REG - Investec PLC - Half Year Results to 30 September
21/11/2024 07:00
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RNS Number : 0441N Investec PLC 21 November 2024
Investec Limited Investec plc
Incorporated in the Republic of South Africa Incorporated in England and Wales
Registration number 1925/002833/06
Registration number 3633621
JSE share code: INL
LSE share code: INVP
JSE hybrid code: INPR JSE share code: INP
ISIN: GB00B17BBQ50
JSE debt code: INLV
LEI: 2138007Z3U5GWDN3MY22
NSX share code: IVD
BSE share code: INVESTEC
ISIN: ZAE000081949
LEI: 213800CU7SM6O4UWOZ70
Investec (comprising Investec plc and Investec Limited) -
Reviewed condensed combined consolidated financial results for the six
months ended 30 September 2024 and cash dividend declaration
Fani Titi, Group Chief Executive commented:
"The Group has delivered a solid performance in the first half of the 2025
financial year in an evolving environment. Adjusted operating profit grew 7.6%
to £475 million demonstrating continued momentum from our differentiated
client franchises. We are pleased to report a ROE of 13.9% putting us on track
to achieve the Group's full year ROE guidance. The Group has maintained strong
capital and liquidity levels, positioning us well to support our clients and
pursue disciplined growth in an improving operating environment. We remain
committed to our purpose of creating enduring worth for all our stakeholders."
Basis of presentation
The comparability of the Group's total period on period performance is
impacted by the financial effects of the combination of Investec Wealth &
Investment UK (IW&I UK) with the Rathbones Group (Rathbones) and the
disposal of the property management companies to Burstone Group Limited
(formerly known as Investec Property Fund (IPF)), which result in IW&I UK
and IPF being presented as discontinued operations in the prior period in line
with applicable accounting standards.
The interim statements are unaudited but have been reviewed by the auditors
and their independent review report is included in this report.
Key financial metrics
Given the nature of the IW&I UK and IPF transactions completed in the
prior period, the Group essentially retained similar economic interest to
these investments before and after the transactions. To provide information
that is more comparable to the current period, the prior period has been
presented on a pro-forma basis as if the transactions had been in effect from
the beginning of the prior period, i.e. IW&I UK has been presented as an
equity accounted investment and IPF as an investment at fair value through
profit or loss in the prior period.
£'millions Revenue Cost to income CLR Adjusted operating profit Adjusted EPS (pence) Basic EPS* (pence) HEPS (pence) ROE ROTE Total DPS (pence) NAV per share (pence) TNAV per share (pence)
1H2025 1 102.6 50.8% 42bps 474.7 39.5 36.6 36.6 13.9% 16.4% 16.5 575.7 491.6
1H2024 1 043.8 53.3% 32bps 441.4 38.7 69.6 36.9 14.6% 16.5% 15.5 554.0 467.7
% change in £ 5.6% 7.6% 2.1% (47.4%) (0.8%) 6.5% 3.9% 5.1%
% change in Rands 5.2% 4.4 % 1.8% (47.6%) (0.5) % 4.4% 5.6%
Totals and variances are presented in £'millions which may result in rounding
differences.
* The Basic EPS decrease reflects the impact of significant net
gains from strategic actions executed in the prior period.
Group financial summary:
Pre-provision adjusted operating profit increased 11.1% to £541.6 million
(1H2024: £487.7 million), as revenue grew 5.6% against operating cost growth
of 0.8%, resulting in a positive jaws ratio.
Revenue benefitted from balance sheet growth, the breadth and depth of our
client franchises, as well as the elevated interest rate environment. Net
interest income (NII) was supported by higher average lending books and higher
average interest rates, partly offset by the effects of deposit repricing in
the UK. Non-interest revenue (NIR) growth reflects increased capital-light
income from our Banking businesses, as well as strong growth in fees from our
SA Wealth & Investment business. Investment income also contributed
positively to NIR growth given the improving global markets backdrop. Trading
income was lower in the current period due to the non-repeat of prior-year
risk management gains from hedging the remaining financial products run down
book in the UK, as well as due to the implementation of hedge accounting in
the South African credit investments portfolio from the first quarter of the
current period.
The cost to income ratio improved to 50.8% (1H2024: 53.3%) as revenue grew
ahead of costs. Total operating costs remained broadly flat increasing by
0.8%. Fixed operating expenditure increased 6.7% reflecting continued
investment in people and technology for growth and inflationary pressures.
Variable remuneration in each geography was in line with respective
performance.
Credit loss ratio (CLR) on core loans was 42bps (1H2024: 32bps), at the upper
end of the Group's through-the-cycle (TTC) range of 25bps to 45bps. Expected
credit loss (ECL) impairment charges increased to £66.9 million (1H2024:
£46.3 million). The overall credit quality remained strong, with no evidence
of trend deterioration.
Return on equity (ROE) of 13.9% (1H2024: 14.6%) is within the Group's upgraded
medium-term 13% to 17% target range, notwithstanding the increase in the
average equity base resulting from the net gain recognised on completion of
the combination of IW&I UK with Rathbones at the end of the prior period.
Return on tangible equity (ROTE) was 16.4% (1H2024: 16.5%) within the Group's
upgraded medium-term 14% to 18% target range.
Net asset value (NAV) per share amounted to 575.7p (31 March 2024: 563.9p),
driven by strong capital generation in the current period and foreign exchange
translation gains, partly offset by distribution to shareholders.
Tangible net asset value (TNAV) per share increased to 491.6p (31 March 2024:
477.5p).
Key drivers
Net core loans increased 5.4% annualised to £31.7 billion (31 March 2024:
£30.9 billion) and grew by 1.9% annualised on a neutral currency basis;
driven by growth from private clients lending in both geographies alongside
muted overall growth in corporate lending portfolios which were offset by
higher repayment rates given the elevated interest rate environment.
Customer deposits increased by 4.7% annualised to £40.4 billion (31 March
2024: £39.5 billion) and grew by 1.3% in neutral currency. Investec plc grew
customer deposits by 8.1% annualised in a competitive deposit market. Investec
Limited continued its strategy to increase the more efficient retail deposits
(up 6.9% annualised) and reduce shorter term wholesale deposits (down 22.2%
annualised); and consequently, lengthened the deposit tenure. As a result,
total Investec Limited customer deposits decreased by 6.2% annualised in
neutral currency.
Funds under management (FUM) in Southern Africa increased by 11.9% to £23.4
billion (31 March 2024: £20.9 billion) driven by net inflows in our
discretionary and annuity funds of R10.0 billion (£428 million), as well as
increased market levels. These were partly offset by FX translation losses and
non-discretionary outflows of R1.9 billion (£79 million).
Investec Wealth & Investment UK FUM is now reported as part of the
Rathbones Group following the completion of the combination in September 2023.
Rathbones Funds Under Management and Administration (FUMA) totalled £108.8
billion at 30 September 2024. Investec owns 41.25% of Rathbones.
Balance sheet strength and strategic execution:
The Group remained well capitalised in both our anchor geographies, with
Investec Limited reporting a CET1 ratio of 14.8% measured on the Advanced
Internal Ratings-Based approach and the Investec plc CET1 at 12.6% measured on
a standardised approach. The strong capital generation from our client
franchises gives us the ability to continue to support our clients, invest in
the business, and make distributions to our shareholders. Liquidity levels
remained strong and well ahead of regulatory and board-approved minimums.
The Group remains committed to its strategic priority to optimise shareholder
returns. The investment in Bud Group Holdings reduced significantly to £108.7
million / R 2.5 billion at 30 September 2024 from £179.6 million / R4.3
billion at 31 March 2024 following the completion of the previously announced
disposal of Assupol. The UK business continues to make progress towards
migrating its capital measurement from the standardised approach to the
internal ratings-based approach.
The Board has proposed an interim dividend of 16.5p per share (1H2024: 15.5p),
translating to a 41.7% payout ratio and within the Group's current 35% to 50%
payout policy.
FY2025 Outlook
Revenue momentum is expected to be underpinned by average book growth,
stronger client activity levels given expected improvement in GDP growth and
continued success in our client acquisition strategies, partly offset by the
effects of reducing global interest rates.
The Group currently expects:
• Group ROE to be c.14.0% and ROTE to be c.16.0%. Southern Africa is
expected to report ROE of c.19.0%, and UK & Other is expected to report
ROTE of c.13.5% in line with 1H2025
• Overall costs to be well managed in the context of inflationary
pressures and continued investment in the business, with cost to income ratio
expected to be between 51.0% and 53.0%
• The credit loss ratio to be within the through-the-cycle range of
25bps to 45bps. Southern Africa is expected to be close to the lower end of
the TTC range of 15bps to 35bps. UK & Other credit loss ratio is expected
to be between 50bps and 60bps.
The Group has maintained strong capital and liquidity levels and is well
positioned to continue supporting our clients and build to scale our
identified growth opportunities, in an improving economic environment.
Key financial data
This announcement covers the results of Investec plc and Investec Limited
(together "the Investec Group" or "Investec" or "the Group") for the six
months ended 30 September 2024 (1H2025). Unless stated otherwise, comparatives
relate to the Group's operations for the six months ended 30 September 2023
(1H2024).
Basic earnings per share in the prior period includes a gain of £360.9
million on the combination of Investec Wealth & Investment UK with
Rathbones plc, partly offset by the net loss on deconsolidation of IPF
totalling £95.3 million.
Performance 1H2025 1H2024^ Variance % Neutral currency
change % change
Operating income (£'m)* 1 102.6 1 043.8 58.8 5.6% 5.4%
Operating costs (£'m) (560.3) (556.1) (4.2) 0.8% 0.6%
Adjusted operating profit (£'m) 474.7 441.4 33.3 7.6% 7.3%
Adjusted earnings attributable to shareholders (£'m) 337.9 329.8 8.1 2.5% 2.1%
Adjusted basic earnings per share (pence) 39.5 38.7 0.8 2.1% 1.8%
Basic earnings per share (pence) 36.6 69.6 (33.0) (47.4%) (47.6%)
Headline earnings per share (pence) 36.6 36.9 (0.3) (0.8%) (1.1%)
Dividend per share (pence) 16.5 15.5
Dividend payout ratio 41.7% 40.1%
CLR (credit loss ratio) 0.42% 0.32%
Cost to income ratio 50.8% 53.3%
ROE (return on equity) 13.9% 14.6%
ROTE (return on tangible equity) 16.4% 16.5%
* Operating income has been prepared on a pro-forma basis for
the prior period. ^ Restated.
Balance sheet 30 Sept 2024 31 March 2024 Variance % change Neutral currency % change
Funds under management (£'bn)
IW&I Southern Africa 23.4 20.9 2.5 11.9% 8.4%
Rathbones/IW&I UK** 108.8 107.6
Customer accounts (deposits) (£'bn) 40.4 39.5 0.9 2.4% 0.7%
Net core loans and advances (£'bn) 31.7 30.9 0.8 2.7% 1.0%
Cash and near cash (£'bn) 17.2 16.4 0.8 4.9% 3.3%
NAV per share (pence) 575.7 563.9 2.1% 1.6%
11.8
TNAV per share (pence) 491.6 477.5 3.0% 2.4%
14.1
Totals and variances are presented in £'billions which may result in rounding
differences.
** Following the all-share combination of IW&I UK and
Rathbones, IW&I UK now forms part of the Rathbones Group. As at 30
September 2024, Rathbones Group, of which Investec holds a 41.25% economic
interest, had funds under management of £108.8 billion.
Salient features by geography 1H2025 1H2024 Variance % change % change in Rands
Investec Limited (Southern Africa)
Adjusted operating profit (£'m) 252.0 205.9 46.1 22.4% 21.9%
Cost to income ratio 49.3% 52.5%
ROE 19.9% 16.2%
ROTE 19.9% 16.3%
CET1 14.8% 13.2%
Leverage ratio 6.3% 5.9%
Customer accounts (deposits) (£'bn) 18.8 20.0 (1.2) (6.0) % (5.5%)
Net core loans and advances (£'bn) 15.0 14.7 0.3 1.8 % 2.3%
Investec plc (UK & Other)
Adjusted operating profit (£'m) 222.7 235.4 (12.7) (5.4%)
Cost to income ratio 52.2% 53.9%
ROE 10.3% 13.6%
ROTE 13.5% 16.7%
CET1 12.6% 11.7%
Leverage ratio 9.9% 8.7%
Customer accounts (deposits) (£'bn) 21.6 19.9 1.7 8.5 %
Net core loans and advances (£'bn) 16.7 16.3 0.4 2.5%
Totals and variance are presented in £'billions, unless otherwise stated,
which may result in rounding differences.
Enquiries
Investec Investor Relations
Results: Qaqambile Dwayi
Tel: +27 (0) 11 291 0129
General enquiries:
Tel: +27 (0) 11 286 7070 or investorrelations@investec.com
Brunswick (SA PR advisers)
Tim Schultz
Tel: +27 (0) 82 309 2496
Lansons (UK PR advisers)
Tom Baldock
Tel: +44 (0) 78 6010 1715
Presentation/conference call details
Investec will host its interim results presentation live from Cape Town and
broadcast live in London today at 11h00 (SA)/ 09h00 (UK) time.
Please register for the presentation at: www.investec.com/investorrelations
A live video webcast of the presentation will be available on www.investec.com
(http://www.investec.com)
About Investec
Investec partners with private, institutional, and corporate clients, offering
international banking, investments, and wealth management services in two
principal markets, South Africa, and the UK, as well as certain other
countries. The Group was established in 1974 and currently has 7,700+
employees.
Investec has a dual listed company structure with primary listings on the
London and Johannesburg Stock Exchanges.
Johannesburg and London
JSE Debt and Equity Sponsor: Investec Bank Limited
Group financial performance
Overview
Pre-provision adjusted operating profit increased 11.1% to £541.6 million
(1H2024: £487.7 million).
Revenue increased 5.6% to £1 102.6 million (1H2024: £1 043.8 million)
Net interest income increased 2.0% to £684.4 million (1H2024: £670.9
million) driven by higher average interest earning assets and higher average
interest rates which was partly offset by the effects of deposit repricing in
the UK. Southern Africa also benefitted from lower cost of funds as we
continued to implement our strategies to optimise the cost of funds.
Non-interest revenue increased 12.2% to £418.2 million (1H2024: £372.9
million).
• Net fee and commission income increased 13.0% to £221.6 million
(1H2024: £196.1 million). This growth benefitted from higher average
discretionary FUM in the SA wealth business, higher UK M&A fees primarily
from the consolidation of Capitalmind for the full period, and higher fees
from the SA Private Banking business given increased activity levels
• Investment income of £63.2 million (1H2024: £25.4 million) reflects
net fair value gains and dividends received on investment portfolios
• Share of post tax operating profit of associates and joint venture
holdings decreased to £35.2 million (1H2024: £39.1 million), primarily
driven by lower share of earnings from the wealth and investment business in
the UK, comprising IW&I UK in the prior period versus our 41.25% share of
operating earnings from Rathbones in the current period
• Trading income arising from customer flow decreased to £74.3 million
(1H2024: £94.6 million), primarily as a result of lower risk management gains
in hedging the remaining and significantly reduced financial products run down
book in the UK. The implementation of hedge accounting for the credit
investment portfolio in South Africa from the first quarter of the current
period has also resulted in lower trading income in the current period. MTM
movements in the derivatives associated with credit investments are now
recognised in the balance sheet and amortised over the life of the hedging
instrument. Equity trading income arising from client flow in both anchor
geographies was strong as markets trended upwards
• Trading income from balance sheet management and other trading
activities increased to £22.3 million (1H2024: £17.9 million), largely as a
result of gains arising from MTM movements in the value of interest rate
hedges on the balance sheet in South Africa.
