Ninety One Regulatory News (N91)

Ninety One plc Ninety One Limited

Incorporated in England and Wales Incorporated in the Republic of South Africa

Registration number 12245293 Registration number 2019/526481/06

Date of registration: 4 October 2019 Date of registration: 18 October 2019

LSE share code: N91 JSE share code: NY1

JSE share code: N91 ISIN: ZAE000282356

ISIN: GB00BJHPLV88

Results for the year ended 31 March 2020

Highlights

· This was a year of meaningful progress in the strategic positioning of Ninety One as an independent, focused investment manager with significant employee ownership. We executed a demerger and listing, with an exciting new brand.

· We delivered net inflows of £6.0 billion, in line with the prior year, representing a torque ratio of 5.4%.

· Assets under management reduced 7% to £103.4 billion.

· Profit before tax increased 11% to £198.5 million.

· Basic earnings per share increased 11% and adjusted earnings per share increased 10%.

· Short-term investment performance was negatively affected by the extreme market correction in March 2020.

· Employees now own more than 21% of Ninety One, which leaves us even better aligned with our clients and shareholders.

· In response to the COVID-19 pandemic, we prioritised the wellbeing of our people and did not furlough or make redundant any of our staff.  We contributed £2.9 million to relief efforts.

Note: 1. Please refer to explanations and definitions on pages 14 and 15.

Hendrik du Toit, Founder and Chief Executive Officer, commented:

"Last year was a momentous year for Ninety One. We ended our twenty-ninth year in business with record earnings, a quality client base from across the world, highly motivated people and an experienced leadership team, but were challenged by the consequences of the COVID-19 pandemic.

During the last month of the 2020 financial year, we successfully demerged from Investec, listed on the London and Johannesburg Stock Exchanges, and rebranded as Ninety One. Significantly, all staff are now shareholders and the people who work in the firm collectively own more than 21% of the equity of Ninety One. This was a pivotal period in the evolution of our business. While these developments support our proposition as an independent investment manager with significant employee ownership, it is important to emphasise the stability of our staff and the continuity our long-term strategy, which underpin the success of our business.

These developments took place in the face of extreme market volatility and weakened economic prospects, which we expect to endure for some time. The resilience of our people and technology enabled us to provide all our clients with uninterrupted service and intensified engagement. We successfully facilitated remote working for our staff to ensure their wellbeing just days after the demerger and listing. Ninety One is committed to doing its best for all stakeholders in the ongoing battle against this pandemic and its devastating economic consequences. We will do this by remaining focused on our clients and the investments we make on their behalf. We will engage and support the companies we invest in, care for our people and contribute to the societies we serve."

For further information please contact:

Investor relations

Varuni Dharma varuni.dharma@ninetyone.com +44(0) 203 938 2486

Eva Hatfield eva.hatfield@ninetyone.com +44(0) 203 938 2908

Media

Media enquiries

Neil Doyle, FTI Consulting (UK) neil.doyle@fticonsulting.com +44 (0) 20 3727 1141

Daniel Thole, Fletcher Advisory (South Africa) daniel@fletcheradvisory.com +27 (0) 61 400 2939

Investor presentation

A presentation to investors and financial analysts will be made via live webcast at 9.00 am (UK time) on 20 May 2020. The webcast link is available at https://ninetyone.com/full-year-results.

A copy of the presentation will be made available on the company's website at https://ninetyone.com/2020-results-documents. The integrated annual report will be published in July 2020 and will be available at https://ninetyone.com/2020-results-documents.

Forward-looking statements

This announcement does not constitute or form part of any offer, invitation or inducement to any person to underwrite, subscribe for or otherwise acquire or dispose of securities in Ninety One plc and its subsidiaries or Ninety One Limited and its subsidiaries (together, "Ninety One"), nor should it be construed as legal, tax, financial, investment or accounting advice.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect Ninety One's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Ninety One's business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date they are made.

Ninety One expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement or any other forward-looking statements it may make whether as a result of new information, future developments or otherwise.

About Ninety One

Ninety One is an independent investment manager, founded in South Africa in 1991. It now operates and invests globally and offers a range of active strategies to its global client base.

Ninety One is listed on the London and Johannesburg Stock Exchanges.

