this pre-listing statement is important and requires …
TRANSCRIPT
THIS PRE-LISTING STATEMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTIONIf you are in any doubt as to the action you should take, please consult your CSDP, banker, broker, legal advisor, accountant or other professional advisor immediately.
The definitions and interpretations set out on pages 3 and 4 of this Pre-listing Statement have been used on this front cover and throughout this document, apart from Annexure 3, which has its own set of definitions.
The distribution of this document in jurisdictions other than South Africa may be restricted by law and persons into whose possession this document comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. The Rand perpetual preference shares are not transferable except in accordance with, and the distribution of this document is subject to, the restrictions set out in paragraph 6.5 of this Pre-listing Statement. Accordingly, this document may not be supplied to the public in any jurisdiction in which any registration, qualification or other requirements exist or would exist in respect of any public offering of shares.
This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities other than the Rand perpetual preference shares by any person in any circumstances in which such offer or solicitation is unlawful and is not for distribution in or into Australia, Canada, Japan or the United States.
No prospectus has been published in respect of the Rand perpetual preference shares in any Relevant Member State and, save for certain exceptions, the Rand perpetual preference shares may not be offered or sold to the public in any Relevant Member State. The Rand perpetual preference shares will not be registered under the Securities Act or the applicable securities laws of Australia, Canada or Japan and subject to certain exceptions, may not be offered or sold within the United States, Australia, Canada or Japan or to, or for the account or benefit of US persons or citizens or residents of Australia, Canada or Japan.
(Incorporated in England and Wales)(Registration number 3633621)Share code: INPPR ISIN: GB00B4B0Q974(“Investec plc” or “the Company”)
PRE-LISTING STATEMENTPrepared in terms of the Listing Requirements of the JSE relating to an offer for subscription of Rand denominated non-redeemable, non-cumulative, non-participating perpetual preference sharesOpening date of the offer for subscription (12:00) 17 June 2011Closing date of the offer for subscription (17:00) 22 June 2011Proposed listing date (09:00) 29 June 2011
Subscriptions can only be made at an acquisition cost, for a single addressee acting as principal, of not less than R1 000 000.
The Rand perpetual preference shares will only be admitted to a listing on the JSE and will only trade on the JSE. At the date of issue of this Pre-listing Statement, the issued share capital of Investec plc will comprise 537 177 588 ordinary shares, 272 836 668 Special Converting (“SC”) shares, 1 special voting share, 1 dividend access (Non-South African Resident) redeemable share (“UK DAN Share”), 1 dividend access (South African Resident) redeemable share (“UK DAS Share”), and 15 081 149 non-redeemable, non-cumulative, non-participating Sterling perpetual preference shares (“Sterling perpetual preference shares”).
Rand perpetual preference shares will be issued in order to raise a maximum capital amount of R750 million. The number of Rand perpetual preference shares issued will be determined on the closing date of the offer for subscription. The Rand perpetual preference shares will be issued at par value, with an initial annual dividend yield and coupon rate of 8.55%. The Rand perpetual preference shares, when issued, will rank pari passu with one another and with the Sterling perpetual preference shares. Application will be made to the JSE on the closing date of the offer for subscription to list the Rand perpetual preference shares in the Specialist Securities – “Preference Shares” sector under the abbreviated name “INVPREFR” and alpha code “INPPR”, subject to the condition referred to in paragraph 6.3 of this Pre-listing Statement. It is anticipated that the listing will be effective from the commencement of business on Wednesday, 29 June 2011.
Date of issue: 17 June 2011
The Directors have the right to increase the amount of permanent capital raised through the issue of Rand perpetual preference shares by undertaking a separate private placement of Rand perpetual preference shares during and subsequent to the offer for subscription. The issue price of these private placements may be negotiated between parties depending on the market conditions at the time.
The Rand perpetual preference shares will only be traded in electronic form and accordingly all preference shareholders who elect to receive certificated Rand perpetual preference shares will have to dematerialise their certificated Rand perpetual preference shares should they wish to trade on the JSE.
The Directors whose names are set out herein, collectively and individually, accept full responsibility for the accuracy of the information given and certify that, to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement false or misleading, and that they have made all reasonable enquiries to ascertain such facts and that this Pre-listing Statement contains all information required by law and by the JSE Listings Requirements.
These Rand perpetual preference shares were initially due to list on the JSE on 24 March 2011, with this document being publicly issued on 8 March 2011. Further to their postponement, Investec has released its annual results for the year ended 31 March 2011. These have been included in Annexure 5 to this Pre-listing Statement. There have been no other material changes to this document, save for pricing and timing implications.
