| Fri 29 Jan 2010, 9:00 | | INL / INP - Investec Limited / Investec Plc - Interim Management Statement |
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INL INP
INL INP
INL / INP - Investec Limited / Investec Plc - 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
29 January 2010
Investec continues to consolidate its position as a well capitalised,
diversified, specialist bank and asset manager, with a strong recurring revenue
base underpinning profitability
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 nine months
ended 31 December 2009 and the corresponding period in the previous year.
Overview of operating fundamentals
The group has remained focused on managing risk, building capital and preserving
liquidity. Investec`s recurring revenue base and operational diversity have
continued to support profitability across its core geographies. Although there
has been a sustained period of stability in financial markets, operating
fundamentals remain mixed with activity levels below historic trends.
Salient features of the nine month period to 31 December 2009 compared to the
nine month period to 31 December 2008 are:
* Net operating income (after expenses and minorities but before impairments
on loans and advances) increased by 1%.
* Defaults and impairments have continued to increase in line with previous
guidance provided. The credit loss charge as a percentage of average gross
core loans and advances annualised for the period amounted to 1.1% (31
March 2009: 1.1%).
* The above mentioned factors have resulted in attributable earnings (see
note 2) remaining in line with the prior year.
* The group`s three core geographies remain profitable with recurring income
as a percentage of total operating income amounting to approximately 63%.
* As at 31 December 2009 the capital adequacy ratio of Investec plc (applying
UK Financial Services Authority rules to its capital base) was 15.2% and
the capital adequacy ratio of Investec Limited (applying South African
Reserve Bank rules to its capital base) was 14.8%.
* The group has a strong liquidity position and currently has approximately
GBP7.4 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 7% to GBP17.4 billion, customer deposits increased by 33%
to GBP19.3 billion and third party assets under management increased by 38%
to GBP67.2 billion.
* Core advances (excluding own originated assets) as a percentage of customer
deposits were 84.0% (31 March 2009:103.6%)
* The group`s gearing ratio remains low at approximately 12 times.
Outlook
Investec has successfully focused on maintaining a sound balance sheet,
increasing both capital and liquidity. The group will continue to leverage off
its existing platforms, seeking to create additional operational efficiencies
and organic growth opportunities across all the geographies in which it
operates. While the pace of economic recovery remains uncertain the group
believes that it is well placed to capitalise on opportunities presented in a
much changed operating environment.
The group will be holding a pre-close briefing on 18 March 2010 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 29 January 2010.
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:
Nine months to Year to 31 Mar Nine months to
31 Dec 2009 2009 31 Dec 2008
Currency Period end Average Period Average Period Average
per end end
GBP1.00
South 11.89 12.60 13.58 14.83 13.59 15.04
African
Rand
Australian 1.80 1.93 2.07 2.19 2.09 2.18
Dollar
Euro 1.12 1.13 1.08 1.21 1.03 1.24
US Dollar 1.62 1.61 1.43 1.73 1.45 1.82
5 The following disclosures are made with respect to Basel II quarterly
disclosure requirements:
The group holds capital in excess of regulatory requirements and intends to
perpetuate this philosophy and ensure that it remains well capitalised in a
vastly changing 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. As per the table
below, all regulated entities met these targets at the reporting date.
Investec IBP* IBAL* Investec IBL*
plc Limited
As at 31 GBP `mn GBP A$`mn ZAR `mn ZAR `mn
December 2009 `mn
Primary 1,272 1,102 539 17,064 15,418
capital (Tier
1)
Other capital 601 502 76 5,599 5,599
(Tier 2)
1,873 1,604 615 22,663 21,017
Less: -228 -167 -92 -630 -730
deductions
Net qualifying 1,645 1,437 523 22,033 20,287
capital
Risk-weighted 10,815 8,765 2,984 149,174 135,973
assets
(banking and
trading)
Capital
requirements 864 701 388 14,172 12,918
Credit risk 694 572 335 11,502 10,871
Securitisation 21 20 0 170 170
exposures
Equity risk 18 18 9 657 639
Market risk 21 21 2 197 104
Operational 110 70 42 1,646 1134
risk
Capital 15.2% 16.4% 17.5% 14.8% 14.9%
adequacy ratio
Tier 1 ratio 11.0% 12.2% 15.5% 11.2% 11.0%
Capital 17.4% 18.2% 19.6% 16.7% 16.4%
adequacy ratio
- pre
operational
risk
Tier 1 ratio 12.7% 13.5% 17.3% 12.7% 12.1%
- pre
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: 18 March 2010
Year-end: 31 March 2010
Release of year-end results: 20 May 2010
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 bank and asset manager 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 GBP3.2 billion.
Date: 29/01/2010 09:00:02 Produced by the JSE SENS Department.
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