11th May 2012 07:00
Investec LimitedIncorporated in the Republic of South AfricaRegistration number 1925/002833/06JSE share code: INLISIN: ZAE000081949 | Investec plcIncorporated in England and WalesRegistration number 3633621JSE share code: INPISIN: 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.
Investec plc and Investec Limited ("Investec") combined results
Reclassifications and enhancements to the disclosures for the results for the year ended 31 March 2011 (as previously reported)
Overview
In terms of Investec's recent presentations and announcements you would be aware that the Investec Group has positioned its strategic discussions around three core business areas namely, Asset Management, Wealth & Investment and Specialist Banking.
In some respects the Group feels that it has historically overcomplicated its external disclosures by elaborating on six core areas of business. As you would have already seen in the Group's recent presentations all the banking businesses have been combined under one broader umbrella of the Specialist Bank.
As a result the Group has chosen to refine some of its disclosures which are explained further below.
The Group believes that these refinements provide greater clarity on the key income and balance sheet drivers of its business.
The financial information on which this statement is based has not been reviewed and reported on by the Group's auditors.
Investec will be hosting a conference call at 11:00 SA time (10:00 UK time) on 11 May, 2012, to go through these refinements.
Details pertaining to the conference call can be found at www.investec.com
For further information contact:
Investec Investor Relations
Tel: +27 (0) 11 286 7070
Tel: +44 (0) 207 597 5546
email: [email protected]
Investec plc and Investec Limited
Combined consolidated income statement
Unaudited
Commentary on income statement reclassifications
·; The previously reported principal transaction income line item has been split into the following line items:
o Investment income: income, other than margin, from securities held for the purpose of generating interest yield, dividends and capital appreciation
o Client flow trading income: income from trading activities arising from making and facilitating client activities
o Income from balance sheet management and other trading activities: includes proprietary trading income and other gains and losses as well as income earned from the balance sheet management desk
·; With the continued reduction in insurance activity, it is deemed appropriate to move the associated line items to other operating income
For the year ended 31 March 2011 | For the year ended 31 March 2011 | ||
GBP'000 | NEW FORMAT | AS PREVIOUSLY REPORTED | Reclassifications |
Interest income | 2 238 783 | 2 238 783 | - |
Interest expense | (1 557 314) | (1 557 314) | - |
Net interest income | 681 469 | 681 469 | - |
Fee and commission income | 896 300 | 896 300 | - |
Fee and commission expense | (108 642) | (108 642) | - |
Principal transactions | - | 418 686 | -418 686 |
Investment income | 254 943 | - | 254 943 |
Trading income | |||
- From customer flow | 76 447 | - | 76 447 |
- From balance sheet management and other trading activities | 87 296 | - | 87 296 |
Investment income on assurance activities | - | 64 834 | (64 834) |
Premiums and reinsurance recoveries on insurance contracts | - | 6 110 | (6 110) |
Other operating income | 67 173 | 54 003 | 13 170 |
Claims and reinsurance premiums on insurance business | - | (57 774) | 57 774 |
Total operating income before impairment losses on loans and advances | 1 954 986 | 1 954 986 | - |
Impairment losses on loans and advances | (318 230) | (318 230) | - |
Operating income | 1 636 756 | 1 636 756 | - |
Operating costs | (1 196 865) | (1 196 865) | - |
Depreciation on operating leased assets | (16 447) | (16 447) | - |
Operating profit before goodwill | 423 444 | 423 444 | - |
Impairment of goodwill | (6 888) | (6 888) | - |
Amortisation of acquired intangibles | (6 341) | (6 341) | - |
Operating profit | 410 215 | 410 215 | - |
Profit arising from associate converted to subsidiary | 73 465 | 73 465 | - |
Net loss on disposal of group operations | (17 302) | (17 302) | - |
Profit before taxation | 466 378 | 466 378 | - |
Taxation on operating profit before goodwill | (65 075) | (65 075) | - |
Taxation on acquired intangibles and acquisition/ disposal of group operations | 6 610 | 6 610 | - |
Profit after taxation | 407 913 | 407 913 | - |
Operating losses attributable to non-controlling interests | 10 962 | 10 962 | - |
Non operating losses attributable to non-controlling interests | 1 641 | 1 641 | - |
Earnings attributable to shareholders | 420 516 | 420 516 | - |
Investec plc and Investec Limited
Combined consolidated balance sheet
Unaudited
Commentary on balance sheet reclassifications
The main driver behind the revision to the balance sheet is to enable a better read of Investec's exposures and to minimise reconciliation points to the detailed risk disclosures in the annual report.
