Investec PLC INVP Half Yearly Report
Investec PLC (INVP) - Half Yearly Report
RNS Number : 1675R
Investec PLC
15 November 2012
Investec plc
(Registration number 3633621)
JSE code: INP
ISIN: GB00B17BBQ50
Investec Limited
(Registration number 1925/002833/06)
JSE code: INL
ISIN: ZAE000081949
15 November 2012
Strong, well-positioned business model ready to take advantage of an
improvement in market conditions
Investec, the international specialist bank and asset manager, announces today
its results for the six months ended 30 September 2012
Highlights
· Adjusted earnings* increased 3.5% to GBP168.6mn - an increase of 13.6%
on a currency neutral basis.
· Adjusted earnings* are 78% higher than that reported in the second half
of the 2012 financial year.
· The group's low-capital intensive asset and wealth management
businesses continued to benefit from net inflows of GBP2.1bn, with these
businesses accounting for 39.3% of the group's operating profit.
· Total third party assets under management amount to GBP99.5bn (31 March
2012: GBP96.8bn).
· Recurring income as a percentage of total operating income amounts to
69.3% (2011: 67.8%).
· Impairments have decreased by 19.3%, with the credit loss charge as a
percentage of average gross core loans and advances improving from 1.12% at 31
March 2012 to 0.85%.
· The group maintained a strong capital position with Tier one ratios of
11.3% for Investec plc and 11.6% for Investec Limited. Liquidity remains
strong with cash and near cash balances amounting to GBP 10.4bn.
Financial features
Six months to Six months to % Change Year to
30 Sep 2012 30 Sep 2011 31 Mar
2012
Operating profit before 229.4 223.6 2.6 358.6
taxation* (GBP'mn)
Earnings attributable to 168.6 162.9 3.5 257.6
shareholders* (GBP'mn)
Adjusted EPS** (pence) 19.7 20.6 (4.4) 31.8
Total shareholders' equity 3 977 3 797 4.7 4 013
(GBP'mn)
Dividends per share (pence) 8.0 8.0 - 17.0
ROE % 10.1 10.1 - 7.8
Cost to income ratio % 64.7 62.6 - 64.7
Business highlights - operating profit before tax*
· Asset Management: increase of 2.5% to GBP67.2mn (2011: GBP65.6mn)
· Wealth and Investment: increase of 4.9% to GBP22.9mn (2011: GBP21.8mn)
· Specialist Banking: increase of 2.3% to GBP139.4mn (2011: GBP136.3mn)
*Before non-operating items, goodwill and acquired intangibles and after
minorities.
**During the reporting period the weighted number of ordinary shares
increased by 8.0% to 855.2mn
Stephen Koseff, Chief Executive Officer of Investec said:
"I am encouraged by our results and the progress we have made in the last six
months, particularly compared to the second half of last year. Impairments
have decreased significantly and our Australian business has returned to
profit. We have continued improving our efficiencies, streamlining our
processes, eliminating duplication and building scale. Our priority is to
ensure each division and geography makes a proper contribution to our
business. Driving the growth in ROE remains our main focus. We have a strong
franchise which is well recognised in all our markets, our business is
flexible and resilient and we have a good record of overcoming the
challenges presented by the global economic environment."
Bernard Kantor, Managing Director of Investec said:
"Global markets remained volatile and challenging throughout most of our
reporting period. The rand depreciated 15.2% which impacted our results in
sterling terms. On a neutral currency basis our earnings increased 14%. The
South African business performed well and increased operating profits by 6.6 %
in rands, benefitting from revenue growth and tight cost control. In
Australia revenue and costs were in line with the prior year. Our business
model has been realigned and we are well positioned to take advantage of a
market upturn."
For further information please contact:
Investec +27 (0) 11 286 7070 or +44 20 (0) 7597 5546
Stephen Koseff, Chief Executive Officer
Bernard Kantor, Managing Director
Ursula Nobrega, Investor Relations (mobile:+27 (0) 82 552 8808)
Newgate (UK PR advisers)
Jonathan Clare
+44 20 76806550
+44 (0) 7770321881
Elena Shalneva
+44 (0) 7584022830
About Investec
Investec is an international specialist bank and asset manager that provides a
diverse range of financial products and services to a niche client base
in three principal markets, the United Kingdom, South Africa and Australia as
well as certain other countries. The group was established in 1974 and
currently has approximately 8 000 employees.
Investec focuses on delivering distinctive profitable solutions for its
clients in three core areas of activity namely, Asset Management, Wealth &
Investment and Specialist Banking.
In July 2002 the Investec group implemented a dual listed company structure
with listings on the London and Johannesburg Stock Exchanges. The combined
group's current market capitalisation is approximately GBP3.4bn.
Investec plc and Investec Limited (combined results)
Unaudited combined consolidated financial results in Pounds Sterling for the
six months ended 30 September 2012
Overall group performance
Operating profit before goodwill, acquired intangibles, non-operating items
and taxation and after non-controlling interests ("operating profit")
increased 2.6% to GBP229.4 million (2011: GBP223.6 million).
The South African business reported an increase in operating profit of 6.6% in
Rand terms benefiting from growth in revenue and cost containment. The
Australian business returned to profitability as a result of a significant
decline in impairments. The UK business reported results marginally behind the
prior period due to lower investment income.
The group's low-capital intensive asset and wealth management businesses were
supported by continued net inflows, with these businesses accounting for 39.3%
of the group's operating profit. Overall results have been impacted by the
depreciation of the average Rand: Pounds Sterling exchange rate of
approximately 15% and low activity levels given the volatile economic
environment.
The main features of the period under review are:
· Adjusted earnings attributable to shareholders before goodwill,
acquired intangibles and non-operating items increased 3.5% to GBP168.6
million (2011: GBP162.9 million) - an increase of 13.6% on a currency neutral
basis.
· Adjusted earnings per share (EPS) before goodwill, acquired intangibles
and non-operating items decreased 4.4% from 20.6 pence to 19.7 pence - an
increase of 4.9% on a currency neutral basis.
· Recurring income as a percentage of total operating income amounts to
69.3% (2011: 67.8%).
· The credit loss charge as a percentage of average gross core loans and
advances has improved from 1.12% at 31 March 2012 to 0.85%.
· Third party assets under management increased 2.8% to GBP99.5 billion
(31 March 2012: GBP96.8 billion) - an increase of 6.7% on a currency neutral
basis.
· Customer accounts (deposits) decreased 2.6% to GBP24.7 billion (31
March 2012: GBP25.3 billion) - an increase of 2.3% on a currency neutral
basis.
· Core loans and advances decreased 2.5% to GBP17.8 billion (31 March
2012: GBP18.2 billion) - an increase of 2.5% on a currency neutral basis.
· The board declared a dividend of 8.0 pence per ordinary share (2011:
8.0 pence) resulting in a dividend cover based on the group's adjusted EPS
before goodwill and non-operating items of 2.5 times (2011: 2.6 times),
consistent with the group's dividend policy.
Business unit review
The successful strategic alignment of the group towards low capital intensive
businesses over the past few years has resulted in a scaleable platform from
which the group's asset management and wealth management businesses can
continue to grow. These businesses have sound franchises and are well placed
to broaden their client base and maintain net inflows. Substantial effort
through the "One-Bank" process has being made to align infrastructure and
processes and to create the appropriate platforms for future growth and
development of the Specialist Bank. The focus of the group remains on
efficiency and balance sheet optimisation within the banking businesses,
whilst growing the business organically and running down the legacy
portfolios. The group has a strong core banking franchise which it will
continue to broaden and develop.
Asset Management
Asset Management increased operating profit 2.5% to GBP67.2 million (2011:
GBP65.6 million) benefiting from higher average funds under management with
net inflows of GBP1.5 billion recorded. Total funds under management amount to
GBP62.4 billion (31 March 2012: GBP61.6 billion).
Wealth & Investment
Wealth & Investment increased operating profit 4.9% to GBP22.9 million (2011:
GBP21.8 million) benefiting from higher average funds under management with
net inflows of GBP0.6 billion recorded. Total funds under management amount to
GBP36.7 billion (31 March 2012: GBP34.8 billion). The integration of Williams
de Broë is progressing well. Williams de Broë migrated onto the group's
platforms in August 2012 and the business has been rebranded Investec Wealth &
Investment. Costs relating to the integration of these acquisitions will
however, still reflect in the group's 2013 financial results.
Specialist Banking
Specialist Banking increased operating profit 2.3% to GBP139.4 million (2011:
GBP136.3 million).
In South Africa the division has reported an increase in net interest due to
higher lending and fixed income balances and a solid performance from the
principal investment and investment properties portfolios. Net fees and
commissions and customer flow trading income have been negatively impacted by
lower activity in the corporate and institutional banking businesses.
In the UK the division benefited from improved margins and an increase in net
fees and commissions in the corporate advisory business. Levels of
transactional activity within the corporate and institutional banking
businesses however, remain mixed.
The Australian division reported a significant decrease in impairments, with
revenue and costs remaining largely in line with the prior year.
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
Income statement analysis
Total operating income
Total operating income decreased by 2.5% to GBP967.4 million (2011: GBP992.4
million).
Net interest income decreased by 4.1% to GBP349.7 million (2011: GBP364.7
million) largely as a result of the depreciation of the Rand. The South
African and UK businesses both reported an increase in net interest.
Net fee and commission income increased by 3.7% to GBP461.7 million (2011:
GBP445.2 million). The group benefited from higher average funds under
management, solid net inflows and the acquisitions of the Evolution Group plc
and the NCB Group. The Specialist Banking business recorded a decrease in net
fees and commissions largely due to lower levels of activity in the corporate
and institutional banking businesses.
Investment income decreased by 10.9% to GBP75.8 million (2011: GBP85.0
million) due to a weaker performance from the fixed income and investment
portfolios in the UK. The unlisted investment portfolios in South Africa and
Hong Kong continued to perform in line with expectations.
Trading income arising from customer flow decreased 4.7% to GBP34.2 million
(2011:GBP35.9 million) whilst trading income arising from other trading
activities increased 44.3% to GBP25.0 million (2011: GBP17.3 million) due to
effective balance sheet management.
Other operating income includes associate income, assurance income and income
earned on an operating lease portfolio acquired during December 2010.
Impairment losses on loans and advances
Impairments on loans and advances decreased from GBP143.3 million to GBP115.6
million, with impairments in South Africa and the UK remaining in line with
the prior period, whilst impairments in Australia decreased from GBP32.9
million to GBP6.4 million. This current impairment charge is 36.5% lower than
that recorded in the second half of the group's 2012 financial year.
Since 31 March 2012 the level of defaults has improved marginally with the
percentage of default loans (net of impairments but before taking collateral
into account) to core loans and advances amounting to 3.07% (31 March 2012:
3.31%). The ratio of collateral to default loans (net of impairments) remains
satisfactory at 1.29 times (31 March 2012: 1.39 times). The credit loss
charge as a percentage of average gross core loans and advances has improved
from 1.12% at 31 March 2012 to 0.85%.
Operating costs and depreciation
The ratio of total operating costs to total operating income amounted to 64.7%
(2011:62.6%).
Total operating expenses grew by 1.9% to GBP619.6 million (2011: GBP607.9
million) largely as a result of the acquisitions of the Evolution Group plc
and the NCB Group. Excluding these acquisitions, costs in the UK business were
marginally lower than the prior period, whilst costs in the South African
business increased by 4.8% in Rands.
Impairment of goodwill
The current year's goodwill impairment relates to Asset Management businesses
acquired in prior years and the Swiss Trust business.
Amortisation of acquired intangibles
Amortisation of acquired intangibles relates to the Wealth & Investment
business and mainly comprises amortisation of amounts attributable to client
relationships.
Costs arising from acquisitions
As anticipated in the 2012 financial year a further cost of GBP9.5 million
(before tax) arose on the integration of the Evolution Group plc, and GBP1.9
million arose on the acquisition of the NCB Group.
Taxation
The effective tax rate amounts to 19.0% (2011:19.2%)
Losses attributable to non-controlling interests
Losses attributable to non-controlling interests largely comprise GBP7.4
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 2012:
· Total shareholders' equity (including non-controlling interests)
decreased by 0.9% to GBP4.0 billion - an increase of 2.8% on a currency
neutral basis. The weakening of the closing Rand exchange rate relative to
Pounds Sterling has resulted in a reduction in total equity of GBP149.2
million.
· Net asset value per share decreased 1.6% to 385.8 pence and net
tangible asset value per share (which excludes goodwill and intangible assets)
decreased by 1.7% to 311.6 pence largely as a result of the depreciation of
the Rand as described above.
· The return on adjusted average shareholders' equity increased from 7.8%
to 10.1%, however, this percentage was in line with that reported at 30
September 2011.
The group's gearing ratios remain low with core loans and advances to equity
at 4.5 times (2011:4.6 times) and total assets (excluding assurance assets) to
equity at 11.1 times (2011:11.5 times).
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. As at 30 September 2012 the group held GBP10.4 billion in
cash and near cash balances (GBP5.7 billion in Investec Limited and GBP4.7
billion in Investec plc) which amounted to 33% of its liability base. Loans
and advances to customers as a percentage of customer deposits amounted to
68.2% (31 March 2012: 67.8%).
Capital adequacy
The group met its capital adequacy targets of a minimum tier one capital ratio
range of 11% to 12% and a total capital adequacy ratio range of 15% to 18% 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.
Basel 2.5 ratios Basel 2.5 ratios Basel 2 ratios
30 Sep 2012 31 Mar 2012 30 Sep 2011
Investec plc
Capital adequacy ratio 17.2% 17.5% 17.1%
Tier 1 ratio 11.3% 11.6% 11.6%
Investec Limited
Capital adequacy ratio 17.2% 16.1% 15.7%
Tier 1 ratio 11.6% 11.6% 12.0%
Credit and counterparty exposures
The group lends mainly to high net worth and high income individuals, 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. Net defaults on core loans and advances have decreased and are
fully covered by collateral, as detailed in the "Financial statement analysis"
above.
Outlook
The financial system has started to show signs of increased stability, as the
process of deleveraging slows down and the capital and liquidity structures of
the major global banks continue to improve. However, the volatile global
economic environment and some unresolved macro risks remain a significant
feature. Investec's business model has been substantially realigned and the
focus going forward is to consolidate the gains made in its asset management
business and broaden the distribution of the wealth management offering. The
group will continue its focus on building on the progress made in clearing
legacy issues and improving returns in its specialist banking business.
Overall, Investec's balanced business model positions the group to adapt to an
uncertain and changing environment and ensures it is well placed to benefit
from an improvement in market conditions.
On behalf of the boards of Investec plc and Investec Limited
Sir David Prosser Fani Titi Stephen Koseff Bernard Kantor
Joint Chairman Joint Chairman Chief Executive Officer Managing Director
14 November 2012
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
International Financial Reporting Standards (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 2011.
Amounts represented on a currency neutral basis for balance sheet items assume
that the closing exchange rates of the group's relevant exchange rates, as
reflected below, remain the same as at 30 September 2012 when compared to 31
March 2012. Whilst, amounts represented on a currency neutral basis for income
statement items assume that the average exchange rates of the group's relevant
exchange rates, as reflected below, remain the same as at 30 September 2012
when compared to 30 September 2011.
· Additional information
Acquisitions
On 11 June 2012, Investec completed the acquisition of 100% of the issued
share capital of Neontar Limited (parent of the NCB group). The assets and
liabilities at the date of acquisition, goodwill arising on the above (and
other minor transactions) and total consideration paid are disclosed in the
table below:
Book value Fair values
at date of at date of
acquisition acquisition
GBP'000 GBP'000
Loans and advances to banks 10 400 10 400
Trading securities 799 799
Investment securities 6 627 6 627
Deferred taxation assets 70 884
Other assets 52 008 51 117
Property and equipment 1 179 1 179
Intangible assets - 4 063
Goodwill - 8 683
71 083 83 752
Current taxation liabilities 75 75
Deferred taxation liabilities - 311
Other trading liabilities 281 281
Other liabilities 45 909 51 405
46 265 52,072
Net assets / fair value of net assets acquired 24 818 31 680
The goodwill arising from the acquisition of the NCB Group is GBP6.0 million,
and consists largely of the benefits expected to arise from the enhancement of
Investec's business in Ireland with particular reference to Investec's wealth
and investment offering. The remaining goodwill arises from non material
acquisitions.
· 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 Year to Six months to
30-Sep-12 31-Mar-12 30-Sep-11
Currency Period end Average Period end Average Period end Average
per GBP1.00
South African Rand 13.39 12.96 12.27 11.85 12.62 11.25
Australian Dollar 1.55 1.54 1.54 1.52 1.60 1.53
Euro 1.26 1.24 1.20 1.16 1.16 1.13
US Dollar 1.61 1.58 1.60 1.60 1.56 1.63
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 depreciated by 15.2% and
the closing rate has depreciated by 9.1% since 31 March 2012.
Salient Features
30 September %
30 September 31 March
2012 2011 Change
2012
Operating profit before goodwill, acquired intangibles, non-operating items, taxation and after
non-controlling interests 229 419 223 629 2.6 358
(£'000) 625
Earnings attributable to shareholders 168 472 178 920 (5.8) 247
(£'000) 527
Adjusted earnings before goodwill, acquired intangibles and non-operating items 168 575 162 867 3.5 257
(£'000) 579
Adjusted earnings per share 19.7 20.6 (4.4) 31.8
(pence)
Earnings per share 16.8 19.2 (12.5) 25.7
(pence)
Dividends per share 8.0 8.0 - 17.0
(pence)
Total equity 3 977 3 797 4.7 4 013
(£'million)
Third party assets under management 99 522 80 000 24.4 96 776
(£'million)
Combined consolidated income statement
Six Six months Year
months to to to
30 30 September 31
September March
£'000
2012 2011* 2012
Interest income 1 1 183 565 2 299
127 516 925
Interest expense (818 853) (1
(777 797) 600 878)
Net interest income 349 364 712 699
719 047
Fee and commission income 534 507 980 1 013
981 379
Fee and commission expense (73 (62 812) (129
270) 145)
Investment income 75 85 022 174
775 327
Trading income arising from
- customer flow 34 35 907 77
223 066
- balance sheet management and other trading activities 25 17 332 32
003 204
Other operating income 20 44 262 65
976 128
Total operating income before impairment on loans and advances 967 992 403 1 932
407 006
Impairment losses on loans and advances (115 (143 328) (325
640) 118)
Operating income 851 849 075 1 606
767 888
Operating costs (619 (607 860) (1 230
601) 628)
Depreciation on operating leased assets (9 (22 154) (28
765) 670)
Operating profit before goodwill and acquired intangibles 222 219 061 347
401 590
Impairment of goodwill (4 (672) (24
751) 366)
Amortisation of acquired intangibles (6 (4 096) (9
631) 530)
Costs arising from integration of acquired subsidiaries (9 - (17
462) 117)
Operating profit 201 214 293 296
557 577
Non-operational costs arising from acquisition of subsidiary (1 - (5
903) 342)
Profit before taxation 199 214 293 291
654 235
Taxation on operating profit before goodwill (42 (41 985) (62
222) 907)
Taxation on acquired intangibles and acquisition/disposal/integration of subsidiaries 4 2 044 8
022 164
Profit after taxation 161 174 352 236
454 492
Operating losses attributable to non-controlling interests 7 4 568 11
018 035
Earnings attributable to shareholders 168 178 920 247
472 527
Earnings attributable to shareholders 168 178 920 247
472 527
Impairment of goodwill 4 672 24
751 366
Amortisation of acquired intangibles, net of taxation 4 907 2 052 7 052
Non-operational costs arising from acquisition of subsidiary (including integration costs),
net of taxation 9 - 16
067 773
Preference dividends paid (25 (26 730) (39
021) 306)
Additional earnings attributable to other equity holders 5 6 201
818 (557)
Currency hedge attributable to perpetual equity instruments 1 752 1
581 724
Adjusted earnings attributable to ordinary shareholders before goodwill,
acquired intangibles and non-operating items 168 162 867 257
575 579
Headline adjustments (gain on investment properties and available-for-sale
instruments recognised in income) (32 (14 949) (40
202) 326)
Headline earnings 136 147 918 217 253
373
Earnings per share (pence)
- Basic 16.8 19.2 25.7
- Diluted 15.9 18.1 24.3
Adjusted earnings per share (pence)
- 19.7 20.6 31.8
Basic
- 18.7 19.4
Diluted 30.1
Number of weighted average shares 855.2 792.1
(million) 809.6
* As restated for reclassifications detailed in the commentary section of this
report.
Combined consolidated statement of comprehensive income
Six Six
months to months to Year
to
30 30 31
September September March
£'000
2012 2011 2012
Profit after 174
taxation 161 454 352 236
492
Other comprehensive income/(loss):
Cash flow hedge movements taken directly to other comprehensive (10 (34
income† 186) 524) (34
691)
Gains on realisation of available-for-sale assets recycled to the income (11 (1 (12
statement 007) 070) 891)
Fair value movements on available-for-sale assets taken directly
to other comprehensive 10 (22
income† 778 115) (312)
Foreign currency adjustments on translating foreign (145 (237 (196
operations 257) 073) 351)
Pension fund actuarial
gains - - 282
Total comprehensive income/(loss) 5 (120
782 430) (7
471)
Total comprehensive loss attributable to non-controlling (19 (19 (21
interests 607) 971) 798)
Total comprehensive income/(loss) attributable to ordinary (127 (24
shareholders 368 189) 979)
Total comprehensive income attributable to perpetual preferred 25 26 39
securities 021 730 306
Total comprehensive 5 (120
income/(loss) 782 430) (7
471)
† Net of taxation of £3.1 million (six months to 30 September 2011: £5.7
million, year to 31 March 2012: (£8.4 million)).
Summarised combined consolidated statement of changes in equity
Six Six
months to months to Year to
30 30 31
September September March
£'000
2012 2011 2012
Balance at the beginning of the 4 012 3 3 961
period 522 961 102 102
Total comprehensive 5
income/(loss) 782 (120 430) (7 471)
Share-based payment 34 69
adjustments 382 36 660 796
Dividends paid to ordinary (78 (70 (134
shareholders 622) 558) 436)
Dividends paid to perpetual preference (25 (26 (39
shareholders 021) 730) 306)
Dividends paid to non-controlling
interests (116) (247) (390)
Issue of ordinary 34 40 219
shares 685 030 642
Issue of perpetual preference 24 20 20
shares 263 638 638
Share issue
expenses - (587) (607)
Movement of treasury (27 (42 (81
shares 315) 894) 212)
Issue of equity instruments by
subsidiaries - - 72
Acquisition of non-controlling (4
interests 111) - (483)
Non-controlling interests relating to disposal of 5
subsidiaries 220 - 177
Balance at the end of the 3 976 3 796 4 012
period 669 984 522
Combined consolidated balance sheet
30 31 30 September
September March
£'000
2012 2012* 2011*
Assets
Cash and balances at central 1 964 2 1 274 647
banks 616 593 851
Loans and advances to 2 548 2 2 186 698
banks 691 725 347
Non-sovereign and non-bank cash placements 736 398 068
548 642 480
Reverse repurchase agreements and cash collateral on securities 2 268 2 332 960
borrowed 021 975 992
Sovereign debt 4 078 4 3 718 994
securities 756 067 093
Bank debt 2 452 3 2 873 850
securities 196 081 061
Other debt 379 217 544
securities 491 377 832
Derivative financial instruments 1 941 1 2 543 704
073 913 650
Securities arising from trading activities 742 997 590
879 640 146
Investment portfolio 835 890 825 040
136 702
Loans and advances to customers 16 834 17 192 16 505 560
925 208
Own originated loans and advances to customers securitised 917 1 034 992 024
033 174
Other loans and advances 2 193 2 2 963 232
571 829 189
Other securitised assets 3 303 3 3 145 539
116 101 422
Interests in associated 27 24 164
undertakings 425 27 506
Deferred taxation assets 153 117 340
849 150 381
Other assets 1 410 1 1 516 069
455 802 121
Property and equipment 132 266 452
491 171 685
Investment properties 395 354 700
202 407 295
470
Goodwill 716 468 454 417
320
Intangible assets 187 130 346
249 192 099
43 973 45 43 838
439 284 554 938
Other financial instruments at fair value through profit or loss in respect of liabilities
to 6 234 6 5 887 649
customers 294 265 846
Total assets 50 207 51 49 726
733 550 400 587
Liabilities
Deposits by 2 732 2 2 594 634
banks 271 967 428
Derivative financial instruments 1 560 1 2 010 287
408 421 130
Other trading 676 834 417
liabilities 970 612 884
Repurchase agreements and cash collateral on securities 1 936 1 864 1 721 545
lent 204 137
Customer accounts (deposits) 24 688 25 24 184 573
559 343 771
Debt securities in 1 624 2 2 149 556
issue 648 243 948
Liabilities arising on securitisation of own originated loans and 922 1 997 254
advances 347 036 674
Liabilities arising on securitisation of other 2 541 2 2 578 539
assets 900 402 043
Current taxation 210 207 298
liabilities 724 209 609
Deferred taxation 113 138 110
liabilities 254 102 478
Other 1 335 1 1 297 615
liabilities 279 575 154
38 342 39 38 713 828
564 779 256
Liabilities to customers under investment contracts 6 232 6 5 885 448
217 263 913
Insurance liabilities, including unit-linked liabilities 2 2 201
077 1 933
44 576 46 44 601 477
858 045 102
Subordinated liabilities 1 654 1 492 1 328 126
206 776
Total liabilities 46 231 47 45 929 603
064 537 878
Equity
Ordinary share
capital 223 221 210
Perpetual preference share
capital 153 153 153
Share 2 502 2 457 2 292 401
premium 909 019
Treasury shares (74 (72 (62
746) 820) 313)
Other reserves (60 82 38
326) 327 838
Retained 1 332 1 249 1 234 384
income 068 515
Shareholders' equity excluding non-controlling 3 700 3 716 3 503 673
interests 281 415
Non-controlling 276 296 293 311
interests 388 107
- Perpetual preferred securities issued by subsidiaries 273 291 293 829
880 769
- Non-controlling interests in partially held 2 4
subsidiaries 508 338 (518)
Total 3 976 4 012 3 796 984
equity 669 522
50 207 51 49 726
Total liabilities and equity 733 550 587
400
* As restated for reclassifications detailed in the commentary section of this
report
Summarised combined consolidated cash flow statement
Six months Six Year
to months to to
30 30 31
September September March
£'000
2012 2011 2012
Cash inflows from operations 366
363 394 574 658
379
Increase in operating (1 827 (3 (2 538
assets 308) 428 440) 282)
Increase in operating 636 2 3
liabilities 863 834 291 393
045
Net cash (outflow)/inflow from operating (824 (199 1
activities 082) 575) 513
142
Net cash (outflow)/inflow from investing (78 (19
activities 825) 493) 39 560
Net cash inflow from financing 203 28
activities 386 144 105
679
Effects of exchange rate changes on cash and cash (118 (129
equivalents 413) 249) (102
563)
Net (decrease)/increase in cash and cash (817 (320 1
equivalents 934) 173) 555
818
Cash and cash equivalents at the beginning of the 4 942 3 386 3
period 806 988 386
988
Cash and cash equivalents at the end of the 4 124 3 066 4
period 872 815 942
806
Cash and cash equivalents are defined as including cash and balances at
central banks, on demand loans and non-sovereign and non-bank cash placements
(all of which have a maturity profile of less than three months).
· Accounting policies and disclosures
These unaudited summarised combined 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).
The accounting policies applied in the preparation of the results for the six
months ended 30 September 2012 are consistent with those adopted in the
financial statements for the year ended 31 March 2012. The financial results
have been prepared under the supervision of Glynn Burger the Group Risk and
Finance Director.
· Restatements and presentation of information
Consistent with the year ended 31 March 2012, the Investec group has
positioned its strategic disclosures 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 are
explained further below. The group believes that these refinements provide
greater clarity on the key income and balance sheet drivers of its business.
Commentary on combined consolidated income statement reclassifications
· Consistent with the year ended 31 March 2012, the previously reported
principal transaction income line item has been split into the following line
items:
o Investment income: income, other than net interest, from securities held
for the purpose of generating interest yield, dividends and capital
appreciation
o Customer flow trading income: income from trading activities arising from
facilitating customer activities
o 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
· With the continued reduction in insurance activity, it is deemed
appropriate to move the associated line items to other operating income
For the six months to 30 September 2011 As
previously Reclassifi-
£'000 New format cations
reported
Interest 1 183 565 1 183 -
income 565
Interest (818 853) (818 -
expense 853)
Net interest 364 712 364 -
income 712
Fee and commission 507 980 507 -
income 980
Fee and commission (62 812) (62 -
expense 812)
Principal 138 (138 261)
transactions - 261
Investment 85 85 022
income 022 -
Trading income arising from
- customer 35 35 907
flow 907 -
- balance sheet management and other trading 17 332 17 332
activities -
Investment income on assurance - 11 (11 630)
activities 630
Premiums and reinsurance recoveries on insurance - 4 (4 198)
contracts 198
Claims and reinsurance premiums on assurance - (15 15 856
business 856)
Other operating 44 44 (28)
income 262 290
Total operating income before impairment on loans and 992 403 992 -
advances 403
Commentary on combined consolidated balance sheet reclassifications
The main driver behind the revision to the balance sheet is to enable a better
understanding of Investec's exposures and to minimise the number of
reconciliation items to the detailed risk disclosures. It is noted that there
are no measurement changes nor are there any changes to total assets,
liabilities and equity and the cash flow statement.
Each category of reclassification is noted below and is consistent with those
made at 31 March 2012:
· Cash equivalent corporate paper
o Cash equivalent advances to customers has been renamed to "non-sovereign
and non-bank cash placements". These balances represent short term placements
in corporates that run an in-house treasury function.
· Loans and securitisation
o To better align the balance sheet with the group'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
o The group'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 and loss, those carried at
amortised cost (held to maturity) and those fair valued through equity
(available for sale). The group 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 securities" includes all instruments (other than derivative
instruments) that are held on balance sheet in relation to trading activities.
Cash
As Total equivalent Securities
At 30 September 2011 New previously reclassifi- corporate Loans and reclassifi-
£'000 format reported cations paper securitisation cation
Total assets reclassified
Cash equivalent advances to customers 398 068 (398 068) (398 068) -
- -
Non-sovereign and non-bank
cash placements 398 068 - 398 068 398 068 -
-
Sovereign debt securities 3 718 994 - 3 718 994 - 3 718 994
-
Bank debt securities 2 873 850 - 2 873 850 - 2 873 850
-
Other debt securities 217 544 - 217 544 - 217 544
-
Trading securities 5 212 200 (5 212 200) - (5 212 200)
- -
Securities arising from trading activities 997 590 - 997 590 - 997 590
-
Investment portfolio 825 040 - 825 040 - 825 040
-
Investment securities 3 461 471 (3 461 471) - (3 461 471)
- -
Loans and advances to customers 16 505 560 17 938 242 (1 432 682) - (1 432 -
682)
Securitised assets 4 137 563 (4 137 563) - (4 137 563) -
-
Own originated loans and advances to
customers securitised 992 024 - 992 024 - 992 -
024
Other loans and advances* 1 432 682 - 1 432 682 - 1 432 -
682
Other securitised assets 3 145 539 - 3 145 539 - 3 145 -
539
Other assets 1 516 069 1 475 416 40 653 - 40 653
-
32 622 960 32 622 960 - - -
-
Total liabilities reclassified
Liabilities arising on securitisation 3 575 793 (3 575 793) - (3 575 793) -
-
Liabilities arising on securitisation of
own originated loans and advances 997 254 - 997 254 - 997 -
254
Liabilities arising on securitisation of
other assets 2 578 539 - 2 578 539 - 2 578 -
539
3 575 793 3 575 793 - - - -
* Refer to further reclassification note below.
Other balance sheet reclassifications
In the current period, the group has moved warehoused assets and liabilities
into other loans and advances and deposits by banks respectively. This change
arises from simplifying the face of the balance sheet with the relevant
information more appropriately detailed in the notes to the financial
statements.
Changes
to
As previously
previously
£'000 Restated reported
reported
31 March 2012
Other loans and advances 2 829 189 1 397 477 1 431
712
Warehoused assets- Kensington warehouse funding 1 431 712 (1 431
- 712)
Deposits by banks 2 967 2 132 516 834
428 912
Deposits by banks- Kensington warehouse funding 834 912 (834
- 912)
30 September 2011
Other loans and advances 2 963 1 432 682 1 530
232 550
Warehoused assets- Kensington warehouse funding 1 530 550 (1 530
- 550)
Deposits by banks 2 594 1 696 070 898
634 564
Deposits by banks- Kensington warehouse funding 898 564 (898
- 564)
31 March 2011
Other loans and advances 2 678 1 066 168 1 612
349 181
Warehoused assets- Kensington warehouse funding 1 612 181 (1 612
- 181)
Deposits by banks 2 834 1 858 893 975
435 542
Deposits by banks- Kensington warehouse funding 975 542 (975
- 542)
Commentary on line of business segmental reclassifications
The 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
· The numbers as reported previously for Asset Management and Wealth &
Investment have not changed (barring the income statement reclassifications as
referred to above)
· To align with the information provided to the Chief Operating Decision
Maker the Property Activities, 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. The total operating
profit has however, not changed from that which was previously reported
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 IFRS
applicable to past, current and future periods, evolving practices with regard
to the interpretation and application of standards under IFRS.
§ domestic and global economic and business conditions.
§ market related risks.
· A number of these factors are beyond the group's control.
· These factors may cause the group's actual future results, performance
or achievements in the markets in which it operates to differ from those
expressed or implied.
· Any forward looking statements made are based on the knowledge of the
group at 14 November 2012.
· The information in the announcement for the six months ended 30
September 2012, which was approved by the board of directors on 14 November
2012, does not constitute statutory accounts as defined in Section 435 of the
UK Companies Act 2006. The 31 March 2012 financial statements were filed with
the registrar and were unqualified with the audit report containing no
statements in respect of sections 498(2) or 498(3) of the UK Companies Act.
· The interim financial statements for the six months ended 30 September
2012 will be posted to shareholders on 30 November 2012.
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 21 of 8 pence (2011: 8
pence) per ordinary share has been declared by the board in respect of the six
months ended 30 September 2012 payable to shareholders recorded in the
members' register of the company at the close of business on Friday, 14
December 2012, 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 1 pence per ordinary share and through a
dividend paid by Investec Limited, on the SA DAS share equivalent to 7 pence
per ordinary share
The relevant dates for the payment of dividend number 21 are as follows:
Last day to trade cum-dividend
On the London Stock Exchange
(LSE) Tuesday, 11
December 2012
On the Johannesburg Stock Exchange (JSE)
Friday, 07 December 2012
Shares commence trading ex-dividend
On the London Stock Exchange
(LSE) Wednesday, 12 December
2012
On the Johannesburg Stock Exchange (JSE)
Monday, 10 December 2012
Record date (on the JSE and LSE)
Friday, 14 December 2012
Payment date (on the JSE and LSE)
Friday, 28 December 2012
Share certificates on the South African branch register may not be
dematerialised or rematerialised between Monday, 10 December 2012 and Friday,
14 December 2012, both dates inclusive, nor may transfers between the UK and
SA registers take place between Monday, 10 December 2012 and Friday, 14
December 2012, both dates inclusive.
Additional information for South African resident shareholders of Investec plc
· Shareholders registered on the South African register are advised that
the distribution of 8 pence, equivalent to a gross dividend of 112 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, 14 November
2012.
· Investec plc UK tax reference number: 2683967322360
· The issued ordinary share capital of Investec plc is 605 196 771
ordinary shares.
· The dividend paid by Investec plc to South African resident
shareholders and the dividend paid by Investec Limited on the SA DAS share are
subject to South African Dividend Tax of 15% (subject to any available
exemptions as legislated).
· Shareholders registered on the South African register who are exempt
from paying the Dividend Tax will receive a net dividend of 112 cents per
share, comprising 98 cents per share paid by Investec Limited on the SA DAS
share and 14 cents per ordinary share paid by Investec plc.
· Shareholders registered on the South African register who are not
exempt from paying the Dividend Tax will receive a net dividend of 99.44885
cents per share, comprising:
o 87.54885 cents per share paid by Investec Limited on the SA DAS share
(gross dividend of 98 cents per share less Dividend Tax of 10.45115 cents per
share, having utilized Secondary Tax on Companies credits as part of the
dividend by Investec Limited on the SA DAS share equivalent to 28.32564 cents
per share), and
o 11.9 cents per share paid by Investec plc (gross dividend of 14 cents per
share less Dividend Tax of 2.1 cents per share).
By order of the board
D Miller
Company Secretary
14 November 2012
Investec plc
Preference share dividend announcement
Registration number: 3633621
Share code: INPP
ISIN: GB00B19RX541
Non-redeemable non-cumulative non-participating preference shares ("preference
shares")
Declaration of dividend number 13
Notice is hereby given that preference dividend number 13 has been declared
for the period 01 April 2012 to 30 September 2012 amounting to 7.521 pence per
preference 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, 07 December 2012.
For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of
7.521 pence per preference share is equivalent to a gross dividend of 105.42
cents per share, which has been determined using the Rand/Pound Sterling
average buy/sell forward rate as at 11h00 (SA Time) on Wednesday, 14 November
2012.
The relevant dates relating to the payment of dividend number 13 are as
follows:
Last day to trade cum-dividend
On the Channel Islands Stock Exchange (CISX)
Tuesday, 04 December 2012
On the Johannesburg Stock Exchange (JSE)
Friday, 30 November 2012
Shares commence trading ex-dividend
On the Channel Islands Stock Exchange (CISX)
Wednesday, 05 December 2012
On the Johannesburg Stock Exchange (JSE)
Monday, 03 December 2012
Record date (on the JSE and CISX)
Friday, 07 December 2012
Payment date (on the JSE and CISX)
Tuesday, 18 December 2012
Share certificates may not be dematerialised or rematerialised between Monday,
03 December 2012 and Friday, 07 December 2012 both dates inclusive, nor may
transfers between the UK and SA registers may take place between Monday, 03
December 2012 and Friday, 07 December 2012 both dates inclusive.
For SA resident preference shareholders, additional information to take note
of:
· Investec plc tax reference number: 2683967322360
· The issued preference share capital of Investec plc is 15 081 149
preference shares.
· The dividend paid by Investec plc to South African resident
shareholders is subject to South African Dividend Tax (Dividend Tax) of 15%
(subject to any available exemptions as legislated).
· No Secondary Tax on Companies ("STC") Credits has been utilized in
respect of this preference share dividend declaration.
· The net dividend amounts to 89.61 cents per preference share for
preference shareholders liable to pay the Dividend Tax and 105.42 cents per
preference share for preference shareholders exempt from paying the Dividend
Tax.
By order of the board
D Miller
Company Secretary
14 November 2012
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 ("preference shares")
Declaration of dividend number 3
Notice is hereby given that preference dividend number 3 has been declared for
the period 01 April 2012 to 30 September 2012 amounting to 419.17123 cents per
preference share payable to holders of the Rand denominated non-redeemable
non-cumulative non-participating perpetual preference shares as recorded in
the books of the company at the close of business on Friday, 07 December 2012.
The relevant dates relating to the payment of dividend number 3 are as
follows:
Last day to trade cum-dividend Friday, 30 November 2012
Shares commence trading ex-dividend Monday, 03 December 2012
Record date Friday, 07 December 2012
Payment date Tuesday, 18 December 2012
Share certificates may not be dematerialised or rematerialised between Monday,
03 December 2012 and Friday, 07 December 2012, both dates inclusive.
For SA resident preference shareholders, additional information to take note
of:
· Investec plc tax reference number: 2683967322360
· The issued preference share capital of Investec plc is 2 275 940
preference shares.
· The dividend paid by Investec plc to South African resident
shareholders is subject to South African Dividend Tax (Dividend Tax) of 15%
(subject to any available exemptions as legislated).
· No Secondary Tax on Companies ("STC") Credits has been utilized in
respect of this preference share dividend declaration.
· The net dividend amounts to 356.29573 cents per preference share for
preference shareholders liable to pay the Dividend Tax and 419.17123 cents per
preference share for preference shareholders exempt from paying the Dividend
Tax.
By order of the board
D Miller
Company Secretary
14 November 2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BIBPTMBTBBMT -0- Nov/15/2012 07:00 GMT
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