Investec Finance PLC

Annual Report and Financial S

RNS Number : 1681B
Investec Finance PLC
12 August 2008
 



Zebra Capital Plans Retails Structured Products Programme

Investec Finance plc 

(Incorporated in England and Wales)

(Company Registration Number: 4111949) 

Annual Report and Financial Statements

Investec Finance plc (the 'Company') is a wholly owned subsidiary of Investec Bank (UK) Limited which is in turn a wholly-owned subsidiary of Investec plc (the 'Investec Group'), which is listed on the London Stock ExchangeThe principal activity of Investec Finance plc is to engage in financial arrangements and transactions and to assist in financing the operations of the Investec Group. In previous years the Company has issued Guaranteed Subordinated Step-Up notes, a fixed coupon sterling bond, a Euro denominated floating rate note and has issued Euro Commercial Paper. In the current year the Company has continued to issue Euro commercial paper. In each case the proceeds have been on-lent to the Company's parent on similar terms so as to minimise liquidity and interest rate risk. The Company will continue to operate in this capacity for the foreseeable future. 


On May 9, 2008, the Company launched a GBP3,000,000,000 Zebra Capital Plans Retail Structured Products Programme (the 'Programme'). In terms of the Programme the Company may from time to time issue notes (the 'Notes') that are linked to the performance of one or more Preference Shares issued by Zebra Capital II Limited, a company incorporated in the Cayman Islands. The payment of all amounts due in respect of the Notes will be unconditionally and irrevocably guaranteed by Investec Bank (UK) Limited on an unsubordinated basis. Applications have been approved for these Notes to be admitted to listing on the Official List of the FSA and to trading on the Regulated Market of the London Stock Exchange. As a result, and in terms of the Programme, the Company is required to publicly release its annual results. 


This announcement includes full text of the Report and Financial Statements produced by the Company for the year 
ended 31 March 2008.This document will also be available on Investec's website at 
www.investec.com/GroupLinks/InvestorRelations/


Enquires and further information:

Investec Structured Products

Investec Bank (UK) Limited

Telephone: 020 7597 4057

2 Gresham StreetLondonEC2V 7QP

United Kingdom


12 August 2008



INVESTEC FINANCE PLC REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2008


directorate and corporate information


BOARD OF DIRECTORS

G R Burger

S M Burgess

B Fried

H S Herman

B Kantor

S Koseff

A Tapnack


SECRETARY

D Miller


AUDITORS

Ernst & Young LLP

1 More London Place

London SE1 2AF


COMPANY REGISTRATION

Registration Number 4111949

Registered Office: 2 Gresham Street

LondonEC2V 7QP


DIRECTORS' REPORT


The directors present their report and financial statements for the year ended 31 March 2008.


PRINCIPAL activity and business review

The company is a wholly owned subsidiary of Investec Bank (UK) Limited which is in turn a wholly-owned subsidiary of Investec plc 


The principal activity of the company is to engage in financial arrangements and transactions and to assist in financing the operations of the Investec Group. In previous years the company has issued Guaranteed Subordinated Step-Up notes, a fixed coupon sterling bond, a Euro denominated floating rate note and has issued Euro Commercial Paper. In the current year the company has continued to issue Euro commercial paper. In each case the proceeds have been on-lent to the company's parent on similar terms so as to minimise liquidity and interest rate risk. The company will continue to operate in this capacity for the foreseeable future. The financial risks are managed at the Group level. The company's exposure to financial risks is further discussed in note 13. 


RESULTS AND DIVIDENDS

The results for the year are shown below. The directors do not recommend the payment of a final dividend for the year ended 31 March 2008 (2007 - nil).


DIRECTORS AND THEIR INTERESTS

The current directors of the company are listed above. No other person was a director at any time during the year under review.


According to the register of directors' interests, no director holding office at 31 March 2008 had any beneficial interest in the shares of the company during the year.


SUPPLIERS

The Group's standard practice is to agree the terms of payment with suppliers at the time of contract and to make payments within the agreed credit term subject to satisfactory performance.


