Ninety One Regulatory News (N91)

Results for the year ended 31 March 2021

Highlights

‒ Strong performance in a challenging year.

‒ Assets under management ("AUM") increased 27% to £130.9 billion; average AUM increased by 1% to £119.9 billion.

‒ Net outflows of £0.2 billion. 

‒ Excellent firm-wide investment performance with three-year outperformance at 82%.

‒ Profit before tax increased 3% to £204.1 million. Adjusted operating profit increased 9% to £206.2 million.

‒ Basic earnings per share increased 1% to 16.9p and adjusted earnings per share increased 6% to 17.0p.

‒ Proposed final dividend of 6.7p per share, resulting in a full year dividend of 12.6p per share.

‒ Staff shareholding increased to 23%.

Note: Please refer to explanations and definitions, including alternative performance measures, on pages 13 to 15.

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

"We thank our clients for their support during this challenging year and over the thirty years that we have been in business. We congratulate our people for their sterling efforts in challenging conditions. Their hard work and the support of our clients have allowed us to report record AUM and profits. Without the support of our broad stakeholder base and our shareholders in particular, this would not have been possible.

Although the past year was the 30th year that we have been in business, it was also a year of firsts; our first full year as a listed company, our first full year operating under the Ninety One brand, and the first time the world has come face-to-face with a pandemic of this magnitude. The year was characterised by a resurgence in investment performance at Ninety One due to the discipline and professionalism of our investment teams. Flow momentum has improved in the second half and we enter the new financial year with a strong pipeline. Nevertheless, we are disappointed that we have not achieved net inflows over the full reporting period.

We are acutely aware that the communities we serve continue to be heavily impacted by the consequences of the pandemic. The pandemic has also accelerated change. The quest for sustainability has become central to our industry. We applaud this and we are ready to play our role in the pursuit for a net zero world. We believe that our purpose of investing for a better tomorrow is now more relevant than ever and we remain excited by the long-term growth opportunities for Ninety One."

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) 203 727 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 19 May 2021. The webcast link is available at https://ninetyone.com/full-year-results-webcast. Registration for this event is required (password: NinetyOneFY21).

A copy of the presentation will be made available on the Company's website at https://ninetyone.com/full-year-results-2021 after 8am (UK time) on 19 May 2021.

Forward-looking statements

This announcement does not constitute or form part of any offer, advice, recommendation, 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 contained in the announcement 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 Ninety One's business, results of operations, financial position, liquidity, prospects, growth and strategies. Forward-looking statements speak only as of the date of this announcement.

Except as required by any applicable law or regulation, 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 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 past financial year was a year of firsts for Ninety One. This period will be remembered for the first global pandemic in over a century. At the start of the 2020 calendar year, COVID-19 spread across the world with devastating consequences. For Ninety One it was our first full year as a listed company. You may recall that we floated our business on the London and Johannesburg Stock Exchanges on 16th March 2020 in the eye of the storm. This was also the first full year in which we operated under the Ninety One brand after 29 years as Investec Asset Management and where most, and at times all, of our staff worked away from the office for protracted periods of time. It was indeed the first year in which we served most of our clients remotely and primarily via digital communication. Finally, the past year proved the robustness and resilience of our business model. Most importantly, the people of Ninety One rose to the challenges of this extraordinary year. We navigated change in the operating landscape and consistent with our culture, cared about our clients, colleagues and the communities we serve. Our purpose of investing for a better tomorrow motivated us. We pursued this by attempting to build a better firm, find ways to invest better and contribute to a better world.

When we introduced the Ninety One brand to the world, we used the tag line "investing for a world of change". Thinking about, coping with and navigating change to the benefit of our clients is what we are about. Even though we could never have anticipated the full extent of the changes that unfolded over the past year, our readiness to embrace change was extremely helpful during this period. At Ninety One we engage and negotiate change with open minds but from a stable footing and solid foundations. Our strong culture, organisational stability, people-centricity, talent friendliness and strategic clarity help us to stay focused on the challenges and opportunities facing us in a calm and rational manner.