It is noted that there are no measurement changes nor are there any changes to total assets, liabilities and equity.
Each category of reclassification is noted below:
·; Cash equivalent corporate paper
Cash equivalent advances to customers has been renamed to "non-sovereign, non-bank cash placements". These balances represent short term placements in corporates that run an in-house treasury function.
·; Loans and securitisation
To better align the balance sheet with the Group's risk management disclosures, loans and advances and securitised assets that form part of our "core" lending activities has been separated from assets that are in warehoused facilities and structured credit investments arising out of our securitisation and principal finance activities. This has resulted in a need to split loans and advances and securitised assets into two balance sheet categories for each. Securitised liabilities has been split into two line items to enable the relationship with securitised assets to be clearly identified.
·; Securities reclassification
The Group's previous balance sheet split securities (other than lending related) into two key line items being trading and investment securities. This classification was driven by the accounting rule sets that mainly distinguish between instruments fair valued through profit and loss, those carried at amortised cost (held to maturity) and those fair valued through equity (available for sale). The Group is of the view that disclosure of the nature of exposures on the balance sheet, distinguishing between instruments held to manage balance sheet liquidity, as principal exposure and balance sheet instruments arising from trading desk activities provides more meaningful disclosure on the face of the balance sheet. The line item "securities arising from trading securities" includes all instruments (other than derivative instruments) that are held on balance sheet in relation to trading activities.
GBP'000 | As at 31 March 2011 | As at 31 March 2011 | Reclassifications | Cash equivalent corporate paper | Loans and securitisation | Securities reclassification |
NEW FORMAT | AS PREVIOUSLY REPORTED | |||||
Assets | ||||||
Cash and balances at central banks | 1 769 078 | 1 769 078 | - | - | - | - |
Loans and advances to banks | 1 468 705 | 1 468 705 | - | - | - | - |
Cash equivalent advances to customers | - | 535 983 | (535 983) | (535 983) | - | - |
Reverse repurchase agreements and cash collateral on securities borrowed | 2 467 775 | 2 467 775 | - | - | - | - |
Non-sovereign and non-bank cash placements | 535 983 | - | 535 983 | 535 983 | - | - |
Sovereign debt securities | 3 532 100 | - | 3 532 100 | - | - | 3 532 100 |
Bank debt securities | 3 006 129 | - | 3 006 129 | - | - | 3 006 129 |
Other debt securities | 267 132 | - | 267 132 | - | - | 267 132 |
Trading securities | - | 5 114 322 | (5 114 322) | - | - | (5 114 322) |
Securities arising from trading activities | 743 487 | - | 743 487 | - | - | 743 487 |
Derivative financial instruments | 1 799 204 | 1 799 204 | - | - | - | - |
Investment securities | - | 3 328 609 | (3 328 609) | - | - | (3 328 609) |
Loans and advances to customers | 17 692 356 | 18 758 524 | (1 066 168) | - | (1 066 168) | - |
Securitised assets | - | 4 924 293 | (4 924 293) | - | (4 924 293) | - |
Own originated loans and advances to customers securitised | 1 065 782 | - | 1 065 782 | - | 1 065 782 | - |
