Interim Management Statement

RNS Number : 2114Q

Investec PLC

30 July 2010

 



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

Investec (comprising Investec plc and Investec Limited) - Interim Management Statement

released on 30 July  2010

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 2010 and the corresponding period in the previous year.

Performance overview

The group's diversified business model and solid recurring income base continued to support a satisfactory performance for the first quarter of the financial year. The UK business performed well with particularly strong results recorded by the Asset Management and Capital Markets divisions. The South African and Australian operations were affected by weak equity markets and low levels of economic activity posting results behind the prior year.

Salient features of the three month period to 30 June 2010 compared to the three month period to 30 June 2009:

·      Net operating income (after expenses and minorities but before impairments on loans and advances) increased by 11%.

·      Impairments remain at elevated levels with the credit loss charge as a percentage of average gross loans and advances annualised for the period amounting to 0.83% (31 March 2010: 1.16%).

·      The effective tax rate increased from 22.5% to 26.3%. 

·      The above mentioned factors have resulted in attributable earnings (see note 2) increasing by 2%.

·      Recurring income as a percentage of total operating income amounts to approximately 66%.

·      As at 30 June 2010 the capital adequacy ratio of Investec plc (applying UK Financial Services Authority rules to its capital base) was 16.1% and the capital adequacy ratio of Investec Limited (applying South African Reserve Bank rules to its capital base) was 15.6%.

·      The group maintained a strong liquidity position and currently has approximately GBP9.8 billion of cash and near cash available to support its activities. 

·      Since 31 March 2010 (the end of the group's financial year) core loans and advances decreased by 2% to GBP17.5 billion, customer deposits increased by 1% to GBP22.2 billion and third party assets under management decreased by 4% to GBP70.9 billion.

·      Core advances (excluding own originated securitised assets) as a percentage of customer deposits were 74.2% (31 March 2010:76.2%) 

Additional information

On 30 March 2010, it was announced that Investec plc and Rensburg Sheppards plc had reached agreement on the terms of a recommended all share offer under which Investec plc would acquire the entire issued and to be issued ordinary share capital of Rensburg Sheppards plc not already owned by it. Following shareholder and regulatory approvals and the sanction of the court, the scheme of arrangement became effective on 25 June 2010. Rensburg Sheppards plc continued to be accounted for as an associate for the three month period ended 30 June 2010.

Outlook

Investec's initiatives to build its private wealth and investment platforms remain on course with the completion of the Rensburg Sheppard's transaction. Increased savings levels in the developed world should continue to underpin growth in both the wealth and asset management businesses whilst the banking and advisory revenue streams remain dependent on the sustainability of economic recovery and the normalisation of economic activity.

The group will be holding a pre-close briefing on 16 September 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 30 July 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, Euros and Dollars. 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:

	Three months to 30 Jun 2010		Year to 31 Mar 2010		Three months to 30 Jun 2009
Currency per GBP1.00	Period end	Average	Period end	Average	Period end	Average
South African Rand	11.48	11.24	11.11	12.38	12.74	12.83
Australian Dollar	1.77	1.69	1.66	1.88	2.04	2.03
Euro	1.22	1.17	1.12	1.13	1.17	1.13
US Dollar	1.50	1.50	1.52	1.59	1.65	1.54

5.   The following disclosures are made with respect to Basel II quarterly disclosure requirements:

The group holds capital in excess of regulatory requirements targeting a minimum tier one capital ratio of 11% and a total capital adequacy ratio range of 14% to 17% on a consolidated basis for each of Investec plc and Investec Limited. As per the table below, all regulated entities met these targets at the reporting date.  

	Investec plc^	IBP*^	IBAL*	Investec Limited^	IBL*
As at 30 June 2010	GBP 'mn	GBP 'mn	A$'mn	ZAR 'mn	ZAR 'mn
Primary capital (Tier 1)	1,326	1,112	555	19,463	16,822
Other capital (Tier 2)	620	525	82	5,723	5,723
	1,946	1,637	637	25,186	22,545
Less: deductions	-134	-115	-86	-668	-667
Net qualifying capital	1,812	1,522	551	24,518	21,878
Risk-weighted assets (banking and trading)	11,276	9,045	2,999	157,006	142,574
Capital requirements	903	723	390	14,916	13,544
Credit risk	720	588	337	12,001	11,271
Securitisation exposures	25	25	0	358	358
Equity risk	18	17	8	679	664
Market risk	22	22	2	156	88
Operational risk	118	71	43	1,722	1163
Capital adequacy ratio	16.1%	16.8%	18.4%	15.6%	15.3%
Tier 1 ratio	11.5%	12.1%	16.0%	12.2%	11.6%
Capital adequacy ratio - pre operational risk	18.5%	18.7%	20.7%	17.7%	16.8%
Tier 1 ratio - pre operational risk	13.2%	13.5%	18.0%	13.8%	12.7%

*IBP is Investec Bank plc; IBAL is Investec Bank (Australia) Limited and IBL is Investec Bank Limited. ^Investec plc includes IBP. IBP includes IBAL. Investec Limited includes IBL.

Timetable:

Pre-close briefing: 16 September 2010

Interim period: 30 September 2010

Release of interim results: 18 November 2010

For further information please contact:

Investec Investor Relations                                                                     

UK: [phone]                                                          

South Africa: [phone]

[e-mail]

 

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 6 100 employees.

Investec focuses on delivering distinctive profitable solutions for its clients in six core areas of activity namely, Asset Management, Private Wealth, Property Activities, Private Banking, Investment Banking and Capital Markets.

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 GBP3.9 billion.

 

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