| Thu 17 Nov 2011, 9:00 | | INP/INL - Investec plc/ Investec Limited - Unaudited consolidated financial |
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INP/INL - Investec plc/ Investec Limited - Unaudited consolidated financial
results in Pounds Sterling for the six months to 30 September 2011
Investec plc
(Registration number 3633621)
JSE Code: INP
ISIN: GB00B17BBQ50
Investec Limited
(Registration number 1925/002833/06)
JSE Code: INL
ISIN: ZAE000081949
Investec plc and Investec Limited (combined results)
Unaudited consolidated financial results in Pounds Sterling
for the six months to 30 September 2011
Salient Features
30 September 30 September % 31 March
2011 2010 Change 2011
Operating profit before 223 629 228 157 (2.0) 434 406
goodwill, acquired
intangibles, non-
operating items, taxation
and after non-controlling
interests (GBP`000)
Earnings attributable to 178 920 246 993 (27.6) 420 516
shareholders (GBP`000)
Adjusted earnings before 162 867 163 202 (0.2) 327 897
goodwill, acquired
intangibles and non-
operating items (GBP`000)
Adjusted earnings per 20.6 22.1 (6.8) 43.2
share (pence)
Earnings per share 19.2 29.7 (35.4) 49.7
(pence)
Headline earnings per 18.7 19.8 (5.6) 37.7
share (pence)
Dividends per share 8.0 8.0 - 17.0
(pence)
Total equity 3 797 3 798 - 3 961
(GBP`million)
Third party assets under 80 000 77 819 2.8 88 878
management (GBP`million)
Asset Management and 39.1 28.6 36.7 38.6
Wealth Management
businesses contribution
to operating profit (%)
Combined consolidated income statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP`000 2011 2010 2011
Interest income 1 183 565 1 118 360 2 238 783
Interest expense (818 853) (797 186) (1 557 314)
Net interest income 364 712 321 174 681 469
Fee and commission income 507 980 389 961 896 300
Fee and commission expense (62 812) (49 467) (108 642)
Principal transactions 138 261 208 706 418 686
Investment income on 11 630 17 986 64 834
assurance activities
Premiums and reinsurance 4 198 5 028 6 110
recoveries on insurance
contracts
Other operating income 44 290 8 387 54 003
Other income 643 547 580 601 1 331 291
Claims and reinsurance (15 856) (20 727) (57 774)
premiums on insurance
business
Total operating income net of 992 403 881 048 1 954 986
insurance claims
Impairment losses on loans (143 328) (122 850) (318 230)
and advances
Operating income 849 075 758 198 1 636 756
Operating costs (607 860) (540 878) (1 196 865)
Depreciation on operating (22 154) - (16 447)
leased assets
Operating profit before 219 061 217 320 423 444
goodwill and amortisation of
acquired intangibles
Impairment of goodwill (672) (2 763) (6 888)
Amortisation of acquired (4 096) (2 254) (6 341)
intangibles
Operating profit 214 293 212 303 410 215
Profit arising from associate - 73 465 73 465
converted to subsidiary
Net loss on sale of - (7 942) (17 302)
subsidiaries
Profit before taxation 214 293 277 826 466 378
Taxation on operating profit (41 985) (43 828) (65 075)
before goodwill
Taxation on intangibles and 2 044 677 6 610
sale of subsidiaries
Profit after taxation 174 352 234 675 407 913
Operating losses attributable 4 568 10 837 10 962
to non-controlling interests
Loss on subsidiaries - 1 481 1 641
attributable to non-
controlling interests
Earnings attributable to 178 920 246 993 420 516
shareholders
Earnings attributable to 178 920 246 993 420 516
shareholders
Impairment of goodwill 672 2 763 6 888
Amortisation of acquired 2 052 1 577 3 509
intangibles, net of taxation
Loss on subsidiaries - (1 481) (1 641)
attributable to non-
controlling interests
Profit arising from associate - (73 465) (73 465)
converted to subsidiary
Net loss on sale of - 7 942 13 524
subsidiaries, net of taxation
Preference dividends paid (26 730) (27 031) (43 019)
Additional earnings 6 201 5 904 1 585
attributable to other equity
holders
Currency hedge attributable 1 752 - -
to perpetual equity
instruments
Adjusted earnings 162 867 163 202 327 897
attributable to ordinary
shareholders before goodwill,
acquired intangibles and non-
operating items