CHIEF EXECUTIVE OFFICER'S REVIEW

The financial year to 31 March 2020 was a momentous year for Ninety One. We ended our twenty ninth year in business with record earnings growth, a quality client base from across the world, and a highly motivated and experienced leadership team, but challenged by the enormous economic and market consequences of the COVID-19 pandemic.

During the last month of the financial year, we successfully demerged from Investec, listed on the London and Johannesburg Stock Exchanges ("LSE" and "JSE"), and rebranded as Ninety One. Significantly, now all staff can be shareholders and the people who work in the firm collectively own more than 21% of the equity of Ninety One. This was a pivotal period in the evolution of our business. While these developments support our proposition as an independent investment manager with a significant employee ownership, it is important to emphasise the stability of our staff and continuity of our long-term strategy, which underpin the success of our business.

Strategy and opportunities

Although the past year is correctly characterised as eventful, our strategy remains consistent. Ninety One continues to provide a range of specialist, active strategies to its global client base. The business is differentiated from the competitor universe by its blend of global and emerging markets investment expertise. With its origins in emerging markets, Ninety One remains committed to participating in the well-established, structural trend of increased representation of these markets in major indices, in line with their growing weight in the total world economy. Our investment approach combines this perspective with a global approach to investing, free from "home bias". The near-term challenges facing emerging markets, relating to the COVID-19-triggered downturn, have not changed our long-term view. On the contrary, we expect the next few years to provide our investors with compelling long-term opportunities in both developed and emerging markets and risk assets in general. The stable and experienced investment teams at Ninety One are motivated to make the most of these opportunities for our clients and shareholders.

Investment performance and progress

In many ways the reporting period was a "year of two parts". Most of the first 11 months took place against the background of rising markets and an expanding global economy. During this period, our short- and longer-term investment performance, as measured at firm level on an aggregate asset-weighted basis displayed an improving trend. As at the end of December 2019, our one- and three-year firm-wide outperformance stood at 81% and 71% respectively. This compared favourably with the numbers we released for the half year to 30 September 2019 (54% and 75% for one- and three-year firm-wide outperformance respectively).

After markets were hit by the COVID-19 correction in March 2020, the situation deteriorated to the point where our aggregate performance looked decidedly average over one and three years, where the percentage of our strategies, measured on an aggregate asset-weighted basis, that beat their benchmarks were 39% and 55% respectively. Value strategies had a particularly tough time. On the positive side, other global and emerging markets equity strategies delivered excellent results. Our South African domestic strategies also reported strong performance. This period of market dislocation caused by the COVID-19 "black swan" event will create opportunities for substantial alpha generation over the coming year and we intend to capture as many of these opportunities as possible. The past year has not been our best performance year, but the investment teams have been here before and know exactly what they need to do to improve the situation. They have the full support of the leadership team to achieve this.

Ninety One has strong client relationships, built up over many years. This is because clients come first at Ninety One. This is non-negotiable and central to the way in which we operate. Against a very challenging background for the active investment industry, we have achieved net inflows in line with the prior year. The flows were mainly driven by our fixed income and specialist equities offerings. Our five client regions (known as "Client Groups") have all generated net inflows, with the UK, Africa and Europe the best performers.

Our focus on developing our outcomes-based offerings across the advisor market was also well reflected in strong inflows in certain multi-asset strategies. Meanwhile, we remain confident that our substantial investments in our Americas and Asia Pacific Client Groups will deliver further value for our shareholders in due course.

Over the past year, Ninety One has increased its investment in technology to support our front office investment and client-facing teams. We are acutely aware of the benefits of our single and well-invested operations platform, which we have built over many years. The fact that we could grow over the past year, demerge, list and rebrand on schedule whilst coping with the COVID-19 imperative to enable more than 1,000 people to work from home without a major incident, tells the story of a robust, experienced, well-invested and well-run operations platform.

Outlook

As we look ahead to the new year, we recognise the challenging market conditions and competitive environment which we face.

Our well-tested and diverse set of investment capabilities are in areas relevant to our clients, as evidenced by recent flows. We have solid bridgeheads into the largest markets in the world and we have maintained positive momentum in our original markets. We expect the appetite for risk assets to increase over time as the extreme volatility recedes and we see abundant opportunities for alpha generation for our clients. Notwithstanding these opportunities, we expect significant revenue pressure in the coming period. Our response will be one of strict prioritisation and cost discipline, but without impairing our ability to serve our clients in these uncertain times.