The year commenced with treacherous market conditions. Strong support from central banks and the widening of narrow markets gave way to significant rotations in market performance. Asset owners re-commenced their allocations and opportunities were created for capable and competitive active investment managers.

For us, the 2021 financial year turned out better than we expected at the outset. It was a record year in AUM, revenue and profit terms. Our adjusted operating profit increased to £206.2 million (2020: £189.9 million). Investment performance recovered significantly and the business functioned well while adapting to the changed conditions. The new brand was well received by our clients and we made significant progress on the sustainability front by engaging widely on the importance of this topic in the world today. We are disappointed not to have achieved net inflows for the year, instead generating net outflows of £197 million (2020: net inflows £6.0 billion). However, we have turned around the flow momentum in the second half of the year and entered the new financial year with a healthy pipeline of new business. The Board is proposing a final dividend of 6.7p per share (2020: n.a.), taking the full dividend to 12.6p per share, in line with our stated dividend policy and while maintaining a strong balance sheet.

People and culture

These results could not have been achieved without the dedication and professionalism of the people who work at Ninety One. Our unique owner culture creates a context within which a diverse group of talented individuals can thrive in a team context. Over the past year we have been able to compete effectively for new talent, while retaining our best people. This context creates alignment of interests among our people but also with stakeholders. This alignment is further enhanced by the growing ownership of the firm by those who work in it. Over the past year, the people of Ninety One have increased their stake in the firm to 23% (31 March 2020: 21%). As owners, we are driven by our desire for long-term success. That is why it was very easy for us to declare at the beginning of the pandemic that we would safeguard the jobs of our people during the 2020 calendar year. This promise was obviously subject to meeting our performance standards. We furloughed no one and took no government help, thereby retaining our independence to the full.

This environment creates the space for competitive long-term investment performance and excellent client service. Ninety One is all about people and culture. This underpins our people-centric, talent-friendly, organic and capital-light business model.

Strategy and opportunities

Our strategy, as articulated a year ago at listing, remains unchanged.

Our belief in the long-term opportunity for high-quality active investment management is unwavering. Over the past year the risk appetite of investors fluctuated but we believe the long-term demand for, and active exposure to, risk assets will continue to grow as the world economy expands over time, the global population keeps on growing and wealth creation continues.

Our capability set remains relevant and attractive to capture this opportunity with adequate diversity to suit varying client needs and future client demand. Overall, we have balanced the need for focus and simplification with adequate revenue and client diversification. As ever, we continued to evolve our offering to retain market relevance and during the past year we made substantial investments in the expansion of our credit and multi-asset platforms. The results of these investments will be seen in the years to come. Notwithstanding all this, we continued to focus on delivering the investment performance our clients expect.

During the pandemic we have been reminded about the value of strong domestic market positions and our longstanding client relationships. South Africa was a star performer. The UK could have done better and we took action by injecting fresh leadership. We believe in the potential of our business in the Americas and we also see significant opportunities in Asia Pacific and remain committed to our chosen niches in Europe.

We have also worked hard to develop the leadership cadre and talent pools across the business. In spite of being forced to conduct many of our interactions virtually in the last year, our culture remains intact, healthy and vital. The concepts of talent density and the importance of building a truly intergenerational firm are uppermost in our minds.

Finally, we are pleased to report that we have made significant progress across the organisation in putting sustainability at the core of our business through our three-dimensional sustainability framework of Invest, Advocate and Inhabit. Looking ahead, we intend to become signatories of the Net Zero Asset Managers Initiative which supports investing that is aligned with the goal of net zero emissions by 2050 or sooner. However, we believe in sustainability with substance and so we will use our framework to work towards a practical transition pathway which is fair and inclusive rather than a singular focus on reducing portfolio carbon by excluding high-emitting countries and companies from our portfolios without considering the consequences. Investors should contribute to a practical transition path for the world towards a lower carbon, and ultimately net zero, economy through responsible ownership and sensible pricing of risk. Reducing carbon in portfolios will not necessarily lead to a low or zero carbon world. Therefore, we have prioritised climate in our sustainability efforts while remaining mindful of the broader goal of sustainable development over the long term.