Headline adjustments (gain on (14 949) (17 002) (41 238)
investment properties and
available-for-sale
instruments recognised in
income)
Headline earnings 147 918 146 200 286 659
Earnings per share (pence)
- Basic 19.2 29.7 49.7
- Diluted 18.1 27.9 46.7
Adjusted earnings per share
(pence)
- Basic 20.6 22.1 43.2
- Diluted 19.4 20.7 40.6
Headline earnings per share
(pence)
- Basic 18.7 19.8 37.7
- Diluted 17.6 18.6 35.5
Number of weighted average
shares (millions)
- Basic 792.1 739.7 759.8
Summarised combined consolidated statement of total comprehensive income
Six months to Six months to Year to
30 September 30 September 31 March
GBP`000 2011 2010 2011
Profit after taxation 174 352 234 675 407 913
Other comprehensive income:
Cash flow hedge movements (34 524) 2 113 9 929
taken directly to other
comprehensive income+
Fair value movements on (22 115) 10 527 27 631
available-for-sale assets
taken directly to other
comprehensive income+
Gains on realisation of (1 070) (1 624) (4 845)
available-for-sale assets
recycled through the income
statement+
Foreign currency adjustments (237 073) 8 224 39 588
on translating foreign
operations
Pension fund actuarial gains - - 10 157
Total comprehensive (120 430) 253 915 490 373
(loss)/income
Total comprehensive loss (19 971) (11 351) (10 710)
attributable to non-
controlling interests
Total comprehensive (127 189) 235 472 458 064
(loss)/income attributable to
ordinary shareholders
Total comprehensive income 26 730 29 794 43 019
attributable to perpetual
preferred securities
Total comprehensive (120 430) 253 915 490 373
(loss)/income
+Net of taxation of (GBP21.5 million) (Six months to 30 September 2010: GBP3.0
million, Year to 31 March 2011: GBP5.7 million).
Summarised combined consolidated statement of changes in equity
Six months to Six months to Year to
30 September 30 September 31 March
GBP`000 2011 2010 2011
Balance at the beginning of 3 961 102 3 291 861 3 291 861
the period
Total comprehensive (120 430) 253 915 490 373
(loss)/income
Share-based payment 36 660 17 708 69 518
adjustments
Dividends paid to ordinary (70 558) (59 341) (123 630)
shareholders
Dividends paid to perpetual (26 730) (27 031) (43 019)
preference shareholders
Dividends paid to non- (247) (182) (356)
controlling interests
Issue of ordinary shares 40 030 317 464 325 886
Issue of perpetual preference 20 638 11 893 16 138
shares
Share issue expenses (587) (3 753) (3 632)
Issue of equity instruments - 1 514 1 493
by subsidiaries
Movement of treasury shares (42 894) (6 253) (45 461)
Acquisition of non- - - (3 970)
controlling interests
Non-controlling interest - - (14 099)
relating to disposal of
subsidiaries
Balance at the end of the 3 796 984 3 797 795 3 961 102
period
Combined consolidated balance sheet
30 September 31 March 30 September
GBP`000 2011 2011 2010*
Assets
Cash and balances at central 1 274 647 1 769 078 1 550 807
banks
Loans and advances to banks 2 186 698 1 468 705 2 257 741
Cash equivalent advances to 398 068 535 983 527 758
customers
Reverse repurchase agreements 2 332 960 2 467 775 1 207 255
and cash collateral on
securities borrowed
Trading securities 5 212 200 5 114 322 5 338 673
Derivative financial 2 543 704 1 799 204 1 970 670
instruments
Investment securities 3 461 471 3 328 609 2 915 969
Loans and advances to 17 938 242 18 758 524 18 110 210
customers
Loans and advances to 1 530 550 1 612 181 1 683 586
customers - Kensington
warehouse assets
Securitised assets 4 137 563 4 924 293 5 150 421
Interests in associated 24 164 23 481 22 303
undertakings
Deferred taxation assets 117 340 114 838 132 252
Other assets 1 475 416 1 410 593 1 188 678
Property and equipment 266 452 279 801 57 774
Investment properties 354 700 379 527 324 672
Goodwill 454 417 456 608 466 125
Intangible assets 130 346 136 452 167 506
Non-current assets classified - - 122 133
as held for sale
43 838 938 44 579 974 43 194 533
Other financial instruments
at fair value through profit
or loss in respect of
- Liabilities to customers 5 887 649 6 361 296 5 781 206