Ninety One is committed to doing its best for all stakeholders in the ongoing battle against the COVID-19 pandemic and its devastating economic consequences. We will do this by remaining focused on our clients and the investments we make on their behalf. We recognise the key to our long-term growth is maintaining client relevance and delivering investment performance. Furthermore, we will engage and support the companies we invest in, care for our people and contribute to the societies we serve. 

We believe our staff stability and strategic clarity position us well for the long term. We intend to use this moment of market and economic dislocation to inspire ourselves to build a better firm, develop better ways of investing and renew our commitment to building a better world. The people of Ninety One fully intend to pursue our purpose of investing for a better tomorrow.

Finally, I would like to thank our clients, shareholders, regulators, board of directors and all the people at Ninety One for their support through this time of change.

OPERATING REVIEW

Assets under management ("AUM")

Our AUM reduced 7% to £103.4 billion (31 March 2019: £111.4 billion), as the positive net flows were offset by negative market movements, caused by the impact of COVID-19 in the last month of the year. The market and foreign exchange impact in the year was negative £14.0 billion (2019: positive £1.4 billion).

AUM by asset class

Our AUM remained well diversified across asset classes. The mix of AUM remained broadly unchanged from the prior year. In spite of positive net flows into all asset classes, the negative impact of markets and foreign exchange reduced the overall AUM in all asset classes (and the South African fund platform) compared with the prior year, with the exception of fixed income, which saw a marginal increase.

AUM by Client Group

The AUM of the business remains well diversified by Client Group. The negative impact of markets and foreign exchange reduced AUM in all regions compared with the prior year. The only exception was Europe, which achieved AUM growth.

AUM by client type

The proportion of total AUM managed on behalf of institutional clients remained flat at 68%, with the remainder managed on behalf of advisor clients. This reflects our strong and stable relationships with our clients and our focus on growing and deepening our reach in both channels. Notwithstanding positive net flows from both advisor and institutional clients, AUM in each channel was reduced by markets and foreign exchange, compared with the prior period.

Net flows

Notwithstanding the significant turbulence in the global markets, we achieved net inflows of £6.0bn, in line with the prior year. This represents 5.4% of opening AUM (2019: 5.9%).

Net flows by asset class

We saw positive flows across all asset classes, with particularly good flows across our fixed income and specialist equities strategies. The overall allocation of net inflows between equities and fixed income remained broadly similar. In equities, this reflected our focus in recent years on growing the Quality equities capability, across both the advisor and institutional channels. Our recently developed sustainability strategies continued to gain investor attention. Multi-asset net inflows were higher compared to prior year, which reflected our focus on scaling our outcomes-based offerings across the advisor market.

Net flows by Client Group

We achieved net inflows in all Client Groups. Net inflows into our most established markets of the UK and Africa were strong at £2.3 billion and £1.8 billion respectively, driven mainly by our established fixed income and equities asset classes. Europe was another area with strong net inflows, driven by our fixed income strategies, including our recently-launched credit strategies.

Net flows by client type

There were positive net flows across both the advisor and institutional channels with £2.4 billion and £3.7 billion, respectively. Institutional net inflows were strong in equities and fixed income and were positive in all regions. Our focus on scaling our outcomes-based offerings across the advisor market was reflected in strong inflows in certain multi-asset strategies. Similarly, our specialist equities offerings were a significant driver of advisor inflows.

Investment performance

Firm-wide investment performance1

During the financial year 2020, short- and longer-term firm-wide investment performance displayed an improving trend. As at the end of December 2019, our one- and three-year outperformance stood at 81% and 71% respectively. This compared favourably with the numbers for the half year to 30 September 2019 (54% and 75% for one- and three-year firm-wide outperformance respectively).

However, after markets were hit by the COVID-19 correction in March 2020, firm-wide outperformance deteriorated resulting in the one- and three-year firm-wide outperformance closing at 39% and 55% respectively (compared with 54% and 71% respectively as at 31 March 2019). Notwithstanding this, long-term firm-wide investment performance remains robust.

