strategic initiatives embarked upon over the past two years. The resultant simplification enables the group to enhance the operational focus to grow and develop its core businesses, so that the right outcomes can be delivered for clients and stakeholders including acceptable returns for shareholders.
This, combined with the opportunities in Investec's two principle markets, leads the group to feel positive about the year ahead; notwithstanding the structural challenges in the South African economy and the intensified regulatory landscape.
On behalf of the boards of Investec plc and Investec Limited
Fani Titi | Stephen Koseff | Bernard Kantor |
Chairman | Chief Executive Officer | Managing Director |
20 May 2015
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 year-end 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.
· 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.
Year to 31 Mar 2015 | Year to 31 Mar 2014 | |||
Currency per GBP1.00 | Period end | Average | Period end | Average |
South African Rand | 17.97 | 17.82 | 17.56 | 16.12 |
Australian Dollar | 1.95 | 1.85 | 1.80 | 1.72 |
Euro | 1.38 | 1.28 | 1.21 | 1.19 |
US Dollar | 1.49 | 1.62 | 1.67 | 1.59 |
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 10.5% and the closing rate has depreciated by 2.3% since 31 March 2014.
· Sale of Investec Bank (Australia) Limited
The sale of Investec Bank (Australia) Limited's Professional Finance and Asset Finance and Leasing businesses and its deposit book to Bank of Queensland Limited was effective 31 July 2014 for cash proceeds of GBP122 million. This has resulted in the derecognition of approximately GBP1.7 billion of assets and approximately GBP1.7 billion of liabilities associated with the businesses sold. The group continues to have a presence in Australia, focusing on its core activities of Specialised Finance, Corporate Advisory, Property Fund Management and Asset Management. The remaining business will operate as a non-banking subsidiary of the Investec group. As a result, the group has decided to no longer report the activities of its Australian businesses separately with these activities now reported under the "UK and Other" geographical segment and the "UK and Other" Specialist Banking segment.
· Sales of Kensington Group plc and Start Mortgage Holdings Limited
On 9 September 2014 the group announced the sale of its UK intermediated mortgage business Kensington Group plc ("Kensington") together with certain other Investec mortgage assets to funds managed by Blackstone Tactical Opportunities Advisors L.L.C. and TPG Special Situations Partners for GBP180 million in cash based on a tangible net asset value of the business of GBP165 million at 31 March 2014. This transaction became effective on 30 January 2015.
On 15 September 2014 the group announced the sale of its Irish intermediated mortgage business Start Mortgage Holdings Limited ("Start") together with certain other Irish mortgage assets to an affiliate of Lone Star Funds. This transaction became effective on 4 December 2014.
This has resulted in the derecognition of approximately GBP4.1 billion of assets and approximately GBP2 billion of external liabilities associated with these businesses sold.
· A net loss on sale of these subsidiaries was recorded
The loss on sale of subsidiaries reflected in the statutory income statement comprises a net profit on the sale of Investec Bank (Australia) Limited offset by a net loss on the sale of the Kensington UK and Start Irish operations.
The net loss after taxation can be analysed further as follows:
GBP'million | |
Net loss before goodwill and taxation | (28.1) |
Goodwill | (64.9) |
Net loss on sale of subsidiaries | (93.0) |
Related tax expense | (20.7) |
Net loss after tax | (113.7) |
· 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 year ended 31 March 2015 are consistent with those adopted in the financial statements for the year ended 31 March 2014 except as noted below.
IFRIC 21 'Levies'
The group has adopted IFRIC 21 'Levies' from 1 April 2014. The cumulative impact of the restatement as at 31 March 2013 is a decrease in operating costs and other liabilities of GBP4.7 million and an increase in taxation on operating profit before goodwill and deferred taxation liabilities of GBP1.0 million. The net impact on retained income at 31 March 2014 is an increase of GBP2.8 million.
The financial results have been prepared under the supervision of Glynn Burger, the Group Risk and Finance Director. The financial statements for the year ended 31 March 2015 will be posted to stakeholders on 30 June 2015. These accounts 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 20 May 2015.
