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INP / INL - Investec - Unaudited consolidated financial results in Pounds
Sterling for the six months to 30 September 2008 and dividend declaration
Investec plc Investec Limited
(Registration number (Registration number
3633621) 1925/002833/06)
JSE Code: INP JSE Code: INL
ISIN: GB00B17BBQ50 ISIN: ZAE000081949
Registered office Registered office
2 Gresham Street 100 Grayston Drive
London, EC2V 7QP Sandown
United Kingdom Sandton 2196
Transfer secretaries Transfer secretaries
Computershare Investor Computershare Investor
Services (Pty) Ltd Services (Pty) Ltd
70 Marshall Street 70 Marshall Street
Johannesburg, 2001 Johannesburg, 2001
Company secretary: D Miller+ Company secretary: B Coetsee
Investec plc and Investec Limited (combined results)
Unaudited consolidated financial results in Pounds Sterling for the six months
to 30 September 2008
Salient Features
30 Sept. 30 Sept. % 31 March
2008 2007 Change 2008
Operating profit before 241,758 244,535 (1.1%) 508,717
goodwill, non-operating
items, taxation and after
minorities (GBP`000)
Adjusted earnings before 165,632 160,858 3.0% 344,695
goodwill and non-
operating items (GBP`000)
Adjusted earnings per 26.3 27.3 (3.7%) 56.9
share (before goodwill
and non-operating items)
(pence)
Earnings attributable to 189,504 182,624 3.8% 391,558
shareholders (GBP`000)
Earnings per share 25.6 26.9 (4.8%) 57.7
(pence)
Headline earnings per 25.4 25.8 (1.6%) 49.7
share (pence)
Dividends per share 8.0 11.5 (30.4%) 25.0
(pence)
Dividends per share 128.0 159.5 (19.8%) 361.5
(cents)
Combined consolidated income statement
6 months to 6 months to Year to
30 Sept. 30 Sept. 31 March
GBP`000 2008 2007 2008
Interest income 1,335,403 789,780 2,083,380
Interest expense (991,775) (566,678) (1,499,960)
Net interest income 343,628 223,102 583,420
Fee and commission income 332,610 312,940 614,357
Fee and commission expense (30,822) (35,238) (63,061)
Principal transactions 82,298 108,492 276,705
Operating income from 7,724 6,369 12,138
associates
Investment income on assurance 26,682 57,375 89,593
activities
Premiums and reinsurance 13,106 29,446 40,849
recoveries on insurance
contracts
Other operating (loss)/income (13,744) 28,142 50,043
Other income 417,854 507,526 1,020,624
Claims and reinsurance premiums (37,753) (83,375) (120,358)
on insurance business
Total operating income net of 723,729 647,253 1,483,686
insurance claims
Impairment losses on loans and (76,780) (11,738) (114,185)
advances
Operating income 646,949 635,515 1,369,501
Administrative expenses (405,480) (371,245) (807,500)
Depreciation and amortisation (14,439) (10,019) (24,330)
of property, equipment and
software
Operating profit before 227,030 254,251 537,671
goodwill
Goodwill - - (62,765)
Operating profit 227,030 254,251 474,906
Profit on disposal of group - - 72,855
operations
Profit before taxation 227,030 254,251 547,761
Taxation (52,254) (61,911) (127,249)
Profit after taxation 174,776 192,340 420,512
Earnings attributable to (14,728) 9,716 28,954
minority interests
Earnings attributable to 189,504 182,624 391,558
shareholders
174,776 192,340 420,512
Earnings attributable to 189,504 182,624 391,558
shareholders
Goodwill - - 62,765
Profit on disposal of group - - (64,345)
operations
Preference dividends paid (28 749) (24,217) (41,779)
Additional earnings 4,877 2,451 (3,504)
attributable to other equity
holders
Adjusted earnings before 165,632 160,858 344,695
goodwill and non-operating
items
Adjustments to derive headline (6,000) (9,175) (43,196)
earnings
Headline earnings 159,632 151,683 301,499
Earnings per share (pence)
- basic 25.6 26.9 57.7
- diluted 24.5 24.8 54.0
Adjusted earnings per share
(pence)
- basic 26.3 27.3 56.9
- diluted 25.2 25.2 53.2
Headline earnings per share
(pence)
- basic 25.4 25.8 49.7
- diluted 24.3 23.8 46.6
Dividends per share 8.0 11.5 25.0
Number of weighted average 629.0 589.0 606.2
shares
- basic (millions)