Note:

1. Firm-wide outperformance (underperformance) is calculated as the sum of the total market values for individual portfolios that have positive active returns (negative active returns) on a gross basis expressed as a percentage of total AUM. Our percentage of firm outperformance is reported on the basis of current AUM and therefore does not include terminated funds. Total AUM excludes double-counting of pooled products and third party assets administered on our South African fund platform. Benchmarks used for the above analysis include cash, peer group averages, inflation and market indices as specified in client mandates or fund prospectuses. For all periods shown, market values are as at the period end date.

Mutual fund investment performance1

During the financial year 2020, Ninety One's mutual fund investment performance on a one-year basis improved over the year with 51% of mutual funds in the first or second quartiles (compared with 49% as at 31 March 2019). On a three- and five-year basis, mutual fund performance declined with 52% and 62% of mutual funds in the first or second quartile respectively (compared with 72% and 70% respectively as at 31 March 2019).

Notes:

1. Mutual fund performance and ranking as per Morningstar data using primary share classes net of fees to 31 March 2020. Peer group universes are either IA, GIFS or ASISA sectors as classified by Morningstar. Cash or cash-equivalent funds are excluded from the tables. Mutual fund performance weighted by AUM.

Percentages may not add up to 100% due to rounding.

FINANCIAL REVIEW

Summary income statement1

Note: 1. Please refer to explanations and definitions on pages 14 and 15.

Our adjusted operating profit increased 10% to £189.9 million (2019: £172.5 million). Adjusted operating profit margin of 32.3% increased on prior year (2019: 31.9%), principally due to higher performance fees earned. Profit before tax and exceptional items increased 9% to £196.3 million (2019: £179.4 million).

Assets under management

Ninety One achieved net inflows of £6.0 billion, in line with the prior year. Total AUM reduced by 7% to £103.4 billion (31 March 2019: £111.4 billion), as the net inflows were more than offset by negative market movements in the last month of the financial year. The market and foreign exchange impact for the year was negative £14.0 billion (2019: positive £1.4 billion).

The torque ratio of 5.4% was slightly lower than prior year (2019: 5.9%), as a result of similar net flows but higher opening AUM of £111.4 billion (31 March 2019: £103.9 billion).

The average AUM increased 10% to £118.3 billion (31 March 2019: £108.0 billion), reflecting the positive market environment for most of the financial year.

Adjusted operating revenue

Management fees increased 8% to £565.7 million (2019: £524.6 million), below the 10% growth in average AUM, reflecting downward fee pressure due to some new mandates agreed at lower fee rates. Average fee rates were also impacted by the AUM mix, with growth in lower fee rate investment strategies, such as fixed income, relative to higher fee rate investment strategies, such as alternatives. The average management fee rate reduced 0.8 bps to 47.8bps (2019: 48.6bps).

Performance fees increased to £21.5 million (2019: £11.0 million) reflecting relative investment outperformance in a selection of strategies, particularly in South African equities.

Foreign exchange gains and other income of £0.8 million was lower compared to prior year (2019: £5.0 million) mainly due to lower foreign exchange gains earned as sterling strengthened and mark-to-market losses on private equity co-invested capital.

Adjusted operating expenses

Adjusted operating expenses increased 8% to £398.1 million (2019: £368.1 million), largely driven by an increase in staff expenses, as well as higher accommodation expenses. The increase in accommodation expenses was mainly due to a new office building in London, with the resulting double rent and associated expenses.

Staff expenses

Ninety One is a people business, and our staff expenses represent the largest portion of our expense base. Total staff expenses (excluding Silica and the deferred employee benefit scheme) increased by 7% to £258.8 million (2019: £242.6 million). This reflects a 5% increase in average headcount to 1,148 (2019: 1,094), with the remainder due to inflation and market-related adjustments. The growth in headcount largely relates to the replacement of functions previously provided by Investec such as IT support services and internal audit.

Over 50% of our staff expenses are variable and fluctuate in line with adjusted operating profit ensuring alignment with financial performance.

The total compensation ratio reduced to 44.0% (2019: 44.9%), mainly due to the growth in management and performance fees being higher than the growth in total staff expenses.

Non-staff expenses

Non-staff expenses increased 11% to £139.3 million (2019: £125.5 million). This largely reflects non-recurring items such as duplicate London rental and one-off donations to COVID-19 relief efforts of £2.9 million, as well as an increase in systems and other expenses. We expect the accommodation expense to normalise following the office move in London in June 2020. Remaining expenses grew largely in line with business activity levels, and our continued investment to support long-term growth.

