Wrap Text
Unaudited combined consolidated financial results for the year ended 31 March 2020 and preference share dividend
Investec plc Investec Limited
Incorporated in England and Wales Incorporated in the Republic of South Africa
Registration number 3633621 Registration number 1925/002833/06
LSE share code: INVP JSE share code: INL
JSE share code: INP NSX share code: IVD
ISIN: GB00B17BBQ50 BSE share code: INVESTEC
LEI: 2138007Z3U5GWDN3MY22 ISIN: ZAE000081949
LEI: 213800CU7SM6O4UWOZ70
INVESTEC PLC AND INVESTEC LIMITED (COMBINED RESULTS)
UNAUDITED COMBINED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR
ENDED 31 MARCH 2020
This announcement covers the statutory results of Investec plc and Investec Limited (together "the Investec group" or "the group") for
the year ended 31 March 2020 (FY2020). The financial impact of strategic actions undertaken to simplify and focus the group has been
separately disclosed from adjusted operating profit in line with the group's interim results. These actions include the closure, sale and
restructure of certain businesses. Furthermore, during the year the group's asset management business was demerged and separately
listed and has hence been accounted for as a discontinued operation. The prior year has been restated to reflect a like-for-like basis
aiding comparability between periods. Unless stated otherwise, comparatives relate to the restated 2019 financial year (FY2019).
Results overview by Investec Chief Executive, Fani Titi:
"In the course of the last two months, the social and economic impact of the COVID-19 pandemic on our customers and the markets
in which we operate has affected the performance of the group. Earnings were characterised by growth in client-related revenues and
much tighter cost containment. This was more than offset by significantly lower investment and trading revenues, and higher expected
credit loss charges given the economic backdrop. Group adjusted operating profit of GBP608.9 million was 16.8% behind the prior year and
adjusted earnings per share of 46.5p was 23.6% behind the prior year.
I have been hugely impressed by the response of our people in this time of crisis. Our focus has been on ensuring that our colleagues and
clients receive the support they need and have come to expect from Investec. We are doing this from a position of strength, with robust
levels of capital and liquidity, while working with governments and regulators to channel additional support into the real economy."
Financial performance
The financial year was characterised by weak economic fundamentals (Brexit-related uncertainties in the UK, geo-political tensions and
persistent economic weakness in South Africa). This was exacerbated by the sudden and extreme COVID-19 related dislocation in global
markets during the last quarter of the financial year, impacting our trading income, investment income (through fair value adjustments) and
expected credit loss charges.
The group navigated this challenging backdrop with its client franchises showing resilience:
- Group adjusted operating profit of GBP608.9 million was 16.8% behind the prior year (2019: GBP731.9 million), while adjusted operating
profit from continuing operations of GBP419.2 million was 24.1% behind the prior year (2019: GBP552.5 million). The COVID-19 impact on
adjusted operating profit was GBP105 million.
- Core loans and advances were broadly flat at GBP24.9 billion, but increased 9.2% in neutral currency. Customer deposits increased
2.9% to GBP32.2 billion (31 March 2019: GBP31.3 billion), up 12.6% in neutral currency. Funds under management recorded net inflows of
GBP599 million.
- Total operating income (before impairments) decreased 7.5% to GBP1,806.8 million (2019: GBP1,953.8 million) impacted by the
aforementioned factors.
- Credit loss ratio increased to 0.52% (2019: 0.31%), primarily driven by COVID-19 related expected credit losses.
- Operating costs decreased 7.0% to GBP1,185.0 million (2019: GBP1,274.5 million) driven by cost containment across the business,
resulting in a continuing operations cost to income ratio of 68.2% (2019: 67.3%).
- Return on equity (ROE) generated by the group was 11.0% (2019: 14.2%) and 8.3% on a continuing operations basis (2019: 12.0%).
- CET1: the Group maintained a sound capital position with a common equity tier 1 (CET1) ratio of 10.7% for Investec plc (standardised
approach) and 10.9% for Investec Limited (FIRB approach) at 31 March 2020. The group retained a higher stake of 25% in Ninety One
upon demerger.
- The fair value of the distribution of Ninety One shares to shareholders amounted to 73.4p per share.
