| Thu 17 Nov 2005, 14:16 | | Investec plc - Unaudited consolidated financial re |
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Investec plc - Unaudited consolidated financial results
Investec plc
(Incorporating the results of Investec Limited)#
Investec plc
(Registration number 3633621)
JSE Code: INP
ISIN: GB0031773103
Company secretary: R Vardy
Unaudited consolidated financial results in Pounds Sterling for the six months
to 30 September 2005
Salient Features
Pro forma Pro forma
30 Sept. % 30 Sept. 31 March
2005 Change 2004* 2005*
Adjusted earnings before 93,357 37.4 67,952 149,510
goodwill impairment and non-
operating items (GBP"000)
Operating profit before 152,771 58.2 96,581 224,124
goodwill impairment and non-
operating items and taxation
(GBP"000)
Earnings attributable to 177,469 188.8 61,443 110,888
shareholders (GBP"000)
Adjusted earnings per share 85.2 40.4 60.7 134.6
(before goodwill impairment
and non-operating items)
(pence)
Earnings per share (pence) 155.6 214.3 49.5 89.2
Headline earnings per share 83.4 43.1 58.3 131.2
(pence)
Dividends per share (pence) 38.0 26.7 30.0 67.0
Dividends per share (cents) 446.0 33.1 335.0 772.0
Consolidated income statements
Pro forma Pro forma
IFRS IFRS IFRS IFRS
restated restated restated restated
6 months 6 months Year 6 months Year to
to to to to
30 Sept. 30 Sept. 31 March 30 Sept. 31 March
GBP"000 2005 2004* 2005* 2004* 2005*
Interest receivable 410,559 368,040 758,513 357,317 734,765
Interest payable (295,613) (288,396) (587,945) (288,396) (587,945)
Net interest income 114,946 79,644 170,568 68,921 146,820
Fees and commissions 208,857 191,052 403,543 207,357 439,958
receivable
Fees and commission (18,902) (10,515) (25,818) (10,515) (25,818)
payable
Principal transactions 93,592 52,019 140,158 49,619 135,358
Operating income from 2,949 7,138 14,474 7,138 14,474
associates
Investment income on 76,387 134,390 258,855 134,390 258,855
assurance activities
Premiums and 72,486 118,147 246,537 118,147 246,537
reinsurance recoveries
on insurance contracts
Other operating income 3,851 3,649 6,120 3,649 6,120
Other income 439,220 495,880 1,043,869 509,785 1,075,484
Claims and reinsurance (139,464) (240,117) (478,894) (240,117) (478,894)
premiums on insurance
business
Total operating income 414,702 335,407 735,543 338,589 743,410
net of insurance
claims
Impairment losses on (5,230) (8,474) (15,845) (13,415) (27,796)
loans and advances
Net operating income 409,472 326,933 719,698 325,174 715,614
Administrative (252,783) (225,679) (485,444) (225,679) (485,444)
expenses
Depreciation and (3,918) (4,673) (10,130) (4,673) (10,130)
impairment of
property, plant and
equipment
Operating profit 152,771 96,581 224,124 94,822 220,040
before goodwill
impairment
Impairment of goodwill (6,595) 4,308 (37,010) 4,308 (37,010)
Operating profit 146,176 100,889 187,114 99,130 183,030
Profit/(loss) on 75,660 (16,492) (14,629) (16,492) (14,629)
disposal or
termination of group
operations
Profit before taxation 221,836 84,397 172,485 82,638 168,401
Taxation (40,323) (21,662) (59,226) (22,058) (60,463)
Profit after taxation 181,513 62,735 113,259 60,580 107,938
Earnings attributable 4,044 1,292 2,371 1,292 2,371
to minority interests
Earnings attributable 177,469 61,443 110,888 59,288 105,567
to shareholders
Earnings attributable 181,513 62,735 113,259 60,580 107,938
to shareholders"
equity
Earnings attributable 177,469 61,443 110,888 59,288 105,567
to shareholders
Impairment of goodwill 6,595 (4,308) 37,010 (4,308) 37,010
(Profit)/loss on (75,660) 16,492 14,629 16,492 14,629
disposal or
termination of group
operations
Preference dividends (6,917) (5,986) (11,742) (5,986) (11,742)
Additional earnings (8,130) 311 (1,275) 311 (1,275)
attributable to
preference
shareholders
Adjusted earnings 93,357 67,952 149,510 65,797 144,189