An abridged version of this Pre-listing Statement was released on SENS and published in the South African press on 15 June 2011.
Investment bank and sponsor
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CONTENTS
Page
Corporate information relating to Investec plc 2
Definitions and interpretations 3
Salient features
1.Introductionandrationale 5
2.Detailsoftheofferforsubscription 5
3.SalientfeaturesoftheRandperpetualpreferenceshares 6
4.FurthercopiesofthisPre-listingStatement 7
Pre-listing Statement
1.Introductionandrationale 8
2.InformationrelatingtoInvestec 8
3.Directors 16
4.SharecapitalofInvestecplc 21
5.ControllingandmajorshareholdersofInvestecplcandInvestecLimited 23
6.Detailsoftheofferforsubscription 23
7.Expensesoftheofferforsubscriptionandlisting 28
8.Advisers’interests 28
9.Materialchanges 28
10.Materialcontracts,acquisitionsordisposalsandborrowings 29
11.Directors’responsibilitystatement 29
12.Litigationstatement 29
13.Experts’consents 29
14.Documentsavailableforinspection 29
Annexure 1 HistoricalfinancialinformationonInvestec 30
Annexure 2 ExtractsfromtheArticlesofAssociationofInvestecplc 51
Annexure 3 TermsoftheRandperpetualpreferenceshares 53
Annexure 4 MarketvalueofexistingclassofsecuritieslistedontheJSE 56
Annexure 5 Summarisedfinancialresultsfortheyearended31March2011 58
Application form (blue) Attached
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CORPORATE INFORMATION RELATING TO INVESTEC PLC
Directors of Investec plcHughSHerman(Non-executiveChairman)StephenKoseff(ChiefExecutiveOfficer)BernardKantor(ManagingDirector)GlynnRBurger(ExecutiveDirector)HendrikduToit(ExecutiveDirector)SamuelEAbrahams(Non-executiveDirector)GeorgeFOAlford(Non-executiveDirector)CherylACarolus(Non-executiveDirector)PeregrineKOCrosthwaite(Non-executiveDirector)BradleyFried(Non-executiveDirector)HarukoFukudaOBE(Non-executiveDirector)IanRKantor(Non-executiveDirector)MPeterMalungani(Non-executiveDirector)SirDavidProsser(Non-executiveDirector)PeterRSThomas(Non-executiveDirector)FaniTiti(Non-executiveDirector)
Secretary and registered office
DavidMiller2GreshamStreetLondonEC2V7QPUnitedKingdom
Investment bank and sponsor
InvestecBankLimited(Registrationnumber1969/004763/06)SecondFloor100GraystonDriveSandown,Sandton2196(POBox785700,Sandton,2146)
Banking Institution
StandardBankVostroaccount3SimmondsStreetJohannesburg2000POBox7725Johannesburg2000
ThisPre-listingStatementisavailableinEnglishandcopiesmaybeobtainedfrom:
•InvestecLimited,100GraystonDrive,Sandown,Sandton;and
•ComputershareInvestorServicesProprietaryLimited,70MarshallStreet,Johannesburg.
Transfer secretaries
ComputershareInvestorServicesProprietaryLimited(Registrationnumber2004/003647/07)GroundFloor70MarshallStreetJohannesburg,2001(POBox61051,Marshalltown,2107)
Auditors
Ernst&YoungLLPBecketHouse1LambethPalaceRoadLondon,SE17EUUnitedKingdom
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DEFINITIONS AND INTERPRETATIONS
In this Pre-listing Statement, unlessotherwise statedor the contextotherwise indicates, thewords in the first columnshallhavethemeaningsstatedoppositetheminthesecondcolumnandwordsinthesingularshallincludethepluralandviceversa,wordsimportingnaturalpersonsshallincludecorporationsandassociationsofpersonsandanexpressiondenotinganygendershallincludetheothergenders.
