Interim Results

RNS Number : 3690W

Investec PLC

18 November 2010

 



Investec Limited Incorporated in the Republic of South Africa Registration number 1925/002833/06       JSE share code: INL              ISIN: ZAE000081949

Investec plc Incorporated in England and Wales Registration number 3633621 JSE share code: INP ISIN: GB00B17BBQ50

18 November 2010 Diversified model delivers strong operational performance Assets under management continue to grow Investec, the FTSE100 international specialist bank and asset manager, announces today its results for the six months ended 30 September 2010 Highlights ·      Investec has seen further progress during the period with its strategy of growing revenues from non-lending businesses ·      Third party assets under management increased 4.9% from GBP74.2bn to GBP77.8bn ·      Asset Management saw further strong net inflows of GBP1.9bn in the six month period from 30 March 2010; AUM rose 6.7% to GBP49.5bn ·      The group's operating profit excluding the GBP46 million profits earned on the repurchase of the group's debt in the prior period increased by 34.2% to GBP228.2 million (2009: GBP170.0 million). ·      Adjusted earnings per share decreased by 7.9%, largely as a result of more shares in issue following the acquisition of Rensburg Sheppards plc and a cash placing ·      The credit loss ratio fell from 1.16% to 1.02%; impairments remain at elevated levels and improvement in the level of non-performing loans has been slow ·      The group maintained a strong capital position with Tier 1 ratios of 12.1% for both Investec plc and Investec Limited; Liquidity remains strong with cash and near cash balances amounting to GBP10.0bn ·      Investment in the brand continued Financial features Six months to 30 Sep 2010 Six months to 30 Sep 2009 % Change Year to 31 Mar 2010 Operating profit before taxation* (GBP'mn) 228.2 216.0 5.6% 432.3 Earnings attributable to shareholders* (GBP'mn) 163.2 160.4 1.7% 309.7 Adjusted EPS* (pence) 22.1 24.0 - 7.9% 45.1 Total equity (GBP'mn) 3 798 2 993 26.9% 3 292 Dividends per share (pence) 8.0 8.0 - 16.0 ROE % 11.5 14.8 - 13.5 Cost to income ratio % 61.4 56.1 - 57.8 Recurring revenue as a percentage of operating income 63.0 61.1 - 60.4 Business highlights - operating profit before tax* ·      Asset Management: increase of 69.1% to GBP48.9mn (2009: GBP28.9mn) ·      Wealth and Investment: increase of 36.1% to GBP16.3mn (2009: GBP12.0mn) ·      Property Activities: increase of 39.8% to GBP16.4 mn (2009: GBP11.7mn) ·      Private Banking: recorded a loss of GBP3.9mn (2009: GBP16.7mn profit) ·      Investment Banking: increase of 58.7% to GBP42.5mn (2009: GBP26.8mn) ·      Capital Markets: increase of 81.3% to GBP133.5mn (2009: GBP73.6mn) ·      Group Services and Other Activities: loss of GBP25.6mn (2009: GBP46.2mn profit) *Before non-operating items, goodwill and acquired intangibles and after minorities Stephen Koseff, Chief Executive Officer of Investec said: "We have continued to invest in our capability and franchise and are well positioned to capture the increasing number of opportunities we are now seeing. We have maintained excess levels of liquidity and capital until the regulatory picture is clearer. This does have a negative impact on short-term earnings and return on equity but the Board believes that this achieves the right strategic balance for the group." Bernard Kantor, Managing Director of Investec said: "Investec has delivered a strong operating performance across most of its divisions and our strategy of building income from less capital intensive, fee earning businesses has made good progress. Looking ahead there are, of course, reasons for caution, but we are encouraged by the overall levels of activity we see in our businesses." For further information please contact: Investec [phone] Stephen Koseff, Chief Executive Officer Bernard Kantor, Managing Director Ursula Nobrega, Investor Relations (mobile:[phone]) Citigate Dewe Rogerson [phone] Jonathan Clare Tom Baldock Ged Brumby 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 7 000 employees. Investec focuses on delivering distinctive profitable solutions for its clients in six core areas of activity namely, Asset Management, Wealth and Investment, Property Activities, Private Banking, Investment Banking and Capital Markets. 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 GBP4bn. Investec plc and Investec Limited (combined results) Unaudited combined consolidated financial results in Pounds Sterling for the six months ended 30 September 2010 Overall group performance The group has delivered a strong operational performance, with five of its six core businesses areas recording a substantial increase in earnings. This was partially offset by profits earned on the repurchase of debt in the prior period not being repeated. The group's strategy to build revenues in its less capital intensive businesses gained further momentum through the acquisition of Rensburg Sheppards plc and strong inflows recorded in the asset management business. The balance sheet remains strong, supported by an increase in capital and liquidity over the period. The pace of economic recovery however, is slow and uncertain. Activity levels within the group's banking and advisory businesses are below historic trends