| Fri 16 Nov 2007, 15:03 | | Investec interim results 30 Sept 07 |
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INL INP INPP
INL INP
INL / INP - Investec - Unaudited Consolidated Financial Results In Pounds
Sterling For The Six Months To 30 September 2007
Investec Limited
Incorporated in the Republic of South Africa
Registration number 1925/002833/06
JSE share code: INL
ISIN: ZAE000081949
Investec plc
Incorporated in England and Wales
Registration number 3633621
JSE share code: INP
ISIN: GB00B17BBQ50
Investec plc and Investec Limited (combined results)
Unaudited consolidated financial results in Pounds Sterling for the six
months to 30 September 2007
Salient Features
30 Sept. 30 Sept. % 31 March
2007 2006 Change 2007
Operating profit before 254,251 205,291 23.8 466,585
goodwill, non-operating
items and taxation
(GBP`000)
Adjusted earnings before 160,858 128,676 25.0 300,704
goodwill and non-operating
items (GBP`000)
Adjusted earnings per 27.3 23.3 17.2 53.3
share (before goodwill and
non-operating items)
(pence)
Earnings attributable to 182,624 153,579 18.9 340,319
shareholders (GBP`000)
Earnings per share (pence) 26.9 24.1 11.6 54.7
Headline earnings per 25.8 22.4 15.2 52.3
share (pence)
Dividends per share 11.5 10.0 15.0 23.0
(pence)
Dividends per share 159.5 138.0 15.6 318.0
(cents)
Combined consolidated income statement
6 months to 6 months to Year to
30 Sept. 30 Sept. 31 March
GBP`000 2007 2006 2007
Interest income 789,780 565,786 1,233,226
Interest expense (566,678) (403,409) (889,311)
Net interest income 223,102 162,377 343,915
Fees and commissions income 312,940 279,276 577,773
Fees and commissions expense (35,238) (27,638) (56,275)
Principal transactions 108,492 103,928 245,463
Operating income from 6,369 4,279 10,685
associates
Investment income on 57,375 13,767 36,821
assurance activities
Premiums and reinsurance 29,446 55,995 80,542
recoveries on insurance
contracts
Other operating income 28,142 10,030 49,685
Other income 507,526 439,637 944,694
Claims and reinsurance (83,375) (68,828) (111,492)
premiums on insurance
business
Total operating income net 647,253 533,186 1,177,117
of insurance claims
Impairment losses on loans (11,738) (8,173) (16,530)
and advances
Operating income 635,515 525,013 1,160,587
Administrative expenses (371,245) (313,966) (680,687)
Depreciation and (10,019) (5,756) (13,315)
amortisation of property,
equipment and software
Operating profit before 254,251 205,291 466,585
goodwill
Goodwill - 7,533 2,569
Profit before taxation 254,251 212,824 469,154
Taxation (61,911) (56,974) (119,781)
Profit after taxation 192,340 155,850 349,373
Earnings attributable to 9,716 2,271 9,054
minority interests
Earnings attributable to 182,624 153,579 340,319
shareholders
192,340 155,850 349,373
Earnings attributable to 182,624 153,579 340,319
shareholders
Goodwill - (7,533) (2,569)
Preference dividends paid (24,217) (20,411) (31,850)
Additional earnings 2,451 3,041 (5,196)
attributable to other equity
holders
Adjusted earnings before 160,858 128,676 300,704
goodwill and non-operating
items
Adjustments to derive (9,175) (4,997) (5,823)
headline earnings
Headline earnings 151,683 123,679 294,881
Earnings per share (pence)
- basic 26.9 24.1 54.7
- diluted 24.8 22.1 50.4
Adjusted earnings per share
(pence)
- basic 27.3 23.3 53.3
- diluted 25.2 21.4 49.2
Headline earnings per share
(pence)
- basic 25.8 22.4 52.3
- diluted 23.8 20.5 48.2
Number of weighted average
shares
- basic (millions) 589.0 552.8 563.8
Combined consolidated cash flow statement
6 months to 6 months to Year to
30 Sept. 30 Sept. 31 March
GBP`000 2007 2006 2007
Cash inflows from 253,562 147,474 401,553
operations
Increase in operating (106,769) (2,899,302) (6,125,514)
assets
Increase in operating 319,089 3,257,379 5,858,320
liabilities
Net cash inflow from 465,882 505,551 134,359
operating activities
Net cash outflow from (27,054) (143,267) (178,985)
investing activities
Net cash (outflow)/inflow (93,696) 106,423 430,471
from financing activities
Effects of exchange rate 24,999 (343,715) (301,588)
changes on cash and cash
equivalents
Net increase in cash and 370,131 124,992 84,257
cash equivalents
Cash and cash equivalents 1,274,440 1,190,183 1,190,183
at the beginning of the
period
Cash and cash equivalents 1,644,571 1,315,175 1,274,440
at the end of the period
Cash and cash equivalents is defined as including: cash and balances at
central banks, on demand loans and advances to banks and cash equivalent
advances to customers (all of which have a maturity profile of less than
three months).