· The information in the announcement for the year ended 31 March 2015, which was approved by the board of directors on 20 May 2015, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. The 31 March 2014 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
Unaudited combined consolidated financial results for the year ended 31 March 2015
Ongoing financial information
Ongoing summarised income statement
for the year to 31 MarchGBP'000 |
2015 | 2014 | % change | Variance amount |
Net interest income | 539 041 | 495 043 | 8.9% | 43 998 |
Net fee and commission income | 1 090 435 | 969 517 | 12.5% | 120 918 |
Investment income | 151 848 | 188 366 | (19.4%) | (36 518) |
Trading income arising from | ||||
- customer flow | 106 588 | 103 514 | 3.0% | 3 074 |
- balance sheet management and other trading activities | (13 041) | 14 158 | (192.1%) | (27 199) |
Other operating income | 12 188 | 18 464 | (34.0%) | (6 276) |
Total operating income before impairment losses on loans and advances | 1 887 059 | 1 789 062 | 5.5% | 97 997 |
Impairment losses on loans and advances | (39 352) | (64 326) | (38.8%) | 24 974 |
Operating income | 1 847 707 | 1 724 736 | 7.1% | 122 971 |
Operating costs | (1 254 009) | (1 203 551) | 4.2% | (50 458) |
Depreciation on operating leased assets | (1 294) | (5 446) | (76.2%) | 4 152 |
Operating profit before goodwill and acquired intangibles | 592 404 | 515 739 | 14.9% | 76 665 |
Profit attributable to other non-controlling interests | (11 701) | (10 849) | 7.9% | (852) |
Profit attributable to Asset Management non-controlling interests | (18 184) | (11 031) | 64.8% | (7 153) |
Operating profit before taxation | 562 519 | 493 859 | 13.9% | 68 660 |
Taxation | (116 182) | (88 181) | 31.8% | (28 001) |
Preference dividends accrued | (36 427) | (33 812) | 7.7% | (2 615) |
Adjusted attributable earnings to shareholders | 409 910 | 371 866 | 10.2% | 38 044 |
Number of weighted average shares - (million) | 862.7 | 862.6 | ||
Adjusted earnings per share (pence) | 47.5 | 43.1 | 10.2% | |
Cost to income ratio | 66.5% | 67.5% |
Segmental geographical and business analysis of operating profit before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests
for the year to 31 March GBP'000 | UK and Other | Southern Africa | Total group |
2015 | |||
Asset Management | 75 491 | 73 484 | 148 975 |
Wealth & Investment | 56 871 | 21 910 | 78 781 |
Specialist Banking | 129 341 | 262 918 | 392 259 |
261 703 | 358 312 | 620 015 | |
Group costs | (30 048) | (9 264) | (39 312) |
Total group | 231 655 | 349 048 | 580 703 |
Other non-controlling interest - equity | 11 701 | ||
Operating profit | 592 404 | ||
2014* | |||
Asset Management | 67 585 | 76 234 | 143 819 |
Wealth & Investment | 46 065 | 20 034 | 66 099 |
Specialist Banking | 121 491 | 209 925 | 331 416 |
235 141 | 306 193 | 541 334 | |
Group costs | (27 672) | (8 772) | (36 444) |
Total group | 207 469 | 297 421 | 504 890 |
Other non-controlling interest - equity | 10 849 | ||
Operating profit | 515 739 |
*Restated for IFRIC 21, inclusion of Australia in "UK and Other" and group costs detailed in the commentary section
Reconciliation from statutory summarised income statement to ongoing summarised income statement
Removal of: | |||||
for the year to 31 March 2015(GBP'000) | Statutory as disclosed | UK legacy business excluding sale assets | Sale assets UK | Sale assets Australia | Ongoing business |
Net interest income | 634 977 | 12 526 | 71 143 | 12 267 | 539 041 |
Net fee and commission income | 1 089 043 | 756 | (4 876) | 2 728 | 1 090 435 |
Investment income | 128 334 | (16 204) | (5 443) | (1 867) | 151 848 |
Trading income arising from | |||||
- customer flow | 106 313 | 350 | (415) | (210) | 106 588 |
- balance sheet management and other trading activities | (13 424) | 19 | (248) | (154) | (13 041) |
Other operating income | 12 236 | - | - | 48 | 12 188 |
Total operating income before impairment losses onloans and advances | 1 957 479 | (2 553) | 60 161 | 12 812 | 1 887 059 |
Impairment losses on loans and advances | (128 381) | (83 468) | (4 085) | (1 476) | (39 352) |
Operating income | 1 829 098 | (86 021) | 56 076 | 11 336 | 1 847 707 |
Operating costs | (1 322 705) | (21 648) | (34 245) | (12 803) | (1 254 009) |
Depreciation on operating leased assets | (1 535) | - | (241) | - | (1 294) |
Operating profit before goodwill and acquired intangibles | 504 858 | (107 669) | 21 590 | (1 467) | 592 404 |
Profit attributable to other non-controlling interests | (11 701) | - | - | - | (11 701) |
Profit attributable to Asset Management non-controlling interests | (18 184) | - | - | - | (18 184) |
Operating profit before taxation | 474 973 | (107 669) | 21 590 | (1 467) | 562 519 |
Taxation* | (99 023) | 21 103 | (4 232) | 288 | (116 182) |
Preference dividends accrued | (36 427) | - | - | - | (36 427) |
Adjusted attributable earnings to shareholders | 339 523 | (86 566) | 17 358 | (1 179) | 409 910 |
Number of weighted average shares - (million) | 862.7 | 862.7 | |||
Adjusted earnings per share (pence) | 39.4 | 47.5 | |||
Cost to income ratio | 67.6% | 66.5% | |||
*Applying the group effective taxation rate of 19.6%
Removal of: | |||||
for the year to 31 March 2014(GBP'000) | Statutory as disclosed | UK legacy business excluding sale assets | Sale assets UK | Sale assets Australia | Ongoing business |