“£”or“PoundsSterling” thelawfulcurrencyoftheUnitedKingdom;
“bank(s)” publiccompaniesregisteredasbank(s)undertheBanksAct(theSouthAfricanBanksAct,1990(Act94of1990),asamended);
“businessday” anydayotherthanaSaturday,SundayorpublicholidayinSouthAfrica
“CISX” TheChannelIslandStockExchange,registeredinGuernseywitharegisterednumberof33\770;
“CSDP” Central SecuritiesDepositoryParticipant, registeredas such in termsof theSA SecuritiesServicesAct;
“commonmonetaryarea” South Africa, the Republic of Namibia and the Kingdoms of Swaziland andLesotho;
“Computershare”or Computershare Investor Services Proprietary Limited (Registration number“TransferSecretaries” 2004/003647/07),aprivatecompanyincorporatedinSouthAfrica;
“couponrate” the variable rate applied to the deemed value in order to determine thedividend, calculated as the prime rate multiplied by the Rand preferencedividendrate;
“deemedvalue” meansthedeemedvalueofeachRandperpetualpreferenceshareforpurposesofcalculationofthedividend,beinganamountofR100,notwithstandingtheactual issuepriceofaRandperpetualpreferenceshare(that is thenominalvalue of the Rand perpetual preference share plus a premium/discountthereon)whichmay varybecauseof a difference in theprice atwhich theRandperpetualpreferencesharesmaybeissuedfromtimetotime;
“Directors” theDirectorsofInvestec,whosenamesanddetailsaregiveninparagraph3.1ofthisPre-listingStatement;
“dividend” theRandperpetualpreferencesharedividenddeterminedbymultiplyingthedeemedvalueby thecouponrate,multipliedby thenumberofdays in thedividendperiod,dividedby365;
“IncomeTaxAct” theSouthAfricanIncomeTaxAct,1962(Act58of1962),asamended;
“Initialdividendyield” theinitialannualdividendtobepaiddividedbytheissueprice;
“Investec” collectively,InvestecplcandInvestecLimited;
“InvestecGroup”or“Group” InvestecplcandInvestecLimitedandtheirrespectivesubsidiaries;
“InvestecLimited” Investec Limited (Registered number 1925/002833/06), a public companyincorporatedinSouthAfricaandlistedontheJSE,withsecondarylistingsontheBotswanaStockExchangeandtheNamibianStockExchange;
“Investecplc”or“theCompany” Investec plc, a company registered in England and Wales with registerednumber3633621andlistedontheLSEwithasecondarylistingontheJSE;
“InvestecplcMember”or“Member” aholderofInvestecplcordinaryshares;
“Investecplcordinaryshares”or ordinarysharesof£0.0002eachinthesharecapitalofInvestecplc;“ordinaryshares”
“Investecplcordinarydividendpayment thedatesonwhichInvestecplcpaysitsinterimandfinaldividendsinrespectofdates” eachfinancialyear;
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“issueprice” theallotmentandissuepriceperRandperpetualpreferenceshareinRand;
“JSE” JSE Limited, a company duly registered and incorporated with limitedliability under the company lawsof SouthAfrica under registration number2005/022939/06,licensedasanexchangeundertheSASecuritiesServicesAct;
“latestpracticabledate” 28February2011,unlessotherwiseindicated;
“listing” thelistingoftheRandperpetualpreferencesharesontheJSEintheSpecialistSecurities – ”Preference Shares” sector under the abbreviated name“INVPREFR”andalphacode“INPPR”,subjecttotheconditionreferredtoinparagraph6.3ofthisPre-listingStatement;
“LSE” theLondonStockExchangeplc,acompanyregisteredinEnglandandWaleswithregisterednumber2075721;
“offerforsubscription” theofferforsubscriptioncontainedinthisPre-listingStatement,tosubscribeforRandperpetualpreferencesharesataminimumsubscriptionamountofR1000000persingleaddresseeactingasprincipal;
“preferencedividendrate” meansarateequalto95%oftheprimeratefromtimetotime;
“preferenceshareholder” aholderofRandperpetualpreferenceshares;
“thisPre-listingStatement” thisPre-listingStatementanditsannexures,dated17June2011;
“ProspectusDirective” the European Commission Directive 2003/71/EC including any relevantimplementingmeasureineachRelevantMemberState;
“primerate” meansInvestecBankLimited’sprimelendingratefromtimetotime(expressedasapercentagerateofinterestperannum,calculateddailyandcompoundedmonthlyonthebasisofa365dayyearfactorirrespectiveofwhethertheyearisaleapyearornot),ascertified(saveformanifesterror)byanymanagerofInvestecBankLimited,whoseappointmentorauthorityneednotbeproved;whichatthelatestpracticabledatewas9%;
