| Thu 17 May 2012, 8:00 | | INLP - Investec Bank Limited - Reviewed preliminary condensed consolidated |
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JSE INLP
INLP
INLP - Investec Bank Limited - Reviewed preliminary condensed consolidated
financial results for the year ended 31 March 2012
Investec Bank Limited
(Registration number 1969/004763/06)
Share code: INLP ISIN: ZAE000048393
Reviewed preliminary condensed consolidated financial results for the year ended
31 March 2012
Consolidated income statement
Year to 31 March Reviewed Restated*
R`million 2012 2011
Interest income 15 850 14 932
Interest expense (11 581) (11 062)
Net interest income 4 269 3 870
Fee and commission income 1 146 948
Fee and commission expense (91) (39)
Investment income 589 1 208
Trading income
- Arising from customer flow 259 209
- Arising from balance sheet management and other 175 253
trading activities
Other operating income/(loss) 10 (2)
Total operating income before impairment losses 6 357 6 447
on loans and advances
Impairment losses on loans and advances (833) (852)
Operating income 5 524 5 595
Operating costs (3 351) (3 181)
Profit before taxation 2 173 2 414
Taxation (215) (132)
Profit after taxation 1 958 2 282
Loss attributable to non-controlling interests - 4
Earnings attributable to shareholders 1 958 2 286
Headline earnings
Earnings attributable to shareholders 1 958 2 286
Preference dividends paid (104) (120)
Earnings attributable to ordinary shareholders 1 854 2 166
Headline adjustments, net of taxation (42) 25
Gain on realisation of available-for-sale (42) -
financial assets
Impairment of associate - 25
Headline earnings attributable to ordinary 1 812 2 191
shareholders
* As restated for reclassifications detailed in the commentary section of this
report.
Condensed consolidated statement of total comprehensive income
Year to 31 March Reviewed Audited
R`million 2012 2011
Profit after taxation 1 958 2 282
Other comprehensive income:
Cash flow hedge movements taken directly to other (354) 82
comprehensive income**
Fair value movements on available-for-sale assets 84 23
taken directly to other comprehensive income**
Gain on realisation of available-for-sale assets (42) -
recycled through the income statement
Foreign currency adjustments on translating 229 (128)
foreign operations
Total comprehensive income 1 875 2 259
Total comprehensive loss attributable to non- - (4)
controlling interests
Total comprehensive income attributable to 1 875 2 263
shareholders
Total comprehensive income 1 875 2 259
** Net of taxation of (R105 million) (2011: R41 million).
Consolidated balance sheet
At 31 March Reviewed Restated* Restated*
R`million 2012 2011 2010
Assets
Cash and balances at central banks 9 303 6 813 3 660
Loans and advances to banks 19 191 4 918 13 245
Non-sovereign and non-bank cash 7 885 5 829 6 455
placements
Reverse repurchase agreements and cash 5 098 8 157 3 776
collateral on securities borrowed
Sovereign debt securities 30 222 29 118 18 668
Bank debt securities 27 695 18 169 13 305
Other debt securities 6 284 4 888 2 003
Derivative financial instruments 10 595 11 487 7 829
Securities arising from trading 1 628 625 624
activities
Investment portfolio 6 036 5 766 5 380
Loans and advances to customers 122 615 114 439 110 894
Own originated loans and advances to 2 302 934 1 369
customers securitised
Other loans and advances 669 784 1 025
Other securitised assets 1 057 1 242 2 162
Interest in associated undertakings 38 135 180
Deferred taxation assets 46 42 22
Other assets 1 074 981 924
Property and equipment 308 286 164
Investment properties 5 5 5
Intangible assets 96 108 96
Loans to group companies 3 805 6 836 6 093
Total assets 255 952 221 562 197 879
Liabilities
Deposits by banks 13 933 10 956 9 554
Derivative financial instruments 8 570 10 495 7 144
Other trading liabilities 172 389 454
Repurchase agreements and cash 18 174 10 733 6 281
collateral on securities lent
Customer accounts (deposits) 176 094 154 772 143 390
Debt securities in issue 1 738 2 489 2 758
Liabilities arising on securitisation 2 933 931 1 487
of own originated loans and advances
Liabilities arising on securitisation 492 1 243 1 220
of other assets
Current taxation liabilities 1 113 1 024 857
Deferred taxation liabilities 9 349 444
Other liabilities 3 082 2 478 2 495
226 310 195 859 176 084
Subordinated liabilities 8 709 6 866 5 341
Total liabilities 235 019 202 725 181 425
Equity
Ordinary share capital 29 27 25
Share premium 13 527 11 845 10 530
Other reserves (119) (100) (156)
Retained income 7 496 7 065 6 051
Shareholders` equity excluding non- 20 933 18 837 16 450
controlling interests
Non-controlling interests - - 4
Total equity 20 933 18 837 16 454
Total liabilities and equity 255 952 221 562 197 879
* As restated for reclassifications detailed in the commentary section of this
report.