Net interest income | 651 679 | 19 355 | 94 715 | 42 566 | 495 043 |
Net fee and commission income | 989 421 | 8 981 | 749 | 10 174 | 969 517 |
Investment income | 166 809 | (11 793) | (9 764) | - | 188 366 |
Trading income arising from | |||||
- customer flow | 103 914 | 695 | (625) | 330 | 103 514 |
- balance sheet management and other trading activities | 10 587 | (1 762) | (875) | (934) | 14 158 |
Other operating income | 18 554 | - | - | 90 | 18 464 |
Total operating income before impairment losses onloans and advances | 1 940 964 | 15 476 | 84 200 | 52 226 | 1 789 062 |
Impairment losses on loans and advances | (166 152) | (59 157) | (38 898) | (3 771) | (64 326) |
Operating income | 1 774 812 | (43 681) | 45 302 | 48 455 | 1 724 736 |
Operating costs | (1 307 243) | (25 370) | (41 136) | (37 186) | (1 203 551) |
Depreciation on operating leased assets | (6 044) | - | (598) | - | (5 446) |
Operating profit before goodwill and acquired intangibles | 461 525 | (69 051) | 3 568 | 11 269 | 515 739 |
Profit attributable to other non-controlling interests | (10 849) | - | - | - | (10 849) |
Profit attributable to Asset Management non-controlling interests | (11 031) | - | - | - | (11 031) |
Operating profit before taxation | 439 645 | (69 051) | 3 568 | 11 269 | 493 859 |
Taxation** | (78 910) | 11 808 | (610) | (1 927) | (88 181) |
Preference dividends accrued | (33 812) | - | - | - | (33 812) |
Adjusted attributable earnings to shareholders | 326 923 | (57 243) | 2 958 | 9 342 | 371 866 |
Number of weighted average shares - (million) | 862.6 | 862.6 | |||
Adjusted earnings per share (pence) | 37.9 | 43.1 | |||
Cost to income ratio | 67.6% | 67.5% | |||
**Applying the group effective taxation rate of 17.1%
Statutory financial information
Salient financial features
Results in Pounds Sterling | Results in Rand | |||||||
Actual as reported Year to 31 March 2015 | Actual as reported Year to 31 March 2014 | Actual as reported % change | Neutral currency Year to 31 March 2015 | Neutral currency % change | Results in Rand Year to 31 March 2015 | Results in Rand Year to 31 March 2014 | % change | |
Operating profit before taxation* (million) | 493 | 451 | 9.3% | 532 | 18.0% | 8 817 | 7 309 | 20.6% |
Earnings attributable to shareholders (million) | 246 | 331 | (25.7%) | 273 | (17.5%) | 3 970 | 5 329 | (25.5%) |
Adjusted earnings attributable to shareholders** (million) | 340 | 327 | 4.0% | 368 | 12.5% | 6 076 | 5 293 | 14.8% |
Adjusted earningsper share** | 39.4 | 37.9 | 4.0% | 42.6 | 12.4% | 703.8 | 613.8 | 14.7% |
Ongoing adjustedearnings per share** | 47.5 | 43.1 | 10.2% | 51.1 | 18.6% | 850.3 | 697.9 | 21.8% |
Basic earnings per share | 24.4 | 34.3 | (28.9%) | 27.3 | (20.4%) | 387.3 | 552.1 | (29.8%) |
Headline earningsper share | 35.8 | 33.8 | 5.9% | 38.5 | 13.6% | 640.3 | 547.7 | 16.9% |
Dividends per share | 20.0p | 19.0p | 5.3% | 362c | 327c | 10.7% | ||
Cost to income ratio | 67.6% | 67.6% | ||||||
Actual as reported At 31 March 2015 | Actual as reported At 31 March 2014 | Actual as reported % change | Neutral currency At 31 March 2015 | Neutral currency % change | Results in Rand At 31 March 2015 | Results in Rand At 31 March 2014 | % change | |
Net asset value per share | 364.9 | 376.0 | (3.0%) | 365.2 | (2.9%) | 6 559 | 6 602 | (0.7%) |
Net tangible asset valueper share | 308.1 | 309.0 | (0.3%) | 308.4 | (0.2%) | 5 538 | 5 425 | 2.1% |
Total equity (million) | 4 040 | 4 016 | 0.6% | 4 087 | 1.8% | 72 625 | 70 505 | 3.0% |
Total assets (million) | 44 353 | 47 142 | (5.9%) | 44 981 | (4.6%) | 797 218 | 827 649 | (3.7%) |
Core loans and advances (million) | 17 189 | 17 157 | 0.2% | 17 430 | 1.6% | 308 957 | 301 224 | 2.6% |
Cash and near cash balances (million) | 9 975 | 9 136 | 9.2% | 10 090 | 10.4% | 179 242 | 160 405 | 11.7% |
Customer deposits (million) | 22 615 | 22 610 | 0.0% | 22 908 | 1.3% | 406 485 | 396 951 | 2.4% |
Third party assets under management (million) | 124 106 | 109 189 | 13.7% | 125 149 | 14.6% | 2 230 197 | 1 917 347 | 16.3% |
Recurring income as a %of total operating income | 74.2% | 70.7% | ||||||
Return on average adjusted shareholders' equity | 10.6% | 10.0% | ||||||
Return on average risk-weighted assets | 1.25% | 1.14% | ||||||
Credit loss ratio | 0.68% | 0.68% | ||||||
Defaults (net ofimpairments and before collateral) as a percentage of net core loans | 2.07% | 2.30% | ||||||
Loans and advances to customers as apercentage of customer deposits | 74.0% | 72.0% | ||||||
* 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
Statutory financial information
Combined consolidated income statement
for the year to 31 March
GBP'000 | 2015 | 2014* |
Interest income | 1 790 867 | 1 905 383 |
Interest expense | (1 155 890) | (1 253 704) |
Net interest income | 634 977 | 651 679 |
Fee and commission income | 1 226 257 | 1 136 902 |
Fee and commission expense | (137 214) | (147 481) |
Investment income | 128 334 | 166 809 |
Trading income arising from | ||
- customer flow | 106 313 | 103 914 |
- balance sheet management and other trading activities | (13 424) | 10 587 |
Other operating income | 12 236 | 18 554 |
Total operating income before impairment losses on loans and advances | 1 957 479 | 1 940 964 |
Impairment losses on loans and advances | (128 381) | (166 152) |