(before goodwill
impairment and non-
operating items)
Earnings per share
(pence)
- basic 155.6 49.5 89.2 47.6 84.5
- diluted 146.4 48.2 85.4 46.4 81.0
Adjusted earnings per
share (pence)
- basic 85.2 60.7 134.6** 58.8 129.8
- diluted 80.7 58.5 127.5** 56.7 123.1
Dividends per share
(pence)
- interim 38.0 30.0 30.0 30.0 30.0
- final - - 37.0 - 37.0
Headline earnings per 83.4 58.3 131.2 56.3 126.4
share (pence)
Number of weighted 109.62 111.92 111.09 111.92 111.09
average shares - basic
("000)
Consolidated cash flow statements
6 months to 6 months to Year to
30 Sept. 30 Sept. 31 March
GBP"000 2005 2004* 2005*
Cash inflows from operations 149,274 128,703 234,204
Increase in operating assets (1,015,495) (1,417,645) (3,228,141)
Increase in operating liabilities 398,799 1,165,468 2,909,285
Net cash outflow from operating (467,422) (123,474) (84,652)
activities
Net cash outflow from investing (7,867) (14,439) (183,269)
activities
Net cash inflow/(outflow) from 92,144 (42,123) 129,478
financing activities
Effects of exchange rate changes 39,770 2,994 5,899
on cash and cash equivalents
Net decrease in cash and cash (343,375) (177,042) (132,544)
equivalents
Cash and cash equivalents at the 1,382,556 1,515,100 1,515,100
beginning of the period
Cash and cash equivalents at the 1,039,181 1,338,058 1,382,556
end of the period
Cash and cash equivalents is defined as including: cash and balances at central
banks, on demand loans and advances to banks and cash equivalent advances to
customers (all of which have a maturity profile of less than three months).
Consolidated balance sheets at
30 Sept. 1 April 31 March 30 Sept.
GBP"000 2005 2005* 2005* 2004*
Assets
Cash and balances at 125,343 105,130 105,130 217,460
central banks
Treasury bills and 323,622 277,583
other eligible bills
Loans and advances to 1,368,108 1,563,066 3,017,326 2,751,353
banks
Reverse repurchase
agreements and cash
collateral on 682,354 2,318,745
securities borrowed
Trading securities 1,308,753 1,279,111
Derivative financial 868,549 936,097
instruments
Cash equivalent 683,731 710,721
advances to customers
Investment securities 1,220,405 1,188,405
Loans and advances to 7,903,166 6,408,368 7,402,460 6,544,234
customers
Other assets 1,091,037 883,555 1,346,017 1,402,377
Debt securities 2,001,682 1,813,798
Equity shares 531,262 355,512
Interests in associated 58,545 13,219 13,219 81,918
undertakings
Deferred taxation 48,097 51,498 49,023 46,899
assets
Property, plant and 231,812 233,867 233,867 219,720
equipment
Goodwill 190,257 199,313 199,313 248,202
Intangible assets 6,474 4,587 4,587 -
15,786,631 15,895,682 15,227,508 13,959,056
Other financial
instruments at fair
value through profit
and loss
- in respect of
liabilities to
customers
under insurance and 3,071,676 2,815,137
investment contracts
- assets related to 1,302,165 1,209,165
reinsurance contracts
Long-term assurance
assets attributable to
policyholders 2,815,137 2,689,767
20,160,472 19,919,984 18,042,645 16,648,823
Liabilities
Deposits by banks 1,282,297 780,829 912,526 886,583
Derivative financial 617,201 838,578
instruments
Other trading 408,279 1,892,732
liabilities
Repurchase agreements
and cash collateral on
securities lent 83,117 508,301
Customer accounts 7,583,753 6,458,714 6,805,429 7,233,545
Debt securities in 2,296,949 1,926,889 1,925,124 1,165,994
issue
Other liabilities 1,482,760 1,809,403 3,700,989 3,012,160
Current taxation 85,155 72,834 72,834 58,940
liabilities
Deferred taxation 22,352 20,784 7,445 9,973
liabilities
Accruals and deferred 226,763 191,299
income
Pension fund 9,141 10,991 10,991 17,295
liabilities
13,871,004 14,320,055 13,662,101 12,575,789
Liabilities to 2,939,994 2,664,434
customers under
investment contracts
Insurance liabilities, 131,682 145,136
including unit-linked
liabilities