and the impairment charge, whilst improving remains high. Against this backdrop the main features of the period under review are: ·      Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after minorities ("operating profit") increased 5.6% to GBP228.2 million (2009: GBP216.0 million). ·      The group's operating profit excluding the GBP46 million profits earned on the repurchase of the group's debt in the prior period increased by 34.2% to GBP228.2 million (2009: GBP170.0 million). ·      Adjusted earnings attributable to shareholders before goodwill, acquired intangibles and non-operating items increased 1.7% to GBP163.2 million (2009: GBP160.4 million). ·      Adjusted earnings per share (EPS) before goodwill, acquired intangibles and non-operating items decreased 7.9% from 24.0 pence to 22.1 pence, largely as a result of an increase in the number of shares in issue. ·      Third party assets under management increased 4.9% to GBP77.8 billion (31 March 2010: GBP74.2 billion) ·      Customer accounts (deposits) increased 7.1% to GBP23.5 billion (31 March 2010: GBP21.9 billion) ·      Core loans and advances increased 1.4% to GBP18.1 billion (31 March 2010: GBP17.9 billion) ·      Core loans and advances (excluding own originated securitised assets) as a percentage of customer deposits improved from 76.2% at 31 March 2010 to 72.5%. ·      Capital adequacy ratios have strengthened in both Investec plc and Investec Limited (refer to "Operational review" below). ·      Low gearing ratios represented by core loans and advances to equity at 4.8 times (31 March 2010: 5.4 times) and total assets (excluding assurance assets) to equity at 11.4 times (31 March 2010: 12.5 times). ·      The board declared a dividend of 8.0 pence per ordinary share (2009: 8.0 pence) resulting in a dividend cover based on the group's adjusted EPS before goodwill and non-operating items of 2.8 times (2009: 3.0 times), consistent with the group's dividend policy. Strategic review Over the past eighteen months the group has made a concerted effort to realign its business model by building its asset and wealth management businesses. This strategy is starting to bear fruit with a significant rise in funds under management resulting in operating profit from these businesses increasing by 59.4% to GBP65.2 million (2009: GBP40.9 million). The banking regulatory environment remains uncertain notwithstanding the recent announcements made by the Basel Committee on Banking Supervision. At this point it is still unclear as to the types of instruments that will qualify as capital in future and the different responses in this regard from the regulators in the geographies in which the group operates. The board has resolved to maintain excess levels of liquidity and capital until the group has further clarity on the way forward. This does have a negative impact on short-term earnings and return on equity, however, the board believes that this is appropriate under the circumstances. Liquidity and funding Diversifying Investec's funding sources has been a key element in improving the quality of the group's balance sheet and reducing its reliance on wholesale funding. The group has continued to increase customer deposits in all three core geographies and cash and near cash balances amount to GBP10.0 billion. Capital adequacy The group targets a minimum tier one capital ratio of 11% and a total capital adequacy ratio range of 14% to 17% on a consolidated basis for each of Investec plc and Investec Limited. Capital ratios are within the group's target range across all core geographies. The group has conducted an initial review of the Basel III requirements as set out in the Basel Committee on Banking Supervision announcement on 12 September 2010. Based on this review the group believes that its current capital structure and capital ratios exceed the minimum capital requirements for 2013. Basel II ratios 30 Sep 2010 31 Mar 2010 30 Sep 2009 Investec plc   Capital adequacy ratio 16.7% 15.9% 15.5%   Tier 1 ratio 12.1% 11.3% 11.0% Investec Limited   Capital adequacy ratio 16.2% 15.6% 14.7%   Tier 1 ratio 12.1% 12.1% 11.3% Asset quality The bulk of Investec's credit and counterparty risk arises through its Private Banking and Capital Markets activities. The Private Bank lends mainly to high net worth and high income individuals, whilst the Capital Markets division primarily transacts with mid to large sized corporates, public sector bodies and institutions. Investec continues to focus on improving asset quality and credit risk in all geographies. Defaults on core loans and advances have increased but remain fully covered, as detailed in the "Financial statement analysis" below. Business unit review Asset Management Asset Management reported an increase in operating profit of 69.1% to GBP48.9 million (2009: GBP28.9 million) benefiting from substantially higher average funds under management and a solid investment performance. Since 31 March 2010 the division recorded strong net inflows of GBP1.9 billion with assets under management increasing by 6.7% from GBP46.4 billion to GBP49.5 billion. Wealth and Investment Wealth and Investment reported an increase in operating profit of 36.1% to GBP16.3 million (2009: GBP12.0 million). The business has benefitted from higher average funds