Annual Report 2 Investec Strategic Report

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2 0 1 7

V.1 Investec strategic report incorporating governance, sustainability and the renumeration

Annual Report 2 Investec strategic report

1 0 incorporating governance, corporate responsibility and the remuneration report

7 Volume 1

Specialist Banking Asset Management Wealth & Investment

he 2017 integrated T annual report covers the period 1 April 2016 to 31 March 2017 and provides an overview of the Investec group. This report covers all our operations across the various geographies in which we operate and has been structured to provide stakeholders with relevant financial and non-financial information

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Volume 1 Volume 2 Volume 3 Strategic report Risk and Basel Pillar III Annual financial incorporating governance, disclosures statements corporate responsibility and remuneration report

Investec integrated annual report 2017 1 Ongoing and statutory information

Statutory information In order to present a more meaningful • The results of the businesses sold in the view of our performance, the results are 2015 financial year, i.e. Investec Bank is set out in volume presented on an ongoing basis. This (Australia) Limited, the UK Kensington three. The sale of information is only set out in volume one of business and the Start (Irish) mortgage our integrated annual report. The additional business; and businesses during the information presented on an ongoing basis • The remaining legacy business in the UK excludes items that, in management’s 2015 financial year (as set out on page 83). view, could distort the comparison of (as explained on page 26) performance between periods (for both This basis of presentation is consistent with had a significant effect on current and historical information). Based the approach adopted for the year ended on this principle, the following items are 31 March 2016. the comparability of the excluded from underlying statutory profit A reconciliation between the statutory and (for both current and historical information, group’s financial position ongoing income statement is provided on where applicable) to derive ongoing page 71. All information in our integrated and results, particularly operating profit: annual report comprising volumes one, in financial year 2015 two and three are based on our statutory and 2016. accounts unless otherwise indicated.

Cross reference tools

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Audited information Page references Website Sustainability Reporting standard

Denotes information Refers readers to Indicates that additional Refers readers to further Denotes our in the risk and information elsewhere in information is available information in our consideration of a remuneration reports this report on our website: sustainability report reporting standard that forms part of the www.investec.com available on our website: group’s audited annual www.investec.com financial statements

Feedback We value feedback and invite questions and comments on our reporting. To give feedback or request hard copies of our reports, please contact our Investor Relations division. For queries regarding information in this document Investor Relations Telephone (27) 11 286 7070 (44) 20 7597 5546 e-mail: [email protected] Investor Relations www.investec.com/en_za/#home/investor_relations.html

2 Investec integrated annual report 2017 Contents

Overview of the year Highlights 5 About the Investec group 12 Our strategic focus 14 Our operational structure 17 Our operational footprint 18 Operational and strategic report 22 01 Financial review 26

Divisional review Group divisional structure 85 Asset Management 86 Wealth & Investment 93 02 Specialist Banking 100

Corporate governance and corporate responsibility Corporate governance 112 Shareholder analysis 150 Communication and stakeholder engagement 155 03 Corporate responsibility 156

Remuneration report Remuneration report 185 Definitions 227 04 Corporate information 231

Investec integrated annual report 2017 3 01

Overview of the year Highlights 01 Overview of the year

Strong client activity levels supporting underlying performance

• Strong performance against a backdrop • The Specialist Banking business • The group has successfully leveraged its of continued macro uncertainty and reported results ahead of the prior year ability to provide clients an international volatility in the group’s key operating supported by sound levels of corporate offering, increasing its client base and geographies. and private client activity. deepening its core franchise. • The Asset Management and Wealth & • Growth in costs primarily reflects Investment businesses have benefited planned investment in growing the client from higher funds under management franchise businesses. supported by rising market levels.

Statutory financial performance

• The legacy portfolio 2017 2016 reduced from £583 million at 31 March 2016 to £476 million £599.1mn £505.6mn through asset sales, Operating profit* increased 18.5% redemptions and write-offs. (increase of 8.0% on a currency • The legacy business neutral basis) reported a loss before taxation of £64.6 million (2016: £78.3 million) with 2017 2016 We continued to impairments on the legacy £434.5mn £359.7mn actively manage portfolio reducing 20.3% from £68.1 million to £54.3 million. Adjusted attributable earnings^ down the UK legacy increased 20.8% (increase of 9.9% on a currency neutral basis) portfolio…

2017 2016 48.3p 41.3p 2017 2016 Adjusted earnings per share^ 23.0p 21.0p increased 16.9% (increase of 6.3% on a currency neutral basis) Dividends per share increased 9.5%

* Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. ^ Before goodwill, acquired intangibles, non-operating items and after non-controlling interests and deduction of preference dividends.

Investec integrated annual report 2017 5 01 Highlights (continued) Overview of the year

Solid performance from We have a diversified business model… the ongoing business % contribution of operating pro t before taxation of 2017 2016 the ongoing business (excluding group costs)*

£663.7mn £583.9mn Percentage Percentage 100 100 Operating profit* increased 13.7% (increase of 4.2% on a 80 80 currency neutral basis) 60 60

40 40

2017 2016 20 20

£487.1mn £423.1mn 0 0 Adjusted attributable earnings^ 12 13 14 15 16 17 12 13 14 15 16 17 increased 15.1% (increase of 5.3% UK and Other Specialist Banking on a currency neutral basis) Southern Africa Wealth & Investment Asset Management We continued to grow our key earnings drivers… 2017 2016 54.1p 48.6p Funds under management increased 23.9% to £150.7 billion – an increase of 14.8% on a currency neutral basis Adjusted earnings per share^ increased 11.3% (increase of 1.9% Funds under management** on a currency neutral basis)

£‘billion 200 2017 2016 72.0% 71.8% 150

Recurring income as a % of total 100 operating income

0 2017 2016 0.29% 12 13 14 15 16 17 0.26% Asset Management Wealth & Investment Other Credit loss charge as a % of average Customer accounts (deposits) increased 21.1% to £29.1 billion – an gross core loans and advances increase of 5.5% on a currency neutral basis Core loans and advances increased 26.8% to £22.2 billion – an increase of 8.5% on a currency neutral basis Customer accounts (deposits) and loans ongoing business**

£‘billion Percentage

30 120

25 100

20 80

15 60

10 40

5 20

0 0

12 13 14 15 16 17 Customer accounts Core loans and advances to customers Loans and advances to customer deposits * Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. ^ Before goodwill, acquired intangibles, non-operating items and after non-controlling interests and deduction of preference dividends. ** Trends in these graphs are shown on a currency neutral basis using the Rand: Pounds Sterling exchange rate applicable at 31 March 2017.

6 Investec integrated annual report 2017 Highlights 01 (continued) Overview of the year

Supporting growth in operating Marginal increase in impairments… income…

Total operating income ongoing business Impairments

£’million £’million 2 400 400 2 200 2 000 1 800 300 1 600 1 400

1 200 200 1 000 800

600 100 400 200 0 0

12 13 14 15 16 17 12 13 14 15 16 17 Trading income Annuity fees and commissions UK legacy business and businesses sold** Investment and associate income Net interest income Southern Africa Other fees and other operating income Total operating income on a currency neutral basis* UK and other ongoing business * The trend for this line is shown on a currency neutral basis using the ** Refers to the remaining UK legacy business and group assets that were Rand: Pounds Sterling exchange rate applicable at 31 March 2017. sold in the 2015 financial year.

Costs increased largely due to planned investment across the business…

Operating costs increased reflecting: planned spend on IT infrastructure and headcount across divisions to support increased activity levels and growth initiatives (notably the build out of the UK private client offering); additional UK premises expenses; an increase in variable remuneration given improved profitability across the group.

Jaws ratio for the group (ongoing business)^ Headcount^^

£’million Number 2 500 10 000 Operating income up 18.1% to £2 286mn 2 000 8 000

1 500 6 000

1 000 4 000 Operating costs up 18.1% to £1 503mn 500 2 000

0 0

12 13 14 15 16 17 12 13 14 15 16 17 Operating income Asset Management Operating costs Wealth & Investment Specialist Banking ^ Trends in this graph are shown on a currency neutral basis using the ^^ Permanent headcount and includes acquisitions. Rand: Pounds Sterling exchange rate applicable at 31 March 2017.

Investec integrated annual report 2017 7 01 Highlights (continued) Overview of the year

Resulting in a solid performance from our ongoing business…

Operating pro t* – Asset Management

£‘million

180 164.8 160 140 120 100 80 60 40 20 0

12 13 14 15 16 17

Operating pro t* – Wealth & Investment

£‘million 100 93.2 90 80 70 60 50 40 30 20 10 0

12 13 14 15 16 17

Operating pro t* – Specialist Banking ongoing business

£‘million

500 454.4 450 400 350 300 250 200 150 100 50 0

12 13 14 15 16 17

Progress made on our financial targets...

Ongoing Statutory

Target March 2017 March 2016 March 2017 March 2016

ROE (post-tax) 12% – 16% over a rolling five-year period 14.2% 13.9% 12.5% 11.5% Adjusted^ EPS growth Target: 10% > UKPRI 11.3% 2.3% 16.9% 4.8% Cost to income Target: < 65% 65.8% 65.8% 66.3% 66.4% Dividend cover (times) Target: 1.7x – 3.5x n/a n/a 2.1x 2.0x

8 Investec integrated annual report 2017 Highlights 01 (continued) Overview of the year

Maintained a sound balance sheet…

Total capital adequacy: 14.0% – 17.0% Common equity tier 1 ratio: > 10.0% Target Total tier 1 ratio: > 11.0% Leverage ratio: > 6.0%

Capital adequacy Tier 1

Percentage Percentage

18 16.9 16 15.4 15.1 14.1 12.5 15 11.5 12 11.1 10.7 12 9 8 6 4 3 0 0

Investec Investec Investec Investec Investec Investec Investec Investec Bank Limited Limited Bank plc plc Bank Limited Limited Bank plc plc

As reported As reported

Leverage ratios Common equity tier 1

Percentage Percentage

16 16 12.5 12.5 12 12 10.8 10.8 11.3 11.3 9.9 9.9 7.6 8.2 8.2 7.7 7.8 8 7.4 6.8 7.3 8

4 4

0 0

Investec Investec Investec Investec Investec Investec Investec Investec Bank Limited Limited Bank plc plc Bank Limited Limited Bank plc plc

Fully loaded As reported Fully loaded As reported

Note: Refer to page 227 for detailed definitions and explanations.

Sound capital and liquidity principles maintained

Continue to focus on: The intimate involvement of senior management ensures stringent management • Maintaining a high level of readily of risk and liquidity. available, high-quality liquid A well-established liquidity management philosophy remains in place. assets targeting a minimum cash to customer deposit ratio of The group’s loan to deposit ratios are as follows: 25.0% • Investec Limited: 75.0% (2016: 74.6%) • Diversifying funding sources • Investec plc: 78.2% (2016: 72.2%) • Maintaining an appropriate mix of Liquidity remains strong with cash and near cash balances amounting to term funding £12.0 billion (2016: £11.0 billion). • Limiting concentration risk. Capital remained in excess of current regulatory requirements. We are comfortable with our common equity tier 1 ratio target at a 10% level as our leverage ratios for Investec Limited and Investec plc are at 7.3% and 7.8% respectively.

Investec integrated annual report 2017 9 01 Highlights (continued) Overview of the year

Value added statement

For Investec, corporate responsibility is about building our businesses to ensure we have a Contributing positive impact on the economic and social progress of communities and on the environment, to society, macro- while growing and preserving clients’ and stakeholders’ wealth based on strong relationships of trust. This commitment to corporate responsibility means integrating social, ethical and economic stability environmental considerations into our day-to-day operations. A key element of this is solid and the environment. corporate governance that ensures sustainable management with a long-term vision. For further information download the corporate responsibility report available on our website. 31 March 31 March £’000 2017 2016

Net income generated Interest receivable 2 230 765 1 705 640 Other income 1 525 789 1 313 997 Interest payable (1 550 870) (1 131 871) Other operating expenditure and impairments on loans (439 962) (383 059) 1 765 722 1 504 707 Distributed as follows: Employees 757 390 588 759 Salaries, wages and other benefits Government 522 984 507 341 Corporation, deferred payroll and other taxes Shareholders 242 440 206 139 Dividends paid to ordinary shareholders 216 602 180 009 Dividends paid to preference shareholders 25 838 26 130 Retention for future expansion and growth 242 908 202 468 Depreciation 25 006 22 745 Retained income for the year 217 902 179 723 Total 1 765 722 1 504 707 Investec carries out its commitment to corporate responsibility through three key focus areas of people, planet and profit.

People

We care about our EMPLOYEES: Recognition • Attracting and developing a strong, diverse and capable workforce • Winner of the Business in the Community’s Responsible • Providing a progressive work environment Business Awards 2016 (Building Stronger Communities) for our flagship programme the Beyond Business social • Respecting and upholding human rights enterprise incubator we run in partnership with the Bromley Employee learning and development by Bow Centre £22.9mn spend (2016: £14.7mn) • Winner in the National CSR Awards 2017, in the Individual Community (Legacy) category, and a finalist in the Business We care about our COMMUNITIES: Charity Awards 2017, in the Community Impact category, Unselfishly contributing to our communities through education and for the Beyond Business Programme entrepreneurship • Short listed in the Business Charity Awards, in the Group Corporate Social and Investment Outstanding Employee category £7.1mn (CSI) spend (2016: £5.0mn) • SERAS awards – most socially responsible company in Africa • SERAS awards – second runner up in CSR practitioner of We care about our CLIENTS: the year • At Investec, we pride ourselves on giving our clients an • Investec has been voted second most attractive employer extraordinary experience in South Africa in the 2017 Universum awards. • We strive to build business depth by deepening existing and creating new client relationships • We provide a high level of service by being nimble, flexible and innovative.

10 Investec integrated annual report 2017 Highlights 01 (continued) Overview of the year

Planet

Direct impact: Recognition Reduce the operational impacts of our physical business. • Investec Limited won the IJ Global African • Scope 1 emissions (tones of CO e) decreased 5.6% Renewables deal 2016 Award for the Kathu Solar 2 Park Concentrated Solar Power (CSP) project in • Scope 2 emissions (tonnes of CO e) decreased 4.1% 2 South Africa • Scope 3 emissions (tonnes of CO e) decreased 12.4%. 2 • Investec Limited won the SERAS awards for the

Total emissions (tonnes of CO2e) best company in affordable and clean energy 64 506 CO2 decreased 7.9% • Investec Limited was awarded an A- for the CDP Indirect impact: 2016 climate scoring • Embed environmental considerations into business activities • The UK’s head office won their 10th Platinum • Responsible financing and investing Award for best practice in waste management • Participating in renewable energy projects and green developments. • The UK’s head office won the inaugural Cleaner City Award run by the Cheapside Business Alliance Participated in the renewable £1.8bn energy sector • The UK’s head office won a Gold prize in the Green Apple Award for Environmental Best Practice Conserving the environment: • The UK’s head office Carbon Trust Waste Standard Given Investec’s African heritage, we are passionate about ensuring the was recertified in 2016 continued existence of a number of African species • The UK’s head office EMS (Energy Management • Over R12 million spent on Rhino Lifeline since inception. Over 66% spent System) was recertified to BSI Energy Reduction on educating communities Verification Kitemark. • R3.5 million spent on BirdLife SA since inception.

Profit

Financial strength and resilience: Recognition Balanced and resilient business model. • The Financial Times of London has recognised Investec Private Banking and Wealth & Investment • Our capital light activities contributed 56% to group income and capital intensive activities contributed 44% to group income. as the best private bank and wealth manager in South Africa – for the fourth consecutive year – at the Global Private Banking Awards Dividends per share increased 9.5% 23.0p • The Investec Managed Fund was awarded • Liquidity remains strong. the special Raging Bull Award for risk-adjusted performance by a South African multi-asset equity Cash and near cash balances (2016: £11.0bn) fund over 21 years £12.0bn Representing approximately 41.4% of customer • Investec won Best Distributor UK/Ireland at the 2017 deposits European Structured Products & Derivatives Awards • Capital remained in excess of current regulatory requirements. • Investec was named 'Bank of the Year' at the 2016 Private Equity Awards Governance: • Investec digital offering ranked 9th in the world in • Strong culture and values to underpin our processes, functions and the Independent Wealth Service Survey structures. • SERAS awards – Best company in sustainability reporting • Investec Wealth & Investment's Discretionary Fund Management (DFM) service was Gold rated by Defaqto in February 2016.

Investec integrated annual report 2017 11 01 About the Investec group Overview of the year

We strive to be a distinctive specialist bank and asset manager, driven by commitment to our core philosophies and values.

Investec (comprising Investec plc and Investec Limited) is an international specialist bank and asset manager that provides a diverse range of financial products and services to a select client base.

Who we are

Founded as a In July 2002, we Since inception, we leasing company in created a dual listed have expanded through Johannesburg in 1974. companies structure a combination of We acquired a banking licence in 1980 (DLC) listed in London substantial organic and were listed on the JSE Limited and Johannesburg. growth and a series of South Africa in 1986. A year later, we concluded a significant strategic acquisitions. empowerment transaction in which Today, we have an efficient integrated our empowerment partners collectively international business platform, offering acquired a 25.1% stake in the issued all our core activities in the UK and share capital of Investec Limited. South Africa.

12 Investec integrated annual report 2017 About the Investec group 01 (continued) Overview of the year

Our philosophies We value What we do

–– Single organisation Distinctive performance We are an international –– Meritocracy –– Outstanding talent – specialist bank and asset –– Focused businesses empowered, enabled and manager that provides a inspired –– Differentiated, yet integrated –– Meritocracy diverse range of financial –– Material employee ownership –– Passion, energy, stamina, products and services to a –– Creating an environment tenacity select client base in three that stimulates extraordinary performance. –– Entrepreneurial spirit principal markets, the UK and Europe, South Africa Client focus and Asia/Australia as well –– Distinctive offering as certain other countries. –– Leverage resources Investec focuses on delivering distinctive –– Break china for the client profitable solutions for its clients in three core areas of activity namely, Asset Cast-iron integrity Management, Wealth & Investment and –– Moral strength Specialist Banking.

–– Risk consciousness Our strategic goals and objectives are –– Highest ethical standards based on the aspiration to be recognised as a distinctive specialist bank and asset Dedicated partnership manager. This distinction is embodied in our entrepreneurial culture, which is balanced –– Respect for others by a strong risk management discipline, –– Embrace diversity client-centric approach and an ability to be nimble, flexible and innovative. We do not –– Open and honest dialogue seek to be all things to all people and aim to –– Unselfish contribution to build well-defined, value-added businesses colleagues, clients and society focused on serving the needs of select market niches where we can compete effectively.

Investec integrated annual report 2017 13 01 Our strategic focus Overview of the year

The Investec distinction

Our strategic goals and objectives are based on our aspiration to be recognised as a distinctive specialist bank and asset manager

Client focused Specialised strategy Sustainable business Strong culture approach

• Clients are at the core of our • Serving select market niches • Contributing to society, • Strong entrepreneurial business as a focused provider of macro-economic stability culture that stimulates tailored structured solutions and the environment extraordinary performance • We strive to build business depth by deepening existing • Enhancing our existing • Well-established brand • Passionate and talented and creating new client position in principal people who are empowered • Managing and positioning relationships businesses and geographies and committed the group for the long term through organic growth and • High level of service by • Depth of leadership select bolt-on acquisitions. • Balancing operational being nimble, flexible and risk with financial risk • Strong risk awareness innovative. while creating value for • Material employee shareholders ownership. • Cost and risk conscious.

14 Investec integrated annual report 2017 Our strategic focus 01 (continued) Overview of the year

Our strategy Growing Asset Management in all regions Our long-term strategy is to build a diversified portfolio of • Focusing on delivery of competitive investment performance businesses and geographies to support clients through varying • Grow in Advisor channel and continue to scale Multi-Asset markets and economic cycles. Since inception we have expanded and Global Equities through a combination of organic growth and strategic acquisitions. • Focus on our large markets, especially North America In order to create a meaningful and balanced portfolio we need Growing the Specialist Banking business proper foundations in place which gain traction over time. • Building and developing our client franchises across all areas Our long-term internationalisation strategy • Improving the ROE in the business • Implementing the UK Private Banking strategy • Follow our customer base • Gain domestic competence and critical mass in our chosen Relevant internationalisation of Wealth & Investment geographies • Digitalisation channel and launch of Click & Invest • Facilitate cross-border transactions and flow. • Creating an international operating platform We have a very deliberate and focused client Other strategy • Continue investing in technology and people to maintain digital client experience • Leverage our unique client profile • Improving the cost to income ratio by focusing on • Provide the best integrated solution supported by our operational efficiencies comprehensive digital offering. • Diversity across the group and transformation in South Africa

Our diversified and balanced business model supporting long-term strategy Broadly defined, we operate across three areas of specialisation focused on well defined target clients:

Asset Management Specialist Banking Wealth & Investment

Operating completely independently

Private client (high net worth/high income)/ Corporate/institutional/government charities/trusts

–– Investment management –– Lending –– Investment management services services to external clients –– Transactional banking –– Independent financial planning advice –– Deposit raising activities –– Treasury and trading –– Advisory –– Investment activities

We aim to maintain an appropriate balance between revenue earned from operational risk activities and revenue earned from financial risk activities.

This ensures that we are not over reliant on any one part of our businesses to sustain our activities and that we have a large recurring revenue base that enables us to navigate through varying cycles and supports our long-term strategy.

Capital light activities Capital intensive activities

• Asset management • Lending portfolios • Wealth management • Investment portfolios 56% • Advisory services 44% • Trading income • Transactional banking services - client flows - balance sheet management • Property and other funds Contributed to Contributed to group income group income Net interest, investment, Fee and commission income Types of income associate and trading income

Investec integrated annual report 2017 15 01 Our strategic focus (continued) Overview of the year

Integrated client strategy There are natural linkages within the private client businesses and between the private client and corporate banking businesses, which are all centred around the client.

Businesses Channel of choice Strong links Private client businesses

Corporate Private Banking Wealth & Investment

Corporate clients (directors, Growth and creation Management and employees) of wealth preservation of wealth Private equity investments Banking Wealth management Manufacturer of funds Property finance Portfolio management Retail structured savings products Private capital Stockbroking Retail

Corporate Private Global Client Investment Digital bankers bankers Support Centre managers

The digitalisation strategy integrates services across business and geography During the financial year we have focused on driving digital engagement through: • additional capabilities being added to our platforms • a strong focus on learning initiatives with staff • the formation of strong partnerships with the growing FinTech ecosystem.

Achieved to date In progress

• Wealth & Investment UK added to Investec Online and the One Place – • Rebuild of corporate platform Investec App global platform Investec Dotcom

• Added Mauritius and Channel Islands (offshore banking) to Investec • Digital Advisor Phase 1- (Legacy Online and the Investec App management of wills and estates) • Launched Digital Briefcase which includes self-service documents such as visa letters, stamped bank statements, etc • Investec Life to be launched in second half of 2017 • Private Bank Youth App (phone and tablet) launched February 2017 • International Payments added enabling outbound payments • Additional Value Added Services (pre-paid electricity, etc.) • Charity funding platform added • Enhanced mobile payments • Revamped South African banking toolset

• Added export capability for credit applications Personal • Self service financial portfolio management (budgets, cashflow forecasting)

• Tax Free Savings tool available South African • Include unit trusts from Wealth & online portfolio Investment and Investec Asset manager Management

• Enhanced Tax Free saving investment capability • Click & Invest in the UK launched to staff UK online • Full market launch of Click & portfolio Invest manager

16 Investec integrated annual report 2017 Our operational structure 01 Overview of the year

Operating structure

During July 2002 Investec Group Limited (since renamed Investec Limited) implemented Investec Limited, which a dual listed companies (DLC) structure and listed its offshore business on the London houses our Southern Stock Exchange. A circular on the establishment of our DLC structure was issued on 20 June 2002 African and Mauritius and is available on our website. operations, has been In terms of our DLC structure, Investec Limited is the controlling company of our businesses listed in South Africa in Southern Africa and Mauritius, and Investec plc is the controlling company of our since 1986. non‑Southern African businesses.

Our DLC structure and main operating subsidiaries as at 31 March 2017

Investec Limited Investec plc JSE primary listing LSE primary listing Sharing agreement NSX secondary listing JSE secondary listing BSE secondary listing

Non-Southern African Southern African operations operations

Investec Asset Investec Asset Investec Management Investec Investec Management Investec Bank Property Group Holdings Securities Bank plc Limited Limited Holdings (Pty) Ltd (Pty) Ltd 84%* (Pty) Ltd 84%*

Investec Investec Investec Investec Wealth Reichmans IEP Group Holdings Bank Import & Investment Holdings (Pty) Ltd** (Australia) (Mauritius) Solutions Limited (Pty) Ltd 45%^ Limited Limited (Pty) Ltd

All shareholdings in the ordinary share capital of the subsidiaries are 100%, unless otherwise stated. * 16% held by senior management in the company (31 March 2016: 15%). ** Previously Investec Equity Partners (Pty) Ltd. ^ 55% held by third party investors in the company together with senior management of the business.

Salient features of the DLC structure • Investec plc and Investec Limited are separate legal entities and listings, but are bound together by contractual agreements and mechanisms

• Investec operates as if it is a single unified economic enterprise

• Shareholders have common economic and voting interests as if Investec plc and Investec Limited were a single company

• Creditors, however, are ring-fenced to either Investec plc or Investec Limited as there are no cross-guarantees between the companies.

Investec integrated annual report 2017 17 01 Operational footprint Overview of the year

We have built a solid international platform, with

diversified revenue streams Southern Africa –– Founded as a leasing and geographic diversity company in 1974 –– Acquired a banking licence in 1980 –– Listed on the JSE Limited South Africa in 1986 –– In 2003 we implemented a 25.1% empowerment shareholding transaction –– Market leading position in all three of our core activities –– Fifth largest bank in the country –– Offices supporting the Southern African businesses include Botswana; Cape Town; Durban; East London; Johannesburg; Knysna; Mauritius; Namibia; Pietermaritzburg; Port Elizabeth; Pretoria; and Stellenbosch.

Operating profit* of the Southern African operations increased Investec in total 16.0% to £374 million

Operating profit* £599.1mn £18.1bn £14.1bn

Assets Total deposit Total core £53 535mn book loans

NAV** Total funds under £53.4bn management £3 426mn

As a % of the group Permanent employees Operating Permanent 62.5% profit* 56.5% 9 029 employees Assets Actual COI^ ROE^ 65.2% 51.9% COI^ NAV** 66.3% 12.5% 55.3% 16.0% ROE^

18 Investec integrated annual report 2017 Operational footprint 01 (continued) Overview of the year

UK and Other • In 1992 we made our first international acquisition, acquiring Allied Trust Bank in London

• Since that date, we have expanded organically and through a number of strategic acquisitions

• Solid positioning in all three of our core activities

• Listed in London in July 2002 through the implementation of a dual listed companies structure

• Offices supporting the UK and Other businesses include Australia; Channel Islands; Hong Kong; India; Ireland; London; North America; Singapore; Switzerland; and Taiwan.

Operating profit* (statutory) of the UK operations increased 23.0% to £224.9 million Operating profit* (ongoing) of the UK operations increased 10.8% to £289.5 million

£11.0bn £8.1bn

Total deposit Total core book loans (ongoing business)

Total funds under £97.3bn management

As a % of the group

Operating Permanent 37.5% profit* 43.5% employees

34.8% Assets Actual 77.0% COI^ NAV** 44.7% 9.4% ROE^ ROE^ 12.6% ongoing

Investec integrated annual report 2017 19 01 Our operational footprint (continued) Overview of the year

Our three distinct business activities are focused on well‑defined target clients

Asset Management

Core client base and Market positioning what we do Total funds under management# 1991: £0.4 billion 2017: £95.3 billion Operates independently from Investec’s Good long-term investment performance other businesses and its sole focus is with growing traction in our distribution the provision of investment management channels services to its predominantly global institutional client base

Wealth & Investment

Core client base and Market positioning what we do Total funds under management# Provides investment management 1997: £0.04 billion 2017: £54.8 billion services and independent financial UK: one of the top five players planning advice to private clients, SA: largest player charities and trusts

Specialist Banking

Core client base and Market positioning what we do Global core loan portfolio: £22.7 billion^^ We offer a broad range of services from lending, transactional banking, treasury – Corporate and other clients: and trading, advisory and investment £9.8 billion activities. These services are aimed at – Private clients: £12.9 billion^^ government, institutional, corporate and high net worth and high-income clients Global deposit book: £29.1 billion

20 Investec integrated annual report 2017 Our operational footprint 01 (continued) Overview of the year

Operating profit* of Asset Management increased 22.3% to £164.8 million As a % of group

27.5% Operating £95.3bn profit*° 2.9% NAV** Total funds 33.1% operating under margin Permanent management 17.2% employees 90.7% ROE^

Operating profit* of Wealth & Investment increased 8.8% to £93.2 million As a % of group

15.6% Operating £32.9bn £21.9bn £54.8bn profit*° NAV** Discretionary and Non-discretionary Total funds under 1.7% operating annuity funds and other funds management 25.9% margin under management under management 17.7% Permanent employees 35.7% ROE^

Operating profit* (statutory) of Specialist Banking increased 17.8% to £389.8 million Operating profit* (ongoing) of Specialist Banking increased 11.0% to £454.4 million

65.0% Operating £29.1bn £22.7bn profit*° 60.6% COI^ NAV** ROE^ Total deposit Total core 95.4% 12.8% book loans 15.3% ROE Permanent ongoing^ 65.1% employees

* Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. ** NAV is tangible shareholders’ equity as calculated on page 62. ^ COI is cost to income ratio. ROE is the pre-tax return on adjusted average shareholders’ equity as calculated on page 66. ^^ Including legacy assets of £0.5 billion as explained on page 83. ° Contributions are larger than 100% due to group costs amounting to £48.8 million which are included in operating profit. # Refer to page 69 for further detail on funds under management.

Investec integrated annual report 2017 21 01 Operational and strategic report Overview of the year

The solid growth in all the core earnings drivers for our three business areas is attributable to the investment made in our people, our infrastructure and our franchises

In the past year, we Can you give us an up 14.8% to £150.7 billion on a currency neutral basis. The key banking earnings’ have successfully overview of the group’s drivers also enjoyed positive growth with leveraged our ability performance for the ongoing core loans and advances up 8.5% to £22.2 billion and customer deposits up to provide clients financial year? 5.5% to £29.1 billion, both on a currency with a comprehensive The group achieved an increase in statutory neutral basis. international offering operating profit of 18.5% to £599.1 million This supported growth in total ongoing (2016: £505.6 million), an 8.0% increase with strong client operating income before impairment on a currency neutral basis. Adjusted losses of 18.1% to £2 285.9 million activity levels EPS increased 16.9% from 41.3 pence to (2016: £1 934.8 million with the percentage supporting underlying 48.3 pence, a 6.3% increase on a currency of recurring income stable at 72.0% of neutral basis. Distributions to shareholders total operating income (2016: 71.8%). performance. Despite increased to 23.0 pence (2016: 21.0 pence) The cost to income ratio remained at 65.8% the unpredictable resulting in a dividend cover of 2.1 times (2016: 65.8%) despite total operating costs (2016: 2.0 times). macro-economic growing by 18.1% to £1 502.6 million The total legacy portfolio reduced from (2016: £1 272.1 million) as a result environment, group £583 million to £476 million through asset of planned investment spend across revenue exceeded the sales, redemptions and write-offs. This the business. £2 billion mark for the resulted in a loss before taxation on the legacy business of £64.6 million (2016: How did the operating first time. Our long-term £78.3 million) with impairments on the environment support investment strategy and legacy portfolio reducing 20.3% from £68.1 million to £54.3 million. performance? the progress made on The ongoing business delivered a sound Despite increased uncertainty due to our strategic initiatives performance with operating profit up 13.7% political developments, there was a mild give us confidence for to £663.7 million (2016: £583.9 million). acceleration in global economic growth. the future. This is a 4.2% increase on a currency Advanced economies generally benefited neutral basis. from resilient domestic demand and Our geographic mix and diversity of emerging markets gradually recovered as revenue streams continued to support a result of a pick-up in global demand and the sound balance of earnings generated higher commodity prices. between capital light businesses and The UK economy remained surprisingly capital intensive businesses. There was resilient despite the UK Brexit vote and the continued growth in key earnings’ drivers consequent cautionary measures taken. with third party assets under management This resilience started to fade towards the

22 Investec integrated annual report 2017 Operational and strategic report 01 (continued) Overview of the year end of the financial year with GDP growth management are confident in the long- Specialist Banking slowing to an annual low as consumers term investment approach. The focus for The ongoing business of Specialist Banking started to feel the effects of weak wage the next year is on growing the Advisor increased operating profit by 11.0% to growth and higher inflation. business globally, strengthening our £454.4 million (2016: £409.2 million). position in North America and continuing to The economic environment in South Africa scale Multi-Asset and Global Equities with The UK and Other businesses reported an remained weak with domestic growth of our clients always remaining at the centre of 8.2% increase in operating profit supported just 0.3% and South African equities ending our strategy. by robust levels of corporate client activity flat on the year. In reality it was a fairly across the lending, advisory and client flow difficult year, particularly from a political Wealth & Investment trading businesses. The investment banking perspective. The positive sentiment towards and advisory business had a record year emerging markets together with the turn Wealth & Investment experienced a solid and the aviation business completed a in the commodity cycle supported the overall performance with operating profit number of significant transactions. The value of the Rand. However, the cabinet increasing 8.8% to £93.2 million (2016: change in target market for the Private reshuffle towards the end of the financial £85.7 million). The business benefited from Bank is starting to see some progress and year which resulted in the appointment of a higher average funds under management a Private Capital business was established new Finance Minister triggered downgrades supported by higher equity market levels during the year to focus on investment from both Standard and Poor’s and Fitch and net inflows of £1.2 billion. Total banking for individuals as a complementary rating agencies. This will impact both funds under management amounted to offering. Costs grew ahead of revenue consumer and business confidence in the £54.8 billion (31 March 2016: £45.5 billion). largely due to the investment in developing coming financial year. Nevertheless, South Operating margin was slightly down from the private client banking offering and we Africa has a robust civil society, a vocal 26.4% to 25.9% as we continued to invest expect this investment to be completed in business sector and a financial sector in digital platforms, IT infrastructure and the 2018 financial year. Costs were also which remains resilient. We are hopeful compliance. impacted by the double premises expense that the united front of opposition parties The operating profit for the South African relating to the London head office move and labour together with the collaboration business was up 10.5% in Rands due to planned for 2018. Looking forward, our between government and business will increased discretionary and annuity funds focus remains on building scale, growing result in the inclusive growth that the under management and net inflows. As the client base, expanding the funds and country desperately requires. a result of our international capabilities, investment product business and ensuring we were able to enhance the One Place ongoing high levels of service to existing How did the three offering to service our South African clients’ clients across our offerings. international needs during a turbulent core areas of activity period for investors. The South African business reported a perform on an ongoing decrease in operating profit in Rands Operating profit for the UK and Other of 3.3% as a result of the change in basis? business was up 3.3%, benefiting from accounting treatment of the assets the growth in average funds under transferred to the IEP group in the prior There was a consistent contribution from all management and supported by a higher year. Operating profit, excluding the impact business activities during the period under level of market indices. The development of this transaction, was considerably ahead review with Asset Management and Wealth of our digital channel, Click & Invest, has of the prior year with continued growth & Investment contributing a combined made good progress and we expect to in the Private Banking client base, sound 38.8% to group operating profit on an launch this service in the first half of the new corporate activity and an increase in the ongoing basis. financial year. scale of the property fund business. We Asset Management We continue to invest in the development continue to benefit from the collaboration between the Private Bank and Wealth & Operating profit in Asset Management of our digital offering, in our international platform and in ensuring we have a robust Investment businesses, with international increased by 22.3% to £164.8 million recognition from the Financial Times as the (2016: £134.8 million) benefiting from and well-resourced global investment process and research capability. We Best Private Bank and Wealth Manager higher average funds under management in South Africa for the fourth year in a largely driven by favourable market and continue to service the ever expanding global investment needs of our private row. At the start of the new financial year, currency movements. Total funds under client activity across lending and treasury management amount to £95.3 billion clients and secure the long-term sustainability of the business. products remains reasonable and we (31 March 2016: £75.7 billion). Operating continue to focus on client acquisition, margin was slightly up from 32.0% to evolving the digital offering, leveraging our 33.1% with operating income increasing international capabilities and maintaining and operating costs impacted by currency operational efficiencies across all fluctuations. It was pleasing to note the businesses. We are also excited about resurgence in the African business with net the launch of Investec Life which will take inflows of £1.4 billion for the year. place later in the 2017 calendar year and While we are cautious about the outlook is expected to further enhance our client for financial asset prices and the prevailing value proposition. challenges in the industry remain,

Investec integrated annual report 2017 23 01 Operational and strategic report (continued) Overview of the year

Can you give us a We continue to spend much time and under review changes to the composition effort focusing on operational, reputational, of the boards of its key subsidiaries. During summary of the year conduct, recovery and resolution risks. the year, the nomdac appointed two new in review from a risk Financial crime and cybercrime remain non-executive directors to the board of high priorities and we continually aim to Investec Bank plc to further enhance perspective? strengthen our systems and controls in order the effectiveness and independence of Our executive management are integrally to manage cyber risk. We are also focused that board. We would like to welcome involved in ensuring stringent management on combating money laundering, as well as Moni Mannings and Brian Stevenson to of risk, liquidity, capital and conduct. The preventing bribery and corruption in order to the Investec Bank plc board, they have primary aim is to achieve a suitable balance ensure the safety of our clients’ wealth and extensive experience and we look forward between risk and reward in our business, to meet our regulatory obligations. to working with them. Furthermore, Investec particularly in the context of prevailing Bank plc set up its own governance market conditions and group strategy. committee which works seamlessly with What have been the key group governance committees. Although the macro-economic environment areas of focus for the continues to present challenges, the We recognise the benefits of a diverse group was able to maintain sound asset board of directors? board being able to contribute alternative performance and risk metrics throughout perspectives and challenge the status quo The board has focused on a range of issues the year in review. which is integral to the Investec culture. over the past year but diversity remains a We are a member of the 30% Club in both Growth in the core loan book was key focal area for the board and the group South Africa and the UK demonstrating moderate in home currencies, reflecting as a whole. our commitment to increased female an increase of 8.4% in South Africa, and We affirmed our strategy and investment representation at the board level. We also 6.6% in the UK. This growth was diversified in our UK private client offering and recognise the need to create opportunities across select target markets with loan to digitalisation projects. We also supported for talented individuals to move up through values at conservative levels and asset managements’ efforts in increasing returns the organisation and have a number of margins broadly in line with the prior year. for the group whilst remaining comfortably diversity initiatives across the group to Our risk appetite continues to favour lower within our stated risk appetite targets. support this aim. risk, income-based lending, with exposures well collateralised and credit risk taken over Succession has been an ongoing focus Looking forward, the board is confident a short to medium term. area for the board and a significant amount with the group strategy and believes we of work has been done over the past have the appropriate leadership in place to The ongoing credit loss ratio remains at two years. Formal succession appraisals execute on that strategy. The focus of the the lower end of our long-term average for all key positions were completed and board will continue to be on both increasing trend of 30bps to 40bps in both South succession plans are in place to help diversity at all levels of the organisation as Africa and the UK. Our loan books remain ensure a smooth transition for the next well as management succession. well diversified although we could see a generation of leaders. The group also moderate increase in impairments given spends a significant amount of resources prevailing market conditions. We continue How do you balance on growing and developing an internal pool to stress our loan books against a number of talented and skilled leaders. We have driving profits of macro-economic scenarios, and manage several leadership programmes in place these risks accordingly. with corporate and to date 90 people have attended an We continue to maintain healthy capital and external executive leadership programme at responsibility? leverage ratios and ensure we have a high Harvard, INSEAD or equivalent leadership Investec helps to fund a stable and level of readily available, high quality liquid institution around the world. sustainable economy by providing assets. The group has always held capital The board continues to be committed to capital and liquidity for social and in excess of regulatory requirements and regularly evaluating its own effectiveness economic development. We build all our banking subsidiaries meet current and that of its committees. The board sustainable businesses that contribute internal targets for total capital adequacy. to macro-economic stability, society therefore undertakes an evaluation of its Capital continued to grow and credit growth and the natural environment. We remain performance and that of its committees is comfortably in line with our risk appetite committed to transformation in South and individual directors annually, with framework and supported by sound risk Africa as our country of inception enters independent external input into the metrics. In the UK, we conservatively a critical juncture in its history, with a dire process every third year. Given the 2016 increased our liquidity levels in anticipation need for job creation and sustainable effectiveness review was conducted by of the Brexit referendum in June 2016. We inclusive economic growth. As part an independent facilitator, this year the then managed this down in the second half of the CEO Initiative, Investec group board effectiveness review was internally of the year through a combination of asset committed R20 million to the small and facilitated. No material issues were growth and liability management to achieve medium enterprises (‘SME’) fund with identified in this process. largely normalised balance sheet liquidity Investec Property Fund contributing a levels by the year-end. In South Africa, In addition to considering the composition further R5 million to the fund which will surplus cash balances were maintained at of the board, the DLC nomination and provide high-potential entrepreneurs high levels given the volatility in the markets. directors’ affairs committee (nomdac) keeps and enterprises with access to not only

24 Investec integrated annual report 2017 Operational and strategic report 01 (continued) Overview of the year

funds but also professional advice and the SERAS award for the most socially engaging with our stakeholders, investing mentorship. We see this as an important responsible company in Africa. in the learning and development of our investment in the future of our country and people and providing support to our We remain active participants in the green the future of the group. Aligned with this communities. Consequently, we believe we economy contributing £1.8 billion to the commitment, Investec Limited retained are well positioned to continue building a renewable energy sector globally in the past its level 2 BEE rating from Empowerdex sustainable business that not only provides year. In the US, Investec was recognised in terms of the current Financial Sector appropriate returns to shareholders but also as the go-to funding source for the US Code, improving on our total score from contributes to macro-economic stability and roof-top solar industry and also won the the previous year as a result of efforts to social upliftment. IJ Global African Renewables deal 2016 improve our employment equity status and Award for Kathu Solar Park in South Our strategy for the coming year is to a focus on preferential procurement. Africa. This is the most meaningful way continue to focus on our revenue drivers Our responsibility to society starts we can contribute to climate change and which support our balanced business with our own people and we depend reduce the impact of our existence on the model. We will look to generate high quality on their experience and proficiency natural environment. income from diversified revenue streams, to perform and deliver superior client increase transactional activity and further service. During the year we invested grow our funds under management. We £22.9 million (2016: £14.7 million) on What is your strategic also continue to manage growth of our the learning and development of our focus and outlook for lending and customer deposits, remaining people and Investec was recognised the coming year? mindful of building capital light activities. as the second most attractive employer At the start of the new financial year, macro in South Africa in the Universum Most Over the past year, we have made good uncertainty persists globally and the political Attractive Employer Awards. We continue progress in building our core franchises environment in the UK is still not clear which to create a progressive and stimulating whist at the same time generating could impact activity levels going forward. work environment and piloted Activity reasonable growth and value for our Nevertheless, we believe that our strategic Based Working in the UK head office. This shareholders. We have a unique and vibrant initiatives and the diversity of our business facilitates collaboration and knowledge culture with a strong leadership team who model place the group in a favourable sharing amongst colleagues and business are motivated to build their businesses position to continue to grow in our core areas and we expect to replicate this in our and improve the quality of earnings. Our markets, supporting performance and new 30 Gresham Street head office. businesses are focused on co-ordinating our service offerings and integrating IT delivering on our promise to stakeholders. An integral part of our corporate systems to leverage our unique client On behalf of the boards of Investec plc and responsibility programme is how we care profile. We have spent time proactively Investec Limited. for our communities. In the UK, we won the Business in the Community’s Responsible Business Awards 2016 (Building Stronger Communities) for our flagship programme the Beyond Business social enterprise incubator which we run in partnership with the Bromley by Bow Centre. In South Fani Titi Stephen Koseff Bernard Kantor Africa, our flagship Promaths programme Chairman Chief executive officer Managing director supports eight centres across the country and in the past year we established the Promaths bursary. Our staff continue (References to ‘operating profit’ in the text above relates to operating profit before to show the Investec caring spirit by taxation, goodwill, acquired intangibles, non-operating items and after other volunteering to participate in our various non-controlling interests.) corporate social investment programmes The operating financial review provides an overview of our strategic position, performance around the world and the volunteerism during the financial year and outlook for the business. It should be read together with the hours increased substantially across sections that follow on pages 26 to 226 as well as volume two of our integrated annual the group. report, which elaborate on the aspects highlighted in this review. Our sustainability efforts continue to be recognised with Investec Limited now ranked as one of four industry leaders on the DJSI Emerging Markets index, and Investec plc one of 17 industry leaders on the DJSI World and DJSI Europe indices. Investec Limited maintained its inclusion in the Climate “A list” with an A- score in the 2016 Carbon Disclosure Project (CDP) which recognises efforts to mitigate climate change. Investec Limited also received

Investec integrated annual report 2017 25 01 Financial review Overview of the year

Introduction – understanding our results

Sale of businesses presented on an ongoing basis excludes This basis of presentation is consistent with items that, in management’s view, could the approach adopted for the year ended During the 2015 financial year the group distort the comparison of performance 31 March 2016. sold a number of businesses, namely between periods (for both current and Investec Bank (Australia) Limited, historical information). A reconciliation between the statutory and Kensington Group plc and Start Mortgage ongoing income statement is provided on Holdings Limited. Based on this principle, the following items page 71. are excluded from underlying statutory profit The sales of these businesses had a (for both current and historical information, significant effect on the comparability of where applicable) to derive ongoing our financial statutory position and results, operating profit: particularly in financial year 2015 and 2016. • The results of the businesses sold as In order to present a more meaningful view mentioned above of our performance, additional management information is presented on our ongoing • The remaining legacy business in the UK businesses. The additional information (as set out on page 83).

Exchange rates Our reporting currency is Pounds Sterling. Certain of our operations are conducted by entities outside the UK. The results of operations and the financial position of our individual companies are reported in the local currencies of the countries in which they are domiciled, including South African Rands, Australian Dollars, Euros and US Dollars. These results are then translated into Pounds Sterling at the applicable foreign currency exchange rates for inclusion in our combined consolidated financial results. In the case of the income statement, the weighted average rate for the relevant period is applied and, in the case of the balance sheet, the relevant closing rate is used.

The following table sets out the movements in certain relevant exchange rates against Pounds Sterling over the year.

31 March 2017 31 March 2016

Currency per £1.00 Year end Average Year end Average

South African Rand 16.77 18.42 21.13 20.72 Australian Dollar 1.64 1.75 1.87 2.04 Euro 1.17 1.19 1.26 1.37 US Dollar 1.25 1.31 1.44 1.50

Exchange rates between local currencies and Pounds Sterling have fluctuated over the year. The most significant impact arises from the volatility of the Rand. The average Rand: Pounds Sterling exchange rate over the year has appreciated by 11.1% and the closing rate has appreciated by 20.6% since 31 March 2016.

Results in Pounds Sterling

Actual as Actual as Neutral reported reported Actual as currency^ Neutral Year to Year to reported Year to currency 31 March 31 March % 31 March % 2017 2016 change 2017 change

Operating profit before taxation* (million) £599 £506 18.5% £546 8.0% Earnings attributable to shareholders (million) £442 £368 20.1% £401 8.8% Adjusted earnings attributable to shareholders** (million) £435 £360 20.8% £395 9.9% Adjusted earnings per share** 48.3p 41.3p 16.9% 43.9p 6.3% Basic earnings per share 50.8p 38.5p 31.9% 46.4p 20.5% Dividends per share 23.0p 21.0p 9.5% n/a n/a * Before goodwill, acquired intangibles, non-operating items and after other non-controlling interests. ** Before goodwill, acquired intangibles, non-operating items and after non-controlling interests. ^ For income statement items we have used the average Rand: Pounds Sterling exchange rate that was applied in the prior year, i.e. 20.72.

26 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Results in Pounds Sterling

Actual as Actual as Neutral reported reported Actual as currency^^ Neutral at at reported at currency 31 March 31 March % 31 March % 2017 2016 change 2017 change

Net asset value per share 431.0p 352.3p 22.3% 395.0p 12.1% Net tangible asset value per share 377.0p 294.3p 28.1% 341.6p 16.1% Total equity (million) £4 809 £3 859 24.6% £4 252 10.2% Total assets (million) £53 535 £45 352 18.0% £46 338 2.2% Core loans and advances (million) £22 707 £18 119 25.3% £19 501 7.6% Cash and near cash balances (million) £12 038 £10 962 9.8% £10 591 (3.4%) Customer deposits (million) £29 109 £24 044 21.1% £25 376 5.5% Third party assets under management (million) £150 735 £121 683 23.9% £139 664 14.8%

^^ For balance sheet items we have assumed that the Rand: Pounds Sterling closing exchange rate has remained neutral since 31 March 2016.

The following table provides a comparison of the group’s results as reported in Pounds Sterling and the group’s results as translated into Rands. Results in Pounds Sterling Results in Rands

Year to Year to Year to Year to 31 March 31 March % 31 March 31 March % 2017 2016 change 2017 2016 change

Operating profit before taxation* (million) £599 £506 18.5% R10 885 R10 494 3.7% Earnings attributable to shareholders (million) £442 £368 20.1% R8 025 R7 635 5.1% Adjusted earnings attributable to shareholders** (million) £435 £360 20.8% R7 880 R7 459 5.7% Adjusted earnings per share** 48.3p 41.3p 16.9% 875c 857c 2.1% Basic earnings per share 50.8p 38.5p 31.9% 920c 798c 15.3% Headline earnings per share 48.2p 38.5p 25.2% 872c 796c 9.5% Dividends per share 23.0p 21.0p 9.5% 403c 473c (14.8%)

At At At At 31 March 31 March % 31 March 31 March % 2017 2016 change 2017 2016 change

Net asset value per share 431.0p 352.3p 22.3% 7 228c 7 444c (2.9%) Net tangible asset value per share 377.0p 294.3p 28.1% 6 322c 6 218c 1.7% Total equity (million) £4 809 £3 859 24.6% R80 638 R81 543 (1.1%) Total assets (million) £53 535 £45 352 18.0% R897 749 R958 221 (6.3%) Core loans and advances (million) £22 707 £18 119 25.3% R380 786 R382 826 (0.5%) Cash and near cash balances (million) £12 038 £10 962 9.8% R201 877 R231 616 (12.8%) Customer deposits (million) £29 109 £24 044 21.1% R488 149 R508 024 (3.9%) Third party assets under management (million) £150 735 £121 683 23.9% R2 527 826 R2 571 141 (1.7%)

* Before goodwill, acquired intangibles, non-operating items and after other non-controlling interests. ** Before goodwill, acquired intangibles, non-operating items and after non-controlling interests.

Investec integrated annual report 2017 27 01 Financial review (continued) Overview of the year

Ten-year review Salient features* % change For the year ended 31 March 2017 2016 2017 vs 2016 2015 2014 2013 2012 2011 2010 2009 2008 Income statement and selected returns Operating profit before goodwill, acquired intangibles, non-operating items and taxation (£’000)ø 599 121 505 593 18.5% 493 157 450 676 426 278 358 625 434 406 432 258 396 766 508 717 Operating profit: Southern Africa (% of total)ø 62.5% 63.8% 70.8% 66.0% 67.5% 80.7% 69.1% 67.2% 74.0% 66.7% Operating profit: UK and Other (% of total)ø 37.5% 36.2% 29.2% 34.0% 32.5% 19.3% 30.9% 32.8% 26.0% 33.3% Adjusted earnings attributable to ordinary shareholders before goodwill, acquired intangibles and non-operating items (£’000) 434 504 359 732 20.8% 339 532 326 923 309 310 257 579 327 897 309 710 269 215 344 695 Headline earnings (£’000) 434 425 334 720 29.8% 308 770 291 561 265 227 217 253 286 659 275 131 261 627 301 499 Cost to income ratio 66.3% 66.4% 67.6% 67.6% 65.7% 64.7% 61.7% 57.8% 55.9% 56.1% Staff compensation to operating income ratio 47.2 47.0% 47.4% 46.3% 43.9% 43.0% 40.7% 36.1% 34.9% 37.2% Return on average adjusted shareholders’ equity (post-tax) 12.5 11.5% 10.6% 10.0% 9.4% 7.8% 11.2% 13.5% 14.8% 23.6% Return on average adjusted tangible shareholders’ equity (post-tax) 14.5% 13.7% 12.7% 12.3% 11.7% 9.6% 13.2% 15.4% 17.4% 28.6% Return on average risk-weighted assets 1.45% 1.34% 1.25% 1.14% 1.06% 0.91% 1.23% 1.33% 1.36% ^ Return on average assets (excluding assurance assets) 1.02% 0.93% 0.86% 0.75% 0.67% 0.57% 0.76% 0.83% 0.84% 1.31% Operating profit per employee (£’000) 64.1 58.7 9.2% 59.7 54.9 53.5 47.8 64.4 69.7 62.6 84.4 Net interest income as a % of operating income 29.7% 29.6% 32.4% 33.6% 35.2% 36.2% 34.9% 37.0% 46.6% 39.3% Non-interest income as a % of operating income 70.3% 70.4% 67.6% 66.4% 64.8% 63.8% 65.1% 63.0% 53.4% 60.7% Recurring income as a % of total operating income 72.0% 71.7% 74.2% 70.7% 68.6% 67.7% 62.3% 60.4% 70.0% 65.1% Effective operational tax rate 18.5% 19.1% 19.6% 17.1% 18.4% 18.1% 15.5% 20.6% 21.1% 22.6% Balance sheet Total capital resources (including subordinated liabilities) (£’million) 6 221 4 994 24.4% 5 219 5 355 5 693 5 505 5 249 4 362 3 762 3 275 Total shareholders’ equity (including preference shares and non-controlling interests) (£’million) 4 809 3 859 24.6% 4 040 4 016 3 942 4 013 3 961 3 292 2 621 2 210 Shareholders’ equity (excluding non-controlling interests) (£’million) 4 131 3 360 22.9% 3 501 3 572 3 661 3 716 3 648 2 955 2 297 1 911 Total assets (£’million) 53 535 45 352 18.0% 44 353 47 142 52 010 51 550 50 941 46 572 37 365 34 224 Net core loans and advances to customers (£’million) 22 707 18 119 25.3% 17 189 17 157 18 415 18 226 18 758 17 891 16 227 12 854 Core loans and advances to customers as a % of total assets 42.4% 40.0% 38.8% 36.4% 35.4% 35.4% 36.8% 38.4% 43.4% 37.7% Cash and near cash balances (£’million) 12 038 10 962 9.8% 9 975 9 136 9 828 10 251 9 319 9 117 4 866 5 028 Customer accounts (deposits) (£’million) 29 109 24 044 21.1% 22 615 22 610 24 461 25 344 24 441 21 934 14 573 12 133 Third party assets under management (£’million) 150 735 121 683 23.9% 124 106 109 189 110 678 96 776 88 878 74 081 48 828 52 749 Capital adequacy ratio: Investec plcº 15.1% 15.1% 16.7% 15.3% 16.7% 17.5% 16.8% 15.9% 16.2% 15.3% Capital adequacy tier 1 ratio: Investec plcº 11.5% 10.7% 11.9% 10.5% 11.0% 11.6% 11.6% 11.3% 10.1% 9.2% Common equity tier 1 ratio: Investec plc^^º 11.3% 9.7% 10.2% 8.8% 8.8% 9.3% Leverage ratio: Investec plc – current^^º 7.8% 7.0% 7.7% 7.4% Capital adequacy ratio: Investec Limitedº 14.1% 14.0% 14.7% 14.9% 15.5% 16.1% 15.9% 15.6% 14.2% 13.9% Capital adequacy tier 1 ratio: Investec Limitedº 10.7% 10.7% 11.3% 11.0% 10.8% 11.6% 11.9% 12.0% 10.8% 10.0% Common equity tier 1 ratio: Investec Limited^^º 9.9% 9.6% 9.6% 9.4% 8.9% 9.3% Leverage ratio: Investec Limited – current^^º 7.3% 6.9% 8.1% 7.8% Credit loss ratio (income statement impairment charge as a % of average gross core loans and advances) 0.54% 0.62% 0.68% 0.68% 0.84% 1.12% 1.27% 1.16% 1.08% 0.51% Defaults (net of impairments and before collateral) as a % of net core loans and advances to customers 1.22% 1.54% 2.07% 2.30% 2.73% 3.31% 4.66% 3.98% 3.28% 1.29% Gearing ratio (assets excluding assurance assets to total equity) 9.5x 10.2x 9.4x 10.3x 11.6x 11.3x 11.3x 12.5x 13.0x 13.8x Core loans to equity ratio 4.7x 4.7x 4.3x 4.3x 4.7x 4.5x 4.7x 5.4x 6.2x 5.8x Loans and advances to customers: customer deposits 76.2% 73.6% 74.0% 72.0% 71.5% 67.8x 72.4% 76.2% 103.6% 98.4% Salient financial features and key statistics Adjusted earnings per share (pence)# 48.3 41.3 16.9% 39.4 37.9 36.1 31.8 43.2 45.1 42.4 56.9 Headline earnings per share (pence)# 48.2 38.5 25.2% 35.8 33.8 31.0 26.8 37.7 40.1 41.2 49.7 Basic earnings per share (pence)# 50.5 38.5 31.9% 24.4 34.3 31.7 25.7 49.7 44.0 38.5 57.7 Diluted earnings per share (pence)# 48.8 36.7 33.0% 23.1 32.3 29.8 24.3 46.7 41.5 36.1 54.0 Dividends per share (pence)# 23.0 21.0 9.5% 20.0 19.0 18.0 17.0 17.0 16.0 13.0 25.0 Dividend cover (times) 2.1 2.0 5.0% 2.0 2.0 2.0 1.9 2.5 2.8 3.3 2.3 Net asset value per share (pence)# 431.0 352.3 22.3% 364.9 376.0 384.2 392.0 416.0 364.0 308.8 260.6 Net tangible asset value per share (pence)# 377.0 294.3 28.1% 308.1 309.0 310.9 317.0 343.8 324.1 266.3 215.0 Weighted number of ordinary shares in issue (million)# 900.4 870.5 3.4% 862.7 862.6 856.0 809.6 759.8 686.3 634.6 606.2 Total number of shares in issue (million)# 958.3 908.8 5.4% 899.4 891.7 884.8 874.0 810.0 741.0 713.2 657.6 Closing share price (pence)# 544 513 6.0% 561 485 459 382 478 539 292 339 Market capitalisation (£’million) 5 213 4 662 11.8% 5 045 4 325 4 061 3 340 3 872 3 993 2 083 2 229 Number of employees in the group (including temps and contractors) 9 716 8 966 8.4% 8 254 8 258 8 151 7 781 7 237 6 123 5 951 6 333 Closing ZAR:£ exchange rate 16.77 21.13 20.6% 17.97 17.56 13.96 12.27 10.88 11.11 13.58 16.17 Average ZAR:£ exchange rate 18.42 20.72 11.1% 17.82 16.12 13.44 11.85 11.16 12.38 14.83 14.31 * Refer to definitions on page 227. ^^ The group’s expected Basel III ‘fully loaded’ numbers are provided on page 85 in volume two. º Investec Limited’s numbers have been reported in terms of Basel III since 31 March 2013, and Investec plc has been reporting in terms of Basel III since 31 March 2014. ø Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. ^ Calculation not comparable.

28 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Investec integrated annual report 2017 29 01 Financial review (continued) Overview of the year

Track record

Up 16.9% to 48.3 pence Up 20.8% to £434.5 million

Adjusted earnings attributable to ordinary shareholders before goodwill, acquired Adjusted earnings per share intangibles and non-operating items

pence £’million 60 500 434.5 50 48.3 400

40 300 30 200 20

100 10

0 0

08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 17

Core loans: up 25.3% to £22.7 billion since Up 23.9% to £150.7 billion since 31 March 2016 – 31 March 2016 – an increase of 7.6% on a an increase of 14.8% on a currency neutral basis* currency neutral basis* Net inflows of £0.7 billion Deposits: up 21.1% to £29.1 billion since 31 March 2016 – an increase of 5.5% on a currency neutral basis*

Core loans and customer deposits Third-party assets under management

£’billion £’billion 30 29.1 200

25 22.7 150 150.7 20

15 100

10 50 5

0 0

08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 17 Core loans Customer deposits

* Currency neutral basis: calculation assumes that the group’s relevant closing exchange rates at 31 March 2017, as reflected on page 26, remain the same as those at 31 March 2016.

30 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Financial targets

We have set the following target over We have set the following target over the medium to long term: the medium to long term: Target Target Group ROE: 12% to 16% over a rolling Group COI ratio: less than 65% in five-year period in Pounds Sterling Pounds Sterling

Cost to income ratio (COI) and staff ROE* compensation to operating income ratio (SC)

Percentage Percentage 25 80 70 66.3 20 60

15 50 47.2 12.5 40

10 30

20 5 10

0 0

08 09 10 11 12 13 14 15 16 17 07 08 09 10 11 12 13 14 15 16 17 SC COI COI target (below 65%)

In the medium to long term, we aim to We intend to maintain a sufficient level of achieve adjusted EPS growth of 10% in capital to satisfy regulatory requirements, as Target excess of UK inflation (in Pounds Sterling). Target well as take advantage of opportunities that We continually strive to build and maintain may arise in the financial services industry a sustainable business model. We intend focusing on increasing our return on equity to maintain a dividend cover of between in the medium to long term. We target a 1.7 to 3.5 times based on earnings per capital adequacy ratio range of between share as defined above, denominated in 14% and 17% on a consolidated basis for Pounds Sterling Investec plc and Investec Limited, and we target a minimum tier 1 ratio of 11.0% and a common equity tier 1 ratio above 10.0%

Adjusted earnings per share (EPS) and Total shareholders’ equity and capital dividends per share (DPS) adequacy ratios (CAR)

pence £’000 Percentage 60 5 000 4 809 30

50 48.3 4 000 25

40 20 3 000 30 15 23.0 2 000 20 10

1 000 10 5

0 0 0

08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 17 EPS** DPS Total shareholders’ equity Investec Limited CAR*** Investec plc CAR*** * ROE is post-tax return on adjusted average shareholders’ equity as calculated on page 64. ** Adjusted EPS before goodwill, acquired intangibles and non-operating items as defined on page 227. *** Investec Limited’s numbers have been reported in terms of Basel III since 31 March 2013, and Investec plc has been reporting in terms of Basel III since 31 March 2014. Note: The numbers shown in the financial targets graphs on this page are for the years ended 31 March, unless otherwise stated.

Investec integrated annual report 2017 31 01 Financial review (continued) Overview of the year

An overview of the operating environment impacting our business

South Africa

Our views

The mild acceleration The commodity cycle too is expected in politicians, along with the burden of to have troughed in 2016, which along government regulation and cost to business in global economic with positive sentiment towards emerging of crime and violence, hold South Africa growth evidenced over market assets, has strengthened the Rand. back from a better institutional ranking. 2016, as key advanced The severe drought has largely come to an end, and in combination with Rand Fiscal consolidation is key, and South and emerging market strength, is expected to moderate inflation Africa will need to ensure this, particularly economies improved somewhat going forward. However, a a stabilisation in public sector debt as a cabinet reshuffle at the end of the financial percentage of GDP, to avoid further local somewhat, along with year saw a new Finance Minister appointed, currency credit rating downgrades to sub- some strained low- with downgrades on South Africa’s hard investment grade. Such fiscal sustainability income economies, has currency debt ratings to sub-investment is vital; not least to ensure the sustainability grade, from Standard and Poor’s and Fitch, of the social grant and broader social been positive for South following on. welfare system for the majority of South Africa. The downward Africans, as well as ensuring lower On a fundamental basis, South Africa borrowing costs, and the avoidance of a trend in domestic growth revealed its institutional soundness over debt trap. since 2010 likely bottomed the past year in the ratings from the World Economic Forum’s (WEF) Global Despite notable progress in some areas, last year, at 0.3% year-on- Competitiveness Survey, particularly structural constraints continue to limit the year, and 2017 is expected in its financial market development, productivity needed for sustained, fast to see global growth gain where it is ranked eleventh in the world. economic growth domestically. The soundness of its banks and ability traction modestly, with of its financial services to meet business South Africa’s economic needs are ranked second globally, the performance expected regulation of its securities exchanges third. Institutionally, South Africa has a ranking of to lift towards 1.0% fortieth out of the one hundred and thirty year-on-year. eight countries surveyed, first on both the strength of auditing and reporting standards and the protection of minority shareholders interests, and third on the efficacy of its 0.3% 1.3% corporate boards. The efficiency of South 2016/17 2015/16 Africa’s legal system in settling disputes and Economic growth Economic growth challenging regulations is respectively ninth and tenth in the world, while the strength of 2017 2016 investor protection is fourteenth. However, the WEF’s global survey shows that the R55 827 R56 449 perceived high cost of the wastefulness GDP per capita has fallen of government spending and diversion of public funds, favouritism in decisions of government officials and public distrust

32 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

GDP grew by 0.5% and 0.7% in the third and fourth quarters of 2016, respectively.

United Kingdom That helped the unemployment rate fall to 4.7% in January and held there in February, the lowest level seen since 2005. Our views

The Uk economy has From a market perspective, there were growth could in turn lead to a marginally two notable reactions to the Brexit vote. higher unemployment rate and a somewhat remained surprisingly First, the Pound fell sharply and, by the slower pace of house price growth. All told, resilient. end of the financial year, sat more than this points to a somewhat more challenging 15% below pre-referendum levels, in economic environment in prospect. trade weighted terms. Second, the Bank of England (BoE) cut the Bank Rate from The 8 June 2017 General Election saw 2.0% 1.9% 0.50% to 0.25% in August 2016 in order the Conservative Party fail to recapture its overall majority. While there may be 2016/17 2015/16 to guard against a post-referendum Economic growth Economic growth economic slowdown. In addition the agreements made with other parties, the BoE also undertook additional purchases government’s effective majority would be 2017 2016 of government bonds as part of its small and there remains uncertainty over Quantitative Easing (QE) programme, how any partnerships would play out. £29 580 £28 768 and began a programme of corporate GDP per capita has risen bond purchases.

