| Thu 18 Nov 2010, 9:00 | | INP/INL - Investec plc/Investec Limited - Unaudited consolidated financial |
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INL INP INPP
INL INP
INP/INL - Investec plc/Investec Limited - Unaudited consolidated financial
results in Pounds Sterling for the six months to 30 September 2010
Investec plc and Investec Limited (combined results)
Unaudited consolidated financial results in Pounds Sterling for the six months
to 30 September 2010
Investec plc Investec Limited
(Registration number 3633621) (Registration number
1925/002833/06)
JSE Code: INP JSE Code: INL
ISIN: GB00B17BBQ50 ISIN: ZAE000081949
Salient Features
30 Sept. 30 % 31 March
Sept.
2010 2009 Change 2010
Operating profit before 228 157 215 979 5.6 432 258
goodwill, acquired
intangibles, non-operating
items, taxation and after
minorities (GBP`000)
Earnings attributable to 246 993 178 534 38.3 346 133
shareholders (GBP`000)
Adjusted earnings before 163 202 160 422 1.7 309 710
goodwill, acquired
intangibles and non-operating
items (GBP`000)
Adjusted earnings per share 22.1 24.0 (7.9) 45.1
(pence)
Earnings per share (pence) 29.7 22.2 33.8 44.0
Headline earnings per share 19.8 20.4 (2.9) 40.1
(pence)
Dividends per share (pence) 8.0 8.0 - 16.0
Total equity (GBP`million) 3 798 2 993 26.9 3 292
Third party assets under 77 819 62 872 23.8 74 181
management (GBP`million)
Combined consolidated income statement
Six months Six months Year to
to to
30 Sept. 30 Sept. 31 March
GBP`000 2010 2009 2010*
Interest income 1 118 360 974 116 2 041 153
Interest expense (797 186) (676 759) (1 428
067)
Net interest income 321 174 297 357 613 086
Fee and commission income 389 961 256 650 612 574
Fee and commission expense (49 467) (30 222) (67 497)
Principal transactions 208 706 230 821 457 759
Operating income from associates 3 172 5 929 11 595
Investment income on assurance 17 986 68 573 94 914
activities
Premiums and reinsurance recoveries
on insurance contracts 5 028 2 179 31 938
Other operating income 5 215 10 470 22 737
Other income 580 601 544 400 1 164 020
Claims and reinsurance premiums on (20 727) (68 777) (119 918)
insurance business
Total operating income net of 881 048 772 980 1 657 188
insurance claims
Impairment losses on loans and (122 850) (134 296) (286 581)
advances
Operating income 758 198 638 684 1 370 607
Administrative expenses (524 159) (417 960) (920 694)
Depreciation, amortisation and (16 719) (15 588) (36 457)
impairment of property, equipment
and software
Operating profit before goodwill and 217 320 205 136 413 456
acquired intangibles
Impairment of goodwill (2 763) (1 234) (3 526)
Amortisation of acquired intangibles (2 254) - -
Operating profit after goodwill and 212 303 203 902 409 930
acquired intangibles
Profit arising from associate 73 465 - -
converted to subsidiary
Write-down of subsidairies held for (7 942) - -
sale
Profit before taxation 277 826 203 902 409 930
Taxation (43 151) (36 211) (82 599)
Profit after taxation 234 675 167 691 327 331
Operating losses attributable to 10 837 10 843 18 802
minority interests
Write-down of subsidiaries held for
sale attributable to
minorities 1 481 - -
Earnings attributable to 246 993 178 534 346 133
shareholders
Earnings attributable to 246 993 178 534 346 133
shareholders
Impairment of goodwill 2 763 1 234 3 526
Amortisation of acquired intangibles 1 577 - -
Write-down of subsidiaries held for (1 481) - -
sale attributable to minorities
Profit arising from associate (73 465) - -
converted to subsidiary
Write-down of subsidairies held for 7 942 - -
sale
Preference dividends paid (27 031) (29 922) (43 860)
Additional earnings attributable to 5 904 10 576 3 911
other equity holders
Adjusted earnings before goodwill,
acquired intangibles
and non-operating items 163 202 160 422 309 710
Headline adjustments (gain on (17 002) (24 005) (34 579)
investment properties and available
for sale instruments recognised in
income)
Headline earnings 146 200 136 417 275 131
Earnings per share (pence)
- basic 29.7 22.2 44.0
- diluted 27.9 21.2 41.5
Adjusted earnings per share (pence)
- basic 22.1 24.0 45.1
- diluted 20.7 22.9 42.5
Headline earnings per share (pence)
- basic 19.8 20.4 40.1
- diluted 18.6 19.5 37.8
Number of weighted average shares
- basic (millions) 739.7 669.2 686.3
*As restated for reclassifications detailed in the commentary section of this
report.