Combined consolidated cash flow statement
6 months to 6 months to Year to
30 Sept. 30 Sept. 31 March
GBP`000 2008 2007 2008
Cash inflows from operations 284,850 253,562 610,450
Increase in operating assets (1,163,368) (106,769) (655,805)
Increase in operating 666,641 319,089 1,080,433
liabilities
Net cash (outflow)/inflow (211,877) 465,882 1,035,078
from operating activities
Net cash outflow from (22,981) (27,054) (65,642)
investing activities
Net cash outflow from (83,206) (93,696) (54,893)
financing activities
Effects of exchange rate 53,136 24,999 (97,791)
changes on cash and cash
equivalents
Net (decrease)/increase in (264,928) 370,131 816,752
cash and cash equivalents
Cash and cash equivalents at 1,951,876 1,135,124 1,135,124
the beginning of the period
Cash and cash equivalents at 1,686,948 1,505,255 1,951,876
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 2008 2008 2007
Assets
Cash and balances at central banks 410,744 788,472 163,515
Loans and advances to banks 2,574,796 2,153,773 2,349,889
Cash equivalent advances to 484,996 504,382 686,623
customers
Reverse repurchase agreements and 1,124,368 794,153 1,172,429
cash collateral on securities
borrowed
Trading securities 2,134,927 1,984,580 2,029,407
Derivative financial instruments 1,261,730 1,305,264 872,115
Investment securities 809,348 1,130,872 1,940,166
Loans and advances to customers 13,882,520 12,249,759 11,298,193
Loans and advances to customers - 1,697,373 1,796,376 1,757,422
Kensington warehouse assets
Securitised assets 5,547,412 6,082,975 6,664,984
Interest in associated 87,045 82,576 77,412
undertakings
Deferred taxation assets 87,259 84,493 69,767
Other assets 1,001,754 882,209 991,610
Property and equipment 150,468 141,352 134,235
Investment properties 161,207 134,975 98,081
Goodwill 273,928 271,932 317,137
Intangible assets 31,584 31,506 38,947
31,721,459 30,419,649 30,661,932
Other financial instruments at
fair value through income in
respect of
- liabilities to customers 3,308,208 2,878,894 3,159,979
- assets related to reinsurance 909,121 805,009 974,189
contracts
35,938,788 34,103,552 34,796,100
Liabilities
Deposits by banks 3,703,112 3,489,032 2,943,203
Deposits by banks - Kensington 1,389,603 1,778,438 1,641,177
warehouse funding
Derivative financial instruments 862,124 881,577 680,389
Other trading liabilities 451,856 450,580 357,781
Repurchase agreements and cash 1,165,651 382,384 561,469
collateral on securities lent
Customer accounts 12,898,703 12,133,120 12,315,991
Debt securities in issue 875,818 777,769 1,138,820
Liabilities arising on 5,371,746 5,760,208 6,358,378
securitisation
Current taxation liabilities 125,561 132,657 108,975
Deferred taxation liabilities 98,233 79,172 64,493
Other liabilities 1,308,836 1,279,372 1,348,016
Pension fund liabilities - - 1,200
28,251,243 27,144,309 27,519,892
Liabilities to customers under 3,288,073 2,862,916 3,138,415
investment contracts
Insurance liabilities, including 20,135 15,978 21,564
unit-linked liabilities
Reinsured liabilities 909,121 805,009 974,189
32,468,572 30,828,212 31,654,060
Subordinated liabilities 1,110,783 1,065,321 984,146
(including convertible debt)
33,579,355 31,893,533 32,638,206
Equity
Called up share capital 177 177 176
Share premium 1,399,993 1,360,450 1,356,826
Treasury shares (126,955) (114,904) (120,538)
Equity portion of convertible - 2,191 2,191
instruments
Perpetual preference shares 283,668 272,335 294,698
Other reserves (66,665) (42,057) 44,359
Profit and loss account 574,250 433,012 280,159
Shareholders` equity excluding 2,064,468 1,911,204 1,857,871
minority interests
Minority interests 294,965 298,815 300,023
- Perpetual preferred securities 257,134 251,637 246,272
issued by subsidiaries
- Minority interests in partially 37,831 47,178 53,751
held subsidiaries
Total equity 2,359,433 2,210,019 2,157,894
Total liabilities and equity 35,938,788 34,103,552 34,796,100
A geographical breakdown of business operating profit for the 6 months to 30
