02 Our performance Investec Group integrated annual report 2023 ![img-0.jpeg](img-0.jpeg) “Building long term partnerships with investors to help them access private markets is a key strategic growth initiative for the business – this is particularly so within our lending franchises where we have established sourcing channels, deep sector expertise, and a long-term track record of delivering compelling risk adjusted rewards through the cycle.” Head of Direct Lending --- 02 | Our performance Investec Group integrated annual report 2023 # KEY PERFORMANCE INDICATORS # Key performance indicators ## Driving sustainable long-term growth Key performance indicators are regularly reviewed by the Board, to assess performance against the Group's most important priorities. These include measures for assessing financial and non-financial performance and balancing the interests of various stakeholders including communities, customers, shareholders and colleagues. Key performance indicators that are directly linked to our remuneration balanced scorecard are marked with this symbol ® ### Return on equity ® ![img-1.jpeg](img-1.jpeg) ### Cost to income ratio ® ![img-2.jpeg](img-2.jpeg) ### Dividend per share (pence per share) ![img-3.jpeg](img-3.jpeg) ### Tangible net asset value (TNAV) per share (pence per share) ® ![img-4.jpeg](img-4.jpeg) * Strategic action impact: Plus distribution in specie of Ninety One shares 73.4p ** Strategic action impact: Plus distribution in specie of Ninety One shares 30.91p * Strategic action impact (Share buy back) 11.60p ** Strategic action impact (Share buy back) -23.92p ** Strategic action impact (Ninety-One distribution) -12.60p 28 --- 02 | Our performance Investec Group integrated annual report 2023 # KEY PERFORMANCE INDICATORS CONTINUED # Sustainability performance indicators and targets For further information regarding our sustainability ambitions please refer to our Investec Group 2023 Sustainability report. Read more on our financed emissions scope, methodology and terminology on page 75 of our Investec Group 2023 TCFD report. The sustainability metrics linked to the short and long-term incentives of executive directors have been updated in FY2023. Read more in the Group's 2023 remuneration report. # Our people Diversity, equality, inclusion and belonging at all levels: Female employees (March 2022: 49.7%) 49.4% Female Board representation (against our target of 33%) 43% Gender and ethnicity pay gap Reduced our gender pay gap in the plc business, reflecting a continuous year-on-year improvement since 2017, and voluntarily included our ethnicity pay gap results. Please refer to page 27 of the Investec Group's Remuneration report and the Investec pay gap reports located on our website for further information. There was a slight increase in the Investec Limited pay gap which we will continue to monitor. Female top managers (2022: 31%) 20% The decline is due to leadership transitions in the Wealth businesses and the appointment of new males of colour. We remain committed to making meaningful progress on the representation of both women and people of colour across Top Management. People of colour on our board (March 2022: 43%) 43% Learning and development spend (2022: 1.6%, Target >1.5%) 1.8% Learning and development spend as a % of staff costs # Our communities Group community spend (2022: 1.3%, £8.9mn) Achieved 1.3% £10.7mn Group community spend as a % of Group operating profit against our target of >1% # The environment and climate change Coal as a % of loans and advances 0.1% Target: Zero thermal coal exposure within Investec Group's loan book by 31 March 2030 Renewable energy 100% Sourced 100% of our Scope 2 electricity consumption through the purchase of renewable energy certificates Emissions # Maintained carbon neutrality Maintained carbon neutrality in our direct emissions for the fifth year in our Scope 1, 2 and operational Scope 3 emissions 29 --- 02 Our performance Investec Group integrated annual report 2023 # CASE STUDY # Delivering on our ‘One Investec’ strategy Through our ‘One Investec’ strategy, we make the full breadth and depth of our relevant capabilities available to meet the needs of each and every client, regardless of specialisation or geography. In recent years, our Private Capital, Private Client and Wealth & Investment teams worked together on several occasions to support a UK-based entrepreneur. Our relationship with this client, who co-founded a private equity firm in the mid-2000s, first began in 2015 when the Private Banking team supported his purchase of a primary residence in London. Over the following years, we maintained a close ongoing relationship with the client. So when he sought increased liquidity, the Private Banking team was well-positioned to introduce the Private Capital team – which led to the successful structuring and execution of a $20.0m revolving credit facility backed by the value of the business. At the same time, the client agreed and completed a partial sale of his business to a strategic investor. Building on the enduring client relationship now established, the Private Capital team introduced the client to our Wealth & Investment team, which resulted in him investing $70.0m of his newly realised liquidity. We continue to develop and enhance our relationship with the client, ensuring that whatever needs may become apparent, he is able to benefit from the full range of Investec capabilities. --- 02 Our performance Inwatec Group integrated annual report 2023 ![img-5.jpeg](img-5.jpeg) “We remain true to our core principles of building trusted relationships with UK entrepreneurs, successfully positioning us as the preferred bank and wealth manager as our clients’ financial profiles evolve.” Stephen Stylianou Private Capital Consultant --- 02 | Our performance Investec Group integrated annual report 2023 # STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) # Listening to and engaging with our stakeholders The Board appreciates the importance of meeting the diverse needs and expectations of all the Group's stakeholders and building lasting relationships with them. Effective communication and stakeholder engagement are integral in building stakeholder value. The Board is committed to providing meaningful, transparent, timely and accurate financial and non-financial information to primary stakeholders, enabling them to make meaningful assessments and informed investment decisions about the Group. In order to achieve these outcomes, the Board addresses material matters of significant interest and concern, highlighting key risks to which the Group is exposed and responses to mitigate these risks. The Group's DLC structure requires compliance with the disclosure obligations contained in the applicable listing rules of the UK Listing Authority (UKLA), the Johannesburg Stock Exchange (JSE) and other exchanges on which the Group's shares are listed, and with any public disclosure obligations as required by the UK Prudential Regulation Authority, the South African Prudential Authority and other regulatory bodies. From time to time, the Group may be required to adhere to public disclosure obligations in other countries where it has operations. The Investor Relations division has the overall responsibility for ensuring appropriate communication with stakeholders and, together with the Group Finance, Group Marketing, and Company Secretarial divisions, ensures that we meet our public disclosure obligations. A Board-approved policy statement is in place to ensure compliance with all relevant public disclosure obligations and to uphold the Board's communication and disclosure philosophy. ## Section 172(1) statement This section of the Strategic Report describes how the directors have had regard to the matters set out in section 172(1), and forms the directors' statement required under the Companies Act 2006. This statement also provides details of how the directors have engaged with and had regard to the interests of our key stakeholders. Strong partnerships and understanding are essential to the creation of enduring worth. To be the best we can be, and to understand stakeholders' needs, we work hard to establish the most effective ways of engaging with them. Engagement is important to us because it means we can understand stakeholder views and are able to respond in a meaningful and impactful way. We gather feedback through continuous dialogue with our stakeholders throughout the year to gain an intimate understanding of their needs. It's only through this varied dialogue that we can improve as a business, consider our strategy and deliver on our purpose. As detailed on the pages that follow, the Board's oversight of engagement with our stakeholders informs their principal decisions during the year. 32 --- 02 Our performance Investec Group integrated annual report 2023 # STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED # Clients ![img-6.jpeg](img-6.jpeg) At Investec, we are all about partnership, striving to build deep and long-lasting relationships with our clients. # What matters to them - A dependable banking, wealth creation and wealth management partner - Innovative and creative solutions - Financial support - Enhanced cyber security - Competitive pricing - Assurance as to the security of their funds. # How we engage - Client engagement is managed on a day-to-day basis by senior management and client relationship managers. The Board receives updates from senior management on key client issues - Client engagement methods have returned to predominantly face-to-face meetings post the COVID-19 pandemic - Comprehensive, user-friendly website and mobile app - Regular telephone and email communications - In-person and online industry-relevant events and client marketing events are held as most people continue to pursue a hybrid working model. # FY2023 highlights - Continued success in HNW client acquisition, growing our client base by 8% and 9% in SA and the UK, respectively - We have further developed our 'One Investec' mindset, a client-centric approach which brings all of Investec that is relevant to every client, enabling us to leverage the whole of our capability to provide solutions most relevant to clients' needs - Recognised by the Financial Times of London as the best Private Bank and Wealth Manager in South Africa for the tenth consecutive year - Recognised as the 'Bank of the Year' at the 2023 City A.M. Awards in the UK. # Our people* ![img-7.jpeg](img-7.jpeg) Our people are at the heart of our business. We aim to be an organisation that values all of its people for their contributions and celebrates them for who they are. # What matters to them - The purpose of the organisation - Meaningful communication - Learning, development, and career progression - Belonging, Inclusion and Diversity (BID) and equality - Wellbeing - Fair remuneration - Flexible working conditions - Sustainable working practices. # How we engage - Culture and value sessions where senior leaders engage employees across the Group on the Investec culture, our purpose, values and how we embed this in all that we do - Regular staff updates and discussions hosted by the Group's executive leadership, aimed at keeping employees up to date with strategic priorities and performance - Ongoing Group Chief Executive staff communication including face-to-face interactions, email updates, staff intranet and other digital channels - Induction training for new joiners including a welcome from the Group Chief Executive and senior management - Tailored internal investor relations presentations on Group results, strategy updates and market feedback - Bespoke application and intranet to support purposeful communication, wellbeing and learning of our people. # FY2023 highlights - Held a Group Leadership Conference, attended by leaders from all Investec geographies, focused on activating our purpose into a purposeful organisation - Rolled out culture dialogues to all jurisdictions in which employees engage executive leadership on the lived Investec culture and the experience of working at Investec - Decision to lead the SA market in terms of minimum salary - Awarded a one-off cost of living allowance to all employees in the UK earning a salary below a certain threshold in response to the unprecedented increase in the cost of living across the UK. * Includes permanent employees, temporary employees and contractors 33 --- 02 Our performance Investec Group integrated annual report 2023 # STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED # Investors ![img-8.jpeg](img-8.jpeg) Our shareholders (largely institutional) are primarily based in SA and the UK given our Group DLC structure. We also engage with debt investors who hold instruments issued by our subsidiary entities. # What matters to them - Progress against strategic objectives - Financial performance - Expectations and guidance on future performance - Balance sheet resilience - Business sustainability and response to climate change - Executive remuneration. # How we engage - Regular meetings with executive directors, senior management and investor relations - Annual meetings for largest shareholders with the Chair of the Board, Chair of the Remuneration Committee, Investor Relations, and Group company secretarial - Annual general meeting hosted by the Chair of the Board with Board members in attendance - Two investor presentations and two pre-close investor calls presented by the Chief Executive and Group Finance Director - Stock exchange announcements - Comprehensive investor relations website - Investor roadshows and presentations - Regular telephone and email communications - Annual and interim reports. # FY2023 highlights - The Chief Executive, Group Finance Director and Investor Relations hosted investor roadshows in SA, the UK, and the US, as well as virtual European roadshows - The Group Finance Director completed a series of meetings with sell-side analysts and sales desks - The Chair of the Board and Chair of the Remuneration Committee held a governance roadshow with top shareholders focusing on sustainability and executive remuneration - Organised two debt roadshows in the UK, which raised £350mn. 124 meetings held with existing and prospective investors # Communities ![img-9.jpeg](img-9.jpeg) Our values of making an unselfish contribution to society, valuing diversity and nurturing an entrepreneurial spirit drive our commitment to support the communities in which we exist. Our focus is on education, entrepreneurship and the environment. # What matters to them - Financial and non-financial support - Time volunteered by our staff - Education and learnership opportunities - Skills training and job creation - Protecting the