| Fri 24 Jul 2009, 8:00 | | INL/INP - Investec Limited/Investec plc - Investec (Comprising Investec Plc |
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INL INP
INL INP
INL/INP - Investec Limited/Investec plc - Investec (Comprising Investec Plc
And Investec Limited) - Interim Management Statement
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06
JSE share code: INL
ISIN: ZAE000081949
Investec plc
Incorporated in England and Wales
Registration number 3633621
JSE share code: INP
ISIN: GB00B17BBQ50
(jointly "Investec")
As part of the dual listed company structure, Investec plc and Investec
Limited notify both the London Stock Exchange and the JSE Limited of matters
which are required to be disclosed under the Disclosure, Transparency and
Listing Rules of the United Kingdom Listing Authority (the "UKLA") and/or the
JSE Listing Requirements.
Accordingly we advise of the following:
Investec (comprising Investec plc and Investec Limited) - Interim Management
Statement
24 July 2009
Diversified business model, sound balance sheet and recurring revenue base
continue to support profitability in challenging economic conditions
This Interim Management Statement is issued by Investec in accordance with the
UK Listing Authority`s Disclosure and Transparency rules. Unless stated
otherwise, key trends and figures highlighted below refer to the three months
ended 30 June 2009 and the corresponding period in the previous year.
Overview of operating fundamentals
Investec`s recurring revenue base and operational diversity have continued to
support profitability across its core geographies. The group has maintained
its disciplined focus on managing risk, building capital and preserving
liquidity. Operating fundamentals and activity levels within the group`s
businesses, however, continue to be negatively impacted by weak global
economic conditions.
Salient features of the quarter to 30 June 2009 compared to the quarter to 30
June 2008 are:
- Expenses continued to be tightly managed and have declined by 7%.
- Net operating income (after expenses and minorities but before
impairments on loans and advances) decreased by 12%.
- Defaults have continued to increase in line with expectations, with the
credit loss ratio on core loans and advances amounting to 0.8% annualised
for the quarter (2008: 0.3%).
- The above mentioned factors have resulted in a decline in attributable
earnings (see note 2) of 26%. The group is, however, trading well ahead
of the last quarter of the 2009 financial year.
- The group`s three core geographies remain profitable with recurring
income as a percentage of total operating income amounting to
approximately 65%.
- As at 30 June 2009 the capital adequacy ratio of Investec plc (applying
UK Financial Services Authority rules to its capital base) was 16.0% and
the capital adequacy ratio of Investec Limited (applying South African
Reserve Bank rules to its capital base) was 14.6%.
- The group has a strong liquidity position and currently has approximately
GBP5.5 billion of cash and near cash available to support its activities.
- Since 31 March 2009 (the end of the group`s financial year) core loans
and advances grew by 1.0% to GBP16.3 billion, customer deposits increased
by 6.4% to GBP15.5 billion and third party assets under management
increased by 9.7% to GBP53.6 billion.
- The group`s gearing ratio remains low at approximately 12 times and the
advances to customer deposits ratio is approximately 1 times.
Additional information
Since 30 June 2009 the group has via a tender offer acquired GBP36.7 million
in aggregate principal amount of its GBP350 million Fixed/Floating Undated
Subordinated Callable Step-Up Notes issued under its Euro Medium Term Note
Programme (RNS announcement made on 7 July 2009) plus a further GBP12.5
million in the open market. In addition, the group has acquired GBP18.4
million principal amount of the 9.00 per cent. Kensington Group plc Callable
Subordinated Notes due 2015 (RNS announcement made on 13 July 2009).
Outlook
Notwithstanding the improvement in some financial markets since the group`s
year-end the global environment remains uncertain. Investec`s geographical and
operational diversity continues to enable it to navigate a steady course.
Investec has a sound balance sheet and the group will continue to leverage off
its existing platforms, seeking to create additional operational efficiencies
and organic growth opportunities across all geographies.
The group will be holding a pre-close briefing on 17 September 2009 at which
it will provide further detail on the performance of its businesses.
On behalf of the board
Hugh Herman (Chairman), Stephen Koseff (Chief Executive Officer) and Bernard
Kantor (Managing Director)
Notes:
1. The financial information on which this statement is based has not been
reviewed and reported on by the group`s auditors.
2. Attributable earnings refer to net profit before goodwill and non-
operating items but after taxation and adjusting for earnings
attributable to minorities and preference shareholders.