Condensed consolidated statement of changes in equity
Year to 31 March Reviewed Audited
R`million 2012 2011
Balance at the beginning of the year 18 837 16 454
Total comprehensive income for the year 1 875 2 259
Issue of ordinary shares 1 684 1 300
Issue of perpetual preference shares - 17
Dividends paid to ordinary shareholders (1 359) (1 073)
Dividends paid to perpetual preference (104) (120)
shareholders
Balance at the end of the year 20 933 18 837
Condensed consolidated cash flow statement
Year to 31 March Reviewed Audited
R`million 2012 2011
Net cash inflow from operating activities 8 353 2 492
Net cash outflow from investing activities (37) (226)
Net cash inflow from financing activities 2 064 1 649
Effects of exchange rate changes on cash and cash 146 (21)
equivalents
Net increase in cash and cash equivalents 10 526 3 894
Cash and cash equivalents at the beginning of the 14 468 10 574
year
Cash and cash equivalents at the end of the year 24 994 14 468
Cash and cash equivalents is defined as including cash and balances at central
banks, on demand loans and advances to banks and non-sovereign and non-bank cash
placements (all of which have a maturity profile of less than three months).
These reviewed preliminary condensed consolidated financial results are
published to provide information to holders of Investec Bank Limited`s listed
non-redeemable, non-cumulative, non-participating preference shares.
Commentary
Overview of results
Investec Bank Limited, a subsidiary of Investec Limited, posted a decrease in
headline earnings attributable to ordinary shareholders of 17.3% to R1,812
million (2011: R2,191 million).
The balance sheet remains strong with a capital adequacy ratio of 16.1% (2011:
15.6%).
For full information on the Investec Group results, refer to the combined
results of Investec plc and Investec Limited or the group`s website
http://www.investec.com
Financial review
Unless the context indicates otherwise, all comparatives referred to in the
financial review relate to the year ended 31 March 2011. Operating profit is
before taxation and headline adjustments.
Salient operational features of the year under review include:
- Total operating income before impairment losses on loans and advances
decreased by 1.4% to R6,357 million (2011: R6,447 million). The components of
operating income are analysed further below:
- Net interest income increased by 10.3% to R4,269 million (2011: R3,870
million) largely as a result of improved margins and a sound performance from
the bank`s fixed income portfolio, partially offset by higher costs on
subordinated liabilities.
- Net fee and commission income increased by 16.1% to R1,055 million (2011: R909
million) supported by increased activity in the corporate and advisory
divisions.
- Investment income decreased by 51.2% to R589 million (2011: R1,208 million)
largely due to a weaker performance from the bank`s listed principal investments
portfolio.
- Trading income arising from customer flow increased by 23.9% to R259 million
(2011: R209 million) whilst trading income arising from other trading activities
decreased by 30.8% to R175 million (2011: R253 million) reflecting lower
activity on the balance sheet management desk.