Outlook

Although we are satisfied with the results, we are never content. At Ninety One we always strive to be better. There is a great deal of work to do in the coming years, because ours is an ambitious organisation with a long-term mindset. It is our intention to continue on our well-established organic growth path. For us it is not about size, it is about the pursuit of excellence and the creation of an enduring organisation which serves its stakeholders to the highest possible standards.

Noting that equity markets are at, or near, all-time highs and long-term interest rates remain at historic lows and are expected to rise in due course, we need to strike a note of caution. In the context of prevailing market conditions and our significant investment performance turnaround, we look ahead to the future with confidence and relish the chance to work towards a continued positive outcome for our stakeholders. Although fee pressure and scrutiny remain, we believe there are still ample opportunities for active managers who execute well. Our pipeline is building and we look forward to improvements in flow momentum.

We remain committed to our people-centric, talent-friendly, organic and capital-light business model with significant employee ownership. Although cost-conscious, we will continue to invest in our future via the cost line, as we have done in the past. We will work hard to contribute to a more sustainable economic model for humanity through our activities, not only as a business but as an investor of third-party capital. As long-term investors, sustainability should be at the centre of what we do.

We would like to take this opportunity to thank all our stakeholders for their support during this pivotal year. This is our 30th year in business and we owe a debt of gratitude to the people who have been instrumental in building this special business, many of whom remain with the firm. We could not have done this without the support of our clients, shareholders and the communities in which we operate.

OPERATING REVIEW

Assets under management

Our AUM increased 27% to £130.9 billion (31 March 2020: £103.4 billion), driven by significant positive market movements. This was largely caused by the market recovery following the initial downward market impact at the start of the financial year. The market and foreign exchange impact added £27.7 billion (2020: negative £14.0 billion) to AUM.

AUM by asset class

Note: (1) During the second quarter of H1 2021, AUM totalling approximately £2.5 billion was reclassified across asset classes. This was done to better reflect our Alternatives asset class, which now predominantly consists of alternative credit strategies. Therefore, the figures presented above for 31 March 2020 are on the same reclassified basis. Prior to reclassification, AUM as at 31 March 2020 was: Equities £45,824 million, fixed income £30,495 million and alternatives £2,608 million; multi-asset and South African fund platform were unaffected by the reclassifications.

Our AUM remained well diversified across asset classes. The mix of AUM remained broadly unchanged from the prior year. In spite of a mixed net flow picture across asset classes, the positive impact of markets and foreign exchange increased the overall AUM in all asset classes (and the South African fund platform) compared with the prior year.

AUM by Client Group

The AUM of the business remains well-diversified by Client Group, representing the global nature of our client base. The positive impact of markets and foreign exchange increased AUM in all regions compared with the prior year.

AUM by client type

The split of AUM between the institutional and advisor channels remained consistent with the prior year. This reflects the strong and stable relationships with our clients and our focus on growing and deepening our reach in both channels. Notwithstanding a mixed net flows picture for advisor and institutional clients, AUM by each client type increased due to markets and foreign exchange, compared with the prior year.

Net flows

We achieved marginal net outflows of £0.2 billion (2020: net inflows of £6.0 billion).

Net flows by asset class

 Note: (1) Due to the AUM reclassifications described above, the net flow figures presented above for the twelve months to 31 March 2020 are on the same reclassified basis. Prior to reclassification, net flows for the twelve months to 31 March 2020, were: Equities £2,435 million, fixed income £2,537 million and alternatives £108 million; multi-asset and South African fund platform were unaffected by the reclassifications.

There were positive net flows into fixed income driven by various areas including total return and blended strategies, as well as strong net inflows into cash strategies. Although total net flows from equities were negative, the underlying movements were varied with strong net inflows into some of our global equity and sustainability strategies, which were offset by net outflows from some other global and Asian equity strategies. Net outflows in multi-asset were largely from total return and income strategies, while outflows in alternatives were mainly driven from African credit strategies.