under management and the acquisition of Rensburg Sheppards plc, as detailed in the "Notes to the commentary" section below. Since 31 March 2010 total funds under management increased by 2.0% from GBP27.1 billion to GBP27.7 billion. Property Activities Property Activities generated an increase in operating profit of 39.8% to GBP16.4 million (2009: GBP11.7 million). The results of the division were largely supported by a satisfactory performance from the investment property portfolio in South Africa. Private Banking The Private Banking division posted a loss of GBP3.9 million (2009: profit of GBP16.7 million) as a result of low activity levels and increased impairments. Notwithstanding, the South African division reported an improved performance. Since 31 March 2010 the private client core lending book has remained at GBP12.9 billion and the deposit book increased by 3.3% from GBP11.8 billion to GBP12.2 billion. Investment Banking The Investment Banking division reported an increase of 58.7% in operating profit to GBP42.5 million (2009: GBP26.8 million). The Principal Investments division recorded a solid result, primarily driven by an improved performance from some of the investments held in the UK and South African portfolio. The Agency divisions benefitted from a good deal pipeline although trading conditions in the Institutional Stockbroking business remain difficult. Capital Markets Capital Markets reported an increase in operating profit of 81.3% to GBP133.5 million (2009: GBP73.6 million). The division has benefitted from good levels of activity across the advisory and structuring businesses, notably within the Principal Finance, Structured Finance and Structured Equity Derivatives teams. Since 31 March 2010 core loans and advances increased 4.1% from GBP4.5 billion to GBP4.7 billion. Group Services and Other Activities Group Services and Other Activities posted a loss of GBP25.6 million (2009: profit of GBP46.2 million). The Central Funding division's results were impacted by lower levels of interest rates and a weaker performance from equity investments held within the South African portfolio. Furthermore, the UK Central Funding division recorded a profit of approximately GBP46 million on the repurchase of debt in the prior period which was not repeated in the current period. Further information on key developments within each of the business units is provided in a detailed report published on the group's website: http://www.investec.com Financial statement analysis Total operating income Total operating income net of insurance claims has increased by 14.0% to GBP881.0 million (2009: GBP773.0 million). Material movements in total operating income are analysed below. Net interest income increased by 8.0% to GBP321.2 million (2009: GBP297.4 million) largely as a result of improved margins within the South African Private Banking division. Net fee and commission income increased by 50.4% to GBP340.5 million (2009: GBP226.4 million). Average funds under management have grown substantially, supported by improved market indices and strong net inflows. The banking businesses recorded an increase in net fees and commissions, although transactional activity levels remain mixed. Income from principal transactions decreased by 9.6% to GBP208.7 million (2009: GBP230.8 million). The group has benefited from a solid performance from its unlisted equity, structured credit and property investment portfolios. The prior period included profits generated on the repurchase of debt which were not repeated in the current period. Operating income from associates decreased by 46.5% to GBP3.2 million (2009: GBP5.9 million). The current period's figure includes Investec's 47.1% share of the post-tax profit of Rensburg Sheppards plc for the period 1 April 2010 to 25 June 2010. The consolidation of the operating results of certain investments held is partly reflected in other operating income, which declined from GBP10.5 million to GBP5.2 million. As a result of the foregoing factors, recurring income as a percentage of total operating income increased to 63.0% (2009: 61.1%). Impairment losses on loans and advances The uncertain pace of economic recovery has slowed the improvement in the level of non-performing loans and defaults have continued to increase. Impairment losses on loans and advances have increased from GBP94.3 million to GBP98.2 million (excluding Kensington). The credit loss charge as a percentage of average gross loans and advances is 1.02%, marginally lower than the 1.16% reported at 31 March 2010.The percentage of default loans (net of impairments but before taking collateral into account) to core loans and advances has increased from 4.0% to 4.6% since 31 March 2010. The ratio of collateral to default loans (net of impairments) remains satisfactory at 1.35 times (31 March 2010: 1.33 times).  Impairment losses on loans and advances relating to the Kensington business amount to GBP24.7 million (2009: GBP40.0 million). The total Kensington book has reduced to GBP4.4 billion from GBP4.7 billion at 31 March 2010. Administrative expenses and depreciation The ratio of total operating expenses to total operating income amounts to 61.4% (2009:56.1%). Total expenses grew by 24.8% to GBP540.9 million (2009: GBP433.5 million) largely as a result of the appreciation of the Rand; the acquisitions of Rensburg Sheppards plc and Lease Direct Finance; an increase in variable remuneration in certain divisions given improved profitability; an increase in headcount in certain divisions; and increased spending on the brand and sponsorships.   