| |
| Group Services
includes the Central
Services and Central
Funding functions,
while Other Activities
predominantly
includes the
International Trade
Finance business |
| |
Scope of activities |
Central Services |
| • |
Corporate Affairs |
| • |
Corporate Social Investment |
| • |
Economics Research |
| • |
Finance and Operations |
| • |
Head Office |
| • |
Human Resources |
| • |
Information and Business Intelligence Centre |
| • |
Information Technology |
| • |
International Financial Institutions |
| • |
Investor Relations |
| • |
Legal and Tax |
| • |
Marketing |
| • |
Organisation Development |
| • |
Regulatory, Internal Audit and Compliance |
| • |
Risk Management |
| • |
Secretarial |
| • |
Staff Share Schemes. |
|
| |
Other Activities |
| International Trade Finance (ReichmansCapital) – trade, asset and debtor finance. |
| |
Management structure |
|
|
| Banking and Institutions |
David Lawrence |
| Chief Integrating Officer |
Allen Zimbler |
| Corporate Affairs and Sustainability |
Carole Mason |
| Corporate Governance and Compliance |
Bradley Tapnack |
| Finance, IT and Operations |
Rayanne Jacobson |
| Human Resources |
Allen Zimbler (UK)
Tracey Rowe (SA) |
| International Financial Institutions |
Helmut Bahrs |
| Investor Relations |
Ursula Nobrega |
| Legal |
David Nurek |
| Marketing |
Raymond van Niekerk |
| Organisation Development |
Caryn Solomon (UK)
Marc Kahn (SA) |
| Risk Management |
Ciaran Whelan |
| Secretarial and Staff Share Schemes |
Les Penfold |
| Tax |
Pankaj Shah (UK)
Justin Cowley (SA) |
| ReichmansCapital |
Robin Jacobson
John Wilks |
|
| |
| |
Overview and financial analysis |
| £’000 |
31 March
2010 |
31 March
2009 |
Variance |
% change |
| International Trade Finance |
7 174 |
7 215 |
(41) |
(0.6) |
| Central Funding |
97 745 |
90 721 |
7 024 |
7.7 |
| Central Services |
(73 198) |
(66 142) |
(7 056) |
10.7 |
| Operating profit before goodwill, non-operating items, taxation and after minorities |
31 721 |
31 794 |
(73) |
(0.2) |
|
| |
31 March 2010
£’000 |
UK and
Europe |
Southern
Africa |
Australia |
Total group |
| International Trade Finance |
2 454 |
4 720 |
– |
7 174 |
| Central Funding |
19 064 |
70 943 |
7 738 |
97 745 |
| Central Services |
(30 925) |
(34 801) |
(7 472) |
(73 198) |
| Operating profit before goodwill, non-operating items, taxation and after minorities |
(9 407) |
40 862 |
266 |
31 721 |
|
| |
31 March 2009
£’000 |
UK and
Europe |
Southern
Africa |
Australia |
Total group |
| International Trade Finance |
3 026 |
4 189 |
– |
7 215 |
| Central Funding |
12 514 |
73 353 |
4 854 |
90 721 |
| Central Services |
(33 856) |
(30 147) |
(2 139) |
(66 142) |
| Operating profit before goodwill, non-operating items, taxation and after minorities |
(18 316) |
47 395 |
2 715 |
31 794 |
|
| |
| |
Developments |
Central Services |
| • |
We have a policy of allocating costs housed in the centre that are, in effect, performing a function for the divisions of the group |
| • |
There are certain costs that are strategic in nature which have not been allocated for pure segmental disclosure, amounting to £73.2 million
(2009: £64.1 million). However, a portion thereof (£59.6 million) is allocated to the operating divisions for purposes of determining return
on adjusted capital per business segment. Refer to ROE by division for further details |
| • |
Central costs are higher than the prior year mainly due to the appreciation of the Rand against Pounds Sterling. |
|
| |
Central Funding |
| |
| • |
We have a business model of maintaining a central pool of capital with the aim of ensuring that economies of scale with respect to
corporate investments, funding and overall management are obtained |
| • |
Various sources of funding are employed, the determination of which depends on the specific financial and strategic requirements the
group faces at the time |
| • |
The funds raised are applied towards making acquisitions, funding central services and debt obligations, and purchasing corporate assets
and investments not allocated to the five operating divisions. |
|
| |
| £’000 |
31 March
2010 |
31 March
2009 |
Variance |
% change |
| Net interest income (excluding interest on sub debt and debentures) |
84 337 |
199 733 |
(115 396) |
(57.8) |
| Principal transactions |
120 054 |
14 301 |
105 753 |
>100.0 |
| Other income |
(721) |
(2 943) |
2 222 |
>100.0 |
| |
203 670 |
211 091 |
(7 421) |
(3.5) |
| Interest paid on sub-debt and debentures |
(70 920) |
(83 749) |
12 829 |
(15.3) |
| Impairment losses on loans and advances |
(28 634) |
(4 197) |
(24 437) |
(>100.0) |
| Admin expenses and depreciation |
(9 522) |
(6 381) |
(3 141) |
49.2 |
| Operating profit before goodwill, non-operating items and taxation |
94 594 |
116 764 |
(22 170) |
(19.0) |
| Earnings attributable to minority interests |
3 151 |
(26 043) |
29 194 |
>100.0 |
| Operating profit before goodwill, non-operating items, taxation and after minorities |
97 745 |
90 721 |
7 024 |
7.7 |
|
| |
| The variance in operating profit over the year can be explained as follows: |
| • |
Net interest income was largely impacted by: |
| |
| – |
A negative endowment impact (i.e. lower return earned on surplus capital) as a result of the declining rate environment |
| – |
The decrease in interest paid on sub-debt is as a result of a decline in interest rates in South Africa |
| – |
A loss of £6.9 million (2009: profit of £25.8 million) arising on the derivative hedging of the preferred securities issued by a subsidiary of
Investec plc from Euros into Pounds sterling. This exposure is hedged with the equal and opposite impact reflected in losses/earnings
attributable to minorities |
|
| • |
The increase in principal transaction income largely reflects the benefit of purchasing the group’s debt in the UK and improved return on
certain investments held in the South African portfolio |
| • |
The group has increased its portfolio impairments. |
|
/ Divisional review / Group Services and Other Activities