Combined summarised consolidated statement of comprehensive income
Six months Six months Year to
to to
30 Sept. 30 Sept. 31 March
GBP`000 2010 2009 2010
Profit after taxation 234 675 167 691 327 331
Fair value movements on cash flow 2 113 9 905 14 202
hedges*
Gains on realisation of available
for sale assets
recycled through income statement* (1 624) (6 758) (8 887)
Fair value movements on available 10 527 24 950 20 370
for sale assets*
Foreign currency adjustments on 8 224 111 476 239 789
translating foreign operations
Pension fund actuarial losses - - (8 180)
Total comprehensive income 253 915 307 264 584 625
Total comprehensive (loss)/income
attributable to minority
shareholders (11 351) (3 018) 9 918
Total comprehensive income
attributable to ordinary
shareholders 235 472 257 815 493 073
Total comprehensive income
attributable to perpetual
preferred securities 29 794 52 467 81 634
Total comprehensive income 253 915 307 264 584 625
* Net of taxation of GBP3.0 million (Six months to 30 September 2009: GBP7.6
million, Year to 31 March 2010: GBP10.0 million).
Combined consolidated balance sheet
30 31 30 Sept.*
Sept. March
GBP`000 2010 2010 2009
Assets
Cash and balances at central banks 1 550 2 338 1 474 204
807 234
Loans and advances to banks 2 257 2 781 1 779 104
741 630
Cash equivalent advances to 527 758 581 496 792
customers 117
Reverse repurchase agreements and
cash
collateral on securities borrowed 1 207 911 560 424
255 432
Trading securities 5 338 4 221 3 569 743
673 645
Derivative financial instruments 1 970 1 591 1 677 224
670 841
Investment securities 2 915 1 996 1 236 293
969 073
Loans and advances to customers 18 110 17 414 16 438 919
210 691
Loans and advances to customers
- Kensington warehouse assets 1 683 1 776 1 873 778
586 525
Securitised assets 5 150 5 334 5 369 003
421 453
Interest in associated undertakings 22 303 104 98 467
059
Deferred taxation assets 132 252 134 139 611
355
Other assets 1 188 1 240 1 022 061
678 624
Property and equipment 57 774 161 159 062
255
Investment properties 324 672 273 200 695
038
Goodwill 466 125 274 260 987
417
Intangible assets 167 506 36 620 35 914
Non-current assets classified as 122 133 - -
held for sale
43 194 41 172 36 392 281
533 009
Other financial instruments at fair
value
through income in respect of
- liabilities to customers 5 781 5 397 4 162 088
206 014
- assets related to reinsurance 2 699 2 842 3 196
contracts
48 978 46 571 40 557 565
438 865
Liabilities
Deposits by banks 2 181 2 439 3 050 282
563 670
Deposits by banks - Kensington 1 082 1 213 1 354 737
warehouse funding 431 042
Derivative financial instruments 1 618 1 193 1 377 955
990 421
Other trading liabilities 540 254 504 305 770
618
Repurchase agreements and cash
collateral
on securities lent 942 699 1 110 655 556
508
Customer accounts (deposits) 23 493 21 934 18 013 512
808 044
Debt securities in issue 1 815 1 791 1 166 386
113 869
Liabilities arising on 4 488 4 714 4 749 629
securitisation 245 556
Current taxation liabilities 191 560 196 168 088
965
Deferred taxation liabilities 202 938 136 139 283
974
Other liabilities 1 561 1 572 1 342 718
941 760
Pension fund liabilities 487 1 285 934
Liabilities directly associated
with non-current assets
held for sale 103 465 - -
38 223 36 809 32 324 850
494 712
Liabilities to customers under 5 776 5 392 4 155 535
investment contracts 517 662
Insurance liabilities, including 4 689 4 352 6 553
unit-linked liabilities
Reinsured liabilities 2 699 2 842 3 196
44 007 42 209 36 490 134
399 568
Subordinated liabilities 1 173 1 070 1 074 041
244 436
45 180 43 280 37 564 175
643 004
Equity
Called up share capital 201 195 195
Perpetual preference share capital 181 152 151
Share premium 2 256 1 928 1 861 329
628 296
Treasury shares (55 182) (66 (74 208)
439)
Other reserves 270 030 246 150 510
718
Retained income 999 077 846 734 845
060
Shareholders` equity excluding 3 470 2 954 2 672 822
minority interests 935 982
Minority interests 326 860 336 320 568
879
- Perpetual preferred securities 311 312 314 307 330
issued by subsidiaries 944
- Minority interests in partially 15 548 21 935 13 238
held subsidiaries
Total equity 3 797 3 291 2 993 390
795 861
Total liabilities and equity 48 978 46 571 40 557 565
438 865
* As restated for reclassifications detailed in the commentary section of this
report.