Impairment of goodwill The current period goodwill impairment relates to Asset Management businesses acquired in prior years.   Amortisation of intangibles The current period amortisation of intangibles relates to the acquisition of Rensburg Sheppards plc and mainly comprises amortisation of client relationships.   Profit on acquisition of subsidiary A net gain of GBP73.5 million has arisen on the acquisition of Rensburg Sheppards plc, as detailed in the "Notes to the commentary" section below. Writedown of subsidiaries held for sale At 30 September 2010, the group had entered into a firm agreement to dispose of one of its investments that was consolidated into the group accounts. Regulatory approval for the transaction was pending at 30 September 2010. As a result the subsidiary has been treated as an asset held for sale, effectively being held at fair value, less cost to realise in the group's accounts. All of the assets and liabilities of the investment have been recognised on single asset and liability lines on the balance sheet, referred to as "non-current assets classified as held for sale" and "liabilities directly associated with non-current assets held for sale". A loss of GBP6.5 million (net of minorities) arising on the pending transaction has been recognised in the income statement in the current period.   Taxation The operational effective tax rate of the group increased from 18.2% to 20.2%, due to a change in the mix of taxable and non-taxable earnings. Losses attributable to minority interests Losses attributable to minority interests of GBP12.3 million comprise: ·      GBP7.4 million relating to investments consolidated in the Private Equity division; ·      GBP4.9 million relating to Euro denominated preferred securities issued by a subsidiary of Investec plc which are reflected on the balance sheet as part of minority 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 minorities). Balance sheet analysis Since 31 March 2010: ·      Total shareholders' equity (including minority interests) increased by 15.4% to GBP3.8 billion largely as a result of retained earnings and the issue of shares. ·      Total assets increased from GBP46.6 billion to GBP49.0 billion largely as a result of increased cash holdings and advances, as well as an increase in goodwill and intangibles associated with the acquisition of Rensburg Sheppards plc. ·      The return on adjusted average shareholders' equity declined from 13.5% to 11.5%. ·      Net asset value per share increased by 8.4% to 394.6 pence and net tangible asset value per share (which excludes goodwill and intangible assets) decreased by 1.9% to 317.8 pence. Outlook The group's operational performance is reflective of our forward-focused approach over the past year and the ongoing effort to build our brand throughout the financial crisis. While the pace of economic recovery varies across the world, and the regulatory environment remains challenging, the system has stabilised and activity levels are starting to improve. The strength and resilience of our franchise, together with a solid balance sheet position, provides appropriate flexibility to support our existing businesses and allows us to capture opportunities arising from the realignment of the financial services industry. On behalf of the boards of Investec plc and Investec Limited Hugh Herman Stephen Koseff Bernard Kantor Chairman Chief Executive Officer Managing Director Notes to the commentary section above ·      Presentation of financial information Investec operates under a Dual Listed Companies (DLC) structure with premium/primary listings of Investec plc on the London Stock Exchange and Investec Limited on the JSE Limited. In terms of the contracts constituting the DLC structure, Investec plc and Investec Limited effectively form a single economic enterprise in which the economic and voting rights of ordinary shareholders of the companies are maintained in equilibrium relative to each other. The directors of the two companies consider that for financial reporting purposes, the fairest presentation is achieved by combining the results and financial position of both companies. Accordingly, the interim results for Investec plc and Investec Limited present the results and financial position of the combined DLC group under IFRS, denominated in Pounds Sterling. In the commentary above, all references to Investec or the group relate to the combined DLC group comprising Investec plc and Investec Limited. Unless the context indicates otherwise, all comparatives included in the commentary above relate to the six months ended 30 September 2009. ·      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: 6 months to 30 Sep 2010 Year to 31 Mar 2010 6 months to 30 Sep 2009 Currency per GBP1.00 Close Ave Close Ave Close Ave South African Rand 11.00 11.29 11.11 12.38 11.99 12.74 Australian Dollar 1.63 1.70 1.66 1.88 1.81 1.87 Euro 1.15 1.18 1.12 1.13 1.09 1.11 Dollar 1.57 1.52 1.52 1.59 1.60 1.59 Exchange rates between local currencies