September 2008
United
Kingdom
Southern and Other Total
GBP`000 Africa Europe Australia Geographies group
Private Banking 22,614 35,080 5,532 - 63,226
Private Client
Portfolio
Management and 6,549 6,579 - - 13,128
Stockbroking
Capital Markets 31,212 39,488 1,430 - 72,130
Investment Banking 29,402 1,199 (2,045) - 28,556
Asset Management 22,495 11,189 - - 33,684
Property Activities 11,173 (363) 334 - 11,144
Group Services and 34,199 (18,287) 3,978 - 19,890
Other
Operating profit after 157,644 74,885 9,229 - 241,758
minorities
Minority interest (14,728)
Operating profit 227,030
A geographical breakdown of business operating profit for the 6 months to 30
September 2007
United
Kingdom
Southern and Other Total
GBP`000 Africa Europe Australia Geographies group
Private Banking 22,878 51,778 11,038 - 85,694
Private Client
Portfolio
Management and 8,369 5,998 - - 14,367
Stockbroking
Capital Markets 32,093 5,939 4,667 - 42,699
Investment 35,876 4,769 4,450 - 45,095
Banking
Asset 24,330 11,873 - - 36,203
Management
Property 11,959 (337) (136) - 11,486
Activities
Group Services 17,491 (9,548) 1,012 36 8,991
and Other
Operating 152,996 70,472 21,031 36 244,535
profit after
minorities
Minority 9,716
interest
Operating 254,251
profit
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 2008 2007 2008
Profit after taxation 174,776 192,340 420,512
Fair value movements on 342 (16,279) (38,907)
available for sale assets
Foreign currency movements 64,474 19,978 (79,591)
Pension fund actuarial gains - - 7,619
Total recognised income and 239,592 196,039 309,633
expenses
Total recognised income and (4,022) 14,563 17,365
expenses attributable to
minority shareholders
Total recognised income and 203,532 154,734 270,327
expenses attributable to
ordinary shareholders
Total recognised income and 40,082 26,742 21,941
expenses attributable to
perpetual preferred
securities
239,592 196,039 309,633
Summarised consolidated statement of changes in equity
6 months to 6 months to Year to
30 Sept. 30 Sept. 31 March
GBP`000 2008 2007 2008
Balance at the beginning of the 2,210,019 1,820,416 1,820,416
period
Foreign currency adjustments 64,474 19, 978 (79,591)
Retained profit for the period 189,504 182,624 391,558
attributable to ordinary
shareholders
Retained (loss)/profit for the (14,728) 9,716 28,954
period attributable to minority
interests
Fair value movements on available 342 (16,279) (38,907)
for sale assets
Transfer to pension fund deficit - - 7,619
Total recognised gains and losses 239,592 196,039 309,633
for the period
Share based payments adjustments 21,857 16,638 39,182
Dividends paid to ordinary (89,092) (74,226) (145,926)
shareholders
Dividends paid to minority (28,749) (24,217) (41,779)
shareholders
Issue of ordinary shares 22,162 235,085 230,664
Share issue expenses - (65) (65)
Movement of treasury shares (12,051) (19,305) (5,625)
Cash flow hedge movements (4,477) - -
Issue of equity instruments by - 7,529 6,777
subsidiaries
Dividends and capital reductions - - (3,923)
paid to minorities
Movement of minorities on 172 - 665
disposals and acquisitions
Balance at the end of the period 2,359,433 2,157,894 2,210,019
Commentary
Investec plc and Investec Limited (combined results)
Unaudited consolidated financial results in Pounds Sterling for the six months
ended 30 September 2008.
Overall performance
The Investec group reports results for the six months ended 30 September 2008
which are stable and consistent with the same period in the previous year. The
group`s strategy of maintaining a solid recurring revenue base; geographical and
operational diversity; and strict management of liquidity and risk has enabled
it to navigate through the present challenging operating environment. The
conditions have however, negatively impacted activity levels and credit loss
ratios, resulting in a 3.7% decline in adjusted earnings per share (EPS) before
goodwill and non-operating items to 26.3 pence (2007: 27.3 pence).