Other loans and advances | 1 066 168 | - | 1 066 168 | - | 1 066 168 | - |
Warehouse assets Kensington | 1 612 181 | 1 612 181 | - | - | - | - |
Other securitised assets | 3 858 511 | - | 3 858 511 | - | 3 858 511 | - |
Investment portfolio | 858 610 | - | 858 610 | - | - | 858 610 |
Interests in associated undertakings | 23 481 | 23 481 | - | - | - | - |
Deferred taxation assets | 114 838 | 114 838 | - | - | - | - |
Other assets | 1 446 066 | 1 410 593 | 35 473 | - | - | 35 473 |
Property and equipment | 279 801 | 279 801 | - | - | - | - |
Investment property | 379 527 | 379 527 | - | - | - | - |
Goodwill | 456 608 | 456 608 | - | - | - | - |
Intangible assets | 136 452 | 136 452 | - | - | - | - |
44 579 974 | 44 579 974 | - | - | - | - | |
Other financial instruments at fair value through profit and loss in respect of liabilities to customers | 6 361 296 | 6 361 296 | - | - | - | - |
50 941 270 | 50 941 270 | - | - | - | - | |
Liabilities | ||||||
Deposits by banks | 1 858 893 | 1 858 893 | - | - | - | - |
Deposits by banks Kensington | 975 542 | 975 542 | - | - | - | - |
Derivative financial instruments | 1 486 419 | 1 486 419 | - | - | - | - |
Other trading liabilities | 716 556 | 716 556 | - | - | - | - |
Repurchase agreements and cash collateral on securities lent | 1 599 646 | 1 599 646 | - | - | - | - |
Customer accounts (deposits) | 24 441 260 | 24 441 260 | - | - | - | - |
Debt securities in issue | 2 145 213 | 2 145 213 | - | - | - | - |
Liabilities arising on securitisation | - | 4 340 864 | (4 340 864) | - | (4 340 864) | - |
Liabilities arising on securitisation of own originated loans and advances | 1 052 281 | - | 1 052 281 | - | 1 052 281 | - |
Liabilities arising on securitisation of other assets | 3 288 583 | - | 3 288 583 | - | 3 288 583 | - |
Current taxation liabilities | 206 957 | 206 957 | - | - | - | - |
Deferred taxation liabilities | 148 750 | 148 750 | - | - | - | - |
Other liabilities | 1 411 137 | 1 411 137 | - | - | - | - |
39 331 237 | 39 331 237 | - | - | - | - | |
Liabilities to customers under investment contracts | 6 358 732 | 6 358 732 | - | - | - | - |
Insurance liabilities, including unit-linked liabilities | 2 564 | 2 564 | - | - | - | - |
45 692 533 | 45 692 533 | - | - | - | - | |
Subordinated liabilities | 1 287 635 | 1 287 635 | - | - | - | - |
46 980 168 | 46 980 168 | - | - | - | - | |
Equity | ||||||
Ordinary share capital | 208 | 208 | - | - | - | - |
Perpetual preference share capital | 153 | 153 | - | - | - | - |
Share premium | 2 242 067 | 2 242 067 | - | - | - | - |
Treasury shares | (42 713) | (42 713) | - | - | - | - |
Other reserves | 315 878 | 315 878 | - | - | - | - |
Retained income | 1 131 980 | 1 131 980 | - | - | - | - |
Shareholders' equity excluding non-controlling interests | 3 647 573 | 3 647 573 | - | - | - | - |
Non-controlling interest | 313 529 | 313 529 | - | - | - | - |
- Perpetual preferred securities issued by subsidiaries | 317 997 | 317 997 | - | - | - | - |
- Non-controlling interests in partially held subsidiaries | (4 468) | (4 468) | - | - | - | - |
Total equity | 3 961 102 | 3 961 102 | - | - | - | - |
- | ||||||
Total liabilities and equity | 50 941 270 | 50 941 270 | - | - | - | - |
Investec plc and Investec Limited
Line of business segmental income statement disclosures
Unaudited
Commentary on line of business segmental reclassifications