- Assets related to - - 2 699
reinsurance contracts
49 726 587 50 941 270 48 978 438
Liabilities
Deposits by banks 1 696 070 1 858 893 2 181 563
Deposits by banks - 898 564 975 542 1 082 431
Kensington warehouse funding
Derivative financial 2 010 287 1 486 419 1 618 990
instruments
Other trading liabilities 834 417 716 556 540 254
Repurchase agreements and 1 721 545 1 599 646 942 699
cash collateral on securities
lent
Customer accounts (deposits) 24 184 573 24 441 260 23 493 808
Debt securities in issue 2 149 556 2 145 213 2 183 112
Liabilities arising on 3 575 793 4 340 864 4 488 245
securitisation
Current taxation liabilities 207 298 206 957 191 560
Deferred taxation liabilities 138 110 148 750 202 938
Other liabilities 1 297 615 1 411 137 1 193 942
Pension fund liabilities - - 487
Liabilities directly - - 103 465
associated with non-current
assets held for sale
38 713 828 39 331 237 38 223 494
Liabilities to customers 5 885 448 6 358 732 5 776 517
under investment contracts
Insurance liabilities, 2 201 2 564 4 689
including unit-linked
liabilities
Reinsured liabilities - - 2 699
44 601 477 45 692 533 44 007 399
Subordinated liabilities 1 328 126 1 287 635 1 173 244
45 929 603 46 980 168 45 180 643
Equity
Ordinary share capital 210 208 201
Perpetual preference share 153 153 181
capital
Share premium 2 292 401 2 242 067 2 256 628
Treasury shares (62 313) (42 713) (55 182)
Other reserves 38 838 315 878 270 030
Retained income 1 234 384 1 131 980 999 077
Shareholders` equity 3 503 673 3 647 573 3 470 935
excluding non-controlling
interests
Non-controlling interests 293 311 313 529 326 860
- Perpetual preferred 293 829 317 997 311 312
securities issued by
subsidiaries
- Non-controlling interests (518) (4 468) 15 548
in partially held
subsidiaries
Total equity 3 796 984 3 961 102 3 797 795
Total liabilities and equity 49 726 587 50 941 270 48 978 438
*As restated for reclassifications detailed in the commentary section of this
report.
Summarised combined consolidated cash flow statement
Six months to Six months to Year to
30 September 30 September 31 March
GBP`000 2011 2010 2011
Cash inflows from operations 394 574 343 799 779 885
Increase in operating assets (3 428 440) (2 460 557) (4 032 844)
Increase in operating 2 834 291 1 295 406 2 752 392
liabilities
Net cash outflow from (199 575) (821 352) (500 567)
operating activities
Net cash outflow from (19 493) (10 946) (292 272)
investing activities
Net cash inflow from 28 144 157 453 156 748
financing activities
Effects of exchange rate (129 249) 15 889 101 032
changes on cash and cash
equivalents
Net decrease in cash and cash (320 173) (658 956) (535 059)
equivalents
Cash and cash equivalents at 3 386 988 3 922 047 3 922 047
the beginning of the period
Cash and cash equivalents at 3 066 815 3 263 091 3 386 988
the end of the period
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).
Segmental geographic and business analysis of operating profit before goodwill,
acquired intangibles, non-operating items and taxation for the six months to 30
September 2011
United Kingdom Southern Total
GBP`000 and Europe Africa Australia group
Asset Management 28 401 37 177 - 65 578
Wealth and Investment 13 217 8 571 - 21 788
Property Activities (20) 10 453 1 255 11 688
Private Banking 3 779 14 701 (23 382) (4 902)
Core Private Banking 9 163 14 701 13 258 37 122
Property development (5 384) - (36 640) (42 024)
portfolio being run
off*
Investment Banking (2 059) 7 488 (1 770) 3 659
Capital Markets 98 892 54 806 1 917 155 615
Group Services and (47 876) 17 478 601 (29 797)
Other Activities
Operating profit after 94 334 150 674 (21 379) 223 629
non-controlling
interests
Core business 99 718 150 674 15 261 265 653
Property development (5 384) - (36 640) (42 024)
portfolio being run
off*
Non-controlling (4 568)
interest - equity
Operating profit 219 061
before goodwill and
acquired intangibles
* Residual property development loan portfolio in Ireland and Australia which
have been ring-fenced for collection and recovery and are being run-off.