But in spite of these cautionary responses to the Brexit vote, the UK economy has This fiscal year saw the UK vote to leave remained surprisingly resilient. By and large, the European Union. Since the shock households and businesses shrugged off result of the 23 June 2016 referendum, the uncertainty associated with the UK’s it has become increasingly clear that, new economic relationship with the rest as part of Brexit, the British government of Europe. will relinquish the UK’s membership of the EU Single Market in exchange for Towards the end of the year, though, powers to tighten immigration rules. But it economic momentum appeared to have remains unclear what Brexit will actually slowed. The main reason is that weakness look like – the government only gave in the Pound was beginning to push up on formal notice of its intention to leave the import prices and broader consumer price EU (by triggering Article 50 of the Lisbon inflation. The rate of CPI inflation rose above Treaty) on 29 March 2017. The triggering the BoE’s 2% target in February 2017, of Article 50 begins a two-year negotiation with further increases in prospect. There is period, at the end of which time the UK evidence that higher inflation was beginning will have formally left the EU. We think to drag on household spending while that a bilateral UK/EU free trade deal is underlying levels of uncertainty probably achievable, but it will take several years weighed somewhat on business investment. to negotiate. We therefore suspect that Granted, the weaker Pound provided a the UK will enter some sort of transitional competitiveness boost to exporters, but arrangement between March 2019 and that might not be enough to offset the the point at which a longer term deal headwinds to household and business is finalised. spending. A (mild) slowdown in economic

Investec integrated annual report 2017 33 01 Financial review (continued) Overview of the year

An overview of the operating environment impacting our business (continued)

Australia United States

Our views Our views

The Australian economy The US economy federal funds rate to 0.75% to 1.00% at the end of the financial year, from a 0.25% expanded by 2.5% in expanded by 1.6% in to 0.50% starting point. Further policy 2016. calendar year 2016, the tightening over the forthcoming period will be driven by the evolution of the economy softest pace of growth and inflation, tied in part to the delivery of since 2011. Presidents Trump’s economic plans. The The pace of growth, however, was far Federal Reserve’s current policy guidance from steady throughout the year, with the points to the prospect of two further federal economy actually recording a period of funds hikes in calendar year 2017. Note contraction in the third quarter, with output One major drag was the weak investment that inflation remained below the Federal falling by 0.5%, the first quarterly drop in backdrop which suffered in part following Reserve’s 2% goal for almost all of 2016, output since March 2011 and only the fourth falls in oil prices; this story looks set to though it moved above it in the early part of in 25 years. Australia managed to escape reverse somewhat and provide a foot-up to 2017, reflecting the dissipating drag of past a technical recession, however, with the growth in 2017 with oil investment already falls in energy prices. economy bouncing back robustly in the showing signs of improvement. final quarter of the year, expanding by 1.1% quarter on quarter. The recovery was driven Household consumption remained more by a surge in exports in the fourth quarter robust, reflecting the improvements in of 2016 as commodity exports picked up the US labour market through the course robustly and as commodity prices firmed. of 2016. The US unemployment rate fell from 5.0% in April 2016 to stand at 4.5% The unemployment rate has held relatively in March 2017 and is now consistent steady over the past year, holding in a range with ‘longer-term’ unemployment rates as of 5.6% to 5.9% according to the fiscal year- defined by the US Federal Reserve, whilst to-date numbers published so far; the most wage growth has also firmed. recent reading, for March 2017, stood at the upper end of this range at 5.9%. Inflation The major political event of 2016 was of has remained relatively subdued through course Donald Trump’s November 2016 this period with CPI inflation reaching a low election victory which led to a pick-up in of 1.0% in the second quarter of 2016 and business and consumer confidence on ending 2016 at 1.5% year-over-year, whilst hopes of promised tax cuts and significant core inflation has also been subdued. infrastructure spending. Since being sworn in as President on 20 January 2017, In light of this and reflecting headwinds to President Trump has rubbed up against growth in the early part of the fiscal year, congressional restraints which have delayed the Reserve Bank of Australia cut the official him enacting these changes quickly, but policy rate (cash rate) to a new record low, overall the President is still likely to enact a from 2.00% to 1.75% in April 2016 and fiscally supportive policy mix which is likely again to 1.50% in August 2016. The cash to be positive, on balance, for 2017 growth rate has remained at these levels since then. and more so in 2018. Australia has maintained its triple-A rating with all of the major rating agencies during Following more than seven years of record the period. However, Standard and Poor’s low interest rates, the Federal Reserve has Australia’s sovereign rating on a negative began tightening policy in December 2015 rating outlook, given its pessimism over and enacted two subsequent hikes in the government's ability to close existing interest rates in December 2016 and budget deficits. March 2017. Those policy moves took the

34 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Eurozone

Our views

The fiscal year has seen In April 2016 headline HICP inflation stood subdued nature of ‘core’ CPI inflation, at -0.2%, a considerable distance below which averaged just +0.8% across the the Euro area economic the ECB’s price stability target of ‘below, fiscal year. ECB policy rates remained at backdrop improve on but close to 2%’. However, much of this record low levels throughout the period, decline in inflation was due to a fall in with the main refinancing rate held at several fronts and most wholesale energy prices. Those effects 0.00% and the deposit rate at -0.40%. notably with a decline in have started to fade and as such headline December 2016 saw the ECB announce an inflation has recovered somewhat; in extension of its asset purchase programme. deflationary risks. March 2017 HICP inflation stood at 1.5%. From April 2017 the ECB will continue to purchase sovereign and other debt The economy continued to experience instruments until December 2017, but at a gradual recovery over the year, with the slower pace of €60 billion per month quarter four 2016 registering the 15th rather than the previous pace of €80 billion consecutive quarter of positive growth. As per month. the fiscal year drew to a close there were further positive economic signs with the Away from the economy, political risks most recent economic indicators pointing became more evident towards the end of to a firming in the pace of economic the under review year as elections loomed activity. Other economic highlights of the in a number of major Euro area economies. fiscal year included a 2.5 million drop in However, March’s Dutch election result unemployment, as the unemployment rate provided some reassurance as the populist fell to 9.5% in February 2017, its lowest anti-EU candidate failed to gain the foothold level since May 2009. The availability of some had feared. Moreover in early credit, as well as lending growth also May 2017, centrist Emmanuel Macron was witnessed improvements during the year. elected President of France, convincingly defeating far-right candidate Marine Le Pen Despite the gradual improvement in the in the second round of voting. Elections to economic backdrop, European Central Germany’s Bundestag are set to take place Bank (ECB) policy has remained ultra- in September 2017. loose, in part due to the continued

Investec integrated annual report 2017 35 01 Financial review (continued) Overview of the year

An overview of the operating environment impacting our business (continued)

Global stock markets

Our views

Global equity markets Amongst the highlights, the S&P500 gained Emerging market equity indices 14.7% over the fiscal year reaching an all- underperformed their developed market faced a number of key time record of 2396 in February, meanwhile peers following the US election as the MSCI risk events over the year, the MSCI world index added 12.5% and Emerging market index notched up gains the Euro Stoxx 50 rose by 16.5%. of 7%. South African equities themselves with the UK’s referendum ended March 2017 flat on the year relative The UK electorate’s vote to leave the on leaving the EU and to March 2016. However, this masks a fairly European Union on 23 June 2016 initially volatile year and wide divergences across the US election of shocked markets, with UK and global sectors. The continuing rally in commodity equity indices witnessing significant falls the particular note. Despite prices saw resource shares rally 13% over morning following the referendum. However, the year. But concerns about the South these events and some equity market weakness proved short-lived African political environment and the knock as UK listed entities’ earnings benefited intervening volatility on effects of higher interest rates and from currency translation effects due to the slower growth saw financials down 8% at times, global equity sharp fall in the Pound, whilst risk sentiment for the year. Meanwhile industrials ended globally improved. markets enjoyed a the year roughly flat. Looking forward, However, global equity markets and continuing political uncertainty is likely to be buoyant year. risk assets more broadly witnessed the the major theme until the end of 2017 when largest gains in the second half of the the governing party, the ANC, meets for its year, following the US election. Republican next elective conference. nominee Donald Trump’s win in November propelled equity markets and commodity prices higher as investors focused on the fiscally stimulative impact of Mr Trump’s policy promises including big ticket tax cuts and increased infrastructure spending. The S&P 500 gained 11.5% across the remainder of the financial year following the election, whilst major commodity benchmarks such as iron ore and copper gained 25% and 15% on the expectation of infrastructure-related demand.

36 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Operating environment The table below provides an overview of some key statistics that should be considered when reviewing our operational performance Average over the Year Year year 1 April ended ended 2016 to 31 March 31 March 31 March 2017 2016 % change 2017

Market indicators FTSE All share 3 990 3 395 17.5% 3 699 JSE All share 52 056 52 250 (0.4%) 52 017 S&P 2 363 2 060 14.7% 2 186 Nikkei 18 909 16 759 12.8% 17 516 Dow Jones 20 663 17 685 16.8% 18 846

Rates UK overnight 0.17% 0.41% 0.30% UK 10 year 1.07% 1.42% 1.18% UK clearing banks base rate 0.25% 0.50% 0.33% LIBOR – three month 0.34% 0.59% 0.44% SA R186 8.84% 9.10% 8.85% Rand overnight 6.86% 6.92% 7.28% SA prime overdraft rate 10.50% 10.50% 10.50% JIBAR – three month 7.36% 7.23% 7.34% US 10 year 2.40% 1.79% 1.97%

Commodities Gold US$1 247/oz US$1 233/oz 1.1% US$1 258/oz Oil US$58/bbl US$40/bbl 45.0% US$50/bbl Platinum US$940/oz US$976/oz (3.7%) US$1 003/oz

Macro-economic UK GDP (% change over the period) 2.0% 1.9% UK per capita GDP (£, calendar year) 29 580 28 768 2.8% South Africa GDP (% change over the period) 0.3% 1.3% South Africa per capita GDP (real value in Rands, historical revised) 55 827 56 449 (1.1%)

Sources: Datastream, Bloomberg, Office for National Statistics, SARB Quarterly Bulletin.

Investec integrated annual report 2017 37 01 Financial review (continued) Overview of the year

Key income drivers We provide a wide range of financial There are therefore a products and services to a select client number of key income base in three principal markets, the drivers for our business which are discussed UK and Europe, South Africa and Asia/ below and alongside. Australia. We are organised as a network comprising three principal business divisions: Asset Management, Wealth & Investment and Specialist Banking.

Asset Management

Key income drivers Income impacted primarily by –– Fixed fees as a percentage of assets under management –– Movements in the value of the assets underlying client portfolios –– Variable performance fees. –– Performance of portfolios against set benchmarks Income statement – –– Net flows. primarily reflected as –– Fees and commissions.

Wealth & Investment

Key income drivers Income impacted primarily by –– Investment management fees –– Movement in the value of assets levied as a percentage of assets underlying client portfolios under management –– The level of investment activity –– Commissions earned for undertaken on behalf of clients, executing transactions for which, in turn, is affected by, among clients. other things, the performance of the global stock markets (which drives investment opportunities), the Income statement – equity investment risk appetite of primarily reflected as our clients, tax considerations and market liquidity. –– Fees and commissions.

38 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Specialist Banking

Key income drivers Income impacted Income statement – primarily by primarily reflected as

–– Lending activities. –– Size of loan portfolio –– Net interest income –– Clients’ capital and infrastructural investments –– Fees and commissions –– Client activity –– Investment income. –– Credit spreads –– Interest rate environment.

–– Cash and near cash balances. –– Capital employed in the business and –– Net interest income capital adequacy targets –– Trading income arising from –– Asset and liability management policies balance sheet management and risk appetite activities. –– Regulatory requirements –– Credit spreads –– Interest rate environment.

–– Deposit and product structuring and –– Distribution channels –– Net interest income distribution. –– Ability to create innovative products –– Fees and commissions. –– Regulatory requirements –– Credit spreads –– Interest rate environment.

–– Investments made (including listed –– Macro- and micro-economic market –– Net interest income and unlisted equities; debt securities; conditions investment properties) –– Investment income –– Availability of profitable exit routes –– Gains or losses on investments –– Share of post taxation –– Whether appropriate market conditions exist operating profit of associates. –– Dividends received. to maximise gains on sale –– Attractive investment opportunities –– Credit spreads.

–– Advisory services. –– The demand for our specialised advisory –– Fees and commissions. services, which, in turn, is affected by applicable regulatory and other macro- and micro-economic fundamentals.

–– Derivative sales, trading and hedging. –– Client activity, including lending activity –– Fees and commissions –– Market conditions/volatility –– Trading income arising from customer flow. –– Asset and liability creation –– Product innovation.

–– Transactional banking services. –– Levels of activity –– Net interest income –– Ability to create innovative products –– Fees and commissions. –– Appropriate systems infrastructure.

Investec integrated annual report 2017 39 01 Financial review (continued) Overview of the year

An overview of the principal risks relating to our operations

The most material and significant risks we face, which the board and senior management believe could have an impact on our operations, financial performance, viability and prospects are summarised briefly below with further details provided in volumes one and two of the integrated annual report. The board, through its various sub-committees, has performed a robust assessment of these principal risks. For additional information pertaining to the management and monitoring of these principal risks, see the references provided. Regular reporting of these risks is made to senior management, the executives and the board at the group risk and capital committee (GRCC) and board risk and capital committee (BRCC).

The group’s board approved risk appetite framework is provided on page 11 in volume two. The board recognises even with sound appetite and judgement that extreme events can happen that are completely outside of the board’s control. It is however, necessary to assess these events and their impact and how they may be mitigated by changing the risk appetite framework if necessary. It is policy to regularly carry out multiple stress testing scenarios which in theory test extreme, but plausible events and from that assess and plan what can be done to mitigate the potential outcome.

Further information Principal risks Key mitigating actions provided Credit and counterparty risk

Credit and counterparty risk • Independent credit committees exist in each geography where Pages 16 to 47 in volume is defined as the risk arising we assume credit risk. These committees operate under board- two. from an obligor’s (typically a approved delegated limits, policies and procedures. client or counterparty) failure • There is a high level of executive involvement and non-executive to meet the terms of any review and oversight in the credit decision-making forums. agreement thereby resulting in a loss to the group. • Our credit exposures are to a select target market comprising high- income and high net worth individuals, established corporates, and medium-sized enterprises.

• Our risk appetite continues to favour lower risk, income-based lending, with exposures well collateralised and credit risk taken over a short to medium term.

• Investec has a limited appetite for unsecured debt, thus the credit risk mitigation technique most commonly used is the taking of collateral, with a strong preference for tangible assets.

• Portfolio reviews (including stress testing analyses) are undertaken on all material businesses, where the portfolios are analysed to assess any migration in portfolio quality, highlight any vulnerabilities, identify portfolio concentrations and make appropriate recommendations, such as a reduction in risk appetite limits or specific exposures.

40 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Further information Principal risks Key mitigating actions provided Country risk

Country risk refers to the risk • Exposures are only to politically stable jurisdictions that we Page 17 in volume two. of lending to a counterparty understand and have preferably operated in before. operating in a particular • There is little appetite for exposures outside of the group’s country or the risk inherent pre-existing core geographies or target markets. in sovereign exposure, i.e. the risk of exposure to loss • The legal environment should be tested, have legal precedent in line caused by events in other with OECD standards and have good corporate governance. countries. Country risk • In certain cases, we may make use of political risk insurance to covers all forms of lending mitigate exposure where deemed necessary. or investment activity whether to/with individuals, corporates, banks or governments.

Investment risk

Investment risk in the banking • Independent credit and investment committees exist in each Pages 48 to 54 in book arises primarily from the geography where we assume investment risk. volume two. group’s principal investments • Risk appetite limits and targets are set to limit our exposure to (private equity) and property equity and investment risk. investment activities, where the group invests in largely • As a matter of course, concentration risk is avoided and unlisted companies and investments are well spread across geographies and industries. select property investments, with risk taken directly on the group’s balance sheet.

Investec integrated annual report 2017 41 01 Financial review (continued) Overview of the year

Further information Principal risks Key mitigating actions provided Market risk in the trading book

Traded market risk is the risk • To manage, measure and mitigate market risk, we have Pages 55 to 60 in that the value of a portfolio independent market risk management teams in our core volume two. of instruments changes geographies where we assume market risk. as a result of changes in • The focus of our trading activities is primarily on supporting client underlying market risk factors activity. Our strategic intent is that proprietary trading should be such as interest rates, limited and that trading should be conducted largely to facilitate equity prices, commodity clients in deal execution. prices, exchange rates and volatilities. • Within our trading activities, we act as principal with clients or the market. Market risk, therefore, exists where we have taken on principal positions resulting from market-making, underwriting, investments and limited proprietary trading in the foreign exchange, capital and money markets. The focus of these businesses is primarily on supporting client activity.

• Measurement techniques used to quantify market risk arising from our trading activities include sensitivity analysis, value at risk (VaR), stressed VaR (sVaR), expected shortfall (ES) and extreme value theory (EVT). Stress testing and scenario analysis are used to simulate extreme conditions to supplement these core measures.

Liquidity risk

Liquidity risk refers to the • Each geographic entity must be self-sufficient from a funding and Pages 62 to 71 in possibility that, despite being liquidity standpoint. volume two. solvent, we have insufficient • Our banking entities in South Africa and the UK are ring-fenced capacity to fund increases in from one another and are required to meet the regulatory liquidity assets or are unable to meet requirements in the jurisdictions in which they operate. our payment obligations as they fall due, without incurring • We maintain a liquidity buffer in the form of unencumbered cash, unacceptable losses. This government or rated securities (typically eligible for repurchase with includes repaying depositors the central bank), and near cash well in excess of the statutory or maturing wholesale debt. requirements as protection against unexpected disruptions in This risk is inherent in all cash flows. banking operations and can • The maintenance of sustainable prudent liquidity resources takes be impacted by a range precedence over profitability. of institution specific and market-wide events. • We target a diversified funding base, avoiding undue concentrations by investor type, maturity, market source, instrument and currency.

• Stable customer deposits must fully fund our core loan book, with little reliance therefore placed on wholesale funding.

• The group does not rely on committed funding lines for protection against unforeseen interruptions to cash flow.

• Balance Sheet Risk Management team independently monitors key daily funding metrics and liquidity ratios to assess potential risks to the liquidity position, which further act as early warning indicators of potential normal market disruption.

• Daily liquidity stress tests are carried out.

42 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Further information Principal risks Key mitigating actions provided Capital risk

The risk that we do not have • Both the Investec Limited and Investec plc groups operate an Pages 81 to 96 in sufficient capital to meet approach to capital management that utilises both regulatory volume two. regulatory requirements or capital as appropriate to that jurisdiction and internal capital, which that capital is inefficiently is an internal risk-based assessment of capital requirements. deployed across the group. • The determination of target capital is driven by our risk profile, strategy and risk appetite, taking into account the regulatory and market factors applicable to the group.

• At the most fundamental level, we seek to balance our capital consumption between prudent capitalisation in the context of the group’s risk profile and optimisation of shareholder returns.

• Our internal capital framework is designed to manage and achieve this balance.

• The framework has been approved by the board and is managed by the DLC capital committee, which is responsible for oversight of the management of capital on a regulatory and an internal capital basis.

Non-trading interest rate risk

Non-trading interest rate risk, • The daily management of interest rate risk in the banking book is Pages 71 to 74 in otherwise known as interest centralised within the Central Treasury function of each geographic volume two. rate risk in the banking entity and is subject to local independent risk and Asset and book, arises from the impact Liability committee (ALCO) review. of adverse movements • Together with the business, the treasurer develops strategies in interest rates on both regarding changes in the volume, composition, pricing and interest net interest-earnings and rate characteristics of assets and liabilities to mitigate the interest economic value of equity rate risk and ensure a high degree of net interest margin stability of adverse movements in over an interest rate cycle. These are presented, debated and interest rates. challenged in the liability product and pricing forum and the ALCO. Non-trading interest rate • Each geographic entity has its own board approved non-trading risk in the banking book is interest rate risk policy and risk appetite, which dictates that long- an inherent consequence of term (>1 year) non-trading interest rate risk is materially eliminated. conducting banking activities, Where natural hedges between banking book items do not suffice and arises from the provision to reduce the exposure within defined limits, interest rate swaps of retail and wholesale (non- are used to transform fixed rate assets and liabilities into variable trading) banking products rate items. and services. • Non-trading interest rate risk is measured and analysed by utilising standard tools of traditional interest rate repricing mismatch and NPV sensitivity to changes in interest rate risk factors.

Investec integrated annual report 2017 43 01 Financial review (continued) Overview of the year

Further information Principal risks Key mitigating actions provided Operational risk

Operational risk is defined as • An independent Group Operational Risk Management function Pages 75 to 79 in the potential or actual impact ensures that operational risk policies and procedures are developed volume two. to the group as a result of and applied consistently and effectively throughout the group. failures relating to internal • Business unit management, supported by operational risk processes, people, systems managers who operate at a business unit level, are responsible or from external events. The for embedding and implementing operational risk practices impacts can be financial as and policies. well as non-financial such as customer detriment, • All personnel are adequately skilled at both a business unit and a reputational or regulatory group level. consequences. Operational risk includes key aspects such as: cybersecurity; information security; financial crime; technology; outsourcing and process failure; business continuity; Regulatory and compliance.

Reputational and strategic risk

Reputational risk is damage • We have various policies and practices to mitigate reputational risk, Pages 79 to 80 in to our reputation, name or including strong values that are regularly and proactively reinforced. volume two. brand. Reputational risk • Strategic and reputational risk is mitigated as much as possible is often associated with through detailed processes and governance/escalation procedures strategic decisions made from business units to the board, and from regular, clear by the board and also communication with shareholders, customers and all stakeholders. arises as a result of other risks manifesting and not • A disclosure and public communications policy has been approved being mitigated. by the board.

44 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Further information Principal risks Key mitigating actions provided Conduct risk

Conduct risk means the risk • Investec’s approach to conduct risk is driven by our values and Pages 80 to 81 in that detriment is caused to philosophies, ensuring that Investec operates in the wholesale arena volume two. the group, its customers, and markets with integrity and puts the well-being of Investec clients its counterparties or the at the heart of how the business is run. market, as a result of • Investec ensures that its products and services are scrutinised and inappropriate execution regularly reviewed to identify any issues early on and to make sure of business activities. they are escalated for appropriate resolution and, where necessary, remedial action.

• Investec’s conduct risk policy aims to create an environment for consumer protection and market integrity within the business, supported with the right conduct risk management framework.

• Customer and market conduct committees exist in South Africa and the UK, with the objective of ensuring that Investec maintains a client-focused and fair outcomes-based culture.

Compliance, governance and regulatory risk

The risks of changing • Investec remains focused on complying with the highest levels of Pages 101 to 102 in legislation, regulation, compliance to professional standards and integrity in each of our volume two. policies, voluntary codes jurisdictions. Our culture is a major component of our compliance of practice and their framework and is supported by robust policies, processes interpretation in the markets and talented professionals who ensure that the interests of our in which we operate can have customers and shareholders remain at the forefront of everything a significant impact on the we do. group’s operations, business • We have independent compliance functions in each of our core prospects, costs, liquidity operating jurisdictions, which ensure that the group implements the and capital requirements. required processes, practices and policies to adhere to applicable regulations and legislation.

• A global compliance forum exists which establishes and standardises group standards where applicable.

Investec integrated annual report 2017 45 01 Financial review (continued) Overview of the year

Further information Principal risks Key mitigating actions provided Legal risk

Legal risk is the risk of • A legal risk forum is constituted in each significant legal entity within the Page 80 in volume two. loss resulting from any of group to ensure we keep abreast of developments and changes in the our rights not being fully nature and extent of our activities, and to benchmark our processes enforceable or from our against best practice. obligations not being properly • We have a central independent in-house legal team with embedded performed. This includes our business units’ legal officers where business volumes or needs dictate. rights and obligations under contracts entered into with • This is supplemented by a pre-approved panel of third party firms to counterparties. be utilised where necessary.

Business risk

Business risk means the risk • The risk of loss caused by income volatility is mitigated through Pages 32 to 37 in that external market factors diversification of income sources, reducing concentration of income volume two. create income volatility. from any one type of business or geography and maintaining a flexible cost base.

• Group strategy is directed towards generating and sustaining a diversified income base for the group.

• In the instance where income falls we retain the flexibility to reduce costs (particularly variable remuneration), thereby maintaining a competitive cost to income ratio.

Environmental, social and economic risk

The risk that our lending and • Investec has a broad-based approach to corporate responsibility, Pages 156 to 183 investment activities give rise which runs beyond recognising our own footprint on the in our corporate to unintended environmental, environment and includes our many corporate social investment responsibility report. social and economic activities and our funding and investing activities. consequences. • This is not merely for business reasons but also our recognition of a broader responsibility to our environment and society.

• Accordingly, corporate responsibility risk considerations are considered by the credit committee and investment committee when making lending or investment decisions.

• There is also oversight by the social and ethics committee on social and environmental issues, including climate-related impact considerations.

People risk

The risk that we may be • We focus on building a strong, diverse and capable workforce Pages 160 to 166 unable to recruit, retain and by providing a workplace that stimulates and rewards distinctive in our corporate motivate key personnel. performance. responsibility report.

• We invest significantly in a number of opportunities for developing and upskilling employees, and in leadership programmes to develop current and future leaders of the group.

• Our internal people activities involve dedicated divisions such as Human Resources (HR) and Organisation Development (OD), which serve to supplement the ongoing people focus of our individual business units.

• The Investec careers and HR teams are mandated to enable the attraction, development and retention of talent who can perform in a manner consistent with our culture and values. OD acts to strengthen the culture of the business, ensure its values are lived, build capability and contribute to the long-term sustainability of the organisation.

46 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Emerging and other • The group’s borrowing costs and its Instruments, due to be implemented access to debt capital markets by the group on 1 April 2018, will risks depend significantly on its credit shift impairment methodology from In addition to the principal risks outlined ratings: Rating agencies have, in the an incurred loss to an expected loss above, the risks below may have the past, altered their ratings of all or a methodology which could impact the potential to impact and/or influence our majority of the participants in a given level and timing of impairment losses. principal risks and consequently the industry as a result of the risks affecting Impairment measurement will involve operations, financial performance, viability that industry. A reduction in the group’s increased complexity and significant and prospects of the group. A number respective banking entities long- or judgements on areas such as the of these risks are beyond the group’s short-term credit ratings could increase estimation of probabilities of default, control and are considered in our capital their borrowing costs, limit their access loss given default, unbiased future plans, stress testing analyses and budget to capital markets and trigger additional economic scenarios, estimation of processes, where applicable. These collateral requirements in derivative expected lives, estimation of exposures emerging risks are briefly highlighted contracts and other secured funding at default and assessing whether a below and should be read in the context arrangements. significant increase in credit risk has of our approach to risk management and occurred. The regulatory capital impact our overall group risk appetite framework Following downgrades to the of IFRS 9 is dependent on the regulatory (refer to volume two of the integrated South African Sovereign credit capital treatment of potential increased annual report). rating in April 2017, the foreign reserves which is the subject of ongoing currency credit ratings of Investec Additional risks and uncertainties not discussion with regulators and across presently known to us or that we currently Limited and Investec Bank Limited the industry, but there is potential deem immaterial may in the future also were downgraded, as no banking for adverse impact on regulatory negatively impact our business operations. entity can typically have a foreign capital ratios. currency rating higher than the • Macro-economic and geopolitical Sovereign rating of the country risks: The group is subject to inherent The group has established an IFRS 9 in which it operates. Further risks arising from general macro- steering committee comprising of information is provided on page 7 economic and geopolitical conditions executive representation and key in the countries in which it operates, in volume two. management from Risk, Finance, including in particular the UK and Analytics and IT. The group continues South Africa, as well as global economic • The group may be exposed to to assess the impact of this standard, and geopolitical conditions. pension risk in relation to its but expects that the recognition and A macro-economic overview is UK operations: Pension risk arises measurement basis of the majority of the provided on pages 32 to 37, and from obligations arising from defined group’s financial assets will be largely the impact of changes in the benefit pension schemes where the unchanged on application of IFRS 9. external environment during our group is required to fund any deficit in financial year is discussed in the the schemes. There are two defined Credit risk methodologies have been respective divisional sections on benefit pension schemes within the defined and model build and approval pages 92, 98, 99, 109 and 110. group and both are closed to new is underway and nearing completion. business. Investec intends to perform a parallel • Fluctuations in exchange rates could run during 2017; models and credit have an adverse impact on the Refer to page 80 in volume two for group’s results of operations: further information. risk processes will be tested during this The group’s reporting currency is Pounds period to embed the changes and help Sterling. Certain of our operations are • The financial services industry in improve the understanding of the new conducted by entities outside the UK. which the group operates is impairment models. The results of operations and the financial intensely competitive: The financial position of individual companies are services industry is competitive and The group will incorporate IFRS 9 reported in the local currencies of the the group faces substantial competition requirements into our group credit risk countries in which they are domiciled, in all aspects of its business. The group classification and provisioning policy. including Rand, Australian Dollars, Euros has developed leading positions in many and US Dollars. These results are then It will not be practical to disclose translated into Pounds Sterling at the of its core areas of activity, but does not reliable financial impact estimates applicable foreign currency exchange take competition lightly, and our until the implementation programme rates for inclusion in the group’s financial strategic objectives continue to focus on and validation and testing is further statements. In the case of the income building business depth; providing the statement, the weighted average rate for best integrated solution to our clients; advanced. The group intends to the relevant period is applied and, in the and leveraging our digitisation strategy disclose this in the 2018 annual financial case of the balance sheet, the relevant in order to remain competitive. statements. closing rate is used. Exchange rates Further information is provided on between local currencies and Pounds Refer to pages 14 to 16 for further pages 37 to 38 in volume three. Sterling have fluctuated significantly information. during recent periods. • Impairment requirements: Further information is provided on The introduction of the impairment page 26. requirements of IFRS 9 Financial

Investec integrated annual report 2017 47 01 Financial review (continued) Overview of the year

Emerging risks which attracted particular • The geopolitical events that attention during the year, and which are unfolded in April 2017 in South included in our stress tests include: Africa and the potential for further Sovereign rating downgrades for • The UK’s exit from the European South Africa: The unexpected cabinet Union: On 23 June 2016 the UK voted reshuffle at the end of the financial year to leave the European Union (EU) and saw a new Finance Minister appointed, the formal exit process commenced on with downgrades on South Africa’s 29 March 2017 when the UK triggered hard currency debt ratings to sub- Article 50. Although negotiations investment grade, from Standard and between the UK and the EU have yet Poor’s and Fitch, following on. to formally commence, the group faces

certain risks associated with the UK’s Fiscal consolidation is key, and decision to exit the EU. South Africa will need to ensure this,

particularly a stabilisation in public For example, because a significant sector debt as a percentage of GDP, proportion of the regulatory regime to avoid further local currency credit applicable to the group in the UK and rating downgrades to sub-investment anticipated regulatory reform is derived grade. Such fiscal sustainability is vital, from EU directives and regulations, the not least to ensure the sustainability UK’s exit from the EU could materially of the social grant and broader social change the legal framework applicable welfare system for the majority of South to the group’s UK operations, including Africans, as well as ensuring lower in relation to its regulatory capital borrowing costs, and the avoidance of requirements. In addition, the UK’s exit a debt trap. Despite notable progress from the EU could result in restrictions in some areas, structural constraints on the movement of capital and the remain to limit the productivity mobility of personnel. needed for sustained, fast economic

growth domestically. Furthermore, the UK’s vote in favour

of leaving the EU may alter the legal The group does run a number of stress framework applicable to the group’s scenarios which consider the impact of European operations, including in further Sovereign rating downgrades on relation to our current branch structure our business. in Ireland and our ability to provide certain services from London to Further information is provided on European clients. page 32.

We have established a Brexit working group to monitor the Brexit negotiations, continuously evaluate the impact of the proposals on our business; and ultimately propose a revised operating model for servicing European clients once the UK leaves the EU.

48 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Statutory income statement analysis The overview that follows will highlight the main reasons for the variance in the major category line items on the face of the statutory income statement during the year under review.

Further details on the key income drivers and significant variances in the various components of our operating income, expenses and profit can be found in the description of our principal businesses on pages 86 to 110.

Total operating income Total operating income before impairment losses on loans and advances increased by 17.9% to £2 286.2 million (2016: £1 939.5 million).

31 March % of total 31 March % of total £’000 2017 income 2016 income % change

Net interest income 679 895 29.7% 573 769 29.6% 18.5% Net fees and commissions income 1 271 524 55.6% 1 061 625 54.7% 19.8% Investment income 136 203 6.0% 170 408 8.8% (20.1%) Share of post-taxation operating profit of associates 18 890 0.8% 1 811 0.1% >100.0% Trading income arising from customer flow 158 001 6.9% 110 227 5.7% 43.3% Trading income arising from balance sheet management and other trading activities 8 218 0.4% 11 377 0.6% (27.8%) Other operating income 13 483 0.6% 10 279 0.5% 31.2% Total operating income 2 286 214 100.0% 1 939 496 100.0% 17.9%

The following table sets out information on total operating income before impairment losses on loans and advances by geography for the year under review.

31 March % of total 31 March % of total £’000 2017 income 2016 income % change

UK and Other 1 306 940 57.2% 1 128 374 58.2% 15.8% Southern Africa 979 274 42.8% 811 122 41.8% 20.7% Total operating income before impairments 2 286 214 100.0% 1 939 496 100.0% 17.9%

The following table sets out information on total operating income before impairment losses on loans and advances by division for the year under review.

31 March % of total 31 March % of total £’000 2017 income 2016 income % change

Asset Management 497 990 21.8% 421 615 21.7% 18.1% Wealth & Investment 360 569 15.8% 324 500 16.7% 11.1% Specialist Banking 1 427 655 62.4% 1 193 381 61.6% 19.6% Total operating income before impairments 2 286 214 100.0% 1 939 496 100.0% 17.9%

Investec integrated annual report 2017 49 01 Financial review (continued) Overview of the year

% of total operating income before impairments

31 March 2017 31 March 2016 £2 286.2 million total operating income before impairments £1 939.5 million total operating income before impairments

Net interest income 29.7% Net interest income 29.6% Net fee and commission income 55.6% Net fee and commission income 54.7% Investment income 6.0% Investment income 8.8% Share of post taxation operating profit Share of post taxation operating profit of associates 0.8% of associates 0.1% Trading income arising from Trading income arising from customer flow 6.9% customer flow 5.7% Trading income arising from balance sheet Trading income arising from balance sheet management and other trading activities 0.4% management and other trading activities 0.6% Other operating income 0.6% Other operating income 0.5%

Net interest income Net interest income increased by 18.5% to £680.0 million (2016: £573.8 million) supported by sound levels of lending activity across the banking businesses.

31 March 31 March £’000 2017 2016 Variance % change

Asset Management 5 118 3 904 1 214 31.1% Wealth & Investment 11 968 7 330 4 638 63.3% Specialist Banking 662 809 562 535 100 274 17.8% Net interest income 679 895 573 769 106 126 18.5%

A further analysis of interest income and interest expense is provided in the tables below.

UK and Other Southern Africa Total group

Balance Balance Balance For the year to 31 March 2017 sheet Interest sheet Interest sheet Interest £’000 Notes value income value income value income

Cash, near cash and bank debt and sovereign debt securities 1 5 621 557 33 255 8 260 231 398 053 13 881 788 431 308 Core loans and advances 2 8 620 742 471 547 14 086 395 1 188 974 22 707 137 1 660 521 Private client 3 454 366 151 645 9 413 110 798 380 12 867 476 950 025 Corporate, institutional and other clients 5 166 376 319 902 4 673 285 390 594 9 839 661 710 496 Other debt securities and other loans and advances 735 059 58 552 735 747 58 244 1 470 806 116 796 Other interest-earning assets 3 – – 10 336 22 140 10 336 22 140 Total interest-earning assets 14 977 358 563 354 23 092 709 1 667 411 38 070 067 2 230 765

50 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

UK and Other Southern Africa Total group

Balance Balance Balance For the year to 31 March 2017 sheet Interest sheet Interest sheet Interest £’000 Notes value expense value expense value expense

Deposits by banks and other debt-related securities 4 2 708 483 (87 872) 3 104 378 (118 225) 5 812 861 (206 097) Customer accounts (deposits) 11 012 809 (130 419) 18 096 619 (1 087 496) 29 109 428 (1 217 915) Other interest-bearing liabilities 5 – – 90 125 (13 050) 90 125 (13 050) Subordinated liabilities 579 356 (55 883) 823 282 (57 925) 1 402 638 (113 808) Total interest-bearing liabilities 14 300 648 (274 174) 22 114 404 (1 276 696) 36 415 052 (1 550 870) Net interest income 289 180 390 715 679 895 Net interest margin (local currency) 1.96% 1.86%**

UK and Other Southern Africa Total group

Balance Balance Balance For the year to 31 March 2016 sheet Interest sheet Interest sheet Interest £’000 Notes value income value income value income

Cash, near cash and bank debt and sovereign debt securities 1 5 622 577 47 481 6 952 692 292 563 12 575 269 340 044 Core loans and advances 2 7 803 602 427 601 10 315 213 826 999 18 118 815 1 254 600 Private client 3 510 327 150 060 6 856 533 550 044 10 366 860 700 104 Corporate, institutional and other clients 4 293 275 277 541 3 458 680 276 955 7 751 955 554 496 Other debt securities and other loans and advances 697 875 74 010 573 692 29 445 1 271 567 103 455 Other interest-earning assets 3 – – 9 730 7 541 9 730 7 541 Total interest-earning assets 14 124 054 549 092 17 851 327 1 156 548 31 975 381 1 705 640

UK and Other Southern Africa Total group

Balance Balance Balance For the year to 31 March 2016 sheet Interest sheet Interest sheet Interest £’000 Notes value expense value expense value expense

Deposits by banks and other debt-related securities 4 2 484 617 (106 707) 3 184 183 (85 888) 5 668 800 (192 595) Customer accounts (deposits) 10 800 668 (124 569) 13 243 613 (703 399) 24 044 281 (827 968) Other interest-bearing liabilities 5 – – 85 884 (15 494) 85 884 (15 494) Subordinated liabilities 597 309 (56 871) 537 574 (38 943) 1 134 883 (95 814) Total interest-bearing liabilities 13 882 594 (288 147) 17 051 254 (843 724) 30 933 848 (1 131 871) Net interest income 260 945 312 824 573 769 Net interest margin (local currency) 1.82% 1.90%**

Notes: 1. Comprises (as per the balance sheet) cash and balances at central banks; loans and advances to banks; non-sovereign and non-bank cash placements; reverse repurchase agreements and cash collateral on securities borrowed; sovereign debt securities; and bank debt securities. 2. Comprises (as per the balance sheet) loans and advances to customers; and own originated loans and advances to customers securitised. 3. Comprises (as per the balance sheet) other securitised assets. No securitised assets are held at amortised cost outside of Southern Africa. 4. Comprises (as per the balance sheet) deposits by banks; debt securities in issue; repurchase agreements and cash collateral on securities lent. 5. Comprises (as per the balance sheet) liabilities arising on securitisation of own originated assets; and liabilities arising on securitisation. No liabilities on securitisation are held at amortised cost outside of Southern Africa.

** Impacted by debt funding issued by the Investec Property Fund in which the group has a 27.86% interest. Excluding this debt funding cost, the net interest margin amounted to 1.99% (2016: 1.98%).

Investec integrated annual report 2017 51 01 Financial review (continued) Overview of the year

Net fee and commission income Net fee and commission income increased by 19.8% to £1 271.5 million (2016: £1 061.6 million) as a result of higher average funds under management in the asset management and wealth management businesses. In addition, the Specialist Banking business benefited from an increase in the scale of the property fund business in South Africa and from a good performance in the corporate and advisory businesses, notably in the UK.

31 March 31 March £’000 2017 2016 Variance % change

Asset Management 484 872 415 528 69 344 16.7% Wealth & Investment 343 708 309 080 34 628 11.2% Specialist Banking 442 944 337 017 105 927 31.4% Net fee and commission income 1 271 524 1 061 625 209 899 19.8%

Further information on net fees by type of fee and geography is provided in the tables below.

For the year to 31 March 2017 UK and Southern Total £’000 Other Africa group

Asset management and wealth management businesses net fee and commission income 575 931 252 649 828 580 Fund management fees/fees for assets under management 639 100 224 498 863 598 Private client transactional fees 56 955 39 400 96 355 Fee and commission expense (120 124) (11 249) (131 373) Specialist Banking net fee and commission income 227 932 215 012 442 944 Corporate and institutional transactional and advisory services 206 407 196 246 402 653 Private client transactional fees 29 684 37 298 66 982 Fee and commission expense (8 159) (18 532) (26 691)

Net fee and commission income/cost 803 863 467 661 1 271 524 Annuity fees (net of fees payable) 581 895 383 355 965 250 Deal fees 221 968 84 306 306 274

For the year to 31 March 2016 UK and Southern Total £’000 Other Africa group

Asset management and wealth management businesses net fee and commission income 520 245 204 363 724 608 Fund management fees/fees for assets under management 567 257 178 549 745 806 Private client transactional fees 54 258 34 664 88 922 Fee and commission expense (101 270) (8 850) (110 120) Specialist Banking net fee and commission income 189 513 147 504 337 017 Corporate and institutional transactional and advisory services 164 088 130 089 294 177 Private client transactional fees 28 141 30 966 59 107 Fee and commission expense (2 716) (13 551) (16 267)

Net fee and commission income 709 758 351 867 1 061 625 Annuity fees (net of fees payable) 542 128 275 058 817 186 Deal fees 167 630 76 809 244 439

52 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Investment income Investment income reduced by 20.1% to £136.2 million (2016: £170.4 million) primarily as a consequence of the change in accounting treatment from fair value to equity accounting for the assets transferred to the IEP Group in South Africa in the prior year (as explained on page 87 in volume three). In the UK, the group's unlisted investment portfolio delivered a sound performance; however, this was offset by the write down of an investment in the Hong Kong portfolio.

31 March 31 March £’000 2017 2016 Variance % change

Asset Management 143 44 99 >100% Wealth & Investment 2 269 6 072 (3 803) (62.6%) Specialist Banking 133 791 164 292 (30 501) (18.6%) Investment income 136 203 170 408 (34 205) (20.1%)

Further information on investment income is provided in the tables below.

For the year to 31 March 2017 UK and Southern Total £’000 Other Africa group

Realised 50 335 51 070 101 405 Unrealised^ (9 271) 6 940 (2 331) Dividend income 12 339 18 540 30 879 Funding and other net related income/(costs) 6 572 (322) 6 250 Investment income 59 975 76 228 136 203

Investment Debt portfolio securities (listed and (sovereign, For the year to 31 March 2017 unlisted bank and Investment Other asset £’000 equities)* other) properties categories Total

UK and Other 47 786 (3 344) 8 329 7 204 59 975 Realised 38 533 (8 482) 18 337 1 947 50 335 Unrealised^ (3 086) 5 138 (10 008) (1 315) (9 271) Dividend income 12 339 – – – 12 339 Funding and other net related income – – – 6 572 6 572 Southern Africa 21 313 8 615 44 992 1 308 76 228 Realised 20 483 6 360 22 003 2 224 51 070 Unrealised^ (13 504) 2 255 22 989 (4 800) 6 940 Dividend income 18 102 – – 438 18 540 Funding and other net related (costs)/income (3 768) – – 3 446 (322) Total investment income 69 099 5 271 53 321 8 512 136 203

* Including embedded derivatives (warrants and profit shares). ^ In a year of realisation, any prior period mark-to-market gains/(losses) recognised are reversed in the unrealised line item.

Investec integrated annual report 2017 53 01 Financial review (continued) Overview of the year

For the year to 31 March 2016 UK and Southern Total £’000 Other Africa group

Realised 44 135 240 167 284 302 Unrealised^ (2 311) (131 813) (134 124) Dividend income 15 419 13 037 28 456 Funding and other net related income/(costs) 4 877 (13 103) (8 226) Investment income 62 120 108 288 170 408

Investment Debt portfolio securities (listed and (sovereign, For the year to 31 March 2016 unlisted bank and Investment Other asset £’000 equities)* other) properties categories Total

UK and Other 41 300 23 675 1 282 (4 137) 62 120 Realised 10 319 31 143 – 2 673 44 135 Unrealised^ 15 562 (7 468) 1 282 (11 687) (2 311) Dividend income 15 419 – – – 15 419 Funding and other net related income – – – 4 877 4 877 Southern Africa 76 824 9 166 20 628 1 670 108 288 Realised 227 043 3 052 9 121 951 240 167 Unrealised^ (149 102) 6 114 11 507 (332) (131 813) Dividend income 12 977 – – 60 13 037 Funding and other net related income (14 094) – – 991 (13 103) Total investment income/(loss) 118 124 32 841 21 910 (2 467) 170 408

* Including embedded derivatives (warrants and profit shares). ^ In a year of realisation, any prior period mark-to-market gains/(losses) recognised are reversed in the unrealised line item.

Share of post taxation operating profit of associates Share of post taxation operating profit of associates of £18.9 million in the current period largely reflects earnings in relation to the group’s investment in the IEP Group.

Trading income Trading income arising from customer flow increased considerably to £158.0 million (2016: £110.2 million) supported by robust client activity levels and market volatility. Trading income from other trading activities amounted to £8.2 million (2016: £11.4 million) predominantly impacted by currency volatility over the period.

Arising from customer flow 31 March 31 March £’000 2017 2016 Variance % change

Wealth & Investment 1 028 316 712 >100% Specialist Banking 156 973 109 911 47 062 42.8% Trading income arising from customer flow 158 001 110 227 47 774 43.3%

54 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Arising from balance sheet management and other trading activities 31 March 31 March £’000 2017 2016 Variance % change

Asset Management 2 213 1 668 545 32.7% Wealth & Investment 87 509 (422) (82.9%) Specialist Banking 5 918 9 200 (3 282) (35.7%) Trading income arising from balance sheet management and other trading activities 8 218 11 377 (3 159) (27.8%)

Impairment losses on loans and advances Impairments on loans and advances increased from £109.5 million to £111.5 million, with the credit loss ratio on core loans and advances amounting to 0.54% (2016: 0.62%). Since 31 March 2016 gross defaults have increased from £466.1 million to £476.0 million largely due to a few specific defaults in the South African banking business. The percentage of default loans (net of impairments but before taking collateral into account) to core loans and advances amounted to 1.22% (31 March 2016: 1.54%). The ratio of collateral to default loans (net of impairments) remains satisfactory at 1.63 times (2016: 1.35 times).

Further information is provided on page 35 in volume two.

31 March 31 March £’000 2017 2016 Variance % change

UK and Other (74 956) (84 217) 9 261 (11.0%) Southern Africa (36 498) (25 299) (11 199) 44.3% Total impairment losses on loans and advances (111 454) (109 516) (1 938) 1.8%

Impairment losses on loans and advances in home currency Southern Africa (R’million) (659) (520) (139) 26.7%

Operating costs The cost to income ratio amounted to 66.3% (2016: 66.4%). Total operating costs grew by 17.5% to £1 515.4 million (2016: £1 289.2 million) reflecting planned investment on IT infrastructure and headcount to support increased activity and growth initiatives, notably the build out of the UK private client offering. Costs are also impacted by additional premises expenses relating to the London office’s future premises move and an increase in variable remuneration given improved profitability across the group.

% of total % of total 31 March operating 31 March operating £’000 2017 costs 2016 costs % change

Staff costs (1 079 701) 71.2% (912 435) 70.7% 18.3% – fixed (690 161) 45.5% (581 847) 45.1% 18.6% – variable (389 540) 25.7% (330 588) 25.6% 17.8% Business expenses (177 057) 11.7% (177 642) 13.8% (0.3%) Premises expenses (excluding depreciation) (80 083) 5.3% (58 847) 4.6% 36.1% Equipment expenses (excluding depreciation) (82 928) 5.5% (57 780) 4.5% 43.5% Marketing expenses (70 625) 4.7% (59 737) 4.6% 18.2% Depreciation and impairment of property, plant, equipment and software (22 837) 1.5% (20 580) 1.6% 11.0% Depreciation on operating leased assets (2 169) 0.1% (2 165) 0.2% 0.2% Total operating costs (1 515 400) 100.0% (1 289 186) 100.0% 17.5%

Investec integrated annual report 2017 55 01 Financial review (continued) Overview of the year

The following table sets out certain information on total operating costs by geography for the year under review.

% of total % of total 31 March operating 31 March operating £’000 2017 costs 2016 costs % change

UK and Other (1 007 271) 66.5% (865 797) 67.2% 16.3% Southern Africa (508 129) 33.5% (423 389) 32.8% 20.0% Total operating costs (1 515 400) 100.0% (1 289 186) 100.0% 17.5%

The following table sets out certain information on total operating costs by division for the year under review.

% of total % of total 31 March operating 31 March operating £’000 2017 costs 2016 costs % change

Asset Management (333 166) 22.0% (286 832) 22.2% 16.2% Wealth & Investment (267 326) 17.6% (238 765) 18.5% 12.0% Specialist Banking (866 132) 57.2% (717 784) 55.7% 20.7% Group costs (48 776) 3.2% (45 805) 3.6% 6.5% Total operating costs (1 515 400) 100.0% (1 289 186) 100.0% 17.5%

% of total operating costs

31 March 2017 31 March 2016 £1 515.4 million total operating costs £1 289.2 million total operating costs

Staff costs 71.2% Staff costs 70.7% Business expenses 11.7% Business expenses 13.8% Premises expenses 5.3% Premises expenses 4.6% Equipment expenses 5.5% Equipment expenses 4.5% Marketing expenses 4.7% Marketing expenses 4.6% Depreciation and impairment of property, Depreciation and impairment of property, plant, equipment and software 1.5% plant, equipment and software 1.6% Depreciation on operating leased assets 0.1% Depreciation on operating leased assets 0.2%

56 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Operating profit before goodwill, acquired intangibles, non-operating items and after other non- controlling interests As a result of the foregoing factors, our operating profit before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests increased by 18.5% from £505.6 million to £599.1 million.

The following tables set out information on operating profit before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests by geography and by division for the year under review.

For the year to 31 March 2017 UK and Southern Total £’000 Other Africa group % change % of total

Asset Management 91 262 73 562 164 824 22.3% 27.5% Wealth & Investment 65 190 28 053 93 243 8.8% 15.6% Specialist Banking 104 604 285 226 389 830 17.8% 65.0% 261 056 386 841 647 897 17.5% 108.1% Group costs (36 163) (12 613) (48 776) 6.5% (8.1%) Total group 224 893 374 228 599 121 18.5% 100.0% Other non-controlling interest – equity 60 239 Operating profit 659 360 % change 23.0% 16.0% 18.5% % of total 37.5% 62.5% 100.0%

For the year to 31 March 2016 UK and Southern Total £’000 Other Africa group % of total

Asset Management 76 853 57 930 134 783 26.7% Wealth & Investment 63 127 22 608 85 735 17.0% Specialist Banking 78 043 252 837 330 880 65.4% 218 023 333 375 551 398 109.1% Group costs (35 160) (10 645) (45 805) (9.1%) Total group 182 863 322 730 505 593 100.0% Other non-controlling interest – equity 35 201 Operating profit 540 794 % of total 36.2% 63.8% 100.0%

Investec integrated annual report 2017 57 01 Financial review (continued) Overview of the year

Key income drivers in our core businesses The information below reflects our key income drivers in our core businesses.

Asset Management

31 March 31 March 31 March 31 March 31 March 31 March Global business (in Pounds Sterling) 2017 2016 2015 2014 2013 2012

Operating margin 33.1% 32.0% 34.2% 34.7% 34.5% 35.7% Net inflows in funds under management as a % of opening funds under management (0.8%) 4.1% 4.6% 3.7% 6.7% 8.8% Average income yield earned on funds under management^ 0.58% 0.55% 0.60% 0.60% 0.62% 0.62%

Wealth & Investment

31 March 31 March 31 March 31 March 31 March 31 March Global business (in Pounds Sterling) 2017 2016 2015 2014 2013 2012

Operating margin 25.9% 26.4% 25.2% 22.9% 20.3% 19.7% Net organic growth in funds under management as a % of opening funds under management 2.7% 4.5% 6.6% 3.5% 2.0% (5.3%) Average income yield earned on funds under management^ 0.72% 0.71% 0.72% 0.71% 0.66% 0.61%

UK and Other^^ (in Pounds Sterling) Operating margin^^ 23.5% 24.6% 22.7% 20.1% 17.3% 16.3% Net organic growth in funds under management as a % of opening funds under management 4.2% 4.5% 7.1% 5.1% 1.3% (7.4%) Average income yield earned on funds under management^ 0.85% 0.87% 0.89% 0.89% 0.86% 0.80%

South Africa (in Rands) Operating margin 33.8% 33.1% 35.1% 33.9% 31.3% 28.5% Net organic growth in discretionary funds under management as a % of opening discretionary funds under management 8.1% 10.4% 8.5% 13.6% 13.9% 8.7% Average income yield earned on funds under management^* 0.47% 0.45% 0.41% 0.41% 0.37% 0.39%

* A large portion of the funds under management are non-discretionary funds. ^ The average income yield on funds under management represents the total operating income for the period as a percentage of the average of opening and closing funds under management. This calculation does not take into account the impact of market movements throughout the period on funds under management or the timing of acquisitions and disposals during the respective periods. ^^ ‘Other’ comprises the Wealth operations in Switzerland, the Republic of Ireland, the Channel Islands, and Hong Kong. Excluding ‘Other’, Investec Wealth & Investment UK has an operating margin of 26.8% (2016: 26.5%).

58 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Specialist Banking – statutory basis

31 March 31 March 31 March 31 March 31 March 31 March Global business (in Pounds Sterling) 2017 2016 2015 2014 2013 2012

Cost to income ratio 60.6%* 60.1%* 63.1%* 63.2%* 63.1% 62.4% ROE post-tax^ 10.5% 10.1% 8.6% 7.9% 6.4% 5.1% ROE post-tax (ongoing business)^ 12.6% 13.0% 12.8% 11.9% – – Growth in net core loans 25.3% 5.4% 0.2%^^ (6.8%) 1.0% (2.8%) Currency neutral growth in net core loans 7.6% – – – – – Growth in risk-weighted assets 22.2% 2.2% (4.9%)^^ (6.0%) 4.7% 1.5% Currency neutral growth in risk-weighted assets 7.2% – – – – – Defaults (net of impairments as a % of core loans) 1.22% 1.54% 2.07% 2.30% 2.73% 3.31% Credit loss ratio on core loans 0.54% 0.62% 0.68% 0.68% 0.84% 1.12%

UK and Other# (in Pounds Sterling) Cost to income ratio 74.8%* 73.4%* 78.9%* 72.5%* 69.0% 68.3% ROE post-tax^ 7.0% 5.5% 2.1% 3.6% 1.7% (1.8%) ROE post-tax (ongoing business)**^ 11.5% 11.4% 9.6% 10.9% – – Growth in net core loans 10.5% 10.5% (14.1%)^^ (0.3%) 6.6% 0.3% Currency neutral growth in net core loans 6.6% – – – – – Growth in risk-weighted assets 8.4% 6.7% (15.5%)^^ 0.4% 7.7% 4.6% Defaults (net of impairments as a % of core loans) 1.55% 2.19% 3.00% 3.21% 3.75% 4.10% Credit loss ratio on core loans 0.90% 1.13% 1.16% 0.99% 1.16% 1.65%

Southern Africa (in Rands) Cost to income ratio 46.9%* 46.5%* 47.2%* 51.0%* 55.5% 55.2% ROE post-tax^ 12.7% 15.1% 15.2% 12.5% 10.0% 9.6% ROE post-tax (excluding investment activities)## 15.3% 15.2% 14.8% – – – Growth in net core loans 8.4% 19.7% 16.1% 10.6% 10.2% 6.6% Growth in risk-weighted assets 6.2% 15.1% 8.3% 11.0% 16.5% 11.9% Defaults (net of impairments as a % of core loans) 1.02% 1.05% 1.43% 1.46% 1.89% 2.73% Credit loss ratio on core loans 0.29% 0.26% 0.28% 0.42% 0.61% 0.65%

^ Divisional ROEs are reported on a pre-tax basis. For the purpose of this calculation we have applied the group's effective tax rate to derive post-tax numbers. Capital as at 31 March 2017 was c.£1.4 billion in the UK and c.R31.3 billion in South Africa. ^^ Impacted by sale of assets. * Excludes group costs. ** Further information is provided on pages 73 and 103. # Includes UK, other non-Southern African jurisdictions and the legacy businesses. ## Refer to page 107 for further information on the group’s investment activities in South Africa.

Investec integrated annual report 2017 59 01 Financial review (continued) Overview of the year

Impairment of goodwill The current year’s goodwill impairment relates to historic acquisitions in the Specialist Banking and Asset Management businesses. Goodwill and intangible assets analysis – balance sheet information 31 March 31 March £’000 2017 2016

UK and Other 355 155 356 994 Asset Management 88 045 88 045 Wealth & Investment 243 169 242 672 Specialist Banking 23 941 26 277 South Africa 12 424 11 045 Asset Management 14 1 149 Wealth & Investment 2 061 1 616 Specialist Banking 10 349 8 280 Intangible assets 143 261 148 280 Total group 510 840 516 319

Amortisation of acquired intangibles Amortisation of acquired intangibles largely relates to the Wealth & Investment business and mainly comprises amortisation of amounts attributable to client relationships.

Taxation The effective operational tax rate amounts to 18.5% (2016: 19.1%).

Effective operational tax rates

31 March 31 March 2017 2016 2017 2016 £’000 £’000 % change

UK and Other 17.6% 19.8% (39 144) (35 335) (10.8%) Southern Africa 19.0% 18.7% (79 344) (67 867) (16.9%) Tax 18.5% 19.1% (118 488) (103 202) (14.8%)

60 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Profit attributable to non-controlling interests Profit attributable to non-controlling interests mainly comprises:

• £20.3 million profit attributable to non-controlling interests in the Asset Management business • £59.9 million profit attributable to non-controlling interests in the Investec Property Fund Limited Earnings attributable to shareholders As a result of the foregoing factors, earnings attributable to shareholders increased from £368.5 million to £442.5 million.

Dividends and earnings per share

Information with respect to dividends and earnings per share is provided on pages 59 to 61 in volume three.

Statutory balance sheet analysis Since 31 March 2016: • Total shareholders’ equity (including non-controlling interests) increased by 24.6% to £4.8 billion due to foreign currency translation gains, an increase in retained earnings and the issuance of shares during the period. • Net asset value per share increased 22.3% to 431.0 pence and net tangible asset value per share (which excludes goodwill and intangible assets) increased by 28.1% to 377.0 pence. • The return on adjusted average shareholders’ equity increased from 11.5% to 12.5%.

Assets by geography

31 March 2017 31 March 2016 £53 535 million total assets £45 352 million total assets

UK and Other 34.8% UK and Other 40.8% Southern Africa 65.2% Southern Africa 59.2%

Investec integrated annual report 2017 61 01 Financial review (continued) Overview of the year

Statutory net tangible asset value per share The group’s net tangible asset value per share is reflected in the table below. 31 March 31 March £’000 2017 2016

Shareholders’ equity 4 131 093 3 360 287 Less: perpetual preference shares issued by holding companies (214 645) (300 258) Less: goodwill and intangible assets (excluding software) (490 841) (503 996) Net tangible asset value 3 425 607 2 556 033

Number of shares in issue (million) 958.3 908.8 Treasury shares (million) (49.7) (40.3) Number of shares in issue in this calculation (million) 908.6 868.5

Net tangible asset value per share (pence) 377.0 294.3

Net asset value per share (pence) 431.0 352.3

Statutory return on risk-weighted assets The group’s return on risk-weighted assets is reflected in the table below.

31 March 31 March 31 March 2017 2016 Average 2015 Average

Adjusted earnings attributable to ordinary shareholders before goodwill, acquired intangibles and non-operating items (£’000) 434 504 359 732 339 523

Investec plc risk-weighted assets (£’million) 13 312 12 297 12 805 11 608 11 953 Investec Limited risk-weighted assets^ (£’million) 19 667 14 626 17 146 14 992 14 809 Total risk-weighted assets (£’million) 32 979 26 923 29 951 26 600 26 762

Return on average risk-weighted assets 1.45% 1.34% 1.25%

^Investec Limited risk-weighted assets (R’million) 329 808 309 052 319 430 269 466 289 259

62 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Capital management and allocation We hold capital in excess of regulatory requirements targeting a minimum common equity tier 1 capital ratio of 10% and a total capital adequacy ratio range of 14% – 17% on a consolidated basis for each of Investec plc and Investec Limited.

Further information is provided on pages 81 to 96 in volume two.

A summary of capital adequacy and leverage ratios

Investec Investec As at 31 March 2017 plcº* IBPº* Limited*^ IBL*^

Common equity tier 1 (as reported) 11.3% 12.5% 9.9% 10.8% Common equity tier 1 (‘fully loaded’)^^ 11.3% 12.5% 9.9% 10.8% Tier 1 (as reported) 11.5% 12.5% 10.7% 11.1% Total capital adequacy ratio (as reported) 15.1% 16.9% 14.1% 15.4% Leverage ratio** – permanent capital 7.8% 8.2% 7.8%# 7.7%# Leverage ratio** – current 7.8% 8.2% 7.3%# 7.6%# Leverage ratio** – ‘fully loaded’^^ 7.7% 8.2% 6.8%# 7.4%#

Investec Investec As at 31 March 2016 plcº* IBPº* Limited*^ IBL*

Common equity tier 1 (as reported) 9.7% 12.2% 9.6% 10.6% Common equity tier 1 (‘fully loaded’)^^ 9.7% 12.2% 9.6% 10.6% Tier 1 (as reported) 10.7% 12.2% 10.7% 11.0% Total capital adequacy ratio (as reported) 15.1% 17.2% 14.0% 14.6% Leverage ratio** – permanent capital 7.0% 7.7% 7.4%# 7.4%# Leverage ratio** – current 7.0% 7.7% 6.9%# 7.2%# Leverage ratio** – ‘fully loaded’^^ 6.3% 7.7% 6.3%# 7.0%#

* Where: IBP is Investec Bank plc consolidated and IBL is Investec Bank Limited. The information for Investec plc includes the information for IBP. The information for Investec Limited includes the information for IBL. º The capital adequacy disclosures follow Investec's normal basis of presentation so as to show a consistent basis of calculation across the jurisdictions in which the group operates. For Investec plc and Investec Bank plc this does not include the deduction of foreseeable dividends when calculating common equity tier 1 as now required under the Capital Requirements Regulation and European Banking Authority technical standards. The impact of the final proposed ordinary and preference dividends totalling £60 million for Investec plc and £35 million for Investec Bank plc would be 45bps and 28bps lower, respectively. At 31 March 2016 the impact of the final proposed ordinary and preference dividends totalling £46 million for Investec plc and £34 million for IBP was 40bps and 30bps lower, respectively. ^^ Based on the group’s understanding of current and draft regulations. ‘fully loaded’ is based on Basel III capital requirements as fully phased in by 2022. ** The leverage ratios are calculated on an end-quarter basis. # Based on revised BIS rules. ^ Investec Limited’s and IBL’s capital information includes unappropriated profits. If unappropriated profits are excluded from capital information, Investec Limited’s and IBL’s common equity tier 1 ratio would be 24bps and 13bps lower, respectively. At 31 March 2016, Investec Limited’s common equity tier 1 ratio would be 16bps lower.

Investec integrated annual report 2017 63 01 Financial review (continued) Overview of the year

Return on equity by country and business – statutory

31 March 31 March 31 March £’000 2017 2016 Average 2015 Average

Calculation of average shareholders’ equity Ordinary shareholders’ equity 3 916 448 3 060 029 3 488 239 3 174 144 3 117 087 Goodwill and intangible assets (excluding software) (490 841) (503 996) (497 419) (494 111) (499 054) Adjusted tangible shareholders’ equity 3 425 607 2 556 033 2 990 820 2 680 033 2 618 033

31 March 31 March £’000 2017 2016

Operating profit* 659 360 540 794 Non-controlling interests (80 530) (51 730) Accrued preference dividends, adjusted for currency hedge (25 838) (26 130) Revised operating profit 552 992 462 934 Taxation on operating profit before goodwill and acquired intangibles (118 488) (103 202) Adjusted attributable earnings to ordinary shareholders* 434 504 359 732

Pre-tax return on average adjusted shareholders’ equity 15.9% 14.9% Post-tax return on average adjusted shareholders’ equity 12.5% 11.5% Pre-tax return on average adjusted tangible shareholders’ equity 18.5% 17.7% Post-tax return on average adjusted tangible shareholders’ equity 14.5% 13.7%

Return on equity on an ongoing basis is provided on page 80.

* Before goodwill, acquired intangibles and non-operating items.

64 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Return on equity by geography

UK and UK and Southern Total Other £’000 Other Africa group ongoing**

Operating profit* 224 713 434 647 659 360 289 305 Taxation on operating profit before goodwill and acquired intangibles (39 144) (79 344) (118 488) (51 094) Non-controlling interests (11 627) (68 903) (80 530) (11 627) Accrued preference dividend adjusted for currency hedge (439) (25 399) (25 838) (439) Adjusted attributable earnings to ordinary shareholders – 31 March 2017 173 503 261 001 434 504 226 145 Adjusted attributable earnings to ordinary shareholders – 31 March 2016 131 602 228 130 359 732 194 988

Ordinary shareholders’ equity – 31 March 2017 1 991 697 1 924 751 3 916 448 1 934 784 Goodwill and intangible assets (excluding software) (459 245) (31 596) (490 841) (459 245) Tangible ordinary shareholders’ equity – 31 March 2017 1 532 452 1 893 155 3 425 607 1 475 539

Ordinary shareholders’ equity – 31 March 2016 1 717 892 1 342 137 3 060 029 1 647 872 Goodwill and intangible assets (excluding software) (475 300) (28 696) (503 996) (475 300) Tangible ordinary shareholders’ equity – 31 March 2016 1 242 592 1 313 441 2 556 033 1 172 572

Ordinary shareholders’ equity – 31 March 2015 1 764 017 1 410 127 3 174 144 1 675 247 Goodwill and intangible assets (excluding software) (488 674) (5 437) (494 111) (488 674) Tangible ordinary shareholders’ equity – 31 March 2015 1 275 343 1 404 690 2 680 033 1 186 573

Average ordinary shareholders’ equity – 31 March 2017 1 854 795 1 633 444 3 488 239 1 791 327 Average ordinary shareholders’ equity – 31 March 2016 1 740 955 1 376 132 3 117 087 1 661 559

Average tangible shareholders’ equity – 31 March 2017 1 387 521 1 603 299 2 990 820 1 324 055 Average tangible shareholders’ equity – 31 March 2016 1 258 967 1 359 066 2 618 033 1 179 572

Post-tax return on average ordinary shareholders’ equity – 31 March 2017 9.4% 16.0% 12.5% 12.6% Post-tax return on average ordinary shareholders’ equity – 31 March 2016 7.6% 16.6% 11.5% 11.7%

Post-tax return on average tangible shareholders’ equity – 31 March 2017 12.5% 16.3% 14.5% 17.1% Post-tax return on adjusted tangible shareholders’ equity – 31 March 2016 10.5% 16.8% 13.7% 16.5%

Pre-tax return on adjusted average ordinary shareholders’ equity – 31 March 2017 11.5% 20.8% 15.9% 15.5% Pre-tax return on adjusted average ordinary shareholders’ equity – 31 March 2016 9.6% 21.5% 14.9% 14.8%

Pre-tax return on average tangible ordinary shareholders’ equity – 31 March 2017 15.3% 21.2% 18.5% 20.9% Pre-tax return on average tangible ordinary shareholders’ equity – 31 March 2016 13.3% 21.8% 17.7% 20.8%

* Before goodwill, acquired intangibles and non-operating items. ** Excluding the remaining UK legacy business as shown on page 83.