- Since 31 March 2011 the level of defaults has improved resulting in a 2.2%
decline in impairments on loans and advances to R833 million (2011: R852
million). The credit loss charge as a percentage of average gross loans and
advances has improved from 0.74% at 31 March 2011 to 0.69%. The percentage of
default loans (net of impairments but before taking collateral into account) to
core loans and advances amounts to 2.79% (2011: 4.13%). The ratio of collateral
to default loans (net of impairments) remains satisfactory at 1.68 times (2011:
1.49 times).
- The ratio of total operating costs to total operating income amounts to 52.7%
(2011: 49.3%). Total operating expenses grew by 5.3% to R3,351 million (2011:
R3,181 million) largely as a result of inflationary adjustments.
- As a result of the foregoing factors operating profit decreased by 10.0% to
R2,173 million (2011: R2,414 million).
Accounting policies and disclosures
These reviewed preliminary condensed consolidated financial results for the year
ended 31 March 2012 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,
the AC 500 Standards as issued by the Accounting Practices Board and the
Companies Act 71 of 2008.
The accounting policies applied in the preparation of the results for the year
ended 31 March 2012 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.
The audited financial statements and the annual report for the year ended 31
March 2012 will be posted to stakeholders on 29 June 2012. These accounts will
be available on the group`s website at the same date.
Restatements
In terms of Investec`s recent presentations and announcements, the Investec
group has positioned its strategic discussions around three core business areas
namely, Asset Management, Wealth & Investment and Specialist Banking. In some
respects the group believes that it has historically overcomplicated its
external disclosures by elaborating on six core areas of business. As you would
have already seen in the group`s recent presentations, all the banking
businesses have been combined under one broader umbrella of Specialist Banking.
As a result the group has chosen to refine some of its disclosures, which have
impacted the disclosures for Investec Bank Limited, and are explained further
below. The group believes that these refinements provide greater clarity on the
key income and balance sheet drivers of its business.
Consolidated income statement
- The previously reported principal transaction income line item has been split
into the following line items:
- Investment income: income, other than margin, from securities held for the
purpose of generating interest yield, dividends and capital appreciation.
- Client flow trading income: income from trading activities arising from making
and facilitating client activities.
- Income from balance sheet management and other trading activities: includes
proprietary trading income and other gains and losses as well as income earned
from the balance sheet management desk.
For the year ended 31 March As
2011 New previously
R`million format reported Reclassifications
Interest income 14 932 14 932 -
Interest expense (11 062) (11 062) -
Net interest income 3 870 3 870 -
Fee and commission income 948 948 -
Fee and commission expense (39) (39) -
Principal transactions - 1 670 (1 670)
Investment income 1 208 - 1 208
Trading income
- From customer flow 209 - 209
- From balance sheet 253 - 253
management and other trading
activities
Operating loss from associates - (17) 17
Other operating income/(loss) (2) 15 (17)
Total operating income before 6 447 6 447 -
impairment losses on loans and
advances
Consolidated balance sheet
The main driver behind the revision to the balance sheet is to enable a better
understanding of Investec`s exposures and to minimise reconciliation points to
the detailed risk disclosures in the annual report. It is noted that there are
no measurement changes nor are there any changes to total assets, liabilities
and equity and cash flow statement.
Each category of reclassification is noted below:
- Cash equivalent corporate paper
- Cash equivalent advances to customers has been renamed to "non-sovereign, non-
bank cash placements". These balances represent short-term placements in
corporates that run an in-house treasury function.
- Loans and securitisation
- To better align the balance sheet with the bank`s risk management disclosures,
loans and advances and securitised assets that form part of our "core" lending
activities has been separated from assets that are in warehoused facilities and
structured credit investments arising out of our securitisation and principal
finance activities. This has resulted in a need to split loans and advances and
securitised assets into two balance sheet categories for each. Securitised
liabilities has been split into two line items to enable the relationship with
securitised assets to be clearly identified.