Reinsured liabilities 1,302,165 1,209,165
Long-term assurance
liabilities
attributable to
policyholders 2,815,137 2,689,767
18,244,845 18,338,790 16,477,238 15,265,556
Subordinated 526,578 502,675 499,995 500,326
liabilities (including
convertible debt)
18,771,423 18,841,465 16,977,233 15,765,882
Equity
Called up share capital 165 165 165 165
Share premium account 1,029,120 1,029,242 1,029,242 1,027,539
Treasury shares (99,753) (109,362) (99,873) (83,907)
Equity portion of 2,191 2,191 2,191 2,384
convertible instruments
Perpetual preference 205,587 196,742 323,800 127,622
shares
Other reserves 117,101 78,054 39,617 50,291
Profit and loss account (155,184) (263,622) (248,975) (284,123)
Shareholders" equity 1,099,227 933,410 1,046,167 839,971
excluding minority
interests
Minority interests 289,822 145,109 19,245 42,970
Total shareholders" 1,389,049 1,078,519 1,065,412 882,941
equity
Total liabilities and 20,160,472 19,919,984 18,042,645 16,648,823
shareholders" equity
# The results of Investec Limited (incorporating the results of Investec plc)
are the same as the results presented in this announcement.
* Pro forma results and the balance sheet at 1 April 2005 incorporate
adjustments relating to IAS 32 & 39 (adopted on 1 April 2005) as explained in
paragraph headed "Accounting policies and disclosures".
Segmental analysis - geographical and business analysis of operating profit
before goodwill impairment and non-operating items and taxation for the 6 months
to 30 September 2005
United
Kingdom
Southern and Other Total
GBP"000 Africa Europe Australia Geographics group
Private 16,244 28,629 5,183 - 50,056
Client
Activities
Treasury and 21,399 7,501 (239) - 28,661
Specialised
Finance
Investment 23,525 15,787 2,777 - 42,089
Banking
Asset 18,325 3,484 - - 21,809
Management
Property 6,530 675 - - 7,205
Activities
Group 11,393 (9,709) 814 453 2,951
Services and
Other
97,416 46,367 8,535 453 152,771
Pro forma segmental analysis - geographical and business analysis of operating
profit before goodwill impairment and non-operating items and taxation for the 6
months to 30 September 2004*
United
Kingdom
Southern and Other Total
GBP"000 Africa Europe Australia Geographics group
Private 13,308 22,427 1,466 1,753 38,954
Client
Activities
Treasury and 15,133 6,159 442 (343) 21,391
Specialised
Finance
Investment 11,712 3,709 1,544 1,840 18,805
Banking
Asset 12,074 1,693 - 152 13,919
Management
Property 2,467 4,162 - - 6,629
Activities
Group 6,943 (11,708) 1,628 20 (3,117)
Services and
Other
61,637 26,442 5,080 3,422 96,581
Summarised consolidated statements of changes in equity
6 months 6 months 12 months
to to to
30 Sept. 30 Sept. 31 March
GBP"000 2005 2004* 2005*
Balance at the beginning of the period 1,078,519 869,123 869,123
As previously reported 967,256 766,373 766,373
Changes in accounting policies arising
from adoption of IFRS
- Minority interests included within 13,195 39,029 39,029
reconciliation of reserves
- IFRS 2 - share based payments 554 (272) (272)
- IFRS 3 - business combinations 10,943 - -
- IAS 10 - events after balance sheet 49,593 38,474 38,474
date
- IAS 12 - income taxes 7,298 81 81
- IAS 17 - leases (6,933) (594) (594)
- IAS 19 - employee benefits (140) (140) (140)
- IAS 27/28/31 - consolidations, 23,646 26,172 26,172
associates and joint ventures
Restated prior to adoption of IAS 32 & 1,065,412 869,123 869,123
39
- IAS 32 & 39 - financial instruments 13,107 - -
(adopted from 1 April 2005)*
Foreign currency adjustments 31,450 (7,446) (15,263)
Earnings for the period attributable 177,469 59,288 105,567
to ordinary shareholders
Earnings for the period attributable 4,044 1,292 2,371
to minority interests
Share based payments adjustments 9,403 4,565 8,849
Fair value movements on available for (5,245) - -
sale assets
Dividends paid to ordinary (41,681) (30,213) (55,394)