Investec integrated annual report 2017 65 01 Financial review (continued) Overview of the year

Return on equity by business*

Specialist Asset Wealth & Specialist Banking £’000 Management Investment^ Banking ongoing**

Operating profit# 164 824 93 243 389 830 454 422 Notional return on regulatory capital 3 379 2 551 (5 930) (5 930) Notional cost of statutory capital (3 898) (5 388) 9 286 9 286 Cost of subordinated debt (1 278) (1 185) 2 463 2 463 Cost of preference shares (628) (478) (24 732) (24 732)

Adjusted earnings – 31 March 2017 162 399 88 734 370 917 435 509 Adjusted earnings – 31 March 2016 131 337 77 124 316 807 395 142 Ordinary shareholders’ equity – 31 March 2017 186 423 251 523 3 319 452 3 262 539 Goodwill and intangible assets (excluding software) (88 059) (191 707) (52 025) (52 025) Tangible ordinary shareholders’ equity – 31 March 2017 98 364 59 816 3 267 427 3 210 514

Ordinary shareholders’ equity – 31 March 2016 171 629 246 302 2 483 048 2 413 028 Goodwill and intangible assets (excluding software) (89 194) (203 534) (52 220) (52 220) Tangible ordinary shareholders’ equity – 31 March 2016 82 435 42 768 2 430 828 2 360 808

Ordinary shareholders’ equity – 31 March 2015 160 648 255 318 2 599 130 2 510 360 Goodwill and intangible assets (excluding software) (91 365) (216 017) (27 679) (27 679) Tangible ordinary shareholders’ equity – 31 March 2015 69 283 39 301 2 571 451 2 482 681

Average ordinary shareholders’ equity – 31 March 2017 179 026 248 913 2 901 249 2 837 783 Average ordinary shareholders’ equity – 31 March 2016 166 139 250 810 2 541 088 2 461 693

Average tangible shareholders’ equity – 31 March 2017 90 400 51 292 2 849 127 2 785 660 Average tangible shareholders’ equity – 31 March 2016 75 859 41 035 2 501 139 2 421 744

Pre-tax return on adjusted average ordinary shareholders’ equity – 31 March 2017 90.7% 35.7% 12.8% 15.3% Pre-tax return on adjusted average ordinary shareholders’ equity – 31 March 2016 79.1% 30.7% 12.5% 16.1%

Pre-tax return on average tangible ordinary shareholders’ equity – 31 March 2017 179.6% 173.0% 13.0% 15.6% Pre-tax return on average tangible ordinary shareholders’ equity – 31 March 2016 173.1% 187.9% 12.7% 16.3%

* The return on equity by business is based on the level of internal capital required by each business, inclusive of an allocation of any surplus capital held by the group. The operating profit is adjusted to reflect a capital structure that includes common equity, Additional tier 1 capital instruments and subordinated debt. ^ Wealth & Investment is consistent with the group computation, except for an adjustment of £159.1 million between ordinary shareholders’ funds and goodwill, which represents historical accounting gains with a corresponding effective increase in goodwill and intangible assets. These gains were excluded from group adjusted earnings. ** Excluding the remaining UK legacy business as shown on page 83. # Before goodwill, acquired intangibles, non-operating items and after other non-controlling interests.

66 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Number of employees

31 March 31 March By division – permanent employees 2017 2016

Asset Management UK and international 478 473 Southern Africa^ 1072 992 Total 1 550 1 465

Wealth & Investment UK and Other 1279 1 218 South Africa 321 314 Total 1 600 1 532

Specialist Banking UK and Other 2 169 2 010 Southern Africa 3710 3 414 Total 5 879 5 424

Total number of permanent employees 9 029 8 421

^ Includes Silica employees, its third party administration business.

31 March 31 March 31 March 31 March 31 March 31 March By geography 2017 2016 2015 2014 2013 2012

UK and Other 3 926 3 701 3 560 3 671 3 827 3 625 SA and Other 5 103 4 720 4 199 3 986 3 748 3 661 Temporary employees and contractors 687 545 495 601 576 495 Total number of employees 9 716 8 966 8 254 8 258 8 151 7 781

Investec integrated annual report 2017 67 01 Financial review (continued) Overview of the year

Statutory operating profit (before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests) per employee

Asset Wealth & Specialist By division Management Investment Banking

Number of employees – 31 March 2017 1 654 1 697 6 365 Number of employees – 31 March 2016 1 543 1 597 5 826 Number of employees – 31 March 2015 1 508 1 533 5 213

Average employees – year to 31 March 2017 1 598 1 647 6 096 Average employees – year to 31 March 2016 1 525 1 565 5 520

Operating profit* – year to 31 March 2017 (£'000) 164 824 93 243 389 830 Operating profit* – year to 31 March 2016 (£'000) 134 783 85 735 330 880

Operating profit per employee^ – year to 31 March 2017(£'000) 103.1^^ 56.6 63.9 Operating profit per employee^ – year to 31 March 2016 (£'000) 88.4^^ 54.8 59.9

* Operating profit excluding group costs ^ Based on average number of employees over the year. ^^ For Asset Management, operating profit per employee includes Silica, its third party administration business.

UK and Southern Total By geography Other Africa group

Number of employees – 31 March 2017 4 165 5 551 9 716 Number of employees – 31 March 2016 3869 5097 8 966 Number of employees – 31 March 2015 3729 4525 8 254

Average employees – year to 31 March 2017 4 017 5 324 9 341 Average employees – year to 31 March 2016 3 799 4 811 8 610

Operating profit* – year to 31 March 2017 (£’000) 224 893 374 228 599 121 Operating profit* – year to 31 March 2016 (£’000) 182 863 322 730 505 593

Operating profit per employee^ – year to 31 March 2017 56.0 70.3 64.1 Operating profit per employee^ – year to 31 March 2016 (£’000) 48.1 67.1 58.7

* Operating profit excluding group costs. ^ Based on average number of employees over the year.

68 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Total third party assets under management

31 March 31 March £’million 2017 2016

Asset Management 95 287 75 679 UK and Other 61 379 51 076 Southern Africa 33 908 24 603 Wealth & Investment 54 773 45 459 UK and Other 35 555 29 769 Southern Africa 19 218 15 690 Specialist Banking 675 545 UK and Other 386 335 Southern Africa 289 210 150 735 121 683

A further analysis of third party assets under management

At 31 March 2017 UK and Southern £’million Other Africa Total

Asset Management 61 379 33 908 95 287 Mutual funds 23 399 15 848 39 247 Segregated mandates 37 980 18 060 56 040 Wealth & Investment 35 555 19 218 54 773 Discretionary 26 336 6 552 32 888 Non-discretionary 9 219 12 666 21 885 Specialist Banking 386 289 675 97 320 53 415 150 735

At 31 March 2016 UK and Southern £’million Other Africa Total

Asset Management 51 076 24 603 75 679 Mutual funds 18 289 11 388 29 677 Segregated mandates 32 787 13 215 46 002 Wealth & Investment 29 769 15 690 45 459 Discretionary 21 747 4 945 26 692 Non-discretionary 8 022 10 745 18 767 Specialist Banking 335 210 545 81 180 40 503 121 683

Investec integrated annual report 2017 69 01 Financial review (continued) Overview of the year

Ongoing information The tables that follow provide information on our ongoing results.

Results in Pounds Sterling Results in Rand

Year to Year to Year to Year to 31 March 31 March % 31 March 31 March % 2017 2016 change 2017 2016 change

Operating profit before taxation* (million) £663.7 £583.9 13.7% R12 075 R12 114 (0.3%) Adjusted earnings attributable to shareholders** (million) £487.1 £423.1 15.1% R8 849 R8 773 0.9% Adjusted earnings per share** 54.1p 48.6p 11.3% 983c 1 008c (2.5%)

Consolidated summarised ongoing income statement For the year to 31 March 31 March £’000 2017 2016 Variance % change

Net interest income 680 539 571 929 108 610 19.0% Net fee and commission income 1 271 591 1 058 340 213 251 20.1% Investment income 135 631 169 915 (34 284) (20.2%) Share of post-taxation operating profit of associates 18 890 1 811 17 079 >100.0% Trading income arising from – customer flow 158 006 110 879 47 127 42.5% – balance sheet management and other trading activities 8 078 11 617 (3 539) (30.5%) Other operating income 13 158 10 279 2 879 28.0% Total operating income before impairment losses on loans and advances 2 285 893 1 934 770 351 123 18.1% Impairment losses on loans and advances (57 149) (41 368) (15 781) 38.1% Operating income 2 228 744 1 893 402 335 342 17.7% Operating costs (1 502 623) (1 272 108) (230 515) 18.1% Depreciation on operating leased assets (2 169) (2 165) (4) 0.2% Operating profit before goodwill, acquired intangibles and non‑operating items 723 952 619 129 104 823 16.9% Profit attributable to other non-controlling interests (60 239) (35 201) (25 038) 71.1% Profit attributable to Asset Management non-controlling interests (20 291) (16 529) (3 762) 22.8% Operating profit before taxation 643 422 567 399 76 023 13.4% Taxation (130 438) (118 151) (12 287) 10.4% Preference dividends accrued (25 838) (26 130) 292 (1.1%) Adjusted attributable earnings to ordinary shareholders 487 146 423 118 64 028 15.1%

Adjusted earnings per share (pence) 54.1 48.6 11.3% Number of weighted average shares (million) 900.4 870.5 Cost to income ratio 65.8% 65.8%

70 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Reconciliation from statutory summarised income statement to ongoing summarised income statement Statutory For the year to 31 March 2017 as UK legacy Ongoing £’000 disclosed business business

Net interest income/(expense) 679 895 (644) 680 539 Net fee and commission income/(expense) 1 271 524 (67) 1 271 591 Investment income 136 203 572 135 631 Share of post-taxation operating profit of associates 18 890 – 18 890 Trading income/(losses) arising from – customer flow 158 001 (5) 158 006 – balance sheet management and other trading activities 8 218 140 8 078 Other operating income 13 483 325 13 158 Total operating income before impairment losses on loans and advances 2 286 214 321 2 285 893 Impairment losses on loans and advances (111 454) (54 305) (57 149) Operating income/(loss) 2 174 760 (53 984) 2 228 744 Operating costs (1 513 231) (10 608) (1 502 623) Depreciation on operating leased assets (2 169) – (2 169) Operating profit/(loss) before goodwill, acquired intangibles and non-operating items 659 360 (64 592) 723 952 Profit attributable to other non-controlling interests (60 239) – (60 239) Profit attributable to Asset Management non-controlling interests (20 291) – (20 291) Operating profit/(loss) before taxation 578 830 (64 592) 643 422 Taxation* (118 488) 11 950 (130 438) Preference dividends accrued (25 838) – (25 838) Adjusted attributable earnings to ordinary shareholders 434 504 (52 642) 487 146

Adjusted earnings per share (pence) 48.3 54.1 Number of weighted average shares (million) 900.4 900.4 Cost to income ratio 66.3% 65.8%

* Applying the group’s effective taxation rate of 18.5%.

Investec integrated annual report 2017 71 01 Financial review (continued) Overview of the year

Reconciliation from statutory summarised income statement to ongoing summarised income statement Statutory For the year to 31 March 2016 as UK legacy Ongoing £’000 disclosed business business

Net interest income 573 769 1 840 571 929 Net fee and commission income 1 061 625 3 285 1 058 340 Investment income 170 408 493 169 915 Share of post-taxation operating profit of associates 1 811 – 1 811 Trading income/(losses) arising from – customer flow 110 227 (652) 110 879 – balance sheet management and other trading activities 11 377 (240) 11 617 Other operating income 10 279 – 10 279 Total operating income before impairment losses on loans and advances 1 939 496 4 726 1 934 770 Impairment losses on loans and advances (109 516) (68 148) (41 368) Operating income/(loss) 1 829 980 (63 422) 1 893 402 Operating costs (1 287 021) (14 913) (1 272 108) Depreciation on operating leased assets (2 165) – (2 165) Operating profit/(loss) before goodwill, acquired intangibles and non-operating items 540 794 (78 335) 619 129 Profit attributable to other non-controlling interests (35 201) – (35 201) Profit attributable to Asset Management non-controlling interests (16 529) – (16 529) Operating profit/(loss) before taxation 489 064 (78 335) 567 399 Taxation* (103 202) 14 949 (118 151) Preference dividends accrued (26 130) – (26 130) Adjusted attributable earnings to ordinary shareholders 359 732 (63 386) 423 118

Adjusted earnings per share (pence) 41.3 48.6 Number of weighted average shares (million) 870.5 870.5 Cost to income ratio 66.4% 65.8%

* Applying the group’s effective taxation rate of 19.1%.

72 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Reconciliation from statutory summarised income statement to ongoing summarised income statement for the UK and Other Specialist Banking Business UK and Other UK and Other Specialist Specialist Banking Banking For the year to 31 March 2017 statutory UK legacy ongoing £’000 as disclosed^ business business

Net interest income/(expense) 284 701 (644) 285 345 Net fee and commission income/(expense) 227 932 (67) 227 999 Investment income 57 806 572 57 234 Share of post-taxation operating profit of associates 840 – 840 Trading income/(losses) arising from – customer flow 128 967 (5) 128 972 – balance sheet management and other trading activities 5 235 140 5 095 Other operating income 7 883 325 7 558 Total operating income before impairment losses on loans and advances 713 364 321 713 043 Impairment losses on loans and advances (74 956) (54 305) (20 651) Operating income/(loss) 638 408 (53 984) 692 392 Operating costs (531 843) (10 608) (521 235) Depreciation on operating leased assets (2 141) – (2 141) Operating profit/(loss) before goodwill, acquired intangibles and non-operating items 104 424 (64 592) 169 016 Profit attributable to other non-controlling interests 180 – 180 Operating profit/(loss) before taxation 104 604 (64 592) 169 196

UK and Other UK and Other Specialist Specialist Banking Banking For the year to 31 March 2016 statutory UK legacy ongoing £’000 as disclosed^ business business

Net interest income 256 591 1 840 254 751 Net fee and commission income 189 513 3 285 186 228 Investment income 56 303 493 55 810 Trading income arising from – customer flow 92 348 (652) 93 000 – balance sheet management and other trading activities (9 875) (240) (9 635) Other operating income 10 797 – 10 797 Total operating income before impairment losses on loans and advances 595 677 4 726 590 951 Impairment losses on loans and advances (84 217) (68 148) (16 069) Operating income 511 460 (63 422) 574 882 Operating costs (435 771) (14 913) (420 858) Depreciation on operating leased assets (2 149) – (2 149) Operating profit before goodwill, acquired intangibles and non-operating items 73 540 (78 335) 151 875 Profit attributable to other non-controlling interests 4 503 – 4 503 Operating profit before taxation 78 043 (78 335) 156 378

^ Refer to pages 47 and 49 in volume three.

Investec integrated annual report 2017 73 01 Financial review (continued) Overview of the year

Segmental geographical and business analysis of operating profit before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests – ongoing business For the year to 31 March 2017 UK and Southern Total % % £’000 Other Africa group change of total

Asset Management 91 262 73 562 164 824 22.3% 24.8% Wealth & Investment 65 190 28 053 93 243 8.8% 14.0% Specialist Banking 169 196 285 226 454 422 11.0% 68.5% 325 648 386 841 712 489 13.1% 107.3% Group costs (36 163) (12 613) (48 776) 6.5% (7.3%) Total group 289 485 374 228 663 713 13.7% 100.0% Other non-controlling interest – equity 60 239 Operating profit 723 952

% change 10.8% 16.0% 13.7% % of total 43.6% 56.4% 100.0%

For the year to 31 March 2016 UK and Southern Total % £’000 Other Africa group of total

Asset Management 76 853 57 930 134 783 23.1% Wealth & Investment 63 127 22 608 85 735 14.7% Specialist Banking 156 378 252 837 409 215 70.1% 296 358 333 375 629 733 107.9% Group costs (35 160) (10 645) (45 805) (7.9%) Total group 261 198 322 730 583 928 100.0% Other non-controlling interest – equity 35 201 Operating profit 619 129 % of total 44.7% 55.3% 100.0%

A reconciliation of the UK and Other Specialist Banking’s operating profit: ongoing vs statutory basis

31 March 31 March £’000 2017 2016 % change

Total ongoing UK and Other Specialist Banking per above 169 196 156 378 8.2% UK legacy remaining (64 592) (78 335) 17.5% Total UK and Other Specialist Banking per statutory accounts 104 604 78 043 34.0%

74 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Ongoing segmental geographic analysis – summarised income statement 31 March 2017 31 March 2016

For the year to UK and Southern UK and Southern £’000 Other Africa Total Other Africa Total

Net interest income 289 824 390 715 680 539 259 105 312 824 571 929 Net fee and commission income 803 930 467 661 1 271 591 706 473 351 867 1 058 340 Investment income 59 403 76 228 135 631 61 627 108 288 169 915 Share of post-taxation operating profit of associates 2 349 16 541 18 890 2 321 (510) 1 811 Trading income arising from – customer flow 129 712 28 294 158 006 93 333 17 546 110 879 – balance sheet management and other trading activities 8 531 (453) 8 078 (7 743) 19 360 11 617 Other operating income 12 870 288 13 158 8 532 1 747 10 279 Total operating income before impairment losses on loans and advances 1 306 619 979 274 2 285 893 1 123 648 811 122 1 934 770 Impairment losses on loans and advances (20 651) (36 498) (57 149) (16 069) (25 299) (41 368) Operating income 1 285 968 942 776 2 228 744 1 107 579 785 823 1 893 402 Operating costs (994 522) (508 101) (1 502 623) (848 735) (423 373) (1 272 108) Depreciation on operating leased assets (2 141) (28) (2 169) (2 149) (16) (2 165) Operating profit before goodwill, acquired intangibles and non-operating items 289 305 434 647 723 952 256 695 362 434 619 129 (Profit)/loss attributable to other non-controlling interests 180 (60 419) (60 239) 4 503 (39 704) (35 201) Operating profit before goodwill, acquired intangibles and non-operating items and after other non- controlling interests 289 485 374 228 663 713 261 198 322 730 583 928 Profit attributable to Asset Management non-controlling interests (11 807) (8 484) (20 291) (10 263) (6 266) (16 529) Operating profit before goodwill, acquired intangibles and non-operating items and after non-controlling interests 277 678 365 744 643 422 250 935 316 464 567 399

Cost to income ratio 76.2% 51.9% 65.8% 75.7% 52.2% 65.8%

Investec integrated annual report 2017 75 01 Financial review (continued) Overview of the year

Ongoing segmental business and geographic analysis – summarised income statement Asset Management Wealth & Investment Specialist Banking Group costs

For the year to 31 March 2017 UK and Southern UK and Southern UK and Southern UK and Southern Total £’000 Other Africa Total Other Africa Total Other Africa Total Other Africa Total group

Net interest income 111 5 007 5 118 4 368 7 600 11 968 285 345 378 108 663 453 – – – 680 539 Net fee and commission income 308 084 176 788 484 872 267 847 75 861 343 708 227 999 215 012 443 011 – – – 1 271 591 Investment income – 143 143 2 169 100 2 269 57 234 75 985 133 219 – – – 135 631 Share of post-taxation operating profit of associates – – – 1 509 – 1 509 840 16 541 17 381 – – – 18 890 Trading income arising from – customer flow – – – 740 288 1 028 128 972 28 006 156 978 – – – 158 006 – balance sheet management and other trading activities 3 221 (1 008) 2 213 215 (128) 87 5 095 683 5 778 – – – 8 078 Other operating income/(loss) 5 312 332 5 644 – – – 7 558 (44) 7 514 – – – 13 158 Total operating income before impairment losses on loans and advances 316 728 181 262 497 990 276 848 83 721 360 569 713 043 714 291 1 427 334 – – – 2 285 893 Impairment losses on loans and advances – – – – – – (20 651) (36 498) (57 149) – – – (57 149) Operating income 316 728 181 262 497 990 276 848 83 721 360 569 692 392 677 793 1 370 185 – – – 2 228 744 Operating costs (225 466) (107 700) (333 166) (211 658) (55 668) (267 326) (521 235) (332 120) (853 355) (36 163) (12 613) (48 776) (1 502 623) Depreciation on operating leased assets – – – – – – (2 141) (28) (2 169) – – – (2 169) Operating profit/(loss) before goodwill, acquired intangibles and non-operating items 91 262 73 562 164 824 65 190 28 053 93 243 169 016 345 645 514 661 (36 163) (12 613) (48 776) 723 952 Profit attributable to other non-controlling interests – – – – – – 180 (60 419) (60 239) – – – (60 239) Operating profit/(loss) before goodwill, acquired intangibles, non-operating items and after other non-controlling interests 91 262 73 562 164 824 65 190 28 053 93 243 169 196 285 226 454 422 (36 163) (12 613) (48 776) 663 713 Profit attributable to Asset Management non- controlling interests (11 807) (8 484) (20 291) – – – – – – – – – (20 291) Operating profit/(loss) before goodwill, acquired intangibles, non-operating items and after non-controlling interests 79 455 65 078 144 533 65 190 28 053 93 243 169 196 285 226 454 422 (36 163) (12 613) (48 776) 643 422 Cost to income ratio 71.2% 59.4% 66.9% 76.5% 66.5% 74.1% 73.3% 46.5% 59.9% n/a n/a n/a 65.8%

76 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Ongoing segmental business and geographic analysis – summarised income statement Asset Management Wealth & Investment Specialist Banking Group costs

For the year to 31 March 2017 UK and Southern UK and Southern UK and Southern UK and Southern Total £’000 Other Africa Total Other Africa Total Other Africa Total Other Africa Total group

Investec integrated annual report 2017 77 01 Financial review (continued) Overview of the year

Ongoing segmental business and geographic analysis – summarised income statement

Asset Management Wealth & Investment Specialist Banking Group costs

For the year to 31 March 2016 UK and Southern UK and Southern UK and Southern UK and Southern Total £’000 Other Africa Total Other Africa Total Other Africa Total Other Africa Total group

Net interest income 290 3 614 3 904 4 064 3 266 7 330 254 751 305 944 560 695 – – – 571 929 Net fee and commission income 275 252 140 276 415 528 244 993 64 087 309 080 186 228 147 504 333 732 – – – 1 058 340 Investment income – 44 44 5 817 255 6 072 55 810 107 989 163 799 – – – 169 915 Share of post-taxation operating profit of associates – – – 1 191 – 1 191 1 130 (510) 620 – – – 1 811 Trading income arising from – customer flow – – – 333 (17) 316 93 000 17 563 110 563 – – – 110 879 – balance sheet management and other trading activities 1 656 12 1 668 236 273 509 (9 635) 19 075 9 440 – – – 11 617 Other operating (loss)/income (1 135) 1 606 471 – 2 2 9 667 139 9 806 – – – 10 279 Total operating income before impairment losses on loans and advances 276 063 145 552 421 615 256 634 67 866 324 500 590 951 597 704 1 188 655 – – – 1 934 770 Impairment losses on loans and advances – – – – – – (16 069) (25 299) (41 368) – – – (41 368) Operating income 276 063 145 552 421 615 256 634 67 866 324 500 574 882 572 405 1 147 287 – – – 1 893 402 Operating costs (199 210) (87 622) (286 832) (193 507) (45 258) (238 765) (420 858) (279 848) (700 706) (35 160) (10 645) (45 805) (1 272 108) Depreciation on operating leased assets – – – – – – (2 149) (16) (2 165) – – – (2 165) Operating profit/(loss) before goodwill, acquired intangibles and non-operating items 76 853 57 930 134 783 63 127 22 608 85 735 151 875 292 541 444 416 (35 160) (10 645) (45 805) 619 129 (Profit)/loss attributable to other non-controlling interests – – – – – – 4 503 (39 704) (35 201) – – – (35 201) Operating profit/(loss) before goodwill, acquired intangibles, non-operating items and after other non-controlling interests 76 853 57 930 134 783 63 127 22 608 85 735 156 378 252 837 409 215 (35 160) (10 645) (45 805) 583 928 Profit attributable to Asset Management non- controlling interests (10 263) (6 266) (16 529) – – – – – – – – – (16 529) Operating profit/(loss) before goodwill, acquired intangibles, non-operating items and after non-controlling interests 66 590 51 664 118 254 63 127 22 608 85 735 156 378 252 837 409 215 (35 160) (10 645) (45 805) 567 399 Cost to income ratio 72.2% 60.2% 68.0% 75.4% 66.7% 73.6% 71.5% 46.8% 59.1% n/a n/a n/a 65.8%

78 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

Ongoing segmental business and geographic analysis – summarised income statement

Asset Management Wealth & Investment Specialist Banking Group costs

For the year to 31 March 2016 UK and Southern UK and Southern UK and Southern UK and Southern Total £’000 Other Africa Total Other Africa Total Other Africa Total Other Africa Total group

Investec integrated annual report 2017 79 01 Financial review (continued) Overview of the year

Return on equity – ongoing basis 31 March 31 March 31 March £’000 2017 2016 Average 2015 Average

Calculation of average shareholders’ equity Ordinary shareholders’ equity 3 859 535 2 990 009 3 424 772 3 085 374 3 037 692 Goodwill and intangible assets (excluding software) (490 841) (503 996) (497 419) (494 111) (499 054) Adjusted tangible shareholders’ equity 3 368 694 2 486 013 2 927 353 2 591 263 2 538 638

31 March 31 March £’000 2017 2016

Operating profit* 723 952 619 129 Non-controlling interests (80 530) (51 730) Accrued preference dividends, adjusted for currency hedge (25 838) (26 130) Revised operating profit 617 584 541 269 Taxation on operating profit before goodwill and acquired intangibles (130 438) (118 151) Adjusted attributable earnings to ordinary shareholders* 487 146 423 118

Pre-taxation return on average adjusted shareholders’ equity 18.0% 17.8% Post taxation return on average adjusted shareholders’ equity 14.2% 13.9% Pre-taxation return on average adjusted tangible shareholders’ equity 21.1% 21.3% Post taxation return on average adjusted tangible shareholders’ equity 16.6% 16.7%

* Before goodwill, acquired intangibles and non-operating items.

80 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

An analysis of core loans and advances to customers and asset quality by geography – ongoing business UK and Other Southern Africa Total group

31 March 31 March 31 March 31 March 31 March 31 March £’000 2017 2016 2017 2016 2017 2016

Gross core loans and advances to customers 8 169 901 7 242 345 14 158 547 10 358 572 22 328 448 17 600 917

Total impairments (25 356) (21 838) (72 152) (43 359) (97 508) (65 197) Specific impairments (12 393) (20 838) (52 689) (32 240) (65 082) (53 078) Portfolio impairments (12 963) (1 000) (19 463) (11 119) (32 426) (12 119) Net core loans and advances to customers 8 144 545 7 220 507 14 086 395 10 315 213 22 230 940 17 535 720 Average gross core loans and advances to customers 7 706 123 6 810 208 12 258 560 10 274 998 19 964 683 17 085 206

Total income statement charge for impairments on core loans and advances (20 690) (17 806) (36 580) (25 576) (57 270) (43 382) Gross default loans and advances to customers 34 166 49 795 215 633 152 135 249 799 201 930 Specific impairments (12 393) (20 838) (52 689) (32 240) (65 082) (53 078) Portfolio impairments (12 963) (1 000) (19 463) (11 119) (32 426) (12 119) Defaults net of impairments before collateral held 8 810 27 957 143 481 108 776 152 291 136 733 Collateral and other credit enhancements 25 948 34 777 259 057 175 051 285 005 209 828 Net default loans and advances to customers (limited to zero) – – – – – –

Ratios: Total impairments as a % of gross core loans and advances to customers 0.31% 0.30% 0.51% 0.42% 0.44% 0.37% Total impairments as a % of gross default loans 74.21% 43.86% 33.46% 28.50% 39.03% 32.29% Gross defaults as a % of gross core loans and advances to customers 0.42% 0.69% 1.52% 1.47% 1.12% 1.15% Defaults (net of impairments) as a % of net core loans and advances to customers 0.11% 0.39% 1.02% 1.05% 0.69% 0.78% Net defaults as a % of net core loans and advances to customers – – – – – – Credit loss ratio (i.e. income statement impairment charge on core loans as a % of average gross core loans and advances) 0.27% 0.26% 0.29% 0.26% 0.29% 0.26%

Investec integrated annual report 2017 81 01 Financial review (continued) Overview of the year

A reconciliation of core loans and advances: statutory basis and ongoing basis

Statutory UK Legacy Ongoing as disclosed^ business business

31 March 2017 (£’000) Gross core loans and advances to customers 22 906 165 577 717 22 328 448 Total impairments (199 028) (101 520) (97 508) Specific impairments (136 177) (71 095) (65 082) Portfolio impairments (62 851) (30 425) (32 426) Net core loans and advances to customers 22 707 137 476 197 22 230 940

31 March 2016 (£’000) Gross core loans and advances to customers 18 305 365 704 448 17 600 917 Total impairments (186 550) (121 353) (65 197) Specific impairments (154 031) (100 953) (53 078) Portfolio impairments (32 519) (20 400) (12 119) Net core loans and advances to customers 18 118 815 583 095 17 535 720

^ Refer to page 35 in volume two.

82 Investec integrated annual report 2017 Financial review 01 (continued) Overview of the year

The legacy business in the UK Specialist Bank comprises: • Assets put on the bank’s books pre-2008 where market conditions post the financial crisis materially impacted the business model • Assets written prior to 2008 with very low/negative margins • Assets relating to business we are no longer undertaking. Legacy business – overview of results Since 31 March 2016 the group’s legacy portfolio in the UK has continued to be actively managed down from £583 million to £476 million through asset sales, redemptions and write-offs. The total legacy business over the period reported a loss before taxation of £64.6 million (2016: £78.3 million), with impairments reducing 20.3% from £68.1 million to £54.3 million. The remaining legacy portfolio will continue to be managed down. Given the uncertainty in the UK following the EU referendum, the legacy book could take longer to wind down than management’s original expectation of two to four years. Total net defaults in the legacy book amount to £125 million (31 March 2016: £143 million).

An analysis of assets within the legacy business

31 March 31 March 31 March 31 March 2017 2017 2016 2016 Total net Total Total net Total assets balance assets balance (after sheet (after sheet £’million impairments) impairments impairments) impairments

Private Bank Irish planning and development assets 18 9 23 14 Other Private Bank assets 458 93 560 107 Total legacy assets 476 102 583 121 Performing 351 – 440 – Non-performing 125 102* 143 121*

* Included in balance sheet impairments is a group portfolio impairment of £30.4 million (31 March 2016: £20.4 million).

Expected run-off of legacy assets

Total remaining UK legacy assets

£’million

5 000 4 856

4 000

3 000 2 615 Expected run-off 2 185 2 000

Other Private Bank assets 1 000 695 Private Bank Irish planning and 583 476 382 development assets 221 Other corporate assets and 0 securitisation activities 08 13 14 15 16 17 F18 F19

Investec integrated annual report 2017 83 02

Divisional review Divisional review 85 02 Hendrik du Toit Glynn Burger Where we operate Where Australia Europe Hong Kong India Mauritius Southern Africa UK USA What we do Private Banking activities Corporate and Institutional Banking activities Investment activities activities Property Services and Other activities Group Specialist Banking

Human resources and organisational Human resources development Kahn Marc Corporate governance and compliance Bradley Tapnack finance Group Nishlan Samujh schemes and secretarial Share Les Penfold financial risk businesses. This ensures that This ensures financial risk businesses. of on any one part not over reliant we are our activities and our business to sustain base revenue that we have a large recurring varying through that enables us to navigate long-term growth cycles and to support our objectives. include strategic objectives Our current of our non- the proportion increasing we largely base which lending revenue continued the intend to achieve through of our and development strengthening wealth and asset management businesses.

structures upport S Group divisional structure Group Executive director Executive director risk and finance director Group Wealth & Investment Wealth Steve Elliott Asset Management Hendrik du Toit Investec integrated annual report 2017 Investec integrated annual report Europe Europe Hong Kong Mauritius Southern Africa UK What we do Portfolio management Stockbroking Alternative investments Investment advisory services trading services Electronic portfolios Retirement we operate Where Wealth & Investment Wealth Our strategic goals and objectives are objectives are Our strategic goals and an to develop motivated by the desire on an and integrated business efficient the active international scale through core utilisation of clearly established business areas.competencies in our principal build well- philosophy has been to Our core focused defined, value-added businesses select market on serving the needs of effectively. we can compete niches where balance seek to maintain an appropriate We operational earned from between revenue earned from risk businesses and revenue Stephen Koseff Kantor Bernard Specialist Banking Ciaran Whelan David van der Walt

Investec is a Investec is

South Africa Glynn Burger Wainwright Richard United Kingdom David van der Walt Steve Elliott

Where we operate Where Africa Americas Asia Pacific Europe UK What we do Equities Fixed Income Multi-Asset Alternatives bank and asset bank and to be distinctive to be distinctive Chief executive officer Managing director GEOGRAPHICAL BUSINESS LEADERS BUSINESS GEOGRAPHICAL manager striving manager Asset Management

in all that it does in all that focused specialist focused specialist Integrated global management structure Global roles Investing Client base Operations platform – – – Organically build an independent an emerging global platform from market base Independently managed entity within the Investec group performance investment Competitive in chosen specialities to: Global approach – – – Institutional and advisor focus Unique and clearly understood culture Stable and experienced leadership Committed to investing for a sustainable future. Our value proposition • • • • • • • •

Net flows of (2016: £3.2 billion) £(0.6) billion interest increased by 22.3% to increased interest £164.8 million contributing 27.5% to group profit contributing 27.5% to group Investec integrated annual report 2017 Investec integrated annual report It all began in South Africa in 1991. than twenty-five years, we have After more to become a successful global grown the investment management firm from continue to develop emerging markets. We committed to and are an owner culture building a long-term inter-generational business. Our investment team of over 195 investment applies clear investment professionals multiple across philosophies and processes is organised asset classes. Our client group five geographically defined units. across supported by our global These teams are operations platform. non-controlling before Operating profit exceeding their investment and client service expectations. exceeding their investment 33.1% dignity or meet their financial objectives by offering specialist, their financial objectives dignity or meet (2016: 32.0%) Operating margin Asset Management active investment expertise. We are a patient, long-term business are a patient, long-term expertise. We active investment At Investec Asset Management, we believe in investing in a betterbelieve in investing in a Management, we At Investec Asset (2016: £75.7 billion) segregated mandates or mutual funds to sophisticated clients. Our to sophisticated clients. or mutual funds segregated mandates tomorrow. We want to assist people around the globe to retire with the globe to retire want to assist people around We tomorrow. clients include some of the world’s largest private and public sector largest private the world’s clients include some of Assets under management £95.3 billion Annual highlights offering organically-developed investment capabilities through active capabilities through investment offering organically-developed pension funds, financial institutions, corporates, foundations, centralpension funds, financial banks and intermediaries serving individual investors. Our business isbanks and intermediaries Chief executive officer Hendrik du Toit Chief operating officer Kim McFarland Global head of client group John Green Co-chief investment officer Domenico (Mimi) Ferrini Co-chief investment officer John McNab to manage our clients’ investments to the highest standard possible by to the highest standard to manage our clients’ investments 86 Global executive committee

Divisional review

02 Divisional review 87 02 £(1 308) mn Asia Paci c (including Middle East) Europe Commodities Private equity Real estate Infrastructure debt – – – – – – – – Alternatives £861 mn (continued) (continued) £61 mn £1 457 mn Asia Pacific Europe (including UK) 2017 Global/ Regional solutions Income solutions – – 2016 – – Multi-Asset £1 393 mn Africa Americas Asset Management £229 mn Investments Client groups Developed Emerging Multi-strategy Absolute return Organisational structure Organisational £(718) mn Americas – – – – Global operations platform – – – – Africa Fixed Income £639 mn Investec integrated annual report 2017 Investec integrated annual report Global Regional Emerging – – – – – – United Kingdom Equities What we do Net flows by geography Financial years to 31 March 2016 and 31 March 2017 Note: The net flows exclude a historic low value cash plus account which is subject to volatile net flows. Where we operate Where group Remainder of Investec Asset Management Assets under management (LHS) Operating proﬁt (RHS) 200 150 50 0 100

95.0% 5.0% £’million Mar 17 Mar 17

95.3

164.8 16 Mar 94.1% 5.9% 15 Mar

16 Mar 14 Mar

Mar 13 Mar 0 12 Mar

80 60 40 20

Ordinary shareholders’ equity** 100

Mar 11 Mar

Mar 10 Mar Mar 09 Mar

82.8% 17.2%

Mar 08 Mar

Mar 07 Mar 82.6% 17.4% 06 Mar Investec integrated annual report 2017 Investec integrated annual report

16 Mar 05 Mar

Mar 04 Mar 0 03 Mar

80 60 40 20

Permanent employees 100

Mar 02 Mar

Mar 01 Mar Mar 00 Mar

72.5% 27.5%

17 99 Mar Mar 98 Mar Asset Management (continued)

26.7% 73.3% Mar 97 Mar

16 Mar 96 Mar March Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. Before goodwill, acquired intangibles, non-operating As calculated on page 66, based on regulatory capital requirements. 0 0 20 40 60 80 £’billion 20 40 60 80 Operating profit* Historical nancial performance Financial analysis 88 100 100 ** *

Divisional review

02 Divisional review 89 8.6% 26.0% 19.3% 22.8% 16.2% 32.7% 16.7% 31.1% 16.4% 22.2% 22.2% 22.3% 18.1% 02 >100.0% >100.0% % change 99 545 23.8 5 173 1 214 (3 762) 14 794 26 279 13 414 12 865 26 279 30 041 76 375 69 344 (46 334) (continued) (continued) Variance 44 471 2016 1 668 3 904 144.8 32.0% 79.1% 51 664 66 590 (16 529) 173.1% 171 629 118 254 118 254 134 783 421 615 415 528 (286 832) 31 March 31 March Asset Management 143 2017 5 644 2 213 5 118 168.6 33.1% 90.7% 65 078 79 455 (20 291) 179.6% 186 423 144 533 144 533 164 824 497 990 484 872 (333 166) 31 March 31 March Investec integrated annual report 2017 Investec integrated annual report ^ As calculated on pages 66 and 68, based on regulatory capital requirements. includes the portion of earnings attributable to the 16% shareholding in the business Earnings after tax attributable to non-controlling interests by employees. Operating profit per employee excludes Silica, our third party administration business. Operating profit per employee excludes Silica, our third Rising markets and a weaker Sterling increased our net fee and commission income in the period to £484.9 million. Rising markets and a weaker Sterling increased £25.5 million in the prior period to £28.0 million. from over the period under review Performance fees increased income (as explained by 22.3%, driven by increased increased interests non-controlling before our operating profit Against this backdrop, fluctuations. significantly impacted by currency which were by operating cost increases, above) and tempered

Operating profit per employee (£’000)* Operating profit Operating margin Return on tangible equity (pre-tax)* ROE (pre-tax)* Selected returns and key statistics Selected returns equity* shareholders’ Ordinary Operating profit before goodwill, acquired intangibles, goodwill, acquired before Operating profit interests non-operating items, taxation and after non-controlling Southern Africa UK and Other Operating profit before goodwill, acquired intangibles, goodwill, acquired before Operating profit interests non-operating items, taxation and after non-controlling Profit attributable to Asset Management non-controlling interests** attributable to Asset Management non-controlling Profit Operating profit before goodwill, acquired intangibles, goodwill, acquired before Operating profit interests non-controlling non-operating items, taxation and before Operating costs Total operating income operating Total Other operating income Other operating income Trading income arising from balance sheet management and other balance sheet management and income arising from Trading trading activities Investment income Net fee and commission income Net fee and commission Net interest income Net interest • • The variance in operating profit over the year can be explained as follows: The variance in operating profit • * ** ^ Income statement analysis Income statement £’000 2016 AUM 2 525 5 056 31 993 21 485 14 620 75 679 31 March 31 March 3% 7% 504 302 (572) 42% 28% 20% 1 236 (1 574) (1 040) Net flows 2017 AUM 3 479 6 904 38 864 27 100 18 940 95 286 31 March 31 March Equities Fixed Income Multi-asset Alternatives Third party funds on advisory platform 31 March 2016 4% 7% 41% 28% 20% Investec integrated annual report 2017 Investec integrated annual report Equities Fixed Income Multi-asset Alternatives Third party funds on advisory platform 31 March 2017 Asset Management (continued) 90 Our long-term track record remains competitive. remains Our long-term track record We measure our investment performance relative to peer groups and against benchmarks over one, three, five and 10 year periods, and benchmarks over one, three, and against to peer groups our investment performance relative measure We since inception. All of our investment capabilities are managed with the simple aim of delivering performance which meets or exceeds our clients’ All of our investment capabilities are parameters. well defined risk and return agreed, expectations around Investment performance Note: The assets under management and flows exclude a historic low value cash plus account that is subject to volatile flows. Note: The assets under management and flows Assets under management by asset class Assets under management by asset Equities Fixed Income Multi-Asset Alternatives party funds on advisory platform Third Total £’million Assets under management and flows Assets under

Divisional review

02 Divisional review 91 3% 52% 30% 15% 02 Underperformance Outperformance (continued) (continued) First quartile Second quartile Third quartile Fourth quartile Ten year Ten 24% 76% 31% 29% 19% 21% Since inception* Asset Management 23% 77% First quartile Second quartile Third quartile Fourth quartile Winner of Funds Europe Award 2016 for European Asset 2016 for European Winner Award of Funds Europe Management Company (assets €20 billion – €100 billion) 10 year • Five year 29% 20% 37% 14% 31% 69% Investec integrated annual report 2017 Investec integrated annual report 5 year First quartile Second quartile Third quartile Fourth quartile 48% 52% Three year Three 3 year 13% 35% 32% 20% 47% 53% 1 year First quartile Second quartile Third quartile Fourth quartile Raging Bull Award for Best South African General Equity Raging Bull Award Outright Performance Fund) and Top Fund (Investec Value over 21 years by a South African General Equity Fund (Investec Equity Fund) One year For “since inception”, performance is shown only for portfolios that are older than 12 months. For “since inception”, performance is shown only for • 0 20 40 60 80 Percentage 100 Overall rm performance Independent recognition Independent recognition Source: Calculated from Morningstar data by value, excludes cash and cash plus funds. Performance to 31 March 2017. Source: Calculated from Morningstar data by value, excludes cash and cash plus funds. Performance to Note: All Investec Asset Management fund ranges relative to other funds in the same sector. Mutual funds investment performance Note: Outperformance/(underperformance) is calculated as the sum of the total market values for those portfolios that have positive active returns (negative active returns) on a gross basis expressed Our % of as a percentage of total assets under management. assets under fund outperformance is reported basis of current on the AUM and therefore does not include terminated funds. Total products and third party assets administeredmanagement exclude double-counting of pooled on our South African platform. cash, peer group averages, inflation and market indices as specified in client mandatesBenchmarks used for the above analysis include market values areor fund prospectuses. For all periods shown, as at the period end date. * to 31 March 2017. Performance returns from StatPro, capability weighted. Source: Calculated by Investec Asset Management, What is your outlook for

the coming financial year? Q. challenges many prevailing are Although there for the industry including the global macro- regulation, increased economic environment, technology and evolvingdisruption from the asset management buying behaviour, a It remains to grow. industry is forecast competitive market which will becomefiercely tougher to navigate and maintain margins. As we expect to see some seeing already, we are toconsolidation in the market in response unlikely to participate are these challenges. We in this consolidation as we continue to see potential for ongoing organic growth. a believe that we have created We sustainable, competitive, long-term business, organically are over the past 26 years. We building a long-term inter-generational business and as such concentrate less on committed remain short-term outcomes. We to being an active investment manager and in ourbelieve that the opportunity for growth industry over the next five years is substantial. The coming year will have its challenges. Markets may not be as supportive, currencies duringas favour much in our as move not may nevertheless confident are We this last year. about our long-term future. segregated mandates or mutual funds to mandates or mutual segregated globally operate sophisticated clients. We in both the Institutional and Advisor space five geographically defined clientthrough that to growth have an approach We groups. is driven by sensible medium to long-term client demand and competitive investment performance. intent onIn the next twelve months, we are our Advisor businesscontinuing to grow our position in strengthening globally, North America and continuing to scale our Multi-Asset and Global Equity offerings. we will continue to invest inFurthermore, a limited number of long-term initiatives, including within our private markets offering. What are your strategicWhat are

objectives in the coming financial year? Q. Our fundamental strategic objectives and unchanged: we want toprinciples remain with the globe to retire assist people around dignity or meet their financial objectives. We aim to manage our clients’ money to the and in line withhighest possible standard and strategytheir expectations and product specifications. a patient, organic and long-term remain We organically-developedbusiness offering activeinvestment capabilities through Our short-term investment performance inOur short-term investment was challengedsome of our larger capabilities we are However, over the period under review. here.beginning to see a turnaround over the our offering have also broadened We past year following substantial investments and Multi-Asset teams. As weinto our credit awe offer go into the 2018 financial year, and well-tested global equities platform,strong a a rapidly developing Multi-Asset capability, emerging markets debt capabilityresurgent skill set. This allows us to credit and a growing income and a competitive set of growth, offer have to the market. We Multi-Asset offerings our and strengthen also continued to grow private markets capabilities. demandingThe challenges of an increasingly client base, to which alpha over the cycle and relevance is a non-negotiable, product us with ample cause costs provided regulatory for thought about our long-term direction. After due consideration, we have concluded well positionedthat our business remains and that we need to focus onfor the future relentless will be even more execution. We in our focus on quality and excellence over the coming years as we pursue the same strategic objectives as we had before. will continue to invest in our peopleWe that binds us the owner culture and nurture quality execution Strategic clarity, together. and an ongoing commitment to our people potential of ourunderwrite the growth business over the long term. Investec integrated annual report 2017 Investec integrated annual report

Asset Management (continued)

What have been the key How has the operating

92 developments in your business over the past financial year? environment in which youenvironment have operated impacted your business over the last financial year? After a good start and a positive net flow number at half-year stage, the flow picture We deteriorated in the second half of the year. closed the financial year with net outflows of £1.7 billion of net ouflows£0.6 billion, where took place in the last six months of the largely The net ouflows were financial year. driven by the Asia Pacific and Americas of client restructurings as a result regions, rather than performanceand rebalancing, that our pleased to report are complaints. We African business has continued its resurgence as evidenced by net inflows of £1.4 billion for the year. Q. During the past year, political and currency political and During the past year, In spite of the strong regularly. volatility featured was a marked slowdownrally in equities, there in decision-making by institutional investors. In addition, the decision not to choose cheap become an activebeta has increasingly decision for institutional asset owners. These on the flows have put pressure circumstances to active asset managers, including Investec Asset Management. re- midway into the ‘great At this stage we are The consequence of our industry. regulation’ devoted to resources is the ever increasing standards. meeting new regulatory On the positive side, Investec Asset theManagement benefited significantly from the of emerging markets towards resurgence period.end of the reporting and the fact that weGiven this environment the financial year with weaker thanentered performance in some of our largerdesired we closed the year with net outflowsofferings, £0.6 billion. of approximately Q. Chief executive officer Hendrik du Toit Questions and answers Questions

Divisional review

02 Divisional review 93 02 Investec Wealth & Investment Investec Wealth has been built via the acquisition and integration of businesses and over a long period organic growth of time platforms in the Well-established UK, South Africa, Switzerland, and Guernsey Republic of Ireland has The business currently four distinct channels: direct, intermediaries, charities and international, and is nearing completion of the development of its fifth ‘online’ distribution channel, Click & Invest Strategy to internationalise the within jurisdictions where has an already Investec group established business in our Focus is on organic growth key markets and enhancing our range of services for the benefit of our clients. Our value proposition • • • • •

Wealth & Investment & Wealth Net inflows of to group profit to group contributing 15.6% (2016: £2.1 billion) £1.2 billion Operating profit up 8.8% to Operating profit Investec integrated annual report 2017 Investec integrated annual report £93.2 million The business specialises in wealth management, portfolio management, services for and stockbroking private office individuals, families, trusts and charities. & Investment is one of Investec Wealth leading private client investment the UK’s managers, the largest in South Africa, has and is presence a significant European developing its operations internationally.

the largest in South Africa. the largest in South Investec Wealth & Investment & Investment Investec Wealth 25.9% (2016: 26.4%) Operating margin international reach and depth of reach and depth international (2016: £45.5 billion) offers its clients comfort in its scale, comfort in its scale, offers its clients Further detail on the Wealth & Investment management structure is available Further detail on the Wealth on our website: www.investec.com Assets under management Annual highlights £54.8 billion

investment processes. Investec Wealth Wealth processes. Investec investment & Investment is one of the UK’s leading leading is one of the UK’s & Investment private client investment managers and investment managers private client Global head: Steve Elliott UK head: Jonathan Wragg South Africa head: Henry Blumenthal Switzerland head: Peter Gyger head: Eddie Clarke Ireland Succession planning ISAs planning. Retirement Financial planning • • • South Africa and Mauritius and brand Strong positioning Largest player in the South African market & Developing Wealth Investment capability in Mauritius UK and Other Brand well recognised Established platforms in the UK, Switzerland, and Republic of Ireland Guernsey leading One of the UK’s private client investment managers to attract ability Proven investment and recruit managers & Developing Wealth Investment capability in Hong Kong Advice and guidance on pension schemes and life assurance. Discretionary investment Discretionary pension management for company and Self Invested Personal Pensions (SIPPs) Investec Wealth & Investment South Africa provides portfolio management, wealth & Investment South Africa provides Investec Wealth services for private clients, charities, pension funds management and stockbroking billion of South Africa with R109.9 across eight offices and trusts. Operating from R212.4 billion of funds under and annuity managed assets and a further discretionary various other forms of administration. The UK operation is conducted through Investec Wealth & Investment Limited. Wealth Investec The UK operation is conducted through Investec Bank conducted through & Investment operations are The other Wealth & Investment Investec Wealth & Investment Ireland, Switzerland, Investec Wealth Capital Asia Limited. Investec Channel Islands and in Hong Kong, through with the above jurisdictions, located throughout offices operate from Over 1 300 staff & Investment is billion. Investec Wealth combined funds under management of £35.6 management services. of private client investment leading providers one of the UK’s • Pensions and retirement • Investec integrated annual report 2017 Investec integrated annual report Wealth & Investment & Wealth (continued) Discretionary and advisory portfolio and advisory portfolio Discretionary for private management services 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. Southern Africa UK and Other Investment and savings • • • • 94 What we do Where we operate Where

Divisional review

02 Divisional review 95 02 (continued) (continued) group Remainder of Investec Wealth & Investment 93.3% 6.7% 17 93.2 Wealth & Investment & Wealth 17 91.5% 8.5% 16 16 0 80 60 40 20 Ordinary shareholders’ equity** 100 15 14 82.3% 17.7% Investec integrated annual report 2017 Investec integrated annual report 17 13 81.8% 18.2% 16 12 0 80 60 40 20 Permanent employees 11 100 10 84.4% 15.6% 17 09 17.0% 83.0% 16 08 March Trend reflects numbers as at the year ended 31 March. Amounts are shown before goodwill, acquired intangibles, non-operating items, taxation and after reflects numbers as at the year ended 31 March. Amounts are shown before goodwill, acquired intangibles, Trend other non-controlling interests. Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. Before goodwill, acquired intangibles, non-operating As calculated on page 66, based on regulatory capital requirements. 0 0 90 80 70 20 40 60 80 60 50 40 30 20 10 £’million Operating profit* Financial analysis 100 100 Operating pro t^ — track record ^ ** * 3.3% 2.1% 3.3% 8.8% 8.8% 24.1% 12.0% 26.7% 11.2% 63.3% 11.1% (82.9%) (62.6%) 32.5% 17.9% 21.1% 14.9% 20.5% 22.5% 19.4% >100.0% % change % change 1.8 712 318 (422) 5 221 7 508 5 445 2 063 7 508 4 638 (3 803) 2016 4 945 8 022 36 069 34 628 (28 561) 45 459 15 690 10 745 29 769 21 747 Variance 31 March 31 March 509 316 54.8 2016 1 193 6 072 7 330 26.4% 30.7% 2017 85 735 22 608 63 127 85 735 6 552 9 219 187.9% 246 302 324 500 309 080 12 666 26 336 54 773 19 218 35 555 (238 765) 31 March 31 March 31 March 31 March 87 56.6 2017 1 028 1 509 2 269 25.9% 35.7% 93 243 28 053 65 190 93 243 11 968 173.0% 251 523 360 569 343 708 (267 326) 31 March 31 March Investec integrated annual report 2017 Investec integrated annual report Wealth & Investment & Wealth (continued) As calculated on pages 66 and 68, based on regulatory capital requirements. The UK and Other business continued to generate good net inflows of funds under management, despite volatile equity markets. The UK and Other business continued to generate good net inflows of funds under management, in average funds under management supported by a higher level of market indices at the key growth Operating income benefited from quarterly billing dates. Rand terms) over the prior year, of 10.5% (in of R514 million, an increase The South African business posted an operating profit and annuity asset funds under management and net inflows. higher discretionary benefiting from Headcount compliance and settlements areas. The business globally continued to invest in its digital platforms, IT infrastructure, 2017. 2016 to 31 March 31 March by 4.4% from increased 96 Operating profit per employee (£’000)* Operating profit Operating margin Return on tangible equity (pre-tax)* ROE (pre-tax)* Selected returns and key statistics Selected returns equity* shareholders’ Ordinary Operating profit before goodwill, acquired intangibles, goodwill, acquired before Operating profit non-operating items, taxation and after other interests non-controlling Southern Africa UK and Other Operating profit before goodwill, acquired intangibles, goodwill, acquired before Operating profit non-operating items, taxation and after other interests non-controlling Operating costs Total operating income operating Total – balance sheet management and other trading activities – balance sheet management and other trading Trading income arising from income arising from Trading – customer flow Share of post taxation operating profit of associates profit of post taxation operating Share Investment income Discretionary and annuity assets Discretionary Non-discretionary and other Non-discretionary Total Discretionary and other Non-discretionary Net fee and commission income Net fee and commission South Africa UK and Other Net interest income Net interest £’million Analysis of key earnings drivers (funds under management) • • • The variance in operating profit over the year can be explained as follows: over the year can be explained profit The variance in operating * £’000 Income statement analysis Income statement

Divisional review

02 Divisional review 97 5.2% (6.4%) (2.8%) 8.2% 16.5% 17.6% 02 50.4% 34.8% 20.2% 19.4% 38.5% 17.6% % change % change % change 3.38 (2.04) (1.26) (0.03) (0.26) 627 4.9% 2016 2016 2016 27.32 27.11 1 318 5 615 9 300 77.9% 2016 2 664 2 037 5 985 14 915 29 769 27 105 21 120 104 480 227 033 331 513 (continued) (continued) 31 March 31 March 31 March 31 March 31 March 31 March 31 March # 3.53 3.71 (262) 943 (2.19) (0.05) (0.24) 2017 2017 2017 4.9% 8 335 27.11 31.87 1 536 (8 597) 2017 79.7% 2 746 6 473 3 689 25 393 35 555 31 866 109 869 212 412 322 281 31 March 31 March 31 March 31 March 31 March 31 March 31 March Wealth & Investment & Wealth Investec integrated annual report 2017 Investec integrated annual report Includes an outflow of R4.9 billion of assets transferred to our specialised securities division not included in Wealth & Investment assets. in Wealth Includes an outflow of R4.9 billion of assets transferred to our specialised securities division not included Impact of market movement and relative performance. Reflects the transfer of clients between jurisdictions. Reflects the disposal of funds relating to certain non-core operations. of opening funds under management. Net organic inflows less outflows (excluding acquired inflows and exceptional outflows) as a percentage

Discretionary Non-discretionary Total Discretionary Non-discretionary Other Investec Wealth & Investment Limited (UK) Investec Wealth Discretionary and annuity assets Discretionary Non-discretionary Total and annuity assets Discretionary # R’million Net inflows at cost over the year R’million At the beginning of the year Inflows Outflows Market adjustment^ Transfers^^ Disposals* At the end of the year year end) MSCI WMA Private Investor Balanced Index (at under management** in total funds Underlying rate of net organic growth basis % of total funds managed on a discretionary management and flows) South Africa: analysis of key drivers (funds under Funds under management Non-discretionary ^ ^^ * ** Funds under management and flows £’billion Further analysis of the Investec Wealth & Investment Limited UK business Wealth Further analysis of the Investec £’million UK and Other: analysis of key drivers (funds under management and flows) (funds under management analysis of key drivers UK and Other: Funds under management Total with our private clients and the importance with our private clients of delivering banking and investments, to our private locally and internationally, clients in One Place. In South Africa, we continue to enhance which focuses on our One Place strategy, servicing clients’ local and international banking and investment needs, a the through particularly important role have done turbulent period. We recent our international so by leveraging off Switzerland, Hong capabilities in Ireland, Kong, Guernsey and the UK. The continuing development of our digital channel, Click & Invest, has made good with some important milestones progress, in the development being achieved during The final stages of development the year. now being undertaken as we prepare are for the forthcoming launch of this new digital service. The UK business has continued the of rationalising its non-core process operations. The business took the decision of its during the year to cease the provision Options service, and this was fully Traded completed during the financial year. of focus which Regulation is always an area the to ensure substantial resources requires fully compliant with all of business remains its obligations. What have been the key developments in your business over the past financial year? We’ve continued to focus and place We’ve an emphasis on enhancing our digital capabilities for our private clients. This includes expanding our self-directed investment capabilities as well as increasing access to our global investment view our managed investment services, through both on our mobile and digital platforms. & Investment and Private Investec Wealth for the fifth year Bank have been awarded, and the fourth year by Euromoney in a row by the FT in London, the accolade in a row Manager of Best Private Bank and Wealth in South Africa. These accolades show the traction our One Place strategy has had Q. In South Africa, our clients have continued In South Africa, our clients to trade and invest both locally and taking a far they are however, offshore, to investment, cautious approach more given the volatility in the market. We net continued to see good discretionary brand inflows, supported by our strong and positioning in the local market and an in our client base. Our investment increase defensive, tends to be more approach favouring some of the larger companies listed on the JSE, these companies experiencing a fall in values over the period. Investec integrated annual report 2017 Investec integrated annual report Wealth & Investment & Wealth (continued)

How has the operating 98 environment in which you environment have operated impacted your business over the last financial year? For the UK business, the financial year has seen two major events which have to investors, being the UK’s been relevant on its membership of the referendum Union and the US presidential European each elections. The periods surrounding significant of these events presented uncertainty for investors. Despite the expectations of most commentators, after some initial volatility and a notable decline in sterling, equity markets responded decision to favourably to both the UK’s leave the EU and to the election of Donald having with principal market indices Trump, highs. This record subsequently reached for a favourable backdrop has presented which has been most of the financial year, beneficial for both our clients and the performance of the business. whilst the overall outcome of However, these events has so far been positive, our dedication to the individual needs of each as important as ever of our clients remains that we continue as we seek to ensure the assurance and service our to provide these clients need to navigate through periods of heightened uncertainty. Q. Global head Steve Elliott Questions and answers Questions

Divisional review

02 Divisional review 99 02 (continued) (continued) What is your outlook What is your outlook for the coming financial for the coming year? Q. events over have seen some significant We others remain the last financial year and the potential to on the horizon which have least the detailed unsettle the markets, not the EU. from exit negotiations of the UK’s a present These continuing uncertainties particularly in an challenge to investors, traditionally returns from where environment are We low. asset classes remain lower-risk focused on maintaining the quality of our client service and possess the expertise the to navigate through and resources uncertainties that may lie ahead, whilst continuing to invest in our capabilities, digital and otherwise, to build for the future. Wealth & Investment & Wealth Investec integrated annual report 2017 Investec integrated annual report and in navigating the complex landscapeand in navigating the complex investing,of asset allocation, goal-based alternativefiduciary and tax information, plans to helpinvestments and the financial financial plans,our clients achieve their a key strategy for us. remains integral to the Having a global view is our business as continued evolution of an international operation. This requires also but our presence not just broadening businesses to ensure integrating our various the best service for clients. Our Asian and Swiss operations continue to allow us to service the expatriate market across various jurisdictions. The development of our digital capability will continue to be a principal strategic theme. The launch of Click & Invest is a key component of this, and achieving the successful delivery of this new service to the market will be a significant point our of focus for the business. However, digital development goes beyond the new committed are Click & Invest service. We to developing digital enhancements to our and investment management offering core make these available to those clients of the suited. business for whom they are core The development and expansion of the UK business’ financial planning capability an important part of our strategy remains and an aspect of our service that we continue to build as the complexity of the personal financial world continues also continuing to are We to increase. in the use of our international see growth by those internationalservice centres clients who seek UK-based investment expertise. and well-resourced see our robust We and research global investment process capability essential to our success. The continuous development of these areas, investment, remains backed by appropriate a principal component of our strategy. What are your What are strategic objectives in the coming financial year? We’ve continued to advance with ongoing We’ve new initiatives. and introduced projects This involves keeping the client at the of all that we do. The strategy of centre working together with Private Bank to offer an integrated banking and investment solution to our private clients, both locally has been a great and internationally, a key focus in success and will remain the years ahead. Our focus on servicing the ever expanding global investment needs of our private clients Q. The most significant change to regulations to regulations The most significant change time will comethat we have seen for some in the over the coming months into effect data protection form of MiFID II and new in the UK. Planning for the requirements substantial changesimplementation of these a significanthas, and continues to be, with considerabletheme for the business, work beingIT development and other the newundertaken to accommodate These developments further requirements. that our scale the important role reinforce success in the and future plays in our current investment management industry. its financial While continuing to progress all and strengthen planning offering aspects of the client engagement, Wealth has seen significant & Investment Ireland in the conversion of new and existing growth management. The clients to discretionary of the wealth side of Investec recognition has continued to expand with the Ireland in Cork. opening of the office In terms of our Swiss operation, a full has been completed and strategy review this has identified an opportunity to consider Switzerland as a multi-jurisdiction platform. High-quality specialist banking private solutions to corporate and clients with leading positions in selected areas high touch personalised Provide service – supported by high tech and ability to execute quickly Ability to leverage international, platforms cross-border positioned to capture Well opportunities between the developed and the emerging world – internationally mobile ability to originate, Strong and distribute manufacture Balanced business model with good business depth and breadth. Our value proposition • • • • • • up 17.8% to Operating profit (statutory) Operating profit £22.7 billion £29.1 billion and energy Customer deposits (statutory) £389.8 million Loans and advances (statutory) The specialist teams are teams are The specialist well positioned to provide services for both personal and business needs Investment, right across Corporate and Institutional Banking and Private Banking activities. Investec integrated annual report 2017 Investec integrated annual report

Specialist expertise Specialist 12.8% 15.3% up 11.0% to t (2016: 12.5%) (2016: 16.1%) Specialist Banking Specialist ROE (pre-tax) (ongoing) ROE (pre-tax) ROE (pre-tax) (statutory) ROE (pre-tax) delivered with dedication with dedication delivered Operating profit (ongoing) Operating profit Annual highlights Further detail on the Specialist Banking management structureFurther detail on the Specialist Banking management is available on our website: www.investec.com £454.4 million

100 Ciaran whelan Global heads: l der wa van David

Divisional review

02 Divisional review 101

02 Hong Kong Investment activities Australia Experienced local teams in place with industry expertise Focus is on entrenching position as a boutique operation (continued) (continued) Australia Hong Kong India Southern Africa UK and Europe USA – – – – – – trading Advisory – – – – – – Corporate and Institutional Corporate and Institutional banking services and trading Treasury Specialised lending, funds and debt capital markets sales and Institutional research UK and Europe Brand well established Sustainable specialist banking business focused on corporate and private banking Mauritius Established in 1997 Focus on corporate institutional and private client banking activities Specialist Banking Specialist North America Focus on advisory and institutional securities activities India Established a presence in 2010 Facilitates the link between India, UK and South Africa South Africa Strong brand and positioning Leading position in corporate institutional and private client banking activities Corporates/government/institutional clients Investec integrated annual report 2017 Investec integrated annual report Australia Hong Kong Southern Africa UK and Europe – – – – Investment activities Principal investments investment fund Property management – – – – Southern Africa UK and Europe worth private clients – – Private Banking activities banking and Transactional exchange foreign Lending Deposits Investments – – High income and high net High income and Where we operate we Where What we do group Remainder of Investec Specialist Banking 11.7% 88.3% 17 389.8 17 14.4% 85.6% 16 16 0 80 60 40 20 Ordinary shareholders’ equity** 100 15 14 34.9% 65.1% 17 13 35.6% 64.4% Investec integrated annual report 2017 Investec integrated annual report 16 12 0 80 60 40 20 Permanent employees 11 100 10 34.9% 65.1% 17 09 Specialist Banking Specialist (continued) 65.4% 34.6% 16 08 March Trend reflects numbers as at the year ended 31 March. Amounts are shown before goodwill, acquired intangibles, non-operating items, taxation and after other reflects numbers as at the year ended 31 March. Amounts are shown before goodwill, acquired intangibles, Trend non-controlling interests. Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. Before goodwill, acquired intangibles, non-operating As calculated on page 66, based on regulatory capital requirements. 0 0

20 40 60 80 £’million Operating profit* Financial analysis 100 200 300 400 500 100 102 Operating pro t^ — track record (statutory) Operating pro t^ — track record ^ ** *

Divisional review

02 Divisional review 103 8.2% 1.8% 6.5% 21.4% (0.2%) 33.7% 43.9% 25.1% 12.8% 34.0% 71.1% 42.8% 31.4% 17.8% 17.8% 17.8% 22.9% 19.6% (18.7%) (17.5%) (20.7%) (20.1%) (35.7%) (18.6%) 02 >100.0% % change (4) 3.9 (1 938) (1 967) (3 282) 58 950 32 389 13 743 26 561 12 818 58 950 83 988 47 062 16 761 232 336 (13 107) (25 038) (30 501) 836 404 570 231 279 280 234 274 105 927 100 274 (continued) (continued) (148 344) Variance – 620 59.9 2016 9 806 9 200 (2 165) 16.1% 17.4% 12.5% 14.2% 60.1% 70 020 78 043 (78 335) (35 201) 330 880 252 837 156 378 330 880 366 081 109 911 164 292 337 017 562 535 (715 619) (109 516) 1 083 865 2 483 048 1 298 566 1 114 462 1 193 381 31 March 31 March Specialist Banking Specialist 63.9 2017 7 839 5 918 (2 169) 16.4% 13.9% 15.3% 12.8% 60.6% 19.6% 56 913 17 381 (64 592) (60 239) 169 196 389 830 285 226 104 604 389 830 450 069 156 973 133 791 442 944 662 809 (863 963) (111 454) 1 316 201 1 868 797 1 393 742 31 March 31 March 3 319 452 1 427 655 # Investec integrated annual report 2017 Investec integrated annual report Detailed income statement provided on page 73. As calculated on pages 66 and 68, based on regulatory capital requirements. Refer to analysis on page 107. Net interest income increased by 12.0% supported by sound levels of lending activity. by 12.0% supported by sound levels of lending activity. income increased Net interest corporate advisory and aviation the by 22.4% largely due to a solid performance from Net fee and commission income increased finance businesses. by the write down partially offset the UK unlisted investment portfolio 2.6% with a sound performance from Investment income increased of an investment in the Hong Kong portfolio. levels and market volatility. client activity considerably supported by robust customer flow increased income from Trading by 21.4%. operating income increased Total on page 36 in is provided loss ratio amounting to 0.27% (2016: 0.26%). Further information marginally with the credit Impairments increased volume two. additional premises largely due to the investment in building out the private client banking offering, ahead of revenue Costs grew profitability. given improved in variable remuneration and headcount, and an increase expenses, deliberate investment in IT infrastructure Southern Africa Ongoing UK and Other Southern Africa Ongoing UK and Other Remaining Legacy Legacy remaining^ Ongoing^ Ongoing ROE (pre-tax) ** Ongoing ROE (pre-tax) Southern Africa excluding investment activities ROE (pre-tax) Statutory ROE (pre-tax)** Selected returns and key statistics Selected returns equity** shareholders’ Ordinary Operating profit before goodwill, acquired intangibles, goodwill, acquired before Operating profit non-operating items, taxation and after other interests non-controlling Southern Africa UK and Other Operating profit before goodwill, acquired intangibles, goodwill, acquired before Operating profit non-operating items, taxation and after other non-controlling interests Profit attributable to non-controlling interests attributable to non-controlling Profit Operating profit before goodwill, acquired intangibles, goodwill, acquired before Operating profit interests non-controlling non-operating items, taxation and before Depreciation on operating leased assets Depreciation Operating costs Operating income Impairment losses on loans and advances Total operating income before impairment on loans and advances income before operating Total Other operating income – balance sheet management and other trading activities – balance sheet management Trading income arising from income arising from Trading – customer flow Share of post taxation operating profit/(loss) of associates of associates profit/(loss) of post taxation operating Share Investment income Net fee and commission income Net fee and commission Operating profit per employee (£’000)** Operating profit Net interest income Net interest Cost to income ratio ** # in the UK ongoing business over the year can be explained as follows: The variance in the operating profit • • • • • • • ^ Income statement analysis Income statement £’000 8.4% 10.5%* 17 236 225 % change 16 15 2016 £7 804 14 R217 958 31 March 13 12 Home currency (million) Home currency 2017 11 £8 621 R236 225 31 March 10 09 08 36.6% 25.3% 10.5%* 0 % change 50 000 Southern Africa R’million 250 000 200 000 150 000 100 000 2016 7 804 18 119 10 315 31 March £’million 8 621 17 2017 16 8 621 22 707 14 086 Investec integrated annual report 2017 Investec integrated annual report 31 March 15 14 13 12 11 10 Specialist Banking Specialist (continued) 09 08 0 The Specialist Banking division reported operating profit before taxation of R5 117 million (2016: R5 290 million) taxation of R5 117 million before operating profit division reported The Specialist Banking to the assets related in accounting treatment of 3.3% is as a consequence of the change in Rands in operating profit The decrease Excluding the impact of this transaction three). prior year (as explained on page 87 in volume in the to the IEP Group transferred ahead of the prior year. was considerably operating profit driven by sound levels of lending activity. by 8.4% income increased Net interest sound in the Private Banking client base, growth by 26.6% supported by continued income improved Net fees and commission fund business. in the scale of the property increase corporate activity and an transaction, as explained above. by 43.1%, impacted by the IEP Group Investment income decreased impacts; while corporate customer flow trading income translation currency largely due to foreign income decreased trading Total volatility. supported by client activity levels and market increased, by 3.6%. income increased operating Total at 0.26%), remaining loans and advances amounting to 0.29% (2016: core loss ratio on average with the credit Impairments increased on page 36 in volume two. information is provided Further the lower end of its long-term average trend. activity and growth the business to support increased costs across higher headcount and IT infrastructure reflecting Costs increased period. in the current transaction, not repeated to the IEP Group with respect by costs incurred initiatives; partly offset The Pound weakened over the period. On a currency neutral basis, growth in the book was approximately 6.6%. The Pound weakened over the period. On a currency neutral basis, growth in the book was approximately 2 000 4 000 6 000 8 000 10 000 £’million 104 UK Total Southern Africa Trend reflects numbers as at the year ended 31 March. Trend * Analysis of key earnings drivers loans and advances Net core The variance in the operating profit in Southern year can be explained as follows: Africa over the operating profit The variance in the on the RandAfrican Specialist Banking division are based variances described below for the South Note: The analysis and numbers reported. • • • • • • • • • United Kingdom Net core loans and advances