Combined consolidated balance sheet at
30 Sept. 31 March 30 Sept.
GBP`000 2007 2007 2006
Assets
Cash and balances at central 163,515 102,751 132,717
banks
Loans and advances to banks 2,349,889 2,431,769 1,690,038
Cash equivalent advances to 913,403 687,918 712,938
customers
Reverse repurchase agreements 945,649 2,185,322 980,456
and cash collateral on
securities borrowed
Trading securities 2,029,407 2,015,144 1,427,871
Derivative financial 872,115 724,492 1,200,754
instruments
Investment securities 1,940,166 1,776,601 1,750,676
Loans and advances to 13,055,615 9,527,080 8,786,090
customers
Securitised assets 6,664,984 831,742 639,048
Interest in associated 77,412 70,332 65,811
undertakings
Deferred taxation assets 69,767 59,394 50,956
Other assets 991,610 1,420,681 1,264,094
Property and equipment 134,235 131,505 121,397
Investment properties 98,081 85,424 86,121
Goodwill 317,137 195,883 209,176
Intangible assets 38,947 35,829 8,707
30,661,932 22,281,867 19,126,850
Other financial instruments
at fair value through income
in respect of
- liabilities to customers 3,159,979 3,024,997 2,806,067
- assets related to 974,189 992,824 1,054,865
reinsurance contracts
34,796,100 26,299,688 22,987,782
Liabilities
Deposits by banks 4,584,380 2,347,095 2,088,156
Derivative financial 680,389 509,919 801,747
instruments
Other trading liabilities 357,781 321,863 425,385
Repurchase agreements and 561,469 1,765,671 649,463
cash collateral on securities
lent
Customer accounts 10,711,255 9,384,848 8,076,640
Debt securities in issue 2,743,556 2,519,006 2,595,300
Liabilities arising on 6,358,378 826,627 637,865
securitisation
Current taxation liabilities 108,975 113,967 96,606
Deferred taxation liabilities 64,493 48,048 31,241
Other liabilities 1,348,016 1,778,488 1,592,423
Pension fund liabilities 1,200 1,467 1,735
27,519,892 19,616,999 16,996,561
Liabilities to customers 3,138,415 3,004,254 2,713,438
under investment contracts
Insurance liabilities, 21,564 20,743 92,630
including unit-linked
liabilities
Reinsured liabilities 974,189 992,824 1,054,865
31,654,060 23,634,820 20,857,494
Subordinated liabilities 969,669 830,705 491,683
(including convertible debt)
32,623,729 24,465,525 21,349,177
Equity
Called up share capital 176 169 166
Share premium 1,356,826 1,129,859 1,106,126
Treasury shares (120,538) (109,279) (74,824)
Equity portion of convertible 2,191 2,191 2,191
instruments
Perpetual preference shares 294,698 292,173 239,132
Other reserves 44,359 40,545 4,087
Profit and loss account 280,159 186,827 68,757
Shareholders` equity 1,857,871 1,542,485 1,345,635
excluding minority interests
Minority interests 314,500 291,678 292,970
- Perpetual preferrred 246,272 241,081 241,640
securities issued by
subsidiaries
- Minority interests in 68,228 50,597 51,330
partially held subsidiaries
Total equity 2,172,371 1,834,163 1,638,605
Total liabilities and equity 34,796,100 26,299,688 22,987,782
A geographical breakdown of business operating profit before goodwill, non-
operating items and taxation for the 6 months to 30 September 2007
United
Kingdom
Southern and Other Total
GBP`000 Africa Europe Australia Geographies group
Private 22,878 51,778 11,038 - 85,694
Banking
Private
Client
Portfolio
Management 8,369 5,998 - - 14,367
and
Stockbroking
Capital 32,093 6,439 4,667 - 43,199
Markets
Investment 35,876 10,623 5,411 - 51,910
Banking
Asset 24,330 11,873 - - 36,203
Management
Property 11,959 (337) (136) - 11,486
Activities
Group 16,838 (6,494) 1,012 36 11,392
Services and
Other
152,343 79,880 21,992 36 254,251
% change 36.9% (0.4%) 61.4% (82.8%) 23.8%
since 30
September
2006
A geographical breakdown of business operating profit before goodwill, non-