Operating income | 1 829 098 | 1 774 812 |
Operating costs | (1 322 705) | (1 307 243) |
Depreciation on operating leased assets | (1 535) | (6 044) |
Operating profit before goodwill and acquired intangibles | 504 858 | 461 525 |
Impairment of goodwill | (5 337) | (12 797) |
Amortisation of acquired intangibles | (14 497) | (13 393) |
Operating costs arising from integration, restructuring and partial disposals of subsidiaries | - | (20 890) |
Operating profit | 485 024 | 414 445 |
Net (loss)/gain on disposal of subsidiaries | (93 033) | 9 821 |
Profit before taxation | 391 991 | 424 266 |
Taxation on operating profit before goodwill and acquired intangibles | (99 023) | (78 910) |
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries | (17 574) | 7 289 |
Profit after taxation | 275 394 | 352 645 |
Profit attributable to Asset Management non-controlling interests | (18 184) | (11 031) |
Profit attributable to other non-controlling interests | (11 701) | (10 849) |
Earnings attributable to shareholders | 245 509 | 330 765 |
Impairment of goodwill | 5 337 | 12 797 |
Amortisation of acquired intangibles, net of taxation | 14 497 | 13 393 |
Operating cost arising from integration, restructuring and partial disposals of subsidiaries | - | 20 890 |
Net loss/(gain) on disposal of subsidiaries | 93 033 | (9 821) |
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries | 17 574 | (7 289) |
Preference dividends paid | (34 803) | (35 268) |
Accrual adjustment on earnings attributable to other equity holders | (1 211) | (386) |
Currency hedge attributable to perpetual equity instruments | (413) | 1 842 |
Adjusted earnings | 339 523 | 326 923 |
Headline adjustments | (30 753) | (35 362) |
Headline earnings | 308 770 | 291 561 |
Earnings per share (pence) | ||
- Basic | 24.4 | 34.3 |
- Diluted | 23.1 | 32.3 |
Statutory adjusted earnings per share (pence) | ||
- Basic | 39.4 | 37.9 |
- Diluted | 37.3 | 35.8 |
Dividends per share (pence) | ||
- Interim | 8.5 | 8.0 |
- Final | 11.5 | 11.0 |
Headline earnings per share (pence) | ||
- Basic | 35.8 | 33.8 |
- Diluted | 33.9 | 32.3 |
Number of weighted average shares - (million) | 862.7 | 862.6 |
*Restated for IFRIC 21 detailed in commentary section
Summarised combined consolidated statement of comprehensive income
for the year to 31 March
GBP'000 | 2015 | 2014* |
Profit after taxation | 275 394 | 352 645 |
Other comprehensive income/(loss): | ||
Items that may be reclassified to the income statement | ||
Fair value movements on cash flow hedges taken directly to other comprehensive income^ | (32 816) | (3 582) |
Gains on realisation of available-for-sale assets recycled through the income statement^ | (4 660) | (2 972) |
Fair value movements on available-for-sale assets taken directly to other comprehensive income^ | 1 037 | 347 |
Foreign currency adjustments on translating foreign operations | (58 318) | (407 479) |
Items that will never be reclassified to the income statement | ||
Remeasurement of net defined benefit pension liability/(asset) | 6 340 | (5 870) |
Total comprehensive income/(loss) | 186 977 | (66 911) |
Total comprehensive income/(loss) attributable to non-controlling interests | 32 050 | (12 724) |
Total comprehensive income/(loss) attributable to ordinary shareholders | 120 124 | (89 455) |
Total comprehensive income attributable to perpetual preferred securities | 34 803 | 35 268 |
Total comprehensive income/(loss) | 186 977 | (66 911) |
*Restated for IFRIC 21 detailed in commentary section
^Net of taxation of GBP4.0million (31 March 2014: GBP7.8million)
Summarised combined consolidated cash flow statement
for the year to 31 MarchGBP'000 | 2015 | 2014* |
Cash inflows from operations | 617 363 | 668 725 |
Increase in operating assets | (2 312 161) | (979 947) |
Increase in operating liabilities | 2 291 132 | 1 290 173 |
Net cash inflow from operating activities | 596 334 | 978 951 |
Net cash inflow from investing activities^ | 192 347 | 24 313 |
Net cash outflow from financing activities | (257 753) | (234 601) |
Effects of exchange rate changes on cash and cash equivalents | (17 091) | (281 225) |
Net increase in cash and cash equivalents | 513 837 | 487 438 |
Cash and cash equivalents at the beginning of the year | 4 049 011 | 3 561 573 |
Cash and cash equivalents at the end of the year | 4 562 848 | 4 049 011 |
*Restated for IFRIC 21 detailed in commentary section
^ Includes the cash flow effects on the sale of subsidiaries detailed in the commentary section of this report.
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 balance sheet
At 31 March
GBP'000 | 2015 | 2014* |
Assets | ||
Cash and balances at central banks | 2 529 562 | 2 080 190 |
Loans and advances to banks | 3 045 864 | 3 280 179 |
Non-sovereign and non-bank cash placements | 586 400 | 515 189 |
Reverse repurchase agreements and cash collateral on securities borrowed | 1 812 156 | 1 388 980 |
Sovereign debt securities | 2 958 641 | 3 215 432 |
Bank debt securities | 1 161 055 | 1 568 097 |
Other debt securities | 627 373 | 605 378 |
Derivative financial instruments | 1 580 681 | 1 619 415 |
Securities arising from trading activities | 1 086 349 | 870 088 |
Investment portfolio | 947 846 | 825 745 |
Loans and advances to customers | 16 740 263 | 16 281 612 |
Own originated loans and advances to customers securitised | 448 647 | 875 755 |