Divisional review

02 Divisional review 105 8.5% 2.0% 02 303 470 17 % change 16 15 2016 14 £10 801 (continued) (continued) R279 820 31 March 13 12 Home currency (million) Home currency 2017 11 £11 013 R303 470 31 March 10 09 Specialist Banking Specialist 08 2.0% 36.6% 21.1% 0 % change 50 000 Southern Africa R’million 350 000 300 000 250 000 200 000 150 000 100 000 2016 24 044 10 801 13 243 31 March £’million Investec integrated annual report 2017 Investec integrated annual report 11 013 17 2017 16 29 109 11 013 18 096 15 31 March 14 13 12 11 10 09 08 0 8 000 6 000 4 000 2 000 12 000 10 000 United Kingdom £’million Total deposits Total UK Southern Africa Trend reflects numbers as at the year ended 31 March. Trend Total deposits Total 0.2% 7.2% 3.3% 8.4% 7.3% 9.6% (0.2%) (1.7%) (9.8%) (9.4%) (1.0%) (8.7%) (6.3%) (8.9%) (8.7%) (1.5%) (3.2%) (9.3%) 50.7% 15.2% 10.1% 16.6% 14.2% 51.3% 43.8% 18.8% 45.6% 12.6% 27.9% 57.2% 23.5% 13.9% 56.3% 11.9% 39.3% 13.1% 20.6% 17.8% (33.9%) (79.1%) (24.8%) (14.3%) (21.3%) (20.9%) (10.4%) >100% 10.5%** % change % change (234) 2016 1 184 2016 4 081 1 421 2 660 6 424 2 375 1 093 3 358 5 068 3 668 1 666 1 692 8 766 38 114 40 942 37 584 34 116 55 723 48 394 73 133 14 594 88 895 41 889 (21 400) 217 958 104 117 101 595 809 220 307 151 899 190 296 389 673 379 766 815 277 833 489 498 926 935 449 266 272 535 2 078 935 1 269 715 1 079 225 4 293 275 1 452 792 1 145 641 1 199 470 7 803 602 31 March 31 March 31 March 890 555 986 (326) 2017 2017 2 142 1 868 2 619 1 338 6 414 2 697 5 548 3 957 5 788 9 813 43 914 33 527 87 977 41 965 40 338 36 381 61 324 56 414 78 476 13 225 (43 388) 924 770 146 100 253 622 438 687 426 073 236 225 333 731 861 140 718 760 117 737 734 274 365 031 463 958 31 March 31 March 31 March 1 055 528 1 893 121 1 158 847 5 178 338 1 309 335 1 592 671 1 227 640 1 481 601 8 620 742 Investec integrated annual report 2017 Investec integrated annual report Specialist Banking Specialist (continued) Currency neutral growth of approximately 6.6%. Small ticket asset finance Large ticket asset finance Commercial real estate – investment real Commercial estate – development real Commercial Commercial real estate – investment real Commercial estate – development real Commercial vacant land and planning Commercial vacant land and planning Commercial estate – investment Residential real estate – development Residential real Residential real estate – development Residential real estate – vacant land and planning Residential real estate – vacant land and planning Residential real Small ticket asset finance Large ticket asset finance 106 Project finance Project loans core net Total Asset finance finance Resource Portfolio impairments Lending collateralised by property estate real Commercial ** ending collateralised by property Lending collateralised estate real Commercial Mortgages High net worth and specialised lending Corporate and other lending Fund finance governmentsOther corporates and financial institutions and Corporate and other lending Acquisition finance Asset-based lending Fund finance Other corporates and financial institutions and governments Net core loans – UK and Other Net core £'000 Residential real estate Residential real High net worth and other private client lending Acquisition finance Asset-based lending estate Residential real High net worth and other private client lending Mortgages High net worth and specialised lending Asset finance R'million Net core loans – Southern Africa Net core An analysis of net core loans over the period net core An analysis of on pages 35 and 36 in volume two. Refer to further information Project finance Project Portfolio impairments loans net core Total Resource finance Resource

Divisional review

02 Divisional review – – (1) 107 (5) (2) 36 74 74 72 16 80 35 16 (53) (56) (52) 737 291 238 303 399 701 (446) Total 02 Income analysis R’million 612 6 670 5 413 2 177 4 361 5 893 6 670 6 354 6 512 Asset 12 563 12 563 42 099 11 951 (continued) (continued) analysis R’million – – 2 (3) 16 22 38 40 16 13 (24) 3.7% 14.7% 15.1% Income analysis £’million Specialist Banking Specialist 36 398 749 323 130 260 713 351 749 398 301 349 2 510 Asset analysis £’million Investec integrated annual report 2017 Investec integrated annual report The group’s investment holding of 27.86% in the Investec Property Fund and 16.57% in the Investec Australia Property Fund. The group’s Does not include equity investments residing in our corporate and private client businesses. Further analysis of operating profit before taxation is provided in the table below: Equity and funding resources capital Total taxation** before Operating profit IEP Group Equity investments^ investments* Property equity exposures Total Associated loans and other assets Debt funded Total exposures on balance sheet exposures Total Impairment losses on loans and advances Operating costs interests attributable to other non-controlling Profit taxation before Operating profit £’million * ^ ** (expense)/income Net interest loans and advances impairment losses on operating income before Total Operating income intangibles and non-operating items goodwill, acquired before Operating profit Net fee and commission income Investment income of associates of post taxation operating profit Share and other operating losses Trading Additional information on the group’s South African South African on the group’s Additional information investment portfolio Taxation Operating profit after taxation Operating profit Risk-weighted assets equity held on investment portfolio – shareholders’ Ordinary 2017 31 March equity held on investment portfolio – shareholders’ Ordinary 2016 31 March equity held on investment portfolio – shareholders’ ordinary Average 2017 31 March equity – shareholders’ Post-tax return on adjusted average ordinary 2017 31 March equity – shareholders’ on adjusted average ordinary Post-tax return 2016 31 March shareholders’ on adjusted average ordinary Post-tax return 2015 equity – 31 March 4 6 2 8 7 5 3 1 ...... 0 60 50 40 30 20 10 0 0 0 0 0 0 0 0 0 0 20 15 10 5 Percentage Percentage Percentage 17 17 17 17 16 16 16 16 Net interest income Net interest 15 15 15 15 Net fees 14 14 14 14 Customer flow trading income 13 13 13 13 ROE post tax 12 12 12 12 Credit loss ratio Credit Cost to income ratio 11 11 11 11 10 10 10 10 Refer to page 107. Net profit before tax before Net profit Total costs Total Impairments Other operating income Investment and associate income * 0 0 0 0 900 800 700 600 500 400 300 200 100 6 000 5 000 4 000 3 000 2 000 1 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 8 000 6 000 4 000 2 000 1 000 14 000 12 000 10 000 Total operating income Impairments R’million Net pro t before tax and ROE (including the investment portfolio)* R’million Southern Bank Africa Specialist ongoing Total costs R’million R’million 6 4 5 3 1 8 . . .7 . . . .2 . 20 0 90 80 70 60 50 40 30 20 10 0 16 12 8 4 0 0 0 0 0 0 0 0 0 Percentage Percentage Percentage 17 17 17 17 Net interest income Net interest 16 16 16 16 Investec integrated annual report 2017 Investec integrated annual report 15 15 15 15 Net fees

14 14 14 14 Customer flow trading income ROE post tax 13 13 13 13 Credit loss ratio Credit Cost to income ratio 12 12 12 12 Specialist Banking Specialist (continued) 11 11 11 11 Net profit before tax before Net profit Total costs Total Impairments Other operating income Investment and associate income 0 0 0 0 £’000 £’000 £’000 40 000 80 000 50 000 40 000 30 000 20 000 10 000 Total operating income 500 000 400 000 300 000 200 000 100 000 700 000 600 000 108 Impairments 200 000 160 000 120 000 200 000 Net pro t before tax and ROE Total costs £’000 Trends in the above graphs are for the year ended 31 March, unless otherwise stated. in the above graphs are for the year ended 31 March, unless otherwise Trends

UK Specialist Bank Bank UK Specialist ongoing 600 000 500 000 400 000 300 000 100 000

Divisional review

02 Divisional review 109 02 (continued) (continued) What is your What are your What are outlook for the coming financial year? strategic objectives in the coming financial year? Q. global political uncertainty The current for both clients backdrop a difficult provides and markets, which to date have proven than expected. On the resilient to be more basis that this scenario continues we are cautiously optimistic that we can deliver underlying performance. another strong large one off anticipating a relatively are We in costs that will not be matched increase to a new office The costs relate in revenue. move during the year and the completion of the private banking build out. on our long term Our focus is, however, success and building scale in our business. in our measuring this by the growth are We revenue of recurring client base and growth confident that in as we build scale and are the medium term we will deliver the returns on the investment. and growth Q. will continue to apply our strategy We of building and developing our client franchises in the UK, with the primary focus corporates and high net on entrepreneurs, the client want to grow worth clients. We base, expand our funds and investment ongoing high business, and ensure product levels of service to existing clients across our offering. the infrastructure strengthening are We technology and our to make sure required matches the high standards digital offering plan to targeting. We of service we are complete the major investment we have made in the private banking infrastructure during the coming year which will then allow us to focus on client acquisition and retention. Specialist Banking Specialist United Kingdom Investec integrated annual report 2017 Investec integrated annual report Flow trading was driven by the increased by the increased Flow trading was driven volatility in markets which saw more our clients. active hedging strategies from The investment banking and advisory year and the aviation business had a record business completed a number of significant transactions. Our continued focus on in building our client base and reputation rewards. our specialist activities is reaping The Private Banking division continues building its UK franchise and developing its client base. The change in our target market to focus on high net worth and high income earners rather than more continues to generally on professionals, successful and enables us to focus prove more clearly. The past year has seen a continuation especially with increased of this strategy, people and investment in the products, for long-term required infrastructure finance property success. The structured business continued to successfully support selected high net worth, seasoned property investors and developers. Our Private Capital business which can simply be described as ‘investment banking for individuals’ was established during the year and has completed a few deals This validates our view that this is a already. complementary addition to the services we our selected client base. offer Overall, we continue to make good in the development of our progress We niched Private Banking offering. our South flow from have seen strong African Private Banking clients, which attraction of our again affirms the multi‑geographical approach.

What have been the How has the operating key developments in your business over the past financial year? environment in which you environment have operated impacted your business over the last financial year? The Specialist Bank recorded robust levels robust The Specialist Bank recorded performance of activity with a very strong by the corporate business. The private banking business continued to invest in to position itself people and infrastructure growth. for future The Corporate and Institutional banking performance from business saw a strong our flow trading businesses, coupled with our lending, aviation good activity across and advisory businesses. Deal flow has been vote very good and the impact of the Brexit has not been felt on activity levels as yet. Q. The year ended 31 March 2017 was The year ended 31 March marked by surprise outcomes in political Despite these events in the UK and abroad. major and bouts of volatility, surprise results global equity indices witnessed double digit gains, energy prices rebounded and deflationary concerns faded. Global below historic averages, remained growth signs of a pickup in many were but there key geographies. UK economic growth following surprisingly resilient remained despite the uncertainty referendum, June’s trade arrangements with the over future EU, although as the financial year closed some signs of a slowing in UK were there economic activity. to In the main the above conditions proved for our clients, be a positive environment and as a consequence for our business, the board. activity levels across with robust Q. Geographical business leaders Geographical business David van der Walt and Ciaran Whelan Walt David van der Questions and answers Questions What is your outlook Management of our liquidity ratios with Management of our liquidity funding initiatives an emphasis on retail Management of our capital to optimise returns Investment in our technology platforms, including digitalisation of products and services. • • • for the coming financial year? Political events are likely to continue Political events are to impact financial markets. That said lending and treasury client activity across reasonable. is expected to remain products Q. Southern Africa Creation of Investec Specialist Creation Investments Launch of Investec Life in second half of 2017 What are your What are – – Grow market share in our niche market share Grow businesses across of revenue Identify new sources our existing client base: – – strategic objectives in the coming financial year? We continue to build our franchise in We client segments. Building and our core developing our client franchises remains and development of integral to the growth committed to our organisation and we are optimising the client experience, ensuring with us as an our target clients do more organisation. Our strategic focus in South Africa remains the following: • • Q. We have made good progress with our have made good progress We digitisation strategy which focuses on a client experience ensuring that we create and ‘high that is both ‘Out of the Ordinary’ tech and high touch’. This is part of our relationships strategy to deepen our strong them a client base, and offer with our core spectrum of services and products. broad by the FT in London recognised were We as the best Private Bank and Wealth Manager in South Africa for the fourth year running. This is testament to our continued our private clients an to offer efforts offering. international, streamlined Investec integrated annual report 2017 Investec integrated annual report Specialist Banking Specialist (continued)

What have been the How has the operating How has the operating 110 key developments in your business over the past financial year? environment in which you environment have operated impacted your business over the last financial year? Q. Q. Excluding the negative impact of the to the IEP related accounting treatment transaction, the Specialist Bank inGroup well ahead results South Africa reported of ourof the prior period. This is reflective client focus and coordination increasing all divisions with enhanced strategiesacross to penetrate our existing client base and grow our market share. The year ended 31 March 2017 was The year ended 31 March for global financial markets. unpredictable The 2016/17 year was marked by volatility and political upheaval, an oil price recovery on and a global stock market recovery US economic growth. signs of improving towards In South Africa a cabinet reshuffle the end of the financial year and related the economic downgrades has affected outlook. Notwithstanding the slowdown in our clients have remained the economy, active and our international reasonably in our client segments is a offering strategic advantage. Geographical business leader Geographical business Richard Wainwright Richard Questions and answers Questions

Divisional review

02 03

Corporate governance and corporate responsibility Investec integrated annual report 2017 Investec integrated annual report Corporate governance Corporate (continued) Fani Titi Chairman 112 9 June 2017 Conclusion and management are, detail of our governance framework, including who our board Over the following pages, you will find more and oversight of strategic direction how they make decisions and what they have done over the past year in terms of their leadership, you with an overview provide and financial statements will together with the strategic report hope that this report, the organisation. We of our stakeholders. and looking after the interests managing the group of how we are Priorities for the year ahead With that said, management succession will continue to be an the year ahead with confidence in our leadership and strategy. approach We within the organisation. of leadership roles the ongoing transition particularly, in the year ahead and more of focus for the board area that will be to ensure for the group of Investec Bank plc established its own governance arrangements and a key focus area The board governance structure. broader embedded into the group’s these governance arrangements are During the past year, the board continued its shareholder consultations. The primary focus of these consultations was executive continued its shareholder the board During the past year, an opportunity to discuss governance and business these consultations have also provided and succession however, remuneration while on the composition of the board, a governance the dialogue centred perspective, From with shareholders. broadly strategy more between pay and performance. linkage to the appropriate the discussion related on remuneration, The board, working closely with the nominations and directors’ affairs committee (nomdac), continues to drive and monitor succession affairs working closely with the nominations and directors’ The board, the organisation. succession plans in place for all key positions throughout robust are planning. It is vital that there engagement Shareholder Management succession Board effectiveness Board therefore The board and that of its committees. its own effectiveness evaluating continues to be committed to regularly The board external with independent annually, that of its committees and individual directors undertakes an evaluation of its performance and was conducted by an independent external facilitator, review the 2016 effectiveness Given year. every third input into the process identified in this process, was internally facilitated. No material issues were review effectiveness this year the board Goffee, Professor Rob the development of the board a useful benchmark for assessing continued to provide report Goffee’s the findings of Professor however, following composition, was the bedding down of the board’s One such area identified for improvement. that were in terms of the areas review effectiveness the 2017 board 2016. Feedback from between 2013 and which had been coordinated programme the refreshment with Peter Thomas stepping down from will recommence programme dynamics and, as such, the refreshment board indicated improved on 10 August 2017. immediately following the annual general meeting the board Strategic initiatives goals and objectives. In terms strategic and judgement in pursuit of Investec’s leadership, integrity has continued to exercise The board and the continued offering product of particular focus have been the digitisation of our opportunities, two areas of positioning for future annual strategy and debated at the board’s discussed these strategic initiatives were of our private client business in the UK. Both of growth of discussion at board meetings. ongoing areas are session, which was held in February 2017, and In an uncertain and volatile world, Investec’s culture and values continue to support the organisation in achieving its strategic objectives. and culture In an uncertain and volatile world, Investec’s committed to its of mind over the past year with Investec remaining to be front spirit have continued Our client focus and entrepreneurial management have sought to and Union. The board the European exit from of the UK’s UK businesses, despite the uncertain implications in these uncertain times and positioning for which is balanced in terms of managing the risks presented develop a strategy for the group opportunities as they arise. future The past year in focus Chairman’s introduction Chairman’s Dear Shareholder to our approach 2017, which describes the year ended 31 March for corporate governance the annual report I am pleased to present to as the board. referred of Investec plc and Investec Limited will be boards the corporate governance. For the purposes of this report, has been attention the board’s our governance looking into the detail of like to make some comments on where framework, I would Before in the year ahead. attention will be placed its priorities and where against how it has delivered focused over the past year, “Sound corporate governance is implicit in our values, culture, processes, in our values, culture, governance is implicit “Sound corporate organisational structure” functions and

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 113 123 127 132 136 142 145 146 147 147 197 114 115 116 121 Page 03 (continued) (continued)

Corporate governance Corporate

Investec integrated annual report 2017 Investec integrated annual report committee report affairs DLC nominations and directors’ DLC social and ethics committee report DLC audit committee report risk and capital committee report DLC board committee report DLC remuneration – – – – – – – – – – Management committees Statement of compliance Other statutory information Regulatory context report Board Governance framework roles Board biographies Director composition Board • • • • • • • • •

How we comply How we comply

What we did Who we are Who we Within you will find: this report DLC Sets the awarded in awarded committee remuneration remuneration remuneration philosophy of the group and ensures group accordance thereof accordance that remuneration is that remuneration

with secondary listings on the Namibia with secondary listings Botswana Stock Exchange and the Stock Exchange. The boards of Investec plc and Investec of Investec plc and The boards of their identical in terms Limited are held are meetings composition and board has been The committee structure jointly. of the UK the requirements derived from Corporate Governance Code and the King III Report on Corporate Governance, as well as the activities of the group. ethics attraction economic with regard with regard Monitors the to social and committee retention and retention development, good corporate group’s activities group’s citizenship, talent DLC social and and capital Determines committee on a solo basis, which the group which the group should undertake on a consolidated categories of risk, DLC board risk DLC board extent of such risks basis, and its banks specific risk and the Investec Limited – a public company Investec Limited – a public incorporated in South Africa and listed on the Johannesburg Stock Exchange, Investec plc – a public company Investec plc – a public and listed on incorporated in the UK with a the London Stock Exchange Johannesburg secondary listing on the Stock Exchange; and Management Committees • From a legal perspective, the DLC is a legal perspective, the DLC From comprised of: • Investec integrated annual report 2017 Investec integrated annual report DLC affairs affairs governance Ensures that Ensures committee and Managing Director Chief Executive Officer the board and the board nominations structure of the structure good corporate the governance group enhances group and directors’ and directors’ Investec plc and Investec Limited Board of Directors Board Investec plc and Investec Limited

Including DLC Capital Committee, Review Executive Risk Review Forum and Policy Executive Risk Review Forum Including DLC Capital Committee, Review Executive Risk Review Forum and Policy Executive Risk Corporate governance Corporate (continued) external

compliance, DLC audit management, Audit reporting, risk reporting, committees Oversight of the Internal group's financial group's and internal audit Compliance Mandated to manage the group, except over such matters reserved by the board in the Board Charter or delegated to the DLC Committees in the Board by the board except over such matters reserved Mandated to manage the group,

114 Who we are Who we Governance framework a dual listed Investec operates under considers and company (DLC) structure the corporate governance principles and South Africa of both the UK and regulations standard adopting the appropriate before with which also complies for the group in both jurisdictions. requirements

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 115 03 (continued) (continued) Responsible for the flow of information and its committees to the board and for ensuring compliance with board procedures and committee Minute all board the deliberations and meetings to record decisions taken therein complies with that the board Ensures legislation and regulation, relevant including Listings Requirements Responsible for ensuring that the Responsible for ensuring risk management processes group’s are effective Leads and manages the group finance function with updates on the the board Provides financial performance group’s Glynn Burger David Miller and Niki van Wyk • • • Group risk and finance director Group • • • Company secretaries Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Monitor executive performance Ensure the effectiveness of internal the effectiveness Ensure and the integrity of controls financial reporting Monitor the performance of management against their agreed strategic goals Ensures that the board receives receives that the board Ensures information that is accurate, timely and to perform clear to enable the directors their duties effectively Assist in developing the group’s strategy Responsible for leading and managing Responsible for leading within the authorities the group delegated by the board Bring unique perspectives to the to facilitate constructive boardroom debate on proposals • • • Stephen Koseff and Bernard Kantor Stephen Koseff and Bernard • Zarina Bassa, Laurel Bowden, Cheryl Carolus, David Friedland, Charles Jacobs, Ian Kantor, Lord Malloch-Brown KCMG, Khumo Shuenyane and Peter Thomas • • • Chief executive officer and managing and Chief executive officer director Non-executive directors Responsible for setting the board the board Responsible for setting is sufficient agenda, ensuring that there of all items time available for discussion Encourages open and honest debate directors between all board Leads and manages the dynamics of and focus direction providing the board, sets the strategy that the board Ensures and assists in monitoring of the group the strategy achieving towards progress evaluations Performs director Serves as the primary interface with and other stakeholders on regulators behalf of the board any concerns to address Available and shareholders or questions from non‑executive directors to a sounding board Provide the chairman in the assessment of Leads the board of the chairman the effectiveness • • • • • • • • • Fani Titi Perry Crosthwaite Chairman Senior independent director Board roles roles Board outlined below: are of the board and responsibilities The key governance roles Investec integrated annual report 2017 Investec integrated annual report Corporate governance Corporate (continued) Bernard Kantor, managing director Kantor, Bernard Age: 67 Qualifications CTA Relevant skills and experience joined Investec in 1980. He has had varied experience within Investec as a manager of the trading division, marketing managerBernard and chief operating officer. Other principal appointments Ltd, Investec Bank Limited, Investec Bank plc and a number of Investec subsidiaries. Phumelela Gaming and Leisure Committees risk and capital, DLC social and ethics and DLC capital. DLC board Date of appointment Investec Limited 9 June 1987 2002 Investec plc 19 March Age: 65 Qualifications MBA BCom, CA(SA), H Dip BDP, Relevant skills and experience and general manager of banking, experience within Investec as chief accounting officer Stephen joined Investec in 1980. He has diverse banking. and merchant treasury Other principal appointments a number of Investec subsidiaries. Investec Bank Limited, Investec Bank plc and Committees risk and capital, DLC social and ethics and DLC capital (chairman). DLC board Date of appointment Investec Limited 6 October 1986 Investec plc 26 June 2002 Stephen Koseff, group chief executive officer group Stephen Koseff, Age: 55 Qualifications BSc (Hons), MA, MBA Relevant skills and experience chairman of Tiso Bank Limited, Investec Bank plc, former Fani is chairman of Investec and former deputy chairman of the Ltd Group Bidvest Group. largest corporates. of some of South Africa’s on the boards and chairman, having served He is an experienced non-executive director Other principal appointments Ltd (chairman), MRC Media (Pty) Ltd Ore Investec Asset Management Ltd, Kumba Iron Investec Asset Management Holdings (Pty) Ltd, other Investec subsidiaries. and Committees (chairman) and DLC social and ethics (chairman). affairs directors’ risk and capital, DLC nominations and DLC board DLC remuneration, Date of appointment 2004 Investec Limited and Investec plc 30 January Fani Titi, chairman 116 Director biographies Director any other principal appointments and skills and experience, including their relevant below, outlined are Biographies of our directors DLC committees. appointments to Investec’s

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 117 03 (continued) (continued) Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Age: 68 Qualifications MA (Hons) in modern languages Relevant skills and experience Perry is a former chairman of Investec Investment Banking and Securities. Other principal appointments Ltd. Ltd (chairman) and Investec Capital and Investments (Ireland) Investec Bank plc, Investec Holdings (Ireland) Committees affairs. (chairman) and DLC nominations and directors’ DLC remuneration Date of appointment Investec Limited 18 June 2010 Investec plc 18 June 2010 Perry KO Crosthwaite, senior independent director Perry KO Crosthwaite, Hendrik J du Toit, Investec Asset Management chief executive officer Hendrik J du Toit, Age: 55 Qualifications (cum laude), MPhil (Cambridge) BCom (Hons) (cum laude), MCom BCom Law, Relevant skills and experience he moved to where Hendrik joined the Investment division of Old Mutual from After lecturing economics at the University of Stellenbosch, Investec in 1991 to establish Investec Asset Management. Other principal appointments and Investec Asset Management Ltd as well as their subsidiaries. Non-executive Investec Asset Management Holdings (Pty) Ltd Business Commission for Sustainable Development. of Naspers Ltd. Hendrik also serves on the Global Director Committees None Date of appointment Investec Limited 15 December 2010 Investec plc 15 December 2010 Glynn R Burger, group risk and finance director risk and finance group Glynn R Burger, Age: 60 Qualifications MBL BAcc, CA(SA), H Dip BDP, Relevant skills and experience risk manager and joint group chief accounting officer, 1980. His positions within Investec have included Glynn joined Investec in Africa. for South managing director Other principal appointments and a number of Investec subsidiaries. Investec Bank Limited Committees risk and capital and DLC capital. DLC board Date of appointment Investec Limited 03 July 2002 Investec plc 03 July 2002 Investec integrated annual report 2017 Investec integrated annual report Corporate governance Corporate (continued) Cheryl A Carolus, independent non-executive director Cheryl A Carolus, Age: 59 Qualifications BA (Law), Honorary doctorate in Law Relevant skills and experience of South was chief executive officer Cheryl was the South African High Commissioner to London between 1998 and 2001 and African Tourism. Other principal appointments -Benz South Africa (Pty) Ltd, WWF South Africa and International, De Beers Consolidated Mines Ltd, Gold Fields Ltd (chair), Mercedes (Pty) Ltd, Ponahalo Capital (Pty) Ltd, Investec Asset Management Holdings (Pty) Ltd, Investec Asset The IQ Business Group of a number of the Peotona group Holdings (Pty) Ltd (chair) and director Management Ltd, executive chairperson of Peotona Group companies and International Crisis Group. Committees DLC social and ethics. Date of appointment 2005 Investec Limited 18 March 2005 Investec plc 18 March Date of appointment Investec Limited 1 November 2014 Investec plc 1 November 2014 Bowden, independent non-executive director C Laurel Age: 52 Relevant skills and experience and fintech. of focus include internet, enterprise software her areas where is a partner at 83North (a private equity business), Laurel technology companies, including led investments in many leading European has over 15 years’ investment experience and has Laurel at GE Capital in London. a director She was previously by SAP). Just Eat, Qliktech and Hybris (acquired Other principal appointments Ltd, MotorK Ltd, Workable Group AB, Celonis GMBH, Mirakl SAS, Wonga Bluevine Capital Inc, Ebury Partners Ltd, iZettle of 83North). serves on as a representative companies which Laurel (the majority of these are Technology Ltd Committees Bank Limited audit. DLC audit, Investec plc audit and Investec Bank plc audit and Investec Limited and Investec Date of appointment Investec Limited 1 January 2015 Investec plc 1 January 2015 * Appointed as chair on 1 April 2017 Zarina BM Bassa, independent non-executive director Zarina BM Bassa, Age: 53 Qualifications BAcc, DipAcc, CA(SA) Relevant skills and experience and a member was an executive director in 2002 and Inc., she joined the Absa Group of ErnstZarina is a former partner & Young the South African Public chaired She has previously with accountability for private banking. executive committee, of the bank’s and has been a member of the JSE GAAP Board and the South African Auditing Standards Board Accountants’ and Auditors’ Monitoring Panel. Other principal appointments Holdings Ltd, and a (Pty) Ltd and Woolworths Ltd, Sun International Ltd, Vodacom Oceana Group The Financial Services Board, number of Investec subsidiaries. Committees Bank plc audit (chairman)*, Investec Limited and Investec Bank Limited audit DLC audit (chairman)*, Investec plc and Investec risk and capital. and DLC board affairs DLC nominations and directors (chairman)*, DLC remuneration, 118

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 119 03 (continued) (continued) Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Ian R Kantor, non-executive director Ian R Kantor, Age: 70 Qualifications BSc (Eng), MBA Relevant skills and experience was the former chairman of Ian is co-founder of Investec, served as the chief executive of Investec Bank Limited until 1985 and of Investec Asset Management Holdings (Pty) Ltd and on the boards a non-executive director Investec Holdings Ltd. Ian is currently Investec Asset Management Limited. Other principal appointments holds an 8.6% Investec Ltd indirectly Chairman of Blue Marlin Holdings SA (formerly Insinger de Beaufort Holdings SA (in which Insinger de Beaufort NV. of Bank and chairman of the Supervisory Board interest) Committees None Date of appointment Investec Limited 30 July 1980 Investec plc 26 June 2002 Charles R Jacobs, independent non-executive director Charles R Jacobs, independent non-executive Age: 50 Qualifications LLB Relevant skills and experience a valuable combination of knowledge ofCharles brings to the board the UK regulatory and corporate governance standards, global as chairman and senior partner at the global law firm Linklaters LLP in October 2016, capital markets and M&A. Charles was elected the world, including in has over 26 years of experience of advising companies around having been appointed a partner in 1999, and and is chairman of plc, a FTSE 100 company, Fresnillo of Charles sits on the board requirements. to their legal and regulatory relation Leicester University. from and holds an LLB Partnership Board committee. Charles chairs the Linklaters their remuneration Other principal appointments committee). and chairman of the remuneration plc (senior independent non-executive director Linklaters LLP and Fresnillo Committees DLC remuneration. Date of appointment Investec Limited 8 August 2014 Investec plc 8 August 2014 * David resigned from these committees with effect from 1 April 2017. * David resigned from these committees with effect Date of appointment 2013 Investec Limited 1 March 2013 Investec plc 1 March David Friedland, independent non-executive director David Friedland, independent Age: 64 Qualifications BCom, CA(SA) Relevant skills and experience risk in KPMG, he also served as head of audit and of both Arthur Andersen and KPMG Inc. where David is a former partner office. Cape Town Other principal appointments Les (Pty) Ltd. Ltd and Pres n Pay Stores Ltd, Pick Investec Bank plc, The Foschini Group Investec Bank Limited, Committees risk and capital audit*, Investec Limited and Investec Bank Limited audit*, DLC board DLC audit*, Investec plc and Investec Bank plc affairs. and directors’ (chairman), DLC capital and DLC nominations Investec integrated annual report 2017 Investec integrated annual report Corporate governance Corporate (continued) Peter RS Thomas, independent non-executive director Age: 72 Qualifications CA(SA) Relevant skills and experience various industrial companies. experience in finance and Ltd. Peter has broad of The Unisec Group Peter served as the Managing Director accounting. in commercial He also has an extensive background Other principal appointments include: Investec Bank Limited, various Investec subsidiaries, JCI Ltd and various unlisted companies Other directorships Committees audit, DLC nominations and directors’ DLC audit, Investec plc and Investec Bank plc audit, Investec Limited and Investec Bank Limited Australia and the USA. and DLC social and ethics. He is also a member of the audit and risk committees in Mauritius, affairs Date of appointment Investec Limited 29 June 1981 Investec plc 26 June 2002 Khumo L Shuenyane, independent non-executive director Khumo L Shuenyane, independent non-executive Age: 46 Qualifications BEcon, CA(England & Wales) Relevant skills and experience in Dubai and focused on the telecoms, technology firm headquartered Khumo is a partner at Delta Partners, an advisory Fund Ltd. of Investec Bank Limited and Investec Property emerging markets. He also serves on the boards and digital sectors across and was a member of its for MTN Group Ltd Chief Mergers & Acquisitions Officer Between 2007 and 2013 Khumo served as Group Executive Committee. Group for the Principal Investments head of Principal Investments at Investec Bank Limited. Prior to taking responsibility Khumo was previously Corporate Finance division for 7 years. division in 2005, Khumo was a member of Investec’s 1992. He completed his articles during his first three for Arthur Andersen for six years from Prior to joining Investec in 1998 Khumo worked in Accountants in England & Wales 1995. as a member of the Institute of Chartered years with the firm in Birmingham, England, qualifying joining Investec. years before he worked for a further three where office Johannesburg to the firm’s He subsequently transferred Other principal appointments Employee Benefits Ltd. Fund Ltd, Investec Investec Life Limited, Investec Specialist Investments (RF) Limited and Investec Property Committees risk and capital. audit and DLC board DLC audit, Investec plc and Investec Bank plc audit, Investec Limited and Investec Bank Limited Date of appointment Investec Limited 8 August 2014 Investec plc 8 August 2014 Lord Malloch-Brown KCMG, independent non-executive director KCMG, independent Malloch-Brown Lord Age: 63 Qualifications Wales) BEcon, CA(England & Relevant skills and experience he was UK government minister Group, Ltd and Senior Advisor to the Eurasia is chairman of SGO Corporation Malloch-Brown Lord as well as a vice- -general of the United Nations secretary was formerly the deputy Malloch-Brown Lord and member of the cabinet. and a journalist with wide ranging at the Economist of United Nations Development Programme Bank and head at the World president experience of boards. Other principal appointments Development Company plc and Smartmatic Ltd. Seplat Petroleum Committees DLC social and ethics. Date of appointment Investec Limited 8 August 2014 Investec plc 8 August 2014 120

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 121 29% 71% 03 (continued) (continued) Executive Non-executive Attendance at credit David Friedland and Peter Thomas attend, by invitation, certain regularly dealing committees of the group credit by sign off requiring with large exposures in terms of the non-executive directors considers The board delegation of authority. their attendance at these committees to be desirable in terms of developing an understanding of the day-to-day issues facing the business. executive directors interferes with their with interferes non-executive directors and their ability independence of judgement best interest. to act in Investec’s has concluded board the Accordingly, Thomas, and Peter that Cheryl Carolus of Investec despite having been directors both financial retain for nine years or more, of independence and independence Peter Thomas character and judgement. -election at the re will not be standing for on 10 August 2017. annual general meeting Notwithstanding the guidelines set out in the UK Corporate Governance Code and is of the view that these King III, the board independent of are non-executive directors of the interest management and promote stakeholders. The balance of the executive is such that and non-executive directors to is a clear division of responsibility there such that no a balance of power, ensure can dominate board one individual or group powers of or have unfettered processes believes that decision-making. The board and evaluates its it functions effectively performance annually. Post-2017 AGM 27% 73% Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Executive Non-executive Charles Jacobs is the chairman and Charles Jacobs is the chairman law firm senior partner of the global having been appointed Linklaters LLP, is on 1 October 2016. Linklaters UK legal one of the Investec’s currently that, concluded advisors. The board with notwithstanding his association independence Linklaters, Charles retains of legal of judgement. Selection and is matter advisors is not a board level. If any decided at the management board to be made at the decision were Linklaters, which has level regarding not happened to date, Charles would with the himself in accordance recuse Companies of the relevant provisions interests. to directors’ Act relating by Linklaters advice is provided Where by separate to Investec, it is provided Linklaters partners and not Charles. The legal fees paid to Linklaters have not been material either to Linklaters or Investec. Tenure is also mindful of its responsibility The board an appropriate remains that there to ensure balance of skills and experience on the of the view that and it is therefore board, of certain members beyond the retention be nine years may in certain circumstances beneficial in ensuring this balance and that succession can take place. orderly of process follows a thorough The board assessing independence on an annual whose tenure basis for each director does not exceeds six years. The board of any of the current believe that the tenure • Balance of non-executive and executive directors: AGM Pre-2017 1 1 9 4 of board of board independent Ian Kantor is the brother of Bernard of Bernard Ian Kantor is the brother managing director. Investec’s Kantor, Ian is also the founder and was of chief executive officer previously the board Investec. Accordingly, concluded that Ian could not be independent under the considered UK Corporate Governance Code and King III. on 1 March Prior to joining the board 2013, David Friedland was a partner of KPMG Inc. KPMG Inc along with Ernst & joint auditors of Investec are Young Inc, concluded that, Limited. The board association notwithstanding his previous with KPMG Inc, David retains independence of judgement given he designated was never Investec Limited’s partner and was auditor or relationship not involved with its Investec account. As at 31 March 2017, the board is 2017, the board As at 31 March B.1.2 of the compliant with Principle UK Corporate Governance Code in that the excluding at least half the board, non- chairman, comprises independent executive directors. is 2017, the board As at 31 March 2, Principle 2.18compliant with Chapter of non- of King III in that the majority independent. are executive directors Executives 67% Chairman Non-independent non-executives Independent non-executive • • Relationships and associations • • uses A summary of the factors the board to determine the independence of non- detailed below: are executive directors Board composition composition Board Independence Independence 5 1 1 3 79% 21% 0 — 3 years 3 — 6 years 6 — 9 years 9 years plus Male Female Average tenure Post-2017 AGM: Average Post-2017 AGM In compliance with the JSE ListingIn compliance with the JSE has considered the board Requirements, of the companyand is satisfied that each relevant is competent, has the secretaries and maintainsqualifications and experience with the board. -length relationship an arm’s has the board In evaluating these qualities, and duties role the prescribed considered the codified in pursuant to the requirements Acts andSouth African and UK Companies the listings and governance requirements as applicable. confirms that forIn addition, the board 2017the period 1 April 2016 to 31 March served asneither of the company secretaries nor did they take part on the board directors deliberations and only advised onin board matters of governance, form or procedure. 5 1 1 4 80% 20% Alexander Review: Good progress has been has been Per the Hampton-Alexander Review: Good progress

Average tenure Average 0 — 3 years 3 — 6 years 6 — 9 years 9 years plus Male Female Pre-2017 AGM: Pre-2017 Average length of service Pre-2017 AGM Pre-2017 Board gender balance: are entitled to seek professional independent entitled to seek professional are of to the exercise advice on matters related the expense at their duties and responsibilities was soughtof Investec. No such advice year. during the 2017 financial Company secretaries of secretary David Miller is the company Wyk is the companyInvestec plc and Niki van company of Investec Limited. The secretary qualified and professionally are secretaries over a number ofhave gained experience evaluated by board years. Their services are evaluationmembers during the annual board for the flow of responsible They are process. and its committeesinformation to the board and for ensuring compliance with board have access to All directors procedures. the advice and services of the company whose appointment and removal secretaries a board matter. are Investec integrated annual report 2017 Investec integrated annual report made towards the target of 33% female representation by 2020 which continues to be a continues to be a by 2020 which the target of 33% female representation made towards priority. Aspirational target: 8 7% 53% 40% 11 13% 40% 47% Corporate governance Corporate (continued) South Africa UK Other UK Corporate Governance recommendation: Recommendation that non-executives should not serve longer than nine years the time of their appointment. from Average length of Average service post-2017 AGM: (Length of service by band) for non-executive directors Average length of Average AGM: service pre-2017 (Length of service by band) for non-executive directors 61 and above Age 40 – 50 51 – 60 122 Diversity Geographical mix: Tenure Through the senior independent director or the senior independent director Through individual directors the company secretaries, Independent advice Terms of appointment Terms On appointment, non-executive directors with a letter of appointment. provided are other things,The letter sets out, among time and expected duties, responsibilities our policy oncommitments, details of and, whereobtaining independent advice committees details of the board appropriate, will beof which the non-executive director an insurance policy have We a member. against liabilities they directors that insures their duties. Onmay incur in carrying out of the nomdac, non- the recommendation will be appointed for anexecutive directors expected term of nine years (three times the date of their first-year terms) from three appointment to the board.

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 7 7 7 7 7 7 6 7 7 7 7 7 5 7 7 123 Other 5% 03 Attended 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 attend Investec Limited (continued) (continued) Eligible to (7 meetings in the year) Governance, compliance and risk 20% 7 7 7 7 7 7 6 7 7 7 7 7 5 7 7 Attended 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 Investec plc Corporate governance Corporate attend Eligible to (7 meetings in the year) Limited Investec 3 Jul 2002 6 Oct 1986 1 Jan 2015 9 Jun 1987 1 Mar 2013 8 Aug 2014 8 Aug 2014 8 Aug 2014 1 Nov 2014 30 Jul 1980 29 Jun 1981 30 Jan 2004 18 Jun 2010 18 Mar 2005 15 Dec 2010 Investec integrated annual report 2017 Investec integrated annual report Board member since Board 3 Jul 2002 1 Jan 2015 1 Mar 2013 8 Aug 2014 8 Aug 2014 8 Aug 2014 1 Nov 2014 26 Jun 2002 26 Jun 2002 26 Jun 2002 30 Jan 2004 18 Jun 2010 19 Mar 2002 18 Mar 2005 15 Dec 2010 Investec plc Finance and operations (including monitoring performance, Finance and operations (including monitoring capital and liquidity) 50% Yes Yes Yes Executive No Executive Yes Yes Executive Yes Yes Executive Yes Yes On appointment Independent

Head of company secretarial and share schemes and share Head of company secretarial Investec plc and Investec Limited Meeting schedule and attendance excluding the annual jointly at least six times annually, of Investec plc and Investec Limited meet The boards of in South Africa, in line with the requirements held in the UK and three meetings were board strategy session. Three two-day board our DLC structure. additional meeting of Investec plc and Investec Limited held one boards 2017, the during the year ended 31 March Furthermore, called as the need arises. Unscheduled meetings are each in the UK and South Africa, respectively. in advance of the meetings. to directors provided are by the board information packs on matters to be considered Comprehensive Approving the group’s strategy the group’s Approving governance and custodian of corporate for, Acting as a focal point leadership on an ethical foundation effective Providing corporate citizen is a responsible Ensuring the group for the governance risk, including risks associated with information technology of Being responsible to non-binding rules and standards complies with the applicable laws and considers adherence Ensuring the group Monitoring performance. The board How the board spent its time How the board Strategy formulation and monitoring of implementation 25% PRS Thomas KL Shuenyane Lord Malloch- Lord KCMG Brown S Koseff IR Kantor B Kantor CR Jacobs D Friedland HJ du Toit PKO Crosthwaite CA Carolus GR Burger LC Bowden ZBM Bassa F Titi (Chairman) Other regular attendees Other regular • Members throughout the year Composition • • • • • • The board seeks to exercise leadership, integrity and judgement in pursuit of Investec’s strategic goals and objectives to achieve long-term strategic goals and objectives to achieve integrity and judgement in pursuit of Investec’s leadership, seeks to exercise The board for: is responsible this objective the board In fulfilling and prosperity. growth sustainability, • Board report Board Role What we did What we Set strategy and deliver value to Set strategy and deliver and stakeholders shareholders and Monitor management activity performance against targets constructive challenge Provide to management and Set parameters for promoting of shareholders deepening the interest meets all Confirmation that the group requirements internal and regulatory Anti-Money Adoption of Group Laundering (AML) and Counter (CFT) Policy Financing Terrorism Consideration of impact of King IV and the JSE Listing Requirements and resolution of the recovery Approval plan for the UK and South Africa of Consideration and approval capital plans of risk appetite Approval Confirmation of the independence of Investec Limited and of directors Investec plc revised Review of Investec Bank plc’s corporate governance structure updates by the Consideration of regular various committees The 2017 board effectiveness review review effectiveness The 2017 board took the form of a self-assessment followed by one on one meetings between the chairman and directors Amended/added questions regarding of Risk and Audit, presentation IT and the boards, projects to succession planning review The 2017 effectiveness on those showed good progress issues identified in the independently review facilitated 2016 effectiveness development for directors’ Topics sessions finalised • • • • • • • • • • Conclusions/actions taken Conclusions/actions • • • • • • • Formulation of strategy and Formulation of strategy monitoring its implementation compliance Receive and review reports from Receive quarterly reports and consideration BRCC for review The board is responsible for is responsible The board ensuring that the policies and level are behaviours set at board communicated and effectively the group implemented across Considered the independence of Considered giving the non-executive directors to the factors that might regard impact their independence the directors’ Considered meetings and contribution at board whether they in fact demonstrated independent challenge Considered the process for the the process Considered effectiveness 2017 board • • • Role of the board • • • • Investec integrated annual report 2017 Investec integrated annual report Group strategy involves Group setting business objectives, long-range plans and annual budgets Consideration of the independence of Investec plc and Investec Limited’s non-executive directors, to with particular regard who had those directors served on the boards for a period longer than six years Reviewed the process Reviewed the process for the 2016 board evaluation effectiveness and made suggestions for changes to enhance the process • Matter addressed • • Corporate governance Corporate (continued) Group strategy Group Board activities Board of focus Areas Group Group compliance Risk Corporate governance Leadership Effectiveness 124

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 125 03 (continued) (continued) Received a report from the from Received a report chair at Remuneration committee each meeting topics a variety of Reports covered developments including regulatory pertaining to remuneration Board refreshment and succession refreshment Board Succession planning for the CEO , MD and senior management Remuneration of executive directors Regular meeting and open dialogue with regulators The board is satisfied that the Investec The board and commitment to standing group’s the various elements of good corporate in place and was citizenship remain actively enforced of social and ethics Frequency committee (SEC) meetings amended to quarterly SEC terms of revised Approval of reference disclosures of the group’s Approval under the UK Modern Slavery required Act requirements Employment Equity Forum: Appointment of Cumesh Moodilar as chairman and Melanie Humphries as deputy chairman with Reviewing the annual report Investec plays to the role respect in society Establishment by IW&I South Africa of Services: Investec Philanthropy IW&I Educational Trust Conclusions/actions taken Conclusions/actions • • Noted and discussed the key areas of key areas Noted and discussed the including shareholders, feedback from to: feedback relating • • • • • • • • • • • Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Ensure satisfactory dialogue with satisfactory dialogue Ensure shareholders and open Fostering strong with regulators relationships The board discusses and monitors The board the various elements of good corporate citizenship Role of the board • • • Relationship with regulators Shareholder views on Shareholder governance and strategy Consider sponsorships, donations and charitable giving health and Environmental, including public safety, the impact of the group’s activities and of its and services products Consumer relationships including the company’s advertising, public relations and compliance with laws consumer protection Labour and employment standing in – the group’s terms of the International labour organisation on decent work protocol and working conditions, employment relationships and its contribution the educational towards development of its employees Promotion of equality, of equality, Promotion of unfair prevention discrimination and of corruption reduction Matter addressed • • • • • • • Remuneration Board activities Board of focus Areas Relations with stakeholders Corporate Citizenship Approved the appointment of Approved the audit Zarina Bassa as chair of committees subsidiary Noted changes made to on the recommendation boards of nomdac Approval of financial results ended of financial results Approval 2017 for Investec plc and 31 March Investec Limited for the half of financial results Approval year ended 30 September 2016 The board confirmed the group’s confirmed the group’s The board viability (i.e. its ability to continue in operation and meet its liabilities taking position of the into account the current assessment of the the board’s group, principal and the prospects group’s risks it faces) was liquid Confirmation that the group and that the solvency and liquidity test has been satisfied Confirmation that adequate resources on a going exist to support the group concern basis Adoption of the going concernconcept capital Confirmation that regulatory information, including a foreseeable in dividend amount, will be declared with the formally approved accordance dividend policy • • Conclusions/actions taken Conclusions/actions • • • • • • • Receive reports from the nomdac at from Receive reports the matters each meeting covering for within its delegated authority and consideration review Appointment of sub-committee Review of financial results Review of discharge of Liquidity and as required Solvency requirements by Section 4 of the South African Companies Act as amended l of dividend policy Approva The board assesses the group’s assesses the group’s The board viability • Role of the board • • • • • Investec integrated annual report 2017 Investec integrated annual report In the case of a dividend, 12 months following the distribution 12 months after date on which the test is or considered; – – – – The board received reports reports received The board on the composition of the key subsidiaries of Investec plc and Investec Limited reports received The board on suggested changes to Investec Bank plc’s governance arrangements Discussion of succession Discussion of succession planning including an update on senior management succession Consideration of financial results The assets of the as fairly valued, company, equal or exceed the liabilities of the company, as fairly valued; and It appears that the company will be able to pay its debts as they become due in course of the ordinary business for a period of: The board satisfies itself of The board viability the group’s • • • Matter addressed • A company satisfies the solvency and liquidity test at a particular time if, considering foreseeable all reasonably at financial circumstances that time: • • • Corporate governance Corporate (continued) Subsidiary and board committee composition and governance Board activities Board of focus Areas Financial results Liquidity, Liquidity, solvency and viability statement 126

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 127 03 (continued) (continued) Succession planning and bedding down of senior executive management appointments in subsidiaries Driving governance changes of Investec Bank Design and approval governance framework within plc’s the context of the Senior Managers Regime Induction of the new senior and independent director for Investec non-executive directors Bank plc Continue to focus on senior management succession planning Implementation of new governance arrangements for Investec Bank plc and including oversight of committee membership and establishment of Investec Bank plc nomination committee and Investec Bank plc audit committee, and ensuring alignment to process the group Continue to implement structured programme refreshment board DLC nomdac Fani Titi Chairman of the DLC nomdac Key achievements in 2016/17 • • • • of focus in 2017/18 Areas • • • “We embrace “We a differences as our strength within company” Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Skills, knowledge and experience Independence Diversity Succession composition. Subsidiary board Fani Titi Chairman, DLC nomdac 9 June 2017 DLC nominations and directors’ affairs committee report committee affairs and directors’ DLC nominations Dear Shareholder committee (nomdac), I am pleased affairs nomination and director’s As the chairman of the you with our report. to present and senior that the board designed to ensure are of the nomdac The key processes the collective of a talented and diverse range of people with comprised management are strategic to meet its objectives and necessary for the group are skills and experience that the successful running and governance of the group for the effective goals. This is essential of our business. of how we make decisions and how we at the core and values are At Investec, our culture governed by these values. Our detailed recruitment are and the nomdac is always guided the needs of our that those joining the organisation understand our culture, ensures process the The tone must be set from clients and our focus on the long-term success of the group. demonstrate our values: distinctive top - our most senior people must be able to live and integrity. and cast-iron performance, dedicated partnerships, client focus, and some key information about the role with you Over the following pages we will share the key topics and themes that the detail will explain in more functioning of the nomdac. We and what we hope to focus on in the forthcoming nomdac has looked at during the year, headings: under the following will be considered Topics year. • • • • • 3 4 4 4 3 Attended Other 10% DLC 4 4 4 4 4 attend Eligible to (4 meetings in the year) Training and Training development 10% since Board Board effectiveness 15% 9 Sept 2010 9 Sept 2010 9 Sept 2010 16 Sept 2014 16 Sept 2014 Committee member Corporate governance of and review disclosures 15% Investec integrated annual report 2017 Investec integrated annual report 25% Succession planning Corporate governance Corporate (continued) In principle, it has been agreed that the chairs of the group’s key governance committees (audit, board risk and capital and remuneration committees) be In principle, it has been agreed that the chairs of the group’s appointment as the Chair of the audit committees, Zarina Bassa was appointed to and further to Zarina Bassa’s appointed to the nomdac. Accordingly, the nomdac with effect from 1 April 2017. SE Abrahams represents Investec Bank Limited on nomdac. Meeting schedule and attendance times per annum of the committee shall be held at least three for the nomdac, meetings terms of reference In terms of the approved on an ad hoc basis. and as and when required the committee met on four occasions. 2017, During the financial year ended 31 March DLC nomdac Identification and nomination of candidates for board vacancies, as and when they arise vacancies, as of candidates for board Identification and nomination corporate governance structure of the group’s Evaluation of the adequacy succession planning which addresses programme, refreshment directorship Maintenance of the board terms of appointment roles, the definition of key board including to the election of directors, key matters relating Consideration of other composition boards’ of the of the appropriateness review and regular 25% Composition of boards and Composition of boards committees How the committee spent its time SE Abrahams** PRS Thomas D Friedland* PKO Crosthwaite F Titi (Chairman) ** * Composition Members throughout the year Members throughout 128 Composition and meeting frequency to discharge its duties. In balance of knowledge and skills in order the appropriate has formed the opinion that the nomdac has The board experience for them to be and all members have the relevant independent non-executive directors the majority of members are particular, to the committee. presented able to consider the issues that are The nomdac is an essential part of the group’s governance framework to which the board has delegated the following key functions: has delegated the following governance to which the board framework part of the group’s The nomdac is an essential • • • • How the nomdac works How the nomdac Role

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 129 03 (continued) (continued) that succession plans are in place that will that succession plans are and the chief allow the managing director operational to hand over executive officer the group and leadership of responsibilities of leaders. to the next generation succession The nomdac considers of ensuring there planning both in terms in and named individuals able to step are immediate cover in the event of an provide and in terms of ensuring that vacancy, the internal pool is increasing the group by of talented and skilled individuals opportunities for individuals to providing within the organisation. develop and grow to succession has approach Investec’s been a successful one, the organisation of developing has an excellent track record talent and managing transition, and has it was unable never had a situation where to fill a key management position through internal resources. In addition to considering the composition the nomdac keeps under of the board, changes to the composition of the review of its key subsidiaries. During the boards the nomdac period under review, acted as the nomination committee of Investec Bank plc. The nomdac has the composition of the board reviewed of Investec Bank plc, and recommended two appointments which it believed would of the further enhance the effectiveness of and the degree Investec Bank plc board independent challenge and independence of Investec Bank The board of the group. and as with the recommendation plc agreed Moni Mannings was appointed as a result of Investec Bank a non-executive director plc on 27 July 2016. Moni brings extensive legal experience, having been a former partner at Olswang as well as valuable and and public sector board commercial committee experience. Brian Stevenson was also appointed on 14 September 2016 as senior independent non-executive for Investec Bank plc. Brian has director extensive banking experience, including experience of chairing audit, risk and committees. The nomdac remuneration that it was important that these considered made to the board appointments were and not to the of Investec Bank plc only, of Investec plc and Investec Limited. boards Investec Bank plc As part of this process, set up its own governance committees which work seamlessly with group governance committees. Subsidiary board composition Subsidiary board Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Succession of focus for the nomdac A further key area to succession has been with regard planning. The nomdac has conducted formal succession appraisals for all key positions, and has continued to ensure Diversity The nomdac, in considering the is mindful of all composition of the board, This includes gender, aspects of diversity. race, skills, experience and knowledge. as At Investec we embrace differences Having within our company. a strength is a clear benefit, a diverse board bringing with it distinct and different outlooks, alternative viewpoints, and challenging mindsets. Investec to gender diversity, With regard of is cognisant of the recommendations with the Hampton-Alexander Review, to the setting of targets for the regards and of women on the board, representation has an aspirational target of 33% female Investec by 2020. However, representation and believes that targets is a meritocracy, should be achieved without the setting recognise of formal quotas. We therefore opportunities for the need to create the talented individuals to move up through assist with this, Investec organisation. To undertakes a number of diversity initiatives the organisation and has signed up across to the 30% Club in both the South Africa female board and the UK, which promotes information on For more representation. to page 156. these initiatives, refer the need to let these changes settle down the need to let these changes further changes to the composition before made. The nomdac, were of the board the now satisfied that are and the board, settled have new members of the board board the structured in. Accordingly, and will proceed programme refreshment the down from Peter Thomas will step annual immediately following the board August 2017. general meeting on 10 to challenge and The nomdac continues and performance assess the independence however, of tenure, regardless of directors, after six years’ service, non-executive test to a rigorous subjected are directors to establish whether they continue to demonstrate independence of character all new and judgement. Furthermore, appointments of non-executive directors years, made for an initial period of three are and with an expectation, made clear at the outset, that they will be unlikely to serve for a period exceeding nine years. Independence Open and honest debate is part of and challenge is culture, Investec’s all employees. Robust expected from independent challenge is a critical operates. component of how the board Investec has always been an organisation that places value on substance over form, considers all and the nomdac therefore directors’ regarding circumstances relevant its however, independence. Ultimately, in fact, concern is whether directors, demonstrate independence of character and judgement, and exhibit this in the challenge to the by providing boardroom members. executive board is one matter that the nomdac Tenure considers when determining independence, and when considering the composition as a whole. The nomdac is of the board needs to be a balance mindful that there on the benefits brought from resulting by new independent directors, board individuals with valuable versus retaining skills, knowledge, experience, and an unique understanding of Investec’s that has been developed over culture Investec has, over time. For this reason, a number of years, operated a structured whereby programme refreshment board members of the board longer‑serving with new replaced step down and are non‑executive directors. have years, six directors Over the last three have been and five new directors retired, the average appointed and, as a result, has reduced for serving directors tenure has been a significant There considerably. board amount of change and previous clearly articulated reviews effectiveness Skills, knowledge and Skills, knowledge experience monitors the The nomdac continually and board composition of the current skills and considers what attributes, for order necessary in experience are discharge its to effectively the board overseen The nomdac has responsibilities. development of directors’ the programme to that it includes training to ensure the up to speed with keep directors developments, including latest relevant Additionally, technology and cybersecurity. Bowden in the appointment of Laurel was strong that there 2015 was to ensure independent non-executive representation has Laurel in the technology area. significant experience of fintech and involvement with businesses at the leading edge of technology and digital solutions. The committee continually monitor The committee continually the succession and assess and review changes that success of management have been implemented. Appointment of two non-executive Moni Mannings and Brian directors, Stevenson (senior independent non- executive director) Appointment of Ruth Leas and Ciaran Whelan as executive directors Appointment of Nishlan Samujh as an executive director Consideration and engagement of consultant for the appointment of an additional non-executive director Appointment of Investec Bank plc’s Head of Conduct and Governance as new chairman Appointment of Investec Bank plc’s Head of Conduct and Governance as and chairman new director The committee concluded that it was and satisfied that both Cheryl Carolus independent, Peter Thomas remained and confirmed that they should as independent non- be regarded executive directors • Conclusions/actions taken Conclusions/actions The following matters were agreed: The following matters were Investec Bank plc • • Investec Bank Limited • • Investec (India) Limited and Investec Bank (Switzerland) A.G. • Investec Bank (Channel Islands) Limited • • Considered management Considered succession in Investec Bank Limited (new chief executive officer) looking report Received a forward succession on future Received a detailed report from the from Received a detailed report managing chief executive and the on the implementation director of management succession place since changes that had taken November 2015 Reviewed the composition of each of the key subsidiaries of Investec plc and Investec Limited any vacancies, new Considered appointments or changes that of would enhance the effectiveness with particular regard the boards, oversight and governance to group of subsidiary companies with due or legal to local regulatory regard and best practice, requirements and ensuring an appropriate level of independent scrutiny at subsidiary level Considered the independence Considered of the non-executive directors to the factors that giving regard might impact their independence, the and in particular considered independence of Peter Thomas and each of whom had Chery Carolus, for periods served on the boards exceeding nine years the directors Considered meetings and contribution at board whether they in fact demonstrated independent challenge • • • Role of the committee • • • • Investec integrated annual report 2017 Investec integrated annual report Discussion of succession Discussion of succession planning including an update on senior management succession Investec Bank Limited & Investec Wealth Investment Limited Investec Securities Limited Investec Asset Management Limited Investec Life Limited (Proprietary) IEP Group Limited formerly Investec Equity Partners Limited (Proprietary) Investec Bank (Switzerland) A.G. Investec (India) Limited Investec Bank (Channel Islands) Limited Investec Bank plc Consideration of the independence of Investec plc and Investec Limited’s non-executive directors, to with particular regard who had those directors served on the boards for a period longer than nine years • Matter addressed • • • • • • • • • The board received reports reports received The board on the composition of the key subsidiaries of Investec plc and Investec Limited, including: • • Corporate governance Corporate (continued) Succession planning Areas of focus Areas Committee activities Subsidiary board composition Corporate governance 130 Further information about the specific actions of the nomdac during the financial year ended 31 March 2017, is contained within the 2017, the financial year ended 31 March the specific actions of the nomdac during Further information about following table.