“Randperpetualpreferenceshares” meansthenon-redeemable,non-cumulative,non-participatingRandperpetualpreferenceshares,denominatedinSouthAfricanRand,issuedbytheCompanyasaseparateclassfromallexistingsharesinissueasclass152withtherights,privileges,restrictionsandconditionsassetoutherein;
“RelevantMemberState” anymemberstateoftheEuropeanEconomicAreawhichhasimplementedtheProspectusDirective;
“RegistrarofCompanies” theRegistrarofCompaniesinSouthAfrica;
“RIS” anyRegulatoryInformationServicethatisapprovedbytheFinancialServicesAuthorityintheUKasmeetingthePrimaryInformationProvidercriteriaandthatisonthelistofRegulatoryInformationServicesmaintainedbytheFinancialServicesAuthority;
“SENS” theSecuritiesExchangeNewsServiceoftheJSE;
“SouthAfrica”or“SA” RepublicofSouthAfrica;
“SACompaniesAct” theSouthAfricanCompaniesAct,1973(Act61of1973),asamended;
“SASecuritiesServicesAct” theSouthAfricanSecuritiesAct,2004(Act36of2004),asamended;
“Sterlingperpetualpreferenceshares” means the non-redeemable non-cumulative, non-participating perpetualpreference shares, denominated inpounds sterling, issuedby theCompanyasaseparateclassfromallexistingsharesinissueasclass151withtherights,privileges,restrictionsandconditionsassetoutthereinandlistedontheJSEandCISX;
“Strate” Strate Limited (Registration number 1998/022242/06), a public companyincorporatedinSouthAfricaandaregisteredcentralsecuritiesdepositoryintermsofsection1oftheSASecuritiesServicesAct,andbeingtheclearingandsettlementsystemgeneratedbytheJSEforsharetransactionstobesettledandtransferofownershiptoberecordedelectronically;and
“UnitedKingdom”or“UK” UnitedKingdomofGreatBritainandNorthernIreland.
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SALIENT FEATURES
ThefollowinginformationisonlyasummaryofthemoredetailedinformationcontainedinthemainbodyofthisPre-listingStatement,andmaynotcontainalltheinformationthatinvestorsshouldconsiderbeforedecidingtoinvestintheInvestecplcRandperpetualpreferenceshares.InvestorsshouldreadtheentirePre-listingStatement,andwherereferred,makeuseoftheappropriateannualfinancialstatementswhichcanbeaccessedontheInvestecwebsite(www.investec.com).
ProspectivepurchasersoftheRandperpetualpreferencesharesshouldensurethattheyunderstandfullythenatureoftheproductandtheextentoftheirexposuretorisks,andthattheyconsiderthesuitabilityofsuchRandperpetualpreferencesharesasaninvestmentinlightoftheirowncircumstancesandfinancialposition.
1. INTRODUCTION AND RATIONALE
Investecplccurrentlyhas15081149SterlingperpetualpreferenceshareslistedontheJSEandCISX.Thedividendrate applicable to the Sterling perpetual preference shares is equivalent to 1% plus the base rate of the Bank ofEnglandfromtimetotimeaspublishedbytheBankofEngland.ItisnowtheintentionofInvestecplctoissueRandperpetualpreferenceshareswhichwillbelistedontheJSE,withadividendratebeingtheequivalenttoapercentageofInvestecBankLimited’sprimelendingratefromtimetotime.TheRandperpetualpreferenceshareswillbesubjecttosubstantiallysimilartermsandconditionsastheexistingissuedSterlingperpetualpreferenceshares,thedetailsofwhicharecontainedinthisPre-listingStatement,savethatthedenominationcurrencywillbeSouthAfricanRandinsteadofPoundSterling.
InvestecplcintendstoissuetheseRandperpetualpreferenceshares,whichwillonlybelistedontheJSE,inordertoraisepermanentcapital,thuscreatingamoreefficientcapitalstructureandallowingittopursuegrowthopportunitiesas andwhen theymay arise. TheDirectors believe theRand perpetual preference shares represent an attractivealternativeinvestmentopportunityforpotentialinvestorswithacompetitivedividendyield.
ThepurposeofthisPre-listingStatementisto:
• provide investors and the market with information relating to Investec, its operations and its Directors andmanagement;
• enableInvestecplctoundertaketheofferforsubscriptioninordertoraisepermanentcapitalofuptoamaximumofR750000000andtobringaboutthelistingoftheseRandperpetualpreferencesharesontheJSE;
• set out the salient dates, terms and times of the offer for subscription and the procedure for completing andreturningtheapplicationform;
• setoutthehistoricalfinancialinformationforInvestecforthethreefinancialyearsended31March2008,2009and2010aswellasforthesixmonthsended30September2010;and
• setoutthefinancialinformationforInvestecfortheyearended31March2011.