Segmental geographic and business analysis of operating profit before goodwill,
acquired intangibles, non-operating items and taxation for the six months to 30
September 2010
United
Kingdom
Southern and Total
GBP`000 Africa Europe Australia group
Asset Management 30 046 18 867 - 48 913
Wealth and Investment 7 346 8 996 - 16 342
Property Activities 14 540 (443) 2 311 16 408
Private Banking 14 150 (12 486) (5 543) (3 879)
Investment Banking 36 845 8 816 (3 151) 42 510
Capital Markets 40 364 88 385 4 757 133 506
Group Services and 3 119 (32 097) 3 335 (25 643)
Other Activities
Operating profit after 146 410 80 038 1 709 228 157
minorities
Minority interest - (10 837)
equity
Operating profit before 217 320
goodwill and acquired
intangibles
Segmental geographic and business analysis of operating profit before goodwill,
acquired intangibles, non-operating items and taxation for the six months to 30
September 2009
United
Kingdom
Southern and Total
GBP`000 Africa Europe Australia group
Asset Management 21 419 7 513 - 28 932
Wealth and 6 619 5 389 - 12 008
Investment
Property Activities 9 464 619 1 650 11 733
Private Banking 8 283 8 754 (328) 16 709
Investment Banking 27 192 (1 527) 1 119 26 784
Capital Markets 30 695 41 161 1 781 73 637
Group Services and 21 485 24 816 (125) 46 176
Other Activities
Operating profit 125 157 86 725 4 097 215 979
after minorities
Minority interest - (10 843)
equity
Operating profit 205 136
before goodwill and
acquired intangibles
Combined summarised consolidated cash flow statement
Six months to Six months Year to
to
30 Sept. 30 Sept.* 31 March
GBP`000 2010 2009 2010
Cash inflows from 343 799 300 664 731 000
operations
Increase in operating (2 460 557) (319 058) (3 336
assets 695)
Increase in operating 1 295 406 369 172 4 115 640
liabilities
Net cash (outflow)/inflow
from
operating activities (821 352) 350 778 1 509 945
Net cash (outflow)/inflow
from
investing activities (10 946) 2 195 (19 368)
Net cash inflow/(outflow)
from
financing activities 157 453 (20 229) (127 794)
Effects of exchange rate
changes on
cash and cash equivalents 15 889 172 102 274 915
Net (decrease)/increase
in cash
and cash equivalents (658 956) 504 846 1 637 698
Cash and cash equivalents
at the
beginning of the period 3 922 047 2 284 349 2 284 349
Cash and cash equivalents
at the end of the period 3 263 091 2 789 195 3 922 047
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).
* As restated for reclassifications detailed in the commentary section of this
report.
Combined summarised consolidated statement of changes in equity
Six months to Six months to Year to
30 Sept. 30 Sept. 31 March
GBP`000 2010 2009 2010
Balance at the beginning
of the period 3 291 861 2 620 537 2 620 537
Total comprehensive income 253 915 307 264 584 625
Share based payments 17 708 25 000 56 942
adjustments
Dividends paid to ordinary (59 341) (35 833) (91 946)
shareholders
Dividends paid to perpetual
preference shareholders (27 031) (29 922) (43 860)
Issue of ordinary shares 317 464 73 303 84 178
Issue of perpetual 11 893 - 40 869
preference shares
Share issue expenses (3 753) (3 554) (3 559)
Movement of treasury shares (6 253) 36 595 40 974
Issue of equity instruments
by
subsidiaries 1 514 - 3 547
Dividends paid to minority (182) - (578)
interests
Acquisition of minority - - 132
interests
Balance at the end of
the period 3 797 795 2 993 390 3 291 861
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated financial results in Pounds Sterling for the six
months ended 30 September 2010
Overall group performance
The group has delivered a strong operational performance, with five of its six
core businesses areas recording a substantial increase in earnings. This was
partially offset by profits earned on the repurchase of debt in the prior period
not being repeated. The group`s strategy to build revenues in its less capital
intensive businesses gained further momentum through the acquisition of Rensburg
Sheppards plc and strong inflows recorded in the asset management business. The
balance sheet remains strong, supported by an increase in capital and liquidity
over the period. The pace of economic recovery however, is slow and uncertain.