operating items and taxation for the 6 months to 30 September 2006
United
Kingdom
Southern and Other Total
GBP`000 Africa Europe Australia Geographies group
Private 17,424 50,476 5,720 - 73,620
Banking
Private
Client
Portfolio
Management 5,664 4,074 - - 9,738
and
Stockbroking
Capital 25,833 29,558 1,674 - 57,065
Markets
Investment 24,789 5,447 5,542 - 35,778
Banking
Asset 23,851 8,045 - - 31,896
Management
Property 6,201 118 - - 6,319
Activities
Group 7,522 (17,545) 689 209 (9,125)
Services and
Other
111,284 80,173 13,625 209 205,291
Summarised consolidated statement of total recognised income and expenses
6 months to 6 months to Year to
30 Sept. 30 Sept. 31 March
GBP`000 2007 2006 2007
Profit after taxation 192,340 155,850 349,373
Fair value movements on
available
for sale assets (16,279) 1,923 12,287
Foreign currency movements 20,708 (196,773) (184,847)
Pension fund actuarial - - (2,470)
losses
Total recognised income and 196,769 (39,000) 174,343
expenses
Total recognised income and 15,293 (34,555) (29,931)
expenses attributable to
minority shareholders
Total recognised income and 178,951 51,569 256,964
expenses attributable to
ordinary shareholders
Total recognised income and 2,525 (56,014) (52,690)
expenses attributable to
perpetual preferred
securities
196,769 (39,000) 174,343
Summarised consolidated statement of changes in equity
6 months to 6 months to Year to
30 Sept. 30 Sept. 31 March
GBP`000 2007 2006 2007
Balance at the beginning of 1 834,163 1,512,093 1,512,093
the period
Foreign currency adjustments 20,708 (196,773) (184,847)
Retained profit for the 182,624 153,579 340,319
period attributable to
ordinary shareholders
Retained profit for the 9,716 2,271 9,054
period attributable to
minority interests
Fair value movements on (16,279) 1,923 12,287
available for sale assets
Transfer to pension fund - - (2,470)
deficit
Total recognised gains and 196,769 (39,000) 174,343
losses for the period
Share based payments 16,638 13,088 33,990
adjustments
Dividends paid to ordinary (74,226) (55,415) (112,592)
shareholders
Dividends paid to minority (24,217) (20,411) (31,850)
shareholders
Issue of ordinary shares 235,085 22,443 47,861
Issue of perpetual - 80,628 131,187
preference shares
Share issue expenses (65) (787) (1,688)
Movement of treasury shares (19,305) 85,637 44,811
Issue of equity instruments 7,529 21,173 20,949
by subsidiaries
Dividends and capital - - (6,799)
reductions paid to
minorities
Movement of minorities on - 19,156 21,858
disposals and acquisitions
Balance at the end of the 2,172,371 1,638,605 1,834,163
period
Commentary
Investec plc and Investec Limited (combined results)
Unaudited consolidated financial results in Pounds Sterling for the six
months ended 30 September 2007.
Overall performance
We are pleased to announce that for the six months ended 30 September 2007,
adjusted earnings per share (EPS) before goodwill and non-operating items
increased by 17.2% to 27.3 pence from 23.3 pence. Our focus on balancing
revenue streams and achieving diversity of earnings, both geographically
and operationally, has continued to support the operating fundamentals of
the group. Our stated growth and financial return objectives have been
achieved benefiting from the strong performance by the majority of our
businesses.
The main features of the period under review are:
* Operating profit before goodwill, non-operating items and taxation
("operating profit") increased 23.8% from GBP205.3 million to GBP254.3
million.
* Earnings attributable to ordinary shareholders before goodwill and non-
operating items increased 25.0% from GBP128.7 million to GBP160.9
million.