The main features of the period under review are:
- Operating profit before goodwill, non-operating items and taxation and after
minorities ("operating profit") decreased 1.1% to GBP241.8 million (2007:
GBP244.5 million).
- Operating profit before impairment losses on loans and advances increased
24.3% to GBP318.5 million (2007: GBP256.3 million).
- Adjusted earnings attributable to shareholders before goodwill and non-
operating items increased 3.0% to GBP165.6 million (2007: GBP160.9 million).
- Earnings attributable to shareholders after goodwill and non-operating items
increased 3.8% to GBP189.5 million (2007: GBP182.6 million).
- The UK and South African operations posted increases in operating profit of
6.3% and 3.0%, respectively. The Australian operations recorded operating profit
56.1% behind the prior period. The group remains geographically diversified with
the UK and Australian operations contributing 34.8% (2007: 37.4%) of total
operating profit.
- Recurring income as a percentage of total operating income amounts to 74.3%
(2007: 62.7%).
- Annualised return on adjusted average shareholders` equity decreased to 19.3%
(2007: 23.9%).
- Net asset value per share increased to 279.4 pence (31 March 2008: 260.6
pence) and net tangible asset value per share (which excludes goodwill and
intangible assets) increased to 233.2 pence (31 March 2008: 215.0 pence).
- The ratio of total operating expenses to total operating income improved to
58.0% (2007: 58.9%).
- Core loans and advances to customers increased 13.4% to GBP14.6 billion (31
March 2008: GBP12.8 billion) with gross defaults (pre collateral) as a
percentage of core loans and advances increasing to 2.5% (2007:1.7%).
- Third party assets under management increased 1.4% to GBP53.5 billion (31
March 2008: GBP52.8 billion).
- Customer accounts (deposits) increased 6.3% to GBP12.9 billion (31 March 2008:
GBP12.1 billion).
- The board declared a dividend of 8.0 pence per ordinary share (2007: 11.5
pence). Given the challenging operating environment the board has deemed it
prudent to increase the upper end of the dividend cover range from 2.3 to 3.5
times.
Business unit review
Private Client Activities
Private Client Activities, comprising Private Bank and Private Client Portfolio
Management and Stockbroking divisions, reported a decline in operating profit of
23.7% to GBP76.4 million (2007: GBP100.1 million).
- Private Banking
Operating profit from the Private Banking division decreased by 26.2% to GBP63.2
million. (2007: GBP85.7 million). Higher average advances and a diversified set
of revenues supported a 9.9% increase in operating income. The South African
business performed well whilst the UK and Australia experienced lower levels of
activity. Impairment losses on loans and advances have increased in all
geographies as a result of the weaker credit environment. The private client
core lending book grew by 11.0% to GBP9.9 billion (31 March 2008: GBP8.9
billion) and the division increased its retail deposit book by 1.5% to GBP6.7
billion (31 March 2008: GBP6.6 billion). Funds under advice decreased 2.1% to
GBP3.6 billion (31 March 2008: GBP3.7 billion).
- Private Client Portfolio Management and Stockbroking
Private Client Portfolio Management and Stockbroking reported a decrease in
operating profit of 8.6% to GBP13.1 million (2007: GBP14.4 million). The Private
Client business in South Africa was negatively impacted by lower market volumes
and the absence of performance fees on alternative investments. Funds under
management, expressed in Rands, decreased by 8.1% to R103.6 billion (31 March
2008: R112.7 billion). The results of the UK operations include Investec`s 47.3%
share of the directors` estimate of the post-tax profit of Rensburg Sheppards
plc.
Capital Markets
Capital Markets reported an increase in operating profit of 68.9% to GBP72.1
million (2007: GBP42.7 million). The division`s advisory and structuring
activities continued to perform well. The results of the Principal Finance
division improved substantially as current year write downs on US structured
credit investments of GBP8.3 million were significantly less than the prior
period of GBP36 million. Core loans and advances increased 14.7% from GBP3.8
billion at 31 March 2008 to GBP4.4 billion. Kensington Group plc ("Kensington")
produced a stable performance and reported operating profit of GBP19.3 million.