Activity levels within the group`s banking and advisory businesses are below
historic trends and the impairment charge, whilst improving remains high.
Against this backdrop the main features of the period under review are:
* Operating profit before goodwill, acquired intangibles, non-operating items
and taxation and after minorities ("operating profit") increased 5.6% to
GBP228.2 million (2009: GBP216.0 million).
* The group`s operating profit excluding the GBP46 million profits earned on
the repurchase of the group`s debt in the prior period increased by 34.2%
to GBP228.2 million (2009: GBP170.0 million).
* Adjusted earnings attributable to shareholders before goodwill, acquired
intangibles and non-operating items increased 1.7% to GBP163.2 million
(2009: GBP160.4 million).
* Adjusted earnings per share (EPS) before goodwill, acquired intangibles and
non-operating items decreased 7.9% from 24.0 pence to 22.1 pence, largely
as a result of an increase in the number of shares in issue.
* Third party assets under management increased 4.9% to GBP77.8 billion (31
March 2010: GBP74.2 billion)
* Customer accounts (deposits) increased 7.1% to GBP23.5 billion (31 March
2010: GBP21.9 billion)
* Core loans and advances increased 1.4% to GBP18.1 billion (31 March 2010:
GBP17.9 billion)
* Core loans and advances (excluding own originated securitised assets) as a
percentage of customer deposits improved from 76.2% at 31 March 2010 to
72.5%.
* Capital adequacy ratios have strengthened in both Investec plc and Investec
Limited (refer to "Operational review" below).
* Low gearing ratios represented by core loans and advances to equity at 4.8
times (31 March 2010: 5.4 times) and total assets (excluding assurance
assets) to equity at 11.4 times (31 March 2010: 12.5 times).
* The board declared a dividend of 8.0 pence per ordinary share (2009: 8.0
pence) resulting in a dividend cover based on the group`s adjusted EPS
before goodwill and non-operating items of 2.8 times (2009: 3.0 times),
consistent with the group`s dividend policy.
Strategic review
Over the past eighteen months the group has made a concerted effort to realign
its business model by building its asset and wealth management businesses. This
strategy is starting to bear fruit with a significant rise in funds under
management resulting in operating profit from these businesses increasing by
59.4% to GBP65.2 million (2009: GBP40.9 million). The banking regulatory
environment remains uncertain notwithstanding the recent announcements made by
the Basel Committee on Banking Supervision. At this point it is still unclear as
to the types of instruments that will qualify as capital in future and the
different responses in this regard from the regulators in the geographies in
which the group operates. The board has resolved to maintain excess levels of
liquidity and capital until the group has further clarity on the way forward.
This does have a negative impact on short-term earnings and return on equity,
however, the board believes that this is appropriate under the circumstances.
Liquidity and funding
Diversifying Investec`s funding sources has been a key element in improving the
quality of the group`s balance sheet and reducing its reliance on wholesale
funding. The group has continued to increase customer deposits in all three core
geographies and cash and near cash balances amount to GBP10.0 billion.
Capital adequacy
The group targets a minimum tier one capital ratio of 11% and a total capital
adequacy ratio range of 14% to 17% on a consolidated basis for each of Investec
plc and Investec Limited. Capital ratios are within the group`s target range
across all core geographies.
The group has conducted an initial review of the Basel III requirements as set
out in the Basel Committee on Banking Supervision announcement on 12 September
2010. Based on this review the group believes that its current capital structure
and capital ratios exceed the minimum capital requirements for 2013.
Basel II ratios 30 Sep 31 Mar 30 Sep
2010 2010 2009
Investec plc
Capital adequacy ratio 16.7% 15.9% 15.5%
Tier 1 ratio 12.1% 11.3% 11.0%
Investec Limited
Capital adequacy ratio 16.2% 15.6% 14.7%
Tier 1 ratio 12.1% 12.1% 11.3%
Asset quality
The bulk of Investec`s credit and counterparty risk arises through its Private
Banking and Capital Markets activities. The Private Bank lends mainly to high
net worth and high income individuals, whilst the Capital Markets division
primarily transacts with mid to large sized corporates, public sector bodies and
institutions. Investec continues to focus on improving asset quality and credit
risk in all geographies. Defaults on core loans and advances have increased but
remain fully covered, as detailed in the "Financial statement analysis" below.