DISCLOSURE OF INFORMATION TO THE AUDITORS

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow directors and the group's auditor, each director has taken all the steps that he/she is obliged to take as a director in order to make himself/herself aware of any relevant audit information and to establish that the auditor is aware of that information.

Corporate Governance

The company has taken advantage of the exemption afforded by the Listing Rules not to make disclosures regarding corporate governance.

going concern

On the basis of current financial projections the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future and accordingly the going concern basis is adopted in the preparation of the financial statements.

auditors

In accordance with Section 385 of the Companies Act 1985, a resolution for the re-appointment of Ernst & Young LLP as auditors of the company is to be proposed at the forthcoming Annual General Meeting. 

 

By order of the Board of Directors


D Miller

Secretary

28 July 2008



statement of directors' responsibilities


The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.


Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to:


 

·                     select suitable accounting policies and then apply them consistently;
 
·                     make judgements and estimates that are reasonable and prudent;
 
·                     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
 
·                     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.



REPORT OF THE AUDITORs


Independent auditors' report to the members of Investec Finance plc


We have audited the company's financial statements for the year ended 31 March 2008 which comprise the Profit and Loss Account, the Balance Sheet and the related notes 1 to 14. These financial statements have been prepared under the accounting policies set out therein.


This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.


Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the financial statements in accordance with applicable United Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Directors' Responsibilities.


Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).


We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the financial statements. 


In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed.


We read the directors' report and consider the implication for our report if we become aware of any apparent misstatements within it.


Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed.


We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.



Opinion

In our opinion:


Ernst & Young LLP

Registered auditor     

London

28 July 2008


PROFIT AND LOSS ACCOUNT

for the year ended 31 March 2008



2008


2007


Notes

GBP000


GBP000






Interest receivable from parent undertaking


55,248


39,334






Interest payable

3

(54,185)


(38,701)






Amortisation of bond costs

4

(1,044)


(666)






PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION


19


(33)






Taxation

5

-


-






PROFIT/(LOSS) FOR THE FINANCIAL YEAR


19


(33)


The above activities are continuing.


There are no recognised gains or losses in the year other than those passed through the profit and loss account.



BALANCE SHEET 

at 31 March 2008


2008


2007


Notes

GBP000


GBP000

CURRENT ASSETS





Debtors:





  Amounts falling due after one year - subordinated loans

6

546,892


546,831

  Amounts falling due after one year

7

12,576


12,832

  Amounts falling due within one year

7

101,906


496,066



661,374


1,055,729






CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

8

(99,256)


(494,477)






NET CURRENT ASSETS


562,118


561,252






CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

9

(562,087)


(561,240)






NET ASSETS


31


12






CAPITAL AND RESERVES





Called up share capital

10

50


50

Profit and loss account

11

(19)


(38)






EQUITY SHAREHOLDERS' FUNDS

12

31


12



The financial statements were approved by the Board of Directors on 28 July 2008 and signed on its behalf by:


B Kantor

Director

 

NOTES TO THE FINANCIAL STATEMENTS AT 31 MARCH 2008
 
1.         ACCOUNTING POLICIES
Basis of presentation
The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. 
Cash flow statement
The company is exempt from the requirements to prepare a cash flow statement under Financial Reporting Standard 1, because a consolidated cash flow statement is included in the publicly available consolidated financial statements of its ultimate holding company, Investec plc.
Taxation
Corporation tax payable is provided on taxable profits at the current rate.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements, which are capable of reversal in one or more subsequent periods.
Deferred tax is measured at a non-discounted basis at the tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted at the balance sheet date.
Related party transactions
The directors have taken advantage of the exemptions available in Financial Reporting Standard 8 from disclosing transactions with related parties which are members of Investec plc Group.
Debt instruments and associated finance costs
Guaranteed subordinated step-up notes and debt securities in issue are initially recognised at fair value and are carried in the balance sheet at amortised cost applying the effective interest method.
 
Loans and receivables
Loans and receivables are carried in the balance sheet at amortised cost applying the effective interest rate method.
 
Disclosure of financial instruments
The directors have taken advantage of the disclosure exemptions available to subsidiary undertakings in Financial Reporting Standard 29. 
 