shareholders
Dividends paid to minority (6,917) (5,986) (11,742)
shareholders
Issue of perpetual preference shares - - 207,313
Share issue expenses (556) - (838)
Re-issue of treasury shares 10,043 443 2,146
Purchase of treasury shares - - (16,159)
Release of pension fund deficit - - 2,370
Issue of equity instruments of 132,520 - -
subsidiaries
Movement on minorities on disposals - (8,125) (32,931)
and acquisitions
Balance at the end of the period 1,389,049 882,941 1,065,412
** Per the Transition to IFRS Report (issued on 21 September 2005) the
adjustment on adoption of IAS 32 & 39 increased reserves by GBP17.6 million.
This increase has been adjusted downward by GBP4.5 million (after taxation
effects) to GBP13.1 million as a result of interpretation and model enhancements
relating to the recognition of certain fee income as a component of the
effective yield of lending transactions. These adjustments relate only to
private banking activities. Similarly, adjusted EPS for the year ended 31 March
2005 has been revised downwards to 134.6 pence.
Commentary
The financial information contained in this commentary is prepared in accordance
with International Financial Reporting Standards (IFRS). Rand values included in
this section are translated into Pounds Sterling - in the case of the income
statement at the weighted average rate for the relevant period, and in the case
of the balance sheets at the relevant closing rate. The average Rand/Pounds
Sterling exchange rates were 11.76 and 11.74 for the six months ended 30
September 2005 and 30 September 2004, respectively.
Unless the context indicates otherwise, all comparatives relate to the pro-forma
results (as explained in the "Accounting policies and disclosures" section
below) for the six months ended 30 September 2004. A number of significant
corporate actions have been undertaken during the period which have a bearing on
our performance and these have been highlighted in the "Presentation of
financial information" section.
Overall performance
We are pleased to announce that for the six months ended 30 September 2005,
adjusted earnings per share (EPS) before goodwill impairment and non-operating
items increased by 40.4% to 85.2 pence from 60.7 pence. We have benefited from a
strong performance from all our businesses, supported by favourable economic
conditions, and have achieved our stated growth and financial return objectives.
The salient features of the period under review are:
* Operating profit before goodwill impairment, non-operating items and taxation
increased 58.2% from GBP96.6 million to GBP152.8 million.
* Earnings attributable to ordinary shareholders before goodwill impairment and
non-operating items increased 37.4% from GBP68.0 million to GBP93.4 million.
* Annualised return on adjusted shareholders" equity (inclusive of compulsorily
convertible instruments) increased from 18.7% to 22.1% against a target of
greater than 20%.
* The ratio of total operating expenses to total operating income improved from
68.7% to 61.9% against a target of below 65%.
* Core loans and advances have increased by 23.3% to GBP7.9 billion since 1
April 2005. Asset quality remains highly satisfactory with the percentage of
gross non-performing loans to core loans and advances decreasing from 0.9% to
0.7%.
* Third party assets under management increased by 37.0% to GBP46.4 billion
since 1 April 2005, supported by favourable markets and the corporate
transactions undertaken.
* The board declared a dividend of 38 pence (2004: 30 pence) per ordinary share,
equating to a dividend cover based on the group"s adjusted EPS before impairment
of goodwill and non-operating items of 2.2 times (2004: 2.0 times). This is
consistent with our policy of maintaining a dividend cover range of 1.7 to 2.3
times.