- Net asset value per share at 31 March 2020 was 414.3p (31 March 2019: 434.1p), and Tangible net asset value per share was
377.6p (31 March 2019: 386.0p). Net asset value was positively impacted by profitability and the demerger but negatively impacted by
the 17.8% depreciation of the Rand year-on-year.
COVID-19 impact
The operational response of our business to the disruptions caused by COVID-19 has been a robust, agile transition into remote working,
enabling a seamless continuation of service to our clients. Approximately 95% of our employees across the world are currently working
from home. To meet the challenges faced by our clients, we have mobilised our balance sheet and expertise to assist in finding the
financial solutions or restructuring advice to help them through this period.
We have acted decisively to support our employees, clients and communities through this crisis, reaffirming Investec's position that
"we live in society, not off it".
Strategy execution
The group continued to make progress in its stated strategy to simplify and focus the business in pursuit of disciplined growth in the
long term. We completed the demerger of the asset management business, executed various actions relating to the closure, sale and
restructure of certain non-core and subscale businesses, reduced operating costs and delivered loan book growth and client acquisition
ahead of budget in the UK Private Banking business.
The longer-term impacts of this crisis are hard to judge at present, and may necessitate a review of the performance targets that were
set for achievement in 2022. We are strategising for a "new normal" and will communicate further when in a position to do so. In the
meantime, we remain focused on delivering our strategy and achieving a sustained improvement in our key financial metrics and
outcomes for all our stakeholders.
Dividends
In light of regulatory guidance provided to banks in both South Africa and the UK, the board has decided not to declare a final ordinary
dividend, resulting in a full year dividend of 11.0 pence per ordinary share (2019: 24.5 pence with a dividend cover based on the group's
adjusted EPS of 2.5 times).
Outlook
The outlook remains fluid and difficult to forecast with any reasonable degree of certainty in the light of the COVID-19 pandemic.
We expect the year ahead to be challenging as the economic recovery from the devastating effects of COVID-19 is likely to be protracted.
Client activity is likely to be muted, interest income impacted by lower interest rates and impairments likely to be elevated. We will
continue to look for opportunity despite the current dislocations.
Continuous and close management oversight of the loan portfolio with ongoing stress testing, scenario modelling and client engagement
to mitigate emerging risk will be key. As revenue pressures are likely to mount in light of the prevailing economic backdrop, we remain
focused on controlling costs and improving efficiencies.
We entered this crisis with a robust balance sheet, characterised by a strong capital position, low gearing (strong leverage ratio) and good
levels of liquidity which we continue to maintain.
We remain committed to supporting our people, our clients and communities. We remain focused on building the business for
the long-term.
Financial highlights:
- Our client franchises showed resilience. Over the year, core loans were broadly flat (up 9.2% in neutral currency), customer deposits
increased 2.9% (up 12.6% in neutral currency) and the Wealth & Investment business achieved net inflows of GBP599 million.
- Group adjusted operating profit of GBP608.9 million was 16.8% behind the prior year (2019: GBP731.9 million) and adjusted earnings per
share of 46.5p was 23.6% behind the prior year (2019: 60.9p).
- Adjusted operating profit from Continuing operations of GBP419.2 million was 24.1% behind the prior year (2019: GBP552.5 million) and
Continuing adjusted earnings per share of 33.9p was 30.4% behind the prior year (2019: 48.7p).
- The impact of COVID-19 across operating income and expected credit losses, net of variable remuneration, was approximately
GBP105 million (GBP50 million in the South African Specialist Bank and GBP55 million in the UK Specialist Bank).
- The reported results are slightly below the guided range, reflecting a severe deterioration in the operating environment since the
guidance was given.
- Specialist Banking:
- Satisfactory performance from lending franchises supported growth in net interest income. This was offset by weak equity capital
markets activity, lower associate income and the effects of COVID-19 which negatively impacted investment income, trading
income and impairments. Operating costs reduced reflecting a strong focus on cost discipline.
- The South African business generated adjusted operating profit of GBP276.4 million (2019: GBP310.3 million), a decline of 10.9%
(8.5% in Rands) against the prior year. The UK business reported adjusted operating profit of GBP106.7 million (2019: GBP191.6 million),
44.3% behind the prior year.