Investment Banking
The Investment Banking division reported a decrease of 36.7% in operating profit
to GBP28.6 million (2007: GBP45.1 million) reflecting a mixed performance across
geographies and business activity. The South African and Australian agency
divisions closed fewer deals in comparison to the prior period with the UK
division recording an increase in corporate fees and trading revenues despite
difficult market conditions. The UK operations were however, impacted by a much
weaker performance from some of the investments held within the Private Equity
and Direct Investments division, whilst the South African Private Equity
operations recorded another steady performance.
Asset Management
Asset Management reported a decrease in operating profit of 7.0% to GBP33.7
million (2007: GBP36.2 million) largely as a result of a tougher mutual fund
environment. The division continued to benefit from a shift in the mix of funds
managed, and solid net inflows, notably within its institutional portfolio.
Assets under management increased by 3.1% to GBP29.6 billion (31 March 2008:
GBP28.8 billion).
Property Activities
Property Activities generated operating profit of GBP11.1 million (2007: GBP11.5
million). The division, based mainly in South Africa, posted a stable result
supported by fees earned on projects completed in the current period and a
reasonable performance from the investment property portfolio.
Group Services and Other Activities
Group Services and Other Activities contributed GBP19.9 million to operating
profit (2007: GBP9.0 million). The Central Funding division in South Africa
performed well benefiting from increased cash holdings and higher average
interest rates. Central Services costs are largely in line with the prior
period.
Further information on key developments within each of the business units is
provided in a detailed report published on the group`s website
www.investec.com/grouplinks/investorrelations.
Financial statement analysis
Total operating income
Total operating income net of insurance claims increased by 11.8% to GBP723.7
million (2007: GBP647.3 million). Material movements in total operating income
are analysed below.
Net interest income increased by 54.0% to GBP343.6 million (2007: GBP223.1
million) as a result of strong growth in average advances, the acquisition of
Kensington and Experien (Pty) Ltd ("Experien"), and a solid performance from the
Central Funding division.
Net fees and commissions income increased by 8.7% to GBP301.8 million (2007:
GBP277.7 million). Transactional activity levels have been impacted by the
current economic environment however, the group has benefited from profit shares
received by the Private Banking division and a solid performance from the
Capital Markets advisory and structuring businesses.
Income from principal transactions decreased by 24.1% to GBP82.3 million (2007:
GBP108.5 million) largely reflecting mark downs, lower revaluations and fewer
realisations in the current period.
Operating income from associates increased by 21.3% to GBP7.7 million (2007:
GBP6.4 million). The figure includes Investec`s 47.3% share of the directors`
estimate of the post-tax profit of Rensburg Sheppards plc for the period 1 April
2008 to 30 September 2008.
Other operating loss amounted to GBP13.7 million (2007: income of GBP28.1
million). This loss arises from the consolidation of the operating results of
two investments held within the group`s Private Equity portfolio.
Impairment losses on loans and advances
As a result of the weaker credit cycle we have seen a decline in the performance
of the loan portfolio resulting in an increase in impairment losses on loans and
advances from GBP3.8 million to GBP48.3 million (excluding Kensington). The
percentage of gross default loans to core loans and advances has increased from
1.7% to 2.5% since 31 March 2008. The annualised credit loss charge as a
percentage of average core loans and advances is 0.7%.
Impairment losses on loans and advances relating to the Kensington business
amount to GBP28.5 million (2007: GBP7.9 million; the business was acquired on 8
August 2007). The total Kensington book has decreased from GBP6.1 billion at 31
March 2008 to GBP5.4 billion. Arrears have increased marginally as the book
becomes more seasoned.
Administrative expenses and depreciation
The ratio of total operating expenses to total operating income improved from
58.9% to 58.0%.
Total expenses increased by 10.1% to GBP419.9 million (2007: GBP381.3 million).
Variable remuneration decreased by 12.5% to GBP81.7 million. Other operating
expenses increased by 17.5% to GBP338.2 million largely as a result of the
acquisition of Kensington and Experien and an increase in average headcount and
associated costs in certain of the businesses. Total headcount will be tightly
managed and expense growth (excluding variable remuneration) is targeted below
the respective inflation rates in each of the group`s core geographies.