Business unit review
Private Client Activities
Our Private Client Activities, comprising the Private Banking and Private Client
Portfolio Management and Stockbroking divisions, reported strong growth in
operating profit before goodwill impairment and non-operating items of 28.5% to
GBP50.1 million (2004: GBP39.0 million).
* Private Banking
Operating profit of the Private Banking division before goodwill impairment and
non-operating items increased by 28.5% to GBP42.4 million (2004: GBP33.0
million) driven by solid growth in total advances and strong performances
recorded across the majority of the division"s areas of activities. Since 1
April 2005, the private client lending book has grown by 18.2% to GBP5.1 billion
and the division increased its retail deposit book by 18.8% to GBP3.9 billion.
* Private Client Portfolio Management and Stockbroking
Private Client Portfolio Management and Stockbroking recorded strong growth,
generating operating profit before goodwill impairment and non-operating items
of GBP7.7 million (2004: GBP6.0 million), an increase of 28.3%. The Private
Client business in South Africa has benefited from positive equity market
conditions and the acquisition of HSBC"s Private Client business in South
Africa. Since 1 April 2005, total funds under management have increased by 72.3%
to GBP6.2 billion. The results of the UK operations include our 47.7% associate
shareholding in Rensburg Sheppards plc"s post tax earnings.
Treasury and Specialised Finance
The Treasury and Specialised Finance division posted operating profit before
goodwill impairment and non-operating items of GBP28.7 million (2004: GBP21.4
million), an increase of 34.0%. Growth was underpinned by a solid performance
from the division"s advisory, structuring, asset creation and distribution
activities with advances increasing by 29.6% to GBP2.6 billion since 1 April
2005.
Investment Banking
The group"s Investment Banking division recorded a significant increase in
operating profit before goodwill impairment and non-operating items from GBP18.8
million to GBP42.1 million. The Institutional Stockbroking operations continued
to perform well against a backdrop of favourable equity markets and the
Corporate Finance operations benefited from a sound deal pipeline across all
geographies. The Direct Investments and Private Equity divisions continued to
perform strongly across the board reflecting our increasing presence in this
activity.
Asset Management
The Asset Management division delivered substantial growth in operating profit
before goodwill impairment and non-operating items of 56.7% to GBP21.8 million
(2004: GBP13.9 million). The division was boosted by favourable market
conditions and net inflows of GBP494 million with assets under management
increasing by 18.2% to GBP27.1 billion since 1 April 2005. The division has
established a durable platform for growth on the back of competitive long term
investment performance, management continuity and growing brand recognition in
its markets.
Property Activities
Operating profit before goodwill impairment and non-operating items of the
Property Activities division increased by 8.7% to GBP7.2 million (2004: GBP6.6
million). The division in South Africa posted solid results driven by an
increase in funds under management and principal transactions given the
favourable property market conditions. These results were partially offset by a
weaker performance in the UK.
Group Services and Other Activities
Group Services and Other Activities earned an operating profit before goodwill
impairment and non-operating items of GBP3.0 million compared to the prior
period loss of GBP3.1 million. The Central Funding division benefited from a
solid performance of its portfolio of assets and increased cash holdings arising
out of the number of corporate actions undertaken as highlighted below. These
results were partially offset by a decrease in earnings from Assurance
Activities and associates following the disposal of these activitis in the prior
period.
Financial statements analysis
Operating income
Operating income increased by 23.6% to GBP414.7 million (2004: GBP335.4
million). The movements in total operating income are analysed further below.
Net interest income increased by 44.3% to GBP114.9 million (2004:GBP79.6
million) as a result of a strong growth in core loans and advances of 23.3% to
GBP7.9 billion since 1 April 2005 and increased cash holdings within the Central
Funding division.
The growth in net fees and commissions of 5.2% to GBP190.0 million (2004:
GBP180.5 million) is impacted by the sale of Carr Sheppards Crosthwaite to
Rensburg plc. Excluding the consolidated income earned from Carr Sheppards
Crosthwaite in both periods results in an increase of 17.2% to GBP186.5 million.