- Securities reclassification
- The bank`s previous balance sheet split securities (other than lending
related) into two key line items being trading and investment securities. This
classification was driven by the accounting rule sets that mainly distinguish
between instruments fair valued through profit or loss, those carried at
amortised cost (held to maturity) and those fair valued through equity
(available-for-sale). The bank is of the view that disclosure of the nature of
exposures on the balance sheet, distinguishing between instruments held to
manage balance sheet liquidity, as principal exposure and balance sheet
instruments arising from trading desk activities provides more meaningful
disclosure on the face of the balance sheet. The line item "Securities arising
from trading activities" includes all instruments (other than derivative
instruments) that are held on balance sheet in relation to trading activities.
As Total
At 31 March 2011 New previously reclassi-
R`million format reported fications
Total assets reclassified
Cash equivalent advances to - 5 829 (5 829)
customers
Non-sovereign and non-bank cash 5 829 - 5 829
placements
Sovereign debt securities 29 118 - 29 118
Bank debt securities 18 169 - 18 169
Other debt securities 4 888 - 4 888
Trading securities - 44 352 (44 352)
Securities arising from trading 625 - 625
activities
Investment portfolio 5 766 - 5 766
Investment securities - 14 214 (14 214)
Loans and advances to customers 114 439 115 223 (784)
Securitised assets - 2 176 (2 176)
Own originated loans and advances 934 - 934
to customers securitised
Other loans and advances 784 - 784
Other securitised assets 1 242 - 1 242
181 794 181 794 -
Total liabilities reclassified
Liabilities arising on - 2 174 (2 174)
securitisation
Liabilities arising on 931 - 931
securitisation of own originated
loans and advances
Liabilities arising on 1 243 - 1 243
securitisation of other assets
2 174 2 174 -
Cash Loans
equivalent and Securities
At 31 March 2011 corporate securiti- reclassi-
R`million paper sation fication
Total assets reclassified
Cash equivalent advances to (5 829) - -
customers
Non-sovereign and non-bank cash 5 829 - -
placements
Sovereign debt securities - - 29 118
Bank debt securities - - 18 169
Other debt securities - - 4 888
Trading securities - - (44 352)
Securities arising from trading - - 625
activities
Investment portfolio - - 5 766
Investment securities - - (14 214)
Loans and advances to customers - (784) -
Securitised assets - (2 176) -
Own originated loans and advances - 934 -
to customers securitised
Other loans and advances - 784 -
Other securitised assets - 1 242 -
- - -
Total liabilities reclassified
Liabilities arising on - (2 174) -
securitisation
Liabilities arising on - 931 -
securitisation of own originated
loans and advances
Liabilities arising on - 1 243 -
securitisation of other assets
- - -
As Total
At 31 March 2010 New previously reclassi-
R`million format reported fications
Total assets reclassified
Cash equivalent advances to - 6 455 (6 455)
customers
Non-sovereign and non-bank cash 6 455 - 6 455
placements
Sovereign debt securities 18 668 - 18 668
Bank debt securities 13 305 - 13 305
Other debt securities 2 003 - 2 003
Trading securities - 36 375 (36 375)
Securities arising from trading 624 - 624
activities
Investment portfolio 5 380 - 5 380
Investment securities - 3 605 (3 605)
Loans and advances to customers 110 894 111 919 (1 025)
Securitised assets - 3 531 (3 531)
Own originated loans and advances 1 369 - 1 369
to customers securitised
Other loans and advances 1 025 - 1 025
Other securitised assets 2 162 - 2 162
161 885 161 885 -
Total liabilities reclassified
Liabilities arising on - 2 707 (2 707)
securitisation
Liabilities arising on 1 487 - 1 487
securitisation of own originated
loans and advances
Liabilities arising on 1 220 - 1 220
securitisation of other assets
2 707 2 707 -
Cash Loans
equivalent and Securities
At 31 March 2010 corporate securiti- reclassi-
R`million paper sation fication
Total assets reclassified
Cash equivalent advances to (6 455) - -
customers
Non-sovereign and non-bank cash 6 455 - -
placements
Sovereign debt securities - - 18 668
Bank debt securities - - 13 305
Other debt securities - - 2 003
Trading securities - - (36 375)
Securities arising from trading - - 624
activities
Investment portfolio - - 5 380
Investment securities - - (3 605)
Loans and advances to customers - (1 025) -
Securitised assets - (3 531) -
Own originated loans and advances - 1 369 -
to customers securitised
Other loans and advances - 1 025 -
Other securitised assets - 2 162 -
- - -
Total liabilities reclassified
Liabilities arising on - (2 707) -
securitisation
Liabilities arising on - 1 487 -
securitisation of own originated
loans and advances
Liabilities arising on - 1 220 -
securitisation of other assets
- - -
Commentary on line of business segmental reclassifications
The Investec Group previously reported segmental disclosures by six core
business lines as well as including a segment for the group`s central functions.