Taxation
The operational effective tax rate of the group decreased from 25.0% to 23.8% as
a result of the decrease in tax rates in key geographies and an increase in
income earned that is subject to lower tax rates or is non-taxable.
Losses attributable to minority interests
Losses attributable to minority interests of GBP14.7 million comprise:
- GBP12.9 million relating to investments consolidated in the Private Equity
division.
- GBP1.8 million relating to 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 transaction loss
arising on the hedge is reflected in operating profit before goodwill with the
equal and opposite impact reflected in earnings attributable to minorities).
Balance sheet analysis
Since 31 March 2008:
- Total shareholders` equity (including minority interests) increased by 6.8% to
GBP2.4 billion largely as a result of retained earnings and foreign currency
translation gains.
- Net asset value per share increased from 260.6 pence to 279.4 pence and net
tangible asset value per share (which excludes goodwill and intangible assets)
increased from 215.0 pence to 233.2 pence.
- Total assets increased from GBP34.1 billion to GBP35.9 billion largely as a
result of an increase in core loans and advances.
The group`s gearing ratios remain low with core loans and advances to equity at
7.0 times and total assets (excluding assurance assets) to equity at 13.4 times.
The annualised return on adjusted average shareholders` equity decreased from
23.9% to 19.3%.
The compulsorily convertible debentures that were outstanding at 31 March 2008
were converted to shares on 31 July 2008. This resulted in an increase in share
capital and share premium with no impact on total equity.
Capital adequacy
As a consequence of the recent banking crisis there is a strong expectation from
bank stakeholders that banking groups need to and will improve their capital
adequacy ratios. Investec has always held capital well in excess of regulatory
requirements and the group intends to perpetuate this philosophy and ensure that
it remains well capitalised in a vastly changed banking world. Accordingly, the
group considers it appropriate to adjust its capital adequacy targets and build
its capital base, targeting a minimum tier one capital ratio of 11% and a total
capital adequacy ratio of 14% to 17%. It intends to meet these targets within 18
months.
Basel II ratios 30 Sept 2008 31 March 2008
Investec Limited
Capital adequacy ratio 13.9% 13.9%
Tier 1 ratio 10.3% 10.0%
Capital adequacy- pre operational 15.4% 15.5%
risk
Tier 1 ratio - pre operational risk 11.5% 11.2%
Investec plc
Capital adequacy ratio 16.1% 15.3%
Tier 1 ratio 9.7% 9.2%
Capital adequacy- pre operational 18.3% 17.4%
risk
Tier 1 ratio - pre operational risk 11.0% 10.5%
Liquidity and funding
A core strategy for many years has been the maintenance of a stock of readily
available, high quality liquid assets well in excess of minimum regulatory
requirements. Since October 2007 the group has on average held approximately
GBP5.1 billion of cash and near cash to support its activities. These balances
have ranged between GBP4.5 billion and GBP6.2 billion over the period. The group
continues to focus on diversifying its funding sources and maintaining a low
reliance on interbank wholesale funding to fund core lending. The Private Bank
has implemented a number of initiatives to increase its funding from private
client and related deposits. Customer deposits have held up well over the period
and the group has been successful in securing medium term syndicated loans due
to its long standing counterparty relationships.
Strategy
Investec is a focused, niche specialist banking group constantly striving to be
distinctive in all that it does. In order to deliver value to shareholders
through economic cycles and achieve the group`s growth objectives the group will
continue to focus on:
- Moderating its loan growth, shifting emphasis to increasing the proportion of
its non-lending revenue base;
- Maintaining credit quality;
- Strictly managing risk and liquidity;
- Creating additional operational efficiencies and containing costs;
- Building business depth rather than business breadth in its attempt to deepen
existing client relationships and generate high quality income through
diversified, sustainable revenue streams.
Outlook
The global environment is extremely challenging. The group expects activity
levels to remain low, which may impact revenue generation in the second six
months of its financial year. A high level of recurring income should support
sustainability of earnings, albeit at a lower level. By focusing on the group`s
core strengths and applying its strategy, its experienced and hands on
management team should enable Investec to take advantage of selective
opportunities and address challenges arising from the current market
dislocation.