and Pounds Sterling have fluctuated over the period. The most significant impact arises from the appreciation of the Rand. The average exchange rate over the period has appreciated by 11.4% and the closing rate has appreciated by 1.0% since 31 March 2010. ·      Acquisition of Rensburg Sheppards plc On 30 March 2010, it was announced that Investec and Rensburg Sheppards plc had reached agreement on the terms of a recommended all share offer under which Investec would acquire the entire issued and to be issued ordinary share capital of Rensburg Sheppards plc not already owned by it. Following shareholder and regulatory approvals the acquisition became effective on 25 June 2010. Prior to this date Investec's 47.1% interest in Rensburg Sheppards plc was accounted for as an associate. As a result of requirements under new accounting rules, the group was required to fair value its existing 47.1% holding in Rensburg Sheppard's plc at the point it acquired the remaining 52.9%. This has resulted in an exceptional gain of GBP73.5 million (net of acquisition costs). The group issued 37.9 million shares to acquire the remaining shares in Rensburg Sheppards plc for a consideration of GBP180.4 million. This consideration combined with the existing fair valued holding resulted in the recognition of goodwill and intangibles of GBP193.6 million and GBP133.4 million, respectively. ·      Accounting policies and disclosures The accounting policies applied in the preparation of the results for the period ended 30 September 2010 are consistent with those adopted in the financial statements for the year ended 31 March 2010, except for the adoption of the revised IFRS 3 - Business Combinations. This standard is applicable to all business combinations effective from 1 April 2010 in the group accounts. The main change arising from the adoption is that acquisition related costs are expensed in the period in which the costs are incurred and the services rendered, except for costs related to the issue of debt (recognised as part of the effective interest rate) and the cost of issue of equity (recognised directly in shareholders' equity). These preliminary condensed consolidated financial statements have been prepared in terms of the recognition and measurement criteria of International Financial Reporting Standards, and the presentation and disclosure requirements of IAS34, Interim Financial Reporting ·      Restatements The group applies a policy of offsetting financial assets and financial liabilities when there is both an intention to settle on a net basis (or simultaneously) and a legal right to offset exists. With regard to derivative instruments, the group identified that in certain isolated instances offsetting was applied in prior financial periods to derivative assets and liabilities where it is not market practice to settle net, while the legal right to settle net exists. This restatement had been identified and disclosed in the 2010 annual report. The corresponding restatement for the 30 September 2009 balance sheet is noted below: GBP'000  30 Sep 2009 Restated Derivative financial instrument assets 1,677,224 Derivative financial instrument liabilities 1,377,955 As previously reported Derivative financial instrument assets 1,453,804 Derivative financial instrument liabilities 1,154,535 Changes to previously reported Derivative financial instrument assets    223,420 Derivative financial instrument liabilities    223,420 The above restatements had no impact on equity, nor the net cash position and are consistent with the restatements as disclosed in the 2010 annual report. Offsetting of intergroup interest received and interest paid On review, it was detected that the gross interest income and expense, as reported at 31 March 2010, had not appropriately netted certain intergroup interest income and expense between the two line items. Whilst net interest income was correctly reported, the restatement to interest received and paid is noted below: GBP'000 31 March 2010 Restated Interest income 2,041,153 Interest expense (1,428,067) Net interest income 613,086 As previously reported Interest income 2,726,011 Interest expense (2,112,925) Net interest income 613,086 Changes to previously reported Interest income (684,858) Interest expense 684,858 Net interest income - The above change has no impact to the income statement (other than as noted above), balance sheet nor cash flow statement. ·      Proviso ·      Please note that matters discussed in this announcement may contain forward looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to: § the further development of standards and interpretations under International Financial Reporting Standards (IFRS) applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS. § domestic and global economic and business conditions. § 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 18 November 2010. ·      The information in the announcement for the six months ended 30 September 2010, which was approved by the board of directors on 17 November 2010, does not constitute statutory accounts as defined in Section 435 of the UK Companies Act 2006. Investec plc and Investec Limited (combined results) Unaudited combined consolidated financial results in Pounds Sterling for the six months ended 30 September 2010