- The group credit loss ratio increased to 0.52% from 0.31% in the prior year, with the increase primarily driven by COVID-19 related
expected credit losses. Pre-COVID-19, the credit loss ratio was calculated at 0.28% for 31 March 2020.
- Wealth & Investment:
- Net inflows and higher average assets under management supported stable revenue. Costs increased primarily from higher
regulatory levies and discretionary technology spend to support growth over the long term.
- The South African adjusted operating profit of GBP26.8 million (2019: GBP26.3 million) was 2.3% (5.7% in Rands) ahead of the prior year.
The UK adjusted operating profit of GBP63.0 million (2019: GBP70.6 million) was 10.8% behind the prior year.
- Against this backdrop, the group generated a return on equity (ROE) of 11.0% (2019: 14.2%). The continued execution of our strategic
cost initiatives saw operating costs reduce, however, lower operating income year on year resulted in an increase in the cost to income
ratio from 67.3% to 68.2%.
- As at 31 March 2020, net asset value per share was 414.3p (31 March 2019: 434.1p) and tangible net asset value per share was
377.6p (31 March 2019: 386.0p). Net asset value was positively impacted by profitability and the demerger but negatively by the
depreciation of the Rand.
- The group has retained strong cash and near cash balances of GBP12.7 billion at 31 March 2020 (representing 39% of customer deposits
and 25% of total assets). Capital and leverage ratios remain sound, ahead of internal targets and regulatory requirements.
Neutral
Financial highlights FY FY currency
Total group(1) 2020 2019(2) % change % change
Adjusted operating profit (GBP'm) 608.9 731.9 (16.8%) (15.8%)
Adjusted earnings attributable to shareholders (GBP'm) 439.9 573.9 (23.4%) (22.8%)
Adjusted basic earnings per share (pence) 46.5 60.9 (23.6%) (23.0%)
Basic earnings per share (pence) 115.3 52.0 121.7% 132.7%
Headline earnings per share (pence) 29.2 52.6 (44.5%) (40.7%)
ROE 11.0% 14.2%
ROTE 12.2% 16.1%
Net asset value per share (pence) 414.3 434.1 (4.6%) 0.6%
Tangible net asset value per share (pence) 377.6 386.0 (2.2%) 3.7%
Continuing operations
Adjusted operating profit (GBP'm) 419.2 552.5 (24.1%) (23.0%)
Adjusted earnings attributable to shareholders (GBP'm) 320.7 458.8 (30.1%) (29.2%)
Adjusted basic earnings per share (pence) 33.9 48.7 (30.4%) (29.4%)
Basic earnings per share (pence) 17.5 40.4 (56.7%) (57.2%)
Headline earnings per share (pence) 21.5 41.1 (47.7%) (46.0%)
Credit loss ratio 0.52% 0.31%
Cost to income ratio 68.2% 67.3%
ROE 8.3% 12.0%
ROTE 9.2% 13.3%
Third party assets under management (GBP'bn) 45.0 55.8 (19.3%) (15.5%)
Customer accounts (deposits) (GBP'bn) 32.2 31.3 2.9% 12.6%
Core loans and advances (GBP'bn) 24.9 24.9 (0.1%) 9.2%
Cash and near cash (GBP'bn) 12.7 13.3 (4.6%) 4.4%
Common equity tier 1 ratio - Investec Limited 10.9% 10.5%(3)
Common equity tier 1 ratio - Investec plc 10.7% 10.8%
Leverage ratio(4) - Investec Limited 6.4% 7.6%
Leverage ratio(4) - Investec plc 7.8% 7.9%
1. Total group represents the group's results including the results of discontinued operations.
2. Restated.
3. Investec Limited adopted the Foundation Internal Ratings Based (FIRB) approach, effective 1 April 2019, resulting in a pro-forma CET1 ratio of 11.6%
had the FIRB approach been applied as of 31 March 2019.
4. Current Leverage ratios calculated on an end quarter basis.
Strategic initiatives
The Group has made progress in the execution of its stated strategy to simplify and focus the business to create value over the long term:
- Completion of the demerger and listing of Ninety One (previously Investec Asset Management). This resulted in an increase in the
CET1 ratio of 40bps for Investec Limited and 59bps for Investec plc. Investec decided not to proceed with the sell down of a 10%
stake in Ninety One given market conditions at the time of Ninety One's listing.