Other loans and advances | 574 830 | 1 693 569 |
Other securitised assets | 780 596 | 3 576 526 |
Interests in associated undertakings | 25 244 | 24 316 |
Deferred taxation assets | 99 301 | 131 142 |
Other assets | 1 741 713 | 1 474 992 |
Property and equipment | 102 354 | 108 738 |
Investment properties | 617 898 | 509 228 |
Goodwill | 361 527 | 433 571 |
Intangible assets | 147 227 | 159 169 |
Non-current assets classified as held for sale | 40 726 | 41 637 |
38 016 253 | 41 278 948 | |
Other financial instruments at fair value through profit or loss in respect of liabilities to customers | 6 337 149 | 5 862 959 |
44 353 402 | 47 141 907 | |
Liabilities | ||
Deposits by banks | 1 908 294 | 2 721 170 |
Derivative financial instruments | 1 544 168 | 1 170 232 |
Other trading liabilities | 885 003 | 861 412 |
Repurchase agreements and cash collateral on securities lent | 1 284 945 | 1 316 087 |
Customer accounts (deposits) | 22 614 868 | 22 609 784 |
Debt securities in issue | 1 709 369 | 1 596 630 |
Liabilities arising on securitisation of own originated loans and advances | 109 953 | 729 534 |
Liabilities arising on securitisation of other assets | 616 909 | 3 041 435 |
Current taxation liabilities | 201 790 | 208 041 |
Deferred taxation liabilities | 76 481 | 97 116 |
Other liabilities | 1 845 679 | 1 572 877 |
32 797 459 | 35 924 318 | |
Liabilities to customers under investment contracts | 6 335 326 | 5 861 389 |
Insurance liabilities, including unit-linked liabilities | 1 823 | 1 570 |
39 134 608 | 41 787 277 | |
Subordinated liabilities | 1 178 299 | 1 338 752 |
40 312 907 | 43 126 029 | |
Equity | ||
Ordinary share capital | 226 | 224 |
Perpetual preference share capital | 153 | 153 |
Share premium | 2 258 148 | 2 473 131 |
Treasury shares | (68 065) | (85 981) |
Other reserves | (563 985) | (467 247) |
Retained income | 1 874 360 | 1 652 016 |
Shareholders' equity excluding non-controlling interests | 3 500 837 | 3 572 296 |
Other Additional Tier 1 securities in issue | 30 599 | - |
Non-controlling interests | 509 059 | 443 582 |
- Perpetual preferred securities issued by subsidiaries | 229 957 | 252 713 |
- Non-controlling interests in partially held subsidiaries | 279 102 | 190 869 |
Total equity | 4 040 495 | 4 015 878 |
Total liabilities and equity | 44 353 402 | 47 141 907 |
*Restated for IFRIC 21 detailed in commentary section
Summarised combined consolidated statement of changes in equity
for the year ended 31 March
GBP'000 | 2015 | 2014* |
Balance at the beginning of the year | 4 015 878 | 3 945 253 |
Total comprehensive income for the year | 186 977 | (66 911) |
Share-based payments adjustments | 63 475 | 66 905 |
Dividends paid to ordinary shareholders | (168 486) | (150 053) |
Dividends declared to perpetual preference shareholders | (16 101) | (16 566) |
Dividends paid to perpetual preference shareholders included in non-controlling interests | (18 702) | (18 702) |
Dividends paid to non-controlling interests | (29 466) | (5 838) |
Issue of ordinary shares | 38 896 | 31 650 |
Issue of Other Additional Tier 1 securities in issue | 30 012 | - |
Issue of equity by subsidiaries | 19 725 | 35 477 |
Acquisition of non-controlling interests | 39 | (270) |
Non-controlling interest relating to partial disposal of subsidiaries | 43 129 | 166 940 |
Partial sale of subsidiary | (2 244) | - |
Capital conversion of subsidiary | - | 126 681 |
Movement of treasury shares | (122 637) | (98 688) |
Balance at the end of the year | 4 040 495 | 4 015 878 |
*Restated for IFRIC 21 detailed in commentary section
Combined consolidated segmental analysis
for the year to 31 March
GBP'000 | UK and Other | Southern Africa | Total group |
Segmental geographical and business analysis of operating profit beforegoodwill, acquired intangibles, non-operating items, taxation and afterother non-controlling interests | |||
2015 | |||
Asset Management | 75 491 | 73 484 | 148 975 |
Wealth & Investment | 56 871 | 21 910 | 78 781 |
Specialist Banking | 41 795 | 262 918 | 304 713 |
174 157 | 358 312 | 532 469 | |
Group costs | (30 048) | (9 264) | (39 312) |
Total group | 144 109 | 349 048 | 493 157 |
Other non-controlling interest - equity | 11 701 | ||
Operating profit | 504 858 |
GBP'000 | UK and Other | Southern Africa | Total group |
Segmental geographical and business analysis of operating profit beforegoodwill, acquired intangibles, non-operating items, taxation and afterother non-controlling interests | |||
2014* | |||
Asset Management | 67 585 | 76 234 | 143 819 |
Wealth & Investment | 46 065 | 20 034 | 66 099 |
Specialist Banking | 67 277 | 209 925 | 277 202 |
180 927 | 306 193 | 487 120 | |
Group costs | (27 672) | (8 772) | (36 444) |
Total group | 153 255 | 297 421 | 450 676 |
Other non-controlling interest - equity | 10 849 | ||
Operating profit | 461 525 |
*Restated for IFRIC 21 and group costs detailed in commentary section
Additional statutory information relating to the consolidated income statement
Impairment of goodwill
The goodwill impairment largely relates to the restructure of the Australian business.
Amortisation of acquired intangibles
Amortisation of acquired intangibles largely relates to the Wealth & Investment business and mainly comprises amortisation of amounts attributable to client relationships.