Salient features

	30 Sept.	30 Sept.	%	31 March
	2010	2009	Change	2010
Operating profit before goodwill, acquired intangibles, non-operating items, taxation and after minorities (GBP'000)	228 157	215 979	5.6	432 258
Earnings attributable to shareholders (GBP'000)	246 993	178 534	38.3	346 133
Adjusted earnings before goodwill, acquired intangibles and non-operating items (GBP'000)	163 202	160 422	1.7	309 710
Adjusted earnings per share (pence)	22.1	24.0	(7.9)	45.1
Earnings per share (pence)	29.7	22.2	33.8	44.0
Dividends per share (pence)	8.0	8.0	-	16.0
Total equity (GBP'million)	3 798	2 993	26.9	3 292
Third party assets under management (GBP'million)	77 819	62 872	23.8	74 181

Combined consolidated income statement

	Six months to	Six months to	Year to
	30 Sept.	30 Sept.	31 March
GBP'000	2010	2009	2010*
Interest income	1 118 360	974 116	2 041 153
Interest expense	(797 186)	(676 759)	(1 428 067)
Net interest income	321 174	297 357	613 086
Fee and commission income	389 961	256 650	612 574
Fee and commission expense	(49 467)	(30 222)	(67 497)
Principal transactions	208 706	230 821	457 759
Operating income from associates	3 172	5 929	11 595
Investment income on assurance activities	17 986	68 573	94 914
Premiums and reinsurance recoveries
on insurance contracts	5 028	2 179	31 938
Other operating income	5 215	10 470	22 737
Other income	580 601	544 400	1 164 020
Claims and reinsurance premiums on insurance business	(20 727)	(68 777)	(119 918)
Total operating income net of insurance claims	881 048	772 980	1 657 188
Impairment losses on loans and advances	(122 850)	(134 296)	(286 581)
Operating income	758 198	638 684	1 370 607
Administrative expenses	(524 159)	(417 960)	(920 694)
Depreciation, amortisation and impairment of property, equipment and software	(16 719)	(15 588)	(36 457)
Operating profit before goodwill and acquired intangibles	217 320	205 136	413 456
Impairment of goodwill	(2 763)	(1 234)	(3 526)
Amortisation of acquired intangibles	(2 254)	-	-
Operating profit after goodwill and acquired intangibles	212 303	203 902	409 930
Profit arising from associate converted to subsidiary	73 465	-	-
Write-down of subsidairies held for sale	(7 942)	-	-
Profit before taxation	277 826	203 902	409 930
Taxation	(43 151)	(36 211)	(82 599)
Profit after taxation	234 675	167 691	327 331
Operating losses attributable to minority interests	10 837	10 843	18 802
Write-down of subsidiaries held for sale attributable to
minorities	1 481	-	-
Earnings attributable to shareholders	246 993	178 534	346 133
Earnings attributable to shareholders	246 993	178 534	346 133
Impairment of goodwill	2 763	1 234	3 526
Amortisation of acquired intangibles	1 577	-	-
Write-down of subsidiaries held for sale attributable to minorities	(1 481)	-	-
Profit arising from associate converted to subsidiary	(73 465)	-	-
Write-down of subsidairies held for sale	7 942	-	-
Preference dividends paid	(27 031)	(29 922)	(43 860)
Additional earnings attributable to other equity holders	5 904	10 576	3 911
Adjusted earnings before goodwill, acquired intangibles
and non-operating items	163 202	160 422	309 710
Earnings per share (pence)
- basic	29.7	22.2	44.0
- diluted	27.9	21.2	41.5
Adjusted earnings per share (pence)
- basic	22.1	24.0	45.1
- diluted	20.7	22.9	42.5
Number of weighted average shares
- basic (millions)	739.7	669.2	686.3

*As restated for reclassifications detailed in the commentary section of this report.

Combined summarised consolidated statement of comprehensive income

	Six months to	Six months to	Year to
	30 Sept.	30 Sept.	31 March
GBP'000	2010	2009	2010
Profit after taxation	234 675	167 691	327 331
Fair value movements on cash flow hedges*	2 113	9 905	14 202
Gains on realisation of available for sale assets
recycled through income statement*	(1 624)	(6 758)	(8 887)
Fair value movements on available for sale assets*	10 527	24 950	20 370
Foreign currency adjustments on translating foreign operations	8 224	111 476	239 789
Pension fund actuarial losses	-	-	(8 180)
Total comprehensive income	253 915	307 264	584 625
Total comprehensive (loss)/income attributable to minority
shareholders	(11 351)	(3 018)	9 918
Total comprehensive income attributable to ordinary
shareholders	235 472	257 815	493 073
Total comprehensive income attributable to perpetual
preferred securities	29 794	52 467	81 634
Total comprehensive income	253 915	307 264	584 625

* Net of taxation of GBP3.0 million (Six months to 30 September 2009: GBP7.6 million, Year to 31 March 2010: GBP10.0 million).