Adjusted net interest income

Adjusted net interest income decreased to £4.5 million (2019: £5.5 million) in line with lower interest rates and maintaining reasonable levels of capital. Adjusted net interest income excludes interest expense on lease liabilities of £3.0m (2019: nil), which has been included in adjusted operating expenses. This ensures that the changes resulting from the implementation of IFRS 16 Leases reflect consistently in adjusted operating expenses for both years.

Silica

Silica is our transfer agency business in South Africa, which was established in 1999. Its profits are not material as it reinvests them annually into its core operational platforms.

Ninety One share scheme implementation

Upon the successful listing, Ninety One awarded shares to the value of £2,000 to each eligible employee and also partially invested deferred compensation awards in shares into the Ninety One share scheme. The Ninety One share scheme implementation income of £13.1 million (2019: nil) reflects the impact of reversing staff expense accruals to fund the investment into the new Ninety One share schemes in March 2020, net of the share scheme expenses which are amortised over the vesting period of the awards under IFRS 2 Share-based Payment. This is to ensure a like-for-like comparison of our operating expenses with the prior financial year.

Other exceptional items

Other exceptional items of £10.9 million (2019: £1.0 million) largely related to the demerger from Investec, and subsequent listing on the LSE and JSE. Most of the demerger expenses related to promotional and rebranding expenses, as well as the IT network and support services migration. The other exceptional items in financial year 2019 included the demerger expenses and net foreign exchange related gain on the closing of our Taiwan subsidiary.

Profit before tax

Profit before tax increased by 11% to £198.5 million (2019: £178.4 million), while adjusted operating profit increased 10% to £189.9 million (2019: £172.5 million).

Effective tax rate

The effective tax rate was 21.4% (2019: 21.6%), above the UK corporation tax rate of 19.0% (2019: 19.0%), mainly due to the effect of higher tax rates applicable in foreign jurisdictions such as South Africa, where the tax rate is 28.0% (2019: 28.0%). The change in the effective tax rate in financial year 2020 was due to an increase in profits earned in higher tax rate countries offset by the adjustment of deferred tax assets for the fact that the UK tax rate will no longer reduce to 17.0% as previously announced.

Earnings per share

Note: 1. These items comprise "non-operating items" per adjusted earnings per share definition on page 15

Basic earnings per share ("Basic EPS") and diluted EPS grew 11% to 16.8p (2019: 15.1p). There was no change in the number of shares in issue and the impact of the investment in own shares held by Ninety One as part of the new Ninety One share scheme had minimal impact on the weighted average number of ordinary shares. Headline earnings per share ("HEPS") grew 12% to 16.8p (2019: 15.0p), broadly in line with the growth in Basic EPS, reflecting minor adjustments between HEPS and Basic EPS.

Adjusted EPS increased by 10% to 16.1p (2019: 14.6p), consistent with the growth in adjusted operating profit and more reflective of the core operating performance of Ninety One.

For details on calculations, see note 6 to the financial statements.

Response to COVID-19

The safety and security of our people and clients is of paramount importance. We continue to monitor and comply with the relevant government recommendations around the spread of COVID-19, across all our geographies. We have put in place a range of precautionary measures, including restrictions of all non-essential travel, and we were able to implement working from home arrangements for all our staff within a week of listing as an independent business. Our people have worked hard to achieve this with no material impact on our operations or client experience.

We have not needed to make any of our staff redundant or furloughed as a result of COVID-19, and we contributed £2.9 million to COVID-19 relief efforts.

Summary balance sheet

Assets and liabilities

Ninety One undertakes linked insurance business through one of its South African entities and does not take on any insurance risk in respect of such business. The policyholders hold units in a pooled portfolio of assets via linked policies issued by the insurance entity. The assets are beneficially held by the insurance entity and the assets are reflected on its statement of financial position. Because of the nature of a linked policy, Ninety One's liability to the policyholders is equal to the market value of the assets underlying the policies, less applicable taxation. Therefore, the commentary below only covers the shareholders' amounts.

Total assets increased to £595.5 million (31 March 2019: £568.6 million). Cash and cash equivalents reduced to £194.5 million (31 March 2019: £269.2 million), which largely related to the payment of dividends prior to the demerger.