Analysis of financial assets and liabilities by category of financial instrument
At 31 March 2015 GBP'000 | Financial instruments at fair value | Financial instruments at amortised cost | Insurance related at fair value | Non-financial instruments | Total |
Assets | |||||
Cash and balances at central banks | 1 302 | 2 528 260 | - | - | 2 529 562 |
Loans and advances to banks | 178 907 | 2 866 957 | - | - | 3 045 864 |
Non-sovereign and non-bank cash placements | 160 | 586 240 | - | - | 586 400 |
Reverse repurchase agreements and cash collateral on securities borrowed | 959 361 | 852 795 | - | - | 1 812 156 |
Sovereign debt securities | 2 760 898 | 197 743 | - | - | 2 958 641 |
Bank debt securities | 485 530 | 675 525 | - | - | 1 161 055 |
Other debt securities | 495 527 | 131 846 | - | - | 627 373 |
Derivative financial instruments | 1 580 681 | - | - | - | 1 580 681 |
Securities arising from trading activities | 1 086 349 | - | - | - | 1 086 349 |
Investment portfolio | 947 846 | - | - | - | 947 846 |
Loans and advances to customers | 707 376 | 16 032 887 | - | - | 16 740 263 |
Own originated loans and advances to customers securitised | - | 448 647 | - | - | 448 647 |
Other loans and advances | - | 574 830 | - | - | 574 830 |
Other securitised assets | 627 928 | 152 668 | - | - | 780 596 |
Interests in associated undertakings | - | - | - | 25 244 | 25 244 |
Deferred taxation assets | - | - | - | 99 301 | 99 301 |
Other assets | 81 977 | 1 305 644 | - | 354 092 | 1 741 713 |
Property and equipment | - | - | - | 102 354 | 102 354 |
Investment properties | - | - | - | 617 898 | 617 898 |
Goodwill | - | - | - | 361 527 | 361 527 |
Intangible assets | - | - | - | 147 227 | 147 227 |
Non-current assets held for resale | - | - | - | 40 726 | 40 726 |
9 913 842 | 26 354 042 | - | 1 748 369 | 38 016 253 | |
Other financial instruments at fair value through profit or loss in respect of liabilities to customers | - | - | 6 337 149 | - | 6 337 149 |
9 913 842 | 26 354 042 | 6 337 149 | 1 748 369 | 44 353 402 | |
Liabilities | |||||
Deposits by banks | - | 1 908 294 | - | - | 1 908 294 |
Derivative financial instruments | 1 544 168 | - | - | - | 1 544 168 |
Other trading liabilities | 885 003 | - | - | - | 885 003 |
Repurchase agreements and cash collateral on securities lent | 553 730 | 731 215 | - | - | 1 284 945 |
Customer accounts (deposits) | 924 083 | 21 690 785 | - | - | 22 614 868 |
Debt securities in issue | 473 037 | 1 236 332 | - | - | 1 709 369 |
Liabilities arising on securitisation of own originated loans and advances | - | 109 953 | - | - | 109 953 |
Liabilities arising on securitisation of other assets | 616 909 | - | - | - | 616 909 |
Current taxation liabilities | - | - | - | 201 790 | 201 790 |
Deferred taxation liabilities | - | - | - | 76 481 | 76 481 |
Other liabilities | 135 268 | 1 239 985 | - | 470 426 | 1 845 679 |
5 132 198 | 26 916 564 | - | 748 697 | 32 797 459 | |
Liabilities to customers under investment contracts | - | - | 6 335 326 | - | 6 335 326 |
Insurance liabilities, including unit-linked liabilities | - | - | 1 823 | - | 1 823 |
5 132 198 | 26 916 564 | 6 337 149 | 748 697 | 39 134 608 | |
Subordinated liabilities | - | 1 178 299 | - | - | 1 178 299 |
5 132 198 | 28 094 863 | 6 337 149 | 748 697 | 40 312 907 |
Fair value category | ||||
At 31 March 2015 GBP'000 | Total instruments at fair value | Level 1 | Level 2 | Level 3 |
Assets | ||||
Cash and balances at central banks | 1 302 | 1 302 | - | - |
Loans and advances to banks | 178 907 | 178 907 | - | - |
Non-sovereign and non-bank cash placements | 160 | - | 160 | - |
Reverse repurchase agreements and cash collateral on securities borrowed | 959 361 | - | 959 361 | - |
Sovereign debt securities | 2 760 898 | 2 759 792 | 1 106 | - |
Bank debt securities | 485 530 | 192 469 | 293 061 | - |
Other debt securities | 495 527 | 379 690 | 97 793 | 18 044 |
Derivative financial instruments | 1 580 681 | 204 626 | 1 332 534 | 43 521 |
Securities arising from trading activities | 1 086 349 | 1 083 956 | 2 393 | - |
Investment portfolio | 947 846 | 131 783 | 70 278 | 745 785 |
Loans and advances to customers | 707 376 | - | 671 376 | 36 000 |
Other securitised assets | 627 928 | - | - | 627 928 |
Other assets | 81 977 | 81 910 | 67 | - |
9 913 842 | 5 014 435 | 3 428 129 | 1 471 278 | |
Liabilities | ||||
Derivative financial instruments | 1 544 168 | 328 214 | 1 213 288 | 2 666 |
Other trading liabilities | 885 003 | 840 647 | 44 356 | - |
Repurchase agreements and cash collateral on securities lent | 553 730 | - | 553 730 | - |
Customer accounts (deposits) | 924 083 | - | 924 083 | - |
Debt securities in issue | 473 037 | - | 473 037 | - |
Liabilities arising on securitisation of other assets | 616 909 | - | - | 616 909 |
Other liabilities | 135 268 | 96 865 | 38 403 | - |
5 132 198 | 1 265 726 | 3 246 897 | 619 575 | |
Net assets | 4 781 644 | 3 748 709 | 181 232 | 851 703 |
For the year to 31 March GBP'000 | Total level 3 financial instruments | Fair value through profit and loss instruments | Available- for-sale 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 1 April 2014 | 869 172 | 904 089 | (34 917) |
Total gains or losses | 122 239 | 120 412 | 1 827 |
In the income statement | 121 813 | 120 412 | 1 401 |
In the statement of comprehensive income | 426 | - | 426 |
Purchases | 152 975 | 123 092 | 29 883 |
Sales | (290 650) | (253 447) | (37 203) |
Issues | (6 996) | (6 996) | - |
Settlements | (68 982) | (52 553) | (16 429) |
Transfers into level 3 | 63 545 | 21 416 | 42 129 |