Business unit review
Asset Management
Asset Management reported an increase in operating profit of 69.1% to GBP48.9
million (2009: GBP28.9 million) benefiting from substantially higher average
funds under management and a solid investment performance. Since 31 March 2010
the division recorded strong net inflows of GBP1.9 billion with assets under
management increasing by 6.7% from GBP46.4 billion to GBP49.5 billion.
Wealth and Investment
Wealth and Investment reported an increase in operating profit of 36.1% to
GBP16.3 million (2009: GBP12.0 million). The business has benefitted from higher
average funds under management and the acquisition of Rensburg Sheppards plc, as
detailed in the "Notes to the commentary" section below. Since 31 March 2010
total funds under management increased by 2.0% from GBP27.1 billion to GBP27.7
billion.
Property Activities
Property Activities generated an increase in operating profit of 39.8% to
GBP16.4 million (2009: GBP11.7 million). The results of the division were
largely supported by a satisfactory performance from the investment property
portfolio in South Africa.
Private Banking
The Private Banking division posted a loss of GBP3.9 million (2009: profit of
GBP16.7 million) as a result of low activity levels and increased impairments.
Notwithstanding, the South African division reported an improved performance.
Since 31 March 2010 the private client core lending book has remained at GBP12.9
billion and the deposit book increased by 3.3% from GBP11.8 billion to GBP12.2
billion.
Investment Banking
The Investment Banking division reported an increase of 58.7% in operating
profit to GBP42.5 million (2009: GBP26.8 million). The Principal Investments
division recorded a solid result, primarily driven by an improved performance
from some of the investments held in the UK and South African portfolio. The
Agency divisions benefitted from a good deal pipeline although trading
conditions in the Institutional Stockbroking business remain difficult.
Capital Markets
Capital Markets reported an increase in operating profit of 81.3% to GBP133.5
million (2009: GBP73.6 million). The division has benefitted from good levels of
activity across the advisory and structuring businesses, notably within the
Principal Finance, Structured Finance and Structured Equity Derivatives teams.
Since 31 March 2010 core loans and advances increased 4.1% from GBP4.5 billion
to GBP4.7 billion.
Group Services and Other Activities
Group Services and Other Activities posted a loss of GBP25.6 million (2009:
profit of GBP46.2 million). The Central Funding division`s results were impacted
by lower levels of interest rates and a weaker performance from equity
investments held within the South African portfolio. Furthermore, the UK Central
Funding division recorded a profit of approximately GBP46 million on the
repurchase of debt in the prior period which was not repeated in the current
period.
Further information on key developments within each of the business units is
provided in a detailed report published on the group`s website:
http://www.investec.com
Financial statement analysis
Total operating income
Total operating income net of insurance claims has increased by 14.0% to
GBP881.0 million (2009: GBP773.0 million). Material movements in total operating
income are analysed below.
Net interest income increased by 8.0% to GBP321.2 million (2009: GBP297.4
million) largely as a result of improved margins within the South African
Private Banking division.
Net fee and commission income increased by 50.4% to GBP340.5 million (2009:
GBP226.4 million). Average funds under management have grown substantially,
supported by improved market indices and strong net inflows. The banking
businesses recorded an increase in net fees and commissions, although
transactional activity levels remain mixed.
Income from principal transactions decreased by 9.6% to GBP208.7 million (2009:
GBP230.8 million). The group has benefited from a solid performance from its
unlisted equity, structured credit and property investment portfolios. The prior
period included profits generated on the repurchase of debt which were not
repeated in the current period.
Operating income from associates decreased by 46.5% to GBP3.2 million (2009:
GBP5.9 million). The current period`s figure includes Investec`s 47.1% share of
the post-tax profit of Rensburg Sheppards plc for the period 1 April 2010 to 25
June 2010.
The consolidation of the operating results of certain investments held is partly
reflected in other operating income, which declined from GBP10.5 million to
GBP5.2 million.
As a result of the foregoing factors, recurring income as a percentage of total
operating income increased to 63.0% (2009: 61.1%).