Expected credit loss (ECL) impairment charges increased to £66.9 million
(1H2024: £46.3 million) resulting in a credit loss ratio on core loans of
42bps (1H2024: 32bps)
Asset quality remains within Group appetite limits, with exposures to a
carefully defined target market well covered by collateral. The increase in
the ECL impairment charges was primarily driven by higher specific impairments
on certain Stage 3 exposures.
Operating costs are broadly flat, up 0.8% to £560.3 million (1H2024: £556.1
million)
The cost-to-income ratio improved to 50.8% from 53.3% in 1H2024. Fixed
operating expenditure increased by 6.7% due to inflationary pressures and
continued investment in technology and people for growth. Higher expenses
primarily on personnel was due to annual salary increases and growth in
headcount as well as higher business expenses given increased business
activity. Variable remuneration in each geography is in line with respective
performance.
Taxation
The taxation charge on adjusted operating profit was £98.3 million (1H2024:
£89.1 million), resulting in an effective tax rate of 22.3% (1H2024: 22.3%).
Investec plc effective tax rate is 23.3% (1H2024: 22.3%), reflecting the
weighted effective tax rate from multiple jurisdictions where Investec plc has
operations.
Investec Limited effective tax rate is 21.6% (1H2024: 22.3%).
Funding and liquidity
Customer deposits increased 4.8% annualised to £40.4 billion (March 2024:
£39.5 billion) on a reported basis and 1.3% annualised in neutral currency.
Customer deposits increased by 8.1% annualised to £21.6 billion for Investec
plc since 31 March 2024. Investec Limited continued its strategy to increase
the more efficient retail deposits and reduce short to medium term wholesale
deposits; and consequently lengthened the wholesale deposit tenure. As a
result, total Investec Limited customer deposits decreased by 6.2% annualised
in neutral currency to R434.7 billion since 31 March 2024.
Cash and near cash of £17.2 billion (£9.8 billion in Investec plc and R170.9
billion in Investec Limited) at 30 September 2024 represent approximately
42.4% of customer deposits (45.2% for Investec plc and 39.3% for Investec
Limited). Loans and advances to customers as a percentage of customer deposits
was 78.0% (1H2024: 72.1%, FY2024: 75.2%) for Investec Limited and 77.4%
(1H2024: 81.7%, FY2024: 79.7%) for Investec plc.
The Group comfortably exceeds Board-approved internal targets and Basel
liquidity requirements for the Liquidity Coverage Ratio (LCR) and Net Stable
Funding Ratio (NSFR)
• Investec Bank Limited (consolidated Group) reported a LCR of 176.3%
and an NSFR of 122.3% at 30 September 2024
• Investec plc reported a LCR of 433% and a NSFR of 149% at 30 September
2024.
Capital adequacy and leverage ratios
Capital and leverage ratios remain sound, ahead of regulatory requirements.
The CET1 and leverage ratio were 14.8% and 6.3% for Investec Limited
(Advanced Internal Ratings Based scope) and 12.6% and 9.9% for Investec plc
(Standardised approach) respectively.
Segmental performance
Specialist Banking
Adjusted operating profit from Specialist Banking increased 5.6% to £426.9
million (1H2024: £404.2 million). Pre-provision adjusted operating profit
increased 9.6% to £493.8 million (1H2024: £450.5 million).
Specialist Banking Southern Africa UK & Other Total
1H2025 1H2024 Variance 1H2025 1H2024 Variance 1H2025 1H2024
£'m £'m £'m % Rands % £'m £'m £'m % £'m £'m
Operating income (before ECL) 441.0 390.2 50.8 13.0% 12.6% 539.3 553.4 (14.1) (2.5%) 980.3 943.6
ECL impairment charges (14.1) (7.0) (7.1) (>100.0%) (95.2%) (52.8) (39.3) (13.5) (34.4%) (66.9) (46.3)
Operating costs (202.4) (186.2) (16.2) (8.7%) (8.3%) (283.3) (306.9) 23.6 7.7% (485.7) (493.1)
(Profit)/loss attributable to NCI 0.1 (0.2) 0.3 (>100.0%) (>100.0%) (0.8) - (0.8) (0.7) (0.2)
100.0%
Adjusted operating profit 224.6 196.8 27.7 14.1% 13.8% 202.3 207.4 (5.0) (2.4%) 426.9 404.2
Totals and variances are presented in £'million which may result in rounding
differences.
Southern Africa Specialist Banking (in Rands)
Pre-provision adjusted operating profit increased by 16.6% to R 5 579 million.
Adjusted operating profit increased 13.8% to R5 251 million (1H2024: R4 616
million), delivered against a backdrop of weak economic activity and
uncertainty in the initial months of the period ahead of the national
elections. We remain focused on building to scale our various growth
initiatives and gaining market share in our core client franchises.
Net core loans grew by 1.5% annualised to R346.2 billion (FY2024: R343.7
billion) reflecting the subdued activity leading up to the SA elections, as
well as the translation impact on the dollar denominated lending books given
the strengthening of the Rand against the US Dollar since 31 March 2024. The
latter months of the period saw increased growth in the private client loan
book and certain corporate credit portfolios, partly offset by higher
redemptions relative to prior periods.
Revenue increased 12.6%, benefitting from higher average net interest margins,
increased activity levels and continued client acquisition in line with our
growth strategies. This was augmented by positive investment income.
• Net interest income (NII) growth of 12.7% benefitted from lower cost
of funds as we continued to implement our strategies to optimise the funding
pool, as well as higher average advances and interest rates. Our non-wholesale
deposits grew by 6.9% annualised in line with our strategy to increase the
proportion of non-wholesale deposits in our funding pool
• Non-interest revenue increased 12.3% driven by:
- Net fee and commission income increased 2.7%, benefitting from growth in
activity levels in the private banking business which was partly offset by the
higher costs associated with the increased transactional activity. Higher
structuring, FX and equity market fees in the corporate and institutional
banking business were offset by lower investment banking fees and muted
utilization of trade finance facilities
- Income from Balance sheet management activities increased due to a
reduction in losses from MTM movements associated with managing fixed deposit
interest rate risk. Recognition of these MTM movements are temporary and
reverse over the life of the fixed deposits
- Positive contribution from Investment income, driven by higher net fair
value gains from investment portfolios in our client franchises as South
African assets repriced following the successful formation of the Government
of National Unity (GNU)
Offset by:
- The reduction in trading income from customer flow; stronger client
flows from equity derivatives and interest rate desks were offset by the net
impact of hedge accounting implementation in the credit investments portfolio.
ECL impairment charges amounted to R328 million (1H2024: R167 million),
resulting in a credit loss ratio of 16bps (1H2024: 8bps), driven by higher
Stage 3 ECL charges and lower recoveries from previously impaired exposures
The cost to income ratio improved to 45.9% (1H2024: 47.7%). Operating costs
increased by 8.3% driven by higher personnel expenses due to annual salary
increases and higher headcount, as well as increased IT spend to support
business growth. Variable remuneration increased in line with performance.
UK & Other Specialist Banking
Pre-provision adjusted operating profit increased by 3.4% to £255.2 million.
Adjusted operating profit decreased by 2.4% to £202.3 million (1H2024:
£207.4 million); our diversified client franchises in the UK mid-market and
selected geographies performed well within the context of a challenging
macro-economic environment. The two-year (i.e. post COVID-19) adjusted
operating profit compound annual growth rate (CAGR) is 25.4%. We have
continued to successfully execute our client acquisition strategies to build
scale and relevance in the UK and other markets in which we operate. Our value
proposition is underpinned by our 'One Investec' integrated approach, taking
our clients along both their personal and business journey.
Net core loans grew by 2.3% annualised to £16.7 billion driven by 6.9%
annualised growth in the UK residential mortgage lending book, alongside a
flat corporate lending portfolio within a constrained market environment.
Moderate growth across the corporate loan book was offset by higher levels of
repayments, particularly in the real estate lending portfolio, as well as the
translation impact of US Dollar and Euro denominated loans. Our diversified
lending franchises allowed us to navigate the uncertain operating environment
which prevailed over the period.
Revenue decreased by 2.5%; strong growth in net fee and commission income
generated from our M&A advisory business in line with our strategy to grow
capital light earnings was offset by lower net interest income and lower
trading income from customer flow. Investment income contributed positively
given the improving global markets backdrop.
• Net interest income decreased by 5.2%, the benefit of a larger
average loan book and higher average interest rates was offset by higher cost
of funding as deposits repriced
• Non-interest revenue increased by 4.6% driven by:
- Higher M&A advisory fees primarily from the consolidation of
Capitalmind as it became a subsidiary in June 2023. We have also seen higher
arrangement fees in certain lending areas
- Higher investment income was largely driven by net fair value gains from
equity investments
Offset by:
- Lower trading income from customer flow, primarily as a result of lower
risk management gains from hedging the significantly reduced financial
products run down book and lower interest rate and FX hedging volumes in our
Treasury Risk Solutions business. This was partially offset by strong equity
trading income from customer flow on the back of positive market sentiment
ECL impairment charges amounted to £52.8 million, resulting in a credit loss
ratio of 67bps (1H2024: 55bps) in line with September 2024 pre-close guidance.
The increase in ECL charges was largely driven by stage 3 ECL charges on
certain exposures. Overall asset quality of the book remained stable; Stage 3
and Stage 2 exposures decreased to 3.2%
(31 March 2024: 3.3%) and 6.9% (31 March 2024: 8.6%) of gross core loans
subject to ECL at 30 September 2024 respectively. We have seen a reduction in
exposures migrating into Stage 3.
The cost to income ratio improved to 52.6% (1H2024: 55.4%). Total operating
costs decreased by 7.7%. Fixed operating costs increased by 3.4%, in line with
the average UK inflation rate over the period. Variable remuneration decreased
in line with business performance.
The Group notes the recent Court of Appeal decisions on the Wrench, Johnson
and Hopcraft cases relating to motor commission arrangements. The Group has
assessed the potential impact of these decisions, as well as any broader
implications, pending the outcome of the intended appeal applications and
concluded the provision of £30 million at 31 March 2024 still remains
appropriate based on the information currently available. The ultimate
financial impact of the Court of Appeal decision and ongoing FCA investigation
into motor commission could materially vary, pending further guidance from the
FCA or the outcome of the intended appeal to the UK Supreme Court.
Wealth & Investment
Adjusted operating profit from the Wealth & Investment businesses
increased 2.3% to £54.6 million (1H2024: £53.3 million).
Wealth & Investment Southern Africa UK & Other Total
1H2025 1H2024 Variance 1H2025 1H2024 Variance 1H2025 1H2024
£'m £'m £'m % % in Rands £'m £'m £'m % £'m £'m
Operating income 70.7 59.2 11.5 19.5% 18.9% 32.3 35.9 (3.5) (9.8%) 103.1 95.1
Operating costs (48.5) (41.7) (6.8) 16.2% 15.8% - - - -% (48.5) (41.7)
Adjusted operating profit 22.2 17.5 4.8 27.2% 26.3% 32.3 35.9 (3.5) (9.8%) 54.6 53.3
Totals and variances are presented in £'million which may result in rounding
differences.
Southern Africa Wealth & Investment International Business (in Rands)
Adjusted operating profit increased by 26.3% to R519 million (1H2024: R411
million) in an evolving operating environment.
Total FUM increased by 7.9% to R540.9 billion (FY2024: R501.3 billion) driven
by discretionary and annuity net inflows of R10.0 billion, positive market
movements partly offset by foreign currency translation impact on dollar
denominated portfolios as the South African Rand strengthened against the US
Dollar and non-discretionary outflows of R1.9 billion. The business reported
strong client retention and acquisitions in a challenging market,
demonstrating the strength and quality of our international wealth management
offering.
Revenue grew by 18.9% underpinned by strong inflows in our discretionary and
annuity portfolios across local and offshore investment products in the
current and prior periods. We also experienced strong growth in fee income
generated from structured products. Non-discretionary brokerage increased in
the current period due to higher trading volumes. Revenue in Switzerland grew
by 6.4% in Pounds driven by higher fee income and customer flow foreign
currency trading income.
Operating costs increased 15.8%, driven by investment in people for growth,
higher technology spend, and higher variable remuneration in line with
performance. Fixed operating expenditure increased by 10.7%. Operating margins
increased to 31.4% (1H2024: 29.5%).
UK & Other Wealth & Investment
The all-share combination of IW&I UK and Rathbones successfully completed
at the end of the prior period, creating the UK's leading discretionary wealth
manager with £108.8 billion FUMA at 30 September 2024.
In the prior period (pre the combination) the IW&I UK business generated
adjusted operating profit (post-tax) of £35.9 million and an operating margin
of 25.2%, on a pro-forma basis this is recognised as post taxation profit from
associates.
The current period consists of the Group's 41.25% share of the combined
Rathbones Group operating earnings recognised as post taxation income from
associates of £32.3 million. As disclosed by Rathbones on 17 October 2024,
going forward the Investec Group will be incorporating Rathbones' latest
published interim results i.e. post taxation earnings for the six months ended
30 June 2024 in our interim results for the six months to 30 September 2024.
Rathbones reported underlying operating margin of 25.1% for the six months to
30 June 2024 (31 December 2023: 22.3%), showing progress towards the target of
a 30%+ margin.
The Rathbones Group reported that synergy delivery increased to £25.5 million
per annum on a cash run-rate basis at 30 September 2024, significantly ahead
of the first-year post-combination objective of £15 million.
We remain confident that the combination will deliver scale and efficiency to
power future long-term growth.
Group Investments
Group Investments includes the holding in Ninety One, Bud Group Holdings,
Burstone Group (formerly known as IPF) and other equity investments
Group Investments Southern Africa UK & Other Total
1H2025 1H2024 Variance 1H2025 1H2024 Variance 1H2025 1H2024
£'m £'m £'m % % in Rands £'m £'m £'m % £'m £'m
Operating income (net of ECL charges) 13.3 (1.1) 14.4 >100.0% >100.0% 6.0 6.2 (0.3) (4.5%) 19.3 5.1
Operating costs - (0.3) 0.3 - - - - - (0.2)
100.0% 100.0%
Adjusted operating profit 13.3 (1.4) 14.7 >100.0% >100.0% 6.0 6.2 (0.3) (4.5%) 19.3 4.9
Totals and variances are presented in £'million which may result in rounding
differences.