environment - Climate change and net-zero commitments. # How we engage - Regular in-person meetings, telephone/conference calls and emails with our community partners - Comprehensive community website and social media platforms to encourage participation - Staff volunteering - Community partners and NGOs invited to collaborate at conferences and events. # FY2023 highlights - We spent £10.7mn on our community initiatives in our jurisdictions around the world (2022: £8.9mn) - Achieved 1.3% Group community spend as a percentage of Group operating profit* against our target of >1% (2022: 1.3%) - 3 100 South African youth given Investec internships through YES since inception (2022: 2 548 since inception) - 10 510 staff volunteering hours in the past year with 2 241 staff** involved (2022: 9 001 hours and 759 staff involved) - We have supported 2 108 Arrival learners in the UK over the past 14 years (2022: 1 995 learners) - 73 students awarded bursaries through the Promaths Bursary Fund (2022: 74 students). £10.7mn spent on community initiatives (2022: £8.9mn) Further information can be found in the Group's 2023 sustainability report which is published and available on our website. * Operating profit before goodwill, acquired intangibles, non-operating items, taxation and after non-controlling interests ** Some staff attended more than one volunteering event 34 --- 02 Our performance Investec Group integrated annual report 2023 # STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED # Government and regulators ![img-10.jpeg](img-10.jpeg) As a dual listed Group, we are regulated by the South African Prudential Authority, the South African Financial Sector Conduct Authority, the UK Prudential Regulation Authority and the UK Financial Conduct Authority, as well as other regulatory bodies. We maintain continuous engagement with governments and regulators in our key markets to ensure our business adapts to evolving regulatory environments. # What matters to them - Compliance with existing and evolving regulatory, legal and governance requirements - Assurance that we have robust prudential standards and supervision in place - Fair treatment of our clients and employees - Financial and operational resilience in the face of changing market conditions - Risk and capital framework and appetite management - Capital and liquidity stress testing and reverse stress testing - Group tax strategy - Climate change and net-zero commitments. # How we engage - Our Chair of the Board, Board members, Chief Executive and executive directors hold regular meetings with the South African Prudential Authority and with the UK Prudential Regulation Authority. This includes the annual trilateral meeting with the Audit Committee and bilateral meetings on 'flavour of the year' topics - Active participation in a number of policy forums - Engagement with industry consultative bodies. # FY2023 highlights - Permission for Zarina Bassa, who, by November 2023, will have served on the Board for a period of nine years, to remain as Chair of the Group Audit Committees until the 2024 AGM - Approval of the appointment of Vanessa Olver as Chair of the DLC BRCC - Approval received for the share buy-back scheme - Conducted a joint simulation exercise to test a simultaneous recovery scenario and the governance framework with the support of regulators in the UK and SA - Contributed to IIF, IOSCO, and the South African Just Energy Transition plan. # ESG and climate-focused industry bodies and analysts ![img-11.jpeg](img-11.jpeg) We are committed to supporting the transition to a clean and energy efficient economy and regularly engage with climate-focused industry bodies and analysts to discuss our evolving sustainability strategy. # What matters to them - Our climate change position statement and climate change framework - Our commitment to net-zero carbon emissions and demonstrating our alignment with the Paris goals by providing SBTi targets - Managing and mitigating direct climate change impact within our operations - Managing and mitigating indirect climate change impact through our loan book and investment portfolio - Addressing ESG risks within our business - Reporting in line with industry standards. # How we engage - Annual sustainability report and sustainability factsheets - Comprehensive sustainability website - Comprehensive ESG disclosures, including a standalone TCFD report - Our Chief Executive is a member of the UN Global Investors for Sustainable Development Alliance - Regular and active participation in a number of ESG and climate forums relating to the TCFDs, e.g. PCAF - Regular knowledge sharing on ESG industry standards. # FY2023 highlights - Disclosed our Scope 3 financed emissions covering 77% of our loan book - Joined the Partnership for Biodiversity Accounting Financials (PBAF) - Broadened our solar offering to clients in South Africa - Participated in writing the climate curriculum for UN PRB. # Carbon neutral Achieved carbon neutrality in Scope 1, 2 and operational Scope 3. We are sourcing 100% of our Scope 2 energy from renewables through the purchase of renewable energy certificates. The remaining unavoidable residual emissions of 38% are off-set through purchasing verified and high-quality carbon credits. 35 --- 02 | Our performance Investec Group integrated annual report 2023 # STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED # Suppliers ![img-12.jpeg](img-12.jpeg) We collaborate with suppliers and sub-contractors securely and who we expect to be resilient and operate and behave in an environmentally and socially responsible manner. # What matters to them - Compliance with applicable environmental, labour and anti-corruption laws and regulations - Prompt payment practices - Fair and transparent RFP and negotiation practices - Clear guidance on policies and procedures, such as due diligence and onboarding. # How we engage - The procurement function is responsible for engaging suppliers, and other business functions will be involved as required. For example, the Group sustainability team may conduct a sustainability and ESG review once a supplier is engaged - Centralised negotiation process - Procurement questionnaires requesting information on suppliers' environmental, social and ethical policies - Due diligence on financial information, cyber security and business continuity. # FY2023 highlights - Consolidated and migrated all our vendor onboarding systems onto one system. The consolidation gives us a 360-degree view of all third parties - We continue to improve our due diligence processes around financial crime, data and information security and financial screening. Critical third parties are monitored 24/7 to ensure compliance with agreed Service Level Agreements (SLAs) Currently all of our suppliers are screened against ethical supply chain practices. 36 --- 02 | Our performance Investec Group integrated annual report 2023 ## STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) ### Principal decisions Here we outline how Board engagement with stakeholders has informed principal decisions during the year. #### Supporting our people The Group has dealt with the aftermath of the COVID-19 pandemic, with our people returning to the office with high degrees of flexibility. With this in mind, the Board focused on the wellbeing of our people, and being front-footed with our clients and other stakeholders. The organisation conducted a review of the organisation's values against its stated purpose and a recommitment to how these values are lived in the organisation. This included an examination of the Group's strategic objectives, including the employee experience as aligned to the purpose, and has been supported by ongoing leadership development, equipping all leaders with the skills to lead within the Investec culture and enable Out of the Ordinary experiences. #### Strategy in execution Investors have a keen interest in the strategic progress made since the 2019 Capital Markets Day (CMD) where the Group embarked on a journey to clarify its strategic positioning and improve shareholder returns. The Group was among the first major banks across SA and the UK to report financial results above pre COVID-19 levels in the 2022 financial year. Investec's 45-year heritage, strong client franchises, specialist expertise, and Out of the Ordinary people and culture have provided the robust platform needed to deliver this exceptional performance. The Board is pleased that the Group has achieved the results that are in line or ahead of our stakeholder expectations. The Board has overseen the communication of strategic progress made to shareholders and staff, in the form of staff updates, conferences, results presentations and in one-on-one dialogue with investors. The Board has continued its regular engagement with shareholders and endeavours to incorporate shareholder feedback in its oversight of strategic execution. The Board is focused on driving sustainable growth for all stakeholders, in line with the Group's core purpose of creating enduring worth. Since the CMD, the Board has concentrated its efforts on creating a simplified, focused business and is now confident that the Group is well placed to pursue long-term growth. The Group's 'One Investec' initiative is a key underpin of our growth strategy, and focuses on bringing the best of Investec to every client. The crux of this integration strategy is about generating sustainable growth and value for stakeholders. 'One Investec' involves close collaboration between client franchises as opposed to a siloed approach, and improving internal operating efficiencies. In the current financial year, the Board approved the all-share combination between Investec Wealth & Investment Limited (IW&I UK) and Rathbones. This is in pursuit of the Group's growth strategy. For more details, refer to page 57. The Board has overseen increased internal communications of the 'One Investec' strategy to all staff. Communications have expressed the Group's aspirations to build an integrated global bank and wealth business, a focused private client proposition and holistic mindset in supporting clients. The Board has also approved certain Group Executive Team changes which are deliberately aimed at creating a leadership cohort that will support the company through its next phase of growth. The Board recognises that to realise the Group's disciplined growth ambitions, it is essential that appropriate and meaningful appointments are made across the global leadership team. The Board is currently driving heightened attention to the Group's purpose statement. In 2018 we set out to rediscover what truly inspires us as an organisation. Through multiple engagement channels across the business over a period of 18 months, 'To create enduring worth', emerged. This expresses how the Group views its responsibility as a business to be a good corporate citizen. Finally, the Board is cognisant of shareholders' interest in succession. This has been a key focus area for the Board and as such a series of succession planning initiatives have started and will continue over the next few years. The Board is committed to the Group's purpose and building a leadership team that enables the Group's potential. #### Capital optimisation Over the past four years, the Group's progress on capital optimisation has been front of mind for investors. The Board has continued its engagement with shareholders and has incorporated their feedback in its oversight of capital allocation. The Board is pleased to report the significant progress made to date in this regard. The strong capital generation within client franchises, allied with capital optimisation strategies, has afforded the Group ability to support its growth ambitions and optionality to return capital to shareholders. The Board has overseen the full adoption of the Advanced Internal Ratings-Based (AIRB) approach in the measurement of capital in South Africa, having received approval for full adoption at the end of January 2023. Investec Limited reported a CET1 ratio of 14.7% at 31 March 2023, which includes the impact of the share buy-back programmes and the full adoption of AIRB. The Group is also in the early stages of developing a plan to move to the Internal Ratings Based (IRB) approach in the UK. In March 2022, the Board resolved to distribute a 15% holding in Ninety One to shareholders, whilst retaining a 10% shareholding. This decision is consistent with the Group's strategic priorities to simplify the business and optimise capital, and the decision is consistent with input received from shareholders post the demerger. A General Meeting was held on 28 April 2022, whereby shareholders were able to cast their vote to approve the distribution of Ninety One shares and associated distribution mechanism. The resolutions were passed with a 99.9% majority. The 15% holding was successfully distributed on 30 May 2022. In the current financial year, the Board approved a share purchase and share buy-back programme of up to a total of R7 billion (c.£350 million), whereby Investec Limited would purchase Investec plc ordinary shares and buy back its own shares. As at 30 May 2023, shares to the total value of c.R5.5 billion, (c.