Total liabilities increased to £444.4 million (31 March 2019: £372.9 million), principally due to the recognition of lease liabilities on the balance sheet under IFRS 16 Leases, and there continues to be no debt financing on the balance sheet.

The adoption of IFRS 16 Leases in financial year 2020 resulted in an initial recognition of assets of £85.3 million and liabilities of £88.6 million, on 1 April 2019, which were previously not recognised on the balance sheet. At 31 March 2020, the corresponding assets and liabilities were £90.7 million and £101.6 million respectively.

Ninety One has limited seed investments. Seed capital for mutual funds was £1.7 million (31 March 2019: £1.2 million) and co-investments in private equity funds totalled £9.3 million (31 March 2019: £11.0 million).

Equity

Equity reduced to £151.1 million (31 March 2019: £195.7 million), which principally reflects the early payment of dividends in March 2020, ahead of the demerger.

Capital and regulatory position1

Notes:

1. The above table represents the amalgamated position across Ninety One plc and its subsidiaries and Ninety One Limited and its subsidiaries, which for regulatory capital purposes are separate groups. Both groups of companies had an expected capital surplus at 31 March 2019 and 31 March 2020.

2. Non-qualifying assets comprise assets that are not available to meet regulatory requirements.

Our estimated regulatory capital increased to £96.8 million (31 March 2019: £86.4 million). This provides Ninety One with an expected capital surplus of £41.6 million (31 March 2019: £35.3 million), which is consistent with our intention of maintaining a capital-light balance sheet. The capital requirements for all Ninety One companies are monitored throughout the year.

Dividends

Prior to the demerger, Ninety One paid its final dividends. The Ninety One board of directors recommended no further ordinary or special dividends for the 2020 financial year.

Looking ahead, Ninety One expects to target an ordinary dividend payout ratio of at least 50% of its profit after tax. We will consider paying a special dividend, which will comprise surplus retained earnings not needed for regulatory or specific investment needs, as well as a reasonable buffer as agreed with our board of directors.

There are no plans to increase the current number of shares in issue.

Liquidity

Ninety One maintains a strong liquidity position, which comprises cash and cash equivalents of £194.5 million (31 March 2019: £269.2 million). Ninety One maintains a consistent liquidity management model, with liquidity requirements monitored carefully against its existing and longer-term obligations. To meet the daily requirements of the business and to mitigate its credit exposure, Ninety One diversifies its cash and cash equivalents across a range of suitably credit-rated corporate banks and money funds.

Alternative performance measures

Ninety One uses non-IFRS measures to reflect the manner in which management monitors and assesses the financial performance of Ninety One. In particular, they exclude Silica as it is not core to Ninety One's asset management activities. These non-IFRS measures are considered additional disclosures and in no case are intended to replace the financial information prepared in accordance with the basis of preparation detailed in the consolidated financial statements. Moreover, the way in which Ninety One defines and calculates these measures may differ from the way in which these or similar measures are calculated by other entities. Accordingly, they may not be comparable to measures used by other entities in Ninety One's industry.

These non-IFRS measures are considered to be pro forma financial information for the purpose of the JSE Listings Requirements and are the responsibility of Ninety One's board of directors. The non-IFRS financial information has been prepared with reference to JSE Guidance Letter: Presentation of pro forma financial information dated 4 March 2010 and in accordance with paragraphs 8.15 to 8.33 in the JSE Listings Requirements, the Revised SAICA Guide on Pro forma Financial Information (issued September 2014) and International Standard on Assurance Engagement ("ISAE") 3420 - Assurance Engagements to Report on the Compilation of Pro forma Financial Information included in a Prospectus, to the extent applicable given the Non-IFRS Financial Information's nature. This pro forma financial information has been reported on by KPMG Inc in terms of ISAE 3420 and their unmodified report is available for inspection on the Ninety One website (www.ninetyone.com).

These non-IFRS measures, including reconciliations to their nearest consolidated financial statements equivalents, are as follows:

Foreign currency

Ninety One prepares its financial information in pounds sterling. The results of operations and the financial condition of Ninety One's individual companies are reported in the local currencies of the countries in which they are domiciled, including South African Rand and US Dollars. These results are then translated into pounds sterling at the applicable foreign currency exchange rates for inclusion in the condensed consolidated financial statements. The following table sets out the movements in the relevant exchange rates against pounds sterling for the years ended 31 March 2019 and 2020.