The Group previously reported segmental disclosures by six core business lines as well as including a segment for the Group's central functions. The Group is now disclosing its segmental disclosures in three core business lines, namely, Asset Management, Wealth & Investment and Specialist Banking. In this regard:
·; The income statement format has been revised as discussed above
·; The numbers as reported previously for Asset Management and Wealth & Investment have not changed (barring the income statement reclassifications as referred to above)
·; The Property Activities, Private Banking, Investment Banking, Capital Markets and Group Services and Other divisions have now been grouped under one banner and collectively referred to as the Specialist Bank. The total operating profit has however, not changed from that which was previously reported
For the year ended 31 March 2011 NEW FORMAT | Asset Management | Wealth & Investment | Specialist Banking | Total Group |
GBP'000 | ||||
Net interest income | 2 989 | 7 281 | 671 199 | 681 469 |
Fee and commission income | 411 935 | 159 055 | 325 310 | 896 300 |
Fee and commission expense | (72 831) | (11 414) | (24 397) | (108 642) |
Investment income | (40) | 1 126 | 253 857 | 254 943 |
Trading income | ||||
- From customer flow | - | (1 932) | 78 379 | 76 447 |
- From balance sheet management and other trading activities | - | (528) | 87 824 | 87 296 |
Other operating income | 2 537 | 2 651 | 61 985 | 67 173 |
Total operating income before impairment losses on loans and advances | 344 590 | 156 239 | 1 454 157 | 1 954 986 |
Impairment losses on loans and advances | 29 | - | (318 259) | (318 230) |
Operating income | 344 619 | 156 239 | 1 135 898 | 1 636 756 |
Operating costs | (216 947) | (115 813) | (864 105) | (1 196 865) |
Depreciation on operating leased assets | - | - | (16 447) | (16 447) |
Operating profit before goodwill and acquired intangibles | 127 672 | 40 426 | 255 346 | 423 444 |
Operating losses attributable to non-controlling interests | (364) | - | 11 326 | 10 962 |
Operating profit before goodwill, acquired intangibles and after non-controlling interests | 127 308 | 40 426 | 266 672 | 434 406 |
AS PREVIOUSLY REPORTED: Operating profit before goodwill, acquired intangibles and after non-controlling interests | 127 308 | 40 426 | 266 672 |
|
Asset Management | 127 308 |
| ||
Wealth & Investment | 40 426 |
| ||
Property Activities | 47 708 |
| ||
Private Banking | (91 441) |
| ||
Investment Banking | 67 362 |
| ||
Capital Markets | 242 049 |
| ||
Group Services and Other activities | 994 |
|
Investec plc and Investec Limited
Geographical segmental income statement disclosures
Unaudited
Commentary on geographical segmental reclassifications
·; The income statement format has been revised as discussed above
·; Total operating profit per geography agrees to numbers as previously disclosed
For the year ended 31 March 2011 NEW FORMAT | UK & Europe | Southern Africa | Australia | Total Group |
GBP'000 | ||||
Net interest income | 270 811 | 338 247 | 72 411 | 681 469 |
| ||||
Fee and commission income | 523 225 | 333 037 | 40 038 | 896 300 |
Fee and commission expense | (99 473) | (5 280) | (3 889) | (108 642) |
Investment income | 138 193 | 111 904 | 4 846 | 254 943 |
Trading income | ||||
- From customer flow | 43 353 | 27 694 | 5 400 | 76 447 |
- From balance sheet management and other trading activities | 62 430 | 25 133 | -267 | 87 296 |
Other operating income | 51 122 | 18 380 | -2 329 | 67 173 |