Transfers out of level 3 | 545 | 545 | - |
Foreign exchange adjustments | 9 855 | 4 437 | 5 418 |
Balance as at 31 March 2015 | 851 703 | 860 995 | (9 292) |
The following table quantifies the gains or (losses) included in the income statement and statement of other comprehensive income recognised on level 3 financial instruments:
For the year to 31 March 2015 GBP'000 | Total | Realised | Unrealised |
Total gains or (losses) included in the income statement for the year | |||
Fee and commission income | 7 859 | (51) | 7 910 |
Investment income | 101 304 | 81 979 | 19 325 |
Trading income arising from customer flow | 13 999 | - | 13 999 |
Trading income arising from balance sheet management and other trading activities | (97) | 877 | (974) |
Other operating loss | (1 252) | - | (1 252) |
121 813 | 82 805 | 39 008 | |
Total gains included in other comprehensive income for the year | |||
Gains on realisation of available-for-sale assets recycled through the income statement | 1 401 | 1 401 | - |
Fair value movements on available-for-sale assets taken directly to other comprehensive income | 426 | - | 426 |
1 827 | 1 401 | 426 |
he 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 value GBP'000 | Significant unobservable input changed in valuation method | Range over which unobservable input has been stressed | Reflected inincome statement | ||
Favourable changes GBP'000 | Unfavourable changes GBP'000 | ||||
2015 | |||||
Assets | |||||
Other debt securities | 18 044 | 156 | (205 | ||
Discount rates | (5%) - 5% | 14 | (60) | ||
Credit spreads | (2%) - 3% | 114 | (128) | ||
Other | (6%) - 5% | 28 | (17) | ||
Derivative financial instruments | 43 521 | 16 685 | (11 121) | ||
Discount rates | (5%) - 5% | 358 | (283) | ||
Volatilities | (4%) - 3% | 626 | (1 536) | ||
Volatilities | (25%)/40% | 3 227 | (1 363) | ||
Credit spreads | (50bps)/50bps | 1 279 | (692) | ||
Cash flow adjustments | (3%) - 8% | 7 | (6) | ||
Price-earnings multiple | ** | 3 816 | (4 074) | ||
Other | ^ | 2 505 | (457) | ||
Other | (11%) - 10% | 4 867 | (2 710) | ||
Investment portfolio | 706 843 | 173 264 | (85 332) | ||
Price-earnings multiple | (10%) - 10% | 1 517 | (1 210) | ||
Price-earnings multiple | ** | 100 880 | (54 829) | ||
EBITDA | 5x EBITDA | 6 958 | (2 640) | ||
Other | ^ | 18 296 | (17 988) | ||
Other | (10%) - 10% | 45 613 | (8 665) | ||
Loans and advances to customers | 36 000 | 6 500 | (1 347) | ||
Cash flows | (5%) - 5% | 5 407 | - | ||
Other | (9%) - 3% | 1 093 | (1 347) | ||
Other securitised assets* | 627 928 | 16 556 | (11 495) | ||
Credit spreads | - 6 months/+12 month adjustment toCDR curve | 5 228 | (167) | ||
Other | 11 328 | (11 328) | |||
Liabilities | |||||
Derivative financial instruments | (2 666) | 1 830 | (1 442) | ||
Cash flow adjustments | (2%) - 1% | 1 830 | (1 442) | ||
Liabilities arising on securitisation of other assets* | (616 909) | 19 021 | (13 749) | ||
Credit default rates. Loss severity, prepayment rates | (5%) - 5% | 5 228 | (167) | ||
Other | 13 793 | (13 582) | |||
812 761 | 234 012 | (124 691) | |||
* The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets.
** The price-earnings multiple has been stressed on an investment by investment basis in order to obtain the aggressive and conservative valuations.
^These valuation sensitivities have been stressed individually using varying scenario based techniques to obtain the aggressive and conservative valuations
Balance sheet value GBP'000 | Significant unobservable input changed | Range which unobservable input has been stressed | Reflected in other comprehensive income | ||
Favourable changes GBP'000 | Unfavourable changes GBP'000 | ||||
| |||||
2015 | |||||
Assets | |||||
Investment portfolio | 38 942 | 2 658 | (2 058) | ||
EBITDA | (10%) - 10% or | 2 658 | (2 058) | ||
5x EBITDA | |||||
Fair value of financial assets and liabilities at amortised cost
at 31 March 2015 GBP'000 | Carrying amount | Fair value |
Assets | ||
Cash and balances at central banks | 2 528 260 | 2 528 260 |
Loans and advances to banks | 2 866 957 | 2 866 957 |
Non-sovereign and non-bank cash placements | 586 240 | 586 580 |
Reverse repurchase agreements and cash collateral on securities borrowed | 852 795 | 852 795 |
Sovereign debt securities | 197 743 | 202 949 |
Bank debt securities | 675 525 | 709 768 |
Other debt securities | 131 846 | 130 147 |
Loans and advances to customers | 16 032 887 | 16 082 898 |
Own originated loans and advances to customers securitised | 448 647 | 448 647 |
Other loans and advances | 574 830 | 620 569 |
Other securitised assets | 152 668 | 152 668 |
Other assets | 1 305 644 | 1 305 519 |
26 354 042 | 26 487 757 | |
Liabilities | ||
Deposits by banks | 1 908 294 | 1 920 130 |
Repurchase agreements and cash collateral on securities lent | 731 215 | 730 508 |
Customer accounts (deposits) | 21 690 785 | 21 739 660 |
Debt securities in issue | 1 236 332 | 1 266 315 |
Liabilities arising on securitisation of own originated loans and advances | 109 953 | 109 953 |
Other liabilities | 1 239 985 | 1 237 888 |
Subordinated liabilities | 1 178 299 | 1 180 558 |
28 094 863 | 28 185 012 |
Investec plc
Incorporated in England and WalesRegistration number 3633621LSE share code: INVP
JSE share code: INPISIN: GB00B17BBQ50
Ordinary share dividend announcement
Declaration of dividend number 26
In terms of the DLC structure, Investec plc shareholders who are not South African resident shareholders 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 who are South African residents, 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.