Impairment losses on loans and advances
The uncertain pace of economic recovery has slowed the improvement in the level
of non-performing loans and defaults have continued to increase. Impairment
losses on loans and advances have increased from GBP94.3 million to GBP98.2
million (excluding Kensington). The credit loss charge as a percentage of
average gross loans and advances is 1.02%, marginally lower than the 1.16%
reported at 31 March 2010.The percentage of default loans (net of impairments
but before taking collateral into account) to core loans and advances has
increased from 4.0% to 4.6% since 31 March 2010. The ratio of collateral to
default loans (net of impairments) remains satisfactory at 1.35 times (31 March
2010: 1.33 times).
Impairment losses on loans and advances relating to the Kensington business
amount to GBP24.7 million (2009: GBP40.0 million). The total Kensington book has
reduced to GBP4.4 billion from GBP4.7 billion at 31 March 2010.
Administrative expenses and depreciation
The ratio of total operating expenses to total operating income amounts to 61.4%
(2009: 56.1%).
Total expenses grew by 24.8% to GBP540.9 million (2009: GBP433.5 million)
largely as a result of the appreciation of the Rand; the acquisitions of
Rensburg Sheppards plc and Lease Direct Finance; an increase in variable
remuneration in certain divisions given improved profitability; an increase in
headcount in certain divisions; and increased spending on the brand and
sponsorships.
Impairment of goodwill
The current period goodwill impairment relates to Asset Management businesses
acquired in prior years.
Amortisation of intangibles
The current period amortisation of intangibles relates to the acquisition of
Rensburg Sheppards plc and mainly comprises amortisation of client
relationships.
Profit on acquisition of subsidiary
A net gain of GBP73.5 million has arisen on the acquisition of Rensburg
Sheppards plc, as detailed in the "Notes to the commentary" section below.
Writedown of subsidiaries held for sale
At 30 September 2010, the group had entered into a firm agreement to dispose of
one of its investments that was consolidated into the group accounts. Regulatory
approval for the transaction was pending at 30 September 2010. As a result the
subsidiary has been treated as an asset held for sale, effectively being held at
fair value, less cost to realise in the group`s accounts. All of the assets and
liabilities of the investment have been recognised on single asset and liability
lines on the balance sheet, referred to as "non-current assets classified as
held for sale" and "liabilities directly associated with non-current assets held
for sale". A loss of GBP6.5 million (net of minorities) arising on the pending
transaction has been recognised in the income statement in the current period.
Taxation
The operational effective tax rate of the group increased from 18.2% to 20.2%,
due to a change in the mix of taxable and non-taxable earnings.
Losses attributable to minority interests
Losses attributable to minority interests of GBP12.3 million comprise:
* GBP7.4 million relating to investments consolidated in the Private Equity
division;
* GBP4.9 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 2010:
* Total shareholders` equity (including minority interests) increased by
15.4% to GBP3.8 billion largely as a result of retained earnings and the
issue of shares.
* Total assets increased from GBP46.6 billion to GBP49.0 billion largely as a
result of increased cash holdings and advances, as well as an increase in
goodwill and intangibles associated with the acquisition of Rensburg
Sheppards plc.
* The return on adjusted average shareholders` equity declined from 13.5% to
11.5%.
* Net asset value per share increased by 8.4% to 394.6 pence and net tangible
asset value per share (which excludes goodwill and intangible assets)
decreased by 1.9% to 317.8 pence.
Outlook
The group`s operational performance is reflective of our forward-focused
approach over the past year and the ongoing effort to build our brand throughout
the financial crisis. While the pace of economic recovery varies across the
world, and the regulatory environment remains challenging, the system has
stabilised and activity levels are starting to improve.
The strength and resilience of our franchise, together with a solid balance
sheet position, provides appropriate flexibility to support our existing
businesses and allows us to capture opportunities arising from the realignment
of the financial services industry.
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
premium/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 2009.
* 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 period:
6 months to Year to 6 months to
30 Sep 2010 31 Mar 2010 30 Sep 2009
Currency per Close Ave Close Ave Close Ave
GBP1.00
South African 11.00 11.29 11.11 12.38 11.99 12.74
Rand
Australian 1.63 1.70 1.66 1.88 1.81 1.87
Dollar
Euro 1.15 1.18 1.12 1.13 1.09 1.11
Dollar 1.57 1.52 1.52 1.59 1.60 1.59
Exchange rates between local currencies and Pounds Sterling have fluctuated over
the period. The most significant impact arises from the appreciation of the
Rand. The average exchange rate over the period has appreciated by 11.4% and the
closing rate has appreciated by 1.0% since 31 March 2010.