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 Total
GBP`000 and Europe Africa Australia group
Asset Management 18 867 30 046 - 48 913
Wealth and Investment 8 996 7 346 - 16 342
Property Activities (443) 14 540 2 311 16 408
Private Banking (12 486) 14 150 (5 543) (3 879)
Core Private Banking 9 536 14 150 6 177 29 863
Property development (22 022) - (11 720) (33 742)
portfolio being run
off*
Investment Banking 8 816 36 845 (3 151) 42 510
Capital Markets 88 385 40 364 4 757 133 506
Group Services and (32 097) 3 119 3 335 (25 643)
Other Activities
Operating profit after 80 038 146 410 1 709 228 157
non-controlling
interests
Core business 102 060 146 410 13 429 261 899
Property development (22 022) - (11 720) (33 742)
portfolio being run
off*
Non-controlling (10 837)
interest - equity
Operating profit 217 320
before goodwill and
acquired intangibles
Commentary
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated financial results in Pounds Sterling for the six
months ended 30 September 2011
Overall group performance
The group`s diversified business model, level of recurring income, and strong
capital and liquidity has supported a stable operational performance against a
backdrop of volatile and unstable economic and market conditions during the
period under review. The group`s low-capital intensive asset and wealth
management businesses have performed well, reporting a strong increase in their
contribution to group earnings. The Specialist Banking businesses have benefited
from growth in net interest income and fee income but earnings from principal
transactions have been negatively impacted by poor economic fundamentals and
market volatility referred to above.
The main features of the period under review are:
- Operating profit before goodwill, acquired intangibles, non-operating items
and taxation and after non-controlling interests ("operating profit") decreased
2.0% to GBP223.6 million (2010: GBP228.2 million).
- Impairments on loans and advances increased 16.7% to GBP143.3 million (2010:
GBP122.9 million), but decreased by 26.6% relative to the second half of the
financial year ended 31 March 2011.
- Adjusted earnings attributable to shareholders before goodwill, acquired
intangibles and non-operating items decreased 0.2% to GBP162.9 million (2010:
GBP163.2 million).
- Adjusted earnings per share (EPS) before goodwill, acquired intangibles and
non-operating items decreased 6.8% from 22.1 pence to 20.6 pence, largely as a
result of an increase in the number of shares in issue.
- The asset management and wealth management businesses account for 39.1% of the
group`s operating profit, compared to 28.6% in 2010.
- Third party assets under management decreased 10.0% to GBP80.0 billion (31
March 2011: GBP88.9 billion) - a decline of 3.4% on a currency neutral basis.
Net inflows amounted to approximately GBP3.0 billion.
- Customer accounts (deposits) decreased 1.0% to GBP24.2 billion (31 March 2011:
GBP24.4 billion) - an increase of 8.1% on a currency neutral basis.
- Core loans and advances decreased 6.7% to GBP17.5 billion (31 March 2011:
GBP18.8 billion) - an increase of 2.0% on a currency neutral basis.
- The board declared a dividend of 8.0 pence per ordinary share (2010: 8.0
pence) resulting in a dividend cover based on the group`s adjusted EPS before
goodwill and non-operating items of 2.6 times (2010: 2.8 times), consistent with
the group`s dividend policy.
Operational review
The banking environment remains uncertain as regulators continue their review
and adjustment of the regulatory framework in an attempt to strengthen the
system and avoid future crises. As a result, the group maintains high levels of
surplus cash and capital in anticipation of a system where higher levels of
liquidity and capital will become the norm.
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 continues to benefit from its growing retail franchise
recording an increase in customer deposits in all three core geographies. Cash
and near cash balances amount to GBP9.3 billion (31 March 2011: GBP9.3 billion)
- GBP10.1 billion on a currency neutral basis.
Capital adequacy
The group comfortably met its capital adequacy targets of 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 respectively.
Capital adequacy ratios remain sound in both Investec plc and Investec Limited,
as reflected in the table below.
30 September 30 September 31 March
Basel II ratios 2011 2010 2011
Investec plc
Capital adequacy ratio 17.1% 16.7% 16.8%
Tier 1 ratio 11.6% 12.1% 11.6%
Investec Limited
Capital adequacy ratio 15.7% 16.2% 15.9%
Tier 1 ratio 12.0% 12.1% 11.9%
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 Capital Markets primarily
transacts with mid to large sized corporates, public sector bodies and
institutions. The majority of the group`s credit and counterparty exposures
reside within its three core geographies. The group has no exposure to
peripheral European sovereign debt. Net defaults on core loans and advances have
decreased and are fully covered by collateral, as detailed in the "Financial
statement analysis" below.