This result was supported by favourable market and economic conditions and
increased transactional activity in the majority of our businesses.
Income from principal transactions increased significantly to GBP93.6 million
(2004: GBP52.0 million) mainly as a result of the strong performance of the
underlying assets within the Direct Investments, Private Equity, Property and
Central Funding portfolios and an improved performance from our market making
activities.
Operating income from associates decreased by 58.7% to GBP2.9 million (2004:
GBP7.1 million). The current period figures include Investec"s 47.7% share of
the reported operating earnings of Rensburg Sheppards plc for the period 6 May
2005 to 30 September 2005. In the prior period our most significant associate
investment was Capital Alliance Holdings Limited.
The decline in net income from assurance activities is as a result of the
reinsurance of the group risk business during the prior period. A net profit of
GBP1.5 million (2004: GBP5.2 million) was generated from assurance activities,
which represents the residual earnings from the businesses that were retained.
Other operating income of GBP3.9 million (2004: GBP3.6 million) principally
represents net rental income earned by the Central Funding division.
Impairment losses on loans and advances
Impairment losses on loans and advances decreased by 38.3% to GBP5.2 million
(2004: GBP8.5 million) largely as a result of a large provision made in the
prior period.
The percentage of gross non-performing loans (NPLs) to core loans and advances
decreased from 0.9% to 0.7%. Total impairment coverage remains highly
satisfactory both as a percentage of gross NPLs and net NPLs (gross NPLs net of
security), at 69.6% and 150.0% respectively.
Administrative expenses
Total administrative expenses increased by 12.0% to GBP252.8 million (2004:
GBP225.7 million), and by 21.6% if the costs of Carr Sheppards Crosthwaite are
excluded in both periods. Variable remuneration increased by 37.4% to GBP60.1
million due to increased profitability. Other operating expenses increased by
5.9% to GBP192.7 million largely as a result of an increase in headcount in
certain of the businesses in line with our growth initiatives and the
introduction of a long-term incentive plan for a group of senior employees in
June 2005.
We achieved our target of operating expenses to total operating income of less
than 65% as the ratio decreased from 68.7% to 61.9%, principally as a result of
the strong growth in operating income of 23.6%.
Goodwill impairment
The charge for goodwill impairment increased from negative GBP4.3 million to
GBP6.6 million. The current charge largely relates to impairment of goodwill
attributable to property management contracts with respect to a portfolio of
properties sold. The prior period included an amount of GBP5 million relating to
negative goodwill arising from a structured finance transaction.
Non-operating items
* Non-operating items principally includes a profit of GBP79.5 million arising
out of the effective 52.3% sale of Carr Sheppards Crosthwaite to Rensburg plc
offset by Investec"s GBP3 million share of integration costs relating to the
transaction.
* The prior period included provisions for losses arising on the sale of the
banking subsidiary in Israel and losses arising on the closure of the Traded
Endowments operation in the UK.
Taxation
* The operational effective tax rate of the group increased from 24.2% to 26.9%
due to a reduction in the level of non-taxable income.
Capital resources
Since 1 April 2005 total capital resources (including total equity and
subordinated liabilities) increased by 21.2% to GBP1.9 billion largely as a
result of the issue of 200 million (GBP132 million) preferred securities by a
subsidiary of Investec plc in June 2005, the gain on the sale of Carr Sheppards
Crosthwaite and increased operating earnings.
The annualised return on adjusted shareholders" equity (inclusive of
compulsorily convertible instruments) increased from 18.7% to 22.1%, exceeding
our target of 20%.
Investec plc and Investec Limited are well capitalised with capital adequacy
ratios comfortably exceeding the minimum regulatory requirements. The capital
adequacy of Investec plc (applying UK Financial Services Authority rules to its
capital base) is 18.7% (March 2005: 15.5%). The capital adequacy of Investec
Limited (applying South African Reserve Bank rules to its capital base) is 17.9%
(March 2005: 20.1%).
Assets under administration
Since 1 April 2005 third party associates under management have increased by
37.0% from GBP33.9 billion to GBP46.4 billion, with sound growth across all
ranges of funds. On balance sheet assets grew by 1.2% from GBP19.9 billion to
GBP20.2 billion with strong growth in core advances offset by a decline in
reverse repurchase agreements and cash collateral on securities borrowed.
