Investec plc, the international specialist bank and asset manager, has released its consolidated results for the year ended 31 March 2014. Investec plc has a current market cap of R54.80 billion and trades on a 20.16 PE ratio and dividend yield of 3.06%. The group’s share price has gained 29% in the last year.
As the group’s Pound Sterling results have been negatively impacted by the depreciation of the average Rand: Pounds Sterling exchange rate of approximately 20% over the period, both Rand and Pound Sterling financial features are reflected in the highlights and financial features summary below.
Highlights
- Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests increased 28.0% in Rands to R7.328 million (2013: R5.725 million)
- Recurring income as a percentage of total operating income amounted to 70.7% (2013: 68.6%)
- Wealth & Investment’s operating profit increased by 56.2% in Rands and Asset Management reported operating profit in Rands was 22.8% ahead of the prior year, with both divisions benefiting from higher levels of average funds under management and combined net inflows of R64 billion
- The Specialist Banking business reported an increase in operating profit of 25.0% in Rands supported by a strong performance from the majority of its businesses in South Africa and a significant decline in impairments in the UK
- The Australian business reported a loss impacted by strategic restructuring, with the pending sale of a large portion of the business announced post the year-end
- The combined South African business reported operating profit 25.3% ahead of the prior year in Rands, whilst the combined UK business posted a 24.4% increase in operating profit in Pound Sterling
- Total group impairments have decreased by 18.3% in Rands, with the credit loss charge as a percentage of average gross core loans and advances improving from 0.84% at 31 March 2013 to 0.68%
- Capital remained well in excess of current regulatory requirements. All banking subsidiaries meet current internal targets. Investec Limited and Investec plc should comfortably achieve a common equity tier one ratio above 10% by March 2016
- Liquidity remains strong with cash and near cash balances amounting to R160 billion
Stephen Koseff, Chief Executive Officer of Investec said: “These are good results and very much in line with expectations, despite the weakness of the Rand. We have made significant strides to reshape and simplify the group to focus on our core businesses with the restructuring and sale of part of our Australian businesses, the sale of our Trust businesses, Lease Direct and strong interest in Kensington. We are now a very different looking business with a lean, well capitalised, focused Specialist Bank sitting alongside our strong Asset Management and Wealth & Investment businesses.”
Bernard Kantor, Managing Director of Investec said, “We have dealt decisively with a number of legacy issues and will continue to take action wherever necessary to ensure that the group and its shareholders benefit from strengthening global economies. Strategically, we are now looking at how best to redeploy capital to improve returns to shareholders released through the pending sale of the Australian businesses and the potential sale of Kensington.”
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