DEFINITIONS

Adjusted earnings per share: Profit attributable to ordinary shareholders, adjusted to remove non-operating items, divided by the number of ordinary shares in issue at the end of the year

Adjusted net interest income: Calculated as net interest income less interest income arising from Silica operations, interest expenses from lease liabilities for office premises, and other interest expenses

Adjusted operating expenses: Calculated as operating expenses less Silica net expenses and deferred employee benefit scheme movements, but including interest expense on lease liabilities

Adjusted operating profit: Calculated as adjusted operating revenue less adjusted operating expenses

Adjusted operating profit margin: Calculated as adjusted operating profit divided by adjusted operating revenue

Adjusted operating revenue: Calculated as net revenue, less Silica third-party revenue and adjusted for foreign exchange gains/losses, deferred employee benefit scheme movements, and other income.

ASISA: Association for Savings and Investment South Africa represents the majority of the country's asset managers, collective investment scheme management companies, linked investment service providers, multi-managers and life insurance companies

Assets under management (AUM): The aggregate assets managed on behalf of clients. For some private markets investments, the aggregate value of assets managed is based on committed funds by clients; this is changed to the lower of committed funds and net asset value, in line with the fee basis. Where cross investment occurs, assets and flows are identified, and the duplication is removed. AUM excludes assets administered for third-party clients by Silica

Average AUM: Calculated as a 13-point average of opening AUM for the year, and the month end AUM for the subsequent 12 months

Average fee rate: Management fee revenue divided by the average AUM (annualised for non-twelve month periods), expressed in basis points

Basic earnings per share (Basic EPS): Profit after tax attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the year, excluding own shares held by Ninety One share schemes

Compensation ratio: Total staff expenses excluding Silica and deferred employee benefit schemes as a percentage of adjusted operating revenue

Diluted earnings per share: Profit for the year attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the year, plus the weighted average number of ordinary shares that would be issued on the conversion of all the potentially dilutive shares into ordinary shares

GIFS: Global Investment Fund Sectors are international categories developed and tested by Standard and Poor's

Headline earnings per share (HEPS): Ninety One is required to calculate HEPS in accordance with JSE Listing Requirements, determined by reference to circular 1/2019 "Headline Earnings" issued by the South African Institute of Chartered Accountants

IA: The Investment Association is the trade body that represents investment managers and asset management firms in the UK

Johannesburg Stock Exchange (JSE): The exchange operated by JSE Limited, a public company incorporated and registered in South Africa, under the Financial Markets Act

London Stock Exchange (LSE): The securities exchange operated by London Stock Exchange plc under the Financial Services and Markets Act 2000, as amended

Net flows: The increase in AUM received from clients, less the decrease in AUM withdrawn by clients, during a given period. Where cross investment occurs, assets and flows are identified, and the duplication is removed

Net revenues: Represents revenue in accordance with IFRS, less commission expense

Quality investment capability: One of Ninety One's equities capabilities, which aims to identify businesses with strong, consistent track records with embedded identifiable strategies, low leverage, strong management teams and good governance structures

Torque ratio: The relative scale of net flows in relation to the overall size of the business, expressed as a percentage. Calculated as net flows for the relevant period divided by AUM as at the first day of that period (annualised for non-twelve month periods)

Review report

The condensed consolidated financial statements, which comprise the condensed consolidated statement of financial position at 31 March 2020 and the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the year then ended and the notes to such condensed consolidated financial statements and the annexure to the consolidated financial statements, have been reviewed by KPMG Inc., in accordance with paragraph 3.18(c) of the JSE Listings Requirements, who expressed an unmodified review conclusion. The auditor's report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement, they should obtain a copy of the auditor's report together with the accompanying financial information from the company's registered office.

Preparation of condensed consolidated financial statements 

These condensed consolidated financial statements have been prepared by management under the supervision of the Finance Director, Kim McFarland CA (SA). The board of directors take full responsibility for the preparation of the condensed consolidated financial statements.

On behalf of the board of directors

Hendrik du Toit Kim McFarland

Chief Executive Officer Finance Director

20 May 2020 20 May 2020