£245 million) have been purchased under the 37 --- 02 Our performance Investec Group integrated annual report 2023 ## STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED programme. The Board anticipates that the programme will be fully executed by 31 March 2024. This is the largest share buy-back programme in the Group's nearly 50-year history. The expected realisation of the Group's investment portfolio in Southern Africa will bolster the capital levels in the medium-term. The Board has acknowledged shareholder aspirations for the Group to reduce exposure to non-core investments. The IEP Group and Bud Group shareholders have approved a restructure to facilitate an exit by certain IEP shareholders, including Investec, by way of a share buyback. The restructure entails the transfer of certain assets to a Newco, to facilitate the orderly disposal of those assets. Our balance sheet remains well capitalised, comfortably above Board approved and regulatory minimums. CET1 ratios are now 12.0% and 14.7% for the UK and South African businesses respectively. ### Executive remuneration policy We engaged in an extensive consultation exercise with our key shareholders and the Investment Association in February and July 2021 to obtain input into the design of our proposed 2022 remuneration policy, which was approved at the 2021 AGM. The key changes were to the financial and non-financial performance measures in both the Short-Term Incentive (STI) and Long-Term Incentive (LTI), and the addition of a risk modifier. In addition, a framework was developed to more clearly link executive director remuneration to ESG. The changes were intended to more closely align reward with business performance and our strategy. We engaged with our key shareholders and the Investment Association on our remuneration outcomes and a minor amendment to the policy was made. The Board was pleased to receive a materially higher vote in favour of both the implementation report and the remuneration policy at the 2022 AGM that had been the case in prior years, at 98% and 90% respectively. The Chair of the Remuneration Committee and the Chair of the Board look forward to engaging with our key shareholders again in July 2023, ahead of the AGM in August 2023, and will engage extensively with our key shareholders during the 2023/24 year to seek input into the design of our proposed 2025 remuneration policy. ### Commitment to sustainability Investec has demonstrated that sustainability is central to its strategic direction. The Board regularly engages with a range of stakeholders (including shareholders, ESG analysts and rating agencies) on a number of climate-related and sustainability topics that are relevant for the business. The Board also acknowledges that climate change represents a material financial risk, and continues to oversee the evaluation of our exposure to understand and mitigate potential risks. In addition, the Board recognises the opportunities that climate change presents within our various business activities. All Board members have a strong awareness around climate-related and sustainability matters that was supplemented by presentations from internal and external parties during various Board meetings. Some targeted training to the Board was done during the past year and more focused training will be done over the next year. The Board takes ultimate accountability for climate-related and sustainability matters, supported by the DLC Social and Ethics Committee (DLC SEC). This structure has been in place for many years and was strengthened to include senior executive responsibility for identifying and managing climate-related risks. In addition, the Chief Executive is supported by the Group ESG Executive Committee to coordinate climate-related and sustainability efforts (including ESG) across geographies and businesses from both a strategy and policy perspective. The Group ESG Executive Committee, mandated by the Group's executive directors, reports relevant climate-related and sustainability matters (including ESG) to the DLC SEC and the Group Executive Risk Committee. Our ambition towards net-zero has been strengthened by joining the Net-Zero Banking Alliance (NZBA) at the end of 2021, highlighting the urgency for faster, immediate and more ambitious climate action. We have delivered on our commitment, tabled at the August 2021 AGM, with regards to our net-zero ambitions and disclosed our Scope 3 financed emissions covering 77% of our loan book. In the past year, we made progress in refining our assumptions and the external quality of the data for emission calculations. At this point we are unable to increase our coverage beyond 77% until there is improved external data available across jurisdictions. We also engaged with SBTi on its recently released recommendations for Financial Institutions and are refining our proposed targets with the aim of reporting verified SBTi targets in the next financial year. Further information on our ESG initiatives and progress can be found in the Group's 2023 sustainability report which is published and available on our website. ### Belonging, Inclusion and Diversity initiatives The Board's commitment to Belonging, Inclusion and Diversity (BID) at Investec continues to be a key strategic objective, with a particular focus on increasing diversity representation with respect to gender and people of colour. Stakeholders such as our employees, shareholders, ESG analysts, and clients remain interested in our progress. During the year, the Board has continued to work towards our commitments to address inequalities. Key areas of our strategy have included increasing diversity representation with respect to gender and ethnicity, particularly in senior roles and decision-making forums, improving leader capability and awareness in creating an inclusive work environment, and ensuring our policies and principles entrench a level playing field. Following extensive engagement with employees, the Board has endorsed a number of initiatives this year in support of our strategy including: - As signatories to the Race at Work Charter in the UK, focused on the development of Black, Asian and Minority Ethnic colleagues, we have delivered the following: - Following the success of the pilot programme in 2021, we delivered our second reciprocal mentoring. The programme pairs senior leaders with people of colour from across the organisation in order to facilitate reciprocal learning and harness the value of difference - We hosted an evening with Woi Kalade, a client and co-founder of the #10000 black interns programme, exploring the programme's ability to catalyse the increase in black representation in the City 38 --- 02 | Our performance Investec Group integrated annual report 2023 # STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) # CONTINUED - We hosted an evening for clients and colleagues with the award-winning artist, activist, author and poet Akala on Black Britain - Of 269 (2022: 223) external hires made during the year in IBP, 18.7% were of Asian Ethnicity (2022: 26%), 5.6% were of Black Ethnicity (2022: 12.1%) and 4.8% were of Mixed Ethnicity (1.35%) - Of 127 (2022: 157) external hires made during the year in IW&I, 12.6% were of Asian Ethnicity (2022: 11.5%), 3.2% were of Black Ethnicity (2022: 10.8%) and 3.2% were of Mixed Ethnicity (2022: 1.9%). - In continuing the advancement of women into senior positions and into principal decision-making committees we achieved the following: - We have exceeded the UK Women in Finance Charter target of 30% female representation at senior leadership by 2022 achieving 36.8% for IBP and 41.2% in IW&I UK - Of 269 (2022: 223) external hires made during the year in IBP, 45% (2022: 41%) were female, with a total of 127 or 46% in IW&I (2022: 157 a total of 45%) - Our 2022 Diversity Pay Gap report will include our ethnicity pay gap alongside the gender pay gap. While ethnicity pay gap reporting is not mandatory, we include these results following the same methodology as the gender pay gap. As at 31 March 2023, our mean hourly gender pay gap was 28.2% (2022: 27.9%) in SA. The UK had a mean hourly gender pay gap of 32.6% at 31 March 2022 (2021: 33.9%)^. Our mean hourly ethnicity pay gap was 15.1% at 31 March 2022 (2021: 12.9%)^ in the UK - For the fifth year running we are participating in the 30% Club mentoring scheme, a cross-company programme to boost female representation at board and executive level - In SA, we run a programme specifically designed to enable women to take up positions as non-executive directors on South African company boards, including the Investec companies' boards, and contribute to the development of board-ready female executives within South Africa. 28 women have been through this programme since it started in 2020. - In order to ensure we continue to focus on the creation of an inclusive environment: - We continue to offer our Allies programme in the UK, equipping colleagues with the skills to recognise and address microaggressions, and challenge exclusion. 183 colleagues have completed the programme - We became a proud member of the Business Disability Forum in the UK, the leading business membership organisation in disability inclusion in September 2022 - We continue to facilitate a reverse mentorship programme in SA, creating spaces that enable young, aspirational talent to mentor, connect and learn with leaders and enabling knowledge exchange between different generations. - We elected new office bearers onto the Employment Equity (EE) Forum in SA. The forum has engaged in formal training to understand the requirements of the Employment Equity Act and their mandate as EE Forum members. We are in the process of electing a new EE Forum Chairperson who has a seat on the Specialist Bank Executive Team in SA - We hosted a diversity day on our Leadership Development Programme in SA, exploring what it means to lead diverse teams in a multicultural society - We continue to run our flagship Zebra Crossing programme, aimed at minimising unconscious bias and raising awareness of multicultural differences at personal, interpersonal and institutional levels. - Our networks in SA and the UK, including Young Minds, Pride, Multicultural and Gender Balance, continue to provide a safe space for people to network, offer support and guidance to its members and raise awareness within the organisation. ^ Gender and ethnicity pay gap statistics are reported a year in arrears. The Board recognises that maintaining a strong focus on BID, and having clear targets and measures to track progress, is critical. BID is integral to Investec's purpose to 'create enduring worth'. The Board firmly believes that improving representation and fostering inclusion and belonging will better enable us to meet our clients' needs. Further information on our gender, diversity and transformation initiatives and progress can be found on pages 110 to 111 as well as in the Group's 2023 sustainability report which is published and available on our website. 39 --- 02 | Our performance Investec Group integrated annual report 2023 # STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT)CONTINUED # Value added statement Highlighting value created by the Group and its distribution to stakeholders | £'000 | 31 March 2023 | % | 31 March 2022 | % | | --- | --- | --- | --- | --- | | **Net income generated – total Group** | | | | | | Interest income | 3 397 341 | | 1 951 209 | | | Other income | 972 095 | | 1 004 915 | | | Interest expense | (2 101 584) | | (1 005 939) | | | Other operating expenditure and impairments on loans | (281 016) | | (214 529) | | | Financial impact of Group restructures (pre-tax) | (5 418) | | (1 203) | | | | **1 981 418** | **100%** | **1 734 453** | **100%** | | **Distributed as follows:** | | | | | | **Employees:** Salaries, wages and other benefits | 639 191 | 32.3% | 621 337 | 35.8% | | **Communities:** Spend on community initiatives | 10 686 | 0.5% | 8 875 | 0.5% | | **Government:** Corporation, deferred payroll and other taxes | 660 171 | 33.3% | 551 106 | 31.8% | | **Shareholders:** | 585 214 | 29.5% | 217 351 | 12.5% | | Dividends to ordinary shareholders | 260 673 | | 178 418 | | | Dividends to perpetual preference and Other Additional Tier 1 security holders | 41 872 | | 38 933 | | | Distribution to shareholders | 282 669 | | — | | | **Retention for future expansion and growth:** | 86 156 | 4.3% | 335 784 | 19.4% | | Depreciation | 14 037 | | 16 691 | | | Retained income | 72 119 | | 319 093 | | | **Total** | **1 981 418** | **100%** | **1 734 453** | **100%** | 40 --- 02 | Our performance Investec Group integrated annual report 2023 Investec has always been a values-driven organisation and we remain dedicated to our core purpose of creating enduring worth ![img-13.jpeg](img-13.jpeg) 41 --- 06 Governance Investec Group integrated annual report 2023 ## BOARD COMPOSITION CONTINUED ### Diversity The Board places great emphasis on ensuring that its membership reflects diversity in its broadest sense. Consideration is given to the combination of demographics, skills, experience, race, ethnicity, religion, age, gender, educational and professional background and other relevant personal attributes. The aim is to provide the range of perspectives, insights and challenge needed to support good decision-making by the Board. New appointments are made on merit, taking into account the specific skills, experience, independence and knowledge needed to ensure a well-rounded Board and the diverse benefits each candidate can bring to the overall Board composition. The Board considered the new UK Listing Rules requirements on diversity-related reporting, and agreed to amend our target from 33% to 40% female representation on the Board. The gender balance of those in senior management and their direct reports, and further information on the Group's broader approach to inclusion and diversity can be found in the 2023 Group sustainability report. In accordance with the requirements of the South African Financial Sector Code, the Board has two further internal objectives: - A minimum of 25% of the Board members who are ordinarily resident in South Africa should be black women - A minimum of 50% of the Board members who are ordinarily resident in South Africa should be black people. As at 31 March 2023: - Six Board members who are from a minority ethnic background (as defined by the UK Listing Rules) - 22% of the Board members ordinarily resident in South Africa are black women - 56% of the Board members ordinarily resident in South Africa are black people. The Board aims that over time its composition will achieve these goals, and diversity is therefore a key consideration when planning for succession and deliberating on potential Board appointments. ### Gender diversity ![img-14.jpeg](img-14.jpeg) | Male | 8 | | --- | --- | | Female | 6 | ### Ethnic diversity ![img-15.jpeg](img-15.jpeg) | White | 8 | | --- | --- | | Black | 6 | ### Board and executive management diversity¹ at 31 March 2023 | Gender | Number of Board members | Percentage of the Board | Number of senior positions on the Board (CEO, CFO, SID and Chair) | Number in executive management¹ | Percentage of executive management | | --- | --- | --- | --- | --- | --- | | Men | 8 | 57% | 3 | 8 | 80% | | Women | 6 | 43% | 1 | 2 | 20% | | Not specified / prefer not to say | — | — | — | — | — | | Ethnic background | Number of Board members | Percentage of the Board | Number of senior positions on the Board (CEO, CFO, SID and Chair) | Number in executive management¹ | Percentage of executive management | | --- | --- | --- | --- | --- | --- | | White British or other White (including minority-white groups) | 8 | 56% | 1 | 7 | 70% | | Mixed / multiple ethnic groups | — | — | — | — | — | | Asian / Asian British | 3 | 22% | 2 | 2 | 20% | | Black / African / Caribbean / Black British | 3 | 22% | 1 | 1 | 10% | | Other ethnic group, including Arab | — | — | — | — | — | | Not specified / prefer not to say | — | — | — | — | — | 1. These tables detail our disclosure in respect of UK Listing Rule 9.8.6R. As at 31 March 2023, we had met the targets set out under LR 9.8.6R (9), in that at least 40% of the individuals on the Board are women and that at least one of the Chair, CEO, CFO or SID is female. 