On behalf of the boards of Investec plc and Investec Limited
Hugh Herman Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
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 2007. Average
balances are based on the period 1 April 2007 to 30 September 2007 and 1 April
2008 to 30 September 2008.
- Foreign currency impact
The group`s reporting currency is Pounds Sterling. Certain of the group`s
operations are conducted by entities outside the UK. The results of operations
and the financial condition of the 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 the
group`s 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 financial period:
30 Sept 2008 31 March 2008 30 Sept 2007
Currency Period Average Period Averag Period Average
per GBP1.00 end end e end
South 14.98 14.95 16.17 14.31 13.98 14.21
African Rand
Australian 2.26 2.12 2.18 2.32 2.30 2.39
Dollar
Euro 1.27 1.26 1.25 1.42 1.43 1.47
US Dollar 1.78 1.94 1.99 2.01 2.04 2.01
Exchange rates between local currencies and Pounds Sterling have fluctuated over
the year. The most significant impact arises from the depreciation/appreciation
of the Rand. The average exchange rate over the period has depreciated by 5.2%
and the closing rate has appreciated by 7.4 % since 31 March 2008.
- Accounting policies
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. The accounting policies
applied in the preparation of the results for the six months ended 30 September
2008 are consistent with those adopted in the financial statements for the year
ended 31 March 2008, excepted as noted below.
The group has elected to early adopt IFRS 8 (Operating Segments) as of 1 April
2008. This standard requires disclosure of information about the group`s
operating segments on the same basis as is used internally for evaluating
operating segment performance and deciding how to allocate resources to
operating segments. Adoption of this standard did not have any impact of the
financial position or performance of the group. The group determined that the
operating segments were the same as the business segments previously identified
under IAS 14 (Segment Reporting).
Reclassifications to prior period balance sheet information
Following the implementation of IFRS 7 disclosure requirements in the 31 March
2008 annual report, the classification of certain financial instruments into
balance sheet classes were refined to achieve more appropriate disclosure.
Adjustments to the 30 September 2007 balance sheet include:
- GBP226.8 million reclassified from cash equivalent advances to customers to
reverse repurchase agreements and cash collateral on securities borrowed and
- GBP1 604.7 million reclassified from debt securities in issue to customer
accounts.
- 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
13 November 2008.
Ordinary dividend announcements
Investec plc
In terms of the DLC structure, Investec plc shareholders who are not South
African resident shareholders may receive all or part of their dividend
entitlements through dividends declared and paid by Investec plc on their
ordinary shares and/or through dividends declared and paid on the SA DAN share
issued by Investec Limited.
Investec plc shareholders who are South African residents, may receive all or
part of their dividend entitlements through dividends declared and paid by
Investec plc on their ordinary shares and/or through dividends declared and paid
on the SA DAS share issued by Investec Limited.
Notice is hereby given that an interim dividend (No. 13) has been declared by
the board in respect of the six months ended 30 September 2008. Shareholders in
Investec plc will receive a distribution of 8.0 pence (2007: 11.5 pence) per
ordinary share, which will be paid as follows:
- for non-South African resident Investec plc shareholders, through a dividend
payment by Investec plc of 8.0 pence per ordinary share
- for South African resident shareholders of Investec plc, through a dividend
payment on the SA DAS share equivalent to 8.0 pence per ordinary share
The relevant dates for the payment of the dividends are as follows:
Last day to trade cum-dividend:
On the London Stock Exchange (LSE) Tuesday, 09 December 2008
On the Johannesburg Stock Friday, 05 December 2008
Exchange (JSE)
Shares commence trading ex-dividend:
On the London Stock Exchange (LSE) Wednesday, 10 December 2008
On the Johannesburg Stock Monday, 08 December 2008
Exchange (JSE)
Record date (on the LSE and the JSE) Friday, 12 December 2008
Payment date (on the LSE and the JSE) Friday, 19 December 2008
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Monday, 08 December 2008 and Friday, 12
December 2008, both dates inclusive, nor may transfers between the UK and SA
registers take place between Monday, 08 December 2008 and Friday, 12 December
2008, both dates inclusive.
Shareholders registered on the South African register are advised that the total
distribution of 8.0 pence, equivalent to 128.0 cents per share, has been arrived
at using the Rand/Pound Sterling average buy/sell forward rate, as determined at
11h00 (SA time) on Wednesday, 12 November 2008.