The group is now disclosing its segmental disclosures in three core business
lines, namely, Asset Management, Wealth & Investment and Specialist Banking. In
this regard:
- The income statement format has been revised as discussed above.
- To align with the information provided to the Chief Operating Decision Maker,
the Private Banking, Investment Banking, Capital Markets and Group Services and
Other divisions have now been grouped under one banner and collectively referred
to as Specialist Banking for Investec Bank Limited. Accordingly no additional
disclosures have been provided regarding the segmental results as the bank only
has one segment. Significant information was provided in the income statement
and balance sheet for this segment. The total operating profit has, however, not
changed from that which was previously reported.
On behalf of the Board of Investec Bank Limited
Fani Titi Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
16 May 2012
Review conclusion
KPMG Inc. and Ernst & Young Inc., the Group`s independent auditors, have
reviewed the preliminary condensed consolidated financial results and have
expressed an unmodified review conclusion on the preliminary condensed
consolidated financial results, which is available for inspection at the
company`s registered office.
Investec Bank Limited
Preference share dividend announcement
Registration number 1969/004763/06
Share code: INLP
ISIN: ZAE000048393
Non-redeemable non- cumulative non-participating preference shares ("preference
shares")
Declaration of dividend number 18
Notice is hereby given that preference dividend number 18 has been declared for
the period 01 October 2011 to 31 March 2012 amounting to a gross dividend of
338.42 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, 15 June 2012.
The relevant dates for the payment of dividend number 18 are as follows:
Last day to trade cum-dividend Friday, 08 June 2012
Shares commence trading ex-dividend Monday, 11 June 2012
Record date Friday, 15 June 2012
Payment date Tuesday, 26 June 2012
Share certificates may not be dematerialised or rematerialised between Monday,
11 June 2012 and Friday, 15 June 2012, both dates inclusive
Additional information to take note of:
- The Investec Bank Limited company tax reference number: 9675/053/71/5.
- The issued preference share capital of Investec Bank Limited is 15 447 630
preference shares.
- The dividend paid by Investec Bank Limited is subject to South African
Dividend Tax (Dividend Tax) of 15% (subject to any available exemptions as
legislated).
- The total Secondary Tax on Companies ("STC") credits utilised as part of this
declaration amount to R52 277 869 (338.42 cents per preference share) and
consequently the STC credits utilised are sufficient to cover the 15% Dividend
Tax required and shareholders will receive a net dividend of 338.42 cents per
preference share.
By order of the Board
B Coetsee
Company Secretary
16 May 2012
Registered office Transfer secretaries
100 Grayston Drive Computershare Investor Services (Pty) Limited
Sandown, Sandton 2196 70 Marshall Street, Johannesburg, 2001
Directors:
F Titi (Chairman)
D M Lawrence (Deputy Chairman)
S Koseff (Chief Executive)
B Kantor (Managing Director)
S E Abrahams
G R Burger
M P Malungani
Sir D J Prosser+
K X T Socikwa
B Tapnack
P R S Thomas
C B Tshili
Executive
+British
Company Secretary:
B Coetsee
Date: 17/05/2012 08:00:01 Produced by the JSE SENS Department.
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