Net flows by Client Group

Africa, followed by Asia Pacific, were the main drivers of inflows this year. These net inflows were largely from fixed income and then, to a lesser extent, multi-asset strategies. The UK suffered overall net outflows driven mainly from multi-asset and UK equity strategies, which overrode the substantial net inflows into our sustainability strategies. Net outflows from the Americas were driven by a higher level of redemptions from Latin American clients, particularly out of Asian equity strategies. Europe's healthy net inflows into credit strategies was countered by net outflows from fixed income and multi-asset strategies.

Net flows by client type

There were advisor client net inflows into all asset classes and all Client Groups (with the exception of alternatives and Europe respectively). Equities and fixed income drove the majority of advisor net inflows and Africa represented the most significant component, with positive net flows from all asset classes. Institutional net flows were strong in fixed income but negative across all other asset classes, particularly equities. Institutional net outflows from equities were primarily driven by UK redemptions from certain global and regional strategies and secondly by significant Latin American client withdrawals from Asian equity strategies.

Investment performance

Firm-wide investment performance

During the financial year 2021, short- and longer-term firm-wide investment performance improved significantly. Our one- and three-year outperformance stood at 80% and 82% respectively (31 March 2020: 39% and 55% respectively). Over five and ten years, our investment performance was strong at 83% and 89% respectively (31 March 2020: 56% and 79% respectively), demonstrating our ability to generate good outcomes for our clients over the medium to long term.

Note: 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 performance

During the financial year 2021, Ninety One's mutual fund investment performance saw some decline compared to the prior year. On a three-year basis, the mutual fund performance remained broadly unchanged, with 51% of mutual funds in the first or second quartile (31 March 2020: 52%). However, on a one- and five-year basis, 43% and 50% of mutual funds were in the first or second quartiles respectively (31 March 2020: 51% and 62% respectively).

Note: Mutual fund performance and ranking as per Morningstar data using primary share classes, as defined by Morningstar, net of fees to 31 March 2021. Peer group universes are either IA, Morningstar Categories or ASISA sectors as classified by Morningstar. Cash or cash-equivalent funds are excluded from the table. Mutual fund performance weighted by AUM. Percentages may not add up to 100% due to rounding.

FINANCIAL REVIEW

Financial results(1)

Note: Please refer to explanations and definitions, including alternative performance measures, on pages 13 to 15.

Adjusted operating profit increased 9% to £206.2 million (2020: £189.9 million). Adjusted operating profit margin of 34.2% increased on the comparative period (2020: 32.3%), principally due to higher performance fees earned and COVID-19 related expense savings. Profit before tax and exceptional items increased 7% to £210.1 million (2020: £196.3 million).

Assets under management

Ninety One saw net outflows of £0.2 billion (2020: net inflows £6.0 billion). Total AUM increased by 27% to £130.9 billion (31 March 2020: £103.4 billion), supported by positive market movements. The market and foreign exchange impact for the period was positive £27.7 billion (2020: negative £14.0 billion).

The average AUM increased 1% to £119.9 billion (2020: £118.3 billion), reflecting lower AUM for a large portion of the financial year.

Adjusted operating revenue

Management fees decreased 1% to £561.0 million (2020: £565.7 million), against a 1% increase in average AUM. The average management fee rate reduced 1.0 bp to 46.8bps (2020: 47.8bps) mainly reflecting a higher weighting of lower fee portfolios.

Performance fees increased to £45.4 million (2020: £21.5 million) reflecting relative investment outperformance in a selection of strategies, particularly in South African equities.

Foreign exchange losses of £6.3 million (2020: gains of £2.1 million) were mainly due to US dollar asset translations where pounds sterling strengthened against the US dollar. The year-end exchange rate moved from 1.23 in 2020 to 1.38 in 2021.

Other income of £3.4 million was higher compared to the comparative period (2020: losses of £1.3 million), due to an increase in items such as research and development credits and seed capital (including private equity) mark-to-market revaluations.