Outlook
Within the context of a competitive operating environment, we have continued to
enhance the quality and sustainability of our earnings. We firmly believe that
our niche focus, our ability to be distinctive and the capability of our people
will enable us to take advantage of favourable market conditions and the board
remains confident on the outlook for the remainder of the financial year.
On behalf of the boards of Investec plc and Investec Limited
Hugh Herman Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
Presentation of financial information
Investec operates under a Dual Listed Companies (DLC) structure with primary
listings of Investec plc on the London Stock Exchange and Investec Limited on
the JSE Limited.
In terms of the contracts constituting the DLC structure, Investec plc and
Investec Limited effectively form a single economic enterprise in which the
economic and voting rights of ordinary shareholders of the companies are
maintained in equilibrium relative to each other. The directors of the two
companies consider that for financial reporting purposes, the fairest
presentation is achieved by consolidating the results and financial position of
both companies.
Accordingly, the interim results for Investec plc 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.
The following significant corporate actions have been undertaken during the
period under review and the previous financial year:
* The sale of our 80.28% stake in Investec Bank (Israel) Limited to The First
International Bank of Israel Ltd on 22 December 2004.
* The reinsurance of the group risk business conducted by Investec Employee
Benefits to Capital Alliance Holdings Limited (CAL) executed on 31 December
2004.
* Investec Limited issued R2.3 billion (GBP207.3 million) of
non-redeemable, non-cumulative, non-participating preference shares in February
2005.
* The sale of our associate investment in CAL, to Liberty Group Limited
effective on 31 March 2005.
* The acquisition of HSBC"s private client business in South Africa effective 1
April 2005.
* The sale of our UK Private Client Stockbroking business, Carr Sheppards
Crosthwaite Ltd, to Rensburg plc on 6 May 2005. We retain 47.7% interest in the
combined entity, Rensburg Sheppards plc.
* A subsidiary of Investec plc issued 200 million preferred securities in June
2005.
Accounting policies and disclosures
Transition to International Financial Reporting Standards
From 1 April 2005 we are required to prepare our consolidated results
(comprising the results of Investec plc and Investec Limited) in accordance with
IFRS. Previously these were prepared in accordance with UK Generally Accepted
Accounting Practice (UK GAAP). The first full year IFRS compliant financial
statements that will be prepared by us will be for the year ending 31 March
2006.
Our transition to IFRS has been performed in accordance with IFRS 1 "First-Time
Adoption of International Reporting Standards" and other relevant standards
expected to be applicable at 31 March 2006.
The following dates are applicable for the transition to IFRS:
* 1 April 2004 - date of transition to IFRS, being the start of the earliest
period of comparative information.
* 30 September 2004 - six month comparative period to 30 September 2005.
* 31 March 2005 - twelve month comparative period to 31 March 2006.
In accordance with the provisions of IFRS 1, we have elected not to apply the
requirements of IAS 32, "Financial Instruments: Disclosure and Recognition", IAS
39, "Financial Instruments: Recognition and Measurement" and IFRS 4, "Insurance
Contracts" to the comparative period. The impact of adoption of these standards
is reflected as an adjustment to the opening balance sheet at 1 April 2005. To
facilitate comparability, a pro-forma income statement is presented which
incorporates the impact of the adoption of IAS 32 and IAS39 in the following
respects:
* recognising certain fees on an effective yield basis,
* the release of general provisions on loans and advances and
* fair value adjustments for embedded derivatives.
IFRS 4 only effects the presentation of the balance sheet.
On 21 September 2005 we released a stock exchange announcement and a transition
to IFRS report detailing the impact of IFRS on our previously reported UK GAAP
consolidated results. This information can be found on our website at
www.investec.com
Future developments under IFRS
The financial information contained in this announcement has been prepared on
the group"s expectation of standards that will be applicable at 31 March 2006
(being the first time that the group will prepare annual financial statements
under IFRS). Changes to information presented in this report may be required due
to one or more of the following reasons:
* Further standards and interpretations may be issued that could be
applicable to the financial year ending 31 March 2006.