2.         EMOLUMENTS OF DIRECTORS
The directors were employed and remunerated as directors or executives of Investec plc and its subsidiaries (“the Group”) in respect of their services to the Group as a whole, and it is therefore considered that there is no appropriate basis on which they can apportion part of their remuneration for their services to the company.
 
 
 
 
3.         INTEREST PAYABLE

 
2008
 
2007
 
GBP000
 
GBP000
Interest payable on Subordinated Step-up Notes
15,500
 
15,500
Interest payable on Subordinated Callable Step-up Notes
21,935
 
4,075
Interest payable on debt securities in issue – short term
16,038
 
18,501
Interest payable on debt securities in issue – medium term
712
 
625
 
54,185
 
38,701
 
 
4.        ADMINISTRATIVE EXPENSES 
In the current year, the auditor’s remuneration of GBP7,953 (2007 - GBP5,104) has been borne by another Group Company.   The company has no employees.
 
5.         TAXATION

 
2008
 
2007
 
GBP000
 
GBP000
Taxation
-
 
-
 
The effective rate for the year is different from the standard rate of UK corporation tax due to the following items:

 
2008
 
2007
 
GBP000
 
GBP000
Tax on profit/(loss) on ordinary activities at UK rate of 30%
6
 
(10)
Losses surrendered (from)/to fellow group companies for nil proceeds
(6)
 
10
 
-
 
-
 
6.         DEBTORS - AMOUNTS FALLING DUE AFTER ONE YEAR

 
Subordinated loans to parent undertaking
 
2008
GBP000
 
2007
GBP000
At beginning of year
 
546,831
 
197,093
New loan
 
-
 
349,738
Movement in accrued interest
 
61
 
-
 
 
 
 
 
At end of year
 
546,892
 
546,831
The net proceeds of two issues of Step-up Notes by the company have been lent to the immediate parent undertaking, Investec Bank (UK) Limited (“IBUK”) on a subordinated basis.
1.   The term of the first loan is 1 March 2016 but it may be redeemed at any time after 1 March 2011. The interest rate on the loan is fixed at 8.1618% until 1 March 2011 and interest is paid annually. After 1 March 2011 the interest rate will be reset in line with the interest rate on the Step-up Notes.
2.   The second loan is undated but it may be redeemed at any time after 23 January 2017. The interest rate on the loan is fixed at 6.4578% until 23 January 2017 and the interest is paid semi-annually. After 23 January 2017 the interest rate will be reset in line with the interest rate on the Step-up Notes.
The terms of the Step-up Notes, which are guaranteed by IBUK, are detailed in note 9.
7.         DEBTORS

 
Amounts falling due within one year
 
2008
GBP000
 
2007
GBP000
Amounts owed by parent undertaking
 
101,906
 
496,066
 
 
 
 
 
Amounts falling after one year
 
 
 
 
Amounts owed by parent undertaking
 
12,576
 
12,832
 
Amounts owed by the parent undertaking mainly represent the proceeds of the issue of debt securities which have been lent to the parent at the same interest and repayment terms as the debt securities.
8.         CREDITORS FALLING DUE WITHIN ONE YEAR

 
 
2008
GBP000
 
2007
GBP000
Amount owed by parent undertaking
 
5
 
-
Debt Securities in issue
 
99,251
 
494,477
 
 
99,256
 
494,477
 
Debt securities in issue include a number of instruments issued under the Company’s Euro Medium Term Note and Euro Commercial Paper programmes. The two largest issues at 31 March 2007 are a 3 year Euro denominated FRN with a face value of Euro 175,000,000 issued on 12 October 2004, was repaid 12 October 2007 bearing interest at three month Euribor plus 0.45% and a 3 year bond issued on 25 February 2005 with a fixed coupon of 5.25% and a face value of GBP175,000,000 was repaid 25 February 2008. The largest issue at 31 March 2008 is a 6 month FRN GBP54,151,000 issued on 19 December 2007 and repayable on 19 June 2008 at a rate of 5.75063%.
 