2. This is the executive committee below the Board (the Group Executive Team). We exclude Board members from this group. 139 --- 06 | Governance Investec Group integrated annual report 2023 ## BOARD COMPOSITION CONTINUED ### Skills The Board considers the collective skills, knowledge and experience of the directors, when assessing the overall composition and suitability of the Board. In addition to a range of skills, the Board also values the innate difference in approach and thinking styles, which results from the varied backgrounds and experiences of our directors. This is covered more fully in the individual biographies across pages 127 to 131. The skills matrix captures the key skills of our directors, and is used by the DLC Nomdac in its annual assessment of the individual suitability of each director and the collective suitability of the Board. During the year, the DLC Nomdac, on conducting its assessment, confirmed that it was satisfied that each of the individual directors and the Board collectively were suitable. The Board, and DLC Nomdac, also considers the skills matrix when reviewing the succession plans for the Board. ### Skills (Number of Board members with respective skill) ![img-16.jpeg](img-16.jpeg) ### Attendance | Members | Investec plc | Investec Limited | DLC Nominations and Directors' Affairs Committee | DLC Social and Ethics Committee | DLC Audit Committee | DLC Board Risk and Capital Committee | | --- | --- | --- | --- | --- | --- | --- | | Philip Hourquebie (Chair) | 8/8 | 8/8 | 6/6 (Chair) | – | – | 5/5 | | Fani Titi (Chief Executive) | 8/8 | 8/8 | – | 4/4 | – | 5/5 | | Henrietta Baldock | 8/8 | 8/8 | 5/6 | – | – | 5/5 | | Zarina Bassa | 8/8 | 8/8 | 6/6 | – | 7/7 (Chair) | 5/5 | | David Friedland^{1} | 3/3 | 3/3 | 2/2 | – | 2/2 | 2/2 | | Stephen Koseff | 8/8 | 8/8 | – | – | – | 5/5 | | Nicky Newton-King | 8/8 | 8/8 | – | 4/4 | – | 5/5 | | Jasandra Nyker | 8/8 | 8/8 | – | 4/4 | – | 5/5 | | Vanessa Olver^{2} | 7/7 | 7/7 | 4/4 | – | 5/5 | 4/4 (Chair) | | Nishian Samujh | 8/8 | 8/8 | – | – | – | 5/5 | | Philisiwe Sibiya | 8/8 | 8/8 | – | – | 7/7 | 5/5 | | Khumo Shuenyane | 8/8 | 8/8 | 6/6 | 4/4 (Chair) | – | 5/5 | | Brian Stevenson | 8/8 | 8/8 | 6/6 | – | – | 5/5 | | Richard Wainwright | 8/8 | 8/8 | – | – | – | – | | Ciaran Whelan | 8/8 | 8/8 | – | – | – | – | 1. David Friedland stepped down from the Board on 4 August 2022. 2. Vanessa Olver was appointed to the Board on 18 May 2022. 3. Where a director is unable to attend a meeting, they receive papers in advance and have the opportunity to provide comments to the Chair. 4. During the year, there were six meetings of the Board, a Board strategy session, a separate Investec plc Board meeting, a separate Investec Limited Board meeting and separate sessions held to discuss key strategic initiatives. 140 --- 06 | Governance Investec Group integrated annual report 2023 # BOARD ACTIVITIES # What we did in 2022/23 The following pages outline the key topics reviewed, monitored, considered and debated by the Board in 2022/23. Discussions at Board meetings are structured using a carefully tailored agenda that is agreed in advance by the Chair, in conjunction with the Chief Executive and the Company Secretaries. ![img-17.jpeg](img-17.jpeg) ## Strategy ### Strategic initiatives The Board reviewed the Group's key strategic initiatives, including the continued advancement of the Group's One Investec mindset. The Board also deliberated on the proposed combination of Investec Wealth & Investment UK and Rathbones Group plc, the restructure of Investec Equity Partners (IEP) Group and the internalisation of the Investec Property Fund management committee. ### Board strategy session The Board held a specific session in respect of strategy, at which it discussed the progress made against the Group's strategic objectives, and analysed an update on the Group's financial outlook. The Board also considered proposals in respect of the strategies for the Group's principal operating subsidiaries. ## Shareholders and key stakeholders ### Dividend The Board recommended a final dividend of 14 pence per ordinary share (May 2022), and an interim dividend of 13.5 pence per ordinary share (November 2022). ### Share purchase programme The Board considered, and approved, the buyback of up to ZAR7 billion of the Group's shares, as part of our capital optimisation strategy. ### Ninety One distribution The Board authorised the distribution of 15% of the Group's shareholding in Ninety One to shareholders. 141 --- 06 | Governance Investec Group integrated annual report 2023 # BOARD ACTIVITIES CONTINUED # Governance # Committee reporting The Board received written Committee reports from the Chairs of the Board Committees on the proceedings of those meetings, including the key discussion points and particular matters to bring to the Board's attention. ![img-18.jpeg](img-18.jpeg) # Matters Reserved for the Board The Board conducted a comprehensive review of the Matters Reserved for the Board, IBL Board, IBP Board, IW&I South Africa Board and IW&I UK Board. # Board effectiveness review The Board discussed the outcome of the 2022/23 annual Board effectiveness review and agreed actions arising from it. The Board also reviewed progress made against the action plan for 2021/22. Read more on page 144 # Risk and assurance # Risk profile The Board reviewed and debated the overall risk profile of the Group, and in particular principal risks, emerging risks and risk appetite. # Risk management The Board reviewed the risk management systems, including financial, operating and compliance controls, and reviewed the effectiveness of the Group's internal control systems. # Financial # Group budget The Board considered performance versus the 2022/23 Group budget. The Board also agreed the 2023/24 Group budget. # Going concern and viability statement The Board reviewed and approved the going concern and viability statement. # Results The Board reviewed and approved the half and full year results. # Purpose, culture and values # Purpose The Board supported the further communication of our purpose, clarifying what enduring worth means for our stakeholders. # Culture and values The Board monitored and assessed culture, and agreed it was aligned with our values and strategy. The Board also oversaw the refinement of the articulation of our values. ![img-19.jpeg](img-19.jpeg) # People strategy, leadership and succession # Executive succession plan The Board considered the Executive succession plan for the Group and its principal operating subsidiaries. The Board also reviewed the Executive talent pipeline. # Board succession plan The Board oversaw the arrangements for Board succession planning, and approved the appointment of Vanessa Olver as an independent Non-Executive Director. Read more on page 126 142 --- 06 | Governance Investec Group integrated annual report 2023 BOARD ACTIVITIES CONTINUED # How the Board engages with our people Investec values all of its people for their contributions and celebrates who they are. The Investec culture is based on principles of engagement and relationship, and we aim to be a place where every employee is able to challenge and have their voice heard. The same cultural practices are extended into workforce engagement. The Board continually monitors the mechanisms by which we engage employees to ensure they remain effective, give a meaningful understanding of the views of the workforce and encourage dialogue between the Board and our people. ## How we engage The Group has established a comprehensive workforce engagement programme, administered by our People and Organisation consulting teams. This programme includes a monitoring component and the dialogues within it seek to understand how people experience, and are aligned to, our purpose, values and culture. These include: - Culture dialogues that include all leaders and employees, which are facilitated by the executive, with the intention of understanding the lived experience of all employees at Investec, measuring progress against our espoused culture and, where relevant, informing future interventions - Team culture sessions are facilitated by People and Organisation and seek to align team culture to organisational culture to enable performance - Regular staff updates and dialogues hosted by the Executive leadership of the Group aimed at keeping employees up to date with strategic priorities and performance and enabling employees to engage directly with the executive - Ongoing messaging from the Executive leadership including email updates, staff intranet and other digital channels - An induction programme for new employees which seeks to inculcate our culture, led by the purpose and values as well as strategic intent, hosted by the Chief Executive and senior leaders - Ongoing learning, leadership development and diversity programmes offered to all employees - Tailored internal investor relations presentations on Group results, strategy updates and market feedback - A newly launched global employee app called Investec Spaces that provides employees with mobile access to our digital workplace (various Investec tools and system) - Comprehensive wellbeing programmes in anchor geographies ## How we consider Given the different requirements in South Africa and the UK, the Board has developed an appropriate reporting framework to enable it to consider the arrangements for workforce engagement across our geographies. There is a designated Non-Executive Director responsible for workforce engagement for Investec plc, supported by non-executive directors in both of Investec plc's main subsidiaries, Investec Bank plc and Investec Wealth & Investment (UK). Henrietta Baldock, Chair of the DLC Remuneration Committee, acts as the designated Non-Executive Director for Investec plc, whilst, David Germain and Cath Thorpe, act as the designated Non-Executive Directors for Investec Bank plc and Investec Wealth & Investment UK respectively. They meet on a quarterly basis, to consider a workforce engagement report, comprising a summary of the Board and management's employee engagement activity, the key issues raised by employees, and the actions undertaken to address those issues. The key items from these reports, and details of the workforce engagement activities that have taken place for all employees across the Group, including the common themes raised, are provided to the Board on a six-monthly basis and provide input into informing Board discussions and decisions. Management also provides an update at each Board meeting, as to the key matters related to our people. ## FY2022/23 highlights Rolled out culture dialogues to all jurisdictions Decision to lead the South African market in terms of minimum salary Awarded a once-off cost of living allowance to all employees in the UK earning a salary below a certain threshold in response to the unprecedented increase in the cost of living across the UK. 143 --- 06 | Governance Investec Group integrated annual report 2023 BOARD EFFECTIVENESS # Board effectiveness Our annual effectiveness review enables the Board to continue to enhance its own performance. The review provides an opportunity for reflection, and to consider ways of identifying greater efficiencies, maximising strengths and highlighting potential areas of further development. The evaluation process YEAR 1 – FY2022 External evaluation Detailed evaluation by external facilitator, Fidelio Partners YEAR 2 – FY2023 Internal evaluation Internal evaluation with particular focus on the action plan resulting from the external evaluation YEAR 3 – FY2024 Internal evaluation Questionnaire-based internal evaluation Impact of the 2022 action plan The action plan resulting from last year's review has been a core foundation of the work conducted by the Board during the year. The Board reviewed the Group's governance framework, including a review of the Matters Reserved for the Board and the Boards of the Group's principal operating subsidiaries, which were consolidated within a single document. The relationship between the Group and the Group's principal subsidiaries was also enhanced by the introduction of regular reports from the Group Chief Executive to the Boards of the Group's principal subsidiaries, and the establishment of an annual Directors' Conference. The Board held a specific Board strategy session, as the Group continues its strategy to deliver disciplined growth in the long-term pursuit of our purpose. The Board places great emphasis on ensuring that its membership reflects diversity in its broadest sense, and will continue to focus on ensuring that it meets the diversity objectives that it has set. This year's review The 2022/23 review was internally facilitated by Company Secretarial, and took the form of a self-assessment questionnaire, followed by one-on-one meetings between the Chair and each of the directors. These meetings provided the Board members with the opportunity to discuss any other matters pertaining to the Board or the Board committees. Board review insights A report was prepared by Company Secretarial, based on the results of the questionnaires and the matters raised in the meetings with the Chair. The final report was then circulated to the members, and became a discussion tool for the DLC Nomdac and the Board, helping them to devise the action plan for the year ahead. The main points highlighted are summarised below: Strategy The Board agreed that there had been an improvement in the time spent on strategy, but that there could be a better coordination of strategic conversations across the Group. Stakeholder relations While there was an acknowledgement of the engagement by the Executive with clients, suppliers and communities, greater line of sight at a Board level was sought. Board logistics The Board agreed, however, that the Board and Board committee cycle was long, and that although there had been improvements in the material provided to the Board, there was still room for further improvement. Board action plan 2023 Facilitating the better coordination of strategy conversations across the Group Increasing the Board's visibility of the Group's engagement with clients, suppliers and communities Enhancing the material provided to the Board, to provide greater focus and avoid information overload. Conclusion Overall, the Board, Board committees, and the individual directors, were considered to be performing effectively. 