* Earnings attributable to ordinary shareholders after goodwill and non-
operating items increased by 18.9% from GBP153.6 million to GBP182.6
million.
* Our South African and Australian operations posted strong increases in
operating profit of 36.9% and 61.4%, respectively. Our UK operations
recorded operating profit in line with the prior period; these results
were negatively impacted by a poor performance from the Capital
Markets Principal Finance division. The group remains geographically
diversified with the UK and Australian operations comprising 40.1% of
total operating profit.
* Annualised return on adjusted average shareholders` equity (inclusive
of compulsorily convertible instruments) increased marginally from
23.8% to 23.9% against a target of greater than 20%.
* The ratio of total operating expenses to total operating income
improved marginally from 60.0% to 58.9% against a target of below 65%.
* Average core loans and advances to customers increased 18.1% from
GBP9.2 billion to GBP10.9 billion. Asset quality remains satisfactory
with the percentage of gross default loans to core loans and advances
improving from 1.23% to 1.01% since 31 March 2007.
* Average third party assets under management increased 9.9% from
GBP52.6 billion to GBP57.8 billion.
* Customer deposits (accounts) increased by 14.1% from GBP9.4 billion to
GBP10.7 billion since 31 March 2007.
* The acquisition of Kensington Group plc ("Kensington") became
effective on 8 August 2007 and forms part of Capital Markets.
* The board declared a dividend of 11.5 pence per ordinary share (2006:
10 pence) resulting in a dividend cover based on the group`s adjusted EPS
before goodwill and non-operating items of 2.37 times (2006: 2.33 times),
consistent with our dividend policy.
Business unit review
Unless the context indicates otherwise, reference to "operating profit" in
the business unit review below, refers to profit before goodwill, non-
operating items and taxation.
Private Client Activities
Private Client Activities, comprising the Private Banking and Private
Client Portfolio Management and Stockbroking divisions, reported strong
growth in operating profit of 20.0% to GBP100.1 million (2006: GBP83.3
million).
* Private Banking
Operating profit of our Private Banking division increased by 16.4% to
GBP85.7 million (2006: GBP73.6 million). Strong lending turnover and
transactional activity continues to drive momentum across all
geographies. The division benefited from increased distribution
capacity and greater penetration across all areas of specialisation,
notably Wealth Management and Growth and Acquisition Finance. The
average private client core lending book grew by 23.4% to GBP7.5
billion (2006: GBP6.1 billion) and the division increased its average
retail deposit book by 24.7% to GBP6.1 billion (2006: GBP4.9 billion).
* Private Client Portfolio Management and Stockbroking
Private Client Portfolio Management and Stockbroking recorded solid
growth, generating operating profit of GBP14.4 million (2006: GBP9.7
million), an increase of 47.5%. The Private Client business in South
Africa benefited from the launch of new products and increased volumes
with average funds under management increasing by 12.7% to GBP7.7
billion (2006: GBP6.9 billion). The results of our UK operations
include Investec`s 47.3% share of the post-tax profit of Rensburg
Sheppards plc.
Capital Markets
Capital Markets posted a decrease in operating profit of 24.3% to GBP43.2
million (2006: GBP57.1 million). The division`s advisory, structuring and
asset creation activities continued to perform well, notably in South
Africa, Australia and Ireland, with a number of mandates closed in Project
Finance, Resource Finance, Structured Finance and Equity Finance. Average
core advances increased 17.2% from GBP3.0 billion to GBP3.5 billion. The
current year`s figure includes GBP4.6 million pre-tax operating profit for
Kensington for the period 8 August 2007 to 30 September 2007 (further
information provided below).
The performance of the Capital Markets division was however, negatively
impacted by write downs of GBP36 million on US structured credit
investments held within the Principal Finance business, largely as a result
of recent rating agency downgrades on these portfolios. The on-balance
sheet value of the US portfolio is GBP81 million of which GBP33 million is
dependent on the performance of the US sub-prime market.
Investment Banking
Our Investment Banking division recorded a 45.1% increase in operating
profit to GBP51.9 million (2006: GBP35.8 million). The Private Equity and
Direct Investment divisions performed very well benefiting from dividends
received and an increase in the value of the underlying investments held.
The Agency business (comprising Corporate Finance and Institutional
Stockbroking) benefited from a stable deal pipeline and increased volumes.