Adjusted operating profit from Group Investments increased to £19.3 million
(1H2024: £4.9 million) driven by higher investment income on the fair value
measurement of our shareholding, and higher dividend income from our
investment, in Burstone Group.
Further information
Additional information on each of the business units is provided in the Group
results analyst book published on the Group's website:
http://www.investec.com.
The maintenance and integrity of the Investec website are the responsibility
of the directors; the review report carried out by the statutory auditors does
not involve a review of the analyst booklets or any other interim financial
information that is published on the website.
On behalf of the Boards of Investec plc and Investec Limited
Philip Hourquebie Fani Titi
Chair Group Chief Executive
20 November 2024
Notes to the commentary section above
Presentation of financial information
Investec operates under a Dual Listed Companies (DLC) structure with primary
listings of Investec plc on the London Stock Exchange and Investec Limited on
the JSE Limited.
In terms of the contracts constituting the DLC structure, Investec plc and
Investec Limited effectively form a single economic enterprise from a
shareholder perspective, in which the economic and voting rights of ordinary
shareholders of the companies are maintained in equilibrium relative to each
other. Creditors, however, are ring-fenced to either Investec plc or Investec
Limited as there are no cross-guarantees between the companies. The directors
of the two companies consider that for financial reporting purposes, the
fairest presentation is achieved by combining the results and financial
position of both companies.
Accordingly, these interim results reflect the results and financial position
of the combined DLC Group under UK adopted International Financial Reporting
Standards (IFRS) which comply with IFRS Accounting Standards as issued by the
International Accounting Standards Board (IASB) and the (EC) No. 1606/2022 as
it applies in the European Union, denominated in Pounds Sterling. In the
commentary above, all references to Investec or the Group relate to the
combined DLC Group comprising Investec plc and Investec Limited.
Following a review of the liquidity, capital position, profitability, the
business model and operational risks facing the business, the directors have a
reasonable expectation that the Investec Group will be a going concern for a
period of at least 12 months. The results for the six months ended 30
September 2024 have accordingly been prepared on the going concern basis.
Unless the context indicates otherwise, all comparatives included in the
commentary above relate to the six months ended 30 September 2024.
Amounts represented on a neutral currency basis for income statement items
assume that the relevant average exchange rates for the six months ended 30
September 2024 remain the same as those in the prior period. Amounts
represented on a neutral currency basis for balance sheet items assume that
the relevant closing exchange rates as at 30 September 2024 remain the same as
those at 31 March 2024.
Pro-forma financial information was prepared for illustrative purposes and
because of its nature may not fairly present the issuer's financial position,
changes in equity, or results of operations.
Foreign currency impact
The Group's reporting currency is Pounds Sterling. Certain of the Group's
operations are conducted by entities outside the UK. The results of operations
and the financial condition of these individual companies are reported in the
local currencies in which they are domiciled, including Rands, Australian
Dollars, Euros, US Dollars and Indian Rupee. These results are then translated
into Pounds Sterling at the applicable foreign currency exchange rates for
inclusion in the Group's combined consolidated financial statements. In the
case of the income statement, the weighted average rate for the relevant
period is applied and, in the case of the balance sheet, the relevant closing
rate is used.
The following table sets out the movements in certain relevant exchange rates
against Pounds Sterling over the period:
30 Sept 2024 31 Mar 2024 30 Sept 2023
Currency Closing Average Closing Average Closing Average
per GBP1.00
South African Rand 23.40 23.96 23.54 22.99 23.48
23.11
Euro 1.20 1.15 1.16
1.18 1.17 1.16
US Dollar 1.34 1.28 1.26 1.26 1.22 1.26
Profit Forecast
Revenue momentum is expected to be underpinned by average book growth,
stronger client activity levels given expected improvement in GDP growth and
continued success in our client acquisition strategies, partly offset by the
effects of reducing global interest rates.
The Group currently expects:
• Group ROE to be c.14.0% and ROTE to be c.16.0%. Investec Limited is
expected to report ROE of c.19.0%, and Investec plc is expected to report ROTE
of c.13.5% in line with 1H2025
• Overall costs to be well managed in the context of inflationary
pressures and continued investment in the business, with cost to income ratio
expected to be between 51.0% and 53.0%
• The credit loss ratio to be within the through-the-cycle (TTC) range
of 25bps to 45bps. Investec Limited is expected to be close to the lower end
of the TTC range of 15bps to 35bps. Investec plc credit loss ratio is expected
to be between 50bps to 60bps range.
The Group has maintained strong capital and liquidity levels and is well
positioned to continue supporting our clients and build to scale our
identified growth opportunities, in an improving economic environment.
The basis of preparation of this statement and the assumptions upon which it
was based are set out below. This statement is subject to various risks and
uncertainties and other factors - these factors may cause the Group's actual
future results, performance or achievements in the markets in which it
operates to differ from those expressed in this Profit Forecast.
Any forward-looking statements made are based on the knowledge of the Group at
20 November 2024.
This forward-looking statement represents a profit forecast under the Listing
Rules of the UK's Financial Conduct Authority. The Profit Forecast relates to
the year ending 31 March 2025.
The financial information on which the Profit Forecast was based is the
responsibility of the Directors of the Group and has not been reviewed and
reported on by the Group's auditors.
Basis of preparation
The Profit Forecast has been properly compiled using the assumptions stated
below, and on a basis consistent with the accounting policies adopted in the
Group's 31 March 2024 audited annual financial statements, which are in
accordance with UK adopted international accounting standards and
International Financial Reporting Standards Accounting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB).
At 30 September 2024, UK adopted IAS are identical in all material respects to
current IFRS applicable to the Group, with differences only in the effective
dates of certain standards.
Assumptions
The Profit Forecast has been prepared on the basis of the following
assumptions during the forecast period:
Factors outside the influence or control of the Investec Board:
• There will be no material change in the political and/or economic
environment that would materially affect the Investec Group
• There will be no material change in legislation or regulation
impacting on the Investec Group's operations or its accounting policies
• There will be no business disruption that will have a significant
impact on the Investec Group's operations, whether for the economic effects of
increased geopolitical tensions or otherwise
• The Rand/Pound Sterling, Euro/Pound, INR/Pound and US Dollar/Pound
Sterling exchange rates and the tax rates remain materially unchanged from the
prevailing rates detailed above
• There will be no material changes in the structure of the markets,
client demand or the competitive environment
• There will be no material change to the facts and circumstances
relating to legal proceedings and uncertain tax matters.
• There have been no material changes to the Group's principal risks as
disclosed on pages 8 to 26 of the Investec Group Risk and Governance report
for the year ended 31 March 2024.
Estimates and judgements
In preparation of the Profit Forecast, the Group makes estimations and applies
judgement that could affect the reported amount of assets and liabilities
within the reporting period. Key areas in which judgement is applied include:
• Valuation of unlisted investments primarily in private equity, direct
investments portfolios and embedded derivatives. Key valuation inputs are
based on the most relevant observable market inputs, adjusted where necessary
for factors that specifically apply to the individual investments and
recognising market volatility
• The determination of ECL against assets that are carried at amortised
cost and ECL relating to debt instruments at fair value through other
comprehensive income (FVOCI) involves the assessment of future cash flows, the
underlying model assumptions and economic scenarios all which are judgmental
in nature
• Valuation of investment properties is performed by capitalising the
budgeted net income of the property at the market related yield applicable at
the time
• The Group's income tax charge and balance sheet provision are
judgmental in nature. This arises from certain transactions for which the
ultimate tax treatment can only be determined by final resolution with the
relevant local tax authorities. The Group recognises in its tax provision
certain amounts in respect of taxation that involve a degree of estimation and
uncertainty where the tax treatment cannot finally be determined until a
resolution has been reached by the relevant tax authority. The carrying amount
of this provision is often dependent on the timetable and progress of
discussions and negotiations with the relevant tax authorities, arbitration
processes and legal proceedings in the relevant tax jurisdictions in which the
Group operates. Issues can take many years to resolve and assumptions on the
likely outcome would therefore have to be made by the Group. Where
appropriate, the Group has utilised expert external advice as well as
experience of similar situations elsewhere in making any such provisions
• Determination of interest income and interest expense using the
effective interest rate method involves judgement in determining the timing
and extent of future cash flows
• There will be no business disruption that will have a significant
impact on the Investec Group's operations, whether due to the economic effects
of increased geopolitical tensions or otherwise.
Accounting policies, significant judgements and disclosures
These reviewed condensed combined consolidated financial results have been
prepared in terms of the recognition and measurement criteria of International
Financial Reporting Standards (IFRS) and the presentation and disclosure
requirements of IAS 34, "Interim Financial Reporting" and IFRS as adopted by
the UK which comply with IFRS as issued by the IASB. At 30 September 2024, UK
adopted IFRS are identical in all material respects to current IFRS applicable
to the Group, with differences only in the effective dates of certain
standards.
The accounting policies applied in the preparation of the results for the six
months ended 30 September 2024 are consistent with those in the audited
financial statements for year ended 31 March 2024.
The financial results have been prepared under the supervision of Nishlan
Samujh, the Group Finance Director. The interim financial statements for the
six months ended 30 September 2024 are available on the Group's website:
www.investec.com
Proviso
• Please note that matters discussed in this announcement may contain
forward-looking statements which are subject to various risks and
uncertainties and other factors, including, but not limited to:
- changes in the political and/or economic environment that would
materially affect the Investec Group
- changes in legislation or regulation impacting the Investec Group's
operations or its accounting policies
- changes in business conditions that will have a significant impact on
the Investec Group's operations
- changes in exchange rates and/or tax rates from the prevailing rates
outlined in this announcement
- changes in the structure of the markets, client demand or the
competitive environment
• A number of these factors are beyond the Group's control
• These factors may cause the Group's future results, performance or
achievements in the markets in which it operates to differ from those
expressed or implied
• Any forward-looking statements made are based on the knowledge of the
Group at 20 November 2024
• The information in the Group's announcement for the six months ended
30 September 2024, which was approved by the Board of Directors on 20 November
2024, does not constitute statutory accounts as defined in Section 435 of the
UK Companies Act 2006. The 31 March 2024 financial statements were filed with
the registrar and were unqualified with the audit report containing no
statements in respect of sections 498(2) or 498(3) of the UK Companies Act
• The financial information on which forward-looking statements are
based is the responsibility of the Directors of the Group and has not been
reviewed and reported on by the Group's auditors.
This announcement is available on the Group's website:
www.investec.com
Definitions
• Adjusted operating profit refers to operating profit before goodwill,
acquired intangibles and strategic actions and after adjusting for earnings
attributable to other non-controlling interests. Non-IFRS measures such as
adjusted operating profit are considered as pro-forma financial information as
per the JSE Listing Requirements. The pro-forma financial information is the
responsibility of the Group's Board of Directors. Pro-forma financial
information was prepared for illustrative purposes and because of its nature
may not fairly present the issuer's financial position, changes in equity or
results of operations
• Adjusted earnings is calculated by adjusting basic earnings
attributable to shareholders for the amortisation of acquired intangible
assets, non-operating items including strategic actions, and earnings
attributable to perpetual preference shareholders and other additional tier 1
security holders
• Adjusted basic earnings per share is calculated as adjusted earnings
attributable to shareholders divided by the weighted average number of
ordinary shares in issue during the year
• Headline earnings is adjusted earnings plus the after tax financial
effect of strategic actions and the amortisation of acquired intangible
assets. Headline earnings is an earnings measure required to be calculated and
disclosed by the JSE and is calculated in accordance with the guidance
provided in Circular 1/2023
• Headline earnings per share (HEPS) is calculated as headline earnings
divided by the weighted average number of ordinary shares in issue during the
year
• Basic earnings is earnings attributable to ordinary shareholders as
defined by IAS33 "Earnings Per Share"
• Dividend payout ratio is calculated as the dividend per share divided
by adjusted earnings per share
• Pre-provision adjusted operating profit is calculated as total
operating income before expected credit loss impairment charges, net of
operating costs and net of operating profits or losses attributable to other
non-controlling interests
• The credit loss ratio is calculated as expected credit loss (ECL)
impairment charges on gross core loans as a percentage of average gross core
loans subject to ECL
• Revenue refers to operating income as found on the face of the
condensed combined consolidated income statement
• The cost to income ratio is calculated as operating costs divided by
operating income before expected credit loss impairment charges (net of
operating profits or losses attributable to other non-controlling interests)
• Return on average ordinary shareholders' equity (ROE) is calculated as
adjusted earnings attributable to ordinary shareholders divided by average
ordinary shareholders' equity
• Return on average tangible ordinary shareholders' equity (ROTE) is
calculated as adjusted earnings attributable to ordinary shareholders divided
by average tangible ordinary shareholders' equity
• Core loans is defined as net loans to customers plus net own
originated securitised assets
• Cash and near cash includes cash, near cash (other 'monetisable
assets' which largely include short-dated trading assets) and central bank
cash placements and guaranteed liquidity
• NCI is non-controlling interests.
Financial assistance
Shareholders are referred to Special Resolution number 3, which was approved
at the annual general meeting held on 8 August 2024, relating to the
provision of direct or indirect financial assistance in terms of Section 45 of
the South African Companies Act, No 71 of 2008 to related or inter-related
companies. Shareholders are hereby notified that in terms of S45(5)(a) of the
South African Companies Act, the Boards of Directors of Investec Limited and
Investec Bank Limited provided such financial assistance during the period
1 April 2023 to 31 March 2024 to various Group subsidiaries.
Exchange rate impact on statutory results
Exchange rates between local currencies and Pounds Sterling have fluctuated
over the period. The most significant impact arises from the volatility of the
Rand. The average Rand: Pound Sterling exchange rate over the period has
appreciated by 0.3% against the comparative 30 September 2023, and the closing
rate has depreciated by 3.6% since 31 March 2024. The following tables provide
an analysis of the impact of the Rand on our reported numbers.
Results in Pounds Sterling Results in Rands
Total Group Six months to 30 Sept 2024 Six months to 30 Sept 2023 % Neutral currency^ Six months to 30 Sept 2024 Neutral Six months to 30 Sept 2024 Six months to 30 Sept 2023 %
change currency change
%
change
Adjusted operating profit before taxation (million) £475 £453 4.7% £473 4.4% R11 105 R10 640 4.4%
Earnings attributable to shareholders (million) £351 £615 (42.9%) £351 (42.9%) R8 222 R14 435 (43.0%)
Adjusted earnings attributable to shareholders (million) £338 £330 2.5% £337 2.1% R7 904 R7 737 2.2%
Adjusted earnings per share 39.5p 38.7p 2.1% 39.4p 1.8% 924c 908c 1.8%
Basic earnings per share 36.6p 69.6p (47.4%) 36.5p (47.6%) 856c 1635c (47.6%)
Headline earnings per share 36.6p 36.9p (0.8%) 36.5p (1.1%) 855c 859c (0.5%)
Results in Pounds Sterling Results in Rands
At 30 Sept 2024 At 31 March 2024* % Neutral currency^^ At 30 Sept 2024 Neutral At 30 Sept 2024 At 31 March 2024* %
change currency change
%
change
Net asset value per share 575.7p 563.9p 2.1% 573.2p 1.6% 13 302c 13 511c (1.5%)
Tangible net asset value per share 491.6p 477.5p 3.0% 489.1p 2.4% 11 358c 11 441c (0.7%)
Total equity (million) £5 668 £5 474 3.5% £5 594 2.2% R130 960 R131 159 (0.2%)
Total assets (million)* £58 114 £56 569 2.7% £57 114 1.0% R1 342 730 R1 355 414 (0.9%)
Core loans (million) £31 731 £30 901 2.7% £31 196 1.0% R733 147 R740 401 (1.0%)
Cash and near cash balances (million) £17 164 £16 359 4.9% £16 900 3.3% R396 574 R391 978 1.2%
Customer accounts (deposits) (million) £40 438 £39 508 2.4% £39 766 0.7% R934 324 R946 626 (1.3%)
^ For income statement items we have used the average Rand:
Pound Sterling exchange rate that was applied in the prior period, i.e. 23.48.