Business unit review
The group continues to realign its business model towards less capital intensive
activities by building strong asset management and wealth management businesses
thereby growing its annuity net fee and commission income. This strategy has
resulted in a solid rise in net inflows of funds under management and an
increase in operating profit from these businesses of 33.9% to GBP87.4 million
(2010: GBP65.2 million).
Asset Management
Asset Management increased operating profit 34.1% to GBP65.6 million (2010:
GBP48.9 million) benefiting from higher average funds under management and a
reliable investment performance. Net inflows of GBP2.2 billion were recorded.
Total funds under management amount to GBP53.1 billion (31 March 2011: GBP58.8
billion) and have been negatively impacted by market and currency volatility.
Wealth & Investment
Wealth & Investment increased operating profit 33.3% to GBP21.8 million (2010:
GBP16.3 million) benefiting from higher average funds under management and a
full contribution from the acquisition of Rensburg Sheppards plc which became
effective in June 2010. Net inflows of GBP0.8 billion were recorded. Total funds
under management amount to GBP26.3 billion (31 March 2011: GBP29.4 billion) and
have also been negatively impacted by market and currency volatility.
Property Activities
Property Activities` operating profit declined by 28.8% to GBP11.7 million
(2010: GBP16.4 million) largely as a result of the sale of R1.7 billion of its
property portfolio at the end of financial year 2011. The results of the
division are in line with the group`s expectations and remain supported by a
sound investment property portfolio in South Africa.
Private Banking
Private Banking reported a loss of GBP4.9 million (2010: loss of GBP3.9
million). If one excludes the property development portfolio which is being run
off in Australia and Ireland, the Private Bank made a profit of GBP37.1 million
(2010: GBP29.9 million). The South African business has benefited from growth in
its loan portfolio and improved margins, whilst the UK business showed a
significantly improved performance as a result of lower impairments. The
professional banking business in Australia continues to perform well and
accounts for approximately 50% of its loan portfolio. The Australian business
has, however, been negatively impacted by significantly increased impairments on
the property development portfolio that is being run off. Activity levels,
whilst improving, remain below historic norms across all three core geographies.
The private client core lending book is GBP12.5 billion (31 March 2011: GBP13.3
billion) and the deposit book is GBP12.0 billion (31 March 2011: GBP12.5
billion).
Investment Banking
Investment Banking operating profit declined by 91.4% to GBP3.7 million (2010:
GBP42.5 million) largely due to the performance of the listed principal
investment portfolio which was adversely affected by a sharp fall in equity
markets towards the end of the period. Weaker economic and trading conditions
have impacted the timing of realisations and dividends received. Agency
divisions benefited from a good deal pipeline, notably in South Africa, however,
operating conditions in the Institutional Stockbroking business remain
difficult.
Capital Markets
Capital Markets increased operating profit by 16.6% to GBP155.6 million (2010:
GBP133.5 million). The division benefited from a strong deal pipeline and
improved margins in South Africa, and another solid performance from the UK
business. Activity levels within the Australian business remain satisfactory.
Core loans and advances amount to GBP4.4 billion (31 March 2011 GBP4.8 billion).
Group Services and Other Activities
Group Services and Other Activities made a loss of GBP29.8 million (2010: loss
of GBP25.6 million). Central Funding`s results were impacted by lower margins
and Central Services incurred an increase in personnel costs and systems related
costs.
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 increased by 12.6% to GBP992.4
million (2010: GBP881.0 million), with recurring income as a percentage of total
operating income amounting to 67.8% (2010: 63.0%).
Net interest income increased by 13.6% to GBP364.7 million (2010: GBP321.2
million) largely as a result of improved margins across all three geographies
and a sound performance from the group`s fixed income portfolios.
Net fee and commission income increased by 30.7% to GBP445.2 million (2010:
GBP340.5 million). The group benefited from higher average funds under
management and solid net inflows. The banking businesses recorded an increase in
net fees and commissions largely due to a good performance by the Capital
Markets division in South Africa, however, transactional activity levels remain
mixed.
Income from principal transactions decreased by 33.8% to GBP138.3 million (2010:
GBP208.7 million) largely due to a weaker performance from the group`s listed
principal investments portfolio as outlined above.
Other operating income includes associate income and income earned on an
operating lease portfolio acquired during December 2010.