Asset Management
Asset Management posted an increase in operating profit of 13.5% to GBP36.2
million (2006: GBP31.9 million) underpinned by the strong momentum of the
UK and international business and continued sound performance in Southern
Africa. Average assets under management increased by 5.9% to GBP30.8
billion (2006: GBP29.1 billion). Solid long term investment performance has
continued to support the fundamentals of the business.
Property Activities
Our Property Activities generated operating profit of GBP11.5 million
(2006: GBP6.3 million), an increase of 81.8%. The South African division
continued to perform well benefiting from higher average funds under
management, realisations and a solid contribution from our investment
property portfolio.
Group Services and Other Activities
Group Services and Other Activities posted an operating profit of GBP11.4
million (2006: loss of GBP9.1 million) as a result of a solid performance
from the Central Funding division which benefited from a strong increase in
net interest income largely as a result of increased cash holdings.
Further information on key developments within each of our business units
is provided in a detailed report published on our website
www.investec.com/grouplinks/investorrelations
Financial statements analysis
Operating income
Operating income increased by 21.0% to GBP635.5 million (2006: GBP525.0
million). Material movements in total operating income are analysed below.
Net interest income increased by 37.4% to GBP223.1 million (2006: GBP162.4
million) as a result of strong growth in average advances, the acquisition
of Kensington and a solid performance from the Central Funding division.
Net fees and commissions increased by 10.4% to GBP277.7 million (2006:
GBP251.6 million) benefiting from increased transactional activity and
higher average assets under management.
Income from principal transactions increased by 4.4% to GBP108.5 million
(2006: GBP103.9 million). Our Growth and Acquisition Finance, Property,
Private Equity and Direct Investments divisions delivered a strong
performance. This result was negatively impacted by the write downs on the
US structured credit investments mentioned above.
Operating income from associates increased by 48.8% to GBP6.4 million
(2006: GBP4.3 million). The current year`s figure includes Investec`s 47.3%
share of the post-tax profit of Rensburg Sheppards plc for the period 1
April 2007 to 30 September 2007.
Other operating income amounts to GBP28.1 million (2006: GBP10.0 million).
The operating results of two investments held within the Private Equity
portfolio have been consolidated with the respective income and expenses
largely reflected in other operating income and administration expenses.
These investments generated a net loss after tax and minority interest of
GBP1.6 million and have a combined net on-balance sheet carrying value of
GBP69 million. Any realisation of these investments in excess of their
carrying values will be recognised as income from principal transactions.
Impairment losses on loans and advances
Notwithstanding, the weaker credit cycle, we have not seen evidence of a
decline in the performance of our loan portfolios.The percentage of gross
default loans to core loans and advances has improved from 1.23% to 1.01%
since 31 March 2007. Total impairment coverage as a percentage of net
default loans (gross default loans net of security) remains highly
satisfactory at 137.3% (31 March 2007: 137.9%). These factors resulted in a
decrease in impairment losses on loans and advances of 53.6% from GBP8.2
million to GBP3.8 million (excluding Kensington).
Included in the current period`s figure of GBP11.7 million is an amount of
GBP7.9 million relating to Kensington. These impairments have been made in
the ordinary course of business, with asset quality improving as the
percentage of accounts greater than 90 days in arrears have decreased from
9.4% to 9.1% since 31 March 2007.
Administrative expenses and depreciation
Total expenses increased by 19.2% to GBP381.3 million (2006: GBP319.7
million). Variable remuneration decreased by 3.0% to GBP93.3 million.
Other operating expenses (excluding variable remuneration) increased by
28.8% to GBP288.0 million largely as a result of an increase in headcount
in certain of the businesses in line with our growth initiatives, an
increase in costs associated with complying with new and forthcoming
regulatory requirements, an investment in product development and IT
infrastructure, the consolidation of two private equity investments and the
acquisition of Kensington.
We achieved our target of operating expenses to total operating income of
less than 65% with the ratio improving from 60.0% to 58.9%.
Taxation
The operational effective tax rate of the group decreased from 28.3% to
25.0% as a result of certain income accruing in lower tax jurisdictions.
Earnings attributable to minority interests
Earnings attributable to minority interests of GBP9.7 million largely
comprise:
* GBP5.7 million in relation to investments held in the Private Equity
division.