^^ For balance sheet items we have assumed that the Rand: Pound
Sterling closing exchange rate has remained neutral since 31 March 2024.
* Restated as detailed below.
Condensed combined consolidated income statement
£'000 Six months to Six months to Year to
30 Sept 2024
30 Sept 2023^ 31 March 2024
Interest income 2 127 120 1 972 340 4 124 150
Interest expense (1 442 735) (1 301 460) (2 785 457)
Net interest income 684 385 670 880 1 338 693
Fee and commission income 252 260 225 672 482 668
Fee and commission expense (30 672) (66 481)
(29 611)
Investment income 63 153 22 436 60 381
Share of post-taxation profit of associates and joint venture holdings 35 214 3 241 55 949
Trading income arising from
- customer flow 74 287 94 575
131 712
- balance sheet management and other trading activities 22 327 17 933 41 496
Other operating income/(loss) 1 656
(230) 1 961
Operating income 1 102 610 1 004 896 2 046 379
Expected credit loss impairment charges (66 897) (46 291)
(79 113)
Operating income after expected credit loss impairment charges 1 035 713 958 605 1 967 266
Operating costs (560 280) (556 108) (1 120 245)
Operating profit before goodwill and acquired intangibles 475 433 402 497 847 021
Amortisation of acquired intangibles -
(543) (1 483)
Amortisation of acquired intangibles arising on equity accounting -
(5 679) (5 679)
Amortisation of acquired intangibles reported by associate* -
(6 359) (6 945)
Acquisition related and integration costs within associate* -
(7 195) (9 631)
Financial impact of strategic actions (4 406) - -
Closure and rundown of the Hong Kong direct investments business 2 304
(1 269) (785)
Profit before taxation from continuing operations 450 525 404 258 822 498
Taxation (98 318) (88 971) (171 187)
Taxation on operating profit before goodwill and acquired intangibles (98 318) (89 123) (172 066)
Taxation on acquired intangibles and net gain on distribution of associate to - 152 879
shareholders
Profit after taxation from continuing operations 352 207 315 287 651 311
Profit after taxation and financial impact of strategic actions from - 311 367 302 877
discontinued operations**
Operating profit before non-controlling interests from discontinued operations - 45 824 45 824
Financial impact of strategic actions net of taxation from discontinued - 265 543 257 053
operations
Profit after taxation from total Group 352 207 626 654 954 188
Profit attributable to non-controlling interests
(712) (4) (1 382)
Profit attributable to non-controlling interests of discontinued operations -
(11 766) (11 766)
Earnings of total Group attributable to shareholders 351 495 614 884 941 040
Earnings attributable to ordinary shareholders 313 004 593 230 891 964
Earnings attributable to perpetual preferred securities and other Additional 38 491 21 654 49 076
Tier 1 security holders
^ Restated
* The lines 'amortisation of acquired intangibles reported by
associate' and 'acquisition related and integration costs within associate'
reported in the prior year as 'financial impact of strategic actions' have
been disaggregated to provide information at a more granular level.
** Refer to discontinued operations disclosure
Earnings per share
Six months to Six months to Year to
30 Sept 2024
30 Sept 2023 31 March 2024
Basic earnings for total Group per share - pence 36.6 69.6 105.3
Diluted basic earnings for total Group per share - pence 35.3 67.0
101.0
Basic earnings for continuing operations per share - pence 36.6 34.5 71.0
Diluted basic earnings for continuing operations per share - pence 35.3 33.2 68.1
Combined consolidated statement of total comprehensive income
£'000 Six months to Six months to Year to
30 Sept 2024
30 Sept 2023^ 31 March 2024
Profit after taxation 352 207 626 654 954 188
Other comprehensive income:
Items that may be reclassified to the income statement
Fair value movements on cash flow hedges taken directly to other comprehensive (4 510) (15 308) (16 585)
income*
Fair value movements on debt instruments at FVOCI taken directly to other 457 (9 047) 11 359
comprehensive income*
Gain on realisation of debt instruments at FVOCI recycled through the income (2 873) (4 789)
statement* (383)
Foreign currency adjustments on translating foreign operations 30 832 (51 920) (139 257)
Items that will never be reclassified to the income statement
Share of other comprehensive (loss)/income of associates and joint venture (3 741) - 257
holdings
Fair value movements on equity instruments at FVOCI taken directly to other 4 871 (14 415)
comprehensive income* (338)
Movement in post-retirement benefit liabilities* - -
(362)
Net (loss)/gain attributable to own credit risk* 866 748
(220)
Total comprehensive income 379 513 548 034 791 144
Total comprehensive income attributable to ordinary shareholders 340 463 553 179 767 726
Total comprehensive income/(loss) attributable to non-controlling interests 559 (26 799) (25 658)
Total comprehensive income attributable to perpetual preferred securities and 38 491 21 654 49 076
Other Additional Tier 1 security holders
Total comprehensive income 379 513 548 034 791 144
^ Restated
* These amounts are net of taxation of a tax credit of £3.0
million (30 September 2023: tax expense £14.2 million; 31 March 2024: tax
expense £17.3 million).
Condensed combined consolidated balance sheet
At 30 Sept 2024 31 March 2024^ 30 Sept 2023^
£'000
Assets
Cash and balances at central banks 4 807 365 6 279 088 5 335 622
Loans and advances to banks 1 132 894 1 063 745 1 441 768
Non-sovereign and non-bank cash placements 425 027 451 482 396 311
Reverse repurchase agreements and cash collateral on securities borrowed 4 213 008 4 381 520 4 666 740
Sovereign debt securities 6 272 249 4 943 147 5 201 188
Bank debt securities 519 541 596 436 718 365
Other debt securities 1 029 964 1 148 147 1 257 697
Derivative financial instruments 1 184 328 811 499 1 272 946
Securities arising from trading activities 2 084 759 1 596 260 1 777 342
Loans and advances to customers 31 435 870 30 645 313 30 719 600
Own originated loans and advances to customers securitised 306 081 269 034 281 543
Other loans and advances 139 028 134 310
117 513
Other securitised assets 63 627 66 704 72 443
Other financial instruments at fair value through profit or loss in respect 194 415 154 738 133 233
of liabilities to customers^^
Investment portfolio^^ 753 525 807 030 838 350
Interests in associated undertakings and joint venture holdings 873 865 858 420 828 093
Current taxation assets 61 077 64 378 70 415
Deferred taxation assets 202 081 204 861 200 544
Other assets 1 963 143 1 658 456 1 931 984
Property and equipment 236 814 238 072 222 133
Investment properties 113 897 105 975
111 157
Goodwill 74 134 75 367 76 085
Software 9 883 9 707 10 063
Non-current assets classified as held for sale 17 574 22 270 3 262
58 114 149 56 569 162 57 701 194
Liabilities
Deposits by banks 2 843 008 3 446 776 3 886 578
Derivative financial instruments 1 186 243 1 005 712 1 532 021
Other trading liabilities 1 605 722 1 369 332 1 363 942
Repurchase agreements and cash collateral on securities lent 1 311 433 915 208 892 434
Customer accounts (deposits) 40 438 009 39 507 805 39 907 270
Debt securities in issue 1 460 896 1 541 194 1 491 065
Liabilities arising on securitisation of own originated loans and advances 220 106 208 571 170 095
Liabilities arising on securitisation of other assets 67 988 76 084
71 751
Current taxation liabilities 56 945 72 697 50 294
Deferred taxation liabilities 14 212 5 198 20 295
Other liabilities 2 042 214 1 822 981 1 989 662
Liabilities to customers under investment contracts^^ 187 981 154 889 133 233
51 434 757 50 122 114 51 512 973
Subordinated liabilities 1 011 339 972 806 1 013 237
52 446 096 51 094 920 52 526 210
Equity
Ordinary shareholders' equity^^^ 4 948 016 4 760 678 4 692 552
Perpetual preference share capital and premium 130 923 127 136 131 437
Shareholders' equity excluding non-controlling interests 5 078 939 4 887 814 4 823 989
Other Additional Tier 1 securities in issue 589 264 586 103 352 168
Non-controlling interests 325
(150) (1 173)
Total equity 5 668 053 5 474 242 5 174 984
Total liabilities and equity 58 114 149 56 569 162 57 701 194
^ Restated
^^ At 31 March 2024 the Group reassessed the order of liquidity
within the balance sheet and moved 'Investment portfolio' to below 'Other
financial instruments at fair value through profit or loss in respect of
liabilities to customers' as it was found to be less liquid than the items
that were listed above it. The reorder has now been applied to 30 September
2023. In addition, 'Insurance liabilities, including unit-linked liabilities'
has been aggregated with 'Liabilities to customers under investment
contracts'.
^^^ The detailed breakdown of 'ordinary shareholders' equity' was not
considered to provide useful information to decision makers and therefore the
lines have been condensed to simplify the condensed results.
Included in 'loans and advances to banks' £43 million (March 24: £19
million), 'reverse repurchase agreements and cash collateral on securities
borrowed' £128 million (March 24: £88 million), 'sovereign debt securities'
£841 million (March 24: £461 million), 'bank debt securities' £66 million
(March 24: £81 million), 'other debt securities' £73 million (£41 million),
'securities arising from trading activities' £165 million (March 24: £113
million) and 'other loans and advances' £2 million (March 24: £3 million)
are assets provided as collateral where the transferee has the right to resell
or repledge.
Condensed combined consolidated statement of changes in equity
For the six months to 30 September 2024 Ordinary shareholders' equity^^ Perpetual preference share capital and share premium Shareholders' equity excluding non-controlling interests Other Additional Tier 1 securities in issue Non-controlling interests Total equity
Balance at the beginning of the period 4 760 678 127 136 4 887 814 586 103 325 5 474 242
Total comprehensive income 369 405 3 787 373 192 5 762 559 379 513
Share-based payments adjustments 6 125 - 6 125 - - 6 125
Dividends paid to ordinary shareholders (172 047) - (172 047) - - (172 047)
Dividends declared to perpetual preference shareholders and Other Additional (38 491) 5 727 (32 764) 32 764 - -
Tier 1 security holders
Dividends paid to perpetual preference and Other Additional Tier 1 security - (5 727) (5 727) (32 764) - (38 491)
holders
Dividends paid to non-controlling interests - - - - (1 276) (1 276)
Cancellation of special converting shares - - -
(4) (4) (4)
Issue of Other Additional Tier 1 security instruments - - - 25 968 - 25 968
Redemption of Other Additional Tier 1 security instruments - - - (28 569) - (28 569)
Net equity impact of non-controlling interest movements - - - - 242 242
Movement of treasury shares 22 350 - 22 350 - - 22 350
Balance at the end of the period 4 948 016 130 923 5 078 939 589 264 (150)
5 668 053
For the six months to 30 September 2023^ Ordinary shareholders' equity^^ Perpetual preference share capital and share premium Shareholders' equity excluding non-controlling interests Other Additional Tier 1 securities in issue Non-controlling interests Total equity
Balance at the beginning of the period 4 322 881 136 259 4 459 140 398 568 450 839 5 308 547
Total comprehensive income 586 715 (5 093) 581 622 (6 789) (26 799) 548 034
Share-based payments adjustments 8 909 - 8 909 - - 8 909
Dividends paid to ordinary shareholders (161 086) - (161 086) - - (161 086)
Dividends declared to perpetual preference shareholders and Other Additional (21 654) 4 838 (16 816) 16 816 - -
Tier 1 security holders
Dividends paid to perpetual preference and Other Additional Tier 1 security - (4 838) (4 838) (16 816) - (21 654)
holders
Dividends paid to non-controlling interests - - - - (12 599) (12 599)
Share buyback of ordinary share capital (17 408) - (17 408) - - (17 408)
Repurchase of perpetual preference shares 271 257 - - 257
(14)
Net equity impact of non-controlling interest movements - - - - 360 360
Movement of treasury shares (20 898) - (20 898) - - (20 898)
Derecognition of non-controlling interests on deconsolidation of subsidiary - - - - (412 974) (412 974)
company
Other equity movements (4 893) - (4 893) (39 611) - (44 504)
Balance at the end of the period 4 692 552 131 437 4 823 989 352 168 (1 173) 5 174 984
^ Restated
^^ The detailed breakdown of 'ordinary shareholders' equity' was not
considered to provide useful information to decision makers and therefore the
additional columns previously disclosed have been condensed to simplify the
condensed results.
Condensed combined consolidated statement of changes in equity continued
For the year to 31 March 2024 Ordinary shareholders' equity^^ Perpetual preference share capital and share premium Shareholders' equity excluding non-controlling interests Other Additional Tier 1 securities in issue Non-controlling interests Total equity
Balance at the beginning of the year 4 322 881 136 259 4 459 140 398 568 450 839 5 308 547
Total comprehensive income 839 523 (9 383) 830 140 (13 338) (25 658) 791 144
Share-based payments adjustments 2 664 - 2 664 - - 2 664
Dividends paid to ordinary shareholders (296 712) - (296 712) - - (296 712)
Dividends declared to perpetual preference shareholders and Other Additional (49 076) 10 441 (38 635) 38 635 - -
Tier 1 security holders
Dividends paid to perpetual preference and Other Additional Tier 1 security - (10 441) (10 441) (38 635) - (49 076)
holders
Dividends paid to non-controlling interests - - - - (12 599) (12 599)
Share buyback of ordinary share capital (17 408) - (17 408) - - (17 408)
Repurchase of perpetual preference shares 260 246 - - 246
(14)
Issue of Other Additional Tier 1 security instruments - - - 382 130 - 382 130
Redemption of Other Additional Tier 1 security instruments - - - (141 892) - (141 892)
Transaction with equity holders (2 971) - (2 971) - - (2 971)
Net equity impact of non-controlling interest movements - - - - 717 717
Gain on Additional Tier 1 security instruments callback 1 420 - 1 420 - - 1 420
Movement of treasury shares (39 629) - (39 629) - - (39 629)
Derecognition of non-controlling interests on deconsolidation of subsidiary - - - - (412 974) (412 974)
company
Other equity movements - - - (39 365) - (39 365)
Balance at the end of the year 4 760 678 127 136 4 887 814 586 103 325
5 474 242
^^ The detailed breakdown of 'ordinary shareholders' equity' was not
considered to provide useful information to decision makers and therefore the
additional columns previously disclosed have been condensed to simplify the
condensed results.
