Integrated Annual Report 2015

Wealth & Investment

Investec Wealth & Investment offers its clients comfort in its scale, international reach and depth of investment processes. Investec Wealth & Investment is one of the UK’s leading private client investment managers and the largest in South Africa

Today the business specialises in wealth management, portfolio management, private office and stockbroking services for individuals, families, trusts and charities. Through the alliance of Investec Private Client Securities in South Africa, Investec Wealth & Investment Limited in the UK, Investec Bank Switzerland, Investec Wealth & Investment Ireland and Investec Wealth & Investment Channel Islands, Investec Wealth & Investment is one of the UK’s leading private client investment managers, the largest in South Africa, and has a significant European presence.

Global head: Steve Elliott
UK head: Jonathan Wragg
South Africa head: Henry Blumenthal
Switzerland head: Peter Gyger
Ireland Wealth Management head: Eddie Clarke


Further detail on the Wealth & Investment management structure is available on our website: www.investec.com

Our value proposition


Annual Highlights

Annual Highlights

What we do and where we operate

UK and Europe

Investments and savings

  • Discretionary and advisory portfolio management services for private clients
  • Specialist investment management services for charities, pension schemes and trusts
  • Independent financial planning advice for private clients
  • Specialist portfolio management services for international clients.
 

Pensions and retirement

  • Discretionary investment management for company pension and Self Invested Personal Pensions (SIPPs)
  • Advice and guidance on pension schemes, life assurance and income protection schemes.
 

Tax planning

  • Succession planning
  • ISAs
  • Retirement planning
  • Venture Capital Trusts (VCT) and Enterprise Investment Schemes (EIS).

The European operations are conducted through Investec Wealth & Investment Limited in the UK, Investec Bank Switzerland, Investec Wealth & Investment Ireland, and in Guernsey through Investec Wealth & Investment Channel Islands.

Over 1 150 staff operate from offices located throughout the UK and Europe, with combined funds under management of £29.6 billion. Investec Wealth & Investment is one of the UK’s leading providers of private client investment management services.


South Africa

 

Investec Wealth & Investment South Africa provides portfolio management, wealth management and stockbroking services for private clients, charities, pension funds and trusts, operating from eight offices across South Africa with R89.4 billion of discretionary and annuity managed assets, and a further R207.4 billion of funds under various other forms of administration.


Financial analysis

Financial analysis
* Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests.
** As calculated here, based on regulatory capital requirements.

Operating profit^ — track record

^ Trend reflects numbers as at the year ended 31 March. Amounts from 2008 are shown before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. Prior to 2008, amounts have not been adjusted for non-controlling interests.

Income statement analysis

£’000 31 March 
2015 
31 March 
2014 
Variance  % change 
Net interest income 6 556  7 857  (1 301) (16.6%)
Net fee and commission income 299 663  275 377  24 286  8.8% 
Investment income 4 123  2 183  1 940  88.9% 
Trading income arising from        
– customer flow 1 024  1 324  (300) (22.7%)
– balance sheet management and other trading activities 574  58  516  > 100.0% 
Other operating income 1 277  1 234  43  3.5% 
Total operating income 313 217  288 033  25 184  8.7% 
Operating costs (234 436) (221 934) (12 502) 5.6% 
Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests 78 781  66 099  12 682  19.2% 
         
UK and Europe 56 871  46 065  10 806  23.5% 
South Africa 21 910  20 034  1 876  9.4% 
Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests 78 781  66 099  12 682  19.2% 
         
Selected returns and key statistics        
Ordinary shareholders’ equity* 255 318  292 650  (37 332) (12.8%)
ROE (pre-tax)* 25.5%  19.9%     
Return on tangible equity (pre-tax)* 136.1%  142.1%     
Operating margin 25.2%  22.9%     
Operating profit per employee (£’000)* 54.0   48.7  5.3  10.9% 
* As calculated on regulatory capital requirements.

The variance in operating profit over the year can be explained as follows:

Analysis of key earnings drivers (funds under management)

£’million 31 March  2015  31 March  2014* % change 
UK and Europe 29 562  26 574  11.2% 
Discretionary 21 602  18 513  16.7% 
Non-discretionary and other 7 960  8 061  (1.3%)
       
South Africa 16 514  14 198  16.3% 
Discretionary and annuity assets 4 974  4 189  18.7% 
Non-discretionary and other 11 540  10 009  15.3% 
       
Total 46 076  40 772  13.0% 


UK and Europe: analysis of key drivers (funds under management and flows)

Funds under management

£’million 31 March 
2015 
31 March  
2014*
% change 
Investec Wealth & Investment Limited (UK) 27 319  24 176   13.0% 
Discretionary 21 128  18 185   16.2% 
Non-discretionary 5 971  5 753   3.8% 
Other 220  238   (7.6%)
       
Rest of Europe 2 243  2 398   (6.5%)
Discretionary 474  328   44.5% 
Non-discretionary 1 769  2 070   (14.5%)
       
Total 29 562 26 574   11.2% 


Further analysis of the Investec Wealth & Investment Limited UK business

Funds under management and flows

£’billion 31 March 
2015 
31 March    
2014***
% change 
At the beginning of the year 24.18  22.27      
Inflows 2.90  2.48      
Outflows (1.02) (1.23)     
Market adjustment^ 1.34  0.70      
Transfers* (0.08) (0.04)     
At the end of the year 27.32  24.18     13.0% 
       
WMA Private Investors Balanced Index (at year end) 3 684  3 385     8.8% 
Annualised underlying rate of net organic growth in total funds under management** 7.8%  5.6%      
% of total funds managed on a discretionary basis 78.1%  76.2%      


South Africa: analysis of key earnings drivers (funds under management and flows)

Funds under management

R’million 31 March 
2015 
31 March  
2014*
% change 
Discretionary and annuity assets 89 382  73 558   21.5% 
Non-discretionary 207 379  175 757   18.0% 
Total 296 761  249 315   19.0% 

Net inflows/(outflows) at cost over the period

R’million 31 March 
2015 
31 March      2014*   
Discretionary and annuity assets 6 261  4 959     
Non-discretionary 8 065  (2 616)^^
Total 14 326  2 343     


Questions and answers

Questions and answers

Steve Elliott

Global head

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