* GBP3.6 million relating to the Euro denominated preferred securities
issued by a subsidiary of Investec plc which are reflected on the
balance sheet as part of minority interests. The transaction is hedged
and a forex translation gain arising on the hedge is reflected in
operating profit before goodwill, with the equal and opposite impact
reflected in earnings attributable to minorities.
Capital resources and total assets
Since 31 March 2007:
* Total shareholders` equity (including minority interests) increased by
18.4% to GBP2.2 billion largely as a result of the issue of GBP235
million of ordinary shares and increased retained earnings.
* Net asset value per share increased from 216.0 pence to 251.6 pence,
and net tangible asset value per share (which excludes goodwill and
intangible assets) increased from 178.6 pence to 197.1 pence.
* On balance sheet assets have increased by 32.3% to GBP34.8 billion,
principally as a result of a solid growth in loans and advances to
customers and the acquisition of Kensington.
The annualised return on adjusted average shareholders` equity
(inclusive of compulsorily convertible instruments) improved
marginally from 23.8% to 23.9% over the period; meeting our target of
greater than 20%.
Investec plc and Investec Limited have capital adequacy ratios well in
excess of the minimum regulatory requirements. The capital adequacy of
Investec plc (applying UK Financial Services Authority rules to its
capital base) is 17.7% (31 March 2007: 24.7%).
The decline since 31 March 2007 is largely as a result of an increase
in risk-weighted assets and the acquisition of Kensington. The capital
adequacy of Investec Limited (applying South African Reserve Bank
rules to its capital base) is 13.7% (31 March 2007: 14.7%). If the
Growthpoint transaction had been completed prior to 30 September 2007,
the capital adequacy ratio of Investec Limited would have been 14.7%.
Outlook
Overall, operating conditions remain mixed. The South African
businesses have made a good start to the second half and are expected
to perform well for the remainder of the year. Our Australian
operations continue to perform in line with expectations, while we
anticipate that UK activity levels will be affected by difficult
credit market conditions. Despite volatile markets, we expect to
benefit from our geographic spread and product diversity in the second
half.
On behalf of the boards of Investec plc and Investec Limited
Hugh Herman Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
15 November 2007
Notes to the commentary section above
* Presentation of financial information
Investec operates under a Dual Listed Companies (DLC) structure with
primary listings of Investec plc on the London Stock Exchange and
Investec Limited on the JSE Limited.
In terms of the contracts constituting the DLC structure, Investec plc
and Investec Limited effectively form a single economic enterprise in
which the economic and voting rights of ordinary shareholders of the
companies are maintained in equilibrium relative to each other. The
directors of the two companies consider that for financial reporting
purposes, the fairest presentation is achieved by combining the
results and financial position of both companies.
Accordingly, the interim results for Investec plc and Investec Limited
present the results and financial position of the combined DLC group
under IFRS, denominated in Pounds Sterling. In the commentary above,
all references to Investec or the group relate to the combined DLC
group comprising Investec plc and Investec Limited.
Unless the context indicates otherwise, all comparatives included in
the commentary above relate to the six months ended 30 September 2006.
Average balances are based on the period 1 April 2006 to 30 September
2006 and 1 April 2007 to 30 September 2007.
* Foreign currency impact
Our reporting currency is Pounds Sterling. Certain of our operations
are conducted by entities outside the UK. The results of operations
and the financial condition of our individual companies are reported
in the local currencies in which they are domiciled, including Rands,
Australian Dollars, Euros and US Dollars. These results are then
translated into Pounds Sterling at the applicable foreign currency
exchange rates for inclusion in our combined consolidated financial
statements. In the case of the income statement, the weighted average
rate for the relevant period is applied and, in the case of the
balance sheet, the relevant closing rate is used.
The following table sets out the movements in certain relevant exchange
rates against Pounds Sterling over the period:
30 Sept 2007 31 March 2007 30 Sept 2006
Period Period Period
Currency per end Average end Average end Average
GBP1.00
South 13.98 14.21 14.20 13.38 14.49 12.66
African Rand
Australian 2.30 2.39 2.42 2.47 2.50 2.46
Dollar
Euro 1.43 1.47 1.47 1.47 1.47 1.46
US Dollar 2.04 2.01 1.96 1.90 1.87 1.85
Exchange rates between local currencies and Pounds Sterling have fluctuated
over the period. The most significant impact arises from the
depreciation/appreciation of the Rand. The average exchange rate over the
period has depreciated by 12.2% and the closing rate has appreciated by
1.6% since 30 September 2006.