Combined consolidated balance sheet

	30 Sept.	31 March	30 Sept.*
GBP'000	2010	2010	2009
Assets
Cash and balances at central banks	1 550 807	2 338 234	1 474 204
Loans and advances to banks	2 257 741	2 781 630	1 779 104
Cash equivalent advances to customers	527 758	581 117	496 792
Reverse repurchase agreements and cash
collateral on securities borrowed	1 207 255	911 432	560 424
Trading securities	5 338 673	4 221 645	3 569 743
Derivative financial instruments	1 970 670	1 591 841	1 677 224
Investment securities	2 915 969	1 996 073	1 236 293
Loans and advances to customers	18 110 210	17 414 691	16 438 919
Loans and advances to customers
- Kensington warehouse assets	1 683 586	1 776 525	1 873 778
Securitised assets	5 150 421	5 334 453	5 369 003
Interest in associated undertakings	22 303	104 059	98 467
Deferred taxation assets	132 252	134 355	139 611
Other assets	1 188 678	1 240 624	1 022 061
Property and equipment	57 774	161 255	159 062
Investment properties	324 672	273 038	200 695
Goodwill	466 125	274 417	260 987
Intangible assets	167 506	36 620	35 914
Non-current assets classified as held for sale	122 133	-	-
	43 194 533	41 172 009	36 392 281
Other financial instruments at fair value
through income in respect of
- liabilities to customers	5 781 206	5 397 014	4 162 088
- assets related to reinsurance contracts	2 699	2 842	3 196
	48 978 438	46 571 865	40 557 565
Liabilities
Deposits by banks	2 181 563	2 439 670	3 050 282
Deposits by banks - Kensington warehouse funding	1 082 431	1 213 042	1 354 737
Derivative financial instruments	1 618 990	1 193 421	1 377 955
Other trading liabilities	540 254	504 618	305 770
Repurchase agreements and cash collateral
on securities lent	942 699	1 110 508	655 556
Customer accounts (deposits)	23 493 808	21 934 044	18 013 512
Debt securities in issue	1 815 113	1 791 869	1 166 386
Liabilities arising on securitisation	4 488 245	4 714 556	4 749 629
Current taxation liabilities	191 560	196 965	168 088
Deferred taxation liabilities	202 938	136 974	139 283
Other liabilities	1 561 941	1 572 760	1 342 718
Pension fund liabilities	487	1 285	934
Liabilities directly associated with non-current assets
held for sale	103 465	-	-
	38 223 494	36 809 712	32 324 850
Liabilities to customers under investment contracts	5 776 517	5 392 662	4 155 535
Insurance liabilities, including unit-linked liabilities	4 689	4 352	6 553
Reinsured liabilities	2 699	2 842	3 196
	44 007 399	42 209 568	36 490 134
Subordinated liabilities	1 173 244	1 070 436	1 074 041
	45 180 643	43 280 004	37 564 175
Equity
Called up share capital	201	195	195
Perpetual preference share capital	181	152	151
Share premium	2 256 628	1 928 296	1 861 329
Treasury shares	(55 182)	(66 439)	(74 208)
Other reserves	270 030	246 718	150 510
Retained income	999 077	846 060	734 845
Shareholders' equity excluding minority interests	3 470 935	2 954 982	2 672 822
Minority interests	326 860	336 879	320 568
- Perpetual preferred securities issued by subsidiaries	311 312	314 944	307 330
- Minority interests in partially held subsidiaries	15 548	21 935	13 238
Total equity	3 797 795	3 291 861	2 993 390
Total liabilities and equity	48 978 438	46 571 865	40 557 565

* As restated for reclassifications detailed in the commentary section of this report.

Segmental geographic and business analysis of operating profit before goodwill, acquired intangibles, non-operating items and taxation for the six months to 30 September 2010

		United
		Kingdom
	Southern	and		Total
GBP'000	Africa	Europe	Australia	group
Asset Management	30 046	18 867	-	48 913
Wealth and Investment	7 346	8 996	-	16 342
Property Activities	14 540	(443)	2 311	16 408
Private Banking	14 150	(12 486)	(5 543)	(3 879)
Investment Banking	36 845	8 816	(3 151)	42 510
Capital Markets	40 364	88 385	4 757	133 506
Group Services and Other Activities	3 119	(32 097)	3 335	(25 643)
Operating profit after minorities	146 410	80 038	1 709	228 157
Minority interest - equity				(10 837)
Operating profit before goodwill and acquired intangibles				217 320

Segmental geographic and business analysis of operating profit before goodwill, acquired intangibles, non-operating items and taxation for the six months to 30 September 2009

		United
		Kingdom
	Southern	and		Total
GBP'000	Africa	Europe	Australia	group
Asset Management	21 419	7 513	-	28 932
Wealth and Investment	6 619	5 389	-	12 008
Property Activities	9 464	619	1 650	11 733
Private Banking	8 283	8 754	(328)	16 709
Investment Banking	27 192	(1 527)	1 119	26 784
Capital Markets	30 695	41 161	1 781	73 637
Group Services and Other Activities	21 485	24 816	(125)	46 176
Operating profit after minorities	125 157	86 725	4 097	215 979
Minority interest - equity				(10 843)
Operating profit before goodwill and acquired intangibles				205 136

Combined summarised consolidated cash flow statement

	Six months to	Six months to	Year to
	30 Sept.	30 Sept.*	31 March
GBP'000	2010	2009	2010
Cash inflows from operations	343 799	300 664	731 000
Increase in operating assets	(2 460 557)	(319 058)	(3 336 695)
Increase in operating liabilities	1 295 406	369 172	4 115 640
Net cash (outflow)/inflow from
operating activities	(821 352)	350 778	1 509 945
Net cash (outflow)/inflow from
investing activities	(10 946)	2 195	(19 368)
Net cash inflow/(outflow) from
financing activities	157 453	(20 229)	(127 794)
Effects of exchange rate changes on
cash and cash equivalents	15 889	172 102	274 915
Net (decrease)/increase in cash
and cash equivalents	(658 956)	504 846	1 637 698
Cash and cash equivalents at the
beginning of the period	3 922 047	2 284 349	2 284 349
Cash and cash equivalents
at the end of the period	3 263 091	2 789 195	3 922 047

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).