Impairment losses on loans and advances
The overall picture on impairment losses on loans and advances was mixed.
Although impairments have fallen since the second half of the last financial
year, losses on loans and advances increased from GBP98.2 million to GBP107.1
million (excluding Kensington) compared to the first half of last year. This was
largely as a result of significantly increased impairments on the property
development portfolio in Australia. The residual loan portfolio has been ring-
fenced for collection and recovery. Since 31 March 2011 the level of defaults in
South Africa has started to improve, whilst the UK reported defaults marginally
ahead of the year-end. The credit loss charge as a percentage of average gross
loans and advances has improved from 1.27% at 31 March 2011 to 1.08% for the
current period. The percentage of default loans (net of impairments but before
taking collateral into account) to core loans and advances amounts to 4.30% (31
March 2011: 4.66%). The ratio of collateral to default loans (net of
impairments) remains satisfactory at 1.19 times (31 March 2011: 1.38 times).
Impairment losses on loans and advances relating to the Kensington business
amount to GBP36.2 million (2010: GBP24.7 million). The Kensington book has
reduced from GBP4.2 billion at 31 March 2011 to GBP3.6 billion.
Operating costs and depreciation
The ratio of total operating costs to total operating income amounts to 62.6%
(2010:61.4%).
Total operating expenses grew by 12.4% to GBP607.9 million (2010: GBP540.9
million) as a result of the acquisitions of Rensburg Sheppards plc, an increase
in variable remuneration in certain divisions given improved profitability, and
an increase in headcount in certain divisions. Cost containment is a key
priority for the group.
Impairment of goodwill
The current period goodwill impairment relates to Asset Management businesses
acquired in prior years.
Amortisation of acquired intangibles
Amortisation of acquired intangibles relates to the Wealth & Investment business
and mainly comprises amortisation of amounts attributable to client
relationships.
Profit arising from associate converted to a subsidiary
In the prior period a net gain of GBP73.5 million arose on the acquisition of
the balance of shares in Rensburg Sheppards plc not already owned by the group.
Net loss on sale of subsidiaries
In the prior period a net loss on sale of subsidiaries of GBP7.9 million arose
from a loss on sale of previously consolidated group investments.
Taxation
The operational effective tax rate amounts to 19.2% (2010: 20.2%).
Losses attributable to non-controlling interests
Losses attributable to non-controlling interests comprise:
- GBP4.6 million relating to Euro denominated preferred securities issued by a
subsidiary of Investec plc which are reflected on the balance sheet as part of
non-controlling 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 non-
controlling interests).
Balance sheet analysis
Since 31 March 2011:
- Total shareholders` equity (including non-controlling interests) decreased by
4.1% to GBP3.8 billion largely as a result of the sharp depreciation of the
Rand, partially offset by retained earnings and the issue of shares.
- Total assets decreased from GBP50.9 billion to GBP49.7 billion largely as a
result of the sharp depreciation of the Rand.
- Core loans and advances (excluding own originated securitised assets) as a
percentage of customer deposits improved from 72.4% to 68.2%.
- The return on adjusted average shareholders` equity declined from 11.2% to
10.1%.
- Net asset value per share decreased 6.0% to 391.2 pence and net tangible asset
value per share (which excludes goodwill and intangible assets) decreased by
6.6% to 321.0 pence largely as a result of the sharp depreciation of the Rand.
The group`s gearing ratios remain low with core loans and advances to equity at
4.6 times (31 March 2011: 4.7 times) and total assets (excluding assurance
assets) to equity at 11.5 times (31 March 2011:11.3 times).
Outlook
The Eurozone crisis continues to affect confidence and activity levels around
the world. Markets remain volatile and the future regulatory landscape is still
uncertain. Investec has made progress, building further scale in its wealth and
asset management businesses and maintaining its absolute level of profitability
since the financial crisis began. The group`s diversified business model
continues to demonstrate strong defensive qualities and the Board believes that
the group`s experienced management team will continue to navigate a steady
course through this period of instability.
On behalf of the boards of Investec plc and Investec Limited
Hugh Herman Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
16 November 2011
Additional information
On 09 September 2011 Investec announced a recommended all share offer for The
Evolution Group plc. The transaction is being implemented via a Scheme of
Arrangement and at a Court meeting on 27 October 2011, Evolution shareholders
voted by the requisite majority to approve the Scheme to implement the
acquisition. The transaction is expected to complete by mid-December, subject to
all necessary regulatory approvals being received.