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 131 03 (continued) (continued) Adoption of changes to the terms Adoption of changes to of reference The 2017 board effectiveness effectiveness The 2017 board would take the form of a review self‑assessment followed by one on one meetings between the chairman and directors Amended/added questions regarding of projects risk and audit, presentation IT and succession to the boards, planning review effectiveness The 2017 board on the showed good progress issues identified in the independently facilitated review Conclusions/actions taken Conclusions/actions • • • • Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Noted governance requirements Noted governance requirements certain regulated that required Diversity entities to adopt a Board female Policy and a target for on the board representation amendments to its terms Approved to include in order of reference Investec that these duties to ensure compliant with Bank plc remained the rules Considered the process for the the process Considered effectiveness 2017 board • • Role of the committee • Considered the target Considered of for the representation of women on the board Investec plc and Investec Limited and confirmed its support of the 33% by target recommended the Hampton-Alexander Review Received information on Received information on governance requirements set out in the UK’s Senior Management Arrangements, Systems Handbook and Controls (SYSC) applying to Investec Bank plc diversity, board regarding and adoption of changes to to terms of reference these requirements reflect Reviewed the process Reviewed the process for the 2016 board evaluation effectiveness and made suggestions for changes to enhance the process • • Matter addressed • Board diversity Board Committee activities of focus Areas Board Board effectiveness Looking ahead to support our succession plans. The nomdac will continue to focus on how to further develop senior management in order the consideration and challenge around with careful programme, the nomdac will continue to implement its refreshment Furthermore, to the who have served for longer than nine years. As noted, the nomdac continuously looks forward independence of those directors that it is optimally to ensure of the board the composition will face, and will continue to review challenges and opportunities that the group to succeed. the strategy that will enable the group to drive forward structured especially in light of the new diversity, race and gender with respect The nomdac will continue to focus on the composition of the board the adoption of a diversity policy. as set out in King IV regarding requirements to the establishment of a Investec Bank plc have agreed and the Investec Bank plc board of subsidiary governance, the board In respect and the chair of the nomdac. The nominations committee. That committee will comprise a majority of independent non-executive directors and the nomdac. into both the Investec Bank plc board Investec Bank plc nominations committee will report Corporate and Social Investment (CSI) spend of R85.9 million and £1.9 million in South Africa and the UK respectively during 2017 Skills development spend of just under R231 million in South Africa and £8.2 million in the UK during 2017 115 individuals have graduated on the since 2012 bursary programme bursary Launched the Promaths fund with R5 million of initial capital allocated by Investec of Oversight and coordination and environmental group social, ethics matters communication of the Improved social environmental, various group and ethics efforts Intensify our engagement in South African society to support socio- economic development Dlc Social and ethics committee Fani Titi SEC Chairman of the DLC Key achievements in 2016/17 • • • • of focus in 2017/18 Areas • • • “Investec lives in “Investec lives off it” society and not Investec integrated annual report 2017 Investec integrated annual report Corporate governance Corporate (continued) Social and economic development Good corporate citizenship health and public safety Environment, Consumer relations and labour relations. management Talent 132 Fani Titi Chairman, DLC SEC Committee 9 June 2017 DLC social and ethics committee report DLC social and Dear Shareholder social and of the the report committee, I am pleased to present As the chairman of this the last financial year. and the work done by this committee during ethics committee (SEC) the relevance given of the SEC is a South African legal requirement, Although the formation to to constitute the SEC have resolved the board all jurisdictions, of its mandate across and not just for Investec Limited. the Investec group monitor the activities for the desire the values and principles of Investec and are to the objectives of the SEC Core at remain shareholders to the world we live in. While our to make a meaningful contribution strive We only about driving profits. attention, our purpose is not of the board’s the forefront cast- demonstrating specialist bank and asset manager, to be a distinctive and relevant values include trust. Our core and behaviour which promotes moral strength integrity, iron others. Outstanding, valuing diversity and respecting unselfishly contributing to society, other qualities that for the planet are spirit and regard talent, entrepreneurial empowered business. to responsible and our approach align our culture of the SEC as set than simply complying with the functions is greater approach Investec’s about the world we care as amended. We out in the South African Companies Act, 2008, and economic growth that recognise We it. live in and believe in living in society and not off for all the communities in future a sustainable vital to creating societal transformation are in enabling this. which we operate and that we play a critical role and some key information about the role with you Over the following pages we will share key themes that the SEC has detail the will explain in more functioning of the SEC. We such as: looked at during the year, • • • • •

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 3 3 3 3 3 2 133 03 Attended 3 3 3 3 3 3 Eligible (continued) (continued) to attend (3 meetings in the year) 25% Policy matters 8 Aug 2014 Committee 17 May 2012 17 May 2012 17 May 2012 17 May 2012 17 May 2012 member since 5% Reputational risk Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report 50% DLC corporate responsibility Sustainability and strategy Head of organisational development Head of investor relations schemes share and staff Head of company secretarial Meeting schedule and attendance committee, meetings of the committee shall be held quarterly. for the social and ethics terms of reference In terms of the approved that there and it was agreed of meetings was discussed 2016, the frequency At a meeting of the committee held on 26 July although the committee could determine that one of the scheduled meetings could should be 4 scheduled meetings per annum, be cancelled. DLC Social and ethics committee Social and economic development Good corporate citizenship. The composition of the committee is in accordance with the requirements of Section 72(8) of the South African Companies Act, 2008, with the requirements The composition of the committee is in accordance as amended, and its associated regulations. PRS Thomas Brown KCMG Malloch-Brown Lord S Koseff B Kantor CA Carolus F Titi (Chairman) • • • Other regular attendees Other regular • 20% How the committee spent its time Employment matters Members throughout the year Members throughout Composition Composition and meeting frequency to discharge balance of knowledge and skills in order have formed the opinion that the SEC has the appropriate The nomdac and the board knowledge and and all members have the relevant independent non-executive directors the majority of members are its duties. In particular, to the committee. presented issues that are experience for them to be able to consider the Our commitment to sustainability means integrating social, ethical and environmental considerations. For Investec, being a good corporate considerations. For Investec, environmental means integrating social, ethical and Our commitment to sustainability and on of communities impact on the economy and social progress we have a positive our businesses to ensure citizen is about building and trust. Our corporate relationships strong clients’ and stakeholders wealth based on and preserving while growing the environment, below. outlined citizenship activities are activities the group’s has delegated the monitoring of governanceto which the board framework part of the group’s The SEC is an essential to: in relation • • How the SEC works How the SEC Role The committee supports the The committee supports international agenda to abolish and forced slavery, human trafficking, child labour. to has started the process The group UK’s of the integrate the provisions Modern Act into its business, Slavery practices in supply chain policies and the UK that the The committee ensures not complicit in any human group was rights abuses The committee is satisfied that the and commitment to standing group’s the various elements of good corporate in place and was citizenship remain actively enforced The committee is satisfied that the does take the appropriate group to comply with the in order measures legislation relevant The committee is satisfied that the does take the appropriate group to comply with in order measures the legislation Conclusions/actions taken Conclusions/actions • • • • • • ensures that the Investec group that the Investec group ensures to the and its subsidiaries adhere laws in all its jurisdictions relevant and strive to advance the UN principles within its sphere of influence remains committed to the remains with 10 principles of the UNGCP to human rights, labour, respect and anti-corruption environment The committee discusses and monitors the various elements of good corporate citizenship Engages with the management to address of human resources matters such as challenges around diversity and employment equity targets Engages with members of the employment equity forum diversityMonitors and reviews and considers any the group across developments in this regard regulatory Monitors progress made against Monitors progress employment Investec Limited’s equity plans Monitors Investec Limited’s Monitors Investec Limited’s empowerment rating and discuss with management how to improve the rating detailed Receives and reviews developments information on recent the Department of with respect and Industry Codes and the Trade Financial Sector Charter and the going forward scorecards • The committee: • Role of the committee • • • • The committee: • The committee: • • Investec integrated annual report 2017 Investec integrated annual report The 10 principles set out The 10 principles set out under the United Nations Global Compact Principles (UNGCP) The Organisation of Economic Co-Operation and Development (OECD) recommendations corruption regarding Refer to page 125 for further details Monitoring Investec Limited and its subsidiaries’ compliance legislation with the relevant Monitoring Investec Limited and its subsidiaries’ compliance legislation with the relevant Monitoring the group’s Monitoring the group’s goals standing in terms of the and purposes of: • • Matter addressed • • • Corporate governance Corporate (continued) Social and economic development (including human rights) Committee activities of focus Areas Good corporate citizenship The South African Employment Equity Act The South African Broad- Based Black Economic Empowerment Act 134

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 135 03 (continued) (continued) The committee ensures that the that The committee ensures the contributes to Investec group development of communities The committee notes that the is heavily involved in Investec group secondary and tertiary education of the community as well as the development of employees The committee is satisfied that the values have core Investec group’s a positive impact on the success and well-being of local communities, - and on overall macro the environment economic stability The committee ensures that it complies The committee ensures with this function The committee ensures that the board that the board The committee ensures matters within of relevant is aware its mandate which could impact the reputation Investec group’s Conclusions/actions taken Conclusions/actions • • • • • Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report The committee receives regular regular The committee receives corporate on the group’s reports as and social investment initiatives spend in well as the strategy and thereof respect The committee receives regular regular The committee receives on the learning opportunities reports and development of employees and others outside of the workplace The committee receives regular regular The committee receives activities in on the group’s reports to offered of programmes respect values enhance its core The committee reports to the The committee reports on its activities on shareholders an annual basis by means of the and at the annual annual reports general meeting of both companies A report is made/tabled at the A report meeting of combined board Investec Limited and Investec plc • Role of the committee • • • • Monitoring Investec Limited and its subsidiaries’ activities in contributing to the development of the communities in which its predominantly activities are conducted or within and which its products predominantly services are marketed Investing in learning and development opportunities for employees as well as individuals outside of the workplace Investec’s core values core Investec’s include unselfishly contributing to society, valuing diversity and others respecting Reporting to shareholders Reporting to shareholders on matters within its mandate By advising the board of By advising the board of any relevant directors matter within its mandate as the occasion requires • Matter addressed • • • • Contribution to the development of communities Committee activities of focus Areas Talent retention retention Talent and attraction of employees Culture and Culture ethics Reporting to shareholders of Investec Limited and Investec plc Advising the on board matters within its mandate Implementation of whistle-blowing hotline IT risk and cybersecurity Business continuity Establishment of Investec Bank plc audit committee Implementation of IFRS9 Implementation of King IV Conduct DLC audit committee David Friedland Chairman of the DLC audit committee 2017 until 31 March Zarina Bassa Chairman of the DLC audit committee 1 April 2017 from Key achievements in 2016/17 • of focus in 2017/18 Areas • • • • • • “Investec’s robust “Investec’s governance framework by its is supported open and honest helps to culture which are ensure any issues escalated in a timely manner” Investec integrated annual report 2017 Investec integrated annual report Corporate governance Corporate (continued) Financial reporting External audit Internal controls. 136 Dear Shareholder DLC audit committee, the Investec plc of the you with the report pleased to present are We the Investec Limited audit committee (the PLC audit committee) and and Investec Bank plc for the financial audit committee (the INL audit committee) and Investec Bank Limited the term audit committees For the purposes of this report, 2017. year ended 31 March INL audit audit committee, PLC audit committee and to the DLC will be used to refer committee combined. and the role with you some key information about we will share Over the following pages to outlining In addition committees within the DLC structure. audit functioning of Investec’s some insight into how decisions are we have included the audit committees’ structure, by judgement needs to be applied to the significant issues addressed made and where under the following Information has been provided the audit committees during the year. audit committees: headings, which align to the key functions of the • • • Role of the chair meetings with the Heads regular of the chairman of the audit committees requires The role of internal audit, as well as the lead external management outside audit partner and senior and develop an understanding of the to maintain of formal committee meetings in order an essential and risks facing the business. These interactions are operations group’s an additional layer of the chairman of the audit committees, as it provides part of the role aligned in terms of their functions are of assurance to gain comfort that these control and mitigation thereof. understanding of the risks facing the business audit committees transitioned of chairman of the 1 April 2017, the role With from effect in the audit David Friedland to Zarina Bassa. This change will result between us; from by different risk and capital committee (BRCC) being chaired committees and the board Whilst these committees have met all legal and independent non-executive directors. a composition and independence perspective to date, from requirements regulatory an additional layer of independence between these this change is viewed as providing some should be synergies in membership, as such, are committees. It is essential that there the audit committees and BRCC will continue to have some common membership given the BRCC will of the matters discussed by these committees. For that reason, the nature by David and Zarina will continue to be a member. continue to be chaired of chairman we met on several occasions to discuss the role As part of the handover, of the audit committees. Given that Zarina has been a member of the audit committees of the issues known to the audit committees, as well as aware since 2014, she is already also met with the external audit partner conducted. We currently how the meetings are functions, including internal internal audit, finance control and key members of Investec’s Zarina is also an experienced audit committee and compliance as part of the handover. has have every confidence that Zarina is well equipped to lead the chairman and the board manner going forward. has an effective audit committees in the board Committee performance effectiveness as part of the board The audit committees’ performance was considered of did not identify any areas that was conducted during 2016. This process process concernaudit committees. about the functioning of the Audit committee report Audit committee

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03 Corporate governance and corporate responsibility 137 03 (continued) (continued) Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Zarina Bassa Chairman, audit committees 9 June 2017 Former chairman, audit committees 9 June 2017 David Friedland

Looking ahead of the audit areas and cybersecurity will continue to be key focus In the year ahead, IT risk and, as such, have by these areas posed of the threats acutely aware are committees. We the which have become a significant portion of on these topics, reporting sought more spend time on the years. The audit committees will over recent audit committees’ agendas to conduct. issues relating IFRS9 and IV, implementation of King the audit committee of the PLC audit committee acted as review, During the period under have agreed of Investec Bank plc and the board nomdac, the board Investec Bank plc. The we believe the Investec Bank plc audit committee. Collectively, to the establishment of and effective and make for more our existing processes that the change will strengthen The Investec Bank plc audit environment. decision-making given the UK regulatory robust the majority of whom will executive directors, committee will comprise of independent non- The Investec Bank plc audit committee of Investec Bank plc but not the board. be directors approval), to regulatory (subject senior independent director by the bank’s will be chaired all members of the audit committees will Zarina will be a member of that committee and will and bedding down this new structure have the right to attend meetings. Implementing be a key focus for the audit committees. including King III audit committee regulatory requirements as requirements regulatory legislation and listing rules – Responsible for all legal and Investec Limited and necessary under South African Investec Bank Limited end and interim results are considered and considered are -end and interim results DLC audit committee group financial statements and group viability statement, review of the viability statement, review external audit and group risk external audit and group Responsible for matters that are Responsible for matters that are the going concern concept, group the going concern concept, group common to the PLC and INL audit independence and effectiveness of independence and effectiveness committee. Including the combined the external audit function, review of the external audit function, review finance function and finance director results announcements, review of the announcements, review results Subsidiaries and audit sub-committee Investec integrated annual report 2017 Investec integrated annual report Investec plc and Investec Limited board of directors board Investec plc and Investec Limited Assurance functions, including group compliance, group legal, group finance, tax, internal audit, legal, group group compliance, Assurance functions, including group Corporate governance Corporate (continued) audit committee Investec plc and Investec Bank plc Responsible for all legal and UK Corporate Governance Code – including the UK Disclosures and – including the UK Disclosures under UK legislation and listing rules Transparency Rules (7.1.3R) and the Transparency regulatory requirements as necessary as requirements regulatory oversight of the group’s financial reporting process and risks process financial reporting oversight of the group’s external auditor the group’s with managing the relationship including that of internal audit. assurance processes, and internal controls the group’s reviewing 138 Audit committee reporting lines Audit committee reporting Composition and meeting frequency Composition and meeting frequency identical. All of the membership of the audit committees are by the audit committees, the matters considered across continuity ensure To is assessed annually by the nomdac, who in turn whose continuing independence independent non-executive directors, the members are have formed the opinion that the audit The nomdac and board to the board. on the members’ independence make a recommendation a majority of the duties. In particular, for them to discharge their balance of knowledge and skills in order committees have the appropriate consider the for them to effectively experience in order commercial accountants and all members have relevant chartered members are to the committees. presented issues that are Structure of the audit committees Structure and the Investec Limited has mandated authority to the PLC audit committee board the Investec plc DLC structure, In terms of Investec’s companies and their subsidiaries. to be the audit committees for those respective has mandated authority to the INL audit committee board common to both Investec plc and Investec Limited, matters that are for audit-related A DLC audit committee, which has responsibility and year annual financial statements the combined group has also been formed. In particular, by the DLC audit committee. to the board for approval recommended The audit committees are an essential part of the group’s governance framework to which the board has delegated the following has delegated the following governance to which the board framework essential part of the group’s an The audit committees are key functions: • • • How the audit committees work How the audit Role

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 139 4 4 3 4 4 03 Attended Other (including governance matters) 5% INL Other (including macro issues and reports subsidiary from committees) 10% Other (including macro issues and reports subsidiary from committees) 10% 4 4 4 4 4 Eligible (continued) (continued) to attend (4 meetings in the year) Risk management and internal controls 10% 4 4 3 4 4 Head of company secretarial and Head of company secretarial schemes share • Attended External audit matters 25% PLC 4 4 4 4 4 Corporate governance Corporate Eligible to attend Risk management and internal controls Risk management and internalcontrols IT risk and cybersecurity) (including BCP, 15% Risk management and internalcontrols IT risk and cybersecurity) (including BCP, 15% (4 meetings in the year) 4 4 3 4 4 Attended Investec integrated annual report 2017 Investec integrated annual report Head of IT Head of operational risk Head of internal audit Head of finance External auditors Internal audit matters 25% Internal audit matters 25% • • • • • DLC 4 4 4 4 4 Eligible to attend (4 meetings in the year) External audit matters 25% External audit matters 25% 1 Jan 2015 1 Mar 2013 8 Aug 2014 1 Nov 2014 17 May 2006 Committee member since DLC board chairman DLC board of the group Chief executive officer of the group Managing director of the group risk and finance director Group Head of compliance Audit committees and attendance Meeting schedule in audit committees each met four times, resulting 2017, the DLC, PLC and INL ended 31 March During the financial year 12 meetings in aggregate. PRS Thomas K Shuenyane LC Bowden ZBM Bassa • • • • • Other regular attendees Other regular Members throughout the year 25% INL Financial reporting 25% committees’ meetings was such that the PLC and INL audit committees spent more The agenda and meeting schedule for the audit compliance functions, which in turn and the annual cycle obtaining the assurance of internal allows the control of their time throughout of the annual financial statements and within its mandate, including consideration are DLC audit committee to focus on the items which assessment of the external auditor. PLC Financial reporting DLC Financial reporting How the committees spent their time How the committees D Friedland 60% Composition Areas of judgement and Areas significant issues assessed The audit committees have policies have whether suitable accounting management been adopted and whether and judgements has made appropriate judgement of estimates. The main areas the audit by that have been considered that appropriate committees to ensure below. outlined are rigour has been applied can be found in All accounting policies 38. on pages 30 to volume three Fair, balanced and balanced and Fair, understandable the DLC of the board, At the request whether, audit committee has considered and in its opinion, the annual report financial statements for the year ended balanced and 2017 is fair, 31 March the board that, based on its knowledge of the board in operation and key processes the group, for the financial enquiries, it is reasonable on a going statements to be prepared concern basis. Solvency. Liquidity Capital Profitability Budgets and forecasts the clarity of disclosures and compliance and the clarity of disclosures and standards with financial reporting financial and governance other relevant requirements. reporting significant issues that have been significant issues that have discussed with the external auditor The committee challenged the level of provisions made and the assumptions used to The committee challenged the level of provisions including assessing impairment held by the group calculate the impairment provisions Particular focus was given to the legacy portfolio and experience against forecasts. environment. macroeconomic by the current affected which are exposures impairment provisions the BRCC where Certain members of the audit committee attend granular level. The BRCC has oversight of the governance also challenged at a more are pertaining to impairments. process appropriate. were provisions The committee was satisfied that the impairment Material individual positions, in particular the unlisted private equity investments, are private equity investments, are Material individual positions, in particular the unlisted the most material noted as standing challenged and debated by the committees with the year. throughout agenda items for each of the audit committees to take into account recorded debated the portfolio valuation adjustment which was We portfolio. risks on the South African private equity macroeconomic the audit committee chair met At the year end, prior to the audit committee meetings the investments across on the material a presentation with management and received assumptions used. including an analysis of the key judgements and group by management for the valuation adjustments proposed The audit committee approved 2017. the year to 31 March The audit committee receives regular updates on this topic from tax, group finance and tax, group updates on this topic from regular The audit committee receives to cover existing of the tax risk provision legal to enable it to evaluate the appropriateness tax risk. Specialist advice has also been obtained during the period. The audit committee analyses the judgements and estimates made and discusses the potential range of outcomes that might arise. for the year end. and disclosures The committee confirmed the tax risk provisions For the year ended 31 March 2017, For the year ended 31 March to the DLC audit committee recommended • • • • going concern of the Investec group as part going concern of the Investec group of the annual financial statement process. in order considered are The following areas to make this statement: • The audit committees receive reports from from reports The audit committees receive finance and external audit at each group The committee of their quarterly meetings. the non-executive meetings afford with the opportunity to discuss directors of judgement management the key areas applied and significant issues disclosed in the financial statements. • • Investec integrated annual report 2017 Investec integrated annual report Committee review and conclusion Committee review • • • • • • • • • • Corporate governance Corporate (continued) Determining the appropriateness of Determining the appropriateness the group impairment losses requires to make assumptions based on management judgement. The group exercises judgement in the exercises The group valuation of complex/ illiquid financial instruments, unlisted investments and embedded derivatives, particularly the level 3 instruments within the portfolio. There are certain legacy structured certain legacy structured are There transactions within Investec plc is uncertainty over there only where the outcome of the tax positions over the and judgement is required calculation of the provision. the appropriateness of accounting the appropriateness policies and practices and any areas of judgement Impairments • Significant judgements and issues Valuations • Uncertain tax positions • 140 The audit committees’ primary responsibility primary responsibility The audit committees’ financial reporting to the group’s in relation and with both management is to review the external auditor the appropriateness -year and annual and accuracy of the half financial statements. matters, amongst other In this process, the audit committees consider: • Financial reporting Process Going concern of the DLC audit One of the key roles the going concern committee is to review by management concept as presented make the necessary and, if appropriate, in to the boards recommendation this regard. Whilst the liquidity and solvency of the on a is closely monitored Investec group individuals in the daily basis by relevant risk management division, the DLC group’s expressly audit committee and board consider the assumptions underlying the

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03 Corporate governance and corporate responsibility 141 03 (continued) (continued) Business continuity Consideration of the impact of the London move in 2018 on the continuity of office business operations Whistle-blowing Oversight of the selection of an whistle- for Investec’s provider appropriate line blowing reporting Information cybersecurity Received and discussed the findings of a follow-up targeted attack simulation that was performed on Investec by an external provider Regulatory compliance of Review and monitoring of results compliance reviews regulatory Risk management The PLC and INL audit committees receive operational risk, from reports regular information technology and compliance. key topics that During the course of the year, have been discussed and debated by the PLC and INL audit committees have been: Internal audit In 2015, Grant Thornton engaged were to complete an external on the review of the internaleffectiveness audit function. was to of this review A recommendation and, the internal audit process streamline the number of lower reduce in particular, Since then, this has been a level reviews. of for internal focus area audit and an area discussion at PLC and INL audit committee meetings. During the course of this year, challenge at committee meetings has on getting this balance right in terms centred of the number of audits, given the risk profile of business’ activities. Delivery of the internal of audit plan has been another key area focus by the PLC and INL audit committees. audit Monitoring the completion of overdue of the internal findings and the resourcing audit function has also been addressed. committees receive regular reports from risk from reports regular committees receive and internalmanagement, compliance audit internal from including a written opinion framework, audit on the risk management internal and internal financial controls the some of Outlined below are controls. INL audit of focus of the PLC and key areas year in terms of committees over the past of the adequacy their ongoing assessment internal controls. of the group’s

Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Internal controls The PLC and INL audit committees have for assessing the adequacy responsibility fulfil To internal controls. of the group’s the PLC and INL audit, this responsibility, Non-audit services The audit committees have adopted a policy on the engagement of the external non-audit services. auditors to provide auditor designed to safeguard This policy, objectivity and independence, includes guidelines on permitted and non-permitted specific services and on services requiring by the audit committees. approval whether The audit committees review the level of non-audit fees could impact the independence of the auditors. This is to the level of fees by reference monitored paid for services, excluding services which by the external to be provided required are against the auditors due to their office, Total fees paid for the audit of the group. audit fees paid to all auditors for the year £10.5 million 2017 were ended 31 March (2016: £8.4 million), of which £1.6 million to the provision (2016: £1.8 million) related of non-audit services. Independence and objectivity Independence and considers the The DLC audit committee of the external auditors each reappointment to making a recommendation year before It assesses and shareholders. the board the independence of the external auditors on an ongoing basis. The external auditors partner the lead audit to rotate required are every five years and other senior audit staff every seven years. Partners and senior staff associated with the Investec audit may only after a cooling be employed by the group period. The lead partners commenced off in 2015 and 2017. their five-year rotation has been the Although Ernst & Young auditors since 2002, we continue group’s limitations on to believe that partner rotation, of -approval non-audit services including pre non-audit work and the confirmation of the and independence of both Ernst & Young adequate safeguards the audit team are is both that the audit process to ensure objective and effective. partners, audit team and audit approach audit approach partners, audit team and during their(planning and execution), meetings at audit committee presentations with the auditorsand ad hoc meetings held Senior finance function the year. throughout to the feedback executives also provided audit committees. Met with senior management to gain Met with senior management underlying assurance that the processes financial the compilation of the annual appropriate statements were Conducted an in-depth, critical review of the annual financial statements requested necessary, and, where amendments to disclosure. The audit committees meet with the external the scope of the externalauditors to review audit plan, budgets, the extent of non-audit and all other audit matters. services rendered The external invited to attend auditors are audit committee meetings and have access to the audit committees chairman. The audit committees evaluated the of the auditors through effectiveness which, completion of a questionnaire amongst other things, assessed the audit Working with the external Working auditor Auditor appointment external auditors at the DLC Investec’s Ernst LLP and & Ernstlevel are & Young Ernst & Young (Ernst & Young). Young Inc. joint auditors of the Inc. and KPMG Inc. are Investec Limited silo and Ernst & Young the auditors of the Investec plc LLP are have been the group’s silo. Ernst & Young listing on the auditors since Investec’s London Stock Exchange in 2002. The DLC audit committee considers the of the external auditors each reappointment to making a recommendation year before It assesses the and shareholders. the board independence of the external auditors on an ongoing basis. External audit The DLC audit committee has responsibility with relationship the group’s for reviewing its external auditors, including, considering audit fees, non-audit services and the independence and objectivity of the external auditors. • As such, the DLC audit committee has and formed the view that the annual report financial statements for the year ended balanced and 2017 is fair, 31 March understandable. understandable, and whether it provides it provides understandable, and whether for shareholders the information necessary position and to assess the group’s model and strategy. performance, business DLC audit In forming its opinion, the committee has: • Review of successful targeted attack simulations to mitigate cybercrime risk of the AIRB Monitoring of progress project Monitoring and continued mitigation and to cybercrime of risks related information security the implementation towards Progress of the AIRB approach DLC board risk and capital committee DLC board David Friedland Chairman of the BRCC Key achievements in 2016/17 • • of focus in 2017/18 Areas • • “We believe that robust “We risk management processes systems and to support are in place the group strategy” Investec integrated annual report 2017 Investec integrated annual report Corporate governance Corporate (continued) 142 David Friedland Chairman, DLC BRCC 9 June 2017 Looking forward to information In the year ahead, the committee will continue to focus on matters related faced change and risks associated with the fast pace of regulatory cybercrime security, risk profile. by the business and assessing the impact of external factors on the group’s item. agenda deadline will also be a regular to the AIRB project made towards Progress Role of the Chair with the heads of risk, as well as heads of the risk disciplines I met regularly During the year, to maintain and develop my understanding outside of formal committee meetings in order as audit committee operations and risks facing the business. As with my role of the group’s of the chairman, an essential part of the role chairman, I believe that these interactions are an additional layer of assurance to help me gain comfort that these risks that as it provides the risks facing the business. to the committee accurately reflect reported are of audit committee chairman 1 April 2017, Zarina Bassa took over the role With from effect by in the DLC audit committee and BRCC being chaired me. This change will result from Whilst these committees have met all legal independent non-executive directors. different a composition and independence perspective to date, from requirements and regulatory an additional layer of independence between these this change is viewed as providing some synergies in membership, as such, the DLC are committees. It is essential that there audit committee and BRCC will continue to have some common members. For that reason, I will continue to chair the BRCC, of which Zarina will continue to be a member. Committee performance effectiveness as part of the DLC board performance was considered The committee’s of did not identify any areas that was conducted during 2016. This process process concerncommittee. about the functioning of the Board risk and capital committee report risk and capital Board Dear Shareholder the financial risk and capital committee (the BRCC), during board As the Chairman of the you with our report. I am pleased to present 2017, year ended 31 March management on behalf of the board, of the committee is to review, The role by perform this function risks facing the business. We on a range of recommendations action is and question that either no management presented considering the risk reports appropriate. management following discussion are or that existing actions taken by required such of emerging economic and political risks, a number presented The year under review on our UK business. Investec and the impact thereof vote to leave the EU as the UK’s the Advanced Internal Ratings on the move towards progress Limited continued to make actively involved risk. The committee was credit to measure in order Based (AIRB) approach held where meetings were and special the various models of the AIRB project in reviewing Subject to regulatory to the committee for approval. presented the various models were and is expected to have a is due in 2018 the completion of the AIRB project approval, the special meetings held to capital ratios. Apart from positive impact on Investec Limited’s made on the timelines progress reviewed specific models, the committee regularly approve the and approved the committee reviewed plan. Furthermore, indicated in the AIRB project plc. capital plans for Investec Limited and Investec of the risk appetite that a detailed review As a committee, we gained comfort in the fact committee (Policy executive risk review limits was conducted by the executive in policy We the risk appetite limits to the committee for approval. ERRF), who recommended contained therein. the risk appetite limits and challenged the assumptions reviewed operational, legal, risk disciplines of credit, Reporting to the committee focuses on the key to the due However, market risk and cybersecurity. capital, liquidity, conduct, reputational, operates, the committee is in which Investec of the business environment dynamic nature they arise. For example, the committee as flexible to consider other matters of relevance due to risks that are to adequately assess in order a number of ad hoc reports requested events. once off on the key matters discussed at the committee. meeting, I report At each board

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 143 9 8 8 9 8 4 9 9 1 8 7 03 Attended 9 9 9 9 9 9 9 9 9 9 3 attend (continued) (continued) Eligible to (9 meetings in the year) Other (Including legal, operational, group insurance, conduct risk business continuity, and IT) cybercrime 25% Jan 2015 Mar 2011 Mar 2011 Mar 2011 Mar 2011 Mar 2011 Nov 2014 Sept 2013 Sept 2013 Sept 2016 Sept 2013 Committee member since Corporate governance Corporate Capital 25% Investec integrated annual report 2017 Investec integrated annual report Market risk 10% Credit risk Credit 20% Group compliance head – Investec Limited Group – Investec Limited Chief risk officer – Investec plc Chief risk officer Investec Asset Management COO Investor relations Global head of governance and compliance CFO Private Bank – Investec Limited (for AIRB meetings) (for AIRB meetings) representative AIRB project Meeting schedule and attendance 2017, the BRCC met nine times. During the year ended 31 March BRCC meets at least six times every year. BRCC Balance sheet risk How the committee spent its time 20% Members throughout the year Members throughout • • • • • • • Other regular attendees Other regular • SE Abrahams ZBM Bassa GR Burger H Fukuda B Kantor S Koseff KL Shuenyane B Stevenson F Titi PRS Thomas D Friedland (Chairman) Composition The nomdac and the board have formed the opinion that the BRCC has the appropriate balance of knowledge and skills in order to in order balance of knowledge and skills appropriate formed the opinion that the BRCC has the have The nomdac and the board members have the relevant and all independent non-executive directors of members are the majority particular, discharge its duties. In to the committee. presented that are for them to be able to consider the issues knowledge and experience The BRCC is an essential part of the group’s governance framework to which the board have delegated the monitoring of the group’s of the group’s have delegated the monitoring governance to which the board framework part of the group’s The BRCC is an essential of risks and capital management. to a number activities in relation meeting frequency Composition and How the BRCC works How the BRCC Role The committee gained comfort The committee gained been that adequate plans had where put in place for a scenario plc Investec Limited or Investec from to recover was required financial stress extreme The committee gained comfort The committee gained that operational risks were identified and appropriately managed within acceptable levels The committee satisfied itself that Investec Limited and Investec plc adequately capitalised and were being made was that progress achieving impending towards amendments to capital regulatory ratios The committee gained comfort to breaches that it addressed limits appropriately The committee challenged the of the management effectiveness of such risks within the business The committee gained comfort risk was that reputational mitigated as much as possible detailed processes through and governance escalation business units from procedures regular, and from to the board, clear communication with all stakeholders The committee challenged the of the management effectiveness of such risks within the business Conclusions/actions taken Conclusions/actions • • • • • • • Questioned the contents of the Questioned the contents plans and resolution recovery and how the board which address from management will recover to avoid financial stress extreme in liquidity and capital difficulties Limited Investec plc and Investec month rolling the 12-month rolling Monitored risk losses due to operational events against the internal risk appetite limit single events losses from Monitored to the internal risk appetite limit for a single event the largest loss from Reviewed the overall operational risk rating for Investec Limited and with the Investec plc in accordance operational risk tolerance policy Discussed risk appetite breaches, action in particular the remedial taken to mitigate the risk events Reviewed significant risk exposures the way in which and interrogated these management was addressing Measured key capital ratios against Measured limits and the internal and regulatory what actions management planned to meet these ratios/limits on Reviewed impending regulations the management of capital Monitored risk appetite breaches risk appetite breaches Monitored and challenged management action these breaches which addressed Monitored the risk appetite limit and Monitored queried management action taken of breaches in respective Monitored events which couldMonitored risk reputational potentially create that and ensured and addressed corporate governanceappropriate that activities, practices, which require based and decisions are processes principle considered on a carefully The committee reviewed and The committee reviewed questioned the conduct risk report which is discussed at each meeting Role of the committee • • • • • • • • • • • • Investec integrated annual report 2017 Investec integrated annual report Annual review of the recovery of the recovery Annual review plans for and resolution both Investec plc and Investec Limited Exposure to any instance Exposure is potential or there where actual impact to the group internal failed from resulting people, systems, processes, external events or from The progress/plan to achieving The progress/plan and regulatory required internal targets and capital and leverage ratios Market risk capital requirements Risk of an obligor failing to meet the terms of any agreement Risk of damage to our name or brand reputation, Risk that detriment caused to the bank, its customers, its counterparties or the market of inappropriate as a result execution of business activities • Matter addressed • • • • • • Corporate governance Corporate (continued) Recovery and plan resolution Committee activities of focus Areas Operational risk Capital Market risk Credit and Credit counterparty risk Reputational risk Conduct risk 144

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 145 03 (continued) (continued) The committee challenged the The committee challenged of the management effectiveness business of such risks within the The committee challenged the The committee challenged of the management effectiveness of such risk within the business The committee gained comfort that the management of was given the cybercrime necessary priority Conclusions/actions taken Conclusions/actions • • • Corporate governance Corporate The committee reviewed a report a report The committee reviewed which highlights bank activity, and key measures exposures and limits against thresholds The committee reviewed, The committee reviewed, reports challenged and debated in place which highlight processes to manage this risk Regular reports were received received were Regular reports the cybercrime regarding landscape, including lessons learnt external cyberattacks from Received the targeted attack and ensured simulation results required that any remediation was completed Role of the committee • • • • Investec integrated annual report 2017 Investec integrated annual report Financial risks relating to our to our Financial risks relating asset and liability portfolios, comprising market liquidity, non- funding, concentration, rate and foreign trading interest and exchange, encumbrance leverage risks Strategy to be able to function Strategy to be able to function in the event of a disaster Cybercrime risk is the risk the Cybercrime is exposed to by criminal group activities carried out by means of computers or the internet • Matter addressed • • Balance sheet risk Committee activities of focus Areas Business continuity risk Cybercrime risk Cybercrime Board remuneration committee report remuneration Board contained on pages 184 report to the remuneration committee, refer remuneration board For information on the decisions taken by the to 226. DLC Capital Committee into the GRCC to assist with the and capital-based incentivisation management of capital allocation models, performance measurement models, performance measurement and structuring, capital planning and Mandated by the BRCC and reporting Mandated by the BRCC and reporting BRCC GRCC Policy ERRF group risk appetite group Mandated by the BRCC and Global forums/committees reporting into the GRCC to assist reporting with the review of risk management with the review policies and practices to ensure the policies and practices to ensure organisation remains in line with the organisation remains Mandated by the BRCC to manage, monitor and mitigate enterprise-wide risk Investec integrated annual report 2017 Investec integrated annual report Investec plc Board and Limited Board Investec plc Board Including global credit committee and group investment committee committee and group Including global credit Corporate governance Corporate (continued) Review ERRF should undertake categories of risk, the specific risks Group risk and capital committee (GRCC) risk and capital committee Group forum (Review ERRF) Review executive risk review (Policy ERRF) forum Policy executive risk review DLC capital committee. and the extent of such risks the group and the extent of such risks the group Mandated by the BRCC and reporting Mandated by the BRCC and reporting into the GRCC to assist in determining 146 • • • as well as the below, is outlined line back into the board the reporting have been established by the BRCC and Each of these committees division of responsibilities. Management committees Management four In particular, management in their governance committees have been established to support A number of management of the group. the: These are and monitoring of the risks facing the group. established to assist with the management key committees have been •

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 147 03 (continued) (continued) with respect to capital and liquidity. In terms to capital and liquidity. with respect is required the group of these requirements, positions its capital and liquidity to stress conditions. stress under a number of severe well testing framework is stress Investec’s and is designed embedded in its operations key group’s test the to identify and regularly ‘vulnerabilities under stress’. daily Scenario modelling and rigorous performed tests are liquidity stress and manage the group’s to measure banking entities’ liquidity respective positions such that payment obligations can be met under a wide range of company scenarios. specific and market-driven stress liquidity, The objective is to have sufficient scenario, to continue to in an acute stress operate for a minimum period as detailed risk appetite and -approved in the board The group’s the regulators. by as required each banking risk appetite also requires entity to maintain a minimum cash to customer deposit ratio of 25%, and ensure banking entities are that the respective on wholesale funding to fund not reliant Each banking entity is asset growth. core to be fully self-funded. Our banking required businesses in both the UK and South Africa for requirements exceed the regulatory the net stable funding ratio and liquidity has currently coverage ratio. The group £12 billion in cash and near cash assets, 41.4% of customer deposits. representing develops annual capital plans The group -year period. over a three that look forward designed to assess the These plans are respective capital adequacy of the group’s banking entities under a range of economic and internal conditions, with the impact on earnings, risk appetite and asset growth, The output of capital liquidity considered. planning allows senior management and the that the to make decisions to ensure board capital to continues to hold sufficient group meet internal capital targets and regulatory years). The over the medium term (i.e. three targets a minimum capital adequacy group ratio of 14% to 17%, a common equity tier 1 ratio in excess of 10% and a leverage ratio in excess of 6% for each of its banking entities. The parameters used in the capital and regularly, reviewed are liquidity stresses taking into account changes in the business business and inputs from environments units. A detailed ‘bottom-up’ analysis is performed in designing Investec’s scenarios. The group specific stress also incorporates the SARB and Bank of England (BoE) annual cyclical stress scenarios into its capital and liquidity Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report (comprising a majority of non-executive (comprising a majority of the which includes members directors, committees audit committees) the audit for the viability statement recommended approval. board and has identified the principal The board and these group emerging risks facing the highlighted on pages 47 to 48. are its various sub-committees, Through notably the audit committees, the GRCC, the BRCC and the capital committees, carries out a robust regularly the board assessment of these risks, and their potential impact on the performance, The liquidity and solvency of the group. sub-committees activities of these board by them are and the issues considered described in this governance of section this report. risks into account, together these Taking strategic objectives and with the group’s the market environment, the prevailing the overall risk appetite approved board risk The group’s for the Investec group. parameters appetite statement sets broad expectations around to the board’s relating performance, business stability and risk management. considers that prudential risk The board management is paramount in all it does. of depositors, customers’ Protection capital adequacy and shareholder interests, manage the key drivers. To returns are number of a are risk appetite there group’s detailed policy statements and governance that ensures in place. The board structures in place resources appropriate are there running to manage the risks arising from our business by having independent Risk Management, Compliance, and Financial supplemented functions. These are Control by an Internal Audit function that reports independently to a non-executive audit committee chairman. believes that the risk The board we management systems and processes adequate to support the have in place are to strategy and allow the group group’s operate within its risk appetite framework. performance/ of the group’s A review against its risk appetite measurement at each BRCC framework is provided meetings. meeting and at the main board In terms of the South African Reserve Bank (SARB), the UK Financial Conduct Authority (FCA) and Prudential Regulation is the group Authority (PRA) requirements, standards to meet regulatory also required

Viability statement a going concern In addition to providing in terms is required, statement, the board of the UK Corporate Governance Code, to the to make a statement with respect viability (i.e. its ability to continue group’s in operation and meet its liabilities) taking position of the into account the current of the assessment the board’s group, and the principal risks it prospects group’s faces. Following confirmation by the BRCC Other statutory Other statutory information The board is of the opinion that, based on The board this the practices disclosed throughout in operation during the which were report, has applied the group year under review, the King III principles. detailed analysis of Investec’s A more compliance with King III is available on the Investec website (www.investec.com). to our governance Any changes required of King IV will be as a result processes made during the course of the year against in next year’s ahead and reported annual report. King III UK Corporate Governance Code 2017, the year ended 31 March Throughout Investec has complied with all the provisions of the UK Corporate Governance Code. Statement of Statement of compliance

Regulatory context a dual listed Investec operates under requires which company (DLC) structure contained in compliance with the principles III Code of Corporate the South African King Governance ( available at Principle the September 2014 and www.iodsa.co.za) edition of the UK Corporate Governance Code (available at www.frc.org.uk). believe that sound corporate We than governance depends on much more Good compliance with regulations. mere conduct and ethical practice is embedded in everything that we do at Investec. with our values By acting in accordance and principles, we believe that good governance is ensured. How we comply How we Page 11 in volume two, which highlights Page 11 in volume two, risk information on the group’s appetite framework which provide Page 6 in volume two, to approach an overview of the group’s in the processes risk management, and its in mitigating place to assist the group principal risks two which Pages 18, 51, 58 in volume the group’s highlight information on testing processes various stress Pages 62 to 64 in volume two, which specifically focus on the to and approach philosophy group’s liquidity management Pages 83 to 84 in volume two capital which explain the group’s management framework. Outside business interests of directors are are of directors Outside business interests satisfied that and we are closely monitored compliant with the are all of the directors which came into PRA requirements, UK’s on 1 July 2014, limiting the number of effect both executive and directorships permitted are non-executive directors to hold. Conflict of interest to Certain statutory duties with respect in force are conflict of interest directors’ under the UK Companies Act 2006 and the South African Companies Act 2008, as with these Acts amended. In accordance and the Articles of Association (Articles) of Investec plc and the Memorandum of Incorporation (MOI) of Investec Limited, may authorise any matter the board that otherwise may involve the directors their duty to avoid conflicts breaching has adopted a The board of interest. as set out in the Articles procedure, for and MOI that includes a requirement to submit, in writing, disclosures directors detailing any actual or potential conflict for consideration, and if considered approval. appropriate, External directorships • • • • • -looking viability statement This forward is based on made by the board information and knowledge of the group could be a number at 9 June 2017. There of risks and uncertainties arising from (but not limited to) domestic and global economic and business conditions beyond that could cause the control the group’s performance or actual results, group’s achievements in the markets in which it those anticipated. from operates to differ Pages 40 to 48, which provide detail Pages 40 to 48, which provide on the principal and emerging risks the faces group Pages 22 to 83, which shows a strategic and financial overview of the business • The purpose of the recovery plans are plans are The purpose of the recovery and senior to document how the board the group that management will ensure to financial stress extreme from recovers in its difficulties avoid liquidity and capital companies. separately regulated plans, stress The capital and liquidity plans and resolution scenarios, recovery are and the risk appetite statement In addition, at least annually. reviewed an annual senior management hosts which at -day risk appetite process three framework risk appetite the group’s and modified to take into is reviewed account risk experience and changes in strategic Furthermore, the environment. which focus on, amongst budget processes other things, the business and competitive landscape; opportunities and challenges; – take place within financial projections each business division at least annually. A summary of these divisional budgets, budget, together with a consolidated group during its to the board is presented early in the year. process strategic review the board viability, In assessing the group’s has taken all of the abovementioned into factors, documents and processes can confirm consideration. The directors expectation that they have a reasonable that Investec will continue to operate and meet its liabilities as they fall due over the has used a years. The board next three -year assessment period as this is three medium term capital aligned to the group’s liquidity, profitability, incorporate which plans leverage and capital adequacy projections a and include impact assessments from has scenarios. The board number of stress viability in its ‘base assessed the group’s case’ and ‘down case’ scenarios. Detailed exists management information therefore senior management and the to provide visibility of the and realistic sufficient board years viability over the next three group’s 2020 under these various to 31 March viability, scenarios. In assessing the group’s built into its a number of assumptions are capital and liquidity plans. In the ‘down case’ scenario these include, for example, and dividend payments being reduced being curtailed. asset growth in The viability statement should be read conjunction with the following sections all of which have in the annual report, assessment of the informed the board’s viability: group’s • Investec integrated annual report 2017 Investec integrated annual report Corporate governance Corporate (continued) A global economic slowdown and A global economic slowdown domestic recession commodity slump A renewed Domestic and global rapid, sharp rate hikes interest ratings of South Africa’s All credit long-term currency foreign sovereign downgraded to sub-investment debt are risk of increased grade on perceived fiscal deterioration load shedding Persistent schedule three (food price) inflation shock Upwards etc.) agricultural disease (weather, Substantial Rand weakness Significant strike action in private sector. annual cyclical stress The BoE’s scenario: this scenario incorporates a a slump UK slowdown in GDP growth, in Pounds Sterling, inflation turning rates in the UK negative and interest going to 0%, in addition to a significant house price fall is an there A scenario where outcome, i.e. a UK unfavourable ‘Brexit’ driving Pounds Sterling further recession inflation, house prices down, increasing and economic than a third fall by more flat lines after an initial slump. growth In this scenario we assume that the is benign with a international backdrop mild slowdown taking place in Ireland countries and the Eurozone is a global trade there A scenario where with higher Libor war and UK recession, rates and UK house prices falling. 148 • • • • • • • Investec plc runs a number of stress briefly scenarios, some of which are highlighted below: • • • tests’, stress also carry out ‘reverse We i.e. those scenarios that would cause the its capital and liquidity to breach group These scenarios are requirements. given the group’s highly unlikely, considered liquidity position and sound capital strong and leverage parameters. to is required the group Furthermore, plan for and resolution have a recovery both Investec Limited and Investec plc. processes. As the group’s banking entities As the group’s processes. separately and ring-fenced regulated are scenarios stress different one another, from banking entities the respective apply across and jurisdictions. down case stress current The group’s takes into scenario in Investec Limited which are account a number of factors, briefly highlighted below: •

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03 Corporate governance and corporate responsibility 149 03 (continued) (continued) Corporate governance Corporate Investec integrated annual report 2017 Investec integrated annual report Niki van Wyk Company secretary Investec Limited Report to shareholders has been to shareholders This report and authorised for issue to the approved of Investec plc and Investec shareholders Limited on 9 June 2017 and signed on its behalf by: David Miller Company secretary Investec plc Directors’ dealings in the securities of dealings in the securities Directors’ Limited are Investec plc and Investec on the Disclosure subject to a policy based Rules of the UKLA and and Transparency the JSE Listing Requirements. and company secretaries All directors’ of the the prior approval dealings require the chairman, Compliance division and or the director the senior independent chairman of the audit committee. All dealings of persons discharging require management responsibilities by line management, approval the compliance division and the chairman. Directors’ dealings Directors’ Dealings in securities to the subject Dealings in securities are The policy policy. personal account dealing and guidance is based on regulatory updated to ensure industry practice and is and regulations compliance with applicable industry best practice. to discourage The policy is designed highlight potential speculative trading and the interest between conflicts of interest or group of employees and the Investec or potential any of its clients, shareholders and Disclosure The UKLA’S shareholders. us to disclose Rules require Transparency securities and related transactions in shares by all persons discharging management and their “connected responsibilities and persons”. These include directors senior executives of the group. The UK and South African Companies disclose any direct to directors Acts require they have in material interest or indirect contracts, contracts, including proposed of significance to the company’s which are to make required are business. Directors meetings, and at board these disclosures in the recorded made are all disclosures minutes of that meeting. to to undertake not required are Staff use any personal hedging strategies to in value lessen the impact of a reduction or any vested shares award of any share period subject to a retention which are following any vesting date. Any breach in the lapse of of this condition will result of such reward, any unvested proportion committee unless the DLC remuneration determines otherwise. 0.3% 0.4% 1.4% 1.0% 5.0% 3.9% 0.4% 0.6% 2.0% 1.0% 4.0% 3.2% 88.0% 88.8% 100.0% 100.0% % of issued % of issued share capital share share capital share 7.0% 1.6% 2.5% 62.4% 15.2% 11.3% 781 921 1 079 755 4 108 380 3 110 267 3 049 656 3 865 451 6 911 512 15 163 456 11 851 907 12 829 249 25 955 789 20 965 693 Number of Number of 265 069 488 301 165 174 583 528 275 657 105 625 shares in issue shares shares in issue shares South Africa UK USA and Canada Rest of Europe Asia Other countries and unknown Investec Limited 4.8% 7.3% 1.9% 3.3% 3.2% 3.7% 2.0% 1.0% 46.3% 15.9% 20.5% 54.2% 16.8% 19.1% 100.0% 100.0% % of total % of total shareholders shareholders 3.5% 1.7% 4.1% 50.6% 26.5% 13.6% Investec integrated annual report 2017 Investec integrated annual report 1 – 500 1 – 500 Holdings Holdings 501 – 1 000 501 – 1 000 1 001 – 5 000 1 001 – 5 000 5 001 – 10 000 5 001 – 10 000 10 001 – 50 000 10 001 – 50 000 100 001 and over 100 001 and over 50 001 – 100 000 50 001 – 100 000 South Africa UK USA and Canada Rest of Europe Asia Other countries and unknown 948 292 615 424 642 170 291 5 053 5 750 4 073 1 121 1 395 1 797 8 792 16 267 30 046 Investec plc Shareholder analysis Shareholder Number of Number of shareholders shareholders 150 Geographical holding by bene cial ordinary share owner as at 31 March 2017 Geographical holding by bene cial ordinary share owner as at 31 Spread of ordinary shareholders as at 31 March 2017 as at 31 March shareholders of ordinary Spread issue in shares Investec plc ordinary Investec ordinary shares Investec ordinary in issue respectively. shares 301.2 million ordinary and Investec Limited had 657.1 million and 2017 Investec plc As at 31 March Investec Limited ordinary shares in issue shares Investec Limited ordinary

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 151 2.6% 2.4% 2.7% 3.2% 2.8% 3.2% 2.9% 3.2% 3.3% 3.8% 3.6% 4.1% 3.9% 5.3% 5.7% 8.4% 6.1% 9.1% 8.3% 11.7% 41.9% 54.4% 03 % holding % holding shares shares (continued) (continued) 7 172 136 9 582 111 9 666 468 9 772 984 16 897 419 17 647 731 18 088 127 18 845 149 21 513 929 11 382 316 23 953 282 12 460 194 25 556 818 15 960 095 37 613 373 25 444 842 27 504 421 39 895 286 35 213 851 54 564 790 Number of Number of 274 575 904 164 159 418 Shareholder analysis Shareholder Investec integrated annual report 2017 Investec integrated annual report

Royal London Mutual Assurance Society (UK)

AQR Capital Mgt (US) The Vanguard Group, Inc (UK and US) Group, The Vanguard The Vanguard Group, Inc (UK and US) Group, The Vanguard Legal & General Group (UK) Legal & General Group Dimensional Fund Advisors (UK) State Street Corporation (UK and US) State Street Fund Mgrs (ZA) Coronation T Rowe Price Associates (UK) BlackRock Inc (UK and US) Old Mutual (ZA) (ZA) Sanlam Group Prudential Group (ZA) Prudential Group Old Mutual (ZA) BlackRock Inc (UK and US) Schemes (ZA) Share Investec Staff Allan Gray (ZA) PIC (ZA) PIC (ZA) Allan Gray (ZA) 9. 9. 8. 8. 7. 7. 6. 6. 5. 5. 4. 4. 3. 3. 2. 2. 1. 1. 10. 10. The top 10 shareholders account for 41.9% of the total shareholding in Investec plc. This information is based on a threshold of 20,000 is based on a threshold in Investec plc. This information account for 41.9% of the total shareholding The top 10 shareholders to be marginally understated. figures below this, which may cause the above Some major fund managers hold additional shares shares. The top 10 shareholders account for 54.4% of the total shareholding in Investec Limited. This information is based on a threshold in Investec Limited. This information is based on a threshold account for 54.4% of the total shareholding The top 10 shareholders to be below this, which may cause the above figures Some major fund managers hold additional shares of 20,000 shares. marginally understated. Shareholder analysis by manager group Shareholder Investec Limited Shareholder analysis by manager group analysis by manager Shareholder Investec plc Largest ordinary shareholders as at 31 March 2017 as at 31 March shareholders Largest ordinary Companies Act 2006 and section 56 of the South African for in section 793 of the UK Companies with the terms provided In accordance (including nominee and shares holders of its ordinary has conducted investigations into the registered the group Act, 2008, as amended, as discussed below. are and the results asset management companies) – 2.5 3.6 9.0 794 11.1 4.78 5.50 4.29 2011 2011 272.8 3 872 537.2 2 568 1 634 52.80 65.50 49.49 9.9% 8.4% 1.5% 42 768 90.1% 100.0% 31 March 31 March 31 March 31 March % holding 1.9 4.5 8.3 12.0 3.82 5.22 3.18 276.0 3 340 598.3 2 286 1 033 1 683 47.16 57.36 42.00 2012 2012 41 232 325 31 March 31 March shares Limited Investec 4 466 715 Number of 2.0 3.9 7.9 29 911 882 25 444 842 980 12.7 4.59 5.14 3.10 301 165 174 271 253 292 279.6 4 061 605.2 2 778 1 305 64.26 69.89 41.31 2013 2013 56 857 31 March 31 March 0.2% 4.0% 1.5% 2.3% 96.0% 100.0% 2.0 3.9 7.8 810 12.8 4.85 5.08 3.66 282.9 4 325 608.8 2 953 1 985 84.84 85.04 59.00 2014 2014 % holding 75 652 31 March 31 March 2.0 3.5 7.0 739 14.2 5.61 6.06 4.91 2015 2015 shares 285.7 5 045 613.6 3 442 2 170 86.02 90 388 100.51 107.35 1 144 683 9 948 809 Number of 15 357 276 26 450 768 31 March 31 March Investec plc 657 105 625 630 654 857 2.0 4.1 8.1 963 12.4 5.13 6.47 4.03 2016 2016 291.4 4 662 617.4 3 167 1 474 93.91 99 886 109.91 121.90 31 March 31 March 31 March 31 March 2.1 4.2 8.9 11.3 5.44 6.19 4.19 2017 2017 301.2 5 213 657.1 3 575 1 149 1 618 91.46 81.46 87 646 112.11 31 March 31 March 31 March 31 March Investec integrated annual report 2017 Investec integrated annual report 3 1 3 3 1 2 2 2 2 Shareholder analysis Shareholder (continued) The JSE Limited have agreed to use the total number of shares in issue for the combined group, comprising Investec plc and Investec Limited, in The JSE Limited have agreed to use the total number of shares in issue for the combined group, comprising calculating market capitalisation i.e. a total of 958.3 million shares in issue. The LSE only include the shares in issue for Investec plc, i.e. 657.1 million, in calculating market capitalisation, as Investec Limited is not incorporated The LSE only include the shares in issue for Investec plc, i.e. 657.1 million, in calculating market capitalisation, in the UK. and non-operating items; and dividends per Calculations are based on the group's consolidated earnings per share before goodwill, acquired intangibles share as prepared in accordance with IFRS and denominated in Pounds Sterling. year ended

152 Non executive directors of Investec plc/Investec Limited of Investec Non executive directors Total Executive directors of Investec plc/Investec Limited of Investec Executive directors schemes share Investec staff Non-public Public* 3 1 2 For the year ended Investec Limited For the year ended Share statistics Share Investec plc *As per the JSE Listings Requirements. Shareholder classification as at 31 March 2017 as at 31 March classification Shareholder Dividend cover (times) Dividend yield (%) Earnings yield (%) Market capitalisation (R’million) Market capitalisation (£’million) traded (’000) Daily average volume of shares Market capitalisation (£’million) traded (’000) Daily average volumes of share Closing market price per share (Rands) Closing market price per share – year ended Closing market price per share (Pounds Sterling) Closing market price per share – Price earnings ratio – highest – highest – lowest – lowest Number of ordinary shares in issue (million) shares Number of ordinary Number of ordinary shares in issue (million) shares Number of ordinary

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility – – – 153 9.1% 9.7% 2.2% 0.4% 1.7% 1.0% 3.3% 2.3% 8.6% 9.1% 9.1% 42.7% 13.1% 17.4% 18.7% 19.8% 19.2% 14.9% 35.5% 17.6% 23.1% 41.3% 20.1% 38.2% 21.9% 03 100.0% 100.0% 100.0% 100.0% preference preference preference preference preference preference % of issued % of issued % of issued % of issued share capital share capital share capital share share capital share (continued) (continued) – – – 5 667 6 118 12 773 12 004 11 559 46 891 56 145 24 525 50 366 26 000 39 176 52 930 314 391 359 785 131 447 235 885 977 186 486 054 637 227 108 625 262 882 1 057 576 5 594 966 2 976 741 2 754 587 7 043 281 2 922 170 12 305 374 32 214 499 Number of Number of Number of Number of preference preference preference preference shares in issue shares in issue shares in issue shares shares in issue shares Shareholder analysis Shareholder – – – 8.0% 4.0% 2.0% 8.1% 7.6% 5.7% 8.0% 1.8% 1.1% 1.1% 6.5% 0.8% 0.6% 16.2% 55.6% 53.3% 14.1% 15.1% 23.0% 22.2% 18.1% 48.0% 43.4% 23.9% 11.8% 100.0% 100.0% 100.0% 100.0% % of total % of total % of total % of total shareholders shareholders shareholders shareholders Investec integrated annual report 2017 Investec integrated annual report 1 – 500 1 – 500 1 – 500 1 – 500 Holdings Holdings Holdings Holdings 501 – 1000 501 – 1000 501 – 1000 501 – 1000 1001 – 5000 1001 – 5000 1001 – 5000 1001 – 5000 5001 – 10000 5001 – 10000 5001 – 10000 5001 – 10000 10001 – 50000 10001 – 50000 10001 – 50000 10001 – 50000 50001 – 100000 50001 – 100000 50001 – 100000 50001 – 100000 100001 and over 100001 and over 100001 and over 100001 and over – – – 7 4 2 5 7 7 4 1 16 22 55 47 54 58 21 31 99 45 88 41 33 997 184 417 359 383 1 269 2 391 5 507 Number of Number of Number of Number of shareholders shareholders shareholders shareholders Investec Limited redeemable preference shareholders preference Investec Limited redeemable Investec Limited perpetual preference shareholders Investec Limited perpetual preference Investec plc (Rand-denominated) perpetual preference shareholders preference Investec plc (Rand-denominated) perpetual Spread of preference shareholders as at 31 March 2017 as at 31 March shareholders of preference Spread shareholders Investec plc preference Investec preference shares Investec preference shares. preference and Investec Bank Limited have issued Investec plc, Investec Limited 1.6% 5.6% 9.0% 0.0% 0.0% 10.3% 35.8% 13.9% 22.8% 31.0% 10.7% 24.4% 10.0% 24.9% 100.0% 100.0% preference preference preference preference % of issued % of issued share capital share share capital share – – 35 140 47 510 30 819 122 475 864 466 241 829 341 717 105 773 3 518 175 1 660 149 3 767 392 1 546 013 3 849 606 15 447 630 Number of Number of preference preference shares in issue shares shares in issue shares 5.2% 2.7% 0.6% 0.0% 0.5% 0.0% 6.0% 5.3% 0.6% 0.4% 90.9% 26.5% 21.7% 39.5% 100.0% 100.0% % of total % of total shareholders shareholders Investec integrated annual report 2017 Investec integrated annual report 1 – 500 1 – 500 Holdings Holdings 501 – 1000 501 – 1000 1001 – 5000 1001 – 5000 5001 – 10000 5001 – 10000 10001 – 50000 10001 – 50000 50001 – 100000 50001 – 100000 100001 and over 100001 and over 5 6 0 0 27 52 21 16 903 822 226 993 199 1 000 1 491 3 775 Shareholder analysis Shareholder (continued) Number of Number of shareholders shareholders 154 Shareholders holding beneficial interests in excess of 5% of the issued preference shares are as follows: are shares of the issued preference in excess of 5% holding beneficial interests Shareholders shares Investec plc perpetual preference Hale Nominees Limited 10.6% Hargreave shares Investec plc (Rand-denominated) perpetual preference Private individual 5.9% Private individual 9.9% Private individual 9.9% shares Investec Limited perpetual preference Strategic Income fund 5.2% Bank – Coronation Chartered Standard shares preference Investec Limited redeemable Private individual 5.8% Private individual 6.7% Private individual 11.9% Private individual 11.9% shares Investec Bank Limited perpetual preference in Investec Bank Limited, as at shares of the issued preference in excess of 5% holding beneficial interests no shareholders were There 2017. 31 March shares preference Investec Bank Limited redeemable Investec Securities Pty Ltd 6.6% Private individual 6.8% Private corporate 5.9% Largest preference shareholders as at 31 March 2017 as at 31 March shareholders Largest preference Investec Bank Limited redeemable preference shareholders preference Investec Bank Limited redeemable Investec Bank Limited perpetual preference shareholders perpetual preference Investec Bank Limited

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 155 03 Investec integrated annual report 2017 Investec integrated annual report Regular email and telephonic communication website investor relations Comprehensive client presentations Tailored Annual and interim reports managers within the business Client relationship Four investor presentations Regular email and telephonic communication website investor relations Comprehensive risk management and executive team, group Regular meetings with investor relations management presentations Tailored rating agency booklet Tailored Annual and interim reports Four investor presentations Stock exchange announcements website investor relations Comprehensive team and executive management Regular meetings with investor relations Regular email and telephonic communication Annual and interim reports Four investor presentations ) Quarterly magazine (Impact management updates hosted by executive Staff and subsidiary fact sheets Group training internal investor relations Tailored employees Induction training for new matters Response and engagement on regulatory Industry consultative bodies Centralised negotiation process information on suppliers’ requesting questionnaires Ad hoc procurement social and ethical policies environmental, Regular email and telephonic communication Stock exchange announcements website investor relations Comprehensive executive management team and Regular meetings with investor relations Annual general meeting Four investor presentations Stock exchange announcements website investor relations Comprehensive and presentations roadshows Shareholder executive management team and Regular meetings with investor relations Regular email and telephonic communication Annual and interim reports Communication policy Active participation in policy forums • • • • • • • • • • • • Equity and debt analysts • • • • • • Clients • Rating agencies • • • • • • • Suppliers • • Media • • • • Investors and shareholders • • • • • • • • Employees • bodies Government and regulatory • Communication and stakeholder engagement stakeholder and Communication The board recognises that effective that effective recognises The board in building communication is integral is committed to stakeholder value and timely meaningful, transparent, providing non-financial and accurate financial and as information to primary stakeholders purpose is to help The defined below. meaningful these stakeholders make investment assessments and informed decisions about the group. a balanced endeavour to present We and understandable assessment of our material matters position by addressing and concern. We of significant interest seek to highlight the key risks to which we consider ourselves exposed and to minimise the impact our responses of these risks. Another objective is to show a balance between the positive and to negative aspects of our activities in order and fair account achieve a comprehensive of our performance. of our DLC structure, As a requirement obligations we comply with the disclosure contained in the applicable listing rules of the UK Listing Authority (UKLA) and Johannesburg Stock Exchange (JSE) and other exchanges on which our shares listed, and with any public disclosure are by the UK regulators obligations as required and the South African Reserve Bank time that from also recognise (SARB). We to adhere to time we may be required obligations in other to public disclosure we have operations. countries where The Investor Relations division has a for ensuring day-to-day responsibility communication with appropriate stakeholders and, together with the Finance and Company Secretarial Group that we meet our public divisions, ensures disclosure obligations. policy -approved have a board We that we statement in place to ensure public disclosure comply with all relevant obligations and uphold the board’s philosophy. communication and disclosure Building trust and credibility among our stakeholders is vital to good business our stakeholders is vital among and credibility Building trust Please refer to the website full corporate for Investec’s citizenship statement. key focus areas. Deliberately not driven key focus areas. on a top-down basis, the executive for oversight, maintains responsibility and integration of coordination direction, while the efforts our corporate responsibility the key individual business units provide drivers behind our activities, in a manner that best makes sense to each. 2014 B Signatory 75 Included Constituent AAA Member Active Signatory 2015 A- Signatory 74 Included Constituent AAA Member Active Signatory 2016 A- Signatory 75 Included Constituent AAA Member Active Signatory Guided by our purpose to create sustained long-term wealth, we seek to be a sustained long-term wealth, we seek to be to create Guided by our purpose which businesses and in each of the societies in all our core positive influence in entrepreneurship communities through do this by empowering we operate. We the recognise We the value in our diversity. and education, and leveraging to the global economy and we will change presents challenges that climate the negative meaningful activity that either reduces consider supporting any the life of our planet. impact on or prolongs Our culture and values demonstrate our Our culture belief that as an organisation we can and must have a positive impact on the success and well-being of communities and the environment, local to our offices, -economic stability. on overall macro Our philosophy seeks to align the interests and stakeholders over of shareholders the individual business time, and provides which with a basis from units and regions The to determine their own approach. is not intended to philosophy group’s be mutually exclusive or exhaustive, but on allows us to concentrate, for now, Investec integrated annual report 2017 Investec integrated annual report Corporate responsibility Corporate

156 Memberships in the following internationalInvestec participates and has maintained its inclusion initiatives Investec as a responsible corporate citizen Investec as a responsible that, while our At Investec we recognise at the forefront, remain shareholders our purpose ultimately is not only about strive to be a distinctive We driving profits. specialist bank and asset manager, moral integrity, demonstrating cast-iron and behaviour which promotes strength values include unselfishly trust. Our core valuing diversity contributing to society, others. Outstanding and and respecting spirit and talent, entrepreneurial empowered other qualities that for the planet are regard of our organisation align with the culture business. to responsible and our approach

Our corporate responsibility philosophy responsibility Our corporate Corporate responsibility business practices responsibility Corporate Carbon Disclosure Project (CDP) Project Carbon Disclosure (Investec is a member and Investec Asset Management is a signatory investor) Code for Responsible Investing in South Africa (CRISA) Dow Jones Sustainability Investment out of 100) Index (score FTSE4Good Index JSE Limited Socially Responsible Investment Index MSCI Global Sustainability Index Series (Investec plc) – Intangible value rating assessment (IVA) STOXX Global ESG Leaders Indices United Nations Global Compact United Nations Principles for Responsible Investment (UNPRI) is a member of Other: Investec Asset Management CEO, HJ du Toit, The Global Commission on Business and Sustainability Development.

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 157 03 (continued) (continued) For a better understanding of the scope of KPMG’s assurance process, the extracted environmental, human resources and corporate social key performance indicators in this report should be read in conjunction with the full 2017 corporate responsibility report containing their assurance statement. Investec Internal Audit performed review a limited of the quantitative and qualitative corporate responsibility information disclosed on pages 158 to 183 of this report. A growing ‘trust deficit’ in the financial A growing services industry Digital technology raising new security and privacy challenges corporate governance practice Strong is seen as a significant issue for the financial sector Tightening and ‘soft-law’ regulatory on economic, social and requirements governance (ESG) issues in responsible interest Steadily growing and practices investment products A shifting understanding of corporate ‘value’ the expectations regarding Broadening responsibility. extent of environmental KPMG has provided limited assurance KPMG has provided human over selected environmental, and corporate social spend resources key performance indicators, as set out review in the corporate responsibility which of this integrated annual report, the 2017 has been extracted from report. corporate responsibility Assurance This included the review of This included the review learningcorporate social spend, and development spend, employee headcount and carbon footprint. • • • • • • • Corporate responsibility Corporate An index of these indicators together with our response to each of them can be found in our separate corporate responsibility report on our website. Investec integrated annual report 2017 Investec integrated annual report Our approach to corporate Our approach to corporate responsibility is documented throughout this integrated annual report detail with further available in a more extensive corporate responsibility report on our website. Income and wealth inequality and calls for inclusive economic growing (and ‘radical economic growth transformation’) in South Africa Continuing political uncertainty and social challenges in South such Africa, particularly in areas as unemployment, education and transformation Increasing political volatility at a Increasing global level Our approach to reporting has to reporting Our approach the King Code followed guidance from of Governance Principles for South Africa (King III) and in accordance with the Global Reporting Initiative’s sustainability core (GRI) Standards reporting guidelines. Reporting • • Material issues: During our 2016/2017 stakeholder the following material engagement process identified: issues were • Due to the nature of Investec’s business, of Investec’s Due to the nature the material aspects identified are unlikely to change in the short considered Investec only to medium term. As a result, every process this comprehensive repeats to four years. three . Refer to page 132 for further Refer to page 132 for information The mandate of this committee places emphasis on the responsibility a strong the communities towards of the group in which we operate, on transformation in the workplace, and on enshrining human rights as well as the well-being and dignity of our employees. in each also have representatives We of the major geographies in which we operate who drive our corporate objectives as well as responsibility various forums discussing corporate considerations. responsibility corporate Feedback on relevant to issues is provided responsibility meetings. members at board board Responsibility is The social and ethics committee - for monitoring the non responsible elements of sustainability. profit Materiality In identifying material issues, consideration is given to those issues we believe have the potential to significantly influence our ability to have a positive impact on the sustainability of our business and on -economic stability as well as overall macro contributing to the success and well-being of our communities and the environment. During the financial year ending we embarked on a robust 31 March 2017, of engagement with internal and process went external stakeholders. This process beyond our day-to-day engagement with stakeholders and involved an independent of of the Investec board interview process executive, heads of business and directors, employees and also external stakeholders such as industry associations, rating agencies, clients, investment analysts and allowed us to confirm NGOs. This process issues corporate responsibility that our core did not materially change in the past three continue with years and we would therefore focus areas. our core (2016: £14.7mn) employee share ownership employee share Level 2 rating in the Financial Sector Code in South Africa £29.1bn loans and advances up 8.5% (on a currency Core neutral basis) to £22.7bn £7.1mn (2016: £5.0mn) the group spend on CSI across Responsible Winner of the Business in the Community’s 2016 in the UK Business Awards Winner company in Africa in of most socially responsible 2016 SERAS awards Member of the 30% Club in South Africa and the UK £22.9mn 7% Investec South Africa was voted 2nd most attractive Investec South Africa was voted 2nd most attractive employer in the 2017 Universum Awards Approximately Learning and development spend Piloted activity-based working in the UK head office Strengthened our lending and investing risk policies Strengthened globally and invested in the IEP Group Created Launch of Investec Life up 5.5% (on a currency neutral Customer accounts up 5.5% (on a currency basis) to Impact Investec integrated annual report 2017 Investec integrated annual report Provide a healthy, stimulating and progressive stimulating and progressive a healthy, Provide work environment Invest in employee learning and development appropriate through Retain and motivate staff structures and reward remuneration through our values-driven culture Entrench the organisation. Encourage a strong culture of entrepreneurship, of entrepreneurship, culture Encourage a strong reward balancing risk versus however, solid lending, investing and risk Ensure management practices. Build deep durable relationships with clients Build deep durable relationships Invest in our distinctive brand our corporate Unselfish contribution to society through social investment (CSI) programmes equality Focus on diversity and promoting of the financial sector in South Africa. Transformation We depend on the experience and proficiency of our depend on the experience and proficiency We people to perform and deliver superior client service. to: Priorities are • • • • We use our specialist financial skills and expertise to We solutions for clients and have a robust structured provide in place. risk management process to: Priorities are • • We leverage key stakeholder relationships to enhance our leverage key stakeholder relationships We -economy. impact on society and the macro to: Priorities are • • • • • Corporate responsibility Corporate (continued) People People Capital and our priorities Human capital Intellectual capital Social and relationship capital 158 We consider our three key focus areas of people, planet and profit focus areas of people, consider our three key We obtained from and values, and input philosophies against Investec’s our stakeholders

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 159 03 (continued) (continued) of group income of group emissions reduced by emissions reduced 2 Number of investors with Wealth & Investment Number of investors with Wealth Online up 80% & Investment Assets under Administration with Wealth Online up 65% & Investment Assets under Management with Wealth Online up 220%. 56% 66.3% to 12.5% overall and 14.2% on an ROE has grown ongoing basis 9.5% in dividends per share increase liquidity with cash and near cash balances at Strong £12.0bn 7.9% £1.8bn energy sector participation in the renewable Winner for the best company in of 2016 SERAS award and clean energy affordable our lending and investing risk policies Strengthened globally Impact Impact Group cost to income: Group Investec was the first financial institution in South Africa to to clients voice biometrics recognition introduce Online Portfolio Manager has a Private banking and & Investment client base overlap of 31% (AUM) Wealth Since the launch of One Place: • • • Capital light activities: Group CO Group Corporate responsibility Corporate Investec integrated annual report 2017 Investec integrated annual report Invest in new IT systems and integrate existing IT systems digital offering. Continually develop our comprehensive Maintain a balanced and resilient business model Maintain a balanced and resilient liquidity Maintain a sound capital base and strong our businesses Organically grow returns and operational efficiency Focus on improving capital light activities. Grow Limit our direct operational carbon impact Limit our direct responsible through Positively impact the environment financing and investing energy and Fund and/or participate in renewable developments. green We have developed a number of IT structures to support have developed a number of IT structures We critical in our business activities. Our digital platforms are driving engagement with our clients and stakeholders. to: Priorities are • • • • • • Financial capital is needed to grow the business and to the business Financial capital is needed to grow sustainable economic value for shareholders. help create to: Priorities are • • • Given our niched specialist financial services focus, we Given our niched specialist and hence our resources depend on very few natural impact is very limited. direct to: Priorities are • Profit Planet Technological Technological capital Financial capital Capital and our priorities Natural capital Capital and our priorities Our internal people activities involve dedicated divisions such as Human (HR) and Organisation Resources Development (OD), which serve to enhance the ongoing people focus of our business. The Investec HR teams are and dedicated Careers mandated to enable the attraction, of talent development and retention who can perform in a manner and consistent with our culture the values. OD acts to strengthen its of the business, ensure culture lived, build capability values are and contribute to the long-term sustainability of the organisation. The HR division participates in local and international forums to ensure alignment of HR strategy with As our operating business strategy. legal jurisdictions have different our requirements, and regulatory various HR functions operate in a yet integrated way differentiated philosophical adhering to the group for Senior responsibility approach. people matters falls under Marc Kahn who is Global Head of HR and OD. Investec South Africa has been voted second most attractive employer in the 2017 Universum Most Attractive Employer Awards. Investec integrated annual report 2017 Investec integrated annual report Female workforce invited to one or more of employees participated in/were and values dialogues culture of employees engage in performance review processes processes of employees engage in performance review every year employees attended internal leadership development programmes of employees attended learning and development programmes and of employees in South Africa attended health interventions wellness programmes Please refer to pages 185 to 226 for more information. Corporate responsibility responsibility Corporate Corporate (continued) 100% 49% and Facilitating an understanding of the Investec culture people practices: 154 that prioritises a diverse workforce: and recruiting Resourcing 100% Leadership development programmes: 66% individual and group regular Performance consulting through pathing and development: reviews, Bespoke (specialised) learning environment: 100% the health and well-being of employees: to ensure Measures Competitive remuneration and reward Competitive remuneration awards Industry competitive packages and long-term share 160 In assuming responsibility for our people we seek to promote corporate corporate seek to promote for our people we responsibility In assuming through: responsibility Our people and uphold an environment and meritocratic approach prize our flat structure We as a strategic differentiator. Investec positions its culture passionate and talented people who are employ in line with business objectives. We that encourages self-starters to drive their careers extraordinarily. and able to perform empowered

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 161 03

(continued) (continued) Corporate responsibility responsibility Corporate Corporate Investec integrated annual report 2017 Investec integrated annual report Further information is provided on pages 185 to 226. It is fair and honest, defined by dialogue that is both respectful and reflective of individual and reflective It is fair and honest, defined by dialogue that is both respectful views and team perceptions; Driven by the employee and the leader; Involves ongoing, timeous feedback; conversations. Disciplined, responsible Our internal resourcing function forms an integral part of our broader talent management as it talent forms an integral part of our broader function Our internal resourcing externally to to recruit required, internally talent and, where and redeploy enables us to source any identified skills gaps. address employees of opportunities for developing and upskilling invest significantly in a number We Our leaders of the group. and future to develop current and in leadership programmes strategic in assisting the business to achieve their a critical role HR and OD teams play They are then matched to learning always and market trends. strategy objectives, which are employees, for new such as an induction programme wide activities also involved in group wide learning of both group to individuals and facilitating the development advice providing and bespoke learning programmes. related performance-related and direct immediate of open and honest dialogue promotes Our culture to help individuals identify and address feedback between the leader and his or her team, their development needs. – the individual’s context of relationships At Investec, performance is viewed within the the organisation as a whole. with others, the team, the business unit and relationships by quality conversations and are functional, engaging, defined are Meaningful relationships Performance can only be meaningfully able to be leveraged to meet business objectives. performance objectives must against business objectives, thus team and individual reviewed and individual performance management has always be aligned to business objectives. Team has the following tenets: both appraisal and development components. The process • • • • Our remuneration practices comply with the principles of local regulations, while continuing to local regulations, practices comply with the principles of Our remuneration people meaningfully for performance and contribution. reward innovative, employees are strategy is based on the philosophy that Our remuneration entrepreneurial and work in an environment that encourages and fosters extraordinary extraordinary that encourages and fosters and work in an environment entrepreneurial the ownership, all employees across performance. In line with our philosophy of employee long- and the opportunity to participate in our awards share with staff provided organisation, are term growth.