By order of the board
D Miller
Company Secretary
13 November 2008
Investec Limited
Notice is hereby given that an interim dividend (No. 106) of 128.0 cents (2007:
159.50 cents) per ordinary share has been declared by the board in respect of
the six months ended 30 September 2008 payable to shareholders recorded in the
members` register of the company at the close of business on Friday, 12 December
2008.
The relevant dates for the payment of the dividend are as follows:
Last day to trade cum-dividend Friday, 05 December 2008
Shares commence trading ex-dividend Monday, 08 December 2008
Record date Friday, 12 December 2008
Payment date Friday, 19 December 2008
The interim dividend of 128.0 cents per ordinary share has been determined by
converting the Investec plc distribution of 8.0 pence per ordinary share into
Rands using the Rand/Pounds Sterling average buy/sell forward rate at 11h00 (SA
time) on Wednesday, 12 November 2008.
Share certificates may not be dematerialised or rematerialised between Monday,
08 December 2008 and Friday, 12 December 2008, both dates inclusive.
By order of the board
B Coetsee
Company Secretary
13 November 2008
Non-redeemable non-cumulative non-participating preference shares dividend
announcements
Investec plc
Share Code: INPP
ISIN: GB00B19RX541
Declaration of dividend number 5
Notice is hereby given that preference dividend number 5 has been declared for
the period 01 April 2008 to 30 September 2008 amounting to 30.14 pence per share
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, 28 November 2008.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of
30.14 pence per share is equivalent to 479.51 cents per share, which has been
determined using the Rand/Pound Sterling average buy/sell forward rate as at
11h00 (SA Time) on Wednesday,12 November 2008.
The relevant dates relating to the payment of dividend number 5 are as follows:
Last day to trade cum-dividend:
On the Johannesburg Stock Friday, 21 November 2008
Exchange (JSE)
On the Channel Islands Stock Tuesday, 25 November 2008
Exchange (CISX)
Shares commence trading ex-dividend:
On the Johannesburg Stock Monday, 24 November 2008
Exchange (JSE)
On the Channel Islands Stock Wednesday, 26 November 2008
Exchange (CISX)
Record date (on the JSE and CISX) Friday, 28 November 2008
Payment date (on the JSE and CISX) Tuesday, 09 December 2008
Share certificates may not be dematerialised or rematerialised between Monday,
24 November 2008 and Friday, 28 November 2008, both dates inclusive, nor may
transfers between the UK and SA registers take place between Monday, 24 November
2008 and Friday, 28 November 2008, both dates inclusive.
By order of the board
D Miller
Company Secretary
13 November 2008
Investec Limited
Share Code: INPR
ISIN: ZAE000063814
Declaration of dividend number 8
Notice is hereby given that preference dividend number 8 has been declared for
the period 01 April 2008 to 30 September 2008 amounting to 536.03 cents per
share 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, 28 November 2008.
The relevant dates for the payment of dividend number 8 are as follows:
Last day to trade cum-dividend Friday, 21 November 2008
Shares commence trading ex-dividend Monday, 24 November 2008
Record date Friday, 28 November 2008
Payment date Tuesday, 09 December 2008
Share certificates may not be dematerialised or rematerialised between Monday,
24 November 2008 and Friday, 28 November 2008, both dates inclusive.
By order of the board
B Coetsee
Company Secretary
Directors: H S Herman (Chairman), S Koseff# (Chief Executive), B Kantor#
(Managing Director), S E Abrahams, G F O Alford+, G R Burger#, C A Carolus, H
Fukuda OBE+, G M T Howe+, I R Kantor, Sir Chips Keswick+, M P Malungani, Sir
David Prosser+, A Tapnack#+, P R S Thomas, F Titi.
#Executive +British
13 November 2008
Further information
Information provided on the Company`s website at www.investec.com includes:
- Copies of this statement.
- The results presentation.
- Additional report produced for the investment community including more detail
on the results.
- Excel worksheets containing the salient financial information under IFRS in
Pounds Sterling.
Alternatively for further information please contact the Investor Relations
division on e-mail investorrelations@investec.com or telephone +44 207 597 5546
/ +27 11 286 7070.
Date: 13/11/2008 09:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited
