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JSE INLP
INVS
Investec Bank Limited - Unaudited summarised consolidated
financial results for the year ended 31 March 2006
Investec Bank Limited
(Registration number 1969/004763/06)
JSE Code: INLP ISIN: ZAE000048393
Unaudited summarised consolidated financial results for the year
ended 31 March 2006
Consolidated income statements
Pro forma*
IFRS restated IFRS restated
Year to year to year to
31 March 31 March 31 March
(R millions) 2006 2005 2005
Interest received 7,827 6,905 6,764
Interest paid (5,827) (5,050) (5,050)
Net interest income 2,000 1,855 1,714
Fees and commissions 647 392 605
receivable
Fees and commissions (28) (22) (22)
payable
Principal transactions 637 558 558
Other income 1,256 928 1,141
Total operating income 3,256 2,783 2,855
Impairment losses on loans 17 (134) (134)
and advances
Net operating income 3,273 2,649 2,721
Administrative expenses (1,722) (1,369) (1,369)
Depreciation and (38) (49) (49)
impairment of property and
equipment
Operating profit 1,513 1,231 1,303
Loss on disposal of - (2) (2)
subsidiaries
Profit before taxation 1,513 1,229 1,301
Taxation (305) (203) (221)
Profit after taxation 1,208 1,026 1,080
Earnings attributable to 32 19 19
minority interests
Earnings attributable to 1,176 1,007 1,061
shareholders
Earnings attributable to 1,208 1,026 1,080
shareholders" equity
Calculation of headline
earnings
Earnings attributable to 1,176 1,007 1,061
shareholders
Headline adjustments (1) 14 14
Realisation of available (1) - -
for sale instrument
Loss on disposal of - 2 2
subsidiaries
Loss on the impairment of - 12 12
owner occupied property
Headline earnings 1,175 1,021 1,075
attributable to
shareholders
Preference dividends paid (121) (131) (131)
Compulsorily convertible - (214) (214)
debenture interest
Headline earnings 1,054 676 730
attributable to ordinary
shareholders
Consolidated balance sheets at
31 March 1 April* 31 March
(R millions) 2006 2005 2005
Assets
Cash and balances at central 1,930 1,113 1,113
banks
Loans and advances to banks 12,473 6,075 6,075
Cash equivalent advances to 5,217 3,960 3,960
customers
Reverse repurchase agreements and
cash collateral on securities
borrowed
1,224 2,148 2,148
Trading securities 12,208 10,419 10,046
Derivative financial instruments 9,032 9,414 9,499
Loans and advances to customers 62,885 45,983 45,737
Investment securities 31 195 568
Deferred taxation assets 241 188 128
Other assets 682 634 636
Property and equipment 83 91 91
Investment property 7 13 13
Intangible assets 26 17 17
Loans to group companies 6,508 8,478 8,455
112,547 88,728 88,486
Liabilities
Deposits by banks 7,776 4,008 4,011
Repurchase agreements and cash 919 2,005 2,005
collateral on securities lent
Derivative financial instruments 7,138 8,725 8,725
Other trading liabilities 266 262 262
Customer accounts 56,201 44,661 44,322
Debt securities in issue 23,502 12,735 12,728
Current taxation liabilities 422 275 275
Deferred taxation liabilities 164 192 192
Other liabilities 4,207 4,202 4,199
100,595 77,065 76,719
Subordinated liabilities 3,140 3,204 2,961
(including convertible debt)
103,735 80,269 79,680
Equity
Called up share capital 16 16 16
Share premium 4,731 4,731 4,731
Equity portion of convertible 229 229 -
debentures
Compulsorily convertible - - 681
debentures
Perpetual preference shares 1,491 1,491 1,491
Other reserves 513 284 412
Profit and loss account 1,824 1,628 1,395
Shareholders" equity excluding 8,804 8,379 8,726
minority interests
Minority interests 8 80 80
Total shareholders" equity 8,812 8,459 8,806
Total liabilities and 112,547 88,728 88,486
shareholders" equity
Statements of changes in equity
Year Year
to to
31 March 31 March
(R millions) 2006 2005
Balance at the beginning of the year 8,806 9,825
As previously reported 8,796 9,671
- IAS 17 - Leases # (73) (6)
Changes in accounting policies arising from
adoption of IFRS
- Minority interest included within 5 29
reconciliation of reserves
- IAS 27/28/31 - consolidations, 78 131
associates and joint ventures
IAS 32/39 - financial instruments (adopted (351) -
from 1 April 2005)
Foreign currency adjustments (2) (6)
Earnings for the year attributable to 1,176 1,061
ordinary shareholders
Earnings for the year attributable to 32 19
minority interests
Compulsorily convertible debenture interest - (214)
Share based payments adjustments - 29
Fair value movements on cash flow hedging - (26)
reserve
Dividends paid to ordinary shareholders (640) (395)
Dividends paid to perpetual preference (121) (131)
shareholders
Movement on minorities on disposals and (104) (99)
acquisitions
Buyback of debentures - (1,257)
Release of cash flow hedging reserve to 16 -
income statement
Balance at the end of the year 8,812 8,806
Consolidated cash flow statements
Year Year
to
to
31 March 31 March
(R millions) 2006 2005
Net cash inflow from operating activities 470 748
Net cash outflow from banking activites (82) (5,454)
Net cash (outflow)/inflow from investing (33) 534
activities
Net cash inflow from financing activities 1,966 2,873
Net increase/(decrease) in cash and cash 2,321 (1,299)
equivalents
Cash and cash equivalents at the beginning 5,358 6,657
of the year
Cash and cash equivalents at the end of the 7,679 5,358
year
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).
Segmental information
For the year to 31 March 2006
(R millions) Private Treasury
Client and
Activities Specialised
Finance
Activities
Group
Investment Services
Banking
and Total
Other
Net 1,110 909 643 610 3,272
operating
income after
headline
adjustments
Operating (730) (468) (159) (403) (1,760)
expenses
Operating
profits
before
taxation and
after 380 441 484 207 1,512
headline
adjustments
Headline 1 - - - 1
adjustments
Operating 381 441 484 207 1,513
profit
before
taxation
Cost to 66.1 48.0 25.0 76.0 54.3
income ratio
(%)
Pro forma IFRS restated for the year to 31 March 2005*
(R millions) Private Treasury
Client and
Activities Specialised
Finance
Activities
Group
Investment Services
Banking
and Total
Other
Net 843 727 448 643 2,661
operating
income after
headline
adjustments
Operating (528) (405) (118) (367) (1,418)
expenses
Operating
profits
before
taxation and
after 315 322 330 276 1,243
headline
adjustments
Headline - - - (14) (14)
adjustments
Operating 315 322 330 262 1,229
profit
before
taxation
Cost to 57.0 56.1 25.9 54.1 51.0
income ratio
(%)
Commentary
Overview of results
We are pleased to announce that Investec Bank Limited, a
subsidiary of Investec Limited, posted a solid increase in
headline earnings attributable to ordinary shareholders of 55.9%
from R676 million to R1 054 million. The bank has benefited from a
strong performance from its businesses, supported by favourable
economic conditions.
For full information on the Investec group results, refer to the
combined results of Investec plc and Investec Limited.
Business unit review
Unless the context indicates otherwise, all comparatives referred
to in the business unit review, relate to the pro forma results
for the year ended 31 March 2005. Operating profit is before
taxation and after headline adjustments.
Salient operational features of the year under review include:
* The Private Client Activities division posted an increase of
20.6% in operating profit from R315 million to R380 million. The
Private Bank has benefited from strong growth in total advances
and recorded sound performances across the division"s areas of
specialisation. The private client lending book has grown by 39.9%
to R40.1 billion and the division increased its retail deposit
book by 45.7% to R17.7 billion.
*The Treasury and Specialised Finance division posted operating
profit of R441 million (2005: R322 million), an increase of 36.9%.
Growth was underpinned by a strong performance from the division"s
advisory, structuring, trading, asset creation and distribution
activities with advances increasing by 32.6% to R19.9 billion.
*Operating profit of the Investment Banking division increased by
46.7% to R484 million (2005: R330 million). The Corporate Finance
division benefited from a high level of activity and the Direct
Investments and Private Equity divisions continued to perform
strongly reflecting the bank"s increasing presence in this
activity.
*Other Activities posted a 25.0% decrease in operating profit from
R276 million to R207 million as a consequence of redemption of
R1.3 billion of debentures in the latter part of the prior year.
Transition to International Financial Reporting Standards (IFRS)
From 1 April 2005 Investec Bank Limited has been required to
prepare its consolidated results in accordance with IFRS.
Previously these were prepared in accordance with South African
Statements of Generally Accepted Accounting Practice (SA GAAP).
Our transition to IFRS has been performed in accordance with IFRS
1 "First-Time Adoption of International Reporting Standards" and
other relevant standards as 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.
*31 March 2005 - twelve month comparative period to 31 March 2006.
A summary of the impact on Investec Bank Limited"s consolidated
results of the transition to IFRS for the year ended 31 March 2005
is provided in the tables below:
Total
Earnings equity,
attributable including
R"millions to shareholders Assets Liabilities minorities
As previously 1 154 88 376 79 575 8 801
reported
IFRS 2 - share (29) - - -
based payments
IAS 17 - leases (67) 30 103 (73)
IAS 27/28/31 - 3 80 2 78
consolidations
Restated to 31 1 061 88 486 79 680 8 806
March 2005
IAS 32/39 - 242 589 (347)
financial
instruments
Restated to 1 88 728 80 269 8 459
April 2005
Note:
* In accordance with the provisions of IFRS 1, we have elected not
to apply the requirements of IAS 32, "Financial Instruments:
Disclosure and Recognition" and IAS 39, "Financial Instruments:
Recognition and Measurement" to the comparative year. 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 the revised IAS39 in
respect of the recognition of certain fees on an effective yield
basis.
The most significant adjustments arising from the transition from
SA GAAP to IFRS are:
*IFRS 2 - share based payments
The inclusion of a fair value charge, for equity and cash settled
options granted to employees, recognised over the vesting period.
*IAS 27 - consolidations (including special purpose vehicles)
*Refinement to principles applied under SIC 12 which results in
the consolidation of certain special purpose vehicles and a gross
up of assets and liabilities on the group balance sheet.
*IAS 32/39 - financial instruments (applied from 1 April 2005).
Refinements to the provisions under AC 133 which include:
*Revised interpretation relating to the recognition of certain
fees as part of the effective yield of a financial instrument.
*Designation of financial instruments at fair value through profit
and loss was early adopted. Application of this amendment results
in more stringent rules applied to the designation of financial
instruments at fair value through profit and loss.
# Further restatement to prior year disclosures
In the South African economy it is common practice for operating
lease agreements to incorporate fixed rental escalation clauses.
Under the provisions of IAS 17 (consistent with the equivalent SA
GAAP standard) lease payments under operating leases are
recognised as an expense on a straight line basis over the lease
term unless another systematic basis is more representative of the
time pattern of the user"s benefits. The group has previously
recognised fixed rental escalations in the period in which they
contractually applied. In terms of the revised interpretation of
IAS 17 in the South African market place these increments have
been taken into consideration in determining a straight line cost
over the term of the lease. This adjustment represents a
correction to prior year disclosures in accordance with
IAS 8 - Accounting policies, changes in accounting estimates and
errors.
On behalf of the board of Investec Bank Limited
Hugh Herman
Chairman
Stephen Koseff
Chief Executive Officer
Bernard Kantor
Managing Director
Sandton
18 May 2006
Non-redeemable non-cumulative non-participating preference shares
Declaration of dividend number 6
Notice is hereby given that preference dividend number 6 amounting
to 392.67 cents per share has been declared for the period 1
October 2005 to 31 March 2006. The dividend is 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 30 June 2006.
The relevant dates relating to the payment of dividend number 6
are as follows:
Last day to trade cum-dividend Friday, 23 June 2006
Shares trade ex-dividend Monday, 26 June 2006
Record date Friday, 30 June 2006
Payment date Monday, 3 July 2006
Share certificates may not be dematerialised or rematerialised
between Monday, 26 June 2006 and Friday, 30 June 2006, both dates
inclusive.
By order of the board
S. Noik Sandton
Company Secretary 18 May 2006
Registered office
100 Grayston Drive
Sandown
Sandton
2196
Transfer secretaries
Computershare Investor Services
2004 (Pty) Ltd
70 Marshall Street
Johannesburg 2001
Investec Bank Limited
(Registration number 1969/004763/06)
JSE Code: INLP ISIN: ZAE000048393
Directors: H S Herman (Chairman), D M Lawrence* (Deputy Chairman),
S Koseff* (Chief Executive), B Kantor* (Managing), S E Abrahams,
G R Burger*, D E Jowell, M P Malungani, B Tapnack*, P R S Thomas,
F Titi. *Executive
On 30 September 2005, Ms DR Motsepe resigned as a director of
Investec Bank Limited and on 4 April 2006 Dr NZ Nkozi and Mr RAP
Upton retired from the board, having reached the mandatory
retirement age. New appointments will be announced shortly.
Company secretary: S Noik
Date: 18/05/2006 08:03:44 AM Produced by the JSE SENS Department
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