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INLP - Investec Bank - Reviewed Preliminary Condensed Consolidated Financial
Results For The Year Ended 31 March 2008
Investec Bank Limited
Share code: ZAE000048393
Share code: INLP
(Registration number 1969/004763/06)
Reviewed preliminary condensed consolidated financial results for the year ended
31 March 2008
Consolidated income statement For the year ended 31 March
Reviewed Audited
R` million 2008 2007
Interest income 15,731 10,339
Interest expense (12,216) (7,785)
Net interest income 3,515 2,554
Fee and commission income 1,084 910
Fee and commission expense (30) (46)
Principal transactions 1,202 1,000
Operating loss from associates (1) (10)
Other income 2,255 1,854
Total operating income 5,770 4,408
Impairment losses on loans and advances (466) (122)
Operating income 5,304 4,286
Administrative expenses (2,713) (2,150)
Depreciation and amortisation of property, (69) (51)
equipment and intangibles
Operating profit 2,522 2,085
(Loss)/profit on disposal of group entities (38) 39
Profit before taxation 2,484 2,124
Taxation (686) (572)
Profit after taxation 1,798 1,552
Earnings attributable to minority interests - 3
Earnings attributable to shareholders 1,798 1,549
1,798 1,552
Headline earnings
Earnings attributable to shareholders 1,798 1,549
Preference dividends paid (142) (121)
Earnings attributable to ordinary shareholders 1,656 1,428
Headline adjustments 38 (39)
Loss/(profit) on disposal of group entities 38 (39)
Headline earnings attributable to ordinary 1,694 1,389
shareholders
Consolidated balance sheet At 31 March
Reviewed Audited
R` million 2008 2007*
Assets
Cash and balances at central banks 2,811 851
Loans and advances to banks 14,418 20,141
Cash equivalent advances to customers 7,782 7,214
Reverse repurchase agreements and cash 5,752 2,916
collateral on securities borrowed
Trading securities 17,913 13,472
Derivative financial instruments 9,668 5,693
Investment securities 350 29
Loans and advances to customers 95,021 69,174
Securitised assets 6,275 11,807
Interest in associated undertakings 195 221
Deferred taxation assets 285 263
Other assets 1,056 1,062
Property and equipment 144 104
Investment properties 5 3
Intangible assets 75 61
Loans to group companies 5,812 9,753
167,562 142,764
Liabilities
Deposits by banks 9,427 12,959
Derivative financial instruments 10,152 5,576
Other trading liabilities 266 255
Repurchase agreements and cash collateral on 1,533 2,378
securities lent
Customer accounts 115,654 91,035
Debt securities in issue 2,524 1,343
Liabilities arising on securitisation 5,637 11,735
Current taxation liabilities 697 307
Deferred taxation liabilities 323 284
Other liabilities 3,679 3,770
149,892 129,642
Subordinated liabilities (including 4,710 3,066
convertible debt)
154,602 132,708
Equity
Ordinary share capital 19 16
Share premium 6,786 4,732
Equity portion of convertible debentures 22 229
Perpetual preference shares 1,491 1,491
Other reserves 911 738
Retained income 3,731 2,850
Total equity 12,960 10,056
Total liabilities and equity 167,562 142,764
Condensed consolidated statement of changes in equity For the year ended 31
March
Reviewed Audited
R` million 2008 2007
Balance at the beginning of the year 10,056 8,812
Foreign currency adjustments 1 12
Earnings for the year attributable to 1,798 1,549
shareholders
Earnings for the year attributable to minority - 3
interests
Dividends paid to ordinary shareholders (650) (190)
Dividends paid to perpetual preference (142) (121)
shareholders
Issue of shares 2,057 -
Redemption of compulsory convertible (207) -
debentures
Fair value gain on available for sale assets 47 2
Decrease in minorities on disposals - (5)
Dividends paid to minorities - (6)
Balance at the end of the year 12,960 10,056
Condensed consolidated cash flow statement For the year ended 31 March
Reviewed Audited
R` million 2008 2007*
Net cash inflow from operating activities 2,792 1,606
Net cash outflow from banking activities (3,017) (724)
Net cash outflow from investing activities (99) (284)
Net cash inflow/(outflow) from financing 2,678 (317)
activities
Net increase in cash and cash equivalents 2,354 281
Cash and cash equivalents at the beginning of 7,960 7,679
the year
Cash and cash equivalents at the end of the 10,314 7,960
year
Cash and cash equivalents are 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).
* Comparative figures have been reclassified to conform to changes in
presentation in the current year.
Condensed consolidated segmental information
For the year ended 31 March 2008
Reviewed Private
Client Capital Investment
R` million Activities Markets Banking Other Total
Operating 2,139 1,780 542 843 5,304
income
Operating (1,322) (849) (217) (394) (2,782)
expenses
Operating 817 931 325 449 2,522
profit
Cost to income 57.8% 41.5% 38.6% 45.2% 48.2%
ratio (%)
For the year ended 31 March 2007
Audited Private
Client Capital Investment
R` million Activities Markets Banking Other Total
Operating 1,550 1,448 584 704 4,286
income
Operating (995) (608) (204) (394) (2,201)
expenses
Operating 555 840 380 310 2,085
profit
Cost to income 61.7% 40.3% 34.9% 56.2% 49.9%
ratio (%)
These preliminary condensed consolidated financial results are published to
provide information to holders of Investec Bank Limited`s listed non-redeemable,
non-cumulative, non-participating preference shares.