Adjusted operating expenses

Adjusted operating expenses marginally decreased to £397.3 million (2020: £398.1 million), largely driven by a reduction in travel and promotional expenses and mostly offset by an increase in staff expenses. The decrease in travel and promotional costs is linked to COVID-19 imposed restrictions which resulted in minimal business travel and fewer client events in the year.

Staff expenses

Ninety One is a people business, and staff expenses represent the largest portion of the expense base. Total staff expenses (excluding Silica and the deferred employee benefit scheme) increased 5% to £271.3 million (2020: £258.8 million), driven by an average headcount increase of 2% to 1,168 (2020: 1,148) along with inflation and market-related adjustments.

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

Non-staff expenses

Non-staff expenses decreased 10% to £126.0 million (2020: £139.3 million). This largely reflects the significant savings on travel and promotional costs in the period. Client and retail fund administration expenses reduced mainly due to the impact of the weaker South African rand on South African based costs. Systems expenses increased in line with the continued investment to support long-term growth. Accommodation costs were relatively flat following the completion of the move to a new office building in London. The end of the duplicate rental expenses was offset by moves to new and more expensive offices in Hong Kong and New York.

Adjusted net interest income

Adjusted net interest income decreased to £2.2 million (2020: £4.5 million) as a result of lower interest rates. Adjusted net interest income excludes interest expense on lease liabilities of £3.7 million (2020: £3.0 million), which has been included in adjusted operating expenses. Interest expense on lease liabilities increased due to the aforementioned new office rentals in Hong Kong and New York.

Silica

Silica was our transfer agency business in South Africa. Silica profits were not material to Ninety One, as they were typically reinvested into Silica's core operational platforms.

During the year, we took a strategic decision to dispose of Silica, further simplifying the Ninety One business. The sale, which completed on 30 April 2021, will allow Silica to work with a strong and strategically-aligned partner. Ninety One recognised an after-tax profit on disposal of £11.1 million. Ninety One remains a client of Silica.

Exceptional items

Other exceptional items of £6.0 million (2020: £10.9 million) are expenses related to the demerger from Investec in March 2020, and the subsequent listing on the London and Johannesburg Stock Exchanges. These demerger expenses related mainly to promotional and rebranding activities in the current year and will not continue beyond this financial year. In the prior year, income of £13.1 million was included in exceptional items due to the net impact of implementing a new share scheme. As previously communicated, the current year's share scheme implementation costs are immaterial and are included in staff expenses.

Profit before tax

Profit before tax increased 3% to £204.1 million (2020: £198.5 million), while adjusted operating profit increased 9% to £206.2 million (2020: £189.9 million).

Effective tax rate

The effective tax rate for the twelve months to 31 March 2021 was 24.3% (2020: 21.4%) against a headline UK corporation tax rate of 19.0% (2020: 19.0%) and a headline South Africa corporation tax rate of 28.0% (2020: 28.0%). The increase in the effective tax rate was largely due to a higher proportion of profits being made in South Africa, as well as the removal of the reducing effect of deferred tax adjustments in the year to 31 March 2020, following the reversal of the previously announced reduction in UK corporation tax rate. The announced tax rate changes in both the UK and South Africa have not been substantively enacted and therefore have not impacted the current year.

Earnings per share ("EPS")

Note: (1) Please refer to explanations and definitions, including alternative performance measures, on pages 13 to 15.

Basic earnings per share ("Basic EPS") and basic headline EPS ("Basic HEPS") increased 1% to 16.9p (2020: 16.8p). Diluted EPS and diluted HEPS were flat at 16.8p (2020: 16.8p). There was no change in the number of shares in issue. The impact of the investment in own shares held by Ninety One as part of the new Ninety One share scheme had a small impact on the weighted average number of ordinary shares.

Adjusted EPS grew 6% to 17.0p (2020: 16.1 p), broadly consistent with the growth in adjusted operating profit and more reflective of the core operating performance of Ninety One.