* Acquisition of Rensburg Sheppards plc
On 30 March 2010, it was announced that Investec and Rensburg Sheppards plc had
reached agreement on the terms of a recommended all share offer under which
Investec would acquire the entire issued and to be issued ordinary share capital
of Rensburg Sheppards plc not already owned by it. Following shareholder and
regulatory approvals the acquisition became effective on 25 June 2010. Prior to
this date Investec`s 47.1% interest in Rensburg Sheppards plc was accounted for
as an associate. As a result of requirements under new accounting rules, the
group was required to fair value its existing 47.1% holding in Rensburg
Sheppard`s plc at the point it acquired the remaining 52.9%. This has resulted
in an exceptional gain of GBP73.5 million (net of acquisition costs). The group
issued 37.9 million shares to acquire the remaining shares in Rensburg Sheppards
plc for a consideration of GBP180.4 million. This consideration combined with
the existing fair valued holding resulted in the recognition of goodwill and
intangibles of GBP193.6 million and GBP133.4 million, respectively.
* Accounting policies and disclosures
The accounting policies applied in the preparation of the results for the period
ended 30 September 2010 are consistent with those adopted in the financial
statements for the year ended 31 March 2010, except for the adoption of the
revised IFRS 3 - Business Combinations. This standard is applicable to all
business combinations effective from 1 April 2010 in the group accounts. The
main change arising from the adoption is that acquisition related costs are
expensed in the period in which the costs are incurred and the services
rendered, except for costs related to the issue of debt (recognised as part of
the effective interest rate) and the cost of issue of equity (recognised
directly in shareholders` equity).
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 IAS34,
Interim Financial Reporting
* Restatements
The group applies a policy of offsetting financial assets and financial
liabilities when there is both an intention to settle on a net basis (or
simultaneously) and a legal right to offset exists. With regard to derivative
instruments, the group identified that in certain isolated instances offsetting
was applied in prior financial periods to derivative assets and liabilities
where it is not market practice to settle net, while the legal right to settle
net exists. This restatement had been identified and disclosed in the 2010
annual report. The corresponding restatement for the 30 September 2009 balance
sheet is noted below:
GBP`000 30 Sep 2009
Restated
Derivative financial instrument assets 1,677,224
Derivative financial instrument liabilities 1,377,955
As previously reported
Derivative financial instrument assets 1,453,804
Derivative financial instrument liabilities 1,154,535
Changes to previously reported
Derivative financial instrument assets 223,420
Derivative financial instrument liabilities 223,420
The above restatements had no impact on equity, nor the net cash position and
are consistent with the restatements as disclosed in the 2010 annual report.
Offsetting of intergroup interest received and interest paid
On review, it was detected that the gross interest income and expense, as
reported at 31 March 2010, had not appropriately netted certain intergroup
interest income and expense between the two line items. Whilst net interest
income was correctly reported, the restatement to interest received and paid is
noted below:
GBP`000 31 March 2010
Restated
Interest income 2,041,153
Interest expense (1,428,067)
Net interest income 613,086
As previously reported
Interest income 2,726,011
Interest expense (2,112,925)
Net interest income 613,086
Changes to previously reported
Interest income (684,858)
Interest expense 684,858
Net interest income -
The above change has no impact to the income statement (other than as noted
above), balance sheet nor cash flow statement.
* 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 18 November 2010.
* The information in the announcement for the six months ended 30 September
2010, which was approved by the board of directors on 17 November 2010,
does not constitute statutory accounts as defined in Section 435 of the UK
Companies Act 2006.
Ordinary dividend announcements
Investec plc
Reg. No.: 3633621
Share Code: INP
ISIN: GB00B17BBQ50
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 number 17 of 8 pence (2009: 8
pence) per ordinary share has been declared by the board in respect of the six
months ended 30 September 2010 payable to shareholders recorded in the members`
register of the company at the close of business on Friday, 10 December 2010,
which will be paid as follows:
for non-South African resident Investec plc shareholders, through a
dividend payment by Investec plc of 8 pence per ordinary share
for South African resident shareholders of Investec plc, through a dividend
payment by Investec plc of 2.25 pence per ordinary share and through a dividend
paid, on the SA DAS share equivalent to 5.75 pence per ordinary share
The relevant dates for the payment of dividend number 17 are as follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Friday, 03 December 2010
On the London Stock Exchange (LSE) Tuesday, 07 December 2010
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Monday, 06 December 2010
On the London Stock Exchange (LSE) Wednesday, 08 December 2010
Record date (on the JSE and LSE) Friday, 10 December 2010
Payment date (on the JSE and LSE) Tuesday, 21 December 2010
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Monday, 06 December 2010 and Friday, 10
December 2010, both dates inclusive, nor may transfers between the UK and SA
registers take place between Monday, 06 December 2010 and Friday, 10 December
2010, both dates inclusive.