* As restated for reclassifications detailed in the commentary section of this report.

Combined summarised consolidated statement of changes in equity

	Six months to	Six months to	Year to
	30 Sept.	30 Sept.	31 March
GBP'000	2010	2009	2010
Balance at the beginning
of the period	3 291 861	2 620 537	2 620 537
Total comprehensive income	253 915	307 264	584 625
Share based payments adjustments	17 708	25 000	56 942
Dividends paid to ordinary shareholders	(59 341)	(35 833)	(91 946)
Dividends paid to perpetual
preference shareholders	(27 031)	(29 922)	(43 860)
Issue of ordinary shares	317 464	73 303	84 178
Issue of perpetual preference shares	11 893	-	40 869
Share issue expenses	(3 753)	(3 554)	(3 559)
Movement of treasury shares	(6 253)	36 595	40 974
Issue of equity instruments by
subsidiaries	1 514	-	3 547
Dividends paid to minority interests	(182)	-	(578)
Acquisition of minority interests	-	-	132
Balance at the end of
the period	3 797 795	2 993 390	3 291 861

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 [e-mail]  or telephone [phone].

Ordinary dividend announcement

Investec plc

Reg. No.: 3633621

Share Code: INP

ISIN: GB00B17BBQ50

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 17 of 8 pence (2009:  8 pence) per ordinary share has been declared by the board in respect of the six months ended 30 September 2010 payable to shareholders recorded in the members' register of the company at the close of business on Friday, 10 December 2010, 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 2.25 pence per ordinary share and through a dividend paid, on the SA DAS share equivalent to 5.75 pence per ordinary share

The relevant dates for the payment of dividend number 17 are as follows:

Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE)	Friday, 03 December 2010
On the London Stock Exchange (LSE)	Tuesday, 07 December 2010
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE)	Monday, 06 December 2010
On the London Stock Exchange (LSE)	Wednesday, 08 December 2010
Record date (on the JSE and LSE)	Friday, 10 December 2010
Payment date (on the JSE and LSE)	Tuesday, 21 December 2010

Share certificates on the South African branch register may not be dematerialised or rematerialised between Monday, 06 December 2010 and Friday, 10 December 2010, both dates inclusive, nor may transfers between the UK and SA registers take place between Monday, 06 December 2010 and Friday, 10 December 2010, both dates inclusive.

Shareholders registered on the South African register are advised that the distribution of 8 pence, equivalent to 90 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, 17 November 2010.

By order of the board

D Miller

Company Secretary       18 November 2010

Investec plc

Reg. No.: 3633621

Share Code: INPP

ISIN: GB00B19RX541

Non-redeemable non-cumulative non-participating preference shares

Declaration of dividend number 9

Notice is hereby given that preference dividend number 9 has been declared for the period 01 April 2010 to 30 September 2010 amounting to 7.52 pence per share payable to holders of the non-redeemable non-cumulative non-participating preference shares as recorded in the books of the company at the close of business on Friday, 03 December 2010.

For shares trading on the Johannesburg Stock Exchange (JSE), the dividend of 7.52 pence per share is equivalent to 85 cents per share, which has been determined using the Rand/Pound Sterling average buy/sell forward rate as at 11h00 (SA Time) on Wednesday, 17 November 2010.

The relevant dates relating to the payment of dividend number 9 are as follows:

Last day to trade cum-dividend
On the Johannesburg Stock Exchange (JSE)	Friday, 26 November 2010
On the Channel Islands Stock Exchange (CISX)	Tuesday, 30 November 2010
Shares commence trading ex-dividend
On the Johannesburg Stock Exchange (JSE)	Monday, 29 November 2010
On the Channel Islands Stock Exchange (CISX)	Wednesday, 01 December 2010
Record date (on the JSE and CISX)	Friday, 03 December 2010
Payment date (on the JSE and CISX)	Tuesday, 14 December 2010

Share certificates may not be dematerialised or rematerialised between Monday, 29 November 2010 and Friday, 03 December 2010, both dates inclusive, nor may transfers between the UK and SA registers may take place between Monday, 29 November 2010 and Friday, 03 December 2010, both dates inclusive.

By order of the board

D Miller

Company Secretary       18 November 2010

 

END

 

 

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