144 --- 06 Governance Investec Group integrated annual report 2023 # DIRECTORS' REPORT The directors' report for the year ended 31 March 2023 comprises pages 125 to 153 of this report, together with the sections of the annual report incorporated by reference. The directors' report deals with the requirements of the combined consolidated Investec Group, comprising the legal entities Investec plc and Investec Limited. As permitted by Section 414C(11) of the UK Companies Act, some of the matters required to be included in the directors' report have instead been included in the strategic report on pages 5 to 122, as the Board considers them to be of strategic importance. Specifically, these are: - Future business developments (throughout the strategic report) - Risk management on pages 87 and 88 - Information on how the directors have had regard to the Group's stakeholders, and the effect of that regard, on pages 32 to 40. The strategic report and the directors' report together form the management report for the purposes of Disclosure Guidance and Transparency Rules (DTR) 4.1.8R. Information relating to the use of financial instruments by the Group can be found on pages 94 to 100 of the Investec Group's 2023 annual financial statements and is incorporated by reference. Information relating to the Group's carbon footprint and Greenhouse Gas (GHG) emissions may be found on page 118 and are incorporated here by reference. Additional information for shareholders of Investec plc is detailed in schedule A to the directors' report on pages 152 and 153. Other information to be disclosed in the directors' report is given in this section. The directors' report fulfils the requirements of the corporate governance statement for the purposes of DTR 7.2.3R. # Directors The directors' biographies are provided on pages 127 to 131. Changes to the composition of the Board during the year and up to the date of this report are shown in the table below: | | Role | Effective date of departure/ appointment | | --- | --- | --- | | **Departures** | | | | David Friedland | Non-Executive Director | 4 August 2022 | | **Appointments** | | | | Vanessa Olver | Non-Executive Director | 18 May 2022 | In accordance with the UK Corporate Governance Code, all of the directors will retire and those willing to serve again will submit themselves for re-election at the AGM. # Company Secretaries The Company Secretary of Investec plc is David Miller and the Company Secretary of Investec Limited is Niki van Wyk. The Company Secretaries are professionally qualified and have gained experience over many years. Their performance is evaluated by Board members during the annual Board evaluation process. They are responsible for the flow of information to the Board and its committees and for ensuring compliance with Board procedures. All directors have access to the advice and services of the Company Secretaries, whose appointment and removal are a Board matter. In compliance with the UK Corporate Governance Code, the UK Companies Act, the King IV™ Code, the South African Companies Act and the JSE Listings Requirements, the Board has considered and is satisfied that each of the Company Secretaries is competent, and has the relevant qualifications and experience. # Debt Officer Laurence Adams currently serves as the Debt Officer of Investec Limited with effect from 27 November 2020. In compliance with the JSE Listings Requirements, the Board of Investec Limited has considered and is satisfied with the competence, qualifications and experience of the Debt Officer. # Induction, training and development The Chair leads the training and development of directors and the Board generally. A comprehensive development programme operates throughout the year, and comprises both formal and informal training and information sessions. On appointment to the Board, all directors benefit from a comprehensive induction which is tailored to the new director's individual requirements. The induction schedule is designed to provide the new director with an understanding of how the Group works and the key issues that it faces. The Company Secretaries consult the Chair when designing an induction schedule, giving consideration to the particular needs of the new director. When a director joins a Board committee, the schedule includes an induction to the operations of that committee. # Directors and their interests The directors' shareholdings and options to acquire shares are detailed in the Investec Group's 2023 remuneration report. # Directors' conflicts of interest The Group has procedures in place for managing conflicts of interest. Should a director become aware that they, or any of their connected parties, have an interest or a potential interest in an existing or proposed transaction with the Group, they are required to notify the Board in writing or at the next Board meeting. Internal controls are in place to ensure that any related party transactions involving directors, or their connected parties, are conducted on an arm's length basis. Directors have a continuing duty to update any changes to their declarations. # Directors' and officers' liability insurance The Group maintains directors' and officers' liability insurance which provides appropriate cover for any potential legal action brought against its directors. # Change of control The Articles of Association of Investec plc and the Memorandum of Incorporation of Investec Limited ensure that a person cannot make an offer for one company without having made an equivalent offer to the shareholders of both companies on equivalent terms. 145 --- 06 Governance Investec Group integrated annual report 2023 ## DIRECTORS' REPORT CONTINUED Pursuant to the terms of the agreements establishing the DLC structure, if either Investec plc or Investec Limited serves written notice on the other at any time after either party becomes a subsidiary of a third party, or after both Investec plc and Investec Limited become subsidiaries of a third party, the agreements establishing the DLC structure will terminate. All of the Group's share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control and, where applicable, subject to the satisfaction of any performance conditions at that time. ### Powers of directors The Board manages the business of the Group under the powers set out in the Articles of Association of Investec plc and the Memorandum of Incorporation of Investec Limited, which include the ability of directors to issue or buy back shares. Directors were granted authority to issue and allot shares and to buy back shares at the 2022 AGM. Shareholders will be asked to renew this authority at the 2023 AGM. ### Contracts Details of contracts with directors can be found on pages 20 and 21 of the Investec Group's 2023 remuneration report. ### Authorised and issued share capital #### Investec plc and Investec Limited Details of the share capital are set out on pages 124 to 128 of the Investec Group 2023 annual financial statements in notes 44 to 47. #### Investec plc Investec plc did not issue any ordinary shares during the financial year ended 31 March 2023. Investec plc did not repurchase any of its ordinary shares during the financial year ended 31 March 2023. Investec Limited purchased 42 485 632 of Investec plc's ordinary shares during the financial year ended 31 March 2023 representing 6.1% of the issued share capital. These shares are being held exclusive of voting rights in treasury. At 31 March 2023, Investec plc held 49 720 148 shares in treasury (2022: 48 997 877), for allotment under share plans. The maximum number of shares held in treasury by Investec plc during the period under review was 50 288 648 shares. #### Investec Limited Investec Limited repurchased 11 393 755 (2022: 8 496 839) of its ordinary shares during the financial year ended 31 March 2023 representing 3.67% (2022: 2.66%) of the issued share capital. The ordinary shares remaining in issue following these repurchases amounts to 299 014 115 (2022: 310 407 870). Investec Limited repurchased 4 382 795 (2022: 1 537 823) non-redeemable non-cumulative non-participating preference shares, representing 14.99% (2022: 5%) of the issued share capital. Repurchases of the preference shares were pursuant to, and in accordance with, the general authority granted to Investec Limited by its shareholders at the AGM held on 4 August 2022 and approved by the South African Prudential Authority. The preference shares remaining in issue following these repurchases amounts to 24 835 843 (2022: 29 218 638) shares. The delisting of 357 914 non-redeemable non-cumulative non-participating preference shares, which formed part of the last tranche of repurchased shares occurred post 31 March 2023. Prior to this delisting the issued share capital was 25 193 757. At 31 March 2023, Investec Limited held 50 689 788 (2022: 52 277 446) shares in treasury, for allotment under share plans. The maximum number of shares held in treasury by Investec Limited during the period under review was 52 282 935 (2022: 54 427 984) shares. ### Ordinary dividends #### Investec plc An interim dividend of 13.5p per ordinary share (2021: 11.0p) was paid on 9 January 2023, as follows: - 13.5p per ordinary share to non-South African resident shareholders registered on 9 December 2022, and - South African resident shareholders registered on 9 December 2022, through a dividend paid by Investec Limited on the SA DAS share, equivalent to 13.5p per ordinary share. The directors have proposed a final dividend to shareholders registered on 18 August 2023, of 17.5p (2022: 14.0p) per ordinary share, subject to the approval of the members of Investec plc at the AGM which is scheduled to take place on 3 August 2023. If approved, this will be paid on 4 September 2023, as follows: - 17.5p per ordinary share to non-South African resident shareholders registered on 18 August 2023, and - South African resident shareholders registered on 18 August 2023, through a dividend paid by Investec Limited on the SA DAS share, equivalent to 17.5p per ordinary share. #### Investec Limited An interim dividend of 278 cents (2021: 230 cents) per ordinary share was declared to shareholders registered on 9 December 2022 and was paid on 9 January 2023. The directors have proposed a final dividend to shareholders registered on 18 August 2023, of 423 cents (2022: 279 cents) per ordinary share, which is subject to the approval by the members of Investec Limited at the AGM that is scheduled to take place on 3 August 2023; if approved, this will be paid on 4 September 2023. ### Preference dividends #### Investec plc ##### Non-redeemable, non-cumulative, non-participating preference shares Preference dividend number 33 for the period 1 April 2022 to 30 September 2022, amounting to 11.44521p per share, was declared to members holding preference shares registered on 9 December 2022 and was paid on 23 December 2022. Preference dividend number 34 for the period 1 October 2022 to 31 March 2023, amounting to 21.58904p per share, was declared to members holding preference shares registered on 9 June 2023 and was paid on 23 June 2023. ##### Rand-denominated non-redeemable, non-cumulative, non-participating preference shares Preference dividend number 23 for the period 1 April 2022 to 30 September 2022, amounting to 402.51369 cents per share, was declared to members holding Rand-denominated non-redeemable, non-cumulative, non-participating preference shares registered on 146 --- 06 Governance Investec Group integrated annual report 2023 ## DIRECTORS' REPORT CONTINUED 9 December 2022 and was paid on 23 December 2022. Preference dividend number 24 for the period 1 October 2022 to 31 March 2023, amounting to 490.94179 cents per share, was declared to members holding preference shares registered on 9 June 2023 and was paid on 23 June 2023. ### Investec Limited #### Non-redeemable, non-cumulative, non-participating preference shares Preference dividend number 36 for the period 1 April 2022 to 30 September 2022, amounting to 329.08429 cents per share (2022: 272.94074), was declared to shareholders holding preference shares registered on 9 December 2022 and was paid on 23 December 2022. Preference dividend number 37 for the period 1 October 2022 to 31 March 2023, amounting to 401.90045 cents per share (2022: 282.26249), was declared to shareholders holding preference shares registered on 9 June 2023 and was paid on 23 June 2023. #### Redeemable cumulative preference shares Dividends amounting to R18 852 043 (2022: R15 388 595) were paid on the redeemable cumulative preference shares. ### Viability statement In accordance with the UK Corporate Governance Code, in addition to providing a going concern statement (disclosed on page 149) the Board is required to make a statement with respect to the Group's viability (i.e. its ability to continue in operation and meet its liabilities), taking into account the current position of the Group, the Board's assessment of the Group's prospects and the principal risks it faces. Following confirmation by the DLC BRCC (comprising a majority of Non-Executive Directors, which includes certain members of the Audit Committees), the Audit Committees recommended the viability statement for Board approval. The Board has identified the principal and emerging risks facing the Group and these are highlighted on pages 8 to 24 of the Investec Group's 2023 risk and governance report. Through its various committees, notably the Audit Committees and the DLC BRCC, the Board regularly carries out a robust assessment of these risks and their potential impact on the performance, liquidity, solvency and operational resilience of the Group. The activities of these Board sub-committees and the issues considered by them are described in the Group's 2023 Risk and Governance Report. Taking these risks into account, together with the Group's strategic objectives and the prevailing market environment, the Board approved the overall mandated risk appetite frameworks for Investec plc and Investec Limited. The risk appetite frameworks set broad parameters relating to the Board's expectations around performance, business stability and risk management. The Board considers that prudential risk management is paramount in all it does. Protection of depositors, customers' interests, capital adequacy and shareholder returns are key drivers. To manage the Group's risk appetite, there are a number of detailed policy statements and governance structures in place. The Board ensures that there are appropriate resources in place to manage the risks arising from running the business by having independent Risk Management, Compliance, and Financial Control functions. These are supplemented by an Internal Audit function that reports independently to a non-executive Audit Committee Chair. The Board believes that the risk management systems and processes, supported by the conclusions of the Internal Audit function and the results of their combined