Total operating income before impairment losses on loans and advances | 989 661 | 849 115 | 116 210 | 1 954 986 |
Impairment losses on loans and advances | (210 485) | (77 538) | (30 207) | (318 230) |
Operating income | 779 176 | 771 577 | 86 003 | 1 636 756 |
Operating costs | (640 282) | (471 013) | (85 570) | (1 196 865) |
Depreciation on operating leased assets | (16 447) | - | - | (16 447) |
Operating profit before goodwill and acquired intangibles | 122 447 | 300 564 | 433 | 423 444 |
Operating losses attributable to non-controlling interests | 11 179 | (490) | 273 | 10 962 |
Operating profit before goodwill, acquired intangibles and after non-controlling interests | 133 626 | 300 074 | 706 | 434 406 |
Investec plc and Investec Limited
Segmental operating profit disclosures
Commentary on segmental geographic and business analysis of operating profit before goodwill, acquired intangibles, non-operating items, taxation and after non-controlling interests
The Group will provide the same disclosures as it previously reported and as reflected below:
For the year ended 31 March 2011 (GBP'000) | UK & Europe | Southern Africa | Australia | Total group |
Asset Management | 53 002 | 74 306 | - | 127 308 |
Wealth and Investment | 25 008 | 15 418 | - | 40 426 |
Specialist Banking | 55 616 | 210 350 | 706 | 266 672 |
Property Activities | 375 | 40 178 | 7 155 | 47 708 |
Private Banking | (84 041) | 2 990 | (10 390) | (91 441) |
Investment Banking | 8 887 | 65 191 | (6 716) | 67 362 |
Capital Markets | 139 978 | 92 211 | 9 860 | 242 049 |
Group Services and Other Activities | (9 583) | 9 780 | 797 | 994 |
Total group | 133 626 | 300 074 | 706 | 434 406 |
Investec plc and Investec Limited
Additional income statement note disclosures
Unaudited
Commentary on additional income statement note disclosures
The Group will provide further information with respect to net interest income, net fees and commissions and investment income as reflected below
Net interest income for the year ended 31 March 2011 | ||||||||
GBP'000 | Balance sheet value as at 31 March 2011 | Interest Received | Balance sheet value as at 31 March 2011 | Interest Received | Balance sheet value as at 31 March 2011 | Interest Received | Balance sheet value as at 31 March 2011 | Interest Received |
UK & Europe | UK & Europe | Southern Africa | Southern Africa | Australia | Australia | Total Group | Total Group | |
Cash, near cash and bank debt and sovereign debt securities | 4 626 562 | 19 642 | 7 147 523 | 306 128 | 1 005 685 | 45 459 | 12 779 770 | 371 229 |
Core loans and advances | 5 576 252 | 318 102 | 11 106 445 | 979 123 | 2 075 441 | 187 343 | 18 758 138 | 1 484 568 |
Private Client | 3 378 213 | 178 218 | 8 126 148 | 664 934 | 1 820 450 | 158 958 | 13 324 811 | 1 002 110 |
Corporate, institutional and other clients | 2 198 039 | 139 884 | 2 980 297 | 314 189 | 254 991 | 28 385 | 5 433 327 | 482 458 |
Other debt securities and other loans and advances | 722 836 | 60 109 | 476 998 | 39 345 | 133 466 | 6 746 | 1 333 300 | 106 200 |
Other interest earning assets | 6 809 548 | 235 936 | 1 774 765 | 33 391 | 131 649 | 7 459 | 8 715 962 | 276 786 |
Total interest earning assets | 17 735 198 | 633 789 | 20 505 731 | 1 357 987 | 3 346 241 | 247 007 | 41 587 170 | 2 238 783 |
GBP'000 | Balance sheet value as at 31 March 2011 | Interest Paid | Balance sheet value as at 31 March 2011 | Interest Paid | Balance sheet value as at 31 March 2011 | Interest Paid | Balance sheet value as at 31 March 2011 | Interest Paid |