Condensed combined consolidated cash flow statement
£'000 Six months to Six months to Year to
30 Sept 2023
31 March 2024
30 Sept 2024
Cash (outflow)/ inflow from operating activities
Profit before taxation adjusted for non-cash, non-operating items and other 549 765 548 692 997 131
required adjustments
Taxation paid (92 527) (97 780) (178 708)
Increase in operating assets (2 241 057) (3 064 806) (2 390 759)
Increase in operating liabilities 594 188 2 101 623 1 703 789
Net cash (outflow)/inflow from operating activities (1 189 631) (512 271) 131 453
Cash flows from investing activities
Cash flow on disposal of Group operations - 10 998
11 870
Cash flow on acquisition of Group operations, net of cash acquired - (29 348) (28 559)
Derecognition of cash on disposal of subsidiaries - (174 953) (174 953)
Cash flows from other investing activities (6 630) (17 728)
11 142
Net cash inflow/(outflow) from investing activities 11 142 (199 933) (209 370)
Cash flows from financing activities
Dividends paid to ordinary shareholders (172 047) (161 086) (296 712)
Dividends paid to other equity holders (39 717) (34 253) (57 808)
Proceeds on issue of other Additional Tier 1 securities in issue 25 968 - 382 130
Repayment of other Additional Tier 1 securities in issue (28 569) - (140 472)
Share buyback of ordinary share capital - (17 408) (17 408)
Proceeds on subordinated liabilities raised - 21 295 52 169
Repayment of subordinated liabilities - (26 409) (153 688)
Cash flows from other financing activities (17 545) (139 250) (140 267)
Net cash outflow from financing activities (231 910) (357 111) (372 056)
Effects of exchange rates on cash and cash equivalents 20 244 (58 769) (95 500)
Net decrease in cash and cash equivalents (1 390 155) (1 128 084) (545 473)
Cash and cash equivalents at the beginning of the period 7 252 177 7 797 650 7 797 650
Cash and cash equivalents at the end of the period 5 862 022 6 669 566 7 252 177
In line with best practice, the detail of the interim cash flow statement has
been expanded.
Headline earnings per share
£'000 Six months to Six months to Year to
30 Sept 2024
30 Sept 2023 31 March 2024
Headline earnings
Earnings attributable to shareholders 351 495 614 884 941 040
Financial impact of strategic actions of discontinued operations excluding - (280 737) (280 737)
implementation costs
Taxation on strategic actions - 2 359 8 337
Dividends payable to perpetual preference shareholders and Other Additional (38 491) (21 654) (49 076)
Tier 1 security holders (other equity holders)
Property revaluation, net of taxation and non-controlling interests**
(466) (311) (1 958)
Gain on repurchase of perpetual preference shares - 1 406
(14)
Headline earnings attributable to ordinary shareholders 312 538 314 527 619 012
Weighted average number of shares in issue during the year 854 984 190 851 765 254 848 806 687
Headline earnings per share - pence*** 36.6 36.9 72.9
Diluted headline earnings per share - pence*** 35.3 35.5 70.0
Prior to becoming a subsidiary, the investment in Capitalmind associates met
the definition of a venture capital investment as defined in the Headline
Earnings Circular 1/2023. During the prior period a gain of £4mn was
recognised as a result of a stepped acquisition of Capitalmind from 30% to 60%
that required a revaluation of the previously held 30%. This amount was
included in headline earnings.
** Taxation on property revaluation headline earnings adjustments
amounted to £0.2 million (September 2023: £0.1 million; March 2024: £0.7
million) no impact on earnings attributable to non-controlling interests. The
amount includes property revaluations included in equity accounted earnings.
*** Headline earnings per share and diluted headline earnings per
share have been calculated and is disclosed in accordance with the JSE listing
requirements, and in terms of circular 1/2023 issued by the South African
Institute of Chartered Accountants.
Adjusted earnings per share
£'000 Six months to Six months to Year to
30 Sept 2024
30 Sept 2023 31 March 2024
Adjusted earnings
Earnings attributable to shareholders 351 495 614 884 941 040
Amortisation of acquired intangibles - 6 967 7 907
Amortisation of acquired intangibles arising on equity accounting 5 679 - 5 679
Amortisation of acquired intangibles reported by associate 6 359 - 6 945
Acquisition related and integration costs within associate 7 195 - 9 631
Financial impact of strategic actions 4 406 - -
Closure and rundown of the Hong Kong direct investments business 1 269 (2 304) 785
Financial impact of strategic actions of discontinued operations - (267 902) (265 390)
Taxation on acquired intangibles and strategic actions -
(152) (879)
Taxation on acquired intangibles and strategic actions of discontinued - 744 6 722
operations
Dividends payable to perpetual preference shareholders and Other Additional (38 491) (21 654) (49 076)
Tier 1 security holders (other equity holders)
Accrual adjustment on earnings attributable to other equity holders* -
(754) (866)
Adjusted earnings attributable to ordinary shareholders 337 912 329 829 662 498
Weighted average number of shares in issue during the year 854 984 190 851 765 254 848 806 687
Adjusted earnings per share - pence*** 39.5 38.7 78.1
Diluted adjusted earnings per share - pence*** 38.1 37.3 74.9
Combined consolidated segmental analysis
Segmental geographical and business analysis of adjusted operating profit
before goodwill, acquired intangibles, non-operating items, taxation and after
non-controlling interests.
Private Client
Specialist Banking
For the six months to 30 September 2024 Wealth & Investment Private Banking Corporate, Investment Banking and Other Group Investments Group Costs Total Group % change % of total
£'000
UK and Other 32 332 25 781 176 558 5 954 (17 933) 222 692 11.6% 46.9%
Southern Africa 22 228 78 982 145 584 13 328 (8 093) 252 029 24.2% 53.1%
Continuing operations adjusted operating profit 54 560 104 763 322 142 19 282 (26 026) 474 721 17.9%
100.0%
Discontinued operations* - - - - - - -%
(100.0%)
Total Group adjusted operating profit 54 560 104 763 322 142 19 282 (26 026) 474 721 4.7%
100.0%
Non-controlling interests of continuing operations 712
Operating profit before goodwill and acquired intangibles 475 433
% change (16.5) % (0.8) % 7.9 % >100.0% 23.7 % 4.7 %
% of total 11.5% 22.1% 67.9% 4.1% (5.5) %
100.0%
Private Client
Specialist Banking
For the six months to 31 September 2023 Wealth & Investment Private Banking^ Corporate, Investment Banking and Other^ Group Investments Group Costs Total Group % of total
£'000
UK and Other - 33 963 173 420 6 233 (14 052) 199 564 44.0%
Southern Africa 17 475 71 684 125 149 (4 389) (6 990) 202 929 44.8%
Continuing operations adjusted operating profit 17 475 105 647 298 569 1 844 (21 042) 402 493 88.8%
Discontinued operations* 47 828 - - 3 012 - 50 840 11.2%
Total Group adjusted operating profit 65 303 105 647 298 569 4 856 (21 042) 453 333
100.0%
Non-controlling interests of continuing operations 4
Non-controlling interests of discontinued operations 11 766
Operating profit before goodwill and acquired intangibles 465 103
Operating profit before non-controlling interests of continuing operations 402 497
Operating profit before non-controlling interests of discontinued operations 62 606
% of total 14.4% 23.3% 65.9% 1.1% (4.6) %
100.0%
* Refer to discontinued operations disclosure
^ Restated. Following a strategic review of our Private Capital
business, previously reported as part of our UK and Other Private Banking
segment, the business is now reported in the UK and Other Corporate,
Investment Banking & Other segment. The comparative period has been
restated to reflect this change.
Combined consolidated segmental geographical analysis of total assets and
total liabilities
At 30 September 2024 2023
£'mn UK and Other Southern Africa Total Group UK and Other Southern Africa Total Group
Total assets 30 103 28 011 58 114 29 435 28 266 57 701
Total liabilities 26 523 25 923 52 446 26 194 26 332 52 526
Combined consolidated segmental geographical analysis of operating income
Private Client
Specialist Banking
For the six months to 30 September 2024 Wealth & Investment Private Banking Corporate, Investment Banking and Other Group Investments Total Group
£'000
UK and Other 32 332 51 720 487 539 5 954 577 545
Southern Africa 70 737 177 992 263 007 13 329 525 065
Operating income 103 069 229 712 750 546 19 283 1 102 610
Private Client
Specialist Banking
For the six months to 30 September 2023 Wealth & Investment Private Banking Corporate, Investment Banking and Other Group Investments Total Group
£'000
UK and Other - 60 343 493 018 6 233 559 594
Southern Africa 59 210 149 444 240 788 (4 140) 445 302
Operating income 59 210 209 787 733 806 2 093 1 004 896
Pro-forma adjustments 35 855 - - 3 012 38 867
Operating income on a pro-forma basis 95 065 209 787 733 806 5 105 1 043 763
Pro-forma income statement
Given the nature of the IW&I UK and IPF transactions completed in the
prior period, the Group essentially retained similar economic interest to
these investments before and after the transactions. To provide information
that is more comparable to the current period, the prior period has been
presented on a pro-forma basis as if the transactions had been in effect from
the beginning of the prior period, i.e. IW&I UK has been presented as an
equity accounted investment and IPF as an investment at fair value through
profit or loss in the prior period.
£'000 Statutory income statement for the six months to Re-presentation of discontinued operation - IPF Re-presentation of discontinued operation - Investec Wealth & Investment Six months to 30 Sept 2023 Pro-forma
UK
30 Sept 2023
Net interest income 670 880 - - 670 880
Net fee and commission income 196 061 - - 196 061
Investment income 22 436 3 012 - 25 448
Share of post-taxation profit of associates and joint venture holdings 3 241 - 35 855 39 096
Trading income arising from
- customer flow 94 575 - - 94 575
- balance sheet management and other trading activities 17 933 - - 17 933
Other operating loss - -
(230) (230)
Operating income 1 004 896 3 012 35 855 1 043 763
Expected credit loss impairment charges (46 291) - - (46 291)
Operating income after expected credit loss impairment charges 958 605 3 012 35 855 997 472
Operating costs (556 108) - - (556 108)
Operating profit before goodwill and acquired intangibles 402 497 3 012 35 855 441 364
Operating profit before strategic actions and non-controlling interests of 62 606 (14 778) (47 828) -
discontinued operations*
Taxation on operating profit before goodwill and acquired intangibles (89 123) - - (89 123)
Taxation on operating profit before goodwill and acquired intangibles of (11 973) - 11 973 -
discontinued operations
364 007 (11 766) - 352 241
Profit attributable to non-controlling interests - -
(4) (4)
Profit attributable to non-controlling interests of discontinued operations* (11 766) 11 766 - -
352 237 - - 352 237
Earnings attributable perpetual preference shareholders and Other Additional (22 408) - - (22 408)
Tier 1 security holders (other equity holders)
Adjusted earnings attributable to ordinary shareholders before goodwill, 329 829 - - 329 829
acquired intangibles and non-operating items
* Refer to discontinued operations disclosure
Discontinued operations
During the 2024 financial year, the Group had two significant strategic
actions which have been reflected as discontinued operations.
The effective date of the combination of Investec Wealth & Investment
Limited and Rathbones Group Plc was 21 September 2023, at which point the
Group deconsolidated its 100% holding in Investec Wealth & Investment
Limited and in return acquired a 41.25% interest in Rathbones Group plc which
is accounted for as an equity investment.
The completion date of the sale of the Investec Property Fund (IPF) management
companies was 6 July 2023 at which point the Group deconsolidated its existing
c.24.3% investment in IPF.
The Investec Wealth & Investment business and IPF have been disclosed as
discontinued operations. The Wealth & Investment business was disclosed in
the Wealth & Investment segment in the UK and other geography and the IPF
business was disclosed in the Group Investments segment in the Southern Africa
geography.
Reconciliation of profit after taxation and financial impact of strategic
actions from discontinued operations as disclosed in the income statement to
earnings from discontinued operations attributable to shareholders provided in
the tables below
For the six months to 30 September 2023
£'000
Operating profit before strategic actions and non-controlling interests 62 606
Amortisation of acquired intangibles (6 424)
Taxation on operating profit (11 973)
Taxation on mortization of acquired intangibles
1 615
Operating profit before strategic actions and non-controlling interests from 45 824
discontinued operations
Financial impact of strategic actions 267 902
Taxation on strategic actions (2 359)
Profit after taxation and financial impact of strategic actions from 311 367
discontinued operations
Profit attributable to non-controlling interests of discontinued operations (11 766)
Earnings from discontinued operations attributable to shareholders 299 601
The table below presents the income statement from discontinued operations
included in the total Group income statement for the six months to 30
September 2023.
For the six months to 30 September 2023
£'000 UK and Southern Total
Other Africa
Net interest income/(expense) 17 324 (6 194) 11 130
Net fee and commission income 161 610 13 088 174 698
Investment income - 3 390 3 390
Trading income/(loss) arising from
- customer flow - (9 749) (9 749)
- balance sheet management and other trading activities -
17 181 17 181
Operating income 178 934 17 716 196 650
Expected credit loss impairment charges -
(267) (267)
Operating income after expected credit loss impairment charges 178 934 17 449 196 383
Operating costs (131 106) (2 671) (133 777)
Operating profit before strategic actions and non-controlling interests 47 828 14 778 62 606
Profit attributable to non-controlling interests from discontinued operations - (11 766) (11 766)
Operating profit before strategic actions 47 828 3 012 50 840
Amortisation of acquired intangibles (6 424) - (6 424)
Financial impact of strategic actions 361 684 (93 782) 267 902
Profit/(loss) before taxation 403 088 (90 770) 312 318
Taxation on operating profit before strategic actions (11 973) - (11 973)
Taxation on financial impact of strategic actions and acquired intangibles 781 (1 525)
(744)
Earnings/(loss) from discontinued operations attributable to shareholders 391 896 (92 295) 299 601
Financial impact of strategic actions of discontinued operations
For the six months to 30 September 2023
£'000
Remeasurement on deconsolidation of IPF, net of gain on sale of IPF management (93 782)
business
Gain on the loss of control on the combination with Rathbones Group 361 684
Net financial impact of strategic actions of discontinued operations 267 902
Taxation on financial impact of strategic actions
(2 359)
Net financial impact of strategic actions of discontinued operations 265 543
Investec Wealth & Investment Limited
On 21 September 2023, the Investec Group successfully completed the all-share
combination of Investec Wealth & Investment Limited and Rathbones Group
Plc. On completion Rathbones issued new Rathbones shares in exchange for 100%
of Investec Wealth & Investment Limited share capital. Investec Group now
owns 41.25% of the economic interest in the enlarged Rathbones Group's share
capital, with Investec Group's voting rights limited to 29.9%.The Group's
holding in Rathbones Group Plc is equity accounted for as an interest in
associated undertakings and joint venture holdings in accordance with IAS 28.