Potentialinvestors’attentionisdrawntothefactthatoffersforsubscriptionarelimitedtoaminimumacquisitioncost,forasingleaddresseeactingasprincipal,ofR1000000.
2. DETAILS OF THE OFFER FOR SUBSCRIPTION
2.1 Particulars of the offer for subscription
Deemedvaluefordividendpurposes R100
PrimeRate 9%
PreferenceDividendRate 95%
Initialannualdividendyieldbasedonthedeemedvalue 8.55%
MinimumRandvalueofsubscriptionpersubscriberactingasprincipal R1 000 000
Maximumamounttoberaisedintermsoftheofferforsubscription R 750 000 000
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2.2 Times and dates of the opening and closing of the offer for subscription
Openingdateoftheofferforsubscription(12:00) 17 June 2011
Closingdateoftheofferforsubscription(17:00) 22 June 2011
Proposedlistingdate(09:00) 29 June 2011
2.3 Condition to the listing
ApplicationhasbeenmadetotheJSEtolisttheRandperpetualpreferencesharesintheSpecialistSecurities–”PreferenceShares”sector.ThenumberofRandperpetualpreferencesharestobelistedwillbedeterminedon the closing date of the offer. The listing is subject to the condition that Investec plc meets the ListingsRequirementsof the JSE in respectof the requisite spreadof preference shareholders, being aminimumof50publicshareholders,excludingemployeesandtheirassociates.
Yourattentionisdrawntoparagraph6.3inthePre-listingstatementforfurtherconditions.
3. SALIENT FEATURES OF THE RAND PERPETUAL PREFERENCE SHARES
TheRandperpetualpreferencesharesarenon-redeemable,non-cumulativeandnon-participatinganddividendsarepayablesemi-annuallyonadateatleastsevenbusinessdayspriortothedateonwhichInvestecplcpaysfinalandinterimordinarydividendstoitsordinaryshareholders,ifany,but,ifdeclared,shallbepayable,notlaterthan120businessdaysafter31Marchand30Septemberofeachyear,respectively.ThefulltermsoftheRandperpetualpreferencesharesaresetoutinAnnexure3tothisPre-listingStatement.Thesummarybelow,alsofoundinparagraphs4.4.1,4.4.2and4.4.3ofthisPre-listingcircular,isnotconclusiveorexhaustive,andpotentialinvestorsshouldrefertothesaidAnnexureforfullparticularsofthetermsandconditionsoftheRandperpetualpreferenceshares.
3.1 Voting rights
Preferenceshareholderswillonlybeentitledtovoteduringperiodswhenapreferencedividend(whichhasbeendeclared)oranypartofitremainsinarrearandunpaidaftersixmonthsfromtheduedatethereoforwhenresolutionsareproposedwhichdirectlyaffectanyrightsattachingtotheRandperpetualpreferencesharesortheinterestsofpreferenceshareholdersoraresolutionisproposedtowinduporinrelationtothewinding-upoftheCompanyorforthereductionofitscapital.
3.2 Entitlements to dividends
TheDirectorsmayresolve todeclareandpay in fullor inpartdividendson theRandperpetualpreferenceshares. If theDirectorsdonot resolve topay suchdividends,holderswill nothaveany right to receiveanyunpaiddividends.Further,asamatterofUKcompany law,theDirectorsarenotpermittedtodeclareorpayanydividendsontheRand perpetualpreferencesharesunlesssuchdividendscanbepaidoutofprofitsavailablefordistributionandpermittedbylawtobedistributed.
Subjecttotheabove,theholdersoftheRandperpetualpreferenceshareswillreceiveasemi-annualdividendbasedonthecouponrate(beingequivalent to95%multipliedbytheprimerate)multipliedbythedeemedvalue,onadailybasisandpayableintwosemi-annualinstalments.AnordinarydividendisnotexpectedtobedeclaredbyInvestecplcatanytimewhiletheRandperpetualpreferencesharesexistunlessthelastoccurringRandperpetualpreferencesharedividendwasdeclaredand isexpectedtobe,orhasbeen, paid in full.ThetermsandconditionsoftheRandperpetualpreferencesharesrequirecertainamountstoberetainedinreservebytheCompany insuchcircumstances. ThedeemedvalueforthepurposeofcalculatingapreferencedividendshallbeanamountofR100,notwithstandingtheactualissuepriceofaRandperpetualpreferenceshare.ThefulltermsandconditionsoftheRandperpetualpreferencesharesaresetoutintheArticlesoftheCompany whenreadtogetherwiththetermsandconditionsoftheRandperpetualpreferencesharesassetoutinAnnexure3tothisdocument.