* Accounting policies and disclosures
The interim results are prepared in accordance with the recognition
and measurement requirements of International Financial Reporting
Standards and the presentation and disclosure requirements of IAS 34,
Interim Financial Reporting. The accounting policies applied in the
preparation of the results for the six months ended 30 September 2007
are consistent with those adopted in the financial statements for the
year ended 31 March 2007.
Securitised assets and related liabilities disclosure
Securitised assets and related liabilities, which continue to be
recognised on balance sheet, are now disclosed as separate line items
on the face of the balance sheet. In prior periods, securitised assets
were included within loans and advances to customers and trading
securities and securitised liabilities were included in debt
securities in issue. This change in disclosure follows the acquisition
of Kensington which resulted in a significant increase in these assets
and liabilities, rendering it more appropriate to disclose these
financial instruments on separate lines to provide information more
relevant and useful to users.
* Acquisition of Kensington
As outlined in the announcement released on 30 May 2007, Investec plc
made an offer to purchase the entire issued share capital of
Kensington. All requisite approvals for this offer were received. The
effective date of the acquisition is 8 August 2007. In terms of the
offer each Kensington shareholder has received 0.7 Investec plc shares
plus a special dividend of 26 pence (paid by Kensington) for each
Kensington share held. The acquisition was satisfied by the issue of
37,449,550 Investec plc shares at 587.5 pence per share. The purchase
consideration has been provisionally allocated between net assets at
acquisition and goodwill. The businesses of Kensington now form part
of Investec`s Capital Markets division. Net assets at the date of
acquisition, total consideration paid and goodwill arising on the
transaction are disclosed in the table below.
GBP`million GBP`million
Value of Investec plc shares issued
(37,449,550 shares at 587.5 pence) 220.0
Acquisition costs 3.8
Kensington net assets at 160.2
acquisition
Less: special dividend (13.6)
Less: fair value adjustments (43.5)
103.1
Goodwill arising on acquisition 120.7
* Challenging credit market conditions have resulted in a significant
restructuring of the business in order to maintain a robust business
model that can respond quickly when market conditions change.
Restructuring efforts include:
* Reduction of overheads
* Tightening of lending criteria
* Appropriate pricing for current market conditions
* Developments include:
* Adverse business volumes have decreased significantly since 30
September 2007.
* Forward flow agreements are still operative and the majority of
warehouse facilities have been renewed or are in the process of being
renewed.
* Further efficiencies to be gained through increased automation across
the operating model.
* Since 31 March 2007:
* Asset quality has improved, as discussed under "impairment losses on
loans and advances" in the section above
* Mortgages under management have decreased from GBP6.9 billion to
GBP6.6 billion
* The weighted average current LTV has improved from 70.5% to 68.3%
* Post balance sheet events
As outlined in the announcement released on 30 May 2007, Investec Property
Group Limited ("IPG") agreed to dispose of its property fund management
business and its property administration business, as a going concern to
Growthpoint Properties Limited ("Growthpoint") ("the transaction"). This
transaction was approved by the Competition Tribunal of South Africa on 18
October 2007. IPG is a wholly owned subsidiary of Investec Limited. The
purchase consideration has been satisfied by the issue of 86,878,057 new
Growthpoint linked units, at a price of 1568 cents per linked unit, on 1
November 2007. A pre-tax gain of R1 030 million was made on the sale of
these businesses.
Furthermore, as announced on 6 November 2007 Investec disposed of
152,473,544 Growthpoint linked units, representing its entire shareholding
in Growthpoint, inter alia monetising the proceeds on the disposal of the
property administration and property fund management businesses mentioned
above. The effect on the earnings, net assets and tangible net assets of
Investec as a result of the transaction is not significant, as set out in
the JSE Listing Requirements. The proceeds of the transaction will be used
to enhance the capital structure of Investec Limited group.
* Proviso
Please note that matters discussed in this announcement may contain
forward looking statements which are subject to various risks and
uncertainties and other factors, including, but not limited to:
* the further development of standards and interpretations under
International Financial Reporting Standards (IFRS) applicable to past,
current and future periods, evolving practices with regard to the
interpretation and application of standards under IFRS.
* domestic and global economic and business conditions.
* market related risks.