To attract, retain, attract, retain, To develop and motivate people who can perform extraordinarily To ensure that ensure To performance management is motivational and constructive To retain and retain To drive performance through appropriate and remuneration structures reward

100 of employees engage in performance dialogues every year Industry competitive packages and long- awards term share People strategy Investec integrated annual report 2017 Investec integrated annual report Whistle-blowing policy and protected disclosures Whistle-blowing policy and protected employees to conduct all internal and external dealings with integrity, values requires One of Investec’s trust. Integrity behaviour which promotes and displaying moral strength consistently and uncompromisingly and sustainability. critical to our reputation and confidentiality are The purpose of our whistle-blowing policy is to encourage employees to raise concerns or disclose behaviour or workplace information about possible fraudulent, unethical, criminal or other improper all seek to protect We misconduct in total confidentiality and anonymity and without fear of retribution. or other stakeholders. its employees conduct by the company, employees who disclose unlawful or irregular race, religion, and/or eliminate any form of discrimination-based on gender, endeavour to prevent We (or any other basis as envisaged by the South African Bill of Rights in the age and sexual preference (and a written policy) to equivalents). Investec has a formal grievance procedure Constitution or regional with any incident which may occur. deal appropriately several informal avenues for employees who wish to discuss concerns, e.g. OD, are there Furthermore, and our independent external consultants. HR, employee relations We fully support employees’ rights to freedom of association. There is no representative trade union for representative is no of association. There fully support employees’ rights to freedom We uphold do, however, union. We part of a trade of any employees who are not aware Investec and we are the right to collective bargaining and of association, the constitutional rights of the individual to freedom the right to be a member of a union of choice. The Investec group remains committed to the 10 principles of the United Nations (UN) Global Compact the 10 principles of the United Nations (UN) committed to remains The Investec group demonstrate and values and anti-corruption. Our culture environment to human rights, labour, with respect success and well-being of local we can have a positive impact on the our belief that as an organisation the support and respect We -economic stability. on overall macro and communities, the environment not complicit in any human and are human rights standards of internationallyprotection proclaimed because this would fall within for the group do not have a formal human rights policy rights abuses. We values including unselfishly and culture strong our the ambit of our Code of Conduct which expresses to the relevant we adhere others. Furthermore, valuing diversity and respecting contributing to society, of influence. the UN principles within our sphere laws in all our jurisdictions and strive to advance and child labour and forced slavery, support the international agenda to abolish human trafficking, We welcome the legislated UK Modern as an organisation is to Slavery Act 2015 (the ‘Act’). Our philosophy at uphold the constitutional rights of our employees the dignity and worth of the individual. We respect committed are We or compulsory labour and do not employ children. all times, do not practice forced of the Act and ensuring that our supply chain is compliant with the the requirements to addressing therein. prescribed regulations Discrimination Freedom of association Freedom Human rights

Corporate responsibility responsibility Corporate Corporate (continued)

162 Zero incidents of discrimination Integrity and Integrity and confidentiality critical to our are and reputation sustainability trade unions Zero

Investec Asset Management CEO, is a HJ du Toit, member of The Global Commission on Business and Sustainability Development

10 Principles of the United Nations (UN) Global Compact Working at Investec Working and in the compliance with Investec (BAWI) outlined in Becoming Acquainted practices of Investec are The policies and business and attitude our actions intended to guide conduct and ensure available on the Investec intranet). These are are handbook (both of which all times. values and philosophies at the group’s reﬂect

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 163 03 (continued) (continued) Corporate responsibility responsibility Corporate Corporate Investec integrated annual report 2017 Investec integrated annual report

Tony Grimes – head of facilities UK. Grimes – head of facilities Tony Craig Gunnell – head of facilities SouthCraig Gunnell – head of Africa Health and safety In South Africa, Investec’s HIV/Aids policy and management forum extends to all permanent employees. policy and management forum extends to all HIV/Aids In South Africa, Investec’s it becomes necessary for Investec to terminate employment-based on operational requirements, Where policy which is more retrenchment with Investec’s to be followed will be in accordance the procedure conduct consultation for a period which exceeds We requirements. favourable than local regulatory period, during which we attempt to ﬁnd a suitable alternative for thethe minimum prescribed position employee. affected • our culture that reflects an environment Creating by providing departments collaboration across will enable cross This activity-based working environment to perform each type of circumstances optimal dedicated facilities for specific activities and creating and sharing knowledge). This is supported by anactivity (e.g. developing ideas, delivering content and tools to collaborate with with instant access to information virtual working environment effective sense of trust, empowerment and a shared a culture colleagues. This working space will further facilitate of responsibility. building. office street activity-based working in our new 30 Gresham anticipate replicating We A group wide formal health and safety programme identifies and manages all health and safety risks, and identifies and manages all health and safety programme wide formal health and A group that meets quarterly to Health and safety is overseen by a committee safety audits. carries out regular any concerns.review This management comprises: • and safety of our people. We health, welfare Investec values the physical, financial and psychological The comprehensive and wellness programme. employees with a bespoke employee assistance provide and concern for employees, on care of our focus which is an expression and integrated programme, in face-to-face counselling and coaching sessions. These personalised interventions offered provides who are by a multi-disciplinary team of select health and other professionals provided interventions are days for our employees to raise awareness also host wellness all specialists in their fields of practice. We an interactive approach. health issues through and education around life of our employees, our leave entitlement and the quality of In line with our commitment to improving the needs and well-being and adjusted, taking into consideration have been reviewed disability procedure best practice in the marketplace. of our employees and current Retrenchment policy Retrenchment Employee wellness

fatalities

% %

occupational injuries 0.7 in the employees retrenched last fiscal year Piloted activity- based working in street our Gresham head office

66 employees in South Africa participate in one or wellness employee more interventions Zero 64 R 8 907 423 4 968 554 81 009 960 21 904 679 15 040 244 310 044 187 117 954 883 192 089 304 178 213 327 £ 31 March 2016 31 March 711 840 421 580 235 157 5 582 689 3 834 122 1 036 727 9 091 399 8 434 662 14 674 088 R 4 290 402 22 792 021 12 599 796 11 380 718 384 586 705 137 866 656 102 474 839 246 720 049 231 048 929 £ 31 March 2017 31 March 751 355 678 659 255 847 8 221 308 6 110 812 1 359 141 22 933 797 14 712 489 13 777 983 Investec integrated annual report 2017 Investec integrated annual report Investec’s educational bursary scheme provides employees with focused educational opportunities to employees educational bursary scheme provides Investec’s enable the acquisition of qualifications. Investec’s external learning policy applies to every external learning instance (for example public Investec’s employees with development seminars and courses). The policy provides conferences, programmes, development opportunities to enable the acquisition of knowledge and skills necessary for career within Investec. Internal learning Our Internal include induction, personal and interpersonal skills, technical and learning programmes and coaching as well as our learnership CA trainee and skills, leadership programmes professional programmes. Educational bursary scheme External learning

Corporate responsibility responsibility Corporate Corporate (continued) bursaries granted qualified CA’s qualified CA’s

164 Total group learning and development spend group Total Total Specialist Banking Wealth & Investment Wealth UK and Other Asset Management Total Specialist Banking Wealth & Investment Wealth Southern Africa Asset Management to full-time employees in South Africa have graduated from the CA have graduated from since inception programme

470 217 (2016: £14.7mn) Employee learning and development spend £22.9mn Year ended Year R learning and development team is mandated to develop and retain people who can perform extraordinarily in support of people who can perform extraordinarily HR learning retain development team is mandated to develop and and Investec’s its from performance Our business seeks extraordinary and values. culture manner consistent with Investec’s business objectives in a and development. and personal growth professional employ talented people and then enable their achieve this, we employees. To addressing in identifying and and should be proactive behind their own development be the driving force believe that employees should We to their unique requirements. development needs, allowing them to maximise learning opportunities most relevant Learning and development for the development a number of opportunities invest significantly in We and to develop current and in leadership programmes of our employees of the group. future leaders

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility – 165 1 3 4 282 226 Total 1 358 1 866 1 267 1 374 4 518 7 159 9 029 03 – – – – 96 55 558 709 718 671 2 335 3 724 4 433 Total Female (continued) (continued) – 1 3 4 186 171 800 549 703 Male 1 157 2 183 3 435 4 596 – 1 1 2 83 85 125 293 394 Total 1 194 2 043 3 631 3 926 – – – – 21 13 32 66 172 544 842 1 558 1 624 Female Corporate responsibility responsibility Corporate Corporate UK and Other – 1 1 2 62 72 93 227 222 650 Male 1 201 2 073 2 302 – – 2 2 Investec integrated annual report 2017 Investec integrated annual report 199 141 873 180 Total 1 233 1 573 2 475 3 528 5 103 in the UK is the umbrella for Investec’s employee-led diversity and for Investec’s in the UK is the umbrella Investec Inspire The first network that was by senior executives. which is sponsored inclusion programme, that attracting, recognising was our Gender Balance network, developed under Inspire female talent, is very important at all levels of the business, and developing and retaining can thrive at Investec. of gender, that everyone, regardless helping to ensure all walks of achievements by women from The Female Lead in the UK celebrates great to prolong founding partner, is supported by Investec Private Bank, the life. The project achievement of 60 leading It celebrates the the impact and influence of the project. science and culture, from business and political leaders and figureheads entrepreneurs, schools and further in UK continues with an education programme sport. The project of inspirational women. profiling A diverse workforce is essential to our ability to be an innovative organisation that is able to our ability to be an innovative organisation is essential A diverse workforce to encourage have various processes changing world. We in a fast to adapt and prosper Emerging and cultures. diversity and different appreciating debate and dialogue around all around to participate in discussions with the executive invited established leaders are and diversity. to talent management issues related which is aligned to our employment equity initiative in South Africa Our Zebra Crossing and enable them at Investec of staff of multi-cultural awareness plan, aims to raise levels population and to take these and celebrate the richness of our diverse to appreciate insights back into the business. initiatives and events in Leadership In South Africa, we have a number of Women to participate in the women, and men, at Investec get the opportunity where our of these also include external Some events where gender. conversation around These rich and informative dialogues invited to participate. clients and stakeholders are to thrive as for women in finance environment the appropriate helping us to create are models for the next generation. and as important role leaders, as entrepreneurs – – – – 75 42 526 643 546 127 1 493 2 166 2 809 Female Southern Africa – – 2 2 99 53 30% 124 707 930 327 982

Male 1 362 2 294 employees have % % female

49 20

in both the UK and South Africa % 3 000 The categorisation of executive directors and senior managers are different for Southern Africa and the UK and Other due to the different regulatoryThe categorisation of executive directors and senior managers are different for Southern Africa and the UK guidelines of the respective geographies and hence cannot be compared across the group. male 51 Over Executive directors Asset Management * Employee gender composition – permanent employees Employee gender composition – Women on our board currently currently our board on Women Investec is a member of the Promoting equity and diversity in the workplace equity and Promoting club and is committing to a goal of 30% women on the board. participated in our Zebra Crossing participated in our Zebra Crossing in Leadership initiatives in and Woman South Africa since inception. Wealth & Investment Wealth 31 March 2017 31 March Specialist Banking Total Senior managers* Asset Management Wealth & Investment Wealth Specialist Banking Total Rest of employees Asset Management Wealth & Investment Wealth Specialist Banking Total Total Investec is committed to enabling SouthInvestec is committed to Enterprises and Micro African Small, Medium to professionals (SMMEs) and business In globally competitive. become more in partnership withpursuit of this goal, and on trips to En-novate, we take entrepreneurs exposing the world, innovation hubs around and bestthem to the latest technologies that the trips are business practices. Given we encourage developmental in nature, the participation of young entrepreneurs previously that were who belong to groups the economy. excluded from The empowerment financing element of the FS Code comprises targeted investments and BEE transaction financing. Targeted investments comprise of debt financing, extensions or equity investment in credit gaps where in areas South African projects, or blockages in economic development have not been adequately and job creation This includes transformational addressed. agricultural development, infrastructure, and black SMEs. BEE housing affordable transaction financing includes all transactions for the acquisition, by black people, of ownership in an existing or new direct entity (other than an SME) in the financial It also or other sectors of the economy. with debt financing includes joint ventures, extension to, and or other forms of credit equity investments in BEE companies (other at least 25% black than SMEs), which are owned. Investec spent a total of R10 billion on empowerment financing initiatives during 2017. The majority the year ended 31 March of this (R7.7 billion) was on transformational and on black SMME funding. infrastructure 100 Target score: 88 score: Target 80 60 Score 77.63 77.55 77.71 Raizcorp, which incubates entrepreneurs entrepreneurs Raizcorp, which incubates and managing their own business who are jobs. The and create have potential to grow selected for the programme entrepreneurs trained assigned a dedicated team of are on key areas Raizcorp guides, who focus marketing, sales and finance, strategy, from personal development. -base black Khulasande Capital, a broad private equity and owned and controlled investment vehicle, is a partnership between and the Entrepreneurship the IEP Group Trust The ED Development (ED) Trust. is a black charitable trust focusing on initiatives. educational and entrepreneurial aim is to participate in Khulasande’s of empowerment opportunities that are create and would benefit to the ED Trust value for its beneficiaries. This partnership Khulasande with access to an provides experienced team with an extensive track ensuring it can add value to its record investee companies and help them grow and multiply. in the South Africa is at a critical juncture need history of transformation with a dire and sustained inclusive for job creation As part of the CEO economic growth. committed Initiative, Investec group R20 million to the small and medium enterprises (‘SME’) fund with Investec Fund contributing a further Property R5 million to the fund which will provide and high-potential entrepreneurs enterprises with access to not only advice and funds but also professional see this as an important mentorship. We of our country. investment in the future Investec integrated annual report 2017 Investec integrated annual report 40 20 Corporate responsibility responsibility Corporate Corporate (continued) 0 Using our entrepreneurial expertise Using our entrepreneurial black of new to foster the creation platforms entrepreneurial of Serving as a leading source empowerment financing Investing significantly in learning and development opportunities for both our employees as well as other South Africans Encouraging internal transformation by in representivity bringing about greater our workplace. 2015 2017 2016 166 Year Transformation rating • • • a level 2 During the year we received Financial Sector Code (FS Code) rating continually strive We Empowerdex. from at all representation to achieve greater the effective levels of the business through implementation of our employment equity of our quantitative targets plan. In respect we exceeded the targeted black headcount middle and semi-skilled levels at the senior, and marginally missed the targets at the top and junior management levels. We met or exceeded the targets at every level for females with the exception of junior management. Our disabled headcount is over double what we targeted it to be and black. 84% of these individuals are Recognising that enterprise and supplier development is vital to South Africa’s transformation, we continue to run several initiatives to support black entrepreneurs. One example of this is an enterprise in partnership with development programme, Transformation in South Africa Transformation committed remains In South Africa, Investec Our to black economic empowerment. involves: approach •

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility R 167 03 973 251 938 315 5 989 095 2 335 206 4 939 234 1 480 565 0.9 33 268 067 23 970 515 70 149 338 62 791 224 103 417 405 2017 £ 1.4 1.0% 31 March 2016 31 March 46 063 44 410 70 074 283 458 110 523 233 769 (continued) (continued) 4 984 645 1 574 545 1 134 501 3 320 100 2 971 847 R 0.9 190 406 partnerships and volunteering initiatives we to support these partners. Further, to make donations to charities in response all regions for assistance across requests This within the group. and business areas allows us to allocate meaningful grants in which might not fall within our main areas focus areas. 6 247 681 1 255 645 6 636 250 1 181 771 2016 32 416 544 18 276 968 85 874 127 73 970 474 10 531 476 118 290 671 1.0 £ 1.2% 31 March 2017 31 March 74 877 70 472 11 354 372 564 395 735 628 016 Investec plc Corporate responsibility responsibility Corporate Corporate 7 053 947 1 933 074 1 089 898 5 120 873 4 411 031 1.1 2015 1.1 Investec Limited Investec integrated annual report 2017 Investec integrated annual report 0 2.0 1.5 1.0 0.5 Percentage CSI spend as a % of operating pro t* Wherever possible, we seek to collaborate Wherever with partners, so as to leverage resources a lasting and expertise and help ensure impact as well as long-term sustainability for our projects. The active involvement of our people, at the core volunteering, remains through We of our social investment strategy. have many well-established charitable

1.3% and

Before goodwill, acquired intangibles, non-operating items, taxation and after other non-controlling interests. CSI spend as a % of operating profit* We target between We 1.0% Total Investec CSI spend as a % of operating profit* Total Total Investec CSI spend Total Total Group Corporate Social Investment Group Specialist Banking Wealth & Investment Wealth UK and Other Asset Management Total Group Corporate Social Investment Group Specialist Banking Wealth & Investment Wealth Southern Africa Asset Management In keeping with our business model of independent, highly autonomous business there centre, units, supported by a strong to social is no single overriding approach although investment within the group, clear commonalities exist. Each of the has pursued social investment as regions to their circumstances deemed appropriate in the evolution of they are and where their business. Our communities to the endeavours are central Social Investment (CSI) Our Corporate nurturing an to society, unselfish contribution values of making an group’s and underpin and respecting others, spirit, valuing diversity entrepreneurial Our approach to CSI corporate citizen. aim of being a responsible Investec’s believe this and the environment. We entrepreneurship focuses on education, wealthopportunities for employment, effective way to create to be the most socio-economic growth. creation and stimulating * Year ended Year 22% 25% 32% 21% 17 10% 27% 33% 30% 16 Spend on CSI initiatives in the last 10 years Building dedicated charitable Building dedicated charitable partnerships Harnessing diverse resources our and collective talent; and in making Engaging all of our people a positive difference. We champion corporate champion corporate We by: responsibility • • • 8% 27% 21% 44% 15 Environment Entrepreneurship Education Philanthropic and other 0 80 60 40 20 CSI spend by category (%) Percentage £15.7mn 100 17 £1.9mn 16 15 Investec integrated annual report 2017 Investec integrated annual report 14 13 12 11 10 increase in CSI spend increase since 2008 Corporate responsibility Corporate (continued) 09 % 08 Focusing on education, entrepreneurship and the environment entrepreneurship Focusing on education, with local community partners Facilitating employee volunteering local charities Granting donations to small and organised events fundraising endeavours through Encouraging employee employee charity funding giving. -Earn encourage employee payroll facility to a Give-As-You Providing 0 77 500 500 000 ’000

500

000 168 CSI spend Investec plc • • • • • UK and Other includes: in the UK Our approach 2 2 £ 1 1

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility

169 03 Winner – Winner – Winner 95% 46% National spent supporting Volunteering: Volunteering: in the GCSE exams CSR Awards Community’s Community’s Awards 2016 Awards (continued) (continued) Business in the Business in 4,900 hrs Arrival education: community organisations Morpeth Secondary being predicted an A or A* of stage 4 graduates went on to Responsible Business Responsible Apprentice: School Young full-time work or higher education Corporate responsibility Corporate Investec integrated annual report 2017 Investec integrated annual report Our people spent over 4 900 hours supporting community organisations local enabled them to donate giving infrastructure payroll Investec’s to our offices. supported their salaries. We from directly in excess of £485,000 to charity, them to fund raise at least £34,000 for Investec supported initiatives and their own personal fundraising endeavours (over £71,100), by recognised donating an additional £25,900 to their chosen causes. We hosted the sixth Morpeth Secondary School Young Apprentice skills Apprentice hosted the sixth Morpeth Secondary School Young We 9 pupils. The select Year for development and work experience programme targeting with the school often diverse backgrounds was chosen from group disengaging from to be at risk of feared certain students because they were developing 93% of pupils reported education. Following the programme, going on to take one or two GCSE exams important life skills. 100% are with 46% being C or higher, for the coming year are early and all predictions an A or A*. predicted Over 120 Investec volunteers from across our London offices worked closely our London offices across Over 120 Investec volunteers from Arrival Education, helping with youth talent development social enterprise, to raise aspirations and to develop mind-sets and skills for students from to achieve success. 95% of stage 4 graduates went on backgrounds difficult went on to University, to full-time work or higher education. 63% of the group A further three university. of which, 42% obtained a place at a Russell Group have joined the these programmes, to us through candidates, introduced (bringing the total in the last two years to five), a victory for Investec workforce internal employee- support of which coincides with increasing social mobility, led diversity initiative, Investec Inspire. Investec won the National CSR Awards, in the Individual Community (Legacy) in the Individual Community Investec won the National CSR Awards, 2017, in the Business Charity Awards and is a finalist in the category, Expert the Beyond Business Programme. for Community Impact category, of the 5% in each in the charity retaining within Investec resulted guidance from of the programme the sustainability launched enterprises, helping to strengthen the stake for the original seed-funding amount. In – alumni may repurchase 2016, this funded one additional enterprise to launch. Investec won Business in the Community’s Responsible Business Awards Responsible Business Awards in the Community’s Investec won Business the for our flagship programme Communities) 2016 (Building Stronger the enterprise incubator we run in partnership with Beyond Business social has in 2008 the programme Since we partnered by Bow Centre. Bromley enterprises, with a combined annual turnlaunched 44 new social -over of sole new jobs. Since 2011 when we became the 250 £2.3 million and created of enterprises we helped to launch have gone 90% funder of the programme, year. on to trade into their third Highlights 5% 84% 11% ogressing ogressing 17 3% 8% 89% 16 Spend on CSI initiatives in the last 10 years To facilitate an increase in the facilitate an increase To -minded number of entrepreneurially those with a matriculants as well as Mathematics decent pass in English, have an and Science and, who matric beyond aspiration to proceed facilitate access to quality To tertiary education. Workplace Transition to workplace Transition Invite as alumni Our objectives are twofold: Our objectives are • • 6% 84% 10% 15 Entrepreneurship Education Philanthropic and other 0 80 60 40 20 CSI spend by category (%) R499mn Percentage 100 17 R86mn 16 15 Tertiary Access to tertiary education Support performance Investec integrated annual report 2017 Investec integrated annual report 14 13 12 11 increase in CSI spend increase since 2008 10 Corporate responsibility Corporate (continued) 09

0 20 80 60 40 100 High school Mathematics and Science thinking Entrepreneurial to careers Exposure ’million 170 Southern Africa pipelines of interventions

CSI spend Investec Limited 156% Southern Africa to the workplace. The illustration below shows how various components of our strategy form a pipeline of interventions starting at high school and pr The illustration below shows how various components of our strategy form a pipeline of interventions Our strategy in South Africa focuses on the support and empowerment of talented focuses on the support and empowerment Our strategy in South Africa and university to school continuum of interventions through individuals within a defined the workplace. R

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility

171 8 17 03 Funding 115 263 288 R5mn Promaths centres new merit awards new merit awards bursary recipients across the country (continued) (continued) distinctions in Science 3,420 hrs Volunteering: spent over Volunteering: Promaths Bursary Fund initial capital allocated to supporting our communities distinctions in Mathematics and Corporate responsibility Corporate Investec integrated annual report 2017 Investec integrated annual report We believe that more can be achieved through successful partnership with can be achieved through believe that more We keen interest members to take a to encourage our staff hence the effort staff in and participate in volunteering initiatives. Investec Merit Awards allocated 17 new merit awards in the 2016 in the 2016 allocated 17 new merit awards Investec Merit Awards academic year. In early 2017, the Promaths Bursary Fund was launched, where Investec Bursary Fund was launched, where In early 2017, the Promaths the fund. allocated an initial capital of R5 million to establish recipients has 115 bursary currently The Investec bursary programme bursary recipients first year to honours level. Last year saw 16 of our from the total number of our graduating and entering the world of work, bringing alumni to 123. and part of our now professionals ex-bursary holders who are In 2016, Promaths 11th year of operation, the Investec funded Promaths funded Promaths 11th year of operation, the Investec In 2016, Promaths The eight Investec funded the country. continued to do well across centres and 263 distinctions in Mathematics the country produced across centres 288 in Science. Our flagship educational programme, Promaths, is aimed at supporting the Promaths, programme, Our flagship educational competent in Mathematics students who are education system by generating extra tuition in Mathematics and provides and science. The programme the country. Science to learners across in grades 10 to 12 at selected schools the country. across centres funds eight Investec currently Highlights initiatives: was allocated to education and entrepreneurial CSI spend a total of 89% of South Africa’s In line with our strategy, Providing our clients Since the launch of One Since the launch of One Place the number of & investors with Wealth Investment Online is up by 80% voice biometric % authentication for Up by 80 % Online Portfolio Manager has a Private banking and Wealth & Investment client base overlap of (AUM) 31 % Investec integrated annual report 2017 Investec integrated annual report Assets under Management with Investment & Wealth Online is up by 220 % Assets under Administration with Investment & Wealth Online is up by 65 Corporate responsibility Corporate (continued)

At Investec, we pride ourselves on giving our clients an extraordinary experience. on giving our clients an extraordinary At Investec, we pride ourselves dedicated Investec consultant, our world-class 24/7 a Interaction can be through or our innovative digital platforms. Global Client Support Centre 172 Investec One Place the Through service culture. client-centred strong One Place is a continuation of Investec’s our clients integrated we now offer & Investment collaboration of Private Banking and Wealth all in One Place. locally and internationally, access to banking and investment services, both Since the launch of One Place: Technology enhancements Technology Our clients The Wealth & Investment Educational Trust is being created as a vehicle for contributions to is being created & Investment Educational Trust The Wealth the needs in education in various capacities in addressing programmes support and provide of applying for its Public Benefit Organisation status is in the process South Africa. The Trust and Section 18A. Wealth & Investment Educational Trust Wealth Investec philanthropy services Investec philanthropy & Investment services within our Wealth launched Investec philanthropy Investec recently individuals, families, businesses and non- advisory services to business. This initiative offers objectives and achieving organisations with the aim of maximizing their philanthropy profit investments. Largely South African- the most positive social impact with their charitable a number of private charitable support services currently based, Investec philanthropy and include education, healthcare, of the foundations vary, foundations. The focus areas An important and conservation and animal welfare. social justice, the environment welfare, organisation prior to the making of of due diligence on a non-profit service is the provision that the private foundations we look after support sustainable and a grant. This is to ensure organisations. effective & Investment clients of the Wealth organisations, which are to non-profit With regard services which include guidance on structuring, legal, tax and business, we also provide corporate governance issues. Voice recognition Voice a voice biometric authentication the first financial institution in South Africa to provide are We method to our clients. 80 The number of investors with Wealth & Investment Online is up by

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 173 17 0.39 03 16 0.41 (continued) (continued) global lending global lending 15 0.43 considerations in Strengthened our Strengthened environmental risk 14 0.39 our daily operations of ce space policy to incorporate 2 13 0.36 Corporate responsibility Corporate 0.44 0.42 0.40 0.38 0.36 0.34 0.32 Emissions per m office space even further with electricity reduction initiatives. space even further with electricity reduction office 2 17 7.05 Investec integrated annual report 2017 Investec integrated annual report 16 8.20 15 8.44 14 8.03 13 7.31 Investec’s environmental policy takes into account the challenges that climate policy takes environmental Investec’s activity and we will consider any meaningful to the global economy change presents We the life of, our planet. impact on, or prolongs the negative that either reduces given our specialised financial services organisation, and believe that as a niched and emerging worlds, we can make a meaningful positioning in the developed change. climate impact in addressing Internally, we focus on creating awareness and encouraging positive sustainability awareness we focus on creating Internally, behavioural change considerations into our incorporating environmental increasingly we are Externally, daily operations cleaner and renewable the opportunities for our clients and businesses in recognise We lending and investing. and responsible energy efficiency energy sources, 9.0 8.5 8.0 7.5 7.0 6.5 6.0 Emissions per average employee Our respective carbon footprints have been calculated according to the international Greenhouse Gas (GHG) Protocol’s Corporate Gas (GHG) Protocol’s to the international Greenhouse carbon footprints have been calculated according Our respective of the CRC Energy Efficiency in line with our requirements edition). Data has been gathered (revised Accounting and Reporting Standard method to determine what is included in our scope of reporting. use the operational control scheme. We level was 5% with all facilities estimated to contribute >1% of total emissions included. Materiality set at a group Direct environmental impact environmental Direct We continue to drive awareness about our direct operational impacts. Over the past 5 years we have not seen significant changes in about our direct continue to drive awareness We scope of our operations. Since then we to cover a broader our intensity indicators. In 2015 we enhanced our data collection processes our emissions per average employee and emission per m have reduced • • As a niched specialist financial services organisation with a small physical presence, presence, services organisation with a small physical As a niched specialist financial limited. operations are daily and social impacts of Investec’s environmental the direct and manage our wider to understand that we have a responsibility In recognising states: policy and social footprint, our environmental environmental • Our planet We have also reduced our travel emissions through continuous collaboration through video conferencing and effective leveraging of and effective video conferencing continuous collaboration through our travel emissions through have also reduced We international teams. 2 – – 8.5% (4.1%) (3.2%) (3.1%) (7.9%) (4.1%) (5.6%) 30.6% (12.4%) (37.3%) (61.5%) (18.5%) (14.0%) >100% (12.4%) equivalent Variance in Variance tonnes CO 2 – – 77 934 266 231 8.20 8 522 14.53 8 663 0.41** 91 686 123 857 190 996 measure in unit of 1 317 622* 2 215 447 1 131 072 2 411 761 77 334 920 43 404 040 43 404 040 Consumption 2 – 51 98 39 13 248* 612 216 891 248 445 CO 1 813 31 March 2016 31 March 70 005* 30 461 31 509 36 683 36 683 Tonnes of Tonnes equivalent Operational control DEFRA (2016) and IEA Emissions per full-time employee space m Emissions per office by KPMG Limited assurance provided 47 793 576 506 404 452 7.05 0.39 9 155 12.60 23 978 115 372 175 321 102 395 measure in unit of 1 325 898 2 675 459 1 092 169 2 341 511 75 891 968 43 407 612 43 407 612 Consumption 2 – 32 15 36 248 128 499 209 766 268 431 CO 1 710 31 March 2017 31 March 64 506 26 682 27 604 35 192 35 192 Tonnes of Tonnes equivalent t t t L L L kl kg kg km km km km km kWh kWh Units Investec integrated annual report 2017 Investec integrated annual report purchase 2 Recycled waste Renewable fuel derived natural oils from Water consumption Water Commercial airlines Commercial Taxi Road business travel Rail travel General waste Paper consumption Electrical energy consumption Vehicle fleet Vehicle Refrigerant CO LPG stationary Diesel Natural gas Corporate responsibility Corporate (continued) For more information refer to the 2017 corporate responsibility report on our website. office space for 2016 was restated. 2 Recycled waste Intensity average employees (including temporary Total employees and excluding Investec Import Solutions employees) Total emissions Total No scope Water Emissions per average employee Emissions per m² office space Emissions per m² office Water consumption per average employee Water * Restated. ** m Employee travel Waste Scope 3 Paper Energy Scope 2 Employee travel Refrigerant Scope 1 Energy Independent assurance Assessment parameters Consolidation approach Emission factor data source Intensity ratio 174 Carbon footprint for the group Carbon footprint

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 2 175

6.0% 5.6% (6.1%) (3.1%) (6.1%) 30.6% 26.5% 76.9% (14.0%) (37.3%) (33.3%) >100% 03 (10.3%) (12.7%) Variance in Variance tonnes CO equivalent% Energy 32% 11 29 reduction 780 120 600 5.81* 0.39 7.55 3 799 28 666 190 996 964 022* (continued) (continued) measure in unit of 2 215 447 2 411 761 34 787 724 14 134 778 14 134 778 Consumption 2 – 9 51 98 52 182* 306 445 497 CO Our 2 Gresham street office in office street Our 2 Gresham the UK, comprising 9.8% of the floor space set an electricity group target of 34% by 2020, reduction with 2008 as a base year. 6 658 6 658 31 March 2016 31 March 22 066* 14 265 14 911 Tonnes of Tonnes equivalent 20 26 52 522 387 600 4.93 0.37 7.67 4 017 30 810 19 175 321 measure in unit of 1 034 080 2 675 459 2 341 511 Corporate responsibility responsibility Corporate Corporate 33 942 801 14 672 879 14 672 879 18 Consumption 2 6 2 32 92 193 128 387 431 525 17 CO 6 250 6 250 31 March 2017 31 March 19 794 12 273 13 019 16 Tonnes of Tonnes equivalent % reduction achieved % reduction Investec integrated annual report 2017 Investec integrated annual report 15 t t t L kl kg km km km km kWh kWh Units 14 Year 13 12 Revised % target reduction 11 10 Water consumption Water Recycled waste Commercial airlines Commercial Taxi Road business travel Rail travel General waste Paper consumption Electrical energy consumption Refrigerant Diesel Natural gas 09 08 Original % target reduction For more information refer to the 2017 corporate responsibility report on our website. 0 -5 -10 -15 -20 -25 -30 -35 -40 Total emissions Total No scope Water Recycled waste Intensity employees (including temporary average Total employees) Emissions per average employee Emissions per m² office space Emissions per m² office Water consumption per average employee consumption per average Water Employee travel Waste Scope 3 Paper Energy Scope 2 Refrigerant Scope 1 Energy Percentage UK energy reduction target Data has been gathered in line with requirements of the CRC Energy Efficiency Scheme in the UK. We use the operational control method to use the operational control Scheme in the UK. We of the CRC Energy Efficiency in line with requirements Data has been gathered all facilities estimated to contribute >1% of level was 5% with Materiality set at a group determine what is included in our scope of reporting. is the same as our carbon footprint report. total emissions included. The GHG report * Restated. Carbon footprint for UK and Other Carbon footprint

Won certified Gas 10th Certified: 72% reduction Our EnMS remains in waste management drinking water IS014001 IS014001 Energy Reduction Our 2 Gresham street office in office street Our 2 Gresham the UK, comprising 9.8% of the gas floor space set a revised group target of 72% by 2020, reduction with 2008 as a base year. Bottled our own pure platinum award for best practice platinum award Verification kitemark Verification 20 19

18 17 16 % reduction achieved % reduction 15 14 Investec integrated annual report 2017 Investec integrated annual report Year 13 12 Revised % target reduction 11 10 09 The UK’s head office drinking water refilling bottled their own pure bottles 29,595 litre and run Cycling continue to encourage active travel amongst our staff We schemes to Work recently travel and continue to mitigate our carbon footprint from We into two strategic partnerships. entered Our air quality campaign reached 2 518 employees and 3 227 air pledges Our air quality campaign reached made certified Energy Management System remains head office The UK’s have to date, Kitemark. We to the Energy Reduction Verification off by switching £2.2 million in this office saved approximately unnecessary electricals. The UK’s head office won their 10th Platinum Award for best practice in Award won their 10th Platinum head office The UK’s waste management run by the Cleaner City Award won the inaugural head office The UK’s Cheapside Business Alliance for Apple Award won a Gold prize in the Green head office The UK’s Best Practice Environmental for the Group Environment Commended by the City of London’s Fridays initiative. disposable free The UK’s head office Energy Management System (EnMS) remains System (EnMS) remains Energy Management head office The UK’s ISO14001 standard certified to the international environmental was further embedded in our programme In 2016 our environment offices. regional Corporate responsibility responsibility Corporate Corporate (continued) • • • • • • • • • • • 08 Original % target reduction 0 -10 -20 -30 -40 -50 -60 -70 -80 Percentage UK gas reduction target 176 Highlights for the UK and Other Highlights for the

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03 Corporate governance and corporate responsibility 2 –

177

7.7% (3.6%) (3.6%) (3.2%) (6.7%) (9.9%) (63.4%) >100% 03 (12.1%) (11.0%) (16.7%) (70.0%) (19.7%) equivalent Variance in Variance tonnes CO Energy – – reduction 66 6.9% 154 505 146 0.43* 10.15 4 723 8 663* 20.15 95 191 91 086 (continued) (continued) 353 600 measure in unit of 1 131 072 42 547 196 29 269 262 29 269 262 Consumption 2 – 66 30 13 306 216 839 247 CO We have set an energy reduction have set an energy reduction We target of 10% by 2020, with 2014 as our base year. 1 315 31 March 2016 31 March 16 598 47 938 16 196 30 025 30 025 Tonnes of Tonnes equivalent 21 241 576 119 20 352 452 8.70 0.40 5 138 16.46 84 562 23 978 291 818 101 795 measure in unit of Corporate responsibility responsibility Corporate Corporate 1 092 169 41 949 167 28 734 733 28 734 733 Consumption 19 2 – 9 55 36 CO 112 209 674 266 1 185 31 March 2017 31 March 14 485 44 712 14 409 28 942 28 942 Tonnes of Tonnes 18 equivalent Investec integrated annual report 2017 Investec integrated annual report t t t L L L kl kg kg km km km kWh Units % reduction achieved % reduction 17 Year 16 % forecast reduction % forecast purchased 15 2 Renewable fuel derived natural oils from Recycled waste Water consumption Water Commercial airlines Commercial Road business travel General waste Paper consumption Electrical energy consumption Vehicle fleet Vehicle Refrigerant CO Diesel LPG stationary office space office 2 14 Target % reduction Target For more information refer the to 2017 corporate responsibility report on our website.

0 -2 -4 -6 -8 -10 -12 Intensity employees (including temporary average Total employees and excluding Investec Import Solutions employees) Emissions per average employee Recycled waste Total emissions Total No scope Water Emissions per m Employee travel Waste Scope 3 Paper Energy Scope 2 Employee travel Refrigerant Scope 1 Energy Water consumption per average employee Water * Restated. Percentage South Africa energy reduction target Carbon footprint for South Africa for South Carbon footprint

6.9% R5mn infrastructure since inception Participated in Earth Hour R12mn reduction in energy spent on Rhino Lifeline Raised awareness around e-waste campaign modernisation of electrical spent on consolidation and spent on consolidation Investec integrated annual report 2017 Investec integrated annual report Corporate responsibility Corporate (continued) Investec staff joined millions of people across the world who switched off their switched off the world who joined millions of people across Investec staff 2017 at 20:30. 25 March lights for Earth Hour on Saturday and over raise awareness Investec Rhino Lifeline continues its strategy to years on the education of youth R12.0 million has been spent in the past four than 66% of this initiatives. More and demand reduction as well as rescue than 6,400 children more spend has been specifically on education with In since inception. a rhino conservation programme through being reached fun educational with this another 5,200 children 2017, we expect to reach conservation programme. Team Green hosted an Out of the Ordinary e-waste campaign using art to an Out of the Ordinary hosted Green Team waste. disposing of electronic of responsibly raise awareness Spent approximately R5 million during the year on consolidation and R5 million Spent approximately modernisation of electrical infrastructure. 6.9% reduction in energy since 2014. In spite of significant growth in 2014. In spite of significant growth in energy since 6.9% reduction in staff floors in Sandton) and growth space (two additional occupied office achieving a towards is good progress Africa) there headcount (8% for South on the 2014 baseline. in energy by 2020 10% reduction Investec Rhino Lifeline which raises awareness of South Africa’s rhino crisis of South Africa’s Investec Rhino Lifeline which raises awareness which Conservation programme (EWT) Carnivore WildlifeEndangered Trust of this our support have renewed wild dogs. We conserves South Africa’s in the last financial year programme on energy projects South Africa which minimises the impact of renewable BirdLife and their habitats. birds Conservation in UK and Other to an urgent need to halt the decline in is a charity established in response Tusk for the people and wildlife of the natural heritage and build a sustainable future Africa’s in Conservation Awards we developed the annual Tusk continent. Now in its fifth year, These of Tusk. and HRH The Duke of Cambridge, Royal Patron partnership with Tusk people towards not only acknowledge the contribution made by extraordinary awards both the immediate and around conservation, but also aim to raise global awareness long-term challenges facing our natural world. Conservation in South Africa to make a meaningful contribution to the world we live in is at the heart of The desire passionate about ensuring African heritage, we are values. Given Investec’s Investec’s fund a number therefore the continued existence of a number of African species. We the sustainable existence of South Africa’s which help to ensure of biodiversity projects rich wildlife. These include: • • • 178 Conservation Highlights for Southern Africa

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 179 03 (continued) (continued) Environmental considerations Environmental and (including animal welfare impacts) climate-related Social considerations -economic considerations. Macro Winner – IJ Global African for Renewables deal 2016 Award the Kathu Solar Park Concentrated in Solar Power (CSP) project South Africa Winner for the – SERAS awards and best company in affordable clean energy Participation in the renewable energy sector: £1.8 billion Participated in 11 renewable wind, (solar, energy sector projects waste). energy from project Piloted a solar rooftop AMP (enterprise supplier development hub) partnering with 10-15 black owned SME’s BEE rating level 3. In particular the following factors factors In particular the following a taken into account when are or approved transaction might be outcome of declined based on the the sustainability considerations: • • • • • • • • • • Corporate responsibility Corporate Investec integrated annual report 2017 Investec integrated annual report Responsible property management Responsible property and 27.86% owned by Fund (which is managed by Investec Property Investec Property development. Sustainability is a key sustainable business Investec Limited), actively explores stability of electricity and water supply the for the Fund which includes improving focus area possible. The cost of occupation where for clients while attempting to manage the increasing to identify energy the portfolio in order Fund tracks and benchmarks consumption across opportunities and monitors improvements. efficiency in Bloemfontein to Mall of Fleurdal on the rooftop a pilot solar project The Fund introduced went live on 1 November 2016. It also provides The project the cost of electricity. reduce grid stability and energy security and will alleviate down-time for clients in the event of load in has resulted This project energy requirements. 20% of the mall’s – shedding, producing out at Musina Mall. The technology will continue to be rolled -out of a similar project the roll the cost base of the Fund as well as the cost feasible building and assist in reducing across of occupation for clients. a comprehensive -out of sustainability initiatives through The Fund will continue with the roll capital involving further capital investment. In addition to the direct two-year programme the majority of which is expected to be value enhancing through spend on the properties, for its clients, the Fund is efficiencies returns on investment for the Fund and improved Council for certain of Buildings the Green of obtaining ratings from engaging in the process its properties. as an enterprise supplier development known as AMP, The Fund has initiated a new project it initially will be partnering with 10 – 15 black-owned small and medium hub, where The initiative seeks industry. to the property services enterprises in the industries that provide subsidising rental the capital to install offices, to develop small businesses by providing payment terms. preferential and providing levels, upskilling of the entrepreneurs BEE rating is level 3 with the next rating scheduled for October 2017. current The Fund’s Power and infrastructure comply with applicable projects -related that all power and infrastructure require We fund or invest in projects law and do not planning, labour and procurement environmental, assessments, do not comply with impact which do not have acceptable environmental be expected to breach and labour laws, and either do or could reasonably procurement target transactions in countries We acceptable behavioural, ethical or moral standards. and that have due Standards Bank with established laws that comply with World If not, sponsors and suppliers are and effectively. applied reasonably that are processes In addition, we have with such standards. obliged to give undertakings and compliance to evaluate and enhanced procedures now designed an internal framework to provide impacts of the social and environmental actively avoid, manage and mitigate the potential proposed. projects Sustainable finance and investment Sustainable our daily to sustainability which is not limited to Investec has a holistic approach social investment rather includes our many impactful corporate operational activities but and to the environment corporate responsibility broader and is based on a programmes can have is through that the most meaningful contribution Investec believe We society. energy. and supporting businesses involved in renewable financing, investing responsible our values, implicit in risk considerations are and environmental social Accordingly, and social applied as part of our environmental are and code of conduct and culture (executive oversight by the social and ethics committee is also risk framework. There issues. environmental committee) on social and For more details on the IAM stewardship policy visit the website: www. investecassetmanagement.com Integrate ESG analysis at a Integrate ESG analysis at a fundamental analysis stage and clients our engage Proactively stakeholders on the subject of sustainability Deliver on our clients’ mandates Deliver on our clients’ the real and grow Preserve power of the assets purchasing entrusted in us risks and Consider all material investments opportunities to our Signatory of the United Nations- supported Principles for Responsible Investment (UNPRI), Code and the UK Stewardship Code for Responsible Investing in South Africa (CRISA) Fundamental principles included in Code our Stewardship Investec integrated annual report 2017 Investec integrated annual report Corporate responsibility Corporate (continued) 180 The majority of strategies currently integrate ESG analysis at a fundamental analysis stage integrate ESG The majority of strategies currently they form a qualitative, quantitative or a mix of both account for material ESG issues. where including external a number of sources, company ESG analysis from we source Currently, allow us to build a view of how well the companies are These sources service providers. identifying, manage and plan for these long-term issues. Ultimately the ESG view is in-house Once we become a holder of the equity -party provider. a third from and not externally sourced to or bond we become active owners and engage with the company or issuers as necessary and minimise any risks of future of a high standard the management of the risks are make sure value. events that may destroy manner believe it is important to not only manage our clients’ assets in a responsible We engage our clients and stakeholders on the subject of sustainability. but also to proactively and that the sustainability imperative means that we have a responsibility recognise We sustainable development and encourage our opportunity to lead the conversation around sustainable long-term investing. more clients on their journey towards Our role as a global asset manager as a global Our role is to deliver on our clients’ mandates. our primary goal as a global asset manager, In our role power of purchasing the real and grow of our work is to preserve The essential purpose this purpose we will us by our clients over the long term. In fulfilling the assets entrusted to of their ownership exercising including the effective over the assets, role assume a stewardship preserve actively engage or withdraw capital to evaluate and, if necessary, monitor, rights. We portfolios. or add value to our clients’ we consider all obligation to make sure it is our legal money, As a fiduciary of our clients’ of an environmental, to our investments which include those material risks and opportunities this priority is outlined and commitment to Our approach social and governance (ESG) nature. Policy and is overseen by our internal Investment Governancein our Stewardship Committee Head such as our CEO, CIO’s, the business around (IGC) which includes senior leaders from of the United Nations-supported also a signatory are of Legal and Investment team heads. We Code and Code for the UK Stewardship Principles for Responsible Investment (UNPRI), investor signatories of the Carbon are We Responsible Investing in South Africa (CRISA). and their Carbon Action initiative, which calls for business to monitor the Project Disclosure also involved in a few are We of carbon emissions. management and reduction cost-effective to better engage on issues of active ownership other advocacy organisations which allows us on a global scale with other investors. While all teams follow the fundamental principles of our stewardship policy, the manner in policy, of our stewardship While all teams follow the fundamental principles will be determined by an active ownership role which Investec Asset Management (IAM) plays of the clients as well as the particular nature an assessment of the costs and benefits to our will be subject Any strategy of intervention in terms of active ownership investment strategy. and with the protection in the company, invested to portfolio decisions on whether to remain the central objective. Each investment enhancement of the value of client portfolios being a framework touching on five key areas: team develops their integration strategies following construction, engagement and reporting. investment universe, fundamental analysis, portfolio

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 181 03 (continued) (continued) Align architecture across the group across Align architecture and data Reduce our application footprint functions Commoditise common and processes Leverage our digital offering our security. Continue to improve The key principles underpinning The key principles underpinning our strategy are: • • • • • Reduced physical database Reduced physical database 78 to 40 servers from in London seeks to New premises optimise energy requirements Continuous collaboration through Continuous collaboration through (VC) Video Conferencing 90% of all servers now virtualised Continue with the automation of hibernation Use of cloud-based services Corporate responsibility Corporate Investec integrated annual report 2017 Investec integrated annual report The implementation of a Software Asset Management (SAM) toolset continues to yield The implementation of a Software the group across negotiations commercial in optimal licensing levels and effective results footprint and the hardware in a reduced clustering resulting Database infrastructure our physical (we reduced in power and cooling requirements subsequent reduction 78 to 40) database servers from and be in London seeks to optimise energy requirements The design of our new premises friendly as possible as environmentally move in London, an ‘activity-based working’ Street for the 2 Gresham In preparation This together with new us for a new working environment. pilot is underway to prepare mobile and productive to be more technologies, will enable staff moved to a purpose built, will be move, the data centre Street As part of the 2 Gresham outside of London. centre energy efficient Continuous collaboration through Video Conferencing (VC), Audio Video (AV) and our (VC), Audio Video (AV) Video Conferencing Continuous collaboration through leveraging of effective geographies, ensures across implementation Telepresence travel costs business international teams and reduces footprint to data centre benefits relating significant Virtualisation has continued to realise technologies have been with 90% of all servers now virtualised. Storage reduction; storage footprint by 80%, the data centre in South Africa, which has reduced refreshed in These initiatives have resulted floor space. of data centre allowing for further reclamation to one, three building from in the Grayston Drive the number of machine rooms reducing about a only requires The new platform the cooling and electricity requirement. reducing tenth of the power Site (MAPS), in South power consumption at the Midrand Alternative Processing Efficient Africa, continues with the automation of hibernation during periods of desktop equipment of low usage feasible, the use of cloud-based services continues to be a major consideration Wherever and physical infrastructure to reduce all geographies and businesses in an effort across geographies. This has been achieved in five different energy requirements. • • • • • Key infrastructure-related developments improving our IT efficiency during our IT efficiency developments improving Key infrastructure-related the period include: • • • • Key infrastructure-related developments reducing our environmental our environmental developments reducing Key infrastructure-related following: footprint during the period include the Information technology (IT) Information technology that meets information technology and effective deliver efficient Our vision is to continuously risk tolerance. facilitating excellent client service, within acceptable the needs of the business We continue to enhance security continue to enhance security We and risk management capabilities Continued consolidation and Continued consolidation and merging of technology and support teams The One Place initiative continues to focus on the elimination of business duplicate and redundant processes Online Apply (eliminating paper) for a suite of banking and savings in both SA and the UK is products available to clients In the UK, the drive to digitise our Private Banking and Mortgage a high focus business remains area Investec integrated annual report 2017 Investec integrated annual report changing threats in a proactive manner through focused manner through in a proactive -changing threats Corporate responsibility Corporate (continued) Our strategy to become an internationallyOur strategy to become -centric organisation continues focused client divisions, across and merging of technology and support teams Continued consolidation is gaining momentum and in some cases geographies, of (paper / printing / physical filing) as a consequence Reduction in physical media and content management technologies automation business process the client optimisation continues as well as enhancing Coding, data and processing need for additional people and the immediate reducing thereby service offerings to scale the business infrastructure and redundant continues to focus on the elimination of duplicate The One Place initiative cost- divisions and geographies to deliver an appropriate across business processes South Africa in our client support centre global, client-friendly service through effective, & now includes full transactional capability for Wealth Our One Place digital offering South Africa and UK, Private Bank Investment South Africa and UK, Private Banking & Investment Switzerland and Channel Islands and view only capability for Wealth Channel Islands & UK Banking and UK Wealth into the Our digital platforms have been introduced and people software Investment client base, leveraging infrastructure, to allow clients to incorporate The digital platform in South Africa has been enhanced to complete externally held transactional accounts, investments and loyalty programmes out for use in the UK been rolled a One Place solution. This functionality has recently in both banking and savings products Online Apply (eliminating paper) for a suite of Major initiatives in both South Africa and South Africa and the UK is available to clients. Digital Briefcase to -advisor (automated online financial advisor) and UK include a robo further enhance processes Wealth & Investment South Africa has leveraged its existing Share Plan platform already Plan platform already Share & Investment South Africa has leveraged its existing Wealth Plan platform for the UK market has developed for the South African market. The Share & Investment South Africa been developed, and will be maintained, by Wealth out an rolling and UK are Corporate and Institutional banking in South Africa and dealing platform, which will cater for transaction, investment e-commerce The payments globally. point to point footprint the current capabilities and reduce in the UK will be consolidated on the unified target architecture architecture a high In the UK, the drive to digitise our private banking and mortgage business remains our developing our digital and CSC channel capabilities to increase are We focus area. our operational optimal technology investments that increase client engagement, through as we grow efficiencies automated, drastically valuations below a specific value are In South Africa, property times and eliminating the need to physically visit property turnaround reducing simplify and being automated to improve are processes sites. Private bank credit downstream processes The Mann Island finance business in Liverpool continues to modernise their technology being the adoption of online and mobile capabilities capabilities, the most recent In the UK, CRM in the cloud was achieved, further enabling the business to put the client and ensuring a robust using both a high tech and high touch approach, in the centre scalable platform trading and the use of the UK leveraging off are Investec Australia and Ireland lending platforms. 182 Security and risk management continue to enhance security and risk management capabilities supported by We Emphasis is the group. specialised central and embedded teams and systems across placed on dealing with the ever target architecture. is supported by a defined group mitigation strategies. Coordination • • • • • • • • Key business application-related developments: Key business application-related • • • • • • • •

Corporate governance and corporate responsibility

03 Corporate governance and corporate responsibility 183 03 (continued) (continued) Is not operating in compliance with all applicable environmental, labour and anti-corruption laws of the countries in and regulations or which they operate, manufacture conduct business Has a significant impact on the and not maintaining environment policy environmental an effective management and/or environmental system that support environmental of pollution prevention protection, or Is using any form of forced involuntary labour Is employing children equal opportunity Is not providing of race, for all employees regardless national origin, gender, ethnicity, sexual orientation age, disability, or religion the right of their Is not respecting associate employees to freely and collectively bargain within the boundaries of the applicable law their employees Is not treating and dignity and not with respect a work environment providing harassment, intimidation free of and bullying a safe and healthy Is not providing in order working environment workplace accidents to prevent and injuries collusive Is engaging in bribery, practices or any other form of corruption to obtain or retain business. Cyber resilience strategy Cyber resilience and employ world class attract We security professionals Our supply chain statement on human incorporates standards rights, labour rights and environmental and anticorruption principles as set out in the UN Global Compact. with will not knowingly engage We any supplier who: • • • • • • • • • Corporate responsibility Corporate Investec integrated annual report 2017 Investec integrated annual report evolving threat landscape by placing an landscape by placing -evolving threat We recognise the potential for our procurement and supply chain practices to be agents for and supply chain practices the potential for our procurement recognise We within continue to engineer, We aspects of sustainability. of the different change in respect In fronts. social and environmental economic, select industries, changed outcomes across has the Fairtrade beverage offering committed to ensuring that 100% of our the UK, we are Fairtrade has met the rigorous that carries the Fairtrade certification mark label. A product for farming communities labour and living conditions which focus on improving standards, people or the environment. harm either a way of farming that doesn’t and on promoting with the BEE requirements practices seek to accord In South Africa, our procurement Codes of Good Practice and we have an and Industry’s of the Department of Trade -based BEE procurement for monitoring and measuring our broad established process and we process key to the procurement partners are responsible Environmentally efforts. with potential and existing vendors. Our focus on sustainability criteria when contracting equipment subscribe to an electronic largest suppliers of personal computers and server such as several areas compliance across code of conduct, which assists in monitoring always consider the Energy Star We and safety. health impact, labour, environmental bearing products equipment. Our banqueting team sources purchasing endorsement before social and environmental, rigorous Alliance Certification seal which assures the Rainforest to achieve long-term sustainability. in order considered economic criteria are Procurement Cybercrime to cybersecurity, -driven approach is based upon a threat strategy Our cyber resilience targeted attack Regular compliance-driven approach. rather than the contemporary used to measure as a whole, is companies, against the group simulations by specialist our cyber defenses. and improve ever with the endeavour to stay current We emphasis on actionable threat intelligence and continuous research. We attract and We intelligence and continuous research. threat emphasis on actionable risk believe people, operating within a We professionals. employ world class security against success’ in being resilient is the ‘key to technology, and not just conscious culture, security threats. 04

Remuneration report Remuneration page 185 9.5% 17.8% 16.9% 20.8% 04 % change 7.0% 9.6% 7.0% 9.7% 2016 (4.8%) 13.6% 14.0% 15.1% 1.34% 71.7% 11.5% 31 March 31 March 21.0 pence 41.3 pence £331 million Year ended Year £359.7 million 2017 7.3% 9.9% 7.8% 10.9% 14.1% 11.3% 15.1% 1.45% 72.0% 12.5% (12.5%) Business context and outcomes for the year under review The committee continues to place great is importance on ensuring that there clear alignment between remuneration key and delivery of the group’s strategic objectives. extension to ten years in the event of an extension to ten years committee ongoing investigation. The due to are believes that as the changes more and are requirements, regulatory than those under the approved onerous these changes, and policy that it can make policy will consequently the remuneration the annual general not be put to a vote at meeting this year. will engage with our significant We during the 2018 financial shareholders help shape the year to seek input and policy which we will present remuneration at the 2018 annual general for approval meeting. In addition, the committee will consider the additional requirements and guidance published by the relevant bodies, including the European regulatory Banking Authority (EBA), the PRA and FCA, the policy ahead of the when reviewing 2018 annual general meeting. Malus adjustments on unvested share applicable to all employees are awards Furthermore, the group. across also subject are Material Risk Takers to clawback adjustments and extended deferral requirements. 31 March 31 March 23.0 pence 48.3 pence £390 million Year ended Year £434.5 million Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report Remuneration outcomes Remuneration outcomes for 2017 remuneration The executive directors’ at the 2015 annual policy was approved general meeting. The policy incorporated the a number of changes, which reflected outcomes of engagement with shareholders in place at the time. The policy remained for the 2017 financial year and will remain until the 2018 annual general in force changes or meeting unless regulatory the business or economic environment necessitate earlier amendment. The only significant changes within the policy for the the extension of 2017 financial year are the deferral and clawback periods for the short-term incentive executive directors’ and long-term incentive, to comply with the under the extended deferral requirements PRA and FCA Remuneration Codes. The vesting periods of the short-term and long- have been extended awards term share that a minimum of 60% of the to ensure variable remuneration executive directors’ to seven over a period of three is deferred have years, while the clawback provisions been extended to seven years, with an do business, the latter through taxation and through do business, the latter activities. Our corporate social responsibility seeks philosophy wide remuneration group between balance to maintain an appropriate and of these stakeholders, the interests and culture is closely aligned to our consciousness, values which include risk material employee ownership meritocracy, to colleagues, and an unselfish contribution clients and society. Variable remuneration pool remuneration Variable Total shareholder return, Investec Limited (Rands) return, shareholder Total Total shareholder return, Investec plc (Pounds Sterling) return, shareholder Total Leverage ratio, Investec Limited Common equity tier 1 capital ratio, Investec Limited Total capital adequacy ratio, Investec Limited Total Leverage ratio, Investec plc Common equity tier 1 capital ratio, Investec plc Total capital adequacy ratio, Investec plc Total Return on average risk-weighted assets Recurring income as a % of total operating income Return on equity Dividends per share Adjusted earnings per share Adjusted earnings attributable to shareholders before goodwill, acquired intangibles, goodwill, acquired before Adjusted earnings attributable to shareholders interests non-operating items and after non-controlling Group performance metrics Group Our overarching remuneration philosophy remuneration Our overarching prior years unchanged from has remained as we maintain focus on employing and individuals the highest calibre retaining the payment of industry through competitive packages and long-term share alignment with key which ensure awards, stakeholders in our business. continue to be distributed Our rewards earnings generated pools of realised from which in excess of targeted thresholds usage of risk-adjusted capital. This reflect economic value-added model has been in operation for about 18 years and ensures that risk and capital management form the at both a group basis for key processes and transaction level thus balancing the between all stakeholders. rewards that financial institutions recognise We their from have to distribute the return enterprises between the suppliers of capital and labour and the societies in which they Remuneration philosophy unchanged remains On behalf of the board remuneration remuneration On behalf of the board I am pleased committee (the committee) on directors’ the report to present year. for the 2017 financial remuneration board was compiled by the This report by committee and approved remuneration the board. Statement by the chair the chair Statement by of the remuneration committee executive directors’ Our non-executive directors’ remuneration. Our directors’ remuneration report for report remuneration Our directors’ 2017 the year ended 31 March Signed on behalf of the board Perry Crosthwaite committee Chairman, DLC remuneration 9 June 2017 • Looking forward that to ensure The committee will continue appropriately packages remain reward for an incentive competitive, provide of our due regard performance, and take values, philosophies, business culture, capital risk management and strategy, management frameworks. committed to engaging remain We and shareholder with our shareholders that organisations to ensure representative taken into consideration their views are when determining our remuneration practices. at the approval seeking shareholder are We 2017 annual general meeting for: • The executive directors are not receiving not receiving are The executive directors year. for the 2018 financial salary increases to recommend agreed The board in fees an inflationary increase for the for the forthcoming year non‑executive directors. Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) 186 During the 2017 financial year the During the 2017 financial positive business benefited from group its operations momentum across a sound performance, and delivered notwithstanding challenging operating conditions. performance against key The group’s table on the metrics is shown in the page. previous performance In light of the positive financial during the 2017 financial of the group achieved progress year and the resultant a range of financial, non-financial across (in terms of the and strategic measures executive short-term incentive plan as and reflected by shareholders approved on pages 192 to 195), the remuneration an annual bonus committee approved of £1.93 million each for Stephen Koseff and £1.68 million for Kantor, and Bernard Bernard Stephen Koseff, Glynn Burger. 30% of Kantor and Glynn Burger receive upfront, their bonus in cash, 30% in shares in shares. with the balance deferred Malus and clawback arrangements apply to these awards. a bonus was awarded Hendrik du Toit of £4.65 million, determined solely the performance of in relation to Investec Asset Management as set out on to page 191. 20% of the bonus awarded into the IAM was deferred Hendrik du Toit Bonus Plan (DBOP). As outlined Deferred made are on page 221, the DBOP awards in the form of investments into various funds managed by IAM. The deferral period years. is just over three

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04 Remuneration page 187 187 188 190 191 195 196 197 200 201 205 206 207 207 208 208 209 209 209 210 213 213 213 214 215 216 216 216 223 225 04 Page/s (continued) (continued) African Notice on the Governance and Risk 2014. Management Framework for Insurers, comprises the report The remuneration the committee chair, annual statement from policy that sets remuneration the directors’ policy for the next out our remuneration between the future year and the differences policy and the policy operated in the 2017 on and the annual report financial year, that explains how the policy remuneration has been implemented in the 2017 financial also contains Pillar III The report year. PRA as mandated by the UK’s disclosures and the South African Reserve Bank.