AlldividendstothepreferenceshareholderswillbedeclaredandpaidinRand.
InthecaseofSouthAfricanresidentpreferenceshareholders,intermsofthedraft2011TaxationLawsAmendmentBills,aproposedDividendsTax isexpectedtobecomeoperationalasof1April2012(viaMinisterialnoticeintheGovernmentGazette). Subjecttospecificexemptions,SouthAfricanresidentswillthusmostlikelybesubjectto10%dividendstaxonthedividends paidinrelationtotheRandperpetualpreferenceshares,withnoadditionalincometaxarisingonsuchdividends.Thepreferencedividendrateof95%ontheprimeratewillnotbeadjustedwhenDividendsTaxbecomeseffective.Theissueyieldhasalreadytakenthistaxintoconsiderationwhendeterminingtheappropriatepricingforthisinstrument.
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Proposedlegislationindicatesthatthedividendspaid,inrelationtotheRandperpetualpreferenceshareslistedontheJSE,tononSouthAfricanresidentswillbeexemptfromthedividendstax.
Your attention is drawn to the fact that this legislation has not yet been finalised. All applicants must obtain their own advice in connection with the taxation consequences relating to their investment in the Rand perpetual preference shares.
4. FURTHER COPIES OF THIS PRE-LISTING STATEMENT
CopiesofthisPre-listingStatementcanbeobtainedduringnormalbusinesshoursfrom12:00on17June2011untiltheclosingdateoftheofferforsubscriptionattheofficesofInvestecLimited,100GraystonDrive,Sandown,Sandton,2196,aswellasfromtheCompany’sTransferSecretary,theaddressofwhichissetoutinthe“CorporateinformationrelatingtoInvestecplc”sectionofthisPre-listingStatement.
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(IncorporatedinEnglandandWales)(Registrationnumber3633621)Sharecode:INPPRISIN:GB00B4B0Q974(“Investecplc”or“theCompany”)
PRE-LISTING STATEMENT
1. INTRODUCTION AND RATIONALE
InvestecplcintendstoissuetheseRandperpetualpreferenceshares,whichwillonlybelistedontheJSE,inordertoraisepermanentcapital,thuscreatingamoreefficientcapitalstructureandallowingittopursuegrowthopportunitiesas andwhen theymay arise. TheDirectors believe theRand perpetual preference shares represent an attractivealternativeinvestmentopportunityforpotentialinvestorswithacompetitivedividendyield.
ThepurposeofthisPre-listingStatementisto:
• provide investors and the market with information relating to Investec, its operations and its Directors andmanagement;
• enableInvestecplctoundertaketheofferforsubscriptioninordertoraisepermanentcapitalofuptoamaximumofR750000000andtobringaboutthelistingoftheseRandperpetualpreferencesharesontheJSE;
• set out the salient dates, terms and times of the offer for subscription and the procedure for completing andreturningtheapplicationform;
• setoutthehistoricalfinancialinformationforInvestecforthethreefinancialyearsended31March2008,2009and2010aswellasforthesixmonthsended30September2010;and
• setoutthefinancialinformationforInvestecfortheyearended31March2011.
Potentialinvestors’attentionisdrawntothefactthatoffersforsubscriptionarelimitedtoaminimumacquisitioncost,forasingleaddresseeactingasprincipal,ofR1000000.
2. INFORMATION RELATING TO INVESTEC
2.1 Overview and history
Investecisaninternationalspecialistbankandassetmanagerthatprovidesadiverserangeoffinancialproductsandservicestoaselectclientbase.ItwasfoundedasaleasingcompanyinJohannesburgin1974,acquiredabankinglicensein1980andwaslistedontheJSELimitedin1986.
InJuly2002,theGroupimplementedaduallistedcompaniesstructure,withlinkedcompanieslistedinLondonandJohannesburg.InvestecplcislistedandtradesontheLondonStockExchangeandInvestecLimitedislistedontheJSELimited.InvestecplcalsohasasecondarylistingontheJSELimited.Thetwocompaniesarelinkedby a Sharing Agreement, which stipulates that they must operate as if they were a single corporate group.InvestecplcandInvestecLimitedthushaveasingleboardandmanagementstructure,whichcomprisethesameindividuals.InvestecplcisaconstituentoftheFTSE100index.In2003theInvestecgroupconcludedasignificantempowermenttransactioninwhichtheGroup’sempowermentpartnerscollectivelyacquireda25.1%stakeintheissuedsharecapitalofInvestecLimited.