UK & Europe | UK & Europe | Southern Africa | Southern Africa | Australia | Australia | Total Group | Total Group | |
Deposits by banks and other debt related securities | 3 585 032 | 70 911 | 3 432 229 | 68 150 | 1 048 452 | 56 577 | 8 065 713 | 195 638 |
Customer accounts | 8 812 240 | 192 456 | 14 207 218 | 830 450 | 1 421 802 | 80 388 | 24 441 260 | 1 103 294 |
Other interest bearing liabilities | 4 062 716 | 53 699 | 1 193 502 | 63 045 | 495 783 | 35 558 | 5 752 001 | 152 302 |
Subordinated liabilities | 636 468 | 45 912 | 619 385 | 58 095 | 31 802 | 2 073 | 1 287 655 | 106 080 |
Total interest bearing liabilities | 17 096 456 | 362 978 | 19 452 334 | 1 019 740 | 2 997 839 | 174 596 | 39 546 629 | 1 557 314 |
Net interest income | 270 811 | 338 247 | 72 411 | 681 469 | ||||
Net fees and commissions for the year ended 31 March 2011
| ||||
GBP'000 | UK & Europe | Southern Africa | Australia | Total Group |
Fund management fees/fees for assets under management | 332 621 | 183 994 | 7 580 | 524 195 |
Private client transactional fees | 53 763 | 80 543 | 12 761 | 147 067 |
Corporate and institutional transactional and advisory services | 136 841 | 68 500 | 19 697 | 225 038 |
Fee and commission income | 523 225 | 333 037 | 40 038 | 896 300 |
Fee and commission expense | (99 473) | (5 280) | (3 889) | (108 642) |
Net fees and commissions | 423 752 | 327 757 | 36 149 | 787 658 |
Investment income for the year ended 31 March 2011 | ||||
GBP'000 | UK & Europe | Southern Africa | Australia | Total Group |
Realised | 124 196 | 31 271 | 4 061 | 159 528 |
Unrealised | 13 054 | 64 915 | 767 | 78 736 |
Dividend income | 943 | 37 482 | 18 | 38 443 |
Funding costs | - | (21 764) | - | (21 764) |
Investment income | 138 193 | 111 904 | 4 846 | 254 943 |
Investment income for the year ended 31 March 2011 | |||||
GBP'000 | Investment portfolio (listed and unlisted equities) |
Debt securities (sovereign, bank and other) | Investment properties | Other asset categories | Total |
Realised | 29 610 | 89 385 | - | 5 201 | 124 196 |
Unrealised | 13 217 | (163) | - | - | 13 054 |
Dividend income | 943 | - | - | - | 943 |
Funding costs | - | - | - | - | - |
Investment income: UK & Europe | 43 770 | 89 222 | - | 5 201 | 138 193 |
GBP'000 | Investment portfolio (listed and unlisted equities) | Debt securities (sovereign, bank and other)
| Investment properties | Other asset categories | Total |
Realised | 26 922 | 3 441 | 908 | - | 31 271 |
Unrealised | 12 072 | (2 141) | 54 984 | - | 64 915 |
Dividend income | 36 826 | 37 | 619 | - | 37 482 |
Funding costs | (15 818) | (107) | (5 839) | - | (21 764) |
Investment income: Southern Africa | 60 002 | 1 230 | 50 672 | - | 111 904 |
GBP'000 | Investment portfolio (listed and unlisted equities) | Debt securities (sovereign, bank and other)
| Investment properties | Other asset categories | Total |
Realised | 130 | 1 578 | - | 2 353 | 4 061 |
Unrealised | 767 | - | - | - | 767 |
Dividend income | 18 | - | - | - | 18 |
Funding costs | - | - | - | - | - |
Investment income: Australia | 915 | 1 578 | - | 2 353 | 4 846 |
Investec plc and Investec Limited
Other disclosures
Commentary on other disclosures
The balance of the Group's non-financial statement disclosures will largely remain as previously reported
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