- Decisive action to restructure, close and sell non-core and subscale businesses. In addition to the strategic actions taken in H1 2020,
additional write-downs were taken on certain exposures in the Hong Kong direct investment portfolio and additional costs related to
businesses closed as part of the Irish business restructure were also taken.
- The net gain of these strategic actions of GBP711.3 million (2019: GBP71.5 million loss), including the gain and costs in relation to the
demerger, has been disclosed separately from adjusted operating profit.
- Operating costs from continuing operations reduced by 7.0%. In the UK Specialist Bank, operating costs reduced by GBP95.9 million, of
which fixed operating costs reduced by GBP31.6 million (6.9%) in FY2020.
- Whilst strategies to reduce the equity investment portfolio are underway, the current environment is not conducive for asset
realisations as the group seeks to optimise the value of these investments.
- Conversion to the Foundation Internal Ratings Based (FIRB) measurement of credit capital in South Africa resulted in a 1.1% uplift to
Investec Limited's CET 1 ratio, effective 1 April 2019. Investec Limited's application for conversion to the Advanced Internal Ratings
Based (AIRB) approach is under review by the South African Prudential Authority and if successful is expected to result in a circa 2%
uplift to the CET1 ratio.
On behalf of the boards of Investec plc and Investec Limited
Perry Crosthwaite Fani Titi
Chairman Chief Executive
This short-form announcement is the responsibility of the directors. It is only a summary of the information contained in the full announcement
and does not contain full or complete details. Any investment decision should be based on the full viewed announcement which can be
accessed from Thursday 21 May 2020, using the following JSE link: https://senspdf.jse.co.za/documents/2020/jse/isse/INL/FY20.pdf
Alternatively the full announcement is available on our website www.investec.com
The full announcement is also available at our registered offices for inspection at no charge, during office hours.
Copies of the full announcement may be requested by contacting
Investor Relations on:
Telephone: (+27 11) 286 7000
e-mail: investorrelations@investec.com
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE share code: INPR
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000063814
LEI: 213800CU7SM6O4UWOZ70
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference
shares ("preference shares")
Declaration of dividend number 31
Notice is hereby given that preference dividend number 31 has
been declared by the Board from income reserves for the period
01 October 2019 to 31 March 2020 amounting to a gross preference
dividend of 382.31605 cents 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, 05 June 2020.
The relevant dates for the payment of dividend number 31 are as
follows:
Last day to trade cum-dividend Tuesday, 02 June 2020
Shares commence trading ex-dividend Wednesday, 03 June 2020
Record date Friday, 05 June 2020
Payment date Monday, 15 June 2020
Share certificates may not be dematerialised or rematerialised
between Wednesday, 03 June 2020 and Friday, 05 June 2020, both
dates inclusive.
Additional information to take note of
- Investec Limited South African tax reference number: 9800/181/71/2
- The issued preference share capital of Investec Limited is
32 214 499 preference shares
- The dividend paid by Investec Limited is subject to South African
Dividend Tax (Dividend Tax) of 20% (subject to any available exemptions
as legislated)
- The net dividend amounts to 305.85284 cents per preference share
for shareholders liable to pay the Dividend Tax and 382.31605 cents
per preference shareholders exempt from paying the Dividend Tax.
By order of the board
N van Wyk
Company Secretary
20 May 2020
Investec plc
Incorporated in England and Wales
Registration number: 3633621
Share code: INPP
ISIN: GB00B19RX541
LEI: 2138007Z3U5GWDN3MY22
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference
shares ("preference shares")
Declaration of dividend number 28
Notice is hereby given that preference dividend number 28 has
been declared by the Board from income reserves for the period
01 October 2019 to 31 March 2020 amounting to a gross preference
dividend of 8.43287 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, 05 June 2020.
For shares trading on the Johannesburg Stock Exchange (JSE), the
dividend of 8.43287 pence per preference share is equivalent to a gross
dividend of 187.48647 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 2020.