assurance coverage and each assurance function, are adequate to support the Group's strategy and allow the Group to operate within its risk appetite framework. A review of the Group's performance/measurement against its risk appetite framework is provided at each DLC BRCC meeting and at the main Board meetings. In terms of the South African Prudential Authority (South African PA), the FCA and PRA requirements, the Group is also required to meet regulatory standards with respect to capital and liquidity. In terms of these requirements, the Group is required to stress its capital and liquidity positions under a number of severe stress conditions. Investec's stress testing framework is well embedded in its operations and is designed to identify and regularly test the Group's key 'vulnerabilities under stress'. In order to manage liquidity risk, liquidity stress testing is performed for a range of scenarios, each representing a different set of assumptions. These include market-wide, firm specific, and combined scenarios (combination of the market-wide and firm specific stresses). The Group manages its liquidity risk appetite in relation to combined stress parameters which represent extreme but plausible circumstances. The objective is to have sufficient liquidity under a combined stress scenario to continue to operate for a minimum period as detailed in the Board-approved risk appetite. In addition to these stress scenarios, the Group's risk appetite also requires it to maintain specified minimum levels for both the liquidity coverage ratio and net stable funding ratio, which are higher than those required by the regulators; a minimum cash and near cash to customer deposit ratio of 25%; and to maintain low reliance on wholesale funding to fund core asset growth. Each banking entity within the Group is required to be fully self-funded. The Group currently has £16.4 billion in cash and near cash assets, representing 41.4% of customer deposits. The Group develops annual capital plans (refreshed after six months), that look forward over a three-year period. The capital plans are refreshed on an ad hoc basis if a material event occurs or is likely to occur. These plans are designed to assess the capital adequacy of the Group's respective banking entities under a range of economic and internal conditions, with the impact on earnings, asset growth, risk appetite and liquidity considered. The output of capital planning allows senior management and the Board to make decisions to ensure that the Group continues to hold sufficient capital to meet internal and regulatory capital targets over the medium term (i.e. three years). The Group targets a CET1 ratio in excess of 10%, a tier 1 ratio greater than 11%, a minimum capital adequacy ratio of 14% to 17%, and a leverage ratio in excess of 6% for each of its banking entities. The parameters used in the capital and liquidity stresses are reviewed regularly, taking into account the principal and emerging risks facing the Group, changes in the business environments and inputs from business units. Scenarios are designed considering macro-economic downside risks, portfolio-specific risk factors and business model vulnerabilities. Multiple scenarios are considered to account for the uncertain forward-looking macro-economic environment. The scenarios described below were as at 31 March 2023, and we have experienced an evolving macro-economic environment since the financial year-end which has 147 --- 06 | Governance Investec Group integrated annual report 2023 ## DIRECTORS' REPORT CONTINUED resulted in higher interest rates than were previously assumed in the base case forecast horizon for the UK. Nevertheless these scenarios are still considered appropriate to assess the ongoing viability of the Group given the severity of the two downside scenarios. As the Group's banking entities are regulated separately and ring-fenced from one another, different stress scenarios apply across the respective banking entities and jurisdictions. ### Investec Limited: - Base case: Economic growth lifts to 3% by the end of the period with sufficient domestic policy support measures to support this acceleration, while global financial market risk sentiment is neutral to positive. South Africa remains in the BB credit rating category bracket as fiscal consolidation (debt to GDP stabilisation) occurs. The Rand stabilises, then strengthens somewhat and inflation is impacted by the course of weather patterns via food price inflation. The impact of loadshedding at an average of stage 5 is included for 2023 and lessening in subsequent years as more generating capacity comes on line. A transition to renewable energy and a slow move away from fossil fuel usage occurs and measures to alleviate the impact of climate change on the economy are modestly implemented. Little expropriation without compensation occurs. The Russian/Ukraine conflict eases. The greylisting lasts 2-3 years. - Lite down case: The international environment (including global financial market risk sentiment) is that of the base case, but the domestic environment differs. South Africa's GDP growth is weak, Business confidence is depressed, with significant loadshedding, weak investment growth, very weak rail and port capacity, civil and political unrest, and a recession. Substantial Rand weakness drives high inflation, along with unfavourable weather conditions. Little transition to renewable energy is apparent, while there is increased pressure on government finances from disaster relief due to unfavourable weather conditions driven by climate change. Expropriation of private sector property is very limited and has a modestly negative impact on the economy. The greylisting is lengthy. Government debt and debt projections fail to stabilise, and South Africa drops into the single B credit ratings from all three of the key credit rating agencies for local and foreign currency sovereign debt but avoids C grades on eventual fiscal consolidation. - Severe down case: There is a lengthy recession in South Africa. Deteriorating government finances see the state borrowing from increasingly wider sources as it sinks deeper into a debt trap. South Africa's credit ratings fall into the C grades, with an increased risk of default. There is a lengthy global recession and/or global financial crisis, with insufficient monetary and other policy support measures. Severe Rand weakness is a feature as well as very high domestic inflation, which is also affected by severely unfavourable weather conditions. There is a failure to transition to renewable energy and to implement sufficient measures to alleviate the impact of climate change on the economy. Full implementation of expropriation without compensation occurs (particularly for land held for speculative purposes), with a significant negative impact on the economy, along with widespread loadshedding, strike action and civil unrest. SA is blacklisted in this scenario ### Investec plc: - Base case: The UK economy recovers from a period of weakness, a trajectory which is followed by a number of other western economies, while inflation falls sharply. This is underpinned by the absence of sharp energy price increases and indeed UK natural gas prices are expected to remain materially lower than in 2022. The expected recession over 2023 is expected to be relatively short and shallow with a peak to trough drop in output of around 0.5%. The Bank rate is 4.50% and falls later in 2023 as inflation declines and the economy remains weak. The unemployment rate increases from a starting point below 4% to 5.3% as economic conditions are unfavourable but also because the decline in labour participation rates is gradually reversed. The housing market goes through a difficult period in 2023. National house prices experience a peak-to-trough decline of 7% with no recovery before the end of the year. Globally, the situation is projected to be similar to that of the UK with many economies struggling, inflation pressures falling and with some central banks easing monetary policy this year. - Inflation Entrenched: The entrenched inflation scenario assumes that upside inflation risks materialise, with core inflation remaining persistent across the forecast horizon, for example inflation is expected to still average 4% at the end of the forecast period. As such central banks tighten policy further and maintain high policy rates, The Bank of England base rate is 4.50% and is maintain at that level throughout the scenario horizon. Amidst this high interest rate, high inflation environment, a recession ensues in the near term and remains stagnant across the forecast period as a whole. - BoE Annual Cyclical Scenario (ACS): The Bank of England's regulatory scenario which encompasses a severe global economic downturn, which both at the domestic and global level is more severe than the Global Financial Crisis of 2008/09, with world GDP assumed to fall 2.5%. The context of the scenario is an economic shock driven by energy and other cost pressures which cause a sharp rise in inflation, in turn prompting a sharp rise in interest rates; the BoE's Bank rate is assumed to rise to 6%. In the UK a year long recession ensues before a recovery is witnessed, supported by an easing in monetary policy. Notably there are severe shocks across various sectors, UK house prices are expected to fall 30% for example, whilst global financial markets witness a significant repricing, equity indices such as the FTSE 100 fall 45%, whilst credit spreads widen sharply. The Group implements regulatory scenarios when they are published by regulators (SA PA biennial scenario and UK BoE Annual Cyclical Scenario). The South African PA scenarios will be run in June 2023 and the results will be included in the financial stability review that will be published by the South African PA in November 2023. The BoE published their new ACS in September 2022 and this scenario has been implemented as part of the Investec Plc 2023 stress testing program. The Board has assessed the Group's viability in its 'base case' and stress scenarios. The Board has also assessed the Group's viability with regards to the impact of the proposed combination of the Rathbones Group and Investec Wealth & Investment Limited in its 'base case' and stress scenario. In assessing the Group's viability, a number of assumptions are built into its capital and liquidity plans. In the stress scenarios 148 --- 06 | Governance Investec Group integrated annual report 2023 ## DIRECTORS' REPORT CONTINUED these include, for example, foregoing or reducing dividend payments and asset growth being curtailed. We also carry out 'reverse stress tests', i.e. scenarios that would cause the Group business model to fail. Reverse stress scenarios are developed thematically and their impact is assessed in qualitative and quantitative terms with respect to regulatory capital and liquidity threshold conditions, taking into account the loss absorbing effects of the bank's capital stack. Escalating losses may expose the business model to unacceptable levels of risk well before regulatory threshold conditions are breached, and mitigation actions are identified with the aim to prevent the failure of the Group. Reverse scenarios are extreme tail events and are considered remote, and mainly serve the purpose of identifying and addressing potential weaknesses that may not be identified through the ongoing risk management and stress testing processes. In addition, Investec plc performs climate scenario analysis and risk assessments in line with the requirements stipulated by Supervisory Statement SS3/19 'Enhancing banks' and insurers' approaches to managing the financial risks from climate change', on a proportionate basis for the size and complexity of the firm. The BoE's '2021 Climate Biennial Exploratory Scenario' has been used as the framework for scenario analysis. To date, findings indicate that transition and physical risk is low and Investec plc has sufficient capital and liquidity to continue as a going concern and meet regulatory capital and liquidity requirements. Investec Bank Limited continues to make progress in quantifying the impact of climate related stresses. The current focus includes estimation of PDs and LGDs based on climate specific economic scenarios, as well as a specific analysis of the property portfolio's sensitivity to climate related risks. Climate-related risks have been identified by the South African PA as an industry wide area of focus for the 2023 calendar year. This will include a review of how Investec Bank Limited governs, manages, stresses and reports climate related risks. Furthermore, the Group is required to have a contingency funding and recovery plan for both Investec Limited and Investec plc as well as a resolution pack for Investec plc and, once new regulations are promulgated in South Africa, a resolution plan for Investec Limited. The purpose of the recovery plans is to document how the Board and senior management will ensure that the Group recovers from extreme financial stress to avoid liquidity and capital difficulties in its separately regulated companies. The Group maintains an operational resilience framework that defines important business services and impact tolerances and plans to respond effectively to a disruption. This not only ensures continuity of business operations but also safeguards the interests of key stakeholders including clients and regulators, as well as maintaining our reputation, brand and value-creating activities. The capital and liquidity plans, stress scenarios, contingency funding and recovery plan, resolution pack and the risk appetite statement are reviewed at least annually. In times of severe economic distress and if applicable, stress scenarios are reviewed more regularly; for example, as was the case with the COVID-19 pandemic. In addition, senior management hosts an annual risk appetite process at which the Group's risk appetite frameworks are reviewed and modified to take into account risk experience and changes in the environment. Furthermore, strategic budget processes take place within each business division at least annually. These focus on, amongst other things: the business and competitive landscape; opportunities and challenges; and financial projections. A summary of these divisional budgets, together with a consolidated Group budget, is presented to the Board during its strategic review process early in the year. In assessing the Group's viability, the Board has taken all of the above-mentioned factors, documents and processes into consideration. The directors can confirm that they have a reasonable expectation that Investec will continue to operate and meet