Summary balance sheet

Ninety One undertakes Investment-linked insurance business through one of its South African entities, Ninety One Assurance, 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. Due to 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. The increase in policyholder assets is largely due to foreign exchange gains and improved markets. The commentary below only covers the shareholders' amounts.

Total assets increased to £789.7 million (31 March 2020: £595.5 million), largely due to cash and cash equivalents which increased to £337.5 million (31 March 2020: £194.5 million). The cash and cash equivalent balance was lower last year due to the settlement of dividends ahead of the year end following the demerger from Investec.

Ninety One has limited seed investments. Seed capital for mutual funds was £3.1 million (31 March 2020: £1.7 million) and co-investments in private equity and real estate funds totalled £8.2 million (31 March 2020: £9.3 million).

Total liabilities increased to £536.4 million (31 March 2020: £444.4 million). There is no debt financing on the balance sheet.

Equity increased to £253.3 million (31 March 2020: £151.1 million), reflecting the profits for the year, net of the payment of the interim dividend.

During the prior year, Ninety One established employee benefit trusts for the purpose of purchasing shares and satisfying the share-based payment awards granted to employees. Throughout the year, 4.6 million shares were purchased through these trusts, resulting in a total of 11.0 million shares, representing 1.2% of Ninety One's 922.7 million total shares in issue.

Capital and regulatory position(1)

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 had an estimated capital surplus at 31 March 2021 and 31 March 2020.

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

Estimated regulatory capital increased to £104.4 million (31 March 2020: £94.4 million). This provides Ninety One with an expected capital surplus of £73.9 million (31 March 2020: £44.0 million), which is consistent with our commitment to a capital-light balance sheet, whilst maintaining a reasonable buffer. The capital requirements for all Ninety One companies are monitored throughout the year.

Dividends

The Board has considered the resilience of the balance sheet. In line with the stated dividend policy, the Board has recommended a final dividend of 6.7 pence per share. Of this, 4.4 pence per share represents 50% of profit after tax and 2.3 pence per share represents after-tax earnings after ensuring we have sufficient capital to meet current or expected changes in the regulatory capital requirements and investment needs, as well as a reasonable buffer to protect against fluctuations in those requirements. If approved at the AGM, the final dividend will be paid on 12 August 2021 to shareholders included on the share registers on 23 July 2021 and will result in a full-year dividend of 12.6 pence per share.

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

Liquidity

Ninety One maintains a healthy liquidity position, which comprises cash and cash equivalents of £337.5 million (31 March 2020: £194.5 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 and as at 30 April 2021 has been divested. 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. Due to their nature, they may not fairly present the issuer's financial position, changes in equity, results of operations or cash flows. 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

The financial information is prepared in British pound sterling. The results of operations and the financial condition of individual companies are reported in the local currencies of the countries in which they are domiciled, including South African rand and US dollar. 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 movement in the relevant exchange rates against pounds sterling for the twelve months ended 31 March 2020 and 2021.

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 expense

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, net gain/(loss) on investments and other items

ASISA: Association for Savings and Investment South Africa

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 each of the subsequent 12 months

Average exchange rate: Calculated as the average of the daily closing spot exchange rates in the relevant period 

Average fee rate: Management fees divided by 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 period, excluding own shares held by Ninety One share schemes

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

Headline earnings per share (HEPS): Ninety One is required to calculate HEPS in accordance with JSE Listings Requirements, determined by reference to circular 1/2021 "Headline Earnings" issued by the South African Institute of Chartered Accountants

IA: The Investment Association (UK)

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

LSE: London Stock Exchange, the securities exchange operated by the 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 revenue: Represents revenue in accordance with IFRS, less commission expense

Non-operating items: Include exceptional items, adjusted net interest income, Silica profit and tax on adjusting items

Review report

The condensed consolidated financial statements, which comprise the condensed consolidated statement of financial position at 31 March 2021 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 condensed consolidated financial statements, have been reviewed by KPMG Inc., in accordance with the requirements of the Companies Act of South Africa, 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 Financial 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

19 May 2021 19 May 2021