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Investec Sees HY Operating Profit Ahead Of Last Year

Investec plc (INVP.L) said that it expects operating profit the six months ending 30 September 2018 to be ahead of the prior period. Revenue is expected to be moderately ahead of the prior period. Recurring income as a percentage of total operating income is expected to be approximately 78% compared to 76% last year.

The first half of the group's financial year continued to see macro challenges in its key operating geographies. The South African economy entered into a technical recession with pressures on household spending and dented business confidence due to continued policy uncertainty. In the UK, Brexit related uncertainty has persisted, however the UK economy has remained resilient.

Against this backdrop, the Asset Management business is expected to report results ahead of the prior period, while the Wealth & Investment business is expected to report results behind the prior period. Both divisions have benefitted from higher levels of average funds under management supported by favourable equity markets and sound net inflows.

The Specialist Banking business is expected to report results ahead of the prior period. The UK Specialist Banking business is expected to report results well ahead of the prior period, while the South African Specialist Banking business is expected to report results in line with the prior period in Rands.

Overall group results have been negatively impacted by the depreciation of the average Rand against Sterling exchange rate of approximately 3.5% over the period.

Following the Group's announcement on management succession made in February 2018, the Joint Chief Executive Officer (Designates, Fani Titi and Hendrik du Toit, have been working closely with the Investec Board) and current members of the Group executive (Stephen Koseff, Bernard Kantor and Glynn Burger) in order to ensure a smooth transition of leadership. In conjunction with this process, the Board together with the executive directors, have conducted a strategic review of the Group to ensure that it is positioned to enhance the long-term interests of shareholders, clients and employees.

The Board has further concluded that it is now appropriate to demerge and publicly list IAM. The Investec Specialist Banking and Investec Wealth & Investment businesses will remain part of the Group's current Dual Listed Companies structure. The Board believes that this Transaction simplifies the Group and focuses IAM and the remaining Group on their respective growth paths, which will enhance the long-term prospects and potential of both businesses for the benefit of their shareholders, clients and employees.

The remaining Group comprises a specialist bank and wealth manager, with an attractive mix of client franchises and a sound balance sheet.

Fani Titi and Hendrik du Toit will become Joint CEOs of the Group on 1 October 2018. Kim McFarland will also become an executive director of the Group Board on that date. Ciaran Whelan will assume his role as Global Head of Risk on 1 April 2019.

Stephen Koseff and Bernard Kantor will step down from their roles as CEO and Managing Director, respectively, on 1 October 2018. From that date they will continue to serve as executive directors with primary responsibility for assisting the incoming Joint CEOs until completion of the Transaction.

Following the implementation of the Transaction, Fani Titi will lead the remaining Group and Hendrik du Toit will lead IAM. The structure and composition of the Boards of the remaining Group and IAM will be determined in due course as part of the Transaction implementation.

by RTTNews Staff Writer

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