Commentary
Overview of results
We are pleased to announce that Investec Bank Limited, a subsidiary of Investec
Limited, posted an increase in headline earnings attributable to ordinary
shareholders of 22.0% from R1,389 million to R1,694 million. For full
information on the Investec group results, refer to the combined results of
Investec plc and Investec Limited.
Business unit review
Unless the context indicates otherwise, all comparatives referred to in the
business unit review relate to the year ended 31 March 2007. Operating profit is
before taxation and headline adjustments.
Salient operational features of the year under review include:
The Private Client Activities division posted an increase of 47.2% in
operating profit to R817 million (2007: R555 million). Strong earnings from
lending continued to drive profitability. The division benefited from increased
distribution capacity and greater penetration across all areas of
specialisation, most notably Wealth Management and Growth and Acquisition
Finance. The private client core lending book grew by 19.4% to R66.6 billion
(2007: R55.8 billion) and the division increased its retail deposit book by
36.6% to R35.9 billion (2007: R26.3 billion). Funds under advice grew 42.6% to
R25.8 billion (2007: R18.1 billion).
The Capital Markets division posted operating profit of R931 million (2007:
R840 million), an increase of 10.8%. Growth was underpinned by a good
performance from the division`s advisory, structuring, asset creation and
distribution activities. The division`s lending book has grown by 20.5% to R25.9
billion (2007: R21.5 billion).
Operating profit of the Investment Banking division decreased by 14.5% to R325
million (2007: R380 million). The Corporate Finance division had a stable
pipeline, however large fees on a few transactions earned in the prior year were
not repeated. The unlisted investments held within the Direct Investment and
Private Equity portfolios continued to perform well. Results were however,
impacted by a weaker performance from some of the listed investments.
Other Activities posted a 44.8% increase in operating profit to R449 million
(2007: R310 million) largely as a result of a strong increase in net interest
income and a solid performance from some of the investments within the central
funding portfolio.
Basis of preparation
The preliminary condensed consolidated financial statements of Investec Bank
Limited ("the Bank") as at and for the year ended 31 March 2008 comprise the
Bank and its subsidiaries ("the Group").
The Bank`s principal accounting policies have been applied consistently over the
current and prior financial years. During the year the Bank has adopted IFRS 7,
Financial Instruments: Disclosure and IAS 1, Presentation of Financial
Statements - Capital Disclosures (amendment). The adoption of IFRS 7 and the
amendment to IAS 1 impacted the type and amount of disclosures made in the
financial statements, but had no impact on the reported profit or financial
position of the Bank.
These preliminary condensed consolidated financial statements have been prepared
in terms of the recognition and measurement criteria of International Financial
Reporting Standards, and the presentation and disclosure requirements of IAS 34,
Interim Financial Reporting.
Comparative figures
Comparative figures have been reclassified to conform to changes in presentation
in the current year. These are further described below:
Securitised assets and liabilities arising on securitisation
Securitised assets and related liabilities, which continue to be recognised on
the 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 liabilities arising on
securitisation were included in debt securities in issue. This change in
disclosure is to provide more relevant and useful information to users.
IFRS 7, Financial Instruments: Disclosure
Following the implementation and adoption of IFRS 7, the classification of
certain financial instruments into balance sheet classes were refined to achieve
more appropriate disclosure. A reclassification to the prior year balance sheet
of R17.9 billion reclassified from debt securities in issue to customer
accounts.
Cash flow statement reclassifications
In order to more appropriately present the cash flow information, the following
reclassifications were made to the prior year cash flow statement:
Dividends paid of R311 million have been reclassified from operating
activities to financing activities as they are seen to be a cost of obtaining
financial resources; and
Cash flows relating to amounts due from group companies of R3.25 billion have
been reclassified from financing activities to banking activities as this better
reflects the nature of these amounts.
Total assets, total liabilities, and amounts recognised in the income statement
and equity were not affected by these reclassifications.
On behalf of the Board of Investec Bank Limited
Fani Titi Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
15 May 2008
Review conclusion
KPMG Inc. and Ernst & Young Inc, the Group`s independent auditors, have reviewed
the preliminary condensed consolidated financial statements, and have issued an
unmodified review conclusion on the preliminary condensed consolidated financial
statements, which is available for inspection at the company`s registered
office.
Non-redeemable non-cumulative non-participating preference shares
Declaration of dividend number 10
Notice is hereby given that preference dividend number 10 amounting to 537.23
cents per share has been declared for the period 1 October 2007 to 31 March
2008. The dividend is payable to holders of the non-redeemable non-cumulative
non-participating preference shares as recorded in the books of the company at
the close of business on Friday 20 June 2008.
The relevant dates for the payment of dividend number 10 are as follows:
Last day to trade cum-dividend Thursday, 12 June 2008
Shares commence trading ex-dividend Friday, 13 June 2008
Record date Friday, 20 June 2008
Payment date Thursday, 3 July 2008
Share certificates may not be dematerialised or rematerialised between Friday,
13 June 2008 and Friday, 20 June 2008, both dates inclusive.
By order of the board
B Coetsee
Company Secretary
Sandton
15 May 2008
Registered office
100 Grayston Drive
Sandown
Sandton
2196
Transfer secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg 2001
Directors: F Titi (Chairman), D M Lawrence* (Deputy Chairman),
S Koseff* (Chief Executive), B Kantor* (Managing Director), S E Abrahams, G R
Burger*,
M P Malungani, K X T Socikwa, B Tapnack*, P R S Thomas, C B Tshili.
*Executive
DE Jowell retired as a board member with effect from 30 September 2007.
Company Secretary: B Coetsee
Date: 15/05/2008 08:01:07 Produced by the JSE SENS Department.
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