In­vestec prof­its surge to £701m

Sub­stan­tial net in­flows

The Mercury - - BUSINESS REPORT - Sandile Mchunu

OUT­GO­ING In­vestec chief ex­ec­u­tive Stephen Kos­eff yes­ter­day re­ported a 5.6 per­cent surge in op­er­at­ing prof­its to £701 mil­lion (R11.82 bil­lion) for the year to end March in his last re­sults for the com­pany.

Kos­eff, who is step­ping down in Oc­to­ber af­ter 40 years of help­ing build the bank and money man­ager, said the group man­aged to up its prof­its from £663.7m recorded last year de­spite a R220m loss in Stein­hoff In­ter­na­tional in­vest­ments dur­ing the pe­riod.

Kos­eff said the per­for­mance was un­der­pinned by sound growth in loans and funds un­der man­age­ment as well a solid re­cur­ring in­come base de­spite a chal­leng­ing back­drop in South Africa and the UK.

He said the com­pany’s Wealth & In­vest­ment and As­set Man­age­ment busi­nesses gen­er­ated sub­stan­tial net in­flows with As­set Man­age­ment ex­ceed­ing £100bn of funds un­der man­age­ment for the first time.

“We have im­ple­mented an or­derly suc­ces­sion plan and feel con­fi­dent that we are hand­ing over a busi­ness that is well placed to con­tinue to grow both its mar­ket po­si­tion and prof­itabil­ity over the fore­see­able fu­ture,” he said.

As­set man­age­ment op­er­at­ing profit in­creased 8 per­cent to £178m, up from £164.8m sup­ported by higher av­er­age funds un­der man­age­ment aris­ing from strong net in­flows of £5.4bn and favourable mar­ket and cur­rency move­ments.

Wealth & In­vest­ment op­er­at­ing profit in­creased by 5.7 per­cent to £98.6m, up from £93.2m. The group said the busi­ness ben­e­fited from higher av­er­age funds un­der man­age­ment sup­ported by higher eq­uity mar­ket levels and solid net in­flows of £2bn while to­tal funds un­der man­age­ment amounted to £56bn, up from £54.8bn.

The UK and other busi­nesses re­ported a 9.3 per­cent de­crease in op­er­at­ing profit while the lo­cal unit re­ported an in­crease in op­er­at­ing profit of 6.9 per­cent. The group’s over­all ad­justed earn­ings per share be­fore good­will, ac­quired in­tan­gi­bles and non-op­er­at­ing items in­creased by 13.3 per­cent to 61.3 pence.

The group said the board pro­posed a fi­nal div­i­dend of 13.5 pence per or­di­nary share, equat­ing to a full year div­i­dend of 24 pence, up by 4.34 per­cent as com­pared to last year’s 23 pence, adding that Brexit and po­lit­i­cal un­cer­tainty in South Africa con­tin­ued to af­fect cor­po­rate and con­sumer con­fi­dence in the two mar­kets.

Ron Klipin, a se­nior an­a­lyst at Cratos Cap­i­tal, said that the re­sults re­flected a mixed op­er­at­ing en­vi­ron­ment in UK and SA, with net in­flows of £7.3bn for as­set and wealth man­age­ment.

“Ster­ling was up by 6.6 per­cent as com­pared to the rand and it was pos­i­tive for re­sults,” Klipin said. “An­nu­ity fees are up 14.2 per­cent but trad­ing in­come de­creased 19.4 per­cent. Fees and op­er­at­ing in­come were down 15.7 per­cent due to the im­pact of Stein­hoff losses. The cost to in­come ra­tio is up 8 per­cent, due to in­creased op­er­at­ing costs. Op­er­at­ing costs rose due partly to on­go­ing in­vest­ment and ex­pan­sion. Im­pair­ments in­creased by around £36m.”

Ne­san Nair, a se­nior port­fo­lio man­ager at Sas­fin Se­cu­ri­ties, said the stronger rand damp­ened the com­pany’s over­all per­for­mance.

“I do not think the re­sults were too bad, ex­cept that the rand was stronger against the pound since the last re­port­ing pe­riod,” he said.

In­vestec shares gained 1.45 per­cent on the JSE yes­ter­day to close at R96.41.


In­vestec chief ex­ec­u­tive Stephen Kos­eff is step­ping down in Oc­to­ber.

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