Investec believes that the Evolution business represents a compelling strategic
fit and that the combination of Investec`s existing private client investment
management business with that of Evolution`s, Williams de Broe business, will
create a stronger platform, allowing it to significantly enhance its market
position. Furthermore, there is great potential to generate longer term value
for the combined business and its employees. Investec also believes a
combination of Evolution Securities with Investec Investment Banking will
contribute to its existing strategy to be the leading mid-market investment bank
in the UK.
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 2010.
Amounts represented on a currency neutral basis assume that the closing exchange
rates of the group`s relevant exchange rates, as reflected below, remain the
same as at 30 September 2011 when compared to 31 March 2011.
- 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:
Six months to Six months to Year to
30 September 2011 30 September 2010 31 March 2011
Currency per Close Ave Close Ave Close Ave
GBP1.00
South African 12.62 11.25 11.00 11.29 10.88 11.16
Rand
Australian 1.60 1.53 1.63 1.70 1.55 1.65
Dollar
Euro 1.16 1.13 1.15 1.18 1.13 1.17
Dollar 1.56 1.63 1.57 1.52 1.60 1.55
Exchange rates between local currencies and Pounds Sterling have fluctuated over
the period. The most significant impact arises from the volatility of the Rand.
The average exchange rate over the period has remained relatively flat and the
closing rate has depreciated by 16.0% since 31 March 2011.
- Accounting policies and disclosures
These unaudited consolidated financial results 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 and the South African Companies Act 71 of 2008.
The accounting policies applied in the preparation of the results for the period
ended 30 September 2011 are consistent with those adopted in the financial
statements for the year ended 31 March 2011. The financial results have been
prepared under the supervision of Glynn Burger the Group Risk and Finance
Director.
- Restatements and presentation of information
Redeemable preference shares
At 31 March 2011 the group disclosed a restatement to the balance sheet to
present redeemable preference share liabilities as a component of debt
securities in issue rather than other liabilities. The impact of this
presentational amendment to 30 September 2010 and 30 September 2009 is noted
below:
Changes to
As previously previously
GBP`000 Restated reported reported
30 September 2010
Debt securities in issue 2 183 112 1 815 113 367 999
Other liabilities 1 193 942 1 561 941 (367 999)
30 September 2009
Debt securities in issue 1 481 971 1 166 386 315 585
Other liabilities 1 027 133 1 342 718 (315 585)
The above change has no impact to the income statement, balance sheet (other
than as noted above) or 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; and
- 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
16 November 2011.
- The information in the announcement for the six months ended 30 September
2011, which was approved by the board of directors on 16 November 2011, does not
constitute statutory accounts as defined in Section 435 of the UK Companies Act
2006.
Investec plc
Ordinary dividend announcement
Registration number: 3633621
Share code: INP
ISIN: GB00BI7BBQ50
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 19 of 8 pence (2010: 8
pence) per ordinary share has been declared by the board in respect of the six
months ended 30 September 2011 payable to shareholders recorded in the members`
register of the company at the close of business on Friday, 09 December 2011,
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 0.5 pence per ordinary share and through a dividend
paid by Investec Limited, on the SA DAS share equivalent to 7.5 pence per
ordinary share
The relevant dates for the payment of dividend number 19 are as follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Friday, 02 December 2011
On the London Stock Exchange (LSE) Tuesday, 06 December 2011
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Monday, 05 December 2011
On the London Stock Exchange (LSE) Wednesday, 07 December 2011
Record date (on the JSE and LSE) Friday, 09 December 2011
Payment date (on the JSE and LSE) Tuesday, 20 December 2011
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Monday, 05 December 2011 and Friday, 09
December 2011, both dates inclusive, nor may transfers between the UK and SA
registers take place between Monday, 05 December 2011 and Friday, 09 December
2011, both dates inclusive.
Shareholders registered on the South African register are advised that the
distribution of 8 pence, equivalent to 103 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, 16 November 2011.
By order of the board
D Miller
Company Secretary
16 November 2011
Investec Limited
Ordinary dividend announcement
Registration number: 1925/002833/06
Share code: INL
ISIN: ZAE000081949
Notice is hereby given that an interim dividend number 112 of 103 cents (2010:
90 cents) per ordinary share has been declared by the board in respect of the
six months ended 30 September 2011 payable to shareholders recorded in the
members` register of the company at the close of business on Friday,09 December
2011.