Gain on loss of control of Investec Wealth & Investment Limited
For the six months to 30 September 2023
£'000
The gain is calculated as follows:
Fair value of % received in Rathbones Group 779 421
Net asset value of Investec Wealth & Investment previously consolidated (405 755)
(including goodwill)
Gain on the combination of Rathbones Group before taxation 373 666
Implementation costs (11 982)
Gain on combination of Rathbones Group before taxation 361 684
Taxation on gain
(834)
Gain on combination of Rathbones Group 360 850
Major classes of assets and liabilities
£'000 2023
Loans and advances to banks 172 595
Goodwill 242 355
Other assets 360 378
Other liabilities (369 573)
Net asset value of Investec Wealth & Investment previously consolidated 405 755
(including goodwill)
Remeasurement on deconsolidation of IPF, net of gain on sale of IPF management
business
The completion date of the sale of the IPF management companies was 6 July
2023 at which point the Group deconsolidated its current c.24.3% investment in
IPF. Historically, IPF has been controlled by the Group because of the power
over relevant activities held by the IPF management function which were, until
the current period, wholly owned by the Group and that the majority of
directors of IPF were associated with the Group. In the current period, the
management companies were sold into the fund, and as a result the Group lost
control of both these functions and the executive directors transferred
employment from Investec to IPF reducing the number of directors associated
with Investec to less than majority. The investment in IPF is now held as an
associate company. In accordance with the Group's accounting policies,
associates that are held with no strategic intention should be accounted for
at fair value through profit or loss by applying the venture capital exemption
as provided in IAS 28. The investment is disclosed in the investment portfolio
line on the balance sheet. Investec Limited, through its ordinary course of
business, has been classified as a venture capital entity and this exemption
provided in IAS 28 has been applied.
Loss on sale of IPF asset management function and deconsolidation
For the six months to 30 September 2023
£'000
The loss is calculated as follows:
Fair value of the consideration 34 330
Fair value of investment at 6 July 2023 61 035
Net asset value of IPF previously consolidated (including non-controlling (545 891)
interests)
Non-controlling interest derecognised previously included in the consolidation 412 974
of IPF at 6 July 2023
Foreign currency translation reserve recycled to the income statement on (55 377)
distribution
Loss before taxation and costs (92 929)
Implementation costs
(853)
Loss before taxation (93 782)
Taxation
(1 525)
Loss on sale of IPF management function and deconsolidation net of taxation (95 307)
and implementation costs
Major classes of assets and liabilities at date of deconsolidation
£'000 2023
Investment properties 568 568
Investment portfolio 425 863
Other assets 88 056
Deposits by banks (258 403)
Debt securities in issue (208 464)
Other liabilities (69 729)
Net asset value of IPF previously consolidated (including non-controlling 545 891
interests)
Balance sheet, cash flow statement and statement of total comprehensive income
restatements
All restatements, other than in respect of the aviation lease, only affect
September 2023.
Restatement of the application of hedge accounting and the correction of the
valuation of certain fair value instruments
It was identified that the application of hedge accounting (cash flow and fair
value hedging) applied in prior years, for certain portfolios within Investec
Bank Limited, did not meet the requirements to apply hedge accounting under
IAS 39 Financial Instruments: Recognition and Measurement. It was further
identified that certain financial instruments were incorrectly fair valued.
This hedge accounting matter was initially restated in the 30 September 2023
interim results but was subsequently revised for 31 March 2024 reporting to
accurately reflect the impact of this matter. This required a restatement to
the 30 September 2023 comparative interim period.
Accordingly, the related 'cash flow hedge reserve' and 'fair value reserve'
through OCI reserves totalling £15.8 million have been restated
retrospectively to 'retained income'. In addition, certain fair value hedge
adjustments made in the balance sheet to hedged items (£50.8 million) have
been reversed to 'retained income' and the valuation of a specific portfolio
of fair value instruments was corrected to retained income. These adjustments
resulted in a reduction of taxable income for certain prior periods to which
these matters relate to and resulted in a reduction in 'current taxation
liabilities' of £14.6 million recognised against 'retained income' for the
recovery of those income taxes. The associated deferred taxation of £1.8
million previously raised on the cash flow hedge reserve was also
derecognised. All changes were retrospectively restated. These changes have no
impact on the cash flow statement.
The Income statements Impacts are disclosed In the Income statement
restatement section.
Gross-up and gross-down of balance sheet line items
Gross-ups within the trading portfolio of equity securities and client trading
accounts
Certain client and exchange settlement balances and equity positions (long and
short equity positions) held were previously incorrectly offset (in terms of
IAS 32) and presented on a net basis. These have been grossed up to
appropriately reflect both the settlement receivables and payables as well as
the correct asset and liability positions. The gross up resulted in a £430.2
million increase in 'other assets' and 'other liabilities' and a £231.3
million increase in 'securities arising from trading activities' and 'other
trading liabilities'. This change has no impact on the income statement, cash
flow statement or statement of changes in equity.
Gross-down of capital guarantee products
Investec Bank Limited traded a capital guarantee product with clients. The
traded positions were incorrectly duplicated and booked on a gross basis to
'securities arising from trading activities' and 'derivative financial
instruments'. The capital guarantee represents a single derivative contract
that should be accounted for on a net basis in 'derivative financial
instruments' liabilities. An amount of £30.6 million was accordingly
adjusted downwards in 'securities arising from trading activities' and
'derivative financial instruments' to reflect a net derivative position. This
change has no impact on the income statement, cash flow statement or statement
of changes in equity.
Derecognition of derivative assets and liabilities
Post the review of the accounting treatment of an aviation lease structure, it
was identified that at September 2023 'derivative financial instruments'
assets of £41.8 million (March 2024: £42.4 million) and 'derivative
financial instruments' liabilities of £62.1 million (March 2024: £63.4
million) were incorrectly bifurcated from leases in the past. These have now
been derecognised in the comparative balances and included in the measurement
of associated lease contracts, leading to a reduction in 'other assets' of
£13.7m (March 2024: £13.0m) and an increase in 'other liabilities' of £6.6m
(March 2024: £6.3m). This change has no material impact on the income
statement, cash flow statement or statement of changes in equity.
Gross down of other securitised assets and customer accounts (deposits)
Investec Bank Limited consolidates securitisation vehicles. The cash held by
the vehicles was considered by management to be restricted cash and was
separately accounted for in the Group as 'customer accounts (deposits)' with
the corresponding entry in 'other securitised assets'. Following a
re-assessment of the current treatment, it was concluded that the accounting
treatment should be revised. Accordingly, an amount of £23.9 million was
adjusted downwards on each line. This change has no impact on the income
statement, cash flow statement (other than the consequential impact on
operating assets and operating liabilities, due to the changes in the balance
sheet line items) or statements of changes in equity.
Reclassifications and eliminations
Reclassification of a reverse repurchase agreement
Investec Bank Limited purchased listed bond positions and entered into a
future sale agreement to sell the positions back to the same counterparty at a
fixed price. The bond and the forward purchase were incorrectly accounted for
in 'sovereign debt securities' and 'derivative financial instruments' asset
respectively. The two separate positions of £241.9 million were reclassified
to 'reverse repurchase agreements and cash collateral on securities borrowed'
to more accurately reflect a collateralised lending transaction. This change
has no impact on the income statement, cash flow statement or statement of
changes in equity.
Reclassification of fully funded trading positions
Investec Limited enters into fully funded credit and equity linked trading
positions with clients. The positions were incorrectly accounted for as a
derivative as a fully funded position does not meet the definition of a
derivative as per IFRS 9 Financial Instruments. £847.2 million was
reclassified from 'derivative financial instruments' liabilities to 'other
trading liabilities'. This change has no impact on the income statement, cash
flow statement or statement of changes in equity.
Elimination of intergroup instruments
Investec Bank Limited holds debt and equity instruments issued by Investec plc
group. At September 2023 these were not eliminated on consolidation, therefore
the prior year balance sheet and statement of changes in equity have been
restated. The liabilities 'debt securities in issue' amounted to £13.9
million with the corresponding asset 'bank debt securities' value of
£13.9 million and the equity instruments 'Other Additional tier 1 securities
in issue' amounted to £39.6 million with asset 'bank debt securities' value
of £34.9 million. The difference in valuation of the equity instruments was
reflected in other comprehensive income. The correction has no material impact
on the income statement or cash flow statement.
Balance sheet, cash flow statement and statement of total comprehensive income
restatements (continued)
The impact of these changes on the 30 September 2023 and 31 March 2024 balance
sheet are:
At 30 September 2023 Restatement of the application of hedge accounting and the correction of the Gross-up and gross-down of balance sheet line items Reclassifications and eliminations At 30 September 2023
valuation of certain fair value instruments
as previously reported restated
£'000
Assets
Reverse repurchase agreements and cash collateral on securities borrowed 4 422 876 - 1 922 241 942 4 666 740
Sovereign debt securities 5 428 112 - - (226 924) 5 201 188
Bank debt securities 807 066 (35 250) (4 604) (48 847) 718 365
Other debt securities 1 273 232 (15 535) - - 1 257 697
Derivative financial instruments 1 329 833 - (41 807) (15 080) 1 272 946
Securities arising from trading activities 1 576 610 - 200 732 - 1 777 342
Other securitised assets 96 296 - (23 853) - 72 443
Deferred taxation assets 202 392 (1 848) - - 200 544
Other assets 1 515 533 - 416 451 - 1 931 984
Total assets 57 253 895 (52 633) 548 841 (48 909) 57 701 194
Liabilities
Derivative financial instruments 2 471 973 - (92 708) (847 244) 1 532 021
Other trading liabilities 285 463 - 231 297 847 182 1 363 942
Repurchase agreements and cash collateral on securities lent 890 512 - 1 922 - 892 434
Customer accounts (deposits) 39 935 727 - (28 457) - 39 907 270
Debt securities in issue 1 504 991 - - (13 926) 1 491 065
Current taxation liabilities 64 899 (14 605) - - 50 294
Other liabilities 1 563 748 (10 873) 436 787 - 1 989 662
Total liabilities 52 016 835 (25 478) 548 841 (13 988) 52 526 210
Equity
Shareholders' equity excluding non-controlling interests 4 715 017 (27 155) - 4 690 4 692 552
Other Additional Tier 1 securities in issue 391 779 - - (39 611) 352 168
Total equity 5 237 060 (27 155) - (34 921) 5 174 984
At 31 March 2024 Gross-up and gross-down of balance sheet line items At 31 March 2024
as previously reported restated
£'000
Assets
Derivative financial instruments 853 938 (42 439) 811 499
Other assets 1 672 582 (14 126) 1 658 456
Total assets 56 625 727 (56 565) 56 569 162
Liabilities
Derivative financial instruments 1 069 119 (63 407) 1 005 712
Other liabilities 1 816 139 6 842 1 822 981
Total liabilities 51 151 485 (56 565) 51 094 920
Balance sheet, cash flow statement and statement of total comprehensive income
restatements (continued)
The impact of the above changes on the 30 September 2023 statement of total
comprehensive income is:
Six months to 30 September 2023 Restatement of the application of hedge accounting and the correction of the Reclassifications and eliminations Six months to 30 September 2023
valuation of certain fair value instruments
as previously reported restated
£'000
Fair value movements on cash flow hedges taken directly to other comprehensive (17 759) 2 451 - (15 308)
income
Fair value movements on debt instruments at FVOCI taken directly to other (13 313) (424) 4 690 (9 047)
comprehensive income
Foreign currency adjustments on translating foreign operations (53 108) - (51 920)
1 188
Total comprehensive income 540 129 3 215 4 690 548 034
Income statement restatements
All restatements only affect September 2023.
Reclassifications between interest income, interest expense and trading
income/(loss)
The interest consequences of certain financial instrument liabilities were
incorrectly accounted for in the interest income line rather than the interest
expense line. This resulted in a reclassification of 'interest income' of
£17.8 million to 'interest expense'.
Fair value adjustments on certain derivative instruments, not formally
designated in a hedge relationship, were accounted for in either 'interest
income' or 'interest expense'. The fair value adjustments of £4.9 million
were reclassified to 'trading income arising from customer flow' and (£3.5
million) were reclassified to 'trading income arising from balance sheet
management and other trading activities'.
In addition, realised cash flows on interest rate swaps (formally designated
in a hedge relationship) were incorrectly grossed up and separately recognised
as 'interest income' and 'interest expense'. The two lines were appropriately
reduced for the gross cash flows of £169.0 million, and the net movement was
accounted for in either 'interest income' or 'interest expense' (depending if
it was an asset or liability being hedged).
Restatement of the application of hedge accounting and the correction of the
valuation of certain fair value instruments
It was identified that the application of hedge accounting (cash flow and fair
value hedging) applied in prior years, for certain portfolios within Investec
Bank Limited, did not meet the requirements to apply hedge accounting under
IAS 39 Financial Instruments: Recognition and Measurement.
As a result of not applying hedge accounting, adjustments previously made to
'interest income' of £10.3 million has been reclassified to 'trading
income/(loss) arising from customer flow'.
These reclassifications in the income statement for the prior period is shown
in the table that follows:
Income statement restatements (continued)
£'000 Six months to Reclassification between interest income and interest expense and trading Restatement of the application of hedge accounting and the correction of the Six months to
income valuation of certain fair value instruments
30 Sept 2023 30 Sept 2023
as previously reported restated
Interest income 2 157 746 (175 101) (10 305) 1 972 340
Interest expense (1 475 108) 173 648 - (1 301 460)
Net interest income 682 638 (1 453) (10 305) 670 880
Fee and commission income 225 672 - - 225 672
Fee and commission expense (29 611) - - (29 611)
Investment (loss)/income 22 436 - - 22 436
Share of post taxation profit of associates and joint venture holdings 3 241 - - 3 241
Trading income/(loss) arising from
- customer flow 79 296 4 974 10 305 94 575
- balance sheet management and other trading activities 21 454 (3 521) - 17 933
Other operating income (230) - - (230)
Operating income 1 004 896 - - 1 004 896
Expected credit loss impairment charges (46 291) - - (46 291)
Operating income after expected credit loss impairment charges 958 605 - - 958 605
Operating costs (556 108) - - (556 108)
Operating profit before goodwill and acquired intangibles 402 497 - - 402 497
Amortisation of acquired intangibles of associates (543) - - (543)
Closure and rundown of the Hong Kong direct investments business 2 304 - - 2 304
Operating profit 404 258 - - 404 258
Net gain on distribution of associate to shareholders - - - -
Financial impact of strategic actions - - - -
Profit before taxation 404 258 - - 404 258
Taxation on operating profit before goodwill and acquired intangibles (89 123) - - (89 123)
Taxation on acquired intangibles and net gain on distribution of associate to 152 - - 152
shareholders
Profit after taxation from continuing operations 315 287 - - 315 287
Profit after taxation from discontinued operations 311 367 - - 311 367
Profit after taxation 626 654 - - 626 654
Profit attributable to non-controlling interests - -
(4) (4)
Profit attributable to non-controlling interests of discontinued operations (11 766) - - (11 766)
Earnings attributable to shareholders 614 884 - - 614 884
Contingent liabilities, provisions and legal matters
Historical German dividend tax arbitrage transactions
Investec Bank plc has previously been notified by the Office of the Public
Prosecutor in Cologne, Germany, that it and certain of its current and former
employees may be involved in possible charges relating to historical
involvement in German dividend tax arbitrage transactions (known as cum-ex
transactions). Investigations are ongoing and no formal proceedings have been
issued against Investec Bank plc by the Office of the Public Prosecutor. In
addition, Investec Bank plc received certain enquiries in respect of client
tax reclaims for the periods 2010-2011 relating to the historical German
dividend arbitrage transactions from the German Federal Tax Office (FTO) in
Bonn. The FTO has provided more information in relation to their claims and
Investec Bank plc has sought further information and clarification.