its liabilities as they fall due over the next three years. The Board has used a three-year assessment period as this is aligned to the Group's medium-term capital plans which incorporate profitability, liquidity, leverage and capital adequacy projections and include impact assessments from a number of stress scenarios. Detailed management information therefore exists to provide senior management and the Board sufficient and realistic visibility of the Group's viability over the three years to 31 March 2026. The viability statement should be read in conjunction with the following sections in the annual reports, all of which have informed the Board's assessment of the Group's viability: - • Pages 5 to 81 which show a strategic and financial overview of the business - • Pages 88 to 104 which provide detail on the principal and emerging risks the Group faces and the processes in place to assist the Group in mitigating its principal risks - • Page 88 which provides information on the overall Group's risk appetite - • Pages 25 to 26 of the Investec Group's 2023 risk and governance report, which provide an overview of the Group's approach to risk management - • Pages 8, 28, 61 to 63, and 86 of the Investec Group's 2023 risk and governance report which highlight information on the Group's various stress testing processes - • Pages 64 to 75 of the Investec Group's 2023 risk and governance report which specifically focus on the Group's philosophy and approach to liquidity management - • Page 82 of the Investec Group's 2023 risk and governance report which provides detail on the recovery and resolution planning for Investec plc and Investec Limited - • Pages 83 to 86 of the Investec Group's 2023 risk and governance report which explain the Group's capital management framework. This forward-looking viability statement made by the Board is based on information and knowledge of the Group at 27 June 2023. There could be a number of risks and uncertainties arising from (but not limited to) domestic and global economic and business conditions beyond the Group's control that could cause the Group's actual results, performance or achievements in the markets in which it operates to differ from those anticipated. ### Going concern In adopting the going concern basis for preparing the consolidated financial statements, the directors have considered the Group's business activities, objectives and strategy, principal risks and uncertainties in achieving its objectives, and performance that are set out on pages 5 to 9, pages 23 to 25 and pages 89 to 149 --- 06 Governance Investec Group integrated annual report 2023 # DIRECTORS' REPORT CONTINUED 104. The directors have performed a robust assessment of the Group's financial forecasts across a range of scenarios over a 12-month period from the date the financial statements are authorised for issue. Based on these, the directors confirm that they have a reasonable expectation that the Group, as a whole, has adequate resources to continue in operational existence for the 12 months from the date the financial statements are authorised for issue. Therefore, the directors consider it appropriate to adopt the going concern basis of accounting in preparing the accompanying consolidated financial statements. # Audit Committees The DLC, Investec Limited and Investec plc Audit Committees comprising independent Non-Executive Directors meet regularly with senior management, the external auditors, operational risk, internal audit, compliance and the finance division to consider the integrity of financial reporting, the nature and scope of the internal and external audit reviews and the effectiveness of our risk and control systems, taking note of the key deliberations of the subsidiary Audit Committees as part of the process. Further details on the role and responsibility of the Audit Committees are set out on pages 101 to 115 of the Investec Group's 2023 risk and governance report. # Independent auditor and audit information Each director, at the date of approval of this report, confirms that, so far as the director is aware, there is no relevant audit information of which the Group's auditor is unaware and that each director has taken all steps that he or she ought to have taken as a director to make himself or herself aware of any relevant audit information and to establish that the Group's auditor is aware of that information. This confirmation is given pursuant to Section 418 of the UK Companies Act and should be interpreted in accordance with and subject to those provisions. Ernst & Young LLP have indicated their willingness to continue in office as auditors of Investec plc and Ernst & Young Inc. have indicated their willingness to continue in office as joint auditor of Investec Limited. The appointment of PwC Inc. in a shadow capacity, for the financial year starting 1 April 2022, was recommended and approved by ordinary shareholders at the AGM held in August 2022. A formal transition process commenced during 2022, whereby PwC Inc. shadowed the full audit cycle performed by the incumbent joint external auditors. The purpose of the shadow period was for PwC Inc. to obtain sufficient information about the Group, the financial control environment and the audit process to ensure a smooth transition as external auditor in the following year i.e for the audit commencing 1 April 2023. Non-audit services provided by PwC Inc. were reviewed and considered in advance of their appointment as external auditors to ensure their continued independence. PwC Inc. have indicated their willingness to act as joint auditor of Investec Limited. The Board having satisfied itself as to their independence and effectiveness, has proposed a resolution to re-appoint Ernst & Young LLP as auditor of Investec plc and Ernst & Young Inc. as joint auditor of Investec Limited, and to appoint PwC Inc. as joint auditor of Investec Limited, at the AGM scheduled to take place on 3 August 2023. Following a comprehensive tender process, Deloitte LLP was nominated as the new external auditor for Investec plc and Deloitte Inc. was nominated as one of the new joint external auditors for Investec Limited, subject to regulatory approval, for the financial year starting 1 April 2024. A formal transition process will commence during 2023, whereby Deloitte LLP and Deloitte Inc. will observe the full audit cycle performed by the incumbent external auditors. The formal shadow period will commence from 1 April 2023 for the year ending 31 March 2024. The appointments of Deloitte LLP and Deloitte Inc. in a shadow capacity, for the 2024 financial year, will be recommended for approval at the AGM to be held in August 2023. # Major shareholders The largest shareholders of Investec plc and Investec Limited are shown on page 164. # Special resolutions # Investec plc At the AGM held on 4 August 2022, special resolutions were passed in terms of which: - A renewable authority was granted to Investec plc to acquire its own ordinary shares in accordance with the terms of Section 701 of the UK Companies Act - A renewable authority was granted to Investec plc to acquire its own preference shares in accordance with the terms of Section 701 of the UK Companies Act. # Investec Limited At the AGM held on 4 August 2022, the following special resolutions were passed in terms of which: - A renewable authority was granted to Investec Limited and any of its subsidiaries to acquire its own ordinary shares in terms of the provisions of the South African Companies Act No. 71 of 2008, as amended (the South African Companies Act) - A renewable authority was granted to Investec Limited and any of its subsidiaries to acquire its own preference shares in terms of the provisions of the South African Companies Act - A renewable authority was granted to Investec Limited to provide financial assistance in order to comply with the provisions of Sections 44 and 45 of the South African Companies Act - A renewable authority was granted to Investec Limited to approve the directors' remuneration in order to comply with the provisions of Sections 65(11)(h), 66(8) and 66(9) of the South African Companies Act. # AGM update statement At the AGM on 4 August 2022, resolution 38 (political donations), passed with a less than 80% majority. As stated in the notices to the AGMs, Investec plc does not give any money for political purposes in the UK nor does it make any donations to UK political organisations or incur UK political expenditure. However, the definitions of political donations and political expenditure used in the UK Companies Act are very wide. In line with UK market practice, the authority is therefore requested only as a precautionary measure to ensure that Investec plc and any company which is or becomes a subsidiary of Investec plc does not inadvertently breach the relevant provisions of the UK Companies Act. 150 --- 06 Governance Investec Group integrated annual report 2023 # DIRECTORS' REPORT CONTINUED # Diversity and inclusion Our diversity and inclusion framework has a sense of belonging for all our people, irrespective of difference, as its goal. We aim to make Investec a place where it is easy to be yourself. It is a responsibility we all share and is integral to our purpose and values as an organisation. Continually mindful of our biases and consciously inclusive, we encourage each other to embrace opportunities for growth. We recognise that a diverse and inclusive workforce is essential to our ability to be an innovative organisation that can adapt and prosper in a fast changing world. Investec's approach is to recruit and develop based on aptitude and attitude, with the deliberate intention to build a diverse workforce, which represents the population of the relevant jurisdiction and reflects its clients. Our recruitment strategies actively seek difference, engaging with minority groups, females and people with disabilities. Investec is committed to being an equal opportunity employer. In accordance with our policies and practices, and relevant International Labour Organisation (ILO) conventions and legislation, we do not tolerate any form of discrimination based on gender, gender reassignment, race, ethnicity, religion, belief, age, disability, nationality, political opinion, sensitive medical conditions, pregnancy, maternity, civil partnership and sexual orientation. People with different abilities are an essential part of a diverse talent pool and every effort is made to facilitate an accessible environment for all. # Empowerment and transformation Investec recognises that economic growth and societal transformation is vital to creating a sustainable future for all the communities in which it operates, and that as a financial services provider, it plays a critical role in enabling this. Further information is provided in the Investec Group's 2023 sustainability report. # Research and development In the ordinary course of business, the Group develops new products and services in each of its business divisions. # Political donations and expenditure The Group did not make any political donations in the financial year ended 31 March 2023 (2022: Nil). # Subsidiary and associated companies Details of principal subsidiary and associated companies are reflected on pages 141 to 145 of the Investec Group's 2023 annual financial statements. # Uncertain tax and other legal matters The Board considered legal and uncertain tax matters with a view to ensuring appropriate accounting treatment in the financial statements. Refer to Note 53 of the annual financial statements. # Restatements As at 31 March 2022, £70.7 million and 31 March 2021, £72.2 million, initial margin on collateral, which is not available as an offset to individual exposures, was recorded in derivative financial instruments liabilities instead of other assets. In addition, certain derivative financial assets and liabilities that are managed by the Group's trading desks were previously presented on a gross basis, while the IAS 32 on-balance sheet netting requirements were met. Due to an upgrade of the internal reporting processes, the intent to net settle was evidenced. The derivative transactions, totalling £14.1 million at 31 March 2023 (31 March 2022: £26.7 million, 31 March 2021: £31.5 million) satisfied the legally enforceable right of set off in terms of IAS 32. These positions are also operationally net settled through the use of the Continuous Linked Settlement (CLS) system. Refer to Note 61 of the annual financial statements. # Events after the reporting date Refer to Note 62 of the annual financial statements. Signed on behalf of the Boards of Investec plc and Investec Limited Philip Hourquebie Group Chair 27 June 2023 Fani Titi Group Chief Executive 27 June 2023 151 --- 06 | Governance Investec Group integrated annual report 2023 # SCHEDULE A TO THE DIRECTORS' REPORT # Additional information for shareholders Set out below is a summary of certain provisions of Investec plc's current Articles of Association (the Articles) and applicable English law concerning companies (the UK Companies Act). This is a summary only and the relevant provisions of the Articles or the UK Companies Act should be consulted if further information is required. # Share capital The issued share capital of Investec plc at 31 March 2023 consists of 696 082 618 ordinary shares of £0.0002 each, 2 754 587 non-redeemable, non-cumulative, non-participating preference shares of £0.01 each, 131 447 ZAR non-redeemable, non-cumulative, non-participating preference shares of R0.001 each, 318 904 709 special converting shares of £0.0002 each, the special voting share of £0.001, the UK DAN share of £0.001 and the UK DAS share of £0.001 (each class as defined in the Articles). # Purchase of own shares Subject to the provisions of the Articles, the UK Companies Act, the UK Uncertificated Securities Regulations 2001 and every other statute for the time being in force concerning companies and affecting Investec plc, the approval of shareholders as provided in the Articles, and without prejudice to any relevant special rights attached to any class of shares, Investec plc may purchase, or may enter into a contract under which it will or may purchase any of its own shares of any class, including without limitation any redeemable shares, in any way and at any price (whether at par or above or below par). # Dividends and distributions Subject to the provisions of the UK Companies Act, Investec plc may by ordinary resolution from time-to-time declare dividends not exceeding the amount recommended by the Board. The Board may pay interim dividends whenever the financial position of Investec plc, in the opinion of the Board, justifies such payment. The Board may withhold