TheGrouphasexpandedthroughacombinationofsubstantialorganicgrowthandaseriesofstrategicacquisitions.IthasanefficientintegratedinternationalbusinessplatformofferingallofitscoreactivitiesintheUKandSouthAfrica,withselectactivitiesalsoinAustralia.
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AsimplifiedillustrationoftheDualListedCompany(“DLC”)structureispresentedbelow:
2.2 An overview of Investec’s business activities
Investec isorganisedasanetworkcomprising sixbusinessdivisions,namelyAssetManagement,WealthandInvestment,PropertyActivities,PrivateBanking,InvestmentBankingandCapitalMarkets.Itsheadofficeprovidescertaingroupwide integrating functionsand isalso responsible for itscentral fundingand theTradeFinancebusiness.
Asset Management
InvestecAssetManagementoffersacomprehensiverangeofportfoliomanagementservicesandproductstoinstitutionalandretailfundclientsintheUK,Africa,Europe,Australia,theAmericasandAsia,aswellascross-border.Thedivisionhasabroadclientbaseincludingsovereignwealthfunds,centralbanks,pensionfunds,banks,privatebanks,familyoffices,independentfinancialadvisorsandindividualinvestors.
TheAssetManagementdivisionwasthesecondlargestcontributortoInvestec’soperatingprofithavingaccountedfor £83.4 million to operating profit for the year ended 31 March 2010 (£66.2 million for the year ended31March2009),or19.3%(16.7%fortheyearended31March2009)ofInvestec’stotalfortheperiod.
Asat31March2010,thedivisionhad£46.4billion(£28.8billionfortheyearended31March2009)ofassetsundermanagement.
UnitedKingdomandEurope
Investec launched its asset management operations in the UK following Investec’s acquisition of GuinnessFlight Hambro in 1998. This acquisition provided InvestecAssetManagement with approximately £7 billionofadditionalassetsundermanagement,asatthedateofacquisition,andtheinfrastructureofGuinnessFlightHambro’soperations.During1999and2000,theproductplatformwasredesignedtofocusonthecreationofadomesticfranchiseintheUKforboththeinstitutionalandmutualfundbusinesses.Thedivisionemergedfromtherestructuringasamulti-specialistinvestmentmanagerwithkeystrengthsintheUKandglobalequitiesandtheUKandglobalfixedincome.Today,InvestecAssetManagementhasastrongbrandintheUKandEuropeanmutualfundsmarketandcontinuestopenetratetheUKandEuropeaninstitutionalmarket.Asat31March2010,UKand international assetsundermanagement amounted to£21.7billion (£13.1billion for the yearended31March2009).
SouthAfrica
InvestecAssetManagementcommencedoperationsinSouthAfricain1991withR225millionofassetsundermanagement.Today,itisoneofthelargestmanagersofthirdpartyassetsinSouthAfrica,managingfundsonbehalfofindividuals,retirementfunds,insurancecompanies,governmentbodies,universities,corporationsandotherinstitutions.Investecisamultispecialistinvestmentmanagerandamarketleaderinspecialistequity,fixedinterest, balancedandabsolute return funds.As at31March2010, SouthAfrican fundsundermanagementamountedtoR274.8billion(£24.7billion)(R213.5billionor£15.7billionfortheyearended31March2009).
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Wealth and Investment
Investec’sWealthandInvestmentbusinessoffershighnetworthindividualsaselectionofpersonalinvestmentand stockbroking services. As at 31 March 2010, this business had approximately £22.5 billion in fundsundermanagement (which includes£12.3 billion as at 31December 2009 relating toRensburg Sheppards)(£16.3billionfortheyearended31March2009whichincludes£12.9billionasat31December2008relatingtoRensburgSheppards),ofwhich£9.9billionand£12.6billion(£7.6billionand£8.7billionrespectivelyfortheyearended31March2009)weremanagedonadiscretionaryandnon-discretionarybasis,respectively.
UnitedKingdom
RensburgSheppardsplcbecameawholly-ownedsubsidiaryoftheInvestecGroupon25June2010.Priortothisdate,Investecowned47.1%ofRensburgSheppardsplc.TheRensburgSheppardsgroupcomprisestwoprincipaltradingsubsidiaries,andRensburgSheppardsInvestmentManagementLimited.