* Interpretations may differ as practice develops.
* Tax legislation and tax related interpretations may develop further.
Dividend announcement
Investec plc
In terms of the DLC structure, Investec plc shareholders who are not South
African resident shareholders may receive all or part of their dividend
entitlements through dividends declared and paid by Investec plc on their
ordinary shares and/or through dividends declared and paid on the SA DAN share
issued by Investec Limited.
Investec plc shareholders who are South African residents, may receive all or
part of their dividend entitlements through dividends declared and paid by
Investec plc on their ordinary shares and/or through dividends declared and paid
on the SA DAS share issued by Investec Limited.
Notice is hereby given that an interim dividend (No. 7) has been declared by the
board in respect of the six months ended 30 September 2005. Shareholders in
Investec plc will receive a total distribution of 38 pence (2004: 30 pence) per
ordinary share, which will be paid as follows:-
- for non-South African resident Investec plc shareholders, through a dividend
paid by Investec plc of 38 pence per ordinary share in Investec plc.
- for South African resident shareholders of Investec plc, through a dividend
paid on the SA DAS share equivalent to 38 pence per ordinary share in Investec
plc.
The relevant dates for the payment of the dividends are:
Last day to trade cum-dividend:
- On the London Stock Exchange Tuesday, 13 December 2005
- On the JSE Limited Thursday, 8 December 2005
Shares commence trading ex-dividend:
- On the London Stock Exchange Wednesday, 14 December 2005
- On the JSE Limited Friday, 9 December 2005
Record date:
- On the London Stock Exchange Friday, 16 December 2005
- On the JSE Limited Thursday, 15 December 2005
Payment date:
- United Kingdom register Friday, 23 December 2005
- South African register Friday, 23 December 2005
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Friday, 9 December 2005 and Thursday,
15 December 2005, both dates inclusive, nor may transfers between the UK and SA
registers take place between Friday, 9 December 2005 and Thursday, 15 December
2005, both dates inclusive.
Shareholders registered on the South African register are advised that the total
distribution of 38 pence, equivalent to 446 cents per share, has been arrived at
using the Rand/Pounds Sterling average buy/sell forward rate, as determined at
11h00 (SA time) on 16 November 2005.
By order of the board
R Vardy
Company Secretary
17 November 2005
Dividend announcement
Investec Limited
Notice is hereby given that an interim dividend (No. 100) of 446 cents (2004:
335 cents) per ordinary share has been declared by the board in respect of the
six months ended 30 September 2005.
The dividend is payable to shareholders recorded in the members" register of the
company at the close of business on Thursday, 15 December 2005.
The relevant dates for the payment of the dividend are:
Last day to trade cum-dividend Thursday, 8 December 2005
Shares commence trading ex-dividend Friday, 9 December 2005
Record date Thursday, 15 December 2005
Payment date Friday, 23 December 2005
The interim dividend of 446 cents per ordinary share has been determined by
converting the Investec plc distribution of 38 pence per ordinary share into
Rands using the Rand/Pounds Sterling average buy/sell forward rate at 11h00 (SA
time) on 16 November 2005.
Share certificates may not be dematerialised or rematerialised between Friday, 9
December 2005 and Thursday, 15 December 2005, both dates inclusive.
By order of the board
S Noik
Company Secretary
17 November 2005
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.
Investec Limited Investec plc
(Registration number 1925/002833/06) (Registration number 3633621)
JSE Code: INL JSE Code: INP
ISIN: ZAE000040531 ISIN: GB0031773103
Company secretary: S Noik Company secretary: R Vardy
Directors: H S Herman (Chairman), S Koseff* (Chief Executive), B Kantor*
(Managing), S E Abrahams, G F O Alford, G R Burger*, C A Carolus, H Fukuda
(OBE), G M T Howe, D E Jowell, I R Kantor, Sir Chips Keswick, M P Malungani, A
Tapnack*, P R S Thomas, F Titi. *Executive
Date: 17/11/2005 09:02:38 AM Produced by the JSE SENS Department