3. Please note that matters highlighted above may contain forward looking
statements which are subject to various risks and uncertainties and other
factors, including, but not limited to:
- the further development of standards and interpretations under
International Financial Reporting Standards (IFRS) applicable
to past, current and future periods, evolving practices with
regard to the interpretation and application of standards under
IFRS.
- domestic and global economic and business conditions.
market related risks.
- A number of these factors are beyond the group`s control.
- These factors may cause the group`s actual future results,
performance or achievements in the markets in which it operates to
differ from those expressed or implied.
- Any forward looking statements made are based on the knowledge of
the group at 24 July 2009.
4. 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 the group`s individual
companies are reported in the local currencies in which they are
domiciled, including Rands, Australian Dollars and Euros. These results
are then translated into Pounds Sterling at the applicable foreign
currency exchange rates for inclusion in our 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:
3 months to Year to 31 Mar 2009 3 months to
30 Jun 2009 30 Jun 2008
Currency Period end Average Period end Average Period end Average
per
GBP1.00
South 12.74 12.83 13.58 14.83 15.62 15.26
African
Rand
Australian 2.04 2.03 2.07 2.19 2.07 2.10
Dollar
Euro 1.17 1.13 1.08 1.21 1.26 1.27
US Dollar 1.65 1.54 1.43 1.73 1.99 1.98
5. The following disclosures are made with respect to Basel II quarterly
disclosure requirements:
The group holds capital well in excess of regulatory requirements and
intends to perpetuate this philosophy and ensure that it remains well
capitalised in a vastly changed banking world. Accordingly, as announced
in November 2008, the group has adjusted its capital adequacy targets and
is focusing on increasing its capital base, targeting a minimum tier one
capital ratio of 11% and a total capital adequacy ratio of 14% to 17% on
a consolidated basis for Investec plc and Investec Limited, respectively.
Investec has made good progress in this regard and intends to meet these
targets by the end of calendar year 2010.
Investec IBP* IBAL* Investec IBL*
plc Limited
As at 30 June 2009 GBP `mn GBP `mn A$`mn ZAR `mn ZAR `mn
Primary capital (Tier 1) 1,107 936 543 16,717 14,747
Other capital (Tier 2 742 613 152 5,123 5,123
and 3)
1,849 1,549 695 21,840 19,870
Less: deductions -172 -161 -122 -232 -332
Net qualifying capital 1,677 1,388 573 21,608 19,538
Risk-weighted assets 10,511 8,643 2,912 147,604 134,105
(banking and trading)
Capital requirements
841 691 379 14,022 12,739
Credit risk 654 545 325 11,530 10,884
Securitisation exposures 15 14 0 135 135
Equity risk 18 18 10 601 577
Market risk 44 44 2 201 122
Operational risk 110 70 42 1,555 1021
Capital adequacy ratio 16.0% 16.1% 19.7% 14.6% 14.6%
Tier 1 ratio 10.0% 10.5% 15.3% 11.2% 10.8%
Capital adequacy ratio 18.4% 17.9% 22.1% 16.5% 15.8%
- pre operational risk
Tier 1 ratio - pre 11.5% 11.6% 17.2% 12.6% 11.8%
operational risk
*IBP is Investec Bank plc; IBAL is Investec Bank (Australia) Limited and
IBL is Investec Bank Limited. IBP includes IBAL.
Timetable:
Pre-close briefing: 17 September 2009
Interim period: 30 September 2009
Release of interim results: 19 November 2009
For further information please contact:
Investec Investor Relations
UK: +44 (0) 207 597 5546
South Africa: +27 (0) 11 286 7070
investorrelations@investec.com
About Investec
Investec is an international specialist banking group that provides a diverse
range of financial products and services to a niche client base in three
principal markets, the United Kingdom, South Africa and Australia as well as
certain other countries. The group was established in 1974 and currently has
approximately 5 900 permanent employees.
Investec focuses on delivering distinctive profitable solutions for its
clients in five core areas of activity namely, Private Client Activities,
Capital Markets, Investment Banking, Asset Management and Property Activities.
In July 2002 the Investec group implemented a dual listed company structure
with listings on the London and Johannesburg Stock Exchanges. The combined
group`s current market capitalisation is approximately GBP2.5 billion.
Date: 24/07/2009 08:00:11 Produced by the JSE SENS Department.
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