Remuneration report Remuneration

Investec integrated annual report 2017 Investec integrated annual report statement The remuneration report complies with the report The remuneration of Schedule 8 of the Large and provisions Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, the UK Corporate Governance Code, the UK Companies Act 2006, the Rules of the UK Listing Authority, the UK Financial Conduct Authority rules, the PRA and FCA Remuneration Code, the South African King III Code of Corporate Practice and Conduct, the South African Companies Act 2008, the JSE Limited and the South Listings Requirements Compliance and governance Stephen Koseff – chief executive Stephen Koseff officer (CEO) Kantor – managing Bernard director (MD) risk and finance Glynn Burger – group (GRFD) director – chief executive Hendrik du Toit Investec Asset Management officer of (CEO of IAM). A summary of the remuneration decisions made during the year ended 31 March 2017 March decisions made during the year ended 31 A summary of the remuneration remuneration on directors’ Annual report 2018 31 March policy for the year ending of remuneration Statement of implementation Non-executive directors (audited) of remuneration figure single total Executive directors’ targets Executive short-term incentives – achievement of performance (audited) of remuneration single total figure Non-executive directors’ (audited) options and long-term incentive awards shareholdings, Directors’ dilution Shareholder table performance graph and CEO remuneration return shareholder Total of spend on remuneration importance and relative change in CEO remuneration Percentage Statement of voting at 2016 annual general meeting (unaudited) disclosures Additional remuneration 2018 and subsequent years policy for the year ending 31 March remuneration Directors’ Benchmarks arrangements remuneration Impact of CRD IV on executive directors’ Remuneration of the CEO of IAM policy table remuneration Executive directors’ performances be assessed? How will executive directors’ and the policy for all employees policy of the executive directors between the remuneration Differences of new executive directors Policy for the recruitment Service contracts and terms of employment Illustrative scenarios for executive remuneration Remuneration policy for non-executive directors and employee views Shareholder (unaudited) disclosures Additional remuneration Remuneration Code disclosures disclosures SARB Pillar III remuneration Where to find details of the key remuneration information remuneration to find details of the key Where Compliance and governance statement • • • The executive directors whose The executive directors are is disclosed in this report remuneration to as follows: referred • Executive directors Navigating this report Navigating this out below. a brief summary of key content is set report, navigate the remuneration help shareholders To 2016 47.0% 48.2% 53.8% 44.8% 31 March 31 March Year ended Year Retention 13.8 2017 47.2% 47.5% 54.7% 45.2% 31 March 31 March Year ended Year Staff compensation ratios Staff Shareholders 13.7 In summary, we estimate our total In summary, been divided between has economic return taxation, owners government through through dividends and employees through follows: total compensation as Government 29.6 Employees 42.9 2017 2016 0 Continue to acknowledge the Continue to acknowledge division of importance of the appropriate by our business generated the returns and workforce between our owners, our operate. the societies in which we 50 40 30 20 10 Value add contribution Percentage • Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) Employ the highest calibre individuals individuals Employ the highest calibre characterised by integrity, who are intellect and innovation and who adhere values and subscribe to our culture, and philosophies by entrepreneurship Strive to inspire that a working environment providing performance, stimulates extraordinary and so that executive directors employees may be positive contributors to our clients, their communities and the group through ownership share staff Provide participation in our employee share with those of schemes to align interests our owners 188 The total cost of compensation is managed through staff compensation ratios which are reviewed regularly. The total staff compensation The total staff regularly. reviewed compensation ratios which are staff The total cost of compensation is managed through as follows: ratios are Our philosophy, which remains unchanged which remains Our philosophy, prior years, is to: from • • • Remuneration philosophy A summary of the the A summary of decisions remuneration the year made during 2017 ended 31 March Total for the group Total Asset Management & Investment Wealth Specialist Banking

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04 Remuneration page – – – – 189 94 94 409 296 113 113 361 267 2016 4 364 4 364 3 837 4 375 Year 7 Year Year 7 Year 04 31 March 31 March – – – – Total Total 95 95 409 296 113 113 362 267 2017 awarded in awarded 4 892 4 892 4 352 5 101 remuneration remuneration Year 6 Year Year 6 Year current period current 31 March 31 March – – – 95 609 296 113 200 313 562 267 200 295 (continued) (continued) 2016 1 480 1 480 1 308 Year 5 Year Year 5 Year 31 March 31 March – – 95 – 610 296 114 200 314 562 267 200 295 Year 4 Year Year 4 Year vested and 2017 1 480 1 480 1 336 performance conditions^^ Value of LTIPs of LTIPs Value still subject to awarded – not awarded – – 31 March 31 March 95 610 296 114 200 314 563 268 200 295 Received in Received in Year 3 Year Year 3 Year 2016 2 884 2 884 2 529 4 375 – – – – 31 March 31 March 99 303 103 200 303 299 200 299 Remuneration report Remuneration Total Total Year 2 Year Year 2 Year to future to future conditions 2017 not subject 3 412 3 412 3 016 5 101 performance remuneration remuneration – – – – 99 31 March 31 March 303 103 200 303 299 200 299 – Year 1 Year Year 1 Year 2016 1 000 1 000 1 000 – – – – 480 336 31 March 31 March year year 1 639 1 159 1 639 1 344 1 008 1 344 (2017) (2017) – Current Current payable in retention^ 2017 1 000 1 000 Investec integrated annual report 2017 Investec integrated annual report 1 000 in in Fixed allowance shares subject to shares 480 336 31 March 31 March 2017 2017 1 932 1 000 1 680 1 000 4 892 1 480 3 412 4 352 1 336 3 016 – Awarded Awarded 562 562 488 2016 31 March 31 March bonus* 773 773 672 930 2017 Total deferred deferred Total 31 March 31 March 2016 1 322 1 322 1 041 4 375 31 March 31 March bonus Total cash Total 2017 1 639 1 639 1 344 4 171 non-deferred benefits, salary, benefits, salary, 31 March 31 March The bonuses for the CEO, MD and GRFD have an amount deferred as per the schedules below while 20% of the bonus for the CEO IAM is deferred for a The bonuses for the CEO, MD and GRFD have an amount period of just over three years. 20% released each year for a period of five years. on 8 June 2017 and the amount reflected in the table represents the number of awards made As discussed on page 204, the awards were made being met. to performance conditions not vested and are still subject multiplied by the grant share price. These awards have Short-term incentive Fixed allowance payable in shares Salary and benefits Short-term incentive Fixed allowance payable in shares Salary and benefits ^ ^^ * £’000 The payment and deferral profile of the remuneration awarded to GR Burger (GRFD) during the 2017 financial year is as follows: awarded of the remuneration The payment and deferral profile Total remuneration Total term incentive awarded in 2017 still subject Long-term incentive awarded performance conditions to future Remuneration awarded in 2017 not subject Remuneration awarded performance conditions to future £’000 Twenty per cent of the bonus awarded to Hendrik du Toit is deferred for three years into the IAM DBOP scheme, vesting over a period of just for three is deferred to Hendrik du Toit per cent of the bonus awarded Twenty years. over three Total remuneration Total term incentive awarded in 2017 still subject Long-term incentive awarded performance conditions to future Remuneration awarded in 2017 not subject Remuneration awarded performance conditions to future £’000 The payment and deferral profile of the remuneration awarded to S Koseff (CEO) and B Kantor (MD) during the 2017 financial year is to S Koseff awarded of the remuneration The payment and deferral profile as follows: CEO Outcomes for executive directors during the year during directors Outcomes for executive can be found awards of these A further breakdown for the year. made to executive directors awards The following table summarises on page 196. MD GRFD CEO IAM information on industry consultation information on industry and developments papers, regulations and practices to remuneration with respect In addition, they our alignment to them. information and provide continued to review and benchmarks, industry on appropriate remuneration comparable organisations’ are practices. Their recommendations of our valued in the ongoing review is practices. Aon Hewitt remuneration a signatory to the UK Remuneration and Code of Conduct Consultants Group’s does not conduct any material work for the company other than for the committee, and is part of Aon plc. The committee, on an annual basis, formally evaluates the Aon Hewitt to ensure from advice received that it is both objective and independent, and considers whether this service should for the forthcoming year. be retained paid to Aon Hewitt for the year Total fees amounted to £3 263 (based on their hourly rates). standard the services The company retained of PricewaterhouseCoopers to assist with the development of remuneration arrangements in light of evolving Banking Authority guidelines European developments. and industry remuneration with This information was also shared the committee. Certain specialist divisions within the group, and the for example, human resources division, provide schemes shares staff supporting information and documentation to presented to matters that are relating the committee. This includes, for example, comparative data and motivations for awards. bonus and share salary, proposed pools are The variable remuneration determined by our finance teams and as part of the audit subject to review taking into account risk-adjusted process and after eliminating capital requirements gains. The employees within unrealised these specialist divisions, which provide not board support to the committee, are not appointed by and are directors the committee. he committee’s terms of reference The committee’s are subject to annual review and are available on our website.

Ensure that the recommendations and that the recommendations Ensure rules within the UK and South Africa adhered are pertaining to remuneration to, as appropriate. Oversee any major changes in our employee benefit structures Review and approve, within the within Review and approve, the total policy, terms of the agreed of packages individual remuneration members of the Internal Audit, Risk and Compliance functions Review and approve, within the within Review and approve, the total policy, terms of the agreed packages individual remuneration and persons of executive directors responsibilities discharging managerial including, and Material Risk Takers bonuses, incentive appropriate, where awards scheme payments and share Where appropriate, the committee appropriate, Where has access to independent executive consultants. The selection remuneration of of the advisers is at the discretion the committee and Investec funds any to their appointment. expenses relating the committee During the financial year, continued to use the services of its principal advisers, Aon Hewitt, which and provided among other things reviewed The remuneration committee met eight The remuneration Each times during the financial year. member attended all of the meetings, with the exception of Charles Jacobs who attended seven. of Investec plc acts The company secretary do not Executive directors as the secretary. attend meetings of the committee, unless to do so by the chairman invited or required of the committee. The chairman of the on the activities of the committee reports committee at each meeting of the board. Advisers to the committee and the company Meetings The committee is authorised by the board The committee is authorised by the board any from to seek any information it requires to perform its duties. employee in order • • • • Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) Determine, develop and agree with Determine, develop and agree the framework or broad the board, of executive policy for the remuneration and executive management directors (comprising individuals discharging who are managerial responsibilities, of areas the global heads of our core members of our global activity and are operations forum) Commission and consider the of an annual internal review results policy implementation of remuneration that qualified and experienced Ensure management and executives are incentives to with appropriate provided encourage enhanced performance and manner, in a fair and responsible are, for their contribution to the rewarded and alignment success of the group with the corporate objectives and business strategy the design of and Review and approve determine targets and objectives for remuneration any performance-related and schemes operated by the group annual payouts the aggregate approve under such schemes 190 Composition and role of the role Composition and committee is the chairman of the Perry Crosthwaite committee. The other members of the Fani Titi,committee are Charles Jacobs and Zarina Bassa. Current members of the committee are deemed to be independent as discussed on page 123. of the committee members Two also members of the group’s are risk and capital committee (as board discussed on page 144), thus bringing mechanisms into the risk and control committee’s deliberations. principal responsibilities The committee’s to: and objectives are • • • • The Investec group aims to apply aims to apply The Investec group directors policies to executive remuneration consistent largely and employees that are that but recognises the group, across governed by are certain parts of the group more that may contain local regulations in certain respects. requirements onerous Annual report on on Annual report remuneration directors’

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04 Remuneration page 191 04 (continued) (continued) Released over five years 20% each year Malus and clawback provisions applyMalus and clawback provisions in cash;Deferral period: 30% upfront 40% the remaining in shares; 30% upfront is deferred as amount is treated The 40% deferred 60% offollows: an amount that ensures (short-termtotal variable remuneration incentive plus long-term incentive) is to seven years, vests over three deferred 20% per annum commencing on the third anniversary: with the balance deferred equally over one and two years This has changed in line with regulatory requirements to relating Malus and clawback provisions IAM apply into the IAM DBOP scheme20% deferred years vesting over a period of just over three – – – – – – – – No increase Award subject to performance criteria as set out Award on pages 194 and 195 at of one times fixed remuneration Award face value Deferral period: equal vesting over years three period to seven, subject to six-month retention Malus and clawback provisions to IAM relating Malus and clawback provisions apply for the CEO of IAM Payable in shares on award Vests Retention period: For CEO, MD, GRFD: award subjectFor CEO, MD, GRFD: award to performance criteria as set out on pages 192 to 194 For CEO of IAM: • • • • • • • • Changes, deferrals and Changes, deferrals performance targets • • Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report 0.23% each of adjusted operating profit 0.23% each of adjusted operating profit for CEO and MD for GRFD 0.20% of adjusted operating profit Subject to a maximum of 100%* of fixed executive for each of the three remuneration subject to CRD IV directors variable1.85% of the earnings of IAM before compensation and tax – – – – Paid entirely in shares Paid entirely subject directors Applicable for each of the three to CRD IV (CEO, MD and GRFD) long-term incentive CEO of IAM does not receive as he is a participant in the IAM equity awards ownership scheme (as explained on pages 221 and 222) Maximum 100% fixed remuneration An allowance granted in shares to ensure an to ensure An allowance granted in shares mix between fixed and variable appropriate remuneration £1 000 000 for each of the three executive £1 000 000 for each of the three GRFD) and MD (CEO, IV CRD to subject directors Incentive pool for CEO, MD, GRFD: Incentive pool for CEO of IAM: £480 000 for the CEO £480 000 for the MD £336 309 (i.e. R4 500 000 Rand portion and £91 961 Pounds Sterling portion) for the GRFD £451 192 for the CEO of IAM • • • • • • • • Values and operation Values • • • • Cap defined in line with EBA discounting rules which allow, when 25% of variable remuneration is deferred over at least five years, a slightly higher cap than 2x Cap defined in line with EBA discounting rules which allow, 2.4x fixed remuneration. These limits will befixed remuneration, depending on the length of deferral, inflation and interest rates. This is currently approximately in line with this cap.

* LTI STI Fixed allowance Base salary and benefits Executive directors the year ending will be implemented for the executive directors policy for general meeting, the remuneration at the 2015 annual As approved 2018 as follows: 31 March Statement of implementation of remuneration policy for the year ending policy for the year ending implementation of remuneration Statement of 2018 31 March Target (100%) Target Target (100%) Target Stretch (200%) Stretch Stretch (200%) Stretch Threshold (0%) Threshold Threshold (0%) Threshold Achievement levels 25% attributable to prudential measures 60% attributable to profitability 60% attributable to profitability measures 0% – 200% 0% – 200% } } Score range Score 85% 25% 35% 12.5% 6.25% 6.25% Weighting 85% 15% Weighting Investec integrated annual report 2017 Investec integrated annual report 1 3 4 4 2 Remuneration report Remuneration (continued) Return on equity is defined as adjusted earnings/average ordinaryReturn on equity is defined as adjusted earnings/average (excluding preference share capital). shareholders’ equity plc and Investec Limited (50% plc: 50% Limited). 1 capital adequacy condition is a blend of the underlying tier 1 capital adequacy ratios for Investec Tier funding ratio) are a blend of the underlying liquidity metrics weighted by region (55% South Africa: The liquidity metrics (liquidity cover ratio and net stable 45% UK). Return on risk-weighted assets is defined as adjusted earnings/average risk-weighted assets, where adjusted earnings are earnings attributable to ordinaryReturn on risk-weighted assets is defined as adjusted acquired intangibles and non-operating items. goodwill, and preference dividends, but before shareholders after taxation, non-controlling interests

192 Executive short-term incentive – financial metrics: achievement levels Executive short-term incentive – financial metrics: achievement performance are target and stretch threshold, Achievement levels for each of the financial metrics, as described above, which determine target and stretch economic and market conditions. The threshold, of relevant and detailed review set by the committee, following a careful page. Achievement levels for the year ended outlined on the next performance levels for the financial metrics set by the committee are shown on page 197. 2017 are 31 March The financial metrics are designed to ensure an appropriate balance between measures which drive profitability (return on risk-weighted (return which drive profitability balance between measures an appropriate designed to ensure The financial metrics are ratios, (tier 1 capital adequacy measures on equity) which comprise 60% of the total weighting of 85% and prudential assets and return of 85%. liquidity cover ratios and the net stable funding ratio) which comprise 25% of the total weighting Aggregate Return on risk-weighted assets 2 3 4 1 Financial metric Executive short-term incentive – financial metrics and weightings Executive short-term incentive – financial as follows: The weightings for each financial metric are Further details on the executive directors’ short-term incentive plan: the executive directors’ Further details on Performance conditions Liquidity cover ratio Return on equity Tier 1 capital adequacy Net stable funding ratio Financial metrics Non-financial metrics term incentive will be earned and stretch levels levels below which no short-term incentive will be earned and stretch threshold -financial metric has set Each financial and non operating profit. of adjusted but to a level capped as a percentage the pool for short-term incentives earned will be increased, whereby actual performance in an incentive pool which will reflect demanding and will result are levels The committee believes that these stretch -term incentive will be Achievement levels for the short of shareholders. with the interests of the executive directors and align the interests by the committee. regularly reviewed

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04 Remuneration page 4 4 4 4 193 UK 15% 12% 45% 95% 1.6% 150% 175% 225% 100% 110% 200% 99.5% 04 162.5% 3 3 3 3 Stretch (200%) Stretch 150% 55% 55% 65% 75% 65% 75% 85% (continued) (continued) 2 2 2 2 12% 1.2% 10.5% 89.5% South Africa 132.5% 100% Target (100%) Target 1 1 1 1 point scale (these are reviewed regularly). regularly). reviewed -point scale (these are Achievement levels Achievement levels 50% 9% 82% 0.9% 9.5% 115% Remuneration report Remuneration 0 0 0 0 0% Threshold (0%) Threshold 15% 3.75% 3.75% 3.75% 3.75% 35% 25% 85% 12.5% 6.25% 6.25% Weighting Weighting Investec integrated annual report 2017 Investec integrated annual report hted by region (55% South Africa: of the underlying liquidity metrics weighted by region (55% South cover ratio and net stable funding ratio) are a blend The liquidity metrics (liquidity 45% UK) as set out below: The group’s adjusted earnings for the year ended 31 March 2017 amounted to £434.5 million earnings adjusted March for the year ended 31 The group’s adjusted earnings for the year on risk-weighted assets metric, the group’s achievement level for the return to achieve the stretch In order larger at £480.0 million ceteris paribus 2017 would have needed to be 10.5% ended 31 March adjusted earnings for the year ended on equity metric, the group’s achievement level for the return to achieve the stretch In order at £523.0 million ceteris paribus. 2017 would have needed to be 20.4% larger 31 March Target Stretch Threshold Target Stretch Threshold Return-weighted assets on risk Tier adequacy 1 capital Liquidity cover ratio* Financial metric Return on equity Non-financial metrics These are as follows: These are Executive short-term incentive – non-financial metrics: achievement levels metrics: achievement Executive short-term incentive – non-financial to attend to important matters on which the long-term executive directors to incentivise The committee believes that it is appropriate Without linked to financial returns. directly performance of the company depends, but which cannot in any one performance period be a in any significant way for activities for non-financial metrics, the executives would not be rewarded meaningful weighting and target score capability and overall long-term sustainability of the risk profile, as essential to the reputation, regard which the committee and the board view of the the board’s reflect The committee considers that both the short- and long-term incentive schemes should properly company. for the executive directors. balance of responsibilities proper assessed on a four of focus, weightings and objectives for the non-financial metrics are The areas Measure Geographical weighting * Liquidity cover ratio Net stable funding ratio to be demanding: considered on equity are on risk-weighted assets and return achievement levels for return Stretch • • • Net stable funding ratio* Culture and values Culture Franchise development Governance and regulatory and shareholder relationships and shareholder Governance and regulatory Employee relationship and developments Employee relationship 1.6% 45.0% Target (100%) Target (100%) Target Stretch (150%) Stretch (200%) Stretch Stretch (150%) Stretch Threshold (0%) Threshold (0%) Threshold Achievement levels 1.2% 30.0% point scale and score 0 -point scale and score 0 Target (100%) Target Succession and the development of Succession and the development the next generation Diversity and black economic and results empowerment initiatives of Continued development and people – both on the job extramurally. Achievement levels – – – – – – 0.7% Further details on the long‑term executive directors’ incentive plan for the executive The vesting of awards will be conditional on performance directors weighted as to financial and non-financial against performance and measured achievement levels. prescribed The committee assesses achievement The committee assesses non-financial against objectives for the metrics on a four in exceptional (0%) and 4 (200%) only range with the typical score circumstances, being 1 (50%), 2 (100%) or 3 (150%). 0 – 150% 0 – 200% 15.0% Score range Score Threshold (0%) Threshold 75% 25% 75% 35% 40% Weighting Weighting Environmental and other Environmental sustainability issues. Quality of brand, development of clientQuality of brand, development communitybase, commitment to the in building the firm and progress Delivering appropriate and Delivering appropriate with high levels sustainable products of service and responsiveness Shareholders should have Shareholders confidence that the firm is being managed. properly Regulators should have confidence that the firm is being properly governed and managed Maintaining open and transparent Maintaining open and transparent with regulators relations – – – – – – – Franchise development – – – – Governance and regulatory and Governance regulatory and relationships shareholder – Employee relationship and development Employee relationship • • • Investec integrated annual report 2017 Investec integrated annual report 1 2 Remuneration report Remuneration (continued) Management visible and proactive in proactive Management visible and behaviour demonstrating appropriate and Performance-driven, transparent risk-conscious organisation and Delivering appropriate levels with high sustainable products of service and responsiveness supporting Acting with integrity, developing people the community, with and maintaining good relations key stakeholders of Continual monitoring of the culture the group. – – – – – Return on risk-weighted assets is defined as adjusted earnings/average risk-weighted assets, where adjusted earnings are earnings attributable to ordinaryReturn on risk-weighted assets is defined as adjusted earnings/average risk-weighted assets, where adjusted goodwill, acquired intangibles and non-operating items, and will shareholders after taxation, non-controlling interests and preference dividends, but before the actual return on risk-weighted assets achieved for each of be measured over the three financial years preceding the first date of vesting by averaging those three financial years. The growth in tangible net asset value is expressed per share, based on neutral currency and after adding back dividends and will be measured over the The growth in tangible net asset value is expressed per share, based on neutral currency and after adding three financial years preceding the first date of vesting. Culture and values Culture – – – – –

194 Financial metrics Growth in tangible net asset value Growth The number of shares awarded will be decreased or increased by a performance multiplier comprising weightings and achievement scores achievement scores by a performance multiplier comprising weightings and or increased will be decreased awarded The number of shares ranges for the financial and non-financial metrics, as follows: within score Financial metrics Non-financial metrics (0%), which vest against both the financial and non-financial performance conditions depend on whether threshold The number of shares vesting on a linear basis between each level. achieved, with awards (150%) levels are target (100%) or stretch vesting will be increased satisfied, the number of shares achievement levels for both the financial and non-financial metrics are If the stretch at the time of grant. awarded and capped at a maximum of 135% of the number of shares The awards will be tested over the three financial years preceding the first date of vesting against the achievement levels set on grant and financial years preceding will be tested over the three The awards the combined total which has been achieved. to will be determined by reference to be received the number of shares 2 1 Executive long-term incentive – financial metrics: achievement levels Executive long-term incentive – financial metrics: achievement -year performance performance for the three target and stretch The achievement levels for each financial metric which determine threshold, being made after a careful by the committee in advance of the award regularly will be reviewed period applicable to each annual award constant expected to remain economic and market conditions. The weightings for each of the financial metrics are of relevant review going forward. as follows: are achievement levels for the financial metrics currently target and stretch Threshold, The committee has set the following areas the following areas The committee has set -financial of the non of focus in respect performance conditions: • Return on risk-weighted assets

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04 Remuneration page 4 4 4 4 195 200% 04 3 3 3 3 150% (continued) (continued) 2 2 2 2 100% As proposed by the board for the by the board As proposed 1 September 2017 to period from 31 August 2018 £435 000 per year £73 000 per year £10 000 per year £63 000 per year £46 000 per year £18 500 per year £17 000 per year £12 500 per year £12 500 per year £45 000 per year £15 000 per year R142 000 per year £14 000 per year £56 000 €50 000 per year €50 000 per year R320 000 per year R470 000 £2 000/R30 000 1 1 1 1 Achievement levels point scale and score 0 (0%) and 4 (200%) -point scale and score 50% Remuneration report Remuneration 0 0 0 0 0% 4% 4% 4% 25% 13% Period ending 31 August 2017 £425 000 per year £72 000 per year £10 000 per year £62 000 per year £45 000 per year £18 000 per year £16 500 per year £12 000 per year £12 000 per year £44 000 per year £14 500 per year R142 000 per year £13 500 per year £55 000 €50 000 per year €50 000 per year R305 000 per year £450 000 per year £2 000/R30 000 Weighting Investec integrated annual report 2017 Investec integrated annual report Non-executive directors’ remuneration Non-executive directors’ Chairman’s total fee Chairman’s fee Basic non-executive director Senior independent director Chairman of the DLC audit committee committee Chairman of the DLC remuneration Member of the DLC audit committee committee Member of the DLC remuneration Member of the DLC nominations and directors’ affairs committee Member of the DLC social and ethics committee risk and capital committee Chairman of the board risk and capital committee Member of the board member in attendance of the Investec Bank Limited board risk and capital committee board Member of the Investec Bank plc board (also member of main board) Member of the Investec Bank plc board Limited Chairman of Investec Holdings (Ireland) of Investec Capital and Investments Independent director Limited (Ireland) Member of the Investec Bank Limited board (also member of main board) Member of the Investec Bank Limited board Per diem fee for additional work committed to the group Non-financial metrics and values Culture Franchise development Governance and regulatory and shareholder relationships and shareholder Governance regulatory and Employee relationship and development Employee relationship Note: Value-Added Tax (VAT), at the prevailing rate, where applicable, will be added to the above-mentioned fees. Two binding general rulings were issued fees. Two at the prevailing rate, where applicable, will be added to the above-mentioned (VAT), Tax Note: Value-Added law that requires non-executive directors of (VAT) Tax by the South African Revenue Service (SARS) in early 2017 confirming the South African Value-Added in respect of any directors’ fees earned for services rendered as a non-executive director that exceed the prescribed companies to register for and charge VAT threshold. These rulings are effective 1 June 2017. Non-executive directors for the period ending 31 August 2017 and 2018 is shown in the table below: for non-executive directors The fee structure – non-financial metrics: achievement levels incentive – non-financial metrics: Executive long-term will be reviewed applicable to each annual award -year performance period objectives for the three The non-financial metrics and associated strategic and operational objectives. the group’s being made, taking into account of the award by the committee, in advance regularly as follows: non-financial metrics are The current The committee assesses achievement against objectives for the non-financial metrics on a four The committee assesses achievement against range being 1 (50%), 2 (100%) or 3 (150%). with the typical score only in exceptional circumstances

Total Total

ration remune- 5 101 192 5 464 024 4 892 026 4 364 000 4 892 026 4 364 000 4 352 640 3 837 890 – – – – – – – £ LTIPs Value of Value 1 089 150 exercised exercised – – £ mance Value of Value 1 480 000 1 480 000 1 480 000 1 480 000 1 336 309 1 308 445 to perfor- LTIP – not LTIP vested and still subject conditions £ Total remu- mance perfor- neration 5 101 192 4 374 874 3 412 026 2 884 000 3 412 026 2 884 000 3 016 331 2 529 445 to future conditions not subject – £ STI – 930 000 772 810 561 600 772 810 561 600 672 008 488 400 deferred £ STI – shares upfront upfront upfront 842 400 842 400 732 600 3 720 000 3 924 000 1 159 216 1 159 216 1 008 014 cash and £

ration Gross 451 192 450 874 remune- 1 480 000 1 480 000 1 480 000 1 480 000 1 336 309 1 308 445 – – £ Fixed Investec integrated annual report 2017 Investec integrated annual report 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 1 000 000 allowance £ Total Total 9 924 6 825 9 493 7 164 5 659 other 10 802 10 102 10 242 taxable benefits – – £ ment 69 668 60 883 38 330 25 379 36 652 30 688 Retire- benefits £ Salary Remuneration report Remuneration (continued) 440 950 292 493 272 098 440 950 399 530 409 015 434 845 445 128 £95.3 billion, with -£0.6 billion in net flows. S Koseff, B Kantor and GR Burger are classified as PRA Material Risk Takers. with reference to performance against financial The annual bonus for the year ended 31 March 2017 for S Koseff, B Kantor and GR Burger was determined and non-financial metrics as set out below and described in detail on pages 192 to 194. 191 a portion of bonuses are paid in cash and a Further information on the short-term incentives is set out on pages 192 to 194 and as discussed on page which vested immediately on award. These shares are, however, subject to a retention period in terms of which 20% of shares will be free from retention subject to a retention period in terms of which 20% which vested immediately on award. These shares are, however, is included in their beneficial and non-beneficialrestrictions each year over a period of five years. The 212,314 Investec plc shares for each of the directors interest holding on page 201. of one of the defined contribution pension or Retirement benefits: None of the directors belong to a defined benefit pension scheme and all are members payable by the company. provident schemes. The amounts reflected in the table above represent the contribution to these schemes group wide executive activities. is currently a director of Investec plc and Investec Limited, he does not perform Investec Notwithstanding that HJ du Toit applicable to employees and any remuneration benefits due to him are subject to the remuneration policies, rules and regulations HJ du Toit Accordingly, is the founder and CEO of group. HJ du Toit of IAM and not the remuneration policies, rules and regulations applicable to other entities within the Investec are not affected by the cap on variableIAM and is not classified as a material risk taker by PRA regulations. As a result, his compensation arrangements variable compensation and tax. For the year endedremuneration. The short-term incentive payable to the CEO of IAM is 1.85% of the earnings of IAM before described on page 221 and the balance was 31 March 2017, a payment of £4.65 million was due. 20% of this was deferred into the DBOP scheme, as million. Assets under management amounted to paid in cash. IAM reported an increase in operating profit before non-controlling interest of 22.3% to £164.8 portion is deferred. The portion deferred is deferred in shares. adjusted amounted to 0.66% of the group’s The target short-term incentive pool available for the CEO, MD and GRFD for the year ended 31 March 2017 allowances, on similar terms to other senior executives. allowance of the CEO, MD and GRFD have received fixed allowances, payable in shares. The fixed ensure compliance with the requirements of CRD IV, To Investec plc shares to each of the directors £1 million each to S Koseff, B Kantor and GR Burger was last year awarded in the form of 212,314 forfeitable items and after non-controlling interests. If the targetoperating profit, defined as operating profit before taxation, goodwill, acquired intangibles and non-operating the CEO, 0.23% to the MD and 0.20% to the GRFD. performance conditions are achieved, distribution of the pool at target performance is as follows: 0.23% to within score ranges for the financial and non- The pool is decreased or increased by a performance multiplier comprising weightings and achievement scores The maximum aggregate pool, if all financial and non-financial stretch levels are achieved, would financial performance measures described in the table below. be 180% of (adjusted operating profit x 0.66%), subject to the remuneration cap as approved by shareholders. for S Koseff, B Kantor and GR Burger No LTIPs year. Long-term incentive awards were granted to S Koseff, B Kantor and GR Burger during the 2017 financial vested in 2017. of shares that vested multiplied by the vested in 2016. The values provided in the table above represent the number Long-term incentive awards for HJ du Toit 2016 integrated annual report. market price of the shares at the date on which they vested. Further information was provided in Investec’s include pension schemes; life, disability and personal accident insurance; medical cover; and fixed The executive directors receive other benefits which may is largely determined in Rands and converted into Pounds Sterling. In Rand terms GR Burger’s Rand-based gross remuneration remained unchanged at Rand-based gross remuneration remained unchanged Sterling. In Rand terms GR Burger’s is largely determined in Rands and converted into Pounds was £91 961. R4 500 000 and his Pound-based gross remuneration gross remuneration of GR Burger (excluding the fixed allowance of £1 million) The year. largely remained the same as the prior remuneration for HJ du Toit fixed allowance and other benefits. Gross remuneration comprises base salary, the fixed allowance of £1 million) remained unchanged from the previous year at £480 000. The gross Gross remuneration of S Koseff and B Kantor (excluding • • • • STI • The determination GRFD are of bonuses for the CEO, MD and set out below: • • • Long-term incentive awards • • • 196 • – 2016 Salary and benefits • – 2016 HJ du Toit (CEO IAM) – 2017 – 2016 GR Burger (GRFD) – 2017 – 2016 B Kantor (MD) – 2017 S Koseff S Koseff (CEO) – 2017 Executive directors Executive directors’ single total figure of remuneration (audited) remuneration of figure single total Executive directors’ the financial period. over for each executive director figure total remuneration a single The table below provides

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04 Remuneration page 197 1 158 2 084 1 331 2 396 1 902 2 106 Actual Actual 200.0% 200.0% 200.0% 200.0% 140.0% 140.0% 115.2% 115.2% 162.7% 162.7% 04 150.9% 150.9% 578 830 578 830 achieved achieved weighting weighting vs % target % vs target 1 1 145 166 145 166 203 233 333 384 659 758 1 485 1 707 £’000 £’000 Actual Actual achieved achieved allocation allocation (continued) (continued) 15% 15% 1.6% 1.6% 200% 200% 99.5% 99.5% 12.0% 12.0% 162.5% 162.5% Stretch Stretch Stretch Stretch 12% 12% 1.2% 1.2% 100% 100% 89.5% 89.5% 10.5% 10.5% Target Target Target Target 132.5% 132.5% Remuneration report Remuneration Achievement levels Achievement levels 9% 9% 0% 0% 82% 82% 9.5% 9.5% 0.9% 0.9% 115% 115% Threshold Threshold Threshold Threshold 2017 2017 11.1% 11.1% 12.5% 12.5% 1.45% 1.45% Actual Actual 118.1% 118.1% 369.4% 369.4% ment at ment at achieve- achieve- 31 March 31 March 31 March 31 March Investec integrated annual report 2017 Investec integrated annual report 25% 25% 35% 35% 6.25% 6.25% 6.25% 6.25% 85.0% 85.0% 12.5 % 12.50% Weighting Weighting 1 The cap is calculated in line with EBA discounting rules which allow, when 25% of variable remuneration is deferred over at least five years, a slightly higher when 25% of variable remuneration is deferred over at least five years, The cap is calculated in line with EBA discounting rules which allow, rates. It has been independently calculated at 242.3% for awards cap than 2x fixed remuneration, depending on the length of deferral, inflation and interest made in respect of the 2017 financial year. The cap is calculated in line with EBA discounting rules which allow, when 25% of variable remuneration is deferred over at least five years, a slightly higher when 25% of variable which allow, The cap is calculated in line with EBA discounting rules calculated at 242.3% for awards rates. It has been independently of deferral, inflation and interest cap than 2x fixed remuneration, depending on the length made in respect of the 2017 financial year.

Total Total NSFR NSFR LCR LCR Tier 1 capital adequacy Tier 1 capital adequacy Return on equity Return on equity Return on risk-weighted assets Return on risk-weighted assets 1 Adjusted operating profit at 31 March 2017 (£’000) at 31 March Adjusted operating profit GRFD ‘incentive pool’ at 0.20% (£’000) cap (£’000) application of the remuneration Maximum leverage at 180%, i.e. maximum potential bonus before (£’000) cannot exceed 242.3% of fixed remuneration variable remuneration cap whereby Maximum bonus subject to remuneration The determination of the bonus for GR Burger is shown below: The portion of the 2016 bonus ‘achieved’ for financial metrics amounted to £1 214 000 (£536 000 for return on risk-weighted assets; metrics amounted to £1 214 000 (£536 000 for return The portion of the 2016 bonus ‘achieved’ for financial 1 capital adequacy; £141 000 for the LCR; and £141 000 for the NSFR). The portion of the£238 000 for return on equity; £158 000 for tier in improvement of a strong performance against financial metrics is thus largely as a result bonus for the 2017 financial year attributable to most of the metrics. Non-financial metrics committee decided to allocate an award described on pages 192 to 194) the remuneration Following an assessment of these metrics (as to the (i.e. weighting of 150%) was awarded of 3 against non-financial metrics. A score (2016: £190 000) for performance 658 £224 of to the weighting of 100%) was awarded (i.e. of 2 categories, a score and development’ and values’ and ‘employee relationship ‘culture and shareholder to the ‘Governance and regulator 1 (i.e. weighting of 50%) was awarded of ‘franchise development’ category and a score on pages 191, 198 and 199. category’. Further information is provided relationships and B Kantor to S Koseff Final bonus awarded above) yield a bonus of £1 932 026. The of the performance assessment against financial and non-financial metrics (reflected The results to as above, and the awards fixed remuneration, subject to a cap of 242.3% of short-term incentive and long-term incentive combined are and B Kantor fall within that cap. S Koseff 1 CEO/MD ‘incentive pool’ at 0.23% (£’000) CEO/MD ‘incentive pool’ The determination of the bonus for S Koseff and B Kantor is shown below: and B Kantor is shown of the bonus for S Koseff The determination 2017 (£’000) March at 31 Adjusted operating profit Maximum leverage at 180%, i.e. maximum potential bonus before application of the remuneration cap (£’000) of the remuneration application i.e. maximum potential bonus before Maximum leverage at 180%, (£’000) of fixed remuneration cannot exceed 242.3% variable remuneration cap, whereby to remuneration Maximum bonus subject Financial metrics Financial metrics The South African Reserve Bank imposed a fine on Investec Bank Limited in money laundering in certain parts to prevent 2016 for shortcomings in controls of Investec Bank Limited. The bank is co-operating fully with the South African the shortcomings Reserve Bank to remediate Investec Limited continues to cooperate with the Competition Commission to their investigation into alleged collusion Authorities in South Africa with respect further information from exchange. The bank has requested to foreign in relation to page 8 in volume two for further details the Authorities. Please refer Our Human Resources and Organisational Development divisions continued to Our Human Resources our values teams to ensure actively work with the executive and our management into our day-to-day activities lived and entrenched are The executive have been supportive of the governance changes at Investec Bank plc The executive hosted and attended multiple functions with new and future leaders with new and future The executive hosted and attended multiple functions during the year chairman and the The executive together with senior employees, the group and with shareholders committee meet regularly chairman of the remuneration and important organisations. These engagements are representative shareholder committee to decisions made by the remuneration contribute directly The executive have engaged in increased activities with employees at all levels activities The executive have engaged in increased panels, management for example, management hosted breakfasts, through, – facilitating discussions on a number of aspects, induction presentations and values including culture • • • • Achievements during the year • • • Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) Maintaining open and transparent relations relations Maintaining open and transparent with regulators Regulators should have confidence governed that the firm is being properly and managed should have confidence that Shareholders managed the firm is being properly and sustainable Delivering appropriate with high levels of service products and responsiveness Management visible and proactive in Management visible and proactive behaviour demonstrating appropriate and risk- Performance-driven, transparent conscious organisation and sustainable Delivering appropriate with high levels of service and products responsiveness supporting the Acting with integrity, developing people and community, with key maintaining good relations stakeholders of Continual monitoring of the culture the group • • • • Governance and regulatory and shareholder relationships: and shareholder Governance and regulatory • • • • • Areas of focus as set out on page 193 Areas and values: Culture 198 An assessment of non-financial metrics non-financial metrics for the CEO, taken into consideration in the assessment of performance against the The following aspects were MD and GRFD. The portion of the 2016 bonus ‘achieved’ for financial metrics amounted to £1 056 000 (£466 000 for return on risk-weighted assets; to £1 056 000 (£466 000 for return bonus ‘achieved’ for financial metrics amounted The portion of the 2016 NSFR). The portion of the £122 000 for the LCR; and £122 000 for the on equity; £139 000 for tier 1 capital adequacy; £207 000 for return in improvement of a strong financial metrics is thus largely as a result year attributable to performance against bonus for the 2017 financial most of the metrics. Non-financial metrics of to allocate an award committee decided to 194) the remuneration of these metrics (as described on pages 192 Following an assessment the ‘culture to of 3 (i.e. weighting of 150%) was awarded 000) for performance against non-financial metrics. A score £195 355 (2016: £165 ‘franchise to the of 2 (i.e. weighting of 100%) was awarded and development’ categories a score relationship and values’ and ‘employee category’. relationships to the ‘Governance and shareholder 50%) was awarded of 1 (i.e. weighting of and a score development’ category, below and on page 191. Further information is provided Burger to GR Final bonus awarded above) yield a bonus of £1 680 022. and non-financial metrics (reflected of the performance assessment against financial The results and the bonus subject to a cap of 242.3% of variable remuneration, The short‑term incentive and long-term incentive combined are to GR Burger falls within that cap. awarded

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04 Remuneration page 199 04 (continued) (continued) Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report Our flagship educational initiative in South Africa, Promaths, continues to outpace Promaths, Our flagship educational initiative in South Africa, the national average for Mathematics and Science in Business The executive have supported the development of the Women the support and advancement of initiative, a new initiative aimed at promoting women in the workplace, while also focusing on supporting our female clients Our core values include unselfishly contributing to society. During the year we During the year values include unselfishly contributing to society. Our core (2016: £5.0 million) spent £7.1 million on social investment initiatives for a significant number of conference The executive hosted a group in 2016, contributing to employee relations the group across employees from and development Investec was the winner of the most socially responsible company in Africa in the Investec was the winner of the most socially responsible 2016 SERAS awards In 2017 we invested £22.9 million in the learning and development of our to £14.7 million in the prior year employees, compared Investec was the winner of the Business in Community’s Responsible Business Investec was the winner of the Business in Community’s 2016 Awards economic empowerment. committed to black In South Africa, Investec remains empowerdex. a level 2 BBBEE rating status from During the year we received at all levels of the representation committed to achieving greater We remain implementation of our employment equity plan. In the effective business through of our quantitative targets we exceeded the target black headcount at the respect middle and semi-skilled levels and marginally missed the targets at the top senior, and junior management levels. Investec maintained its inclusion in a number of internationalInvestec maintained its sustainability indices Africa and the UK committing to Investec is a member of the 30% Club in South the towards and has made good progress a goal of 30% woman on the board, by 2020, per the Hampton-Alexander Review target of 33% female representation active in South Africa in support -active in South Africa in have been very pro Investec and Stephen Koseff enterprise of multi-party democracy and free employer in the 2017 Universum Investec was voted the second most attractive Awards We continued to grow our client base and invest in our franchise businesses our client base continued to grow We during the year no key personnel departures were There We continue to receive very positive feedback from clients regarding our service clients regarding from very positive feedback continue to receive We the next level of management The executive have been active in developing The Investec brand is well recognised The Investec brand is well • • • • • • • • • • • • • • • • • Achievements during the year Achievements during Succession and development of the next generation Diversity and black economic empowerment initiatives and results Continued development of people – both on the job and extramurally Quality of brand, development of client base, Quality of brand, development and progress commitment to the community in building the firm issues and other sustainability Environmental Areas of focus as set out on page 193 of focus as set out on Areas Franchise development: • • Employee relationship and development: Employee relationship • • • £ 2016 Total 87 500 84 989 85 988 81 500 81 500 36 900 415 000 123 814 196 015 294 590 121 132 205 510 115 666 1 930 104 remuneration – – £ 2017 Total 90 000 84 000 88 500 88 500 88 000 425 000 137 561 221 627 310 861 133 149 200 879 1 868 077 remuneration Investec integrated annual report 2017 Investec integrated annual report KCMG

Remuneration report Remuneration (continued) 2 1 B Fried resigned from the board on 31 March 2016. H Fukuda resigned from the board on 6 August 2015.

200 No such payments have been made. Payments to past directors and payments for loss of office (audited) and payments for loss of office Payments to past directors 1 2 Name Non-executive directors’ single total remuneration figure (audited) (audited) figure total remuneration single Non-executive directors’ period. over the financial for each non-executive director figure total remuneration a single The table below provides Non-executive directors (current) Non-executive directors F Titi (chairman) ZBM Bassa LC Bowden CA Carolus PKO Crosthwaite D Friedland CR Jacobs IR Kantor Malloch-Brown Lord KL Shuenyane PRS Thomas (no longer on the board) Non-executive directors B Fried Total in Pounds Sterling in Total H Fukuda

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04 Remuneration page – – – – – – – – – – – – – – 201 2017 2016 0.4% 0.8% 0.1% 0.2% 1.5% 1.5% 4 000 1 April 04 Investec 1 31 March 31 March Limited

% of shares in% of shares issue – – – – – – – – – – – – 325 325 2016 2017 4 000 1 1 April 327 076 604 740 (continued) (continued) 4 967 040 1 234 399 2 800 500 4 966 715 31 March 31 March Investec Bank Limited – – – – – – – – – – – – 325 325 2017 2016 3 000 1 April Investec Limited beneficial interest beneficial interest 327 076 604 740 Beneficial and non- 31 March 31 March 4 467 040 1 234 399 2 300 500 4 466 715 – – – – – – – – – – – – –

1 Remuneration report Remuneration 2017 2017 0.2% 0.8% 0.2% 0.5% 1.7% 0.2% 1.5% 3 000 Investec Limited plc 31 March 31 March 31 March 31 March in issue Investec % of shares – – – – – – – – – – – 2016 2016 19 900 1 April 1 April 101 198 832 657 115 738 1 3 645 183 3 509 545 5 274 035 3 316 390 9 423 082 13 068 265 Investec integrated annual report 2017 Investec integrated annual report – – – – – – – – – – – Investec plc Investec plc 2017 2017 12 139 19 900 beneficial interest beneficial interest 115 738 Beneficial and non- 31 March 31 March 31 March 31 March 1 144 683 1 009 045 5 295 775 1 164 359 3 488 675 9 948 809 11 093 492

2 2 Name Name 2 The number of shares in issue and share prices for Investec plc and Investec Limited over the period is provided on page 204. The number of shares in issue and share prices for Investec plc and Investec Limited over the period is Investec plc shares which relate to the awards to each include 212 314 The beneficial and non-beneficial holdings of S Koseff, B Kantor and GR Burger, subject to a 196). These shares are, however, of the directors of shares in respect of a £1 million fixed allowance on 2 June 2016 (as explained on page each year over a period of five years. retention period in terms of which 20% of shares will be free from retention restrictions plc preference shares were tendered at £5.75 S Koseff disposed of holdings in his Investec plc preference shareholding on 27 July 2016. 80 000 Investec per share. per share and a further 9 059 Investec plc preference shares were traded at R103.38 Executive director S Koseff

Executive directors S Koseff Total number Total Brown KCMG Malloch-Brown Lord KL Shuenyane PRS Thomas number Total D Friedland H Fukuda OBE CR Jacobs IR Kantor B Kantor GR Burger Non-executive directors F Titi (chairman) ZBM Bassa LC Bowden CA Carolus PKO Crosthwaite B Fried HJ du Toit HJ du Toit number Total • market price of an Investec Limited preference share at 31 March 2017 was R75.00 (2016: R73.20). The • market price of an Investec Bank Limited preference share at 31 March 2017 was R82.00 (2016: R79.00). The • Directors’ interest in preference shares at 31 March 2017 (audited) 2017 at 31 March shares in preference interest Directors’ There are no requirements for directors to hold shares in the group. to hold shares for directors no requirements are There 29 May 2017. 2017 and between 31 March no changes in notifiable interests were There The table above reflects holdings of shares by current directors. 1 2 Directors’ shareholdings in Investec plc and Investec Limited shares at 31 March 2017 (audited) 2017 at 31 March plc and Investec Limited shares in Investec shareholdings Directors’ Directors’ shareholdings, options and long-term incentive awards (audited) long-term incentive awards options and shareholdings, Directors’ and long-term incentive awards. options shareholdings, contains full details of directors' interests of directors' The company's register the year ended for long-term incentive awards options and shareholdings, information on the directors' The tables that follow provide 2017. 31 March period A further A further A further A further A further A further Retention six months six months six months six months six months six months vesting date vesting date vesting date vesting date vesting date vesting date retention after retention retention after retention after retention retention after retention after retention retention after retention

criteria criteria criteria Period percent is percent percent is percent percent is percent being met being met being met 2017; and 2017; and 2017; and percent on percent percent on percent percent on percent Twenty five five Twenty Twenty five five Twenty Twenty five Twenty Seventy five Seventy five Seventy five exercisable 2018, subject 2018, subject 2018, subject exercisable on exercisable 16 September 16 September exercisable on exercisable 16 September 16 September exercisable on exercisable 16 September 16 September to performance to performance to performance at 2017 804 617 804 617 804 617 Balance 31 March shares shares 204 617 204 617 204 617 being met Additional conditions awarded for awarded performance Yes Yes Yes met (Y/N) conditions Performance to to 2016 2016 2016 period Investec integrated annual report 2017 Investec integrated annual report ected above. 31 March 31 March 31 March 31 March f 1 April 2013 1 April 2013 Performance 1 April 2013 to Nil Nil Nil price Exercise 2013 shares 600 000 600 000 600 000 Remuneration report Remuneration (continued) Number of awarded on awarded Investec plc 16 September The Executive Incentive and the Plan awards 2013 made September were on 16 approved 2013 annual at the July 2013 general meeting in terms of which 600 000 nil cost options each were awarded S Koseff, to B Kantor and GR Burger. The performance criteria in respect of these awards were met and detailed integrated in Investec’s 2016 annual report. These awards have now vested subject the to retention periods re 202 Directors' interests in the Investec plc Executive Incentive Plan 2013 at 31 March 2017 (audited) March Executive Incentive Plan 2013 at 31 in the Investec plc interests Directors' 2013 31 March of the financial year ending made in respect Awards Investec plc shares in options over Investec plc shares. do not have any interest The directors Investec Limited shares in options over Investec Limited shares. do not have any interest The directors 2017 (audited) at 31 March in options interest Directors’ S Koseff Name B Kantor GR Burger

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04 Remuneration page 203 period 04 A further A further A further six-month six-month six-month Retention vesting date vesting date vesting date retention after retention retention after retention retention after retention ected in the

f (continued) (continued) Period exercisable 2 June 2019; one third on 2 June 2019; one third 2 June 2019; one third on 2 June 2019; one third 2 June 2019; one third on 2 June 2019; one third on 2 June 2021 subject to on 2 June 2021 subject to on 2 June 2021 subject toon 2 June 2021 subject One third is exercisable on is exercisable One third One third is exercisable on is exercisable One third One third is exercisable on is exercisable One third 2 June 2020 and the final third 2 June 2020 and the final third 2 June 2020 and the final third 2 June 2020 and the final third 2 June 2020 and the final third third 2 June 2020 and the final performance criteria being met performance criteria being met performance criteria being met performance criteria being Remuneration report Remuneration ance 2019 2019 2019 period Perform- 1 April 2016 1 April 2016 1 April 2016 to 31 March to 31 March to 31 March at 2017 Balance 277 801 314 225 314 225 31 March Investec integrated annual report 2017 Investec integrated annual report made nancial year ending The March value 31 2016. of these awards is re awards 277 801 314 225 314 225 Conditional – – – shares at shares Number of 1 April 2016 Investec plc Nil Nil Nil price Exercise of 2016 Date 2016 2016 grant 2 June 2 June 2 June table on page189. The performance criteria in respectof these awards are detailed on pages These and 195. 194 awards have not yet vested. The face value at grant for these awards amounted 480 £1 000 to for S Koseff and and 308 B Kantor, £1 000 for GR Burger based on the share price for Investec plc at the time of grant. The Executive Incentive and the Plan awards 2013 made thereunder were approved at the annual August 2015 general meeting. conditional 225 314 On awards 2 June were 2016, awarded S Koseff to and GR and to 801 Burger. These B Kantor, 277 awards formed part of their variable remuneration in respect of the f GR Burger B Kantor S Koseff Name Directors' interests in the Investec plc Executive Incentive Plan 2013 at 31 March 2017 (audited) 2013 at 31 March Incentive Plan plc Executive in the Investec interests Directors' 2016 financial year of the granted in respect awards share Long-term £4.19 period R81.46 A further A further A further the year six-month six-month six-month Low over Retention vesting date vesting date vesting date retention after retention retention after retention retention after retention £6.19 R112.11 the year High over Period exercisable 2016 617.4 291.4 £5.13 R109.91 31 March 31 March 8 June each year, commencing 8 June each year, 8 June each year, commencing 8 June each year, 8 June each year, commencing 8 June each year, Twenty per cent is exercisable on cent is exercisable per Twenty Twenty per cent is exercisable on cent is exercisable per Twenty Twenty per cent is exercisable on per cent is exercisable Twenty on 8 June 2020 until 8 June 2024 on 8 June 2020 until 8 June 2024 on 8 June 2020 until 8 June 2024 on 8 June 2020 until 8 2017 301.2 657.1 £5.44 R91.46 subject to performance criteria being met subject to performance criteria being met subject to performance criteria being met subject to performance 31 March 31 March to to to 2020 2020 2020 period 31 March 31 March 31 March 31 March 31 March 1 April 2017 1 April 2017 1 April 2017 Performance year 227 651 252 130 252 130 during the Conditional awards made awards Investec integrated annual report 2017 Investec integrated annual report – – – shares at shares Number of 1 April 2017 Investec plc Nil Nil Nil price Exercise Remuneration report Remuneration (continued) 2017 2017 2017 grant 8 June 8 June 8 June Date of Number of Investec Limited shares in issue (million) Number of Investec Limited shares Number of Investec plc shares in issue (million) Number of Investec plc shares Investec Limited share price Investec Limited share Investec plc share price Investec plc share 204 The Executive Incentive Plan and the awards made thereunder were approved at the August 2015 annual general meeting. approved were thereunder made The Executive Incentive Plan and the awards formed These awards to GR Burger. and 227 651 B Kantor, and Koseff to S awarded were On 8 June 2017, 252 130 conditional awards in the table is reflected 2017. The value of these awards year ending 31 March of the financial in respect part of their variable remuneration have not yet vested. awards detailed on pages 194 and 195. These are of these awards on page 189. The performance criteria in respect based on the and £1 336 309 for GR Burger and B Kantor, to £1 480 000 for S Koseff amounted The face value at grant for these awards 30 May 2017 to 2 June 2017. price for Investec plc from average of the closing share GR Burger B Kantor S Koseff Summary: Investec plc and Investec Limited share statistics share Summary: Investec plc and Investec Limited The number of shares in issue and share prices for Investec plc and Investec Limited are provided below: provided plc and Investec Limited are prices for Investec in issue and share The number of shares Name Directors' interests in the Investec plc Executive Incentive Plan 2013 at 31 March 2017 (audited) March Executive Incentive Plan 2013 at 31 in the Investec plc interests Directors' of the 2017 financial year respect granted in awards Long-term share

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04 Remuneration page 205 3/4/5/6 04 Total issued at Total 2017 31 March 289 764 0.03% of issued share capital of company 2 221 871 0.23% of issued share capital of company 29 510 704 3.08% of issued share capital of company 19 924 777 2.08% of issued share capital of company 7 756 347 0.81% of issued share capital of company 3 546 942 0.37% of issued share capital of company during the financial year. 2 – – (continued) (continued) 6.19 year shares 12 150 granted Options/ 2 221 871 7 849 627 3 653 622 during the to a high of £ 4.19 Remuneration report Remuneration (2016: £5.13), ranging from a low of £ 44 . 5 Vesting one third at the end of years one third Vesting four and five. three, Market strike options: twenty five percent Market strike options: twenty five percent four vesting end of years two, three, and five awards: Long-term share one third Vest Junior Material Risk Takers: and a at the end of two and a half, three half and four and a half years Risk Managers and FCA Designated at the one third Senior Managers: Vest and a half end of two and a half, three and five years PRA Designated Senior Managers: Vest to three twenty per cent per annum from seven years period All have a six month retention thereafter term incentive awards: Nil Long-term incentive awards: Cost Options term incentive awards – Nil Long-term incentive awards Cost Options: seventy Vesting Non-material Risk Takers: end year four and twenty five five percent end year five percent seventy five Vesting Material Risk Takers: and a half years and end of three percent at the end of four and twenty five percent a half years with six month retention Vesting seventy five percent at end year seventy five percent Vesting at end year five four and twenty five percent term share awards: forfeitable awards: Long-term share and Conditional shares shares term share awards: Forfeitable awards: Long-term share and Conditional Shares Shares vesting at the end of years three, One third four and five for non-material Risk Takers Investec integrated annual report 2017 Investec integrated annual report Vesting period Vesting • • • • • • • • • • • • • • • 1 1 1 Excluding deferred Excluding deferred awards bonus share In any financial year: 1x remuneration package Cumulative limit of all 2 500 000 across option plans Cumulative limit of all 2 500 000 across option plans Cumulative limit of all 2 500 000 across option plans Excluding deferred Excluding deferred awards bonus share Excluding deferred Excluding deferred awards bonus share In any financial year: 1x remuneration package In any financial year: 1x remuneration package Maximum award per Maximum award individual • • • • • • • • • he market price of an Investec plc share at 31 March 2017 was £ The rules of these long-term incentive plans do not allow awards to be made to executive directors. The table above excludes details of the Investec plc The rules of these long-term incentive plans do not allow awards to be made to executive directors. The Executive Incentive Plan 2013 on pages 202 to 204. The market price of an Investec Limited share at 31 March 2017 was R91.46 (2016: R109.91), ranging from a low of R81.46 to a high of R112.11 during The market price of an Investec Limited share at 31 March 2017 was R91.46 (2016: R109.91), ranging the financial year. The limits for allocations to employees and executive management during a financial year may be exceeded if the directors determine that exceptional The limits for allocations to employees and executive management during a financial year may be exceeded circumstances make it desirable that awards should be granted in excess of that limit. in volume three. More details on the directors’ This represents the number of awards made to all participants. For further details, see pages 57 and 58 shareholdings are also provided in tables accompanying this report. as from the date of the and accordingly, Dilution limits: Investec is committed to following the Investment Association principles of remuneration which may be issued by the company under all of the share implementation of our DLC structure (29 July 2002), the maximum number of new shares have, capital of the company over a rolling 10-year period. We plans (in respect of grants made after July 2002) may not exceed 10% of the issued share since our listing date, complied with both the 10% in 10 years guideline for discretionary and non-discretionary awards in aggregate as well as the 5% in 10 year guideline for discretionary to ensure that these awards. The committee regularly monitors the utilisation of dilution limits and available headroom deferred bonus scheme are paid for by the respective division at the time of the award guidelines are complied with. Shares issued in terms of the group’s The issued share capital of Investec plc and Investec Limited at and are not included in these dilution calculations as they have been issued for full value. 31 March 2017 was 657.1 million shares and 301.2 million shares, respectively. New and existing full- time employees Executive management and Material Risk Takers New and existing full- time employees New and existing full- time employees New and existing full- time employees New and existing full- time employees T

4 5 6 1 2 3 Investec Limited Share Incentive Plan – 16 March 2005 – Investec Limited Incentive Plan – 16 March Investec Limited Share • Investec plc Executive Incentive Plan – 2013 Investec plc Executive Incentive • Investec 1 Limited Share Incentive Plan – 16 March 2005 – Investec plc – 16 March Incentive Plan Share Investec 1 Limited • Eligibility • • • Shareholder dilution Shareholder incentive plans option and long-term share Summary of Investec’s invested in the FTSE 350 General Finance invested in the FTSE 350 £150 if invested in the of Index and a return FTSE 100 Index. 2016 to 1 April During the period from shareholders to 2017, the return 31 March Pounds in of Investec plc (measured (measured Sterling) and Investec Limited -12.5%, in Rands) was 10.9% and to a 13.3% compares This respectively. General Finance return for the FTSE 350 for the FTSE 100 of 23.3% Index, a return 0.7% for the of Index and a return 40 Index. JSE Top on the LSE The market price of our shares 2017, ranging from was £5.44 at 31 March a low of £4.19 to a high of £6.19 during The market price of our the financial year. on the JSE Limited was R91.46 shares a low of 2017, ranging from at 31 March R81.46 to a high of R112.11 during the financial year. Investec plc (LSE listing) return total shareholder of return shareholder Total the FTSE 350 General Finance index of return shareholder Total the FTSE 100 index 17 380 254 250 16 335 229 203 Schedule 8 of the UK Large and Medium- Schedule 8 of the UK Large (Accounts sized Companies and Groups 2008 (as and Report) Regulations to include a this report amended) requires total plc’s performance graph of Investec (TSR) performance return shareholder index. A market against that of a broad within the FTSE 350 number of companies conduct similar General Finance Index they do not activities to us, although geographical necessarily have the same has been Nevertheless, to date this profile. index against which the most appropriate our performance on the LSE. to measure included in not currently Although we are part of that index the FTSE 100, we were between 2010 and 2011 and we have of that return included the total shareholder index for illustrative purposes. The graph below shows the cumulative for a holding of our return shareholder (in purple) in Pounds Sterling on shares with the average total the LSE, compared of other members return shareholder of the FTSE 350 General Finance Index and the FTSE 100 Index. It shows that, a hypothetical £100 at 31 March 2017, 2009 invested in Investec plc at 31 March of would have generated a total return of £280 if with a return £154 compared Investec integrated annual report 2017 Investec integrated annual report 345 243 215 15 14 285 203 201 220 189 182 13 12 170 167 146 11 186 164 178 Remuneration report Remuneration (continued) 10 191 152 152 100 09 March 0 50 Rebased to 100 (value £) Total shareholder return shareholder Total 400 350 300 250 200 150 100 206 Performance graph Source: Datastream We recognise that remuneration is an area is an area that remuneration recognise We and to shareholders of particular interest changes to that in setting and considering it is important that we take remuneration a their views into account. Accordingly, held each year with series of meetings are and shareholder our major shareholders The remuneration groups. representative committee chairman attends these meetings, accompanied by senior Investec chairman. This employees and the group engagement is meaningful and helpful to the committee in its work and contributes to the decisions made by the directly committee. in have implemented a DLC structure, We terms of which we have primary listings in London and Johannesburg. The listing on the London Stock Exchange (LSE) took have been listed place on 29 July 2002. We in South Africa since 1986. Performance graph: total Performance graph: return shareholder Directors’ remuneration remuneration Directors’ interests – alignment of with shareholders (unaudited)

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04 Remuneration page 207 % (3.3%) (1.1%) 92% 21.7% 37.6% 18.6% 17.8% 17.6% 20.3% 18.3% 2017 bonus 04 4 892 3 412 1 480 Annual change 740 451 2 269 341 Number of abstentions 95% 3% 2016 4 364 2 884 1 480 20% 2016 0.0% 10.7% 15.1% 26 130 581 847 330 588 206 139 180 009 912 435 (continued) (continued) benefits ‘against’ 31 March 31 March resolution Salary and % of votes – 65% 2015 3 970 3 970 2017 25 838 389 540 242 440 216 602 690 161 – ‘against’ 31 March 31 March 1 079 701 resolution votes cast 24 756 363 Number of 50% 139 600 542 2014 2 420 2 420 ‘for’ Remuneration report Remuneration 97% 80% n/a^ 2013 4 602 1 950 2 652 resolution % of votes – ‘for’ n/a^ 450 450 2012 resolution votes cast Number of 684 494 403 568 121 333 Investec integrated annual report 2017 Investec integrated annual report – n/a^ 2011 3 425 3 425 – n/a^ 2010 2 660 2 660 The fixed allowance is granted in shares which are released over five years. The fixed allowance is granted in shares which are released not meet performance conditions in the relevant periods. Incentives awarded on 16 September 2013Historical long-term incentives did not vest as they did on page 202, and are now due to vest in 2017 and 2018. Incentives awarded on 2 June 2016 andhave been tested against performance criteria, as shown 2017 information respectively) are still subject to performance conditions and have not yet vested. 8 June 2017 (as reflected in the March 2016 and March of a formulaic approach where maximum and minimum awards could be derived. Historically annual bonuses were not determined in terms executive directors’ remuneration the non-executive directors’ approve To To approve the directors’ remuneration report remuneration the directors’ approve To Increase in total costs for Investec Limited employees (In Rands) in total costs for Investec Limited employees Increase CEO (in Pounds Sterling) Sterling) in total costs for Investec plc employees (in Pounds Increase – Variable Dividends to shareholders shares – Ordinary shares – Preference Statement of voting at 2016 annual general meeting passed at the 2016 annual general meetings of Investec plc and Investec resolutions on each of the two remuneration The combined results as follows: Limited were £’000 added statement is provided on page 10. In summary, the relative importance of remuneration and distributions to shareholders is and distributions to shareholders remuneration importance of the relative on page 10. In summary, Our value-added statement is provided shown below: Relative importance of spend on remuneration Relative importance of spend on Group compensation costs Group – Fixed The table below shows how the percentage change in the CEO’s salary and annual bonus between 2016 and 2017 compares with the salary and annual bonus between 2016 and 2017 compares in the CEO’s change The table below shows how the percentage Limited employees. for Investec plc employees and Investec change in each of those components of remuneration percentage Percentage change in the CEO’s remuneration change in the CEO’s Percentage * ** ^ Year ended 31 March ended Year Table of CEO remuneration Table calculating the value of of the CEO. For the purpose of remuneration an eight-year summary of the total provides In addition, the table below as set out on methodology figure’ the ‘single remuneration has been collated on a basis consistent with of the CEO, data the remuneration page 196. CEO single figure of total CEO single figure (£’000) remuneration Salary, benefits, fixed allowance Salary, and bonus (£’000)* term incentives granted Long-term incentives granted price share (value reflects multiplied by number of shares at date of award)** awarded (£’000) % maximum of short-term incentive Be in line with the business strategy, Be in line with the business strategy, objectives, values and long-term of the Investec group interests sound Be consistent with and promote risk management, and not and effective encourage risk taking that exceeds the level of tolerated risk of the Investec group that payment of variable Ensure does not limit the Investec remuneration ability to maintain or strengthen group’s its capital base (base fixed remuneration gross Target salary and benefits including pension) at median market levels to contain fixed costs Investec Asset Management Limited Investec Asset Management & Investment Limited Investec Wealth Investec Bank plc Hale Limited. Hargreave Remuneration philosophy unchanged which remains Our philosophy, prior years, is to employ the highest from characterised individuals who are calibre intellect and innovation and by integrity, and subscribe to our culture, who adhere strive to values and philosophies. We by providing entrepreneurship inspire that stimulates a working environment performance so that extraordinary and employees may executive directors be positive contributors to our clients, their communities and the group. Remuneration principles and Remuneration policies, procedures to as the practices, collectively referred designed, in policy’, are ‘remuneration normal market conditions, to: • • • • or FCA and as such maintain their own or FCA and as such maintain the from policies separate remuneration line with policy and in Investec group and business own risk profile such entity’s activities: • • • • Under the PRA and FCA Remuneration Code, Investec Bank plc is the only entity which is classified as being group level 2. It should be noted that our Asset Management Management and Wealth businesses have been classified as level 3 rules of the entities under the proportionality PRA and FCA Remuneration Code. policies details of the remuneration More companies subsidiary our of in each applied can be found on pages 216 to 223. Scope of our remuneration Scope of our remuneration policy aims to apply The Investec group policies to executive directors remuneration largely consistent and employees that are that but recognises the group, across governed by are certain parts of the group that may contain more local regulations in certain respects. requirements onerous are In those cases, the higher requirements This is applied to that part of the group. to Investec plc and its subsidiary relevant subject to the PRA companies that are and FCA Remuneration Code (as a level 2 and in organisation as defined therein), to Material Risk Takers. particular in relation any aspect of our where Additionally, policy contravenes local laws remuneration the local laws or regulations or regulations, shall prevail. entities The following Investec plc group by the PRA and/ separately regulated are Shareholders voted in favour of our voted in favour of Shareholders policy at the remuneration directors’ meeting and August 2015 annual general that date. from the policy was effective in force remain It is anticipated that it will meeting until the 2018 annual general changes or the business unless regulatory necessitate or economic environment earlier amendment. The only significant changes within the policy for the 2017 the extension of the financial year are deferral and clawback periods for the short-term incentive executive directors’ and long-term incentive, to comply with the under the extended deferral requirements PRA and FCA Remuneration Codes. The vesting periods of the short-term and long- have been extended awards term share that a minimum of 60% of the to ensure variable remuneration executive directors’ to seven over a period of three is deferred have years, while the clawback provisions been extended to seven years, with an extension to ten years in the event of an ongoing investigation. The committee due to believes that, as the changes are more and are requirements regulatory than those under the approved onerous and it can make these changes, policy, policy will consequently the remuneration not be put to a vote at the annual general meeting this year. Directors’ remuneration remuneration Directors’ year policy for the 2018 ending 31 March years and subsequent Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) Hendrik du Toit Steve Elliott David van der Walt Ciaran Whelan – – – – Asset Management – Wealth & Investment Wealth – Specialist Banking – – 208 South African 2008 Companies Act, disclosures In compliance with to regulatory Africa, Investec developments in South to disclose the Limited is required that are of those individuals remuneration Companies defined by the South African amended), Act, No 71 of 2008 (as together with the Companies read Regulations 2011 (together the Act), officers. as prescribed integrated In keeping with the group’s as well as global management structure distinct business activities of the the three & i.e. Asset Management, Wealth group, Investment and Specialist Banking, the for Investec Limited, as officers prescribed the following heads of the per the Act, are distinct business activities: three group’s • Additional remuneration remuneration Additional (unaudited) disclosures • • Hendrik du Toit is one of the executive Hendrik du Toit of Investec Limited and his directors is disclosed on page 196. remuneration by Investec Steve Elliott is remunerated & Investment Limited (a UK Wealth domiciled company and subsidiary of and Investec plc), and David van der Walt employed by Investec Ciaran Whelan are Bank plc (a UK domiciled company and a subsidiary of Investec plc). As a result, to disclose their not required they are under the South African remuneration Companies Act.