SouthAfrica
Investec commenced itsWealth and Investmentbusiness inSouthAfrica in1996 through theacquisitionofFergussonBros,whichnowoperatesunder thename InvestecSecuritiesLimited.Measuredbyassetsundermanagement,InvestecSecuritiesLimitedisoneofthelargestprivateclientstockbrokersandoneofthelargestprivateclientportfoliomanagersinSouthAfrica.Thebusinesshasgrownprimarilythroughstrategicacquisitions,supplemented with solid discretionary portfolio management growth in managed clients. Some of the sub-division’ssignificantacquisitionsinclude:
• the June 1999 purchase of HSBC’s Johannesburg private client operation (resulting in the addition ofapproximatelyR4.5billioninassetsundermanagement);
• the October 2000 purchase of Quyn Martin Asset Management (adding R1.8 billion in assets undermanagement);
• the January2002purchaseofMerrill LynchSouthAfrica’s private clientoperation inCapeTown (addingR4.3billioninassetsundermanagement);and
• theMarch2005acquisitionofHSBC’sCapeTownprivateclientoperation(addingapproximatelyR13.4billiontoassetsundermanagement).
Asat31March2010,Investec’sSouthAfricanWealthandInvestmentbusinesshadassetsundermanagementof R113 billion (£10.2 billion) (R84.9 billion or £6.3 billion for the year ended 31 March 2009) of whichR19.7billion(£1.8billion)(R15.6billionor£1.1billionfortheyearended31March2009)andR93.3billion(£8.4billion)(R69.4billionor£5.1billionfortheyearended31March2009)weremanagedonadiscretionaryandnon-discretionarybasis,respectively.
Property Activities
The Property division contributed £33.5 million to operating profit for the year ended 31 March 2010(£24.7millionfortheyearended31March2009),or7.7%(6.2%fortheyearended31March2009)ofInvestec’stotal for the period (excluding Group Services and Other Activities), making it the fifth largest contributortooperatingprofit for theperiod.TheSouthAfricanbusiness iswellestablishedand theUKandAustralianbusinesseshavebeenoperationalsince2007.
ServicesprovidedbythePropertybusinessinSouthAfricaincludemanagementofpropertyinvestmentfunds(listed and unlisted), property trading and development and listed property portfolio management. As at31 March 2010, total funds under management in the South African business amounted to R678 million(£61million)(R846millionor£62millionfortheyearended31March2009).
InvestecismakingprogressinexpandingtheGroup’sSouthAfricanpropertymodelintheUKtoincludepropertyfundmanagement,investment,tradinganddevelopment.
Theplatform for Investec’s property investments business inAustraliawas enhancedby the creationof theInvestec Property Opportunity Fund in 2007. Total funds under management as at 31 March 2010 wereA$252million(£152million)(A$252millionor£122millionfortheyearended31March2009).
Private Banking
ThePrivateBankingdivision is the fourth largest contributor to Investec’soperatingprofit, accounting foranoperatingprofitof£37.1millionfortheyearended31March2010(£80.5millionfortheyearended31March2009),whichrepresented8.6%(20.3%fortheyearended31March2009)ofInvestec’stotalfortheperiod.
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Thedivisionhadretaildepositsandatotalloanportfolioasat31March2010of£11.8billionand£12.9billion,respectively(£7.7billionand£11.1billioneachfortheyearended31March2009).TotalfundsunderadviceinthePrivateBankingdivisionamountedto£4.1billion(£3.3billionfortheyearended31March2009).
InvestecPrivateBankprovidesa rangeofprivatebanking services, targeting selecthigh incomeandhighnetworthindividualsandtheirbusinessesinchosennichemarkets,primarilyintheUK,SouthAfricaandAustralia.Theseservicesinclude:wealthmanagementandadvisory;structuredpropertyfinance;specialisedlending;growthandacquisition finance; trustand fiduciaryservicesandbankingservices. Investecseeks toposition itsprivatebankingoperations in the lowvolume,highadvisorymarket.ThePrivateBank’s strategy is tooperateas ‘aninvestment bank for private clients’, offering both credit and investment services to its select clientele. TheDirectorsbelieve thatoneof Investec’s strengths is itsability tooriginatenewbusinessby leveragingoff thestrongclientrelationshipsithasbeenabletoestablishthroughitslendingactivities.TheDirectorsbelievethatthisoperatingmodelpositionsitmorefavourablycomparedtoprivatebanksthataredependentonthemoretraditionalasset-gatheringmodel.