Notice is hereby given that a final dividend number 26, being a gross dividend of 11.5 pence (2014: 11 pence) per ordinary share has been recommended by the board from income reserves in respect of the financial year ended 31 March 2015 payable to shareholders recorded in the members' register of the company at the close of business on Friday, 31 July 2015, which will be paid as follows:
· for non-South African resident Investec plc shareholders, through a dividend payment by Investec plc from income reserves of 11.5 pence per ordinary share
· for South African resident shareholders of Investec plc, through a dividend payment by Investec plc from income reserves of 2.5 pence per ordinary share and through a dividend paid by Investec Limited, on the SA DAS share, payable from income reserves, equivalent to 9 pence per ordinary share
The relevant dates for the payment of dividend number 26 are as follows:
Last day to trade cum-dividend
On the London Stock Exchange (LSE) Wednesday, 29 July 2015
On the Johannesburg Stock Exchange (JSE) Friday, 24 July 2015
Shares commence trading ex-dividend
On the London Stock Exchange (LSE)Thursday, 30 July 2015
On the Johannesburg Stock Exchange (JSE) Monday, 27 July 2015
Record date (on the JSE and LSE) Friday, 31 July 2015
Payment date (on the JSE and LSE) Friday, 14 August 2015
Share certificates on the South African branch register may not be dematerialised or rematerialised between Monday, 27 July 2015 and Friday, 31 July 2015, both dates inclusive, nor may transfers between the UK and SA registers take place between Monday, 27 July 2015 and Friday, 31 July 2015, both dates inclusive.
Additional information for South African resident shareholders of Investec plc
· Shareholders registered on the South African register are advised that the distribution of 11.5 pence, equivalent to a gross dividend of 216 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, 20 May 2015
· Investec plc UK tax reference number: 2683967322360
· The issued ordinary share capital of Investec plc is 613 609 642 ordinary shares
· The dividend paid by Investec plc to South African resident shareholders and the dividend paid by Investec Limited on the SA DAS share are subject to South African Dividend Tax of 15% (subject to any available exemptions as legislated)
· Shareholders registered on the South African register who are exempt from paying the Dividend Tax will receive a net dividend of 216 cents per share, comprising 169.04348 cents per share paid by Investec Limited on the SA DAS share and 46.95652 cents per ordinary share paid by Investec plc
· Shareholders registered on the South African register who are not exempt from paying the Dividend Tax will receive a net dividend of 183.60 cents per share, (gross dividend of 216 cents per share less Dividend Tax of 32.4 cents per share)
By order of the board
D Miller
Company Secretary
20 May 2015
Investec plc
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 18
Notice is hereby given that preference dividend number 18 has been declared for the period 01 October 2014 to 31 March 2015 amounting to a gross preference dividend of 7.47945 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, 12 June 2015.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of 7.47945 pence per preference share is equivalent to a gross dividend of 139.126 cents per share, which has been determined using the Rand/Pound Sterling average buy/sell forward rate as at 11h00 (SA Time) on Wednesday, 20 May 2015.
The relevant dates relating to the payment of dividend number 18 are as follows:
Last day to trade cum-dividend
On the Channel Islands Stock Exchange (CISX) Wednesday, 10 June 2015
On the Johannesburg Stock Exchange (JSE) Friday, 05 June 2015
Shares commence trading ex-dividend
On the Channel Islands Stock Exchange (CISX) Thursday, 11 June 2015
On the Johannesburg Stock Exchange (JSE) Monday, 08 June 2015
Record date (on the JSE and CISX) Friday, 12 June 2015
Payment date (on the JSE and CISX) Monday, 22 June 2015
Share certificates may not be dematerialised or rematerialised between Monday, 08 June 2015 and Friday, 12 June 2015 both dates inclusive, nor may transfers between the UK and SA registers take place between Monday, 08 June 2015 and Friday, 12 June 2015 both dates inclusive.
For SA resident preference shareholders, additional information to take note of:
· Investec plc tax reference number: 2683967322360
· The issued preference share capital of Investec plc is 15 081 149 preference shares.
· The dividend paid by Investec plc to South African resident shareholders is subject to South African Dividend Tax (Dividend Tax) of 15% (subject to any available exemptions as legislated).
· The net dividend amounts to 118.25710 cents per preference share for preference shareholders liable to pay the Dividend Tax and 139.126 cents per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
20 May 2015
Investec plc
Registration number: 3633621
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 8
Notice is hereby given that preference dividend number 8 has been declared for the period 01 October 2014 to 31 March 2015 amounting to a gross preference dividend of 438.17123 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, 12 June 2015.
The relevant dates relating to the payment of dividend number 8 are as follows:
Last day to trade cum-dividend | Friday, 05 June 2015 |
Shares commence trading ex-dividend | Monday, 08 June 2015 |
Record date | Friday, 12 June 2015 |
Payment date | Monday, 22 June 2015 |
Share certificates may not be dematerialised or rematerialised between Monday, 08 June 2015 and Friday, 12 June 2015, both dates inclusive.
For SA resident preference shareholders, additional information to take note of:
· Investec plc tax reference number: 2683967322360
· The issued preference share capital of Investec plc is 2 275 940 preference shares.
· The dividend paid by Investec plc to South African resident shareholders is subject to South African Dividend Tax (Dividend Tax) of 15% (subject to any available exemptions as legislated).
· The net dividend amounts to 372.44555 cents per preference share for preference shareholders liable to pay the Dividend Tax and 438.17123 cents per preference share for preference shareholders exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
20 May 2015