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04 Remuneration page 209 04 (continued) (continued) Hendrik du Toit will no longer Hendrik du Toit receive long-term incentive awards as he is a participant in the IAM equity ownership scheme as explained on pages 221 and 222. Remuneration of the Remuneration of CEO of IAM is du Toit Notwithstanding that Hendrik of Investec plc and a director currently not perform Investec Limited, he does duties. wide executive Investec group and any du Toit Hendrik Accordingly, are benefits due to him remuneration policies, rules subject to the remuneration applicable to employees and regulations policies, of IAM and not the remuneration applicable to rules and regulations other entities within the Investec group. quantum and the structure Consequently, in many respects differs of his remuneration that of the other executive directors. from For example, in line with practice in asset management businesses, his short-term incentive is uncapped. remuneration Hendrik du Toit’s not impacted by CRD IV arrangements are as IAM is not subject to these requirements, is not Hendrik du Toit and accordingly He is defined as a PRA Material Risk Taker. entitled to an annual bonus as determined to the performance of IAM with respect IAM and is Hendrik is the founder of only. entitled to 1.85% of the earnings of IAM tax and variable remuneration. before was 20% of the bonus of Hendrik du Toit into the IAM DBOP scheme. As deferred outlined on page 221, the DBOP awards made in the form of investments into are various funds managed by IAM. The years and deferral period is just over three only paid out under specific are awards is subject listed conditions. Hendrik du Toit relating to malus and clawback provisions to IAM. 2:1, depending on the length of deferral, 2:1, depending on the is currently rates. This inflation and interest 2.4x fixed remuneration. approximately Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report The pool is decreased or increased by a performance multiplier comprising weightings and achievement scores within score ranges for the financial and non-financial performance measures (as discussed on pages 192 to 194). groups of South African (and sub-groups group and non-South African peers) comprising: Asset Management, Barclays Aberdeen Alliance Bernstein, Close Africa Group, FirstRand, Invesco, Group, Brothers Macquarie Group, Julius Baer, Jefferies, Rathbone Nedbank Group, Man Group, Bank Group Standard Schroders, Brothers, The short-term incentive Prebon. and Tullett by 50% was reduced sharing percentage of the the reintroduction in 2016 to reflect long-term incentive. and the pool share The levels of CEO profit compatible with international more are levels than South African reward reward levels. The committee believes this is given the complexity of appropriate, Investec and the challenges involved in three operating across managing a group geographies. businesses in two core CRD IV is EU regulation that has been CRD IV is EU regulation January 2014. The main 1 from effective of CRD IV that impacts directors’ feature at Investec is the application remuneration of a cap on variable remuneration to Material Risk that can be awarded (including executive directors). Takers At the 2014 annual general meeting, a maximum approved shareholders fixed remuneration variable remuneration: ratio of 2:1, which applied to variable of the in respect awarded remuneration 2015 performance year and thereafter. This cap is defined in line with EBA when 25% discounting rules which allow, over at is deferred of variable remuneration least five years, a slightly higher cap than Impact of CRD IV on executive remuneration directors’ arrangements Ensure that variable remuneration that variable remuneration Ensure added is largely economic value underpinned by – based and (EVA) and risk appetite our predetermined capital allocation shareholders Facilitate alignment with - deferral of a portion of short through and long- term incentives into shares awards term incentive share salary, total compensation (base Target to the relevant benefits and incentives) competitive market at upper quartile levels for superior performance. package remuneration An annual gross an (base salary and benefits) providing industry competitive package to A variable short-term incentive related performance (annual bonus) awards) A long-term incentive (share long-term equity participation providing Certain of our Material Risk Takers fixed monthly cash allowances receive and a for the role) appropriate (where of variable commensurate reduction short-term incentive. Benchmarks The short-term incentive initially allocated in to the CEO and pool (as reflected our policy) in 2015 was arrived at after extensive benchmarking over a five-year period against short-term incentives of: and (ii) groups (i) chief executive officers, for a bespoke peer of executive directors • • Given our stance on maintaining a low our fixed cost component of remuneration, commitment to inspiring an entrepreneurial on and our risk-adjusted return culture, we do not apply to EVA, capital approach other an upper limit on variable rewards of Material Risk Takers than in respect (as discussed hereunder). employees generally for their reward We contribution through: • • • • a fixed The CEO, MD and GRFD receive as outlined in the table allowance in shares, on page 196. • None None None None • • Changes from Changes from prior year • • 1 £1 million per annum paid in shares The individual can elect what is of fixed remuneration proportion allocated as their pension/provident contribution Targeted at median market levels at median market levels Targeted with relevant when compared comparator groups Benefits include: life, disability and personal accident insurance; medical cover; and other benefits, as dictated by competitive local market practices is no maximum value but There the value of benefits provided will generally be in line with market comparators Annual increases in salaries are in salaries are Annual increases to the average increase referenced to other employees, unless awarded committee deems the remuneration to adjustments to be made relating market factors • • • Maximum value and performance Maximum value and targets • • • 1 Investec integrated annual report 2017 Investec integrated annual report Deferred over a five-year period Deferred with 20% being released each year Only salaries, not fixed allowances or annual bonuses, pensionable are Paid in shares participate Executive directors in defined contribution pension/ schemes provident Fixed allowance reviewed by Fixed allowance reviewed committee the remuneration years or on a every three change of role benchmarked Benefits are against relevant comparator groups Salaries are benchmarked Salaries are against relevant comparator groups Salaries of executive directors Salaries of executive directors and set annually reviewed are committee by the remuneration Executive directors may elect Executive directors to sacrifice a portion of their in remuneration annual gross exchange for benefits such as travel allowances and medical aid • • • • • • • Operation • • Remuneration report Remuneration (continued) Refer to page 212. To enable executive To for to provide directors their retirement To provide a market a market provide To competitive package To provide competitive competitive provide To recognising remuneration and depth of the breadth the role To provide an industry provide To competitive package so able to recruit that we are the people and retain that we need to develop our business the relative Salaries reflect skills and experience of, and contribution made by, the individual

1 Pension/provident • • Benefits • Fixed allowances – CEO, MD and GRFD Fixed allowances – CEO, MD and • • Purpose and link to strategy Fixed remuneration Salary 210 Executive directors’ remuneration policy table policy remuneration Executive directors’ 2018. for the year ending 31 March policy for executive directors the remuneration The table below summarises

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04 Remuneration page 211 04 The introduction The introduction of deferral The vesting period has been extended, in line with regulatory requirements Changes from prior Changes from year • • (continued) (continued) 3 2 Remuneration report Remuneration Return on risk-weighted assets; Return on equity; Tier 1 capital adequacy; Liquidity coverage ratio; and Net stable funding ratio. Culture and values; Culture Franchise development; Governance and regulatory compliance; and Employee and shareholder relationships. – – – – – – – – – The CEO of IAM is entitled to 1.85% tax and of the earnings of IAM before variable compensation committee The IAM remuneration of IAM the financial results reviews within the context of the risk appetite of the business and can risk-adjust the cash bonus should they believe given the risk taken this is required and the overall financial results financial stretch If all financial and non-financial stretch met, up to 180% of the levels are subject target may be awarded, to an overall maximum of variable being (including LTIPs) remuneration cap subject to the remuneration committee has The remuneration to vary the weightings of discretion the performance metrics to improve alignment with business strategy Based on a balanced scorecard Based on a balanced scorecard of financial and non-financial with performance measures correspond achievement levels that with our short-term objectives 85% based on financial measures including: – – – – – 15% based on non-financial including: measures – – – – If target performance conditions achieved, distribution will be as follows: 0.23% of AOP to CEO; 0.23% of AOP to MD; and 0.20% of AOP to GRFD Maximum value and performance Maximum value and targets • • • • • • • • (continued) Investec integrated annual report 2017 Investec integrated annual report 4 2 Awards are subject to malus are Awards to IAM and clawback relating The cash bonus payment to the by the CEO of IAM is approved committee DLC remuneration 20% of the short-term incentive into the IAM will be deferred DBOP scheme, vesting after three years The balance of the short-term incentive is payable in cash shortly after the end of the financial year -term Establishment of a short incentive pool-based on the adjusted operating group’s (AOP) profit The remaining 40% is deferred; 40% is deferred; The remaining of this portion, an amount 60% of total that ensures (short- variable remuneration term incentive plus long-term over three incentive) is deferred to seven years, vests 20% per annum commencing on the anniversary third portion vests The remaining equally after one and two years for a must be retained Shares period of six months after vesting period will The retention be extended to one year in for the year of awards respect 2018 and ending 31 March subsequent years Remuneration committee to reduce discretion retains the amount payable to ensure that incentives truly reflect not performance and are distorted by an unintended formulaic outcome subject to malus of are Awards and clawback unvested shares award on the entire Receive 30% in cash immediately; shares; 30% in upfront Operation • • • • • • • • • • • • Refer to page 212. To reward behaviour and reward To against objectives effort and values and retain key employees The cash bonus pool determination is based on of IAM only the profitability Alignment with key business objectives Deferral structure alignment provides with shareholders

Purpose and link to strategy 2,3,4 • Short-term incentive – CEO of IAM • • • Variable remuneration Variable – CEO, MD and GRFD Short-term incentive Executive directors’ remuneration policy table policy remuneration Executive directors’ The vesting period has been extended, in line with regulatory requirements Changes from prior Changes from year • Growth in tangible net asset Growth value (40%); Return on risk-weighted assets (35%); (25%). Non-financial measures – – – Annual award of 100% of aggregate of 100% of aggregate Annual award fixed remuneration subject to the following are Awards and performance measures weightings: – – – Targets for financial performance for Targets and non-financial measures metrics will be set annually by the committee in advance remuneration being made of the award committee The remuneration in exceptional has discretion, to amend targets or circumstances, if an event happens that, in measures the opinion of the committee, caused to no those targets or measures longer be appropriate committee retains The remuneration weightings the adjust to discretion the to best of performance measures meet the objectives of the business Maximum value and performance Maximum value and targets • • • • • (continued) Investec integrated annual report 2017 Investec integrated annual report 5 Applies to the CEO, MD Applies to the CEO, MD and GRFD Remuneration committee to adjust discretion retains vesting to the level of awards that incentives truly ensure performance and are reflect not distorted by an unintended formulaic outcome Awards are subject to malus of are Awards and clawback unvested shares of vested shares The retention period will The retention be extended to one year in for the year of awards respect 2018 and ending 31 March subsequent years Vested shares are subject are shares Vested to a further six-month retention period Awards vest twenty per cent Awards per annum commencing on the anniversary and ending on third the seventh anniversary of grant Conditional awards of shares of shares Conditional awards subject to performance over conditions measured years three financial Operation • • • • • • • Remuneration report Remuneration (continued) Hendrik du Toit will no longer receive long-term incentive awards as he is a participant in the IAM equity ownership scheme as explained on pages 221 Hendrik du Toit and 222. Notwithstanding that Hendrik du Toit is currently a director of Investec plc and Investec Limited, he does not perform Investec group wide executive Notwithstanding that Hendrik du Toit policies, rules and regulations and any remuneration benefits due to him are subject to the remuneration Hendrik du Toit activities. Accordingly, applicable to other entities within the Investec group. applicable to employees of IAM and not the remuneration policies, rules and regulations and is entitled to an annual bonus as determined with respect to the performance of IAM only as is not defined as a Material Risk Taker Hendrik du Toit explained in the table above. Peer group companies include Aberdeen Asset Management, Barclays Africa Group, Alliance Bernstein, Close Brothers Group, FirstRand, Invesco, Peer group companies include Aberdeen Asset Management, Barclays Africa Group, Alliance Bernstein, Prebon. Macquarie Group, Man Group, Nedbank Group, Rathbone Brothers, Schroders, Standard Bank Group and Tullett Jefferies, Julius Baer, and after non-controlling interests. AOP defined as operating profit before taxation, goodwill, acquired intangibles and non-operating items when 25% of variable remuneration is deferred over at least five years, a slightly higher cap Cap defined in line with EBA discounting rules which allow, on interest rates and inflation). These limits will be in line with this than 2x fixed remuneration (currently approximately 2.4x fixed remuneration dependent EBA cap. Clear link between performance and remuneration Embeds alignment with returns shareholder Performance targets aligned with business objectives Non-financial metrics take into account the and strategic group’s operational objectives

Purpose and link to strategy 5 4 1 2 3 Notes to the preceding table: • • • • Long-term incentive – CEO, MD and GRFD Long-term incentive Executive directors’ remuneration policy table policy remuneration Executive directors’ 212

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04 Remuneration page 213 04 (continued) (continued) Maximum value In line with policy £1 million Currently 15% of salary In line with policy 100%* of fixed remuneration 100% of fixed remuneration Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report Determined by similar factors to salary In line with normal policy in line with normal policy Offered In line with normal policy In line with normal policy has forfeited as that the new executive director committee can buy out a bonus or incentive awards The remuneration applicable where of forfeiture of accepting the appointment, subject to proof a result made to compensate for forfeited remuneration by the PRA and FCA Remuneration Code, any award As required value timing, and form of delivery of the the than, and should aim to mirror generous no more should be broadly forfeited remuneration Determined by market conditions, market practice and ability to recruit committee may remuneration or promotion, If salary below market level on recruitment salary over transitional period with higher than normal increases realign Commentary More remuneration details of the approach to employee can be found on pages 216 to 223. A detailed explanation of these performanceA detailed explanation measures is provided on pages 192 to 194. The performance measures have been selected taking into account:

Cap defined in line with EBA discounting rules which allow, when 25% of variable remuneration is deferred over at least five years, a slightly higher cap Cap defined in line with EBA discounting rules which allow, on interest rates and inflation). These limits will be in line with this than 2x fixed remuneration (currently approximately 2.4x fixed remuneration dependent EBA cap. Key stakeholders’ requirements (including shareholders and regulators) which were assessed through extensive consultations on assessed through which were and regulators) shareholders (including Key stakeholders’ requirements the matter balance between measures an appropriate is for a range of financial metrics that ensure the board of the committee and The preference financial believes that it is right to include non- committee In addition, the remuneration measures. and prudential which drive profitability important matters on which the long-term should be incentivised to attend to as directors of awards in determining levels measures financial returns. linked to performance period be directly depends, but which cannot in any one performance of the company * Fixed allowance Pension Other benefits STI LTIP Buy-outs Salary Element If the new joiner is not affected by the bonus cap then the remuneration committee may construct a package as set out above, but then committee may construct by the bonus cap then the remuneration If the new joiner is not affected other relevant given market factors and opportunities as appropriate award may allocate the amount of the fixed allowance into STI or LTI comparator trends. Policy for the recruitment of new executive directors Policy for the recruitment policy for executive remuneration will be in line with the current executive directors of new to the recruitment It is intended that the approach that for new recruits committee will consider levels of remuneration the remuneration However, as outlined above and below. directors the by the bonus cap under CRD IV, For individuals covered competitive for the skills and experience of the individual being recruited. are be as set out below. will on recruitment of each element of remuneration treatment We apply consistent remuneration principles and philosophies across the whole employee population and are cognisant of these when the whole employee population and are principles and philosophies across apply consistent remuneration We is benchmarked against of salary and benefits paid to executive directors The quantum remuneration. considering executive directors’ to the average is referenced in such remuneration the annual increase (as discussed on page 209), however, comparator groups appropriate Although this has not been the case of late, the remuneration to employees in South Africa and the UK, respectively. awarded increase have been large make adjustments outside these parameters, particularly in cases when there under certain circumstances, committee may, referenced. adjustments in the comparator group of specific performance a number are there -term incentive is performance-based, however, As is the case with other employees, the short annual bonus for the CEO, MD and GRFD (as set out below). The annual bonus for criteria that apply in the case of determining the Short-term to the performance of IAM only. is referenced of the Investec group) (CEO of IAM and executive director Hendrik du Toit subject to deferral, malus and clawback are defined as Material Risk Takers, and the employees, incentives for executive directors GRFD and to some employees in the UK Specialist Bank only applicable to the CEO, MD and of CRD IV are The requirements requirements. classified as Material Risk Takers. who are Differences between the remuneration policy of the executive directors and and policy of the executive directors between the remuneration Differences the policy for all employees How will executive directors’ performances be assessed? performances directors’ How will executive to performance conditions. subject -term incentives are The short-term and long • • -term incentive is equal to long Target one times fixed remuneration. includes the latest Fixed remuneration company pension known salary, contributions and the benefits receivable 2017 during the year ended 31 March short-term incentive is 1.85% of Variable -compensation earnings -tax and pre pre of IAM, determined on a discretionary and uncapped basis will no longer receive Hendrik du Toit as he long-term incentive awards is a participant in the IAM equity ownership scheme information cannot be Forecasted or target to determine a stretch provided years and thus the amount for future depicts graph on the next page merely and prior amounts paid in the current financial year. • For the CEO of IAM: • • • • CEO IAM Indefinite contract of employment, terminable by either party Indefinite contract of employment, months’ written notice with three benefits and pension payable for period of notice Salary, payable on early termination for compensation No provision n/a n/a n/a requirement is no formal shareholding There Target variable short-term incentive is Target 0.23% (CEO and MD) and 0.20% for the GRFD of adjusted operating profit interests) (after total non-controlling for based on £578.8 million as reported the financial year ended 31 March 2017 and maximum variable short-term incentive is 180% of target (subject to an overriding maximum in terms cap as approved of the remuneration and depending on by shareholders the length of deferral, inflation and interest rates) Fixed remuneration includes salaries, Fixed remuneration company pension contributions and for (i.e. as proposed benefits receivable 2018), and a the year ending 31 March fixed allowance of £1 million ‘At stretch’ – fixed remuneration and – fixed remuneration ‘At stretch’ achievement levels that the ‘stretch’ for variable short-term may be awarded vesting annual incentive and ‘stretch’ of any long-term incentives that may be awarded. • The scenarios do not reflect share price share The scenarios do not reflect and potential movement between award any dividends or dividend vesting, nor are equivalents taken into account. For the CEO, MD and GRFD based on for the policy proposed the remuneration 2018: year ending 31 March • • Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) ‘Minimum’ – fixed remuneration only ‘Minimum’ – fixed remuneration and ‘At target’ – fixed remuneration the ‘at target’ variable short-term annual incentive and ‘at target’ vesting of any long-term incentives that may be awarded CEO, MD and GRFD with of employment, terminable by either party Indefinite service contracts six months’ written notice for period of notice fixed allowance, benefits and pension payable Salary, payable on early termination for compensation No provision lapse on resignation awards or LTI shares EVA bonus Outstanding deferred misconduct or termination for gross a is considered if the director may be retained awards or LTI share Deferred with a minimum of 10 years’ service, disability ‘good leaver’ (e.g. retirement or ill health) event, the remuneration In the event of a takeover or major corporate to determine whether all outstanding awards committee has the discretion in the same or vest at the time of the event or whether they continue revised form requirement is no formal shareholding There • The charts on page 215 show the potential value of the executive directors’ arrangements under this remuneration performance scenarios: policy in three • Illustrative scenarios for executive directors’ remuneration How does executive How does executive remuneration directors’ change based on performance? Executive directors are permitted to accept are Executive directors or outside appointments on external boards not deemed these are committees provided with the business of the to interfere Any fees earned by executives in company. to Investec. forfeited are this regard Copies of the service contracts are available for inspection at the company’s registered office. Service contracts and terms of employment Service contracts is set out below. for the four executive directors of office for compensation for loss and provision The terms of service contracts 214

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04 Remuneration page 215 04 (continued) (continued) The maximum potential remuneration as calculated in terms of the formula is this amount £4.756 million. However, will be capped to £4.543 million when one applies the remuneration cap as approved by shareholders. The maximum potential remuneration as calculated in terms of the formula is this amount £5.356 million. However, will be capped to £5.032 million when one applies the remuneration cap as approved by shareholders. ^ * Remuneration report Remuneration Bonus Salary and benefits (gross fixed remuneration) Bonus Long-term incentive (have not vested and subject to performance conditions) Annual allowance (payable in and subject to shares period) retention Salary and benefits (gross fixed remuneration) Bonus Long-term incentive (have not vested and subject to performance conditions) Annual allowance (payable in and subject to shares period) retention Salary and benefits (gross fixed remuneration) Cap to be applied^ Cap to be applied* Investec integrated annual report 2017 Investec integrated annual report 4 756 5 356 42% 29% 22% 7% 41% 29% 20% 10% 4 375 90% 10% At stretch At stretch 31 March 2016 3 830 4 291 30% 35% 26% 9% 31% 35% 23% 11% At target At target 5 101 91% 9% 68% 32% 1 336 75% 25% 1 480 31 March 2017 Minimum Minimum 0 0 0 Illustrative payouts for the CEO and MD Illustrative payouts 1 000 2 000 3 000 4 000 5 000 6 000 1 000 2 000 3 000 4 000 5 000 1 000 2 000 3 000 4 000 5 000 6 000 Illustrative payouts for the CEO of IAM £’000 £’000 £’000 Illustrative payouts for the GRFD Changes from prior year Changes from Added Tax (VAT), (VAT), -Added Tax Note: Value rate, where at the prevailing applicable, will be added binding to the fees. Two issued general rulings were by the South African Revenue Service (SARS) in early 2017 confirming the South African law (VAT) -Added Tax Value -executive non that requires of companies to directors in for and charge VAT register fees of any directors’ respect earned for services rendered as a non-executive director that exceed the prescribed These rulings are threshold. 1 June 2017. effective Additional remuneration remuneration Additional (unaudited) disclosures Remuneration policy and principles for employees to the remuneration Our policy with respect unchanged of employees has remained 2017. during the year ending 31 March has 53 Material Risk Investec currently a fixed of which a number receive Takers, appropriate monthly cash allowance where for the role. benefits payable (salary, All remuneration and incentives) is assessed at a group, business unit and individual level. This framework seeks to balance both financial of performance and non-financial measures factors are that the appropriate to ensure and prior to making awards, considered mix of cash and that the appropriate made. are -based awards share Fee increases will generally Fee increases be in line with inflation and market rates fees payable by Aggregate subject to an Investec plc are overall maximum of £1 million under the Investec plc articles Refer to page 195 for further information Maximum value and performance targets • • • Statement of consideration of employment conditions in the group elsewhere policy of executive The remuneration has been drawn up in line with directors philosophy wide remuneration our group below), subject to the and principles (refer is The committee of CRD IV. requirements arrangements mindful of the remuneration the group. across remuneration, it is important that we take remuneration, we their views into account. Accordingly, with our major shareholders meet regularly groups. representative and shareholder committee chairman The remuneration attends these meetings, accompanied by senior Investec employees and the chairman. This engagement is meaningful and helpful to the committee in its work and to the decisions made contributes directly by the committee. committee and the The remuneration and transparent believe in effective board communication with key stakeholders, and will continue to engage on matters that may of importance and/or concern arise and are to stakeholders. Investec integrated annual report 2017 Investec integrated annual report Operation In addition to fees for board In addition to fees for board payable to membership, fees are the senior independent director, chairmanship and membership committees, of major DLC board membership of the Investec Bank Limited and Investec Bank plc and for attendance at boards certain committee meetings The fee structure covers the dual The fee structure perform that the directors roles for the UK-listed Investec plc and the South African-listed Investec Limited boards executive directors Fees of non-executive directors annually by the board reviewed are taking into account market data and time commitment • • • Remuneration report Remuneration (continued) Fees industry provide To competitive fees to attract non-executive with appropriate directors skills and experience Purpose and link to strategy Non-executive directors’ remuneration Non-executive directors’ 216 We recognise that remuneration is an area is an area that remuneration recognise We and to shareholders of particular interest bodies, and representative shareholder that in setting and considering changes to Shareholder views in the Shareholder consideration of executive remuneration directors’ arrangements Shareholder and and Shareholder employee views Fees are also payable for any additional Fees are including time committed to the group, attendance at certain other meetings. for non- is no requirement There in to hold shares executive directors has left The group company. a group of each this choice to the discretion non‑executive director. The policy as described above will be taken of new non- into account in the recruitment executive directors. Copies of the letters of appointment are available for inspection at the company’s office. registered Remuneration policy for non-executive directors policy for non-executive Remuneration in non-executive committees. The increase and membership of board individual responsibilities policy is that fees should reflect The board’s Their fee structure time commitment required. market conditions and additional current year reflects fees for the forthcoming directors’ and are boards the South African-listed Investec Limited perform for the UK-listed Investec plc and directors that the covers the dual roles companies. equally between the two awarded

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04 Remuneration page 217 04 (continued) (continued) adjusted EVA model Risk-adjusted EVA Affordability. Market context Risk the Group Specific input from and Compliance functions. Achievement of individual targets and objectives and individual Scope of responsibility contributions. Alignment and adherence to our Alignment and adherence and values culture The level of cooperation and collaboration fostered Development of self and others risk Attitude displayed towards consciousness and effective risk management to internal controls Adherence procedures Compliance with the group’s and relevant requirements regulatory including policies and procedures, customers fairly treating and develop The ability to grow markets and client relationships Multi-year contribution to performance and brand building Long-term sustained performance Risk the Group Specific input from and Compliance functions Attitude and contribution to sustainability principles and initiatives. – – – – – – – – – – – – – – – – – Financial measures of performance: Financial measures – – financial measures of performance: Non-financial measures – – Financial measures of performance Financial measures – – financial measures of performance Non-financial measures – – – – – – – – – – – The most relevant competitive reference competitive reference The most relevant based levels are points for remuneration and on the scope of responsibility individual contributions made Factors considered for overall levels for overall Factors considered at the level of the of remuneration group include: • • Factors considered to determine total Factors considered compensation for each individual include: • • Remuneration levels are targeted to Remuneration levels are competitive, on the be commercially following basis: • Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report Determination of remuneration Determination of remuneration levels Qualitative and quantitative considerations form an integral part of the determination and total of overall levels of remuneration compensation for each individual. capital approach to EVA, we do not apply to EVA, capital approach other rewards an upper limit on variable (as Takers of Material Risk than in respect discussed on page 209). remuneration The fixed cost component of so designed to be sufficient is, however, become dependent that employees do not as we are on their variable compensation not consider not contractually (and do to make variable ourselves morally) bound Investec has the awards. remuneration bonuses and make ability to pay no annual should the no long-term incentive awards or individual performance of the group this. employees require through do not pay remuneration We vehicles that facilitate avoidance of applicable laws and regulations. employees must undertake Furthermore, not to use any personal hedging strategies or liability-related or remuneration contracts of insurance to undermine embedded in the risk alignment effects arrangements. Group their remuneration Compliance maintains arrangements that employees comply designed to ensure with this policy. No individual is involved in the determination of his/her own remuneration and and specific internal controls rewards conflicts in place to prevent are processes between Investec and its clients of interest occurring and posing a risk to the from on prudential grounds. group that financial we recognise In summary, institutions have to distribute the return their enterprises between the suppliers from of capital and labour and the societies in which they do business, the latter through taxation and corporate social responsibility wide remuneration activities. Our group philosophy seeks to maintain an balance between the interests appropriate of these stakeholders, and is closely and values which aligned to our culture include risk consciousness, meritocracy, material employee ownership and an unselfish contribution to colleagues, clients and society. An annual gross remuneration package package remuneration An annual gross an providing (base salary and benefits) industry competitive package to A variable short-term incentive related performance (annual bonus) awards) A long-term incentive (share long-term equity participation providing Risk Takers Certain of our Material fixed monthly cash allowances receive and a for the role) appropriate (where of variable commensurate reduction short-term incentive a fixed The CEO, MD and GRFD receive as outlined in the allowance in shares, table on page 196. We reward employees generally for their reward We contribution through: • • • • • of the above consider the aggregate We package as the overall remuneration incentivise and designed to attract, retain, drive the behaviour of our employees over the short, medium and longer term in a are Overall, rewards risk-conscious manner. values as important as our core considered responsibility, of work content (greater variety of work and high level of challenge) feel (entrepreneurial and work affiliation in to the company and unique culture) and motivation of the attraction, retention employees. merit entrepreneurial, have a strong We characterised and values-based culture, by passion, energy and stamina. The ability to live and perpetuate our culture and values in the pursuit of excellence industry and within an in a regulated risk management environment effective paramount in determining is considered overall reward levels. The type of people the organisation and environment attracts, and the culture crucial within which they work, remain in determining our success and long- programmes Our reward term progress. designed clear and transparent, are and to align directors’ and administered with those of all employees’ interests short-, the group’s stakeholders and ensure medium- and long-term success. target total compensation (base salary, We benefits and incentives) to the relevant competitive market at upper quartile levels for superior performance. Given our stance on maintaining a low our fixed cost component of remuneration, commitment to inspiring an entrepreneurial on and our risk-adjusted return culture, risks and the extent of such risks which risks and the extent of well as should undertake, as the group overall capital the mitigation of risks and Senior process. management and allocation risk management members of the group’s for the information teams, who provide contribute and meeting packs and present attend discussions, to the committee’s these meetings. is a sub- The DLC Capital Committee and provides committee of the BRCC identification, detailed input into the group’s of its quantification and measurement taking into account capital requirements, of the banking the capital requirements It determines the amount of regulators. should hold internal capital that the group and its minimum liquidity requirements, taking into account all the associated risks or unidentified for any future plus a buffer of internal capital forms risks. This measure part of the basis for determining the variable pools of the various operating remuneration business units (as discussed above). forum The policy executive risk review forum risk review (Policy ERRF) and review (Review ERRF), comprising members of the executive and the heads of the various risk These committees functions, meet weekly. limits and include approving responsibilities adhered mandates, ensuring these are to recommendations to and that agreed implemented. mitigate risk are and risk forums central credit The bank’s independent transaction approval provide of the business unit on a deal-by-deal basis. The riskiness of business undertaken is prior to initiation evaluated and approved various central of the business through forums and committees, deal forum, credit committee, investment committee and and forum and is reviewed new product ratified at Review ERRF and Policy ERRF basis. These central forums on a regular a level of risk management by provide ensuring that risk appetite and various to and that an being adhered limits are rate and, by implication, interest appropriate is built into every approved risk premium of transactions by transaction. The approval these independent central forums ensures that every transaction undertaken by the in a contribution to profit results group been subject to some risk that has already adjustment. model as described in detail below Our EVA profits is principally applied to realised targets above risk against predetermined In terms of and capital weighted returns. capital is allocated based structure, the EVA In our ordinary course of business we face a number of risks that could affect our business operations, as highlighted on pages 40 to 46. Risk-weighted returns form basis for Risk-weighted returns levels variable remuneration All employees are eligible to be considered eligible to be considered All employees are annual bonus, subject for a discretionary inter alia to the factors set out above in the section dealing with the determination of of short- levels. The structure remuneration term incentives varies between employees operating divisions: Asset of our three & Investment and Management, Wealth differing the Specialist Bank. This reflects on the different requirements regulatory competitive legal entities and also differing distinct market. in each pressures Specialist Banking: variable short-term incentive Variable short-term incentive: Variable annual bonus Group Risk Management is independent Group the business units and monitors, from risk to on the group’s manages and reports it is within the stated risk appetite as ensure through of directors mandated by the board Risk and Capital Committee the Board monitors and controls (BRCC). The group market, credit, through risk exposure operational and legal risk divisions/ liquidity, forums/committees. Risk consciousness and management is embedded in the organisational culture the initiation of transactional activity from to the monitoring of adherence through to mandates and limits and throughout everything we do. The BRCC (comprising both executive and meets six times non-executive directors) per annum and sets the overall risk appetite and determines the for the Investec group categories of risk, the specific types of driven and competitive so market-driven and competitive levels are not inhibit our do that levels of remuneration to the people we need ability to recruit develop our business. levels targeted at competitive Benefits are flexible and through delivered and are pension packages. Benefits include tailored and personal schemes; life, disability cover; and accident insurance; medical by competitive other benefits, as dictated Only salaries, not local market practices. Risk Takers annual bonuses or Material pensionable. allowances, are Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) The committee recognises that we that The committee recognises operate an international business local and and compete with both international competitors in each of our markets and benchmark, industry Appropriate remuneration comparable organisations’ regularly reviewed practices are combinations For employees generally, 15 and the JSE Financial of firms from Finance sector the FTSE 350 General the most appropriate have offered benchmarks to avoid disproportionate In order of the group areas packages across and between executives, adjustments to ensure may be made at any extremes Adjustments internal consistency. broad may also be made to the competitive components positioning of remuneration a higher for individuals, in cases where level of investment is needed in order or sustain either to build or grow a business unit or our capability in a geography. 218 Salaries and benefits are reviewed annually reviewed Salaries and benefits are skills and experience the relative and reflect the individual. of, and contribution made by, policy to seek to set base It is the group’s salaries and benefits (together known as at median market remuneration) gross like for like with peer levels when compared companies. group division provides The Human Resources guidelines to business units on salary levels for all recommended employees within the organisation to These guidelines facilitate the review. include a strategic message on how to set salary levels that will aid Investec in meeting true to its objectives while remaining corporate values, and incorporate guidance levels to take account of the on increasing change in the cost of living over the year to that salary levels always allow ensure standard a reasonable employees to afford on of living and do not encourage a reliance variable remuneration. often engaged by either the Advisers are division or the business Human Resources units to obtain general benchmark information or to benchmark specific remuneration that gross positions to ensure Gross remuneration: base remuneration: Gross salary and benefits • • • The following section outlines our detail for each policy in more remuneration element of total compensation as it applies to employees. •

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04 Remuneration page 219 04 (continued) (continued) then ensures that it actually holds capital that it actually holds then ensures internalin excess of this level of capital Internal is allocated to each capital business unit via a comprehensive within that analysis of the risks inherent of the business and an assessment costs of those risks are rates or targeted returns Hurdle unit based determined for each business cost of capital on the weighted average for trading businesses (plus a buffer to take into account additional risks not identified in the capital allocation applied to internal capital process) by business unit differ returns Targeted the competitive economics reflecting expectation for the and shareholder of the business, and are specific area of risk to the degree set with reference and the competitive benchmarks for line each product are In essence, varying levels of return for each business unit reflecting required country of the state of market maturity, operation, risk, capital invested (capital intensive businesses) or expected expense base (fee-based businesses) over time will result in profitability Growth bonus pool, as long in an increasing as it is not achieved at the expense of capital efficiency of the must be reflective returns Target risk assumed in the business. inherent in absolute profitability Thus, an increase in an does not automatically result in the annual bonus pool. increase allows us to embed risk This approach and capital discipline in our business subject to These targets are processes. annual review risk forums and credit The group’s transaction approval provide independent of the business unit on a deal-by-deal basis adding a level of risk consciousness to the predetermined (and risk-adjusted) capital allocation rates and thus hurdle and required that each transaction generates ensure that is commensurate with its a return associated risk profile. • • • • • • • if business process, In terms of our EVA and individual performance goals are exceeded, the variable element of the package is likely to total remuneration be substantially higher than the relevant that overall target benchmark. This ensures levels have the potential to remuneration Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report A detailed explanation of our capital management and allocation process is provided on pages 84 to 86 in volume two. Equals: Net profits. Notional profit paid by centre paid by centre Add: Notional profit on internal allocated capital Profits earned on retained earned on retained Less: Profits earnings and statutory held capital -allocated costs and Less: Group charges (certain independent residual on a provided functions are group centralised basis, with an allocation model applied to charge out costs to business units. Costs incurred based on the full allocated are operational costs for the particular inclusive of central service area, cost the variable remuneration of the central service. Allocation methodologies generally use cost drivers as the basis of allocation) Direct operating costs Less: Direct (personnel, systems, etc.) Add back: Debt coupon or dividends paid out share preference applicable) of the business (where Less: Impairments for bad debts Less: Funding costs Realised gross revenue (net margin revenue Realised gross and other income) – – – – – – – – – – – – – – – – – – Internal capital comprises the regulatory Internal capital comprises the regulatory taking into account capital requirement a number of specified risks plus a which caters, inter alia, capital buffer risks not for any unspecified or future specifically identified in the capital The Investec group planning process. The group has always held capital The group in excess of minimum regulatory and this principle is requirements, perpetuated in our internal capital This process allocation process. that risk and capital discipline ensures is embedded at the level of deal initiation and incorporates independent (outside of the business unit) approval of transactions by the various risk and committees. credit Capital allocated is a function of and internal capital both regulatory the risk assumed requirements, within the business and our overall business strategy • • • segment activity. -segment activity. The profitability of each operating The profitability business unit is determined as if they are revenue a stand-alone business. Gross is determined based on the activity of length pricing the business, with arm’s applicable to inter determined as follows: are Profits Our business strategy and associated risk capital appetite, together with effective bonus annual utilisation, underpin the EVA allocation model. in the annual bonus Business units share pool to the extent that they have generated on their allocated risk- return a realised adjusted capital base in excess of their Many of the on equity. target return risks that the firm may potential future ensuring that the avoided through face are based on actual realised bonus pools are risk-adjusted profits. The bonus pools for non-operating business units (Central Services and Head generated by a levy functions) are Office payable by each operating business on This bonus pool may, its operating profit. in some years, be supplemented by a allocation as determined discretionary and by the chief executive officer by the and agreed managing director, remuneration committee. model has been consistently Our EVA applied for a period of about 18 years and encompasses the following elements: • EVA model: allocation of model: EVA bonus performance-related pool on risk and therefore the higher the risk, the the higher the risk, on risk and therefore and the higher higher the capital allocation This model return rate required. the hurdle that risk and capital management ensures at both embedded in key processes are form and transaction level, which a group - performance the basis of the group’s thus model, variable remuneration related stakeholders. of all balancing the interests both the Risk and Compliance Further, in the also embedded functions are subject and are operating business units by the internal audit and to review compliance monitoring teams. The Risk and on an Compliance functions also provide, to exception-only basis, information relating the behaviour of individuals and business been evidence of non- has if there areas compliance or behaviour which gives rise the riskiness of to concerns regarding business undertaken. Material Risk Takers include senior include Material Risk Takers engaged staff management, risk takers, any other in central functions and activities employees whose professional risk have a material impact on Investec’s within Investec plc profile to Material Risk Takers Individual awards pools determined based on EVA are in the same manner as is applicable (as set out above), and to all staff remuneration subject to the group (also policy and governance processes set out above) to Material Annual bonus awards (excluding executive Risk Takers employees of a who are directors firm) and all annual separately regulated total variable where bonus awards exceeds £500 000 are remuneration subject to 60% deferral to All other annual bonus awards subject to are Material Risk Takers 40% deferral in the former The 40% not deferred in instance or the 60% not deferred as the latter instance will be awarded to 50% in cash and 50% in short term awards share awards short term share The upfront but will only be will vest immediately, after a period of six months, released to one year in 2018 which will increase for awards remuneration Variable not who are Material Risk Takers exempted by the de minimis concession subject to 40% deferral (60% if total are exceeds variable remuneration £500 000) after taking into account the granted to each awards value of share member in the applicable financial staff included in deferred year and which are The deferred variable remuneration. to awards portion of discretionary will, at the election Material Risk Takers be made either member, of the staff in the form of short term share entirely or 50% in short term share awards, and 50% in cash awards Deferral of variable Deferral of variable awards: remuneration within Takers UK Material Risk the Specialist Bank • • • • • • • to page 205). The entire amount of the amount to page 205). The entire is payable deferred annual bonus that is not in cash. upfront Thereafter, these recommendations these recommendations Thereafter, by to a global review are subject the executive management before and review committee’s remuneration process. approval Bonus recommendations are then are Bonus recommendations geographic subject to an extensive local involving human resources, review remuneration management and local committees Once the annual audit is complete, Once the annual audit line managers in each business bonus unit will make discretionary for each team recommendations member taking into consideration criteria qualitative and quantitative (as mentioned above) Deferral of annual bonus other than Material awards: within the Risk Takers Specialist Bank exceeding a awards bonus All annual subject to level are hurdle predetermined of that portion that 60% deferral in respect level. The deferred exceeds the hurdle in the form of: short amount is awarded vesting in three awards term share equal tranches at the end of 12 months, 24 months and 36 months; or cash equal tranches at the end in three released of 12 months, 24 months and 36 months. to being awarded are shares Where employees as part of the deferral of these are performance bonus awards, awards. to as short term share referred made in terms of our are These awards existing long-term incentive plans (refer The group remuneration committee remuneration The group the and approves specifically reviews packages of the individual remuneration persons discharging executive directors, and Material managerial responsibilities, The committee also reviews Risk Takers. the salaries and performance bonuses to a number of other senior and awarded the group. higher paid employees across In addition, the committee specifically the salaries and and approves reviews to each performance bonuses awarded employee within the Internal Audit, Compliance and Risk functions, both in the business units and in the central functions, ensuring that such packages determined competitive and are are independently of the other business areas. In making these decisions the committee on a combination of external advice relies and supporting information prepared internally by the group. • • • Investec integrated annual report 2017 Investec integrated annual report -end -term Remuneration report Remuneration (continued) A fixed predetermined percentage of percentage A fixed predetermined hurdle in excess of the EVA any return pool accrues to the business units’ EVA pool A portion of the total EVA the bonus is allocated towards pool for central service and head office employees reviewed These bonus pools are by the appropriate regularly management and non-executive are that awards committees to ensure to do only paid when it is appropriate so, considering firm-wide performance against non-financial risk (both current and compliance-based and future) that to ensure objectives and in order the payment of such discretionary bonuses does not inhibit the group’s ability to maintain/raise its capital levels. All users of capital operate within a strict a philosophical framework that requires and that is balancing of risk and reward designed to encourage behaviour in the of all stakeholders as opposed interests to just employees calculated centrally pools are The EVA Finance function and by the group’s subject to audit as part of the year ss audit proce 220 interests of that business unit or the group, the group, of that business unit or interests in the short profits despite the lack of EVA functions, support staff term, e.g. control and key business staff. It should be noted the salaries and bonuses for employees proposed for risk, internal audit and responsible not based on a formulaic compliance are independent of any and are approach generated by the or profits revenues they work. The level of business units where assessed for these employees are rewards against the overall financial performance objectives based on their of the group; function; and compliance with the various to above. non-financial aspects referred Key elements of the bonus allocation set out below: are process • • • • be positioned at the upper quartile level be positioned at the upper in line with our for superior performance, policy. remuneration overarching an operating where In circumstances have an EVA business unit does not a loss or when pool (e.g. when it incurs officer it is a start-up), the chief executive may consider and managing director for a allocation to allow a discretionary who were staff modest bonus for those to the longer expected to contribute

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04 Remuneration page 221 04 (continued) (continued) Employee equity ownership In August 2013, 40 employees of IAM a 15% stake in the IAM business, acquired in which a trust structure ultimately through each employee owns a portion of the underlying trust assets. An additional 1% during the financial stake was acquired Each employee funded their portions year. a combination of existing deferred through compensation (for which vesting was accelerated), personal debt and personal locks in key talent cash. This structure with and aligns employees’ interests of the firm as a whole, our the interests and our clients. shareholders governed Employees’ portion holdings are by the terms of a trust deed to which all summary, portion holders have agreed. In apply to -emption provisions various pre level and risk management for IAM and level and risk management remuneration feeds her views into the including sending decision-making process, to the IAM remuneration a risk report when making committee for consideration and decisions. IAM HR remuneration for ensuring responsible Compliance are compliant are processes that remuneration with applicable regulations. Compliance In addition, IAM HR and for ensuring that the responsible are into committee takes IAM remuneration consideration financial and non-financial and criteria, risk and compliance reports, information in making any other relevant remuneration. decisions around The primary determinant of the variable compensation pool available for distribution is an There own annual profit. is IAM’s annual budget against which the business is measured. The variable compensation pool is allocated to business divisions and then to individuals based on divisional performance and the that performance. This ensures individual’s for meeting appropriately rewarded are staff their objectives and keeping within the values of the business. The oversight of conflicts of interest is and the link between risk and reward a combination of effective achieved through components, designed to remuneration incorporate risk and of the dual operation committee and of the DLC remuneration committee in ensuring IAM remuneration necessary, and, where appropriate independent oversight of both remuneration policy and outcomes. Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report Deferred Bonus Plan (DBOP) Deferred As noted above, participation in the DBOP is determined on an annual basis at the of of IAM based on the roles discretion individual employees. The purpose of the key employees and DBOP is both to retain better alignment of the interests to provide with clients and to manage potential, risks. unknown future currently The conditions for participation in the DBOP by the IAM remuneration approved are based on the committee annually, in the year being requirements remuneration This will take into consideration considered. practices and local market remuneration regulations. and required relevant made in the form of are The DBOP awards investments into various funds managed by IAM and with specific allocations for the portfolio managers into their own funds. The years anddeferral period is just over three only paid out under specific listed are awards does not accrue toconditions. The award the employee until the end of the deferral period and as such both the asset and liability on the balance sheet of IAM until thatremain time. Employees forfeit their allocations if they or their employment terminates (otherresign of IAM for redundancy, than at the discretion death or disability) prior to the retirement, vesting date. Payments can only be made to participants prior to a scheduled vesting date with the consent of the IAM executive committee and committee. ultimately by the IAM remuneration operating governance processes, IAM’s Investec within the context of the broader oversight robust ensure processes, group’s management of any and effective of reward while reflecting potential conflicts of interest decisions with the need to link remuneration risk appetite. IAM’s The head of the IAM Risk Committee assesses the risk appetite, risk tolerance reviewed where it was considered that it was considered where reviewed in order necessary bonus payments were the business in and protect staff to retain had been the long-term even if the business -term). loss-making in the short to is provided Management information to ensure committee the IAM remuneration put into the are financial results that IAM’s of the business context of the risk appetite is committee and the IAM remuneration pool able to risk-adjust the cash bonus given the is required should they believe this risk taken and the overall financial results. Annual Discretionary Cash Bonus Annual Discretionary Scheme (ADCBS) (all employees of IAM eligible to be considered currently are for a cash bonus payment under this scheme) Bonus Plan (DBOP) Deferred (participation in this scheme is determined on an annual basis at the of of IAM based on the roles discretion individual employees). All deferrals in the form of short term All deferrals in the form (being either 50% or awards share vest over 100% of such deferral) years and periods of up to seven then subject to an appropriate are being six months, period of retention, to one year in 2018. increasing Awards under the ADCBS are payable under the ADCBS are Awards in cash. The purpose of the cash entirely behaviour and effort bonus is to reward against objectives and values, and retain key employees. The cash bonus pool determination is based on the profitability would be In principle, there of IAM only. no cash bonus payments should IAM be loss-making (although this would be Annual Discretionary Cash Annual Discretionary Bonus Scheme (ADCBS) • allocated to the of profit The percentage pool has been agreed variable remuneration (at a fixed participation rate) and approved by both the DLC and IAM remuneration committees. The same fixed participation rate has been applied consistently for has been a key many years. This structure contributor to the long-term success of to behave IAM and encourages the staff believe in aligning the like owners. We of clients, shareholders long-term interests and staff. are Individual annual bonus awards by the IAM remuneration approved committee and the DLC remuneration committee annually. IAM: variable incentive (IAM) The Investec Asset Management for committee is responsible remuneration all and overseeing considering, agreeing the overall and elements of remuneration principles and philosophy, remuneration this from policy of IAM. The proposals by subject to final approval committee are committee. the DLC remuneration IAM operates the following annual bonus in annual schemes which may result payments to employees: • • The extent to which the individual had The extent to which the over the outcome control systems of internal control Failure of the The impact of the risk profile or member of the group relevant business unit culture Any violation of the group’s and values The long-term impact of the outcome on business unit or relevant the group External factors including market conditions factors. Any other relevant Long-term incentive: awards share option and have a number of share We incentive plans that are long-term share of employees designed to align the interests and long-term with those of shareholders and to build organisational interests, ownership over the long material share These share awards. share term through also used in option and incentive plans are as a mechanism circumstances appropriate the skills of key talent. for retaining made in the form of forfeitable are Awards for non Material Risk Takers awards share the taxation other than for countries where is penal. In these cases of such awards made in the form of conditional are awards or market strike options. awards made in the form of conditional are Awards for Material Risk Takers. awards eligible In principle all employees are are for long-term incentives. Awards committee by the remuneration considered and made only in the 42-day period In these cases, management and the In these cases, management into committee will take remuneration in determining account the following factors the quantum the extent (if any) to which should be subject awards of deferred to clawback: • • • • • • • bonus share Specifically for deferred used to determine the profits where awards, materially reduced bonus are original EVA after the bonus determination, the awards and for such reduction will be recalculated consideration given to clawback (if any) to pool is EVA the extent that the prior period’s and the extent to which it affected reduced each employee. of non- awards share The deferred subject to are Material Risk Takers malus adjustments. Where the firm or business unit suffers the firm or business unit suffers Where of risk management. a material failure Where the firm or operating business Where a material downturn in its unit suffers financial performance Where there is reasonable evidence of is reasonable there Where employee misbehaviour -year over a three deferred in cash, and are attract employer period. Payments do not pension contributions. bonus plans, incentive and Under the core to performance for the relate awards An interim March. financial year ending 31 the annual award payment on account of at the half-year. is considered and reviewed, Non-financial performance is standards individuals fall below the where or may be deferred expected, awards forfeited, in part or in full. Payments are in cash and do not attract made entirely employer pension contributions. The to the individual may be paid directly award (subject to the deduction of income tax & at Wealth and national insurance) or, as an additional Investment discretion, employer pension contribution. & Investment executive directors Wealth an participate in the bonus plan, and where is primarily client-facing that role individual’s will also be eligible to participate in director plans. incentive and growth the core • • Other information on deferred Other information on deferred and clawback awards within the group provisions Employees who leave the employment of Investec prior to vesting of deferred will lose their deferred incentive awards other than awards bonus short term share subject to of death and disability, as a result normal good leaver provisions the group’s in exceptional cases. process and approval for Material Risk awards share The deferred subject to malus and clawback are Takers adjustments. The assessment of whether any malus adjustment should be made will be unvested award to an individual’s undertaken within the following framework: • Investec Wealth & Investment Investec Wealth South Africa: variable short-term incentive overriding regulatory no are As there applicable to the business, requirements the policies applicable to the Specialist unit as set applied to this business Bank are out on pages 218 to 220. Investec integrated annual report 2017 Investec integrated annual report

Remuneration report Remuneration (continued) Core incentive plan – for those in client- Core who and administrative staff facing roles support them directly Bonus plan – for those in non-client- facing, central services and support functions primarily in plan – for staff Growth who generate client-facing roles income directly. 222 short-term incentive & Investment recognises Investec Wealth that all obligation to ensure Investec’s satisfy their businesses within the group obligations under the PRA and FCA & Investment Remuneration Code. Wealth and procedures that the policy, recognises practices it has adopted should not conflict obligations under the PRA with the group’s and FCA Remuneration Code. The Wealth committee is & Investment remuneration and for considering, agreeing responsible overseeing all elements of remuneration philosophy and the overall remuneration & Investment within and policy of Wealth agreed the context of the Investec group’s philosophy and policy. remuneration this committee are from The proposals by the DLC subject to final approval committee. remuneration & Investment operates the Wealth discretionary following performance-related plans: remuneration • • • of the Funding is at the discretion committee. Under the core remuneration plan, an incentive pool is derived from to the related a formula that is directly of a team or business unit. profitability The pool is distributed to the members of the team or business unit on a discretionary basis. to the Funding for bonuses is related & of the Wealth overall profitability to Investment business and is awarded basis. individuals on a discretionary in plan incentivises growth The growth net of the impact of market revenues, to performance relate movements. Awards payable are for each year to 28 February, Investec Wealth & Investment & Investec Wealth Africa: variable other than in South the transfer of employees’ portions. On the transfer of employees’ to offer required leaving, an employee is in limited their portions for sale (save part of the portion where circumstances leaver/bad Good holding may be retained). the apply to determine leaver provisions must be offered price at which the portions for sale.

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04 Remuneration page 223 04

(continued) (continued) The bank’s qualitative remuneration The bank’s disclosures are provided on pages 185 to 223. Remuneration Code disclosures Chapter on Disclosure In terms of the PRA’s the bank (BIPRU 11.5.18) Requirements to make certain in the UK is required remuneration quantitative and qualitative with respect on an annual basis disclosures to Material Risk Takers. defined as those are Material Risk Takers whose employees (including directors) activities could have a material professional A total of risk profile. impact on the bank’s Material Risk Takers 53 individuals were in 2017. The information contained in the tables quantitative below sets out the bank’s of Material Risk in respect disclosures 2017. year ended 31 March for the Takers Remuneration report Remuneration Investec integrated annual report 2017 Investec integrated annual report Limited to the first year of service. Limited to the first year In the context of hiring new staff In the context of hiring Exceptional Discretionary extended pension Discretionary benefits policy extended pension payments All proposed made to employees upon reaching by the will be reviewed retirement committee for alignment with remuneration laws, policy and regulation. appropriate Severance awards Severance payments for the early at termination of a contract are absolute executive management’s performance and must reflect discretion achieved over time and be designed in a Severance failure. way that does not reward shall payments for Material Risk Takers by the DLC be subject to approval committee. remuneration Retention awards to awards Investec only pays retention in exceptional circumstances. serving staff shall In all such cases, human resources that payments to ensure proposed review in line with this policy and any other they are for Material Additionally, regulation. relevant committee the remuneration Risk Takers, all proposed and approve shall review the group where Circumstances awards. awards will consider making retention include the case of a major restructuring of the company or any subsidiary or one of its business units (for instance in the start‑up of a new business line, or the the of a business line) where closure of individuals is essential to the retention completion of the task. A valid business of the individual case for the retention for a retention in order must be presented and the PRA should to be approved award award be notified prior to the retention and being made to Material Risk Takers, should consider seeking guidance on the for awards of retention appropriateness certain individuals. approve -approve committee pre The remuneration above a defined all guaranteed awards and has oversight of all other threshold, above a lower defined guaranteed awards threshold. • • value can be determined prior to award. prior to award. value can be determined limited to sign-on, This includes, but is not Guaranteed buy-out and guarantee awards. paid or will not be awarded, variable awards the group to any individual within provided unless they are: • ‘New starter’ awards are made based made based are ‘New starter’ awards basis on a de facto non-discretionary linked to using an allocation table salary levels also are ‘General allocation’ awards of the awards de facto non-discretionary same quantum as new starter awards made to employees who have and are in a award not had any other share -year period three made at the are awards up’ ‘Top of line management primarily discretion multi-year performance and to ensure long-term value generation. Guaranteed variable remuneration Guaranteed variable remuneration whose comprises all forms of remuneration Other remuneration structures Other remuneration • • long-term incentive awards All proposed by business unit recommended are by the staff management, approved executive committee and then the share being committee before remuneration of Investec plc forfeitable Awards awarded. where or conditional shares shares, made to employees of are appropriate, of Investec Limited Investec plc and awards for employees of Investec forfeitable shares only are Limited. At IAM, long-term awards for employees who do generally considered not participate in the DBOP and/or the IAM equity ownership scheme. for non-Material Risk Forfeitable shares vesting at subject to one-third are Takers fourth and fifth year, the end of the third, for our which we believe is appropriate Long-term incentive business requirements. subject are to Material Risk Takers awards to performance conditions and to vesting over a period of two and a half to five to seven years, determined years, or three then and are requirements, by regulatory period, subject to a six-month retention to one year for 2018 and which will increase forfeited are subsequent years. The awards on termination, but ‘good leaver’ discretion is applied in exceptional circumstances. the through Retention is addressed granted, of awards long-term nature an element of ‘lock-in’ for which provides the vesting period employees throughout and allows for multi-year contribution to performance and brand building. following the release of our interim or of our interim following the release with in accordance final financial results principles of the Investment Association comprise These awards remuneration. elements, namely: three • – – – – – 7 1 1 2 1 1 2 6.9 2.5 6.3 0.9 (0.5) 11 50.7 24.7 19.4 10.6 57.6 51.0 (12.0) Total Total Number of Material Risk Takers – 3.2 7.3 1.7 2.2 3.4 1.2 (0.4) (7.3) 35.1 13.0 34.7 23.5 Other Other Material Material Risk Takers Risk Takers – 3.7 0.8 4.1 7.2 0.7 (0.1) (4.7) 15.6 11.7 12.1 22.9 27.5 Senior Senior management management Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) All employees are subject to malus and clawback provisions as discussed on page 222. No remuneration was reduced for ex post implicit adjustments All employees are subject to malus and clawback provisions as discussed on page 222. No remuneration during the year. Total number of employees receiving variable remuneration was 48. number of employees receiving variable remuneration was Total price. These awards were made during the period but have not yet represents the number of shares awarded multiplied by the applicable share Value and a half years, up to three to seven years, two and a half to four and vest over a period of vested. These awards are subject to performance conditions determined by regulatory retention period after vesting. requirements. They are also subject to a six-month Deferred cash Deferred Deferred shares Deferred Deferred shares – long-term incentive awards** shares Deferred 224 ^^ £’million Additional disclosure on deferred remuneration on deferred Additional disclosure Material Risk Takers received total remuneration in the following bands: total remuneration received Material Risk Takers * ** Aggregate remuneration by remuneration type by remuneration remuneration Aggregate £’million £800 000 – £1 200 000 £1 200 001 – £1 600 000 £1 600 001 – £2 000 000 £2 000 001 – £2 400 000 £2 400 001 – £2 800 000 £2 800 001 – £3 200 000 £4 000 001 – £4 400 000 £4 800 001 – £5 200 000 £3 200 001 – £3 600 000 £3 600 001 – £4 000 000 £4 400 001 – £4 800 000 > £5 200 001 Deferred unvested remuneration outstanding at the beginning of the year unvested remuneration Deferred Fixed remuneration Deferred unvested remuneration adjustment – employees no longer unvested remuneration Deferred and reclassifications Material Risk Takers Variable remuneration* Variable – Cash Deferred remuneration awarded in year awarded remuneration Deferred – Deferred remuneration reduced in year through performance adjustments in year through reduced remuneration Deferred – Deferred remuneration vested in year remuneration Deferred – Deferred unvested remuneration outstanding at the end of the year^^ unvested remuneration Deferred Total aggregate remuneration and deferred incentives and deferred remuneration aggregate Total Ratio between fixed and variable pay

Remuneration page

04 Remuneration page – – 1 1 225 0.5 0.4 6.3 2.7 6.0 3.0 0.3 51.3 57.6 12.0 87.5 28.0 Total Total Total Total 237.3 229.9 141.6 724.3 04 – – – 1 1 0.5 0.4 4.5 2.4 3.3 1.5 0.1 7.3 1.5 30.2 34.7 59.0 38.3 staff^ 138.5 237.3 Other Other Other (continued) (continued) Material Material Material risk control risk control Risk Takers Risk Takers Risk Takers Financial and – – – – – – – 1.8 0.3 2.7 1.5 0.2 4.7 56.2 88.6 47.4 43.1 21.1 22.9 Risk 235.3 takers^ Senior Senior Senior management management management Remuneration report Remuneration 42.6 82.3 38.6 28.0 60.2 251.7 Senior management^ Investec integrated annual report 2017 Investec integrated annual report ank’s qualitative remuneration disclosures are provided on pages 185 to 223. The bank’s See page 226. number of employees receiving variable remuneration was 240. Total but have not yet represents the number of shares awarded multiplied by the applicable share price. These awards were made during the period Value vested. These vest one third at the end of years three, four and five. For awards made in 2015 financial year For awards made in 2014 financial year For awards made in 2013 financial year For awards made in 2012 financial year For awards Deferred shares Deferred cash Deferred – long-term incentive awards** shares Deferred * ** ^ Aggregate remuneration by remuneration type by remuneration remuneration Aggregate The bank in South Africa is required to make certain quantitative and qualitative remuneration disclosures on an annual basis in terms of the disclosures to make certain quantitative and qualitative remuneration The bank in South Africa is required requirements. Basel Pillar III disclosure South African Reserve Bank’s Pillar lll remuneration disclosures disclosures Pillar lll remuneration £’million Other remuneration disclosures Other remuneration £’million £’million The information contained in the tables below sets out the bank’s quantitative disclosures for the year ended 31 March 2017. for the year ended 31 March quantitative disclosures The information contained in the tables below sets out the bank’s R’million Sign-on payments Made during the year (£’million) Number of beneficiaries Severance payments Made during the year (£’million) Number of beneficiaries Guaranteed bonuses Made during the year (£’million) Number of beneficiaries Deferred unvested remuneration outstanding at the end of the year outstanding unvested remuneration Deferred – Equity – Cash vested in year remuneration Deferred – – – – Fixed remuneration Variable remuneration* Variable – Cash – – – incentives and deferred remuneration aggregate Total – – – – 4 – 6.7 67.3 36.1 27.8 74.7 Total Total Total Total 138.6 (93.3) 257.1 (138.6) 1 086.8 1 019.5 1 061.6 1 086.8 – – – – – – 2 1.0 0.7 0.7 39.8 staff^ staff^ staff^ staff^ (44.6) (20.2) 18.5 20.2 199.9 224.9 199.9 199.9 risk control risk control risk control risk control Financial and Financial and Financial and Financial and – – – – – – 2 6.0 16.7 13.0 50.8 21.1 32.2 90.5 Risk 424.9 424.9 (50.8) Risk Risk Risk 353.0 424.9 takers^ takers^ takers^ takers^ – – – – – – – 67.3 18.4 14.1 67.6 35.1 394.7 462.0 (80.9) (67.6) Senior Senior Senior Senior 483.7 126.8 462.0 management^ management^ management^ management^ Investec integrated annual report 2017 Investec integrated annual report Remuneration report Remuneration (continued) Senior management: All members of our South African general management forum, excluding executive directors. balance sheet management, Risk takers: Includes anyone (not categorised above) who is deemed to be responsible for a division/function (e.g. lending, advisory activities) which could be incurring risk on behalf of the bank. and transactional banking Financial and risk control staff: Includes everyone finance and central group risk as well as employees responsible for Risk and Finance in central group functions within the operating business units. For awards made in 2015 financial year For awards For awards made in 2014 financial year For awards For awards made in 2013 financial year For awards ^ R’million R’million R’million 226 Sign-on payments Made during the year (R’million) Deferred unvested remuneration outstanding at the end of the unvested remuneration Deferred year – Equity vested in year remuneration Deferred – Deferred unvested remuneration outstanding at the beginning outstanding unvested remuneration Deferred of the year Other remuneration disclosures Other remuneration Additional disclosure on deferred remuneration on deferred Additional disclosure Number of beneficiaries – Cash Deferred unvested remuneration adjustment – employees that are – employees that are adjustment unvested remuneration Deferred the bank and reclassifications no longer employed by – Severance payments Made during the year (R’million) Deferred remuneration awarded in year awarded remuneration Deferred – Number of beneficiaries Deferred remuneration reduced in year through performance adjustments performance in year through reduced remuneration Deferred Guaranteed bonuses Made during the year (R’million) Deferred remuneration vested in year remuneration Deferred Number of beneficiaries Deferred unvested remuneration outstanding at the end of the year outstanding at the end of unvested remuneration Deferred

Remuneration page

04 Remuneration page 227 04 (continued) (continued) Definitions Total capital resources Total subordinated equity, Includes shareholders’ interests liabilities and non-controlling equity Total equity including shareholders’ Total interests non-controlling number of ordinary Weighted issue in shares in issue shares The number of ordinary by at the beginning of the year increased weighted issued during the year, shares on a time basis for the period during which they have participated in the income of Refer to shares. less treasury the group calculation on page 59 in volume three Return adjusted on average equity tangible shareholders’ page 64 Refer to calculation on Return assets on risk-weighted Adjusted earnings divided by average risk‑weighted assets Risk-weighted assets of risk-weighted Is calculated as the sum and Investec assets for Investec plc Limited (converted into Pounds Sterling) on page 90 in volume two as reflected compensation to Staff operating income ratio as a costs expressed All employee-related of operating income percentage party assets under Third administration party assets under Includes third administration managed by the Wealth & Investment, Asset Management and businesses Property Investec integrated annual report 2017 Investec integrated annual report Operating profit per employee Operating profit Refer to calculation on page 68 Recurring income income plus net annuity Net interest as a fees and commissions expressed of total operating income percentage Return on average adjusted equity shareholders’ Refer to calculation on page 64 Refer to calculation on page 62 Refer to calculation on Non-operating items on and/or losses Reflects profits disposal of or termination, restructuring made operations and acquisitions group Operating profit administrative Operating income less expenses, impairments for bad and of tangible doubtful debts and depreciation fixed assets. This amount is before intangibles and goodwill, acquired non-operating items Net tangible asset value Net tangible asset per share Total number of shares in issue (including number of shares Total Investec plc and Investec Limited) multiplied price of Investec plc on by the closing share the London Stock Exchange Market capitalisation Effective operational Effective tax rate activities on ordinary on profit Tax (excluding non-operating items) divided by operating profit Refer to page 59 in volume three Adjusted earnings per ordinary Adjusted earnings per ordinary acquired goodwill, before share intangibles and non-operating items Refer to page 59 in volume three Earnings attributable to before shareholders ordinary intangibles goodwill, acquired and non-operating items (i.e. adjusted earnings) Adjusted earnings per ordinary share before before share Adjusted earnings per ordinary goodwill and non-operating items divided share by dividends per ordinary Dividend cover Core loans and advances Core Net loans and advances to customers plus net own originated securitised assets Refer to calculation on page 35 in volume two Cost to income ratio Cost to income ratio by operating Operating costs divided leased on income (net of depreciation leased on operating assets). Depreciation against off assets has been netted operating income Adjusted shareholders’ equity Adjusted shareholders’ page 64 Refer to calculation on 04 Corporate information Remuneration page

Investec plc and Investec Limited

Secretary and registered office Transfer secretaries in Investec plc South Africa David Miller Computershare Investor Services Proprietary Ltd 2 Gresham Street Rosebank Towers London EC2V 7QP 15 Biermann Avenue United Kingdom Rosebank 2196 PO Box 61051 Telephone (44) 20 7597 4000 Marshalltown 2107 Facsimile (44) 20 7597 4491 Telephone (27) 11 370 5000 Investec Limited Niki van Wyk Directorate 100 Grayston Drive Executive directors Sandown Sandton 2196 Stephen Koseff (chief executive officer) PO Box 785700 Sandton 2196 Bernard Kantor (managing director) Telephone (27) 11 286 7000 Glynn R Burger (group risk and finance director) Facsimile (27) 11 286 7966 Hendrik J du Toit (chief executive officer, Investec Asset Management)

Internet address Non-executive directors Fani Titi (chairman) www.investec.com Zarina BM Bassa Registration number Laurel C Bowden Cheryl A Carolus Investec plc Perry KO Crosthwaite (senior independent director) Registration number 3633621 David Friedland Charles R Jacobs Investec Limited Ian R Kantor Registration number 1925/002833/06 Lord Malloch-Brown KCMG Khumo L Shuenyane Auditors Peter RS Thomas Ernst & Young LLP For contact details for Investec offices internationally Ernst & Young Inc. refer to pages 148 and 150 in volume three.

Registrars in the UK Computershare Investor Services plc The Pavilions Bridgwater Road Bristol BS99 6ZZ United Kingdom Telephone (44) 370 707 1077

228 Investec integrated annual report 2017

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V.1 Investec strategic report incorporating governance, corporate responsibility and the remuneration

Annual Report 2 Investec strategic report

1 0 incorporating governance, corporate responsibility and the remuneration report

7 Volume 1

Specialist Banking Asset Management Wealth & Investment