Investec Bank plc is cooperating with the German authorities and continues to
conduct its own internal investigation into the matters in question. A
provision is held to reflect the estimate of financial outflows that could
arise as a result of this matter. There are factual issues to be resolved
which may have legal consequences, including financial penalties.
In relation to potential civil claims; whilst Investec Bank plc is not a
claimant nor a defendant to any civil claims in respect of cum-ex
transactions, Investec Bank plc has received third party notices in relation
to two civil proceedings in Germany and may elect to join the proceedings as a
third party participant. Investec Bank plc has itself served third party
notices on various participants to these historic transactions in order to
preserve the statute of limitations on any potential future claims that
Investec Bank plc may seek to bring against those parties, should Investec
Bank plc incur any liability in the future. Investec Bank plc has also entered
into standstill agreements with some third parties in order to suspend the
limitation period in respect of the potential civil claims. While Investec
Bank plc is not a claimant nor a defendant to any civil claims at this stage,
it cannot rule out the possibility of civil claims by or against Investec Bank
plc in future in relation to the relevant transactions.
The Group has not provided further disclosure with respect to these historical
dividend arbitrage transactions because it has concluded that such disclosure
may be expected to seriously prejudice its outcome.
Motor commission review
Investec Group (the Group) notes the recent Court of Appeal decisions on
Wrench, Johnson and Hopcraft relating to motor commission arrangements. The
Group also notes the intention of the lenders to appeal the decisions to the
UK Supreme Court.
The Court of Appeal has determined that motor dealers acting as credit brokers
owe certain duties to disclose to their customers commission payable to them
by lenders, and that lenders will be liable for dealers' non-disclosures. This
sets a higher bar for the disclosure of and consent to the existence, nature,
and quantum of any commission paid than had been understood to be required or
applied across the motor finance industry prior to the decision. Our
understanding of compliant disclosure was built on FCA/regulatory guidance and
previous legal authorities. These decisions relate to commission disclosure
and consent obligations which go beyond the scope of the current FCA motor
commissions review.
The Group has assessed the potential impact of these decisions, as well as any
broader implications, pending the outcome of the intended appeal applications
and concluded the provision of £30 million at 31 March 2024 still remains
appropriate based on the information currently available. This provision
continues to include estimates for operational and legal costs, including
litigation costs, together with estimates for potential awards, based on
various scenarios using a range of assumptions.
There is significant uncertainty across the industry as to the extent of any
misconduct and customer loss that may be identified, and/or the nature, extent
and timing of any remediation action that may subsequently be required
following the court of appeal decision and FCA motor commission review. The
Group therefore notes that the ultimate financial impact of the Court of
Appeal decision and ongoing FCA investigation into motor commission could
materially vary, pending further guidance from the FCA or the outcome of the
intended appeal to the UK Supreme Court.
Events after the reporting period
At the date of this report, there were no significant events subsequent to
period end.
Net fee and commission income
For the six months to 30 September 2024 UK and Southern Total
£'000 Other Africa
Wealth & Investment net fee and commission income - 64 583 64 583
Fund management fees/fees for funds under management - 35 853 35 853
Private client transactional fees* - 30 345 30 345
Fee and commission expense -
(1 615) (1 615)
Specialist Banking net fee and commission income 75 985 81 177 157 162
Specialist Banking fee and commission income** 82 021 104 041 186 062
Specialist Banking fee and commission expense (6 036) (22 864) (28 900)
Group Investments net fee and commission income - (157) (157)
Group Investments fee and commission income - - -
Group Investments fee and commission expense -
(157) (157)
Net fee and commission income 75 985 145 603 221 588
Fee and commission income 82 021 170 239 252 260
Fee and commission expense (6 036) (24 636) (30 672)
Net fee and commission income 75 985 145 603 221 588
Annuity fees (net of fees payable) 9 755 113 304 123 059
Deal fees 66 230 32 299 98 529
For the six months to 30 September 2023 UK and Southern Total
£'000 Other Africa
Wealth & Investment net fee and commission income - 52 250 52 250
Fund management fees/fees for funds under management - 32 383 32 383
Private client transactional fees* - 21 361 21 361
Fee and commission expense -
(1 494) (1 494)
Specialist Banking net fee and commission income 65 103 78 711 143 814
Specialist Banking fee and commission income** 72 245 99 686
171 931
Specialist Banking fee and commission expense (20 975)
(7 142) (28 117)
Group Investments net fee and commission income - (3) (3)
Group Investments fee and commission income -
(3) (3)
Group Investments fee and commission expense - - -
Net fee and commission income 65 103 130 958 196 061
Fee and commission income 72 245 153 427 225 672
Fee and commission expense (22 469) (29 611)
(7 142)
Net fee and commission income 65 103 130 958 196 061
Annuity fees (net of fees payable) 4 593 93 159 97 752
Deal fees 60 510 37 799 98 309
* Trust and fiduciary fees amounted to £0.2 million (2023:
£0.2 million) and are included in Private client transactional fees.
** Included in Specialist Banking is fee and commission income of
£4.7 million (2023: £4.3 million) for operating lease income which is out of
the scope of IFRS 15 - Revenue from Contracts with Customers.
Analysis of financial assets and liabilities by category of financial
instrument
At 30 September 2024 Total Amortised Non-financial Total
instruments at cost instruments or
fair value scoped out of
IFRS 9
£'000
Assets
Cash and balances at central banks - 4 807 365 - 4 807 365
Loans and advances to banks - 1 132 894 - 1 132 894
Non-sovereign and non-bank cash placements 39 362 385 665 - 425 027
Reverse repurchase agreements and cash collateral on securities borrowed 1 321 094 2 891 914 - 4 213 008
Sovereign debt securities 2 513 773 3 758 476 - 6 272 249
Bank debt securities 351 735 167 806 - 519 541
Other debt securities 304 036 725 928 - 1 029 964
Derivative financial instruments 1 184 328 - - 1 184 328
Securities arising from trading activities 2 084 759 - - 2 084 759
Loans and advances to customers 3 175 654 28 260 216 - 31 435 870
Own originated loans and advances to customers securitised - 306 081 - 306 081
Other loans and advances - 139 028 - 139 028
Other securitised assets 63 627 - - 63 627
Other financial instruments at fair value through profit or loss in respect of 194 415 - - 194 415
liabilities to customers
Investment portfolio 753 525 - - 753 525
Interests in associated undertakings and joint venture holdings - - 873 865 873 865
Current taxation assets - - 61 077 61 077
Deferred taxation assets - - 202 081 202 081
Other assets 205 332 1 293 585 464 226 1 963 143
Property and equipment - - 236 814 236 814
Investment properties - - 113 897 113 897
Goodwill - - 74 134 74 134
Software - - 9 883 9 883
Non-current assets classified as held for sale - - 17 574 17 574
12 191 640 43 868 958 2 053 551 58 114 149
Liabilities
Deposits by banks - 2 843 008 - 2 843 008
Derivative financial instruments 1 186 243 - - 1 186 243
Other trading liabilities 1 605 722 - - 1 605 722
Repurchase agreements and cash collateral on securities lent 275 865 1 035 568 - 1 311 433
Customer accounts (deposits) 2 274 649 38 163 360 - 40 438 009
Debt securities in issue 252 1 460 644 - 1 460 896
Liabilities arising on securitisation of own originated loans and advances - 220 106 - 220 106
Liabilities arising on securitisation of other assets 67 988 - - 67 988
Current taxation liabilities - - 56 945 56 945
Deferred taxation liabilities - - 14 212 14 212
Other liabilities 35 060 1 444 560 562 594 2 042 214
Liabilities to customers under investment contracts 187 981 - - 187 981
5 633 760 45 167 246 633 751 51 434 757
Subordinated liabilities - 1 011 339 - 1 011 339
5 633 760 46 178 585 633 751 52 446 096
Financial instruments at fair value
The table below analyses recurring fair value measurements for financial
assets and financial liabilities. These fair value measurements are
categorised into different levels in the fair value hierarchy based on the
inputs to the valuation technique used.
The different levels are identified as follows:
Level 1 - quoted (unadjusted) prices in active markets for identical assets or
liabilities.
Level 2 - inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly
(i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3 - inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
Fair value category
At 30 September 2024 Total Level 1 Level 2 Level 3
instruments at
fair value
£'000
Assets
Non-sovereign and non-bank cash placements 39 362 - 39 362 -
Reverse repurchase agreements and cash collateral on securities borrowed 1 321 094 - 1 321 094 -
Sovereign debt securities 2 513 773 2 513 773 - -
Bank debt securities 351 735 341 074 10 661 -
Other debt securities 304 036 83 836 168 142 52 058
Derivative financial instruments 1 184 328 - 1 174 404 9 924
Securities arising from trading activities 2 084 759 1 932 633 152 126 -
Loans and advances to customers 3 175 654 - 658 152 2 517 502
Other securitised assets 63 627 - - 63 627
Other financial instruments at fair value through profit or loss in respect of 194 415 139 620 38 447 16 348
liabilities to customers
Investment portfolio 753 525 276 236 4 392 472 897
Other assets 205 332 205 180 152 -
12 191 640 5 492 352 3 566 932 3 132 356
Liabilities
Derivative financial instruments 1 186 243 - 1 185 182
1 061
Other trading liabilities 1 605 722 632 384 973 338 -
Repurchase agreements and cash collateral on securities lent 275 865 - 275 865 -
Customer accounts (deposits) 2 274 649 - 2 274 649 -
Debt securities in issue 252 - 252 -
Liabilities arising on securitisation of other assets 67 988 - - 67 988
Other liabilities 35 060 - 35 060 -
Liabilities to customers under investment contracts 187 981 - 156 901 31 080
5 633 760 632 384 4 901 247 100 129
Net financial assets/(liabilities) at fair value 6 557 880 4 859 968 (1 334 315) 3 032 227
Transfers between level 1 and level 2
There were no transfers between level 1 and level 2 in the current period.
Measurement of financial assets and liabilities at level 2
The table below sets out information about the valuation techniques used at
the end of the reporting period in measuring financial instruments categorised
as level 2 in the fair value hierarchy:
Valuation basis/techniques Main inputs
Assets
Non-sovereign and non-bank cash placements Discounted cash flow model Yield curves
Reverse repurchase agreements and cash collateral on securities borrowed Discounted cash flow model, Hermite interpolation, Black-Scholes Yield curves, discount rates, volatilities
Bank debt securities Discounted cash flow model Yield curves
Other debt securities Discounted cash flow model Yield curves, NCD curves and swap curves, discount rates, external prices,
broker quotes
Derivative financial instruments Discounted cash flow model, Hermite interpolation, industry standard Discount rate, risk-free rate, volatilities, forex forward points and spot
derivative pricing models including Black-Scholes and Local Volatility rates, interest rate swap curves and credit curves
Securities arising from trading activities Standard industry derivative pricing model, Discounted cash flow model Interest rate curves, implied bond spreads, equity volatilities, yield curves
Loans and advances to customers Discounted cash flow model Yield curves
Other financial instruments at fair value through profit or loss in respect of Current price of underlying unitised assets Listed prices
liabilities to customers
Investment portfolio Discounted cash flow model, relative valuation model comparable quoted inputs Discount rate and fund unit price, net assets
Liabilities
Derivative financial instruments Discounted cash flow model, Hermite interpolation, industry standard Discount rate, risk-free rate, volatilities, forex forward points and spot
derivative pricing models including Black-Scholes and Local Volatility rates, interest rate swap curves and credit curves
Other trading liabilities Discounted cash flow model, Hermite interpolation, industry standard Discount rate, risk-free rate, volatilities, forex forward points and spot
derivative pricing models including Local Volatility rates, interest rate swap curves and credit curves
Repurchase agreements and cash collateral on securities lent Discounted cash flow model, Hermite interpolation Yield curves, discount rates
Customer accounts (deposits) Discounted cash flow model Yield curves, discount rates
Debt securities in issue Discounted cash flow model, Hermite interpolation, industry standard Discount rate, risk-free rate, volatilities, forex forward points and spot
derivative pricing models including Local Volatility rates, interest rate swap curves and credit curves
Other liabilities Discounted cash flow model Yield curves
Liabilities to customers under investment contracts Current price of underlying unitised assets Listed prices
Level 3 financial instruments
The following tables show a reconciliation of the opening balances to the
closing balances for level 3 financial instruments. All instruments are at
fair value through profit or loss.
£'000 Investment Loans and Other securitised Other balance Total
portfolio advances to assets sheet assets^
customers
Assets
Balance at 1 April 2024 559 637 2 079 671 66 704 86 004 2 792 016
Total (losses)/gains 6 329 103 612 724 733
111 398
In the income statement 6 329 107 551 724 733 115 337
In the statement of comprehensive income - (3 939) - - (3 939)
Purchases 7 370 1 546 712 - 14 413 1 568 495
Sales (10 844) (431 495) - - (442 339)
Issues - 729 - - 729
Settlements (92 826) (700 161) (19 489) (816 275)
(3 799)
Transfers out of level 3 - - -
(1 825) (1 825)
Foreign exchange adjustments 3 231 (79 741) (79 843)
(2) (3 331)
Balance at 30 September 2024 472 897 2 517 502 63 627 78 330 3 132 356
£'000 Liabilities arising Other balance Total
on securitisation sheet liabilities^
of other assets
Liabilities
Balance at 1 April 2024 71 751 33 482 105 233
Total losses/(gains) in the income statement 366
(3 813) (3 447)
Issues - 1 285 1 285
Settlements -
(4 129) (4 129)
Foreign exchange adjustments -
1 187 1 187
Balance at 30 September 2024 67 988 32 141 100 129
^ Restated. In addition, the opening balances were restated
to reflect unquoted investments within 'other financial instruments at fair
value through profit or loss in respect of liabilities to customers' which
were previously omitted and the consequential impact on 'Liabilities to
customers under investment contracts'.
The Group transfers between levels within the fair value hierarchy when the
significance of the unobservable inputs change or if the valuation methods
change. Transfers are deemed to occur at the end of each semi-annual reporting
period. There are no material transfers into or out of level 3 during the
current period.