A number of these factors are beyond the group`s control.
These factors may cause the group`s actual future results, performance or
achievements in the markets in which it operates to differ from those
expressed or implied.
Any forward looking statements made are based on the knowledge of the group
at today`s date.
The information in this announcement for six months to 30 September 2007,
which was approved by the board of directors on 14 November 2007, does not
constitute statutory accounts as defined in Section 240 of the UK Companies
Act 1985 ("Act"). Statutory accounts for the year ended 31 March 2007,
which contained an unqualified audit report under Section 235 of the Act
and which did not contain statements under Section 237 of the Act, have
been delivered to the Registrar of Companies in accordance with Section 242
of the Act.
Ordinary dividend announcements
Investec plc
Notice is hereby given that an interim dividend (No. 11) of 11.5 pence per
ordinary share has been declared by the board in respect of the six months
ended 30 September 2007.
Shareholders in Investec plc will receive a distribution of 11.5 pence
(2006: 10 pence) per ordinary share, which will be paid as follows:
* for non-South African resident Investec plc shareholders, through a
dividend paid by Investec plc of 11.5 pence per ordinary share.
* for South African resident shareholders of Investec plc, through a
dividend payment by Investec plc of 6.0 pence per ordinary share and
through a dividend paid, on the SA DAS share equivalent to 5.5 pence
per ordinary share.
The relevant dates for the payment of the dividends are:
Last day to trade cum-dividend
- On the London Stock Exchange Tuesday, 11 December 2007
- On the JSE Friday, 7 December 2007
Shares commence trading ex-dividend
- On the London Stock Exchange Wednesday, 12 December 2007
- On the JSE Monday, 10 December 2007
Record date
- On the London Stock Exchange Friday, 14 December 2007
- On the JSE Friday, 14 December 2007
Payment date
- On the London Stock Exchange Friday, 21 December 2007
- On the JSE Friday, 21 December 2007
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Monday, 10 December 2007 and
Friday, 14 December 2007, both dates inclusive, nor may transfers between
the UK and SA registers take place between Monday, 10 December 2007 and
Friday, 14 December 2007, both dates inclusive.
Shareholders registered on the South African register are advised that the
total distribution of 11.5 pence, equivalent to 159.5 cents per share, has
been arrived at using the Rand/Pound Sterling average buy/sell forward
rate, as determined at 11h00 (SA time) on 14 November 2007.
By order of the board
D Miller
Company Secretary
15 November 2007
Investec Limited
Notice is hereby given that an interim dividend (No. 104) of 159.5 cents
(2006: 138 cents) per ordinary share has been declared by the board in
respect of the six months ended 30 September 2007.
The dividend is payable to shareholders recorded in the members` register
of the company at the close of business on Friday, 14 December 2007.
The relevant dates for the payment of the dividend are:
Last day to trade cum-dividend Friday, 7 December 2007
Shares commence trading ex-dividend Monday, 10 December 2007
Record date Friday, 14 December 2007
Payment date Friday, 21 December 2007
The interim dividend of 159.5 cents per ordinary share has been determined
by converting the Investec plc distribution of 11.5 pence per ordinary
share into Rands using the Rand/Pound Sterling average buy/sell forward
rate at 11h00 (SA time) on 14 November 2007.
Share certificates may not be dematerialised or rematerialised between
Monday, 10 December 2007 and Friday, 14 December 2007, both dates
inclusive.
By order of the board
B Coetsee
Company Secretary
15 November 2007
Non-redeemable non-cumulative non-participating preference shares dividend
announcements
Investec plc
Share Code: INPP
ISIN: GB00B19RX541
Declaration of dividend number 3
Notice is hereby given that preference dividend number 3 amounting to 32.93
pence per share has been declared for the period 1 April 2007 to 30
September 2007. The dividend is payable to holders of the non-redeemable
non-cumulative non-participating preference shares as recorded in books of
the company at the close of business on Friday, 30 November 2007.
For shares trading on the JSE, the dividend of 32.93 pence per share is
equivalent to 456.12 cents per share, which has been determined using the
Rand/Pound Sterling average buy/sell forward rate as at 11h00 (SA Time) on
Wednesday,14 November 2007.
The relevant dates relating to the payment of dividend number 3 are as
follows:
Last day to trade cum-dividend:
On the JSE Friday, 23 November 2007
On the CISX