The relevant dates for the payment of dividend number 112 are as follows:
Last day to trade cum-dividend Friday, 02 December 2011
Shares commence trading ex-dividend Monday, 05 December 2011
Record date (on the JSE) Friday, 09 December 2011
Payment date (on the JSE) Tuesday, 20 December 2011
The interim dividend of 103 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, 16 November 2011.
Share certificates may not be dematerialised or rematerialised between Monday,
05 December 2011 and Friday, 09 December 2011, both dates inclusive.
By order of the board
B Coetsee
Company Secretary
16 November 2011
Investec plc
Preference share dividend announcement
Registration number: 3633621
Share code: INPP
ISIN: GB00B19RX541
Non-redeemable non-cumulative non-participating preference shares
Declaration of dividend number 11
Notice is hereby given that preference dividend number 11 has been declared for
the period 01 April 2011 to 30 September 2011 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, 02 December 2011.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of
7.52 pence per share is equivalent to 97 cents per share, which has been
determined using the Rand/Pound Sterling average buy/sell forward rate as at
11h00 (SA Time) on Wednesday, 16 November 2011.
The relevant dates relating to the payment of dividend number 11 are as follows:
Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE) Friday, 25 November 2011
On the Channel Islands Stock Exchange (CISX) Tuesday, 29 November 2011
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE) Monday, 28 November 2011
On the Channel Islands Stock Exchange (CISX) Wednesday, 30 November 2011
Record date (on the JSE and CISX) Friday, 02 December 2011
Payment date (on the JSE and CISX) Tuesday, 13 December 2011
Share certificates may not be dematerialised or rematerialised between Monday,
28 November 2011 and Friday, 02 December 2011, both dates inclusive, nor may
transfers between the UK and SA registers take place between Monday, 28 November
2011 and Friday, 02 December 2011, both dates inclusive.
By order of the board
D Miller
Company Secretary
16 November 2011
Investec plc
Rand denominated preference share dividend announcement
Registration number: 3633621
Share code: INPPR
ISIN: GB00B4B0Q974
Rand denominated non-redeemable, non-cumulative, non-participating perpetual
preference shares
Declaration of dividend number 1
Notice is hereby given that preference dividend number 1 has been declared for
the period 29 June 2011 to 30 September 2011 amounting to 220.19 cents per share
payable to holders of the Rand denominated non-redeemable non-cumulative non-
participating preference shares as recorded in the books of the company at the
close of business on Friday, 02 December 2011.
The relevant dates relating to the payment of dividend number 1 are as follows:
Last day to trade cum-dividend Friday, 25 November 2011
Shares commence trading ex-dividend Monday, 28 November 2011
Record date Friday, 02 December 2011
Payment date Tuesday, 13 December 2011
Share certificates may not be dematerialised or rematerialised between Monday,
28 November 2011 and Friday, 02 December 2011, both days inclusive.
By order of the board
D Miller
Company Secretary
16 November 2011
Investec Limited
Preference share dividend announcement
Registration number: 1925/002833/06
Share code: INPR
ISIN: ZAE000063814
Non-redeemable non-cumulative non-participating preference shares
Declaration of dividend number 14
Notice is hereby given that preference dividend number 14 has been declared for
the period 01 April 2011 to 30 September 2011 amounting to 315.86 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, 02 December 2011.
The relevant dates for the payment of dividend number 14 are as follows:
Last day to trade cum-dividend Friday, 25 November 2011
Shares commence trading ex-dividend Monday, 28 November 2011
Record date Friday, 02 December 2011
Payment date Tuesday, 13 December 2011
Share certificates may not be dematerialised or rematerialised between Monday,
28 November 2011 and Friday, 02 December 2011, both dates inclusive.
By order of the board
B Coetsee
Company Secretary
16 November 2011
Registered office Registered office
2 Gresham Street 100 Grayston Drive
London, EC2V 7QP Sandown
United Kingdom Sandton 2196
Transfer secretaries Transfer secretaries
Computershare Investor Services Computershare Investor Services
(Pty) Ltd (Pty) Ltd
70 Marshall Street, 70 Marshall Street,
Johannesburg 2001 Johannesburg 2001
Company secretary: Company secretary:
D Miller 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
O C Dickson
H J du Toit*
B Fried
H Fukuda OBE
I R Kantor
M P Malungani
Sir David Prosser
P R S Thomas
F Titi
*Executive
British
www.investec.com
Date: 17/11/2011 09:00:01 Produced by the JSE SENS Department.
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