9.         CREDITORS FALLING DUE AFTER MORE THAN ONE YEAR

 
 
2008
GBP000
 
2007
GBP000
Guaranteed Subordinated Step-up Notes
 
199,243
 
198,641
Guaranteed Undated Subordinated Callable Step-up Notes
 
350,268
 
349,767
Debt Securities in issue
 
12,576
 
12,832
 
 
562,087
 
561,240
 
On 1 March 2004 the company issued GBP200,000,000 7.75% Guaranteed Subordinated Step-up Notes due 2016 at a discount. Interest is paid annually. The notes are guaranteed by IBUK and are listed on the Luxembourg Stock Exchange. The Step-up Notes may be redeemed by the issuer, at par, at any time after 1 March 2011, subject to the prior consent of the Financial Services Authority. On 1 March 2011 the interest rate will be reset to become the aggregate of 3.5% and the gross redemption yield of the relevant benchmark gilt.
 
On 23 January 2007 the company issued GBP350,000,000 6.25% Guaranteed Undated Subordinated Step-up Notes callable 2017 at a discount. Interest is paid semi-annually. The notes are guaranteed by IBUK and are listed on the Luxembourg Stock Exchange. The Step-up Notes may be redeemed by the issuer, at par, at any time after 23 January 2007, subject to the prior consent of the Financial Services Authority. On 23 January 2017 the interest rate will be reset to become three month LIBOR plus 2.11% payable quarterly in arrears.
 
The company issued on 6 June 2006 a 5 year bond with a coupon of 3 month USD libor + 40bp and a face value of USD 25,000,000 repayable 6 June 2011.
10.     CALLED UP SHARE CAPITAL

 
2008
 
2007
 
GBP000
 
GBP000
Authorised:
 
 
 
100,000 (2007 - 100,000) ordinary shares of GBP1 each
100
 
100
 
 
 
 
Allotted, called up and fully paid
 
 
 
50,000 (2007 - 50,000) ordinary shares of GBP1 each
50
 
50
 
 
 
11.     RESERVES

 
2008
 
2007
 
GBP000
 
GBP000
Profit and loss account
 
 
 
At beginning of year
(38)
 
(5)
Profit/(loss) for the year
19
 
(33)
 
 
 
 
At end of year
(19)
 
(38)
 
12.     RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS

 
2008
 
2007
 
GBP000
 
GBP000
Opening shareholders’ funds
12
 
45
Profit/(loss) for the year
19
 
(33)
 
 
 
 
Closing shareholders’ funds
31
 
12
 
13.     RISK MANAGEMENT
As a wholly-owned subsidiary of Investec plc, the company falls under the Investec Group’s Risk Management Framework which is set out on pages 20 to 79 of Investec plc’s 2008 Annual Report. The company’s function is to raise finance for the Investec Group and its policy is to on-lend the proceeds of any financial indebtedness to its immediate parent, IBUK, on back to back terms that minimise any liquidity, currency or interest rate risk.
Credit risk
As all funds raised by the company are on-lent to IBUK, the company is therefore dependent on repayment of principal and interest from IBUK for the purposes of meeting its financial obligations. Its financial obligations in respect of the Guaranteed Undated Subordinated Callable Step-up Notes,   Guaranteed Subordinated Step-up Notes, fixed coupon sterling bond, Euro denominated floating rate note and Euro Commercial Paper issues are guaranteed by IBUK.
 
Liquidity risk
Loans to IBUK are matched in terms of maturity and interest payment dates to those of the related borrowing so as to eliminate any liquidity risk.
 
Foreign currency risk
Loans to IBUK are denominated in the same currency as the related borrowing so as to ensure that the company is not exposed to foreign currency risk.
 
14.      ULTIMATE PARENT UNDERTAKING
The company’s immediate parent undertaking is IBUK.
 
The company’s ultimate parent undertaking and controlling party is Investec plc, a company incorporated in the United Kingdom and registered in England and Wales. The consolidated financial statements of Investec plc and IBUK are available to the public at 2 Gresham Street, London, EC2V 7QP. IBUK is the smallest group and Investec plc is the largest group in which the results of the company are consolidated.
 
 
 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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