The relevant dates relating to the payment of dividend number 28
are as follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Tuesday, 02 June 2020
On the International Stock Exchange (TISE) Wednesday, 03 June 2020
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Wednesday, 03 June 2020
On the International Stock Exchange (TISE) Thursday, 04 June 2020
Record date (on the JSE and TISE) Friday, 05 June 2020
Payment date (on the JSE and TISE) Monday, 15 June 2020
Share certificates may not be dematerialised or rematerialised between
Wednesday, 03 June 2020 and Friday, 05 June 2020, both dates
inclusive, nor may transfers between the United Kingdom share register
and the South African branch register take place between Wednesday,
03 June 2020 and Friday, 05 June 2020, both dates inclusive.
Additional information for South African resident
shareholders of Investec plc
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued preference share capital of Investec plc is 2 754
587 preference shares
- The dividend paid by Investec plc to shareholders recorded on the
South African branch register is subject to South African Dividend Tax
(Dividend Tax) of 20% (subject to any available exemptions as legislated)
- The net dividend amounts to 149.00000 cents per preference share
for preference shareholders liable to pay the Dividend Tax and
187.48647 cents per preference share for preference shareholders
exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
20 May 2020
Investec plc
Incorporated in England and Wales
Registration number: 3633621
JSE share code: INPPR
ISIN: GB00B4B0Q974
LEI: 2138007Z3U5GWDN3MY22
Rand-denominated preference share dividend announcement
Rand-denominated non-redeemable non-cumulative
non-participating perpetual preference shares
("preference shares")
Declaration of dividend number 18
Notice is hereby given that preference dividend number 18 has
been declared by the Board from income reserves for the period
01 October 2019 to 31 March 2020 amounting to a gross preference
dividend of 468.29795 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, 05 June 2020.
The relevant dates relating to the payment of dividend number 18
are as follows:
Last day to trade cum-dividend Tuesday, 02 June 2020
Shares commence trading ex-dividend Wednesday, 03 June 2020
Record date Friday, 05 June 2020
Payment date Monday, 15 June 2020
Share certificates may not be dematerialised or rematerialised
between Wednesday, 03 June 2020 and Friday, 05 June 2020, both
dates inclusive.
Additional information for South African resident
shareholders of Investec plc
- Investec plc United Kingdom tax reference number: 2683967322360
- The issued Rand-denominated preference share capital of Investec plc
is 131 447 preference shares
- The dividend paid by Investec plc to shareholders recorded on the
South African branch register is subject to South African Dividend Tax
(Dividend Tax) of 20% (subject to any available exemptions as legislated)
- The net dividend amounts to 374.63836 cents per preference share
for preference shareholders liable to pay the Dividend Tax and
468.29795 cents per preference share for preference shareholders
exempt from paying the Dividend Tax.
By order of the board
D Miller
Company Secretary
20 May 2020
Investec plc
Incorporated in England and Wales
(Registration number 3633621)
JSE ordinary share code: INP
LSE ordinary share code: INVP
ISIN: GB00B17BBQ50
Registered office:
30 Gresham Street, London
EC2V 7QP, United Kingdom
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Company Secretary:
D Miller?
Investec Limited
Incorporated in the Republic of South Africa
(Registration number 1925/002833/06)
JSE ordinary share code: INL
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
Registered office:
100 Grayston Drive
Sandown, Sandton, 2196
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Company Secretary:
N van Wyk
Directors:
PKO Crosthwaite? (Chairman)
F Titi (Chief Executive Officer)
NA Samujh (Finance Director)
DM van der Walt* (Executive)
JKC Whelan^* (Executive)
H Baldock?
ZBM Bassa
D Friedland
PA Hourquebie
CR Jacobs^
IR Kantor#
Lord Malloch-Brown KCMG?
PG Sibiya
KL Shuenyane
?British #Dutch ^Irish
*Appointed 01 April 2020
HJ du Toit (Joint Chief Executive Officer) resigned 16 March 2020
S Koseff (Executive) retired 08 August 2019
B Kantor (Executive) retired 08 August 2019
K McFarland (Executive) resigned 16 March 2020
LC Bowden? resigned 08 August 2019
CA Carolus resigned 08 August 2019
Sponsor:
Investec Bank Limited
Date: 21-05-2020 08:00:00
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