The following table quantifies the gains or (losses) included in the income
statement and statement of other comprehensive income recognised on level 3
financial instruments:
For the year to 30 September 2024 Total Realised Unrealised
£'000
Total gains included in the income statement for the period
Net interest income 112 098 84 998 27 100
Investment income/(loss) 4 523 (12 036) 16 559
Trading income loss from customer flow 34 - 34
Other operating income 2 129 - 2 129
118 784 72 962 45 822
Total gains included in other comprehensive income for the period
Gain on realisation on debt instruments at FVOCI recycled through the income 235 235 -
statement
Fair value movements on debt instruments at FVOCI taken directly to other (3 939) - (3 939)
comprehensive income
(3 704) 235 (3 939)
Sensitivity of fair values to reasonably possible alternative assumptions by
level 3 instrument type
The fair value of financial instruments in level 3 are measured using
valuation techniques that incorporate assumptions that are not evidenced by
prices from observable market data. The following table shows the sensitivity
of these fair values to reasonably possible alternative assumptions,
determined at a transactional level:
At 30 September 2024 Balance sheet Principal valuation technique Significant unobservable input changed Range of unobservable input used Favourable Unfavourable
value changes changes
£'000 £'000 £'000
Assets
Other debt securities 52 058 Potential impact on income statement 1 947 (3 521)
Discounted cash flows Cash flow adjustments CPR 14.18% 186 (252)
Discounted cash flows Credit spreads 0.36%-1.22% 54 (102)
Other Other ^ 1 707 (3 167)
Derivative financial instruments 9 924 Potential impact on income statement 938 (696)
Option pricing model Volatilities 7.5%-16.95% 1
(1)
Underlying asset value Underlying asset value^^ ^^ 1 (3)
Discounted cash flows Cash flow adjustment CPR 7.71% 17 (20)
Other Other^ ^ 919 (672)
Loans and advances to customers 2 517 502 Potential impact on income statement 23 500 (41 082)
Discounted cash flows Credit spreads 0.16% - 37.3% 9 012 (18 909)
Underlying asset value Property value ** 10 871 (13 451)
Price earnings Price earnings multiple 4x 2 099 (6 951)
Underlying asset value Underlying asset value^^ ^^ 1 467 (1 670)
Other Other^ ^ 51 (101)
Potential impact on other comprehensive income 12 417 (21 285)
Credit spreads 0.15% - 5.3% 12 417 (21 285)
Other securitised assets* 63 627 Potential impact on income statement 672 (440)
Discounted cash flows Cash flow adjustments CPR 7.71% 672 (440)
Investment portfolio 472 897 Potential impact on income statement 51 336 (79 409)
Price earnings Price earnings multiple 4x-9x 8 586 (14 766)
Net asset value Underlying asset value^^ ^^ 3 293 (5 373)
Price earnings EBITDA ** 7 779 (7 543)
Price earnings EBITDA (10%)-10% 10 870 (10 870)
Discounted cash flows Cash flows ** 1 727 (1 751)
Underlying asset value Underlying asset value^^ ^^ 1 231 (2 722)
Discounted cash flows Precious and industrial metal prices (5%)-5% 216 (216)
Other Other^ ^ 17 634 (36 168)
Other financial instruments at fair value through profit or loss in respect of 16 348 Potential impact on income statement 1 635 (1 635)
liabilities to customers
Underlying asset value Underlying asset value^^ ^^ 1 635 (1 635)
Total level 3 assets 3 132 356 92 445 (148 068)
Liabilities
Derivative financial instruments 1 061 Potential impact on income statement - 1
Option pricing model Volatilities 9%-16.95% - 1
Liabilities arising on securitisation of other assets* 67 988 Potential impact on income statement (365) 290
Discounted cash flows Cash flow adjustments CPR 7.71% (365) 290
Potential impact on income statement (3 108) 3 108
Liabilities to customers under investment contracts 31 080 Underlying asset value Underlying asset value^^ (3 108) 3 108
Total level 3 liabilities 100 129 (3 473) 3 399
Net level 3 assets 3 032 227 88 972 (144 669)
^ Other - The valuation sensitivity has been
assessed by adjusting various inputs such as expected cash flows, discount
rates, earnings multiples rather than a single input. It is deemed appropriate
to reflect the outcome on a portfolio basis for the purposes of this analysis
as the sensitivity of the assets cannot be determined through the adjustment
of a single input.
^^ Underlying asset values are calculated by reference
to a tangible asset, for example property, aircraft or shares.
∗∗ The EBITDA, cash flows and property values have
been stressed on an investment-by-investment and loan-by-loan basis in order
to obtain favourable and unfavourable valuations.
In determining the value of level 3 financial instruments, the following are
the principal input that can require judgement:
Credit spreads
Credit spreads reflect the additional yield that a market participant would
demand for taking exposure to the credit risk of an instrument. The credit
spread for an instrument forms part of the yield used in a discounted cash
flow calculation. In general a significant increase in a credit spread in
isolation will result in a movement in fair value that is unfavourable for the
holder of a financial instrument.
Discount rates
Discount rates (including WACC) are used to adjust for the time value of money
when using a discounted cash flow valuation method. Where relevant, the
discount rate also accounts for illiquidity, market conditions and uncertainty
of future cash flows.
Volatilities
Volatility is a key input in the valuation of derivative products containing
optionality. Volatility is a measure of the variability or uncertainty in
returns for a given derivative underlying. It represents an estimate of how
much a particular underlying instrument, parameter or index will change in
value over time.
Cash flows
Cash flows relate to the future cash flows which can be expected from the
instrument and requires judgement.
EBITDA
The earnings before interest, taxes, depreciation and amortisation of the
company being valued. This is the main input into
a price-earnings multiple valuation method.
Price-earnings multiple
The price-to-earnings ratio is an equity valuation multiple. It is a key
driver in the valuation of unlisted investments.
Property value and precious and industrial metal prices
The property value and precious and industrial metal prices is a key driver of
future cash flows on these investments.
Underlying asset value
In instances where cash flows have links to referenced assets, the underlying
asset value is used to determine the fair value. To the extent possible, the
underlying asset valuation is derived using observable market prices sourced
from broker quotes, specialist valuers or other reliable pricing sources.
Fair value of financial assets and liabilities at amortised cost
At 30 September 2024 Carrying amount Fair value approximates carrying amount Balances where fair values do not approximate carrying amounts Fair value of balances that do not approximate carrying amounts
£'000
Assets
Cash and balances at central banks 4 807 365 4 807 365 - -
Loans and advances to banks 1 132 894 1 132 894 - -
Non-sovereign and non-bank cash placements 385 665 385 665 - -
Reverse repurchase agreements and cash collateral on securities borrowed 2 891 914 1 517 818 1 374 096 1 374 392
Sovereign debt securities 3 758 476 3 746 916 3 770 265
11 560
Bank debt securities 167 806 8 767 159 039 153 682
Other debt securities 725 928 51 354 674 574 684 901
Loans and advances to customers 28 260 216 13 655 092 14 605 124 14 491 954
Own originated loans and advances to customers securitised 306 081 306 081 - -
Other loans and advances 139 028 87 850 51 239
51 178
Other assets 1 293 585 1 293 585 - -
43 868 958 23 258 031 20 610 927 20 526 433
Liabilities
Deposits by banks 2 843 008 411 406 2 431 602 2 470 082
Repurchase agreements and cash collateral on securities lent 1 035 568 462 176 573 392 575 338
Customer accounts (deposits) 38 163 360 21 362 876 16 800 484 16 851 889
Debt securities in issue 1 460 644 256 540 1 204 104 1 206 154
Liabilities arising on securitisation of own originated loans and advances 220 106 220 106 - -
Other liabilities 1 444 560 1 443 514 1 046 304
Subordinated liabilities 1 011 339 311 034 700 305 727 577
46 178 585 24 467 652 21 710 933 21 831 344
Investec plc
Incorporated in England and Wales
Registration number: 3633621
LSE ordinary share code: INVP
JSE ordinary share code: INP
ISIN: GB00B17BBQ50
LEI: 2138007Z3U5GWDN3MY22
Ordinary share dividend announcement
In terms of the DLC structure, Investec plc shareholders registered on the
United Kingdom share register may receive all or part of their dividend
entitlements through dividends declared and paid by Investec plc on their
ordinary shares and/or through dividends declared and paid on the SA DAN share
issued by Investec Limited.
Investec plc shareholders registered on the South African branch register may
receive all or part of their dividend entitlements through dividends declared
and paid by Investec plc on their ordinary shares and/or through dividends
declared and paid on the SA DAS share issued by Investec Limited.
Declaration of dividend number 44
Notice is hereby given that interim dividend number 44, being a gross dividend
of 16.50000 pence (2023: 15.50000 pence) per ordinary share has been declared
by the Board from income reserves in respect of the six months ended
30 September 2024, payable to shareholders recorded in the shareholders'
register of the Company at the close of business on Friday 13 December 2024.
• For Investec plc shareholders, registered on the United Kingdom share
register, through a dividend payment by Investec plc from income reserves of
16.50000 pence per ordinary share
• For Investec plc shareholders, registered on the South African branch
register, through a dividend payment by Investec Limited, on the SA DAS share,
payable from income reserves, equivalent to 16.50000 pence per ordinary share.
The relevant dates relating to the payment of dividend number 44 are as
follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Tuesday 10 December 2024
On the London Stock Exchange (LSE) Wednesday 11 December 2024
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Wednesday 11 December 2024
On the London Stock Exchange (LSE) Thursday 12 December 2024
Record date (on the JSE and LSE) Friday 13 December 2024
Payment date (on the JSE and LSE) Tuesday 31 December 2024
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Wednesday 11 December 2024 and
Friday 13 December 2024, both dates inclusive, nor may transfers between the
United Kingdom share register and the South African branch register take place
between Wednesday 11 December 2024 and Friday 13 December 2024, both dates
inclusive.
Additional information for South African resident shareholders of Investec plc
• Shareholders registered on the South African branch register are
advised that the distribution of 16.50000 pence, equivalent to a gross
dividend of 379.92900 cents per share (rounded to 380.00000 cents per share),
has been arrived at using the Rand/Pound Sterling average buy/sell forward
rate of 23.02600, as determined at 11h00 (SA time) on Wednesday 20 November
2024
• Investec plc United Kingdom tax reference number: 2683967322360
• The issued ordinary share capital of Investec plc is 696 082 618
ordinary shares
• The dividend paid by Investec plc to South African resident
shareholders registered on the South African branch register and the dividend
paid by Investec Limited to Investec plc shareholders on the SA DAS share are
subject to South African Dividend Tax (Dividend Tax) of 20% (subject to any
available exemptions as legislated)
• Shareholders registered on the South African branch register who are
exempt from paying the Dividend Tax will receive a net dividend of 380.00000
cents per share paid by Investec Limited on the SA DAS share
• Shareholders registered on the South African branch register who are
not exempt from paying the Dividend Tax will receive a net dividend of
304.00000 cents per share (gross dividend of 380.00000 cents per share less
Dividend Tax of 76.00000 cents per share) per share paid by Investec Limited
on the SA DAS share.
By order of the Board
David Miller
Company Secretary
20 November 2024
Investec Limited
Incorporated in the Republic of South Africa
Registration number: 1925/002833/06
JSE share code: INL
JSE hybrid code: INPR
JSE debt code: INLV
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
LEI: 213800CU7SM6O4UWOZ70
Ordinary share dividend announcement
Declaration of dividend number 137
Notice is hereby given that interim dividend number 137, being a gross
dividend of 380.00000 cents (2023: 352.00000 cents) per ordinary share has
been declared by the Board from income reserves in respect of the six months
ended 30 September 2024 payable to shareholders recorded in the shareholders'
register of the Company at the close of business on Friday 13 December 2024.
The relevant dates relating to the payment of dividend number 137 are as
follows:
Last day to trade cum-dividend Tuesday 10 December 2024
Shares commence trading ex-dividend Wednesday 11 December 2024
Record date Friday 13 December 2024
Payment date Tuesday 31 December 2024
The interim gross dividend of 379.92900 cents per share (rounded to 380.00000
cents per ordinary share) has been determined by converting the Investec plc
distribution of 16.50000 pence per ordinary share into Rands using the
Rand/Pound Sterling average buy/sell forward rate of 23.02600 at 11h00 (SA
time) on Wednesday 20 November 2024.
Share certificates may not be dematerialised or rematerialised between
Wednesday 11 December 2024 and Friday 13 December 2024 both dates inclusive,
nor may transfers between the Botswana and/or Namibia share register/s and the
South African branch register take place between Wednesday 27 November 2024
and Friday 29 November 2024 both dates inclusive.
Additional information to take note of
• Investec Limited South African tax reference number: 9800/181/71/2
• The issued ordinary share capital of Investec Limited is 295 125 806
ordinary shares
• The dividend paid by Investec Limited is subject to South African
Dividend Tax (Dividend Tax) of 20% (subject to any available exemptions as
legislated)
• Shareholders who are exempt from paying the Dividend Tax will receive
a net dividend of 380.00000 cents per ordinary share
• Shareholders who are not exempt from paying the Dividend Tax will
receive a net dividend of 304.00000 cents per ordinary share (gross dividend
of 380.00000 cents per ordinary share less Dividend Tax of 76.00000 cents per
ordinary share).
By order of the Board
Niki van Wyk
Company Secretary
20 November 2024
Investec plc
Incorporated in England and Wales
Registration number 3633621
JSE ordinary share code: INP
LSE ordinary share code: INVP
ISIN: GB00B17BBQ50
LEI: 2138007Z3U5GWDN3MY22
Registered office
30 Gresham Street, London
EC2V 7QP, United Kingdom
Auditor
Deloitte LLP
Registrars in the United Kingdom
Computershare Investor Services PLC
The Pavilions, Bridgwater Road, Bristol
BS99 6ZZ, United Kingdom
Company Secretary
David Miller
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06
JSE ordinary share code: INL
JSE hybrid code: INPR
JSE debt code: INLV
NSX ordinary share code: IVD
BSE ordinary share code: INVESTEC
ISIN: ZAE000081949
LEI: 213800CU7SM6O4UWOZ70
Registered office
100 Grayston Drive
Sandown, Sandton
2196, South Africa
Auditors
Deloitte & Touche
PricewaterhouseCoopers Inc.
Transfer secretaries in South Africa
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank
2196, South Africa
Company Secretary
Niki van Wyk
Directors
Philip Hourquebie(1) (Chair)
Fani Titi(2) (Chief Executive)
Nishlan Samujh(2) (Finance Director)
Henrietta Baldock(1) (Senior Independent Director)
Stephen Koseff(2)
Nicky Newton-King(2)
Jasandra Nyker(2
) Vanessa Olver(2
) Diane Radley(2
) Brian Stevenson(1)
1 British
2 South African
Zarina Bassa and Philisiwe Sibiya stepped down from the Board on 8 August
2024.
Sponsor
Investec Bank Limited
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