payment of all or any part of any dividends or other monies payable in respect of Investec plc's shares from a person with a 0.25% or more interest in the nominal value of the issued shares if such a person has been served with a notice after failure to provide Investec plc with information concerning interests in those shares required to be provided under the UK Companies Act. # Voting rights Subject to any special rights or restrictions attaching to any class of shares, at a general meeting, every member present in person has, upon a show of hands, one vote and, on a poll, every member who is present in person or by proxy has one vote for each share. In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the register of members in respect of the share. Under the UK Companies Act, members are entitled to appoint a proxy, who need not be a member of Investec plc, to exercise all or any of their rights to attend and vote on their behalf at a general meeting or class meeting. A member may appoint more than one proxy in relation to a general meeting or class meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that member. A member that is a corporation may appoint an individual to act on its behalf at a general meeting or class meeting as a corporate representative. The person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual member of Investec plc. # Restrictions on voting No member shall be entitled to vote either in person or by proxy at any general meeting or class meeting in respect of any shares held by them if any call or other sum then payable by them in respect of that share remains unpaid. In addition, no member shall be entitled to vote if they have been served with a notice after failure to provide Investec plc with information concerning interests in those shares required to be provided under the UK Companies Act. # Deadlines for exercising voting rights Votes are exercisable at a general meeting of Investec plc in respect of which the business being voted upon is being heard. Votes may be exercised in person, by proxy, or in relation to corporate members, by corporate representatives. The Articles provide a deadline for submission of proxy forms of not less than 48 hours before the time appointed for the holding of the meeting or adjourned meeting. # Variation of rights Subject to the UK Companies Act, the Articles specify that rights attached to any class of shares may be varied with the written consent of the holders of not less than three-fourths in nominal value of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of those shares. The rights conferred upon the holders of any shares shall not, unless otherwise expressly provided in the rights attaching to those shares, be deemed to be varied by the creation or issue of further shares ranking pari passu with them. Where, under the Company's share incentive plan, participants are the beneficial owners of the shares, but not the registered owners, the participants are not entitled to exercise any voting rights until the shares are released to the participants. Under the Company's employee trust, the trustee does not vote in respect of unallocated shares. # Transfer of shares All transfers of shares may be effected by transfer in writing in any usual or common form or in any other form acceptable to the directors. The instrument of transfer shall be signed by or on behalf of the transferor and (except in the case of fully paid shares) by or on behalf of the transferee. Transfers of shares which are in uncertificated form are effected by means of the CREST system. The directors may, in the case of shares in certificated form, in their absolute discretion and without assigning any reason, refuse to register any transfer of shares (not being fully paid shares), provided that such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis. The directors may also refuse to register an allotment or transfer of shares (whether fully paid or not) in favour of more than four persons jointly. The directors may decline to recognise any instrument of transfer unless the instrument of transfer is in respect of only one class of share and, when submitted for registration, is accompanied by the relevant share certificates and such other evidence as the directors may reasonably require. Subject to the UK Companies Act and regulations and applicable CREST rules, the directors may determine that any 152 --- 06 Governance Investec Group integrated annual report 2023 # SCHEDULE A TO THE DIRECTORS' REPORT CONTINUED class of shares may be held in uncertificated form and that title to such shares may be transferred by means of the CREST system or that shares of any class should cease to be so held and transferred. A number of the Company's employee share plans include restrictions on transfer of shares while the shares are subject to the plans, in particular, the share incentive plan. # Investec plc preference shares The following are the rights and privileges which attach to the Investec plc preference shares: - On a return of capital, whether or not on a winding up (but not on a redemption or purchase of any shares by Investec plc) or otherwise, the plc preference shares will rank, pari passu inter se and with the most senior ranking preference shares of Investec plc in issue (if any) from time-to-time and with any other shares of Investec plc that are expressed to rank pari passu herewith as regards to participation in the capital, and otherwise in priority to any other class of shares of Investec plc - Investec plc may, at its option, redeem all or any of the plc preference shares for the time being issued and outstanding on the first call date or any dividend payment date thereafter - Holders of plc preference shares will not be entitled to attend and vote at general meetings of Investec plc. Holders will be entitled to attend and vote at a class meeting of holders of plc preference shares. # Non-redeemable, non-cumulative, non-participating preference shares The following are the rights and privileges which attach to the perpetual preference shares: - Each perpetual preference share will rank as regards to dividends and a repayment of capital on the winding up of Investec plc prior to the ordinary shares, the plc special converting shares, the UK DAN share, the UK DAS share, but pari passu with the plc preference shares. The perpetual preference shares shall confer on the holders, on a per perpetual preference share and equal basis, the right to a return of capital on the winding up of Investec plc of an amount equal to the aggregate of the nominal value and premiums in respect of perpetual preference shares issued, divided by the number of perpetual preference shares in issue - Each perpetual preference share may confer upon the holder thereof the right to receive out of the profits of Investec plc which it shall determine to distribute, in priority to the ordinary shares, the plc special converting shares, the UK DAN share and the UK DAS share, but pari passu with the plc preference shares, the preference dividend calculated in accordance with the Articles - The holders of the perpetual preference shares shall be entitled to receive notice of and be present but not to vote, either in person or by proxy, at any meeting of Investec plc, by virtue of or in respect of the perpetual preference shares, unless either or both of the following circumstances prevail at the date of the meeting: - The preference dividend or any part thereof remains in arrears and unpaid as determined in accordance with the Articles after six months from the due date thereof; and/or - A resolution of Investec plc is proposed which directly affects the rights attached to the perpetual preference shares or the interests of the holders thereof, or a resolution of Investec plc is proposed to wind up or in relation to the winding up of Investec plc or for the reduction of its capital. in which event the preference shareholders shall be entitled to vote only on such resolution. # Rand-denominated non-redeemable, non-cumulative, non-participating perpetual preference shares (the ZAR perpetual preference shares) The ZAR perpetual preference shares are subject to substantially similar terms and conditions as the existing Pound Sterling non-redeemable, non- cumulative, non-participating preference shares, as outlined above, save that they are denominated in South African Rands. # Shares required for the DLC structure Investec SSC (UK) Limited, a UK trust company, specially formed for the purpose of the DLC structure, holds the plc special voting share, the plc special converting shares, the UK DAN share and the UK DAS share. These shares can only be transferred to another UK trust company, in limited circumstances. The plc special voting shares are specially created shares so that shareholders of both Investec plc and Investec Limited effectively vote together as a single decision-making body on matters affecting shareholders of both companies in similar ways, as set out in the Articles. Prior to a change of control, approval of termination of the sharing agreement (which regulates the DLC), liquidation or insolvency of Investec plc, the plc special converting shares have no voting rights, except in relation to a resolution proposing the: (i) Variation of the rights attaching to the shares or (ii) Winding up, and they have no rights to dividends. The special converting shares are held on trust for the Investec Limited ordinary shareholders. Investec plc and Investec Limited have established dividend access trust arrangements as part of the DLC. Investec plc has issued two dividend access shares, the UK DAS share and UK DAN share which enables Investec plc to pay dividends to the shareholders of Investec Limited. This facility may be used by the Board to address imbalances in the distributable reserves of Investec plc and Investec Limited and/ or to address the effects of South African exchange controls and/or if they otherwise consider it necessary or desirable. 153 --- 07 Remuneration Investec Group Integrated annual report 2023 # Remuneration ![img-20.jpeg](img-20.jpeg) --- 07 Remuneration Investec Group integrated annual report 2023 # IN THIS SECTION **156** Annual statement from the Remuneration Committee chair ![img-21.jpeg](img-21.jpeg) --- 07 Remuneration Investec Group integrated annual report 2023 ANNUAL STATEMENT FROM THE REMUNERATION COMMITTEE CHAIR # Annual statement from the Remuneration Committee Chair **Henrietta Baldock** **27 June 2023** | | Eligible to attend | Attended | | --- | --- | --- | | Henrietta Baldock (Chair) | 7 | 7 | | Nicky Newton-King | 3^{1} | 3^{1} | | Philip Hourquebie | 7 | 7 | | Zarina Bassa | 7 | 7 | 1. Nicky Newton-King became a committee member on 22 September 2022 ## Key achievements in FY 2023 - Further incorporated shareholder feedback in setting performance targets, including being more rigorous in our approach to the assessment of the non-financial measures for the short-term and long-term incentives - Focused on the external challenges that presented during the year which had an impact on employees, including mitigating the impacts of the cost-of-living challenges faced by our people - Undertook an extensive review to assess whether a "windfall gain" had arisen from the long-term incentive grant made in June 2020 ## Areas of focus in FY 2024 - Develop a new Directors' Remuneration Policy to be presented to shareholders for approval at the AGM in 2024. This will include consideration of the impending likely removal of the "bonus cap" and involve extensive engagement with key shareholders to develop the revised policy - Consider the remuneration implications following the all-share combination of UK IW&I with Rathbones - Continue to consider and provide initiatives to support our employees under the banner "Power of Purpose", including mitigating cost-of-living challenges ## In this section - Performance in the year - Remuneration overview for the year - Executive Director outcomes - Exercise of discretion - Malus and clawback - Group-wide employee remuneration - Directors' Remuneration Policy - Compliance and governance statement - Response to shareholder feedback - Non-Executive Director fees - Looking ahead - Approvals ## Dear shareholders On behalf of the Board and as Chair of the Remuneration Committee, I am pleased to introduce the Directors' remuneration report for the year, full report can be found within the Investec Group Remuneration Report which is published separately. We appreciate the constructive engagements we had with our shareholders and executives during the year. ## Performance in the year The Group successfully navigated a complex macro-economic backdrop. We achieved 21.6% adjusted operating profit growth to £835.9 million and a Return on Equity (ROE) of 13.7%. The strong revenue performance was supported by continued client acquisition, resulting in higher average advances, rising interest rates and increased client activity. Fee and commission income in our Wealth & Investment businesses was negatively impacted by the effects of the market sell off on average funds under management. The overall performance also reflects the effects of inflationary pressures on operating costs as well as normalisation in both discretionary expenditure and expected credit impairment loss. We continue to maintain strong capital and liquidity levels while striving to provide improved shareholder returns, including dividends. This year we have achieved our financial targets announced in guidance provided in November 2022, a year ahead of schedule. We returned approximately £780 million to shareholders, comprising ordinary dividends, the share buy-back / repurchase and the distribution of the 15% shareholding in Ninety One. Full details of our performance for the year can be found in the section 'Our Performance' in the Integrated Report. ## Remuneration overview for the year In August 2021 shareholders approved a revised Directors' Remuneration Policy that we believe is aligned with our strategy to simplify and focus the business for growth, through five strategic objectives: - Capital discipline; - Growth initiatives; - Improved cost management; - Digitalisation; and - Greater connectivity. Performance against targets: Below we cover the salient features of the 2023 remuneration achievements, illustrated through the lens of the Group Chief Executive remuneration outcomes. - Short-term incentive (STI) achievement against both the financial and non-financial measures was between on-target and stretch - Long-term incentive (LTI) achievement against the financial measures achieved stretch level and between on-target and stretch for the non-financial measures. 156