Shareholders registered on the South African register are advised that the
distribution of 8 pence, equivalent to 90 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, 17 November 2010.
By order of the board
D Miller
Company Secretary 18 November 2010
Investec Limited
Reg. No.: 1925/002833/06
Share Code: INL
ISIN: ZAE000081949
Notice is hereby given that an interim dividend number 110 of 90 cents (2009:
100 cents) per ordinary share has been declared by the board in respect of the
six months ended 30 September 2010 payable to shareholders recorded in the
members` register of the company at the close of business on Friday, 10 December
2010.
The relevant dates for the payment of the dividend number 110 are as follows:
Last day to trade cum-dividend Friday, 03 December 2010
Shares commence trading ex-dividend Monday, 06 December 2010
Record date (on the JSE) Friday, 10 December 2010
Payment date (on the JSE) Tuesday, 21 December 2010
The interim dividend of 90 cents per ordinary share has been determined by
converting the Investec plc distribution of 8 pence per ordinary share into
Rands using the Rand/Pounds Sterling average buy/sell forward rate at 11h00 (SA
time) on Wednesday
17 November 2010.
Share certificates may not be dematerialised or rematerialised between Monday,
06 December 2010 and Friday, 10 December 2010, both dates inclusive.
By order of the board
B Coetsee
Company Secretary 18 November 2010
Investec plc
Reg. No.: 3633621
Share Code: INPP
ISIN: GB00B19RX541
Non-redeemable non-cumulative non-participating preference shares
Declaration of dividend number 9
Notice is hereby given that preference dividend number 9 has been declared for
the period 01 April 2010 to 30 September 2010 amounting to 7.52 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, 03 December 2010.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of
7.52 pence per share is equivalent to 85 cents per share, which has been
determined using the Rand/Pound Sterling average buy/sell forward rate as at
11h00 (SA Time) on Wednesday, 17 November 2010.
The relevant dates relating to the payment of dividend number 9 are as follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Friday, 26 November 2010
On the Channel Islands Stock Exchange (CISX) Tuesday, 30 November 2010
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Monday, 29 November 2010
On the Channel Islands Stock Exchange (CISX) Wednesday, 01 December 2010
Record date (on the JSE and CISX) Friday, 03 December 2010
Payment date (on the JSE and CISX) Tuesday, 14 December 2010
Share certificates may not be dematerialised or rematerialised between Monday,
29 November 2010 and Friday, 03 December 2010, both dates inclusive, nor may
transfers between the UK and SA registers may take place between Monday, 29
November 2010 and Friday, 03 December 2010, both dates inclusive.
By order of the board
D Miller
Company Secretary 18 November 2010
Investec Limited
Reg. No.: 1925/002833/06
Share Code: INPR
ISIN: ZAE 000063814
Non-redeemable non-cumulative non-participating preference shares
Declaration of dividend number 12
Notice is hereby given that preference dividend number 12 has been declared for
the period 01 April 2010 to 30 September 2010 amounting to 348.95 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, 03 December 2010.
The relevant dates for the payment of dividend number 12 are as follows:
Last day to trade cum-dividend Friday, 26 November 2010
Shares commence trading ex-dividend Monday, 29 November 2010
Record date Friday, 03 December 2010
Payment date Tuesday, 14 December 2010
Share certificates may not be dematerialised or rematerialised between Monday,
29 November 2010 and Friday, 03 December 2010, both dates inclusive.
By order of the board
B Coetsee
Company Secretary 18 November 2010
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.
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
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, P K O Crosthwaite+ ?, B
Fried+ ?, H Fukuda OBE+,
G M T Howe+, I R Kantor, M P Malungani, Sir David Prosser+, A Tapnack+, P R S
Thomas, F Titi.
? B Fried and P K O Crosthwaite were appointed to the Board of Directors with
effect from 01 April 2010 and 18 June 2010 respectively.
Sir Chips Keswick resigned from the Board of Directors on 13 August 2010.
Executive +British
Sponsor:
Investec Bank Limited
Date: 18/11/2010 09:00:01 Produced by the JSE SENS Department.
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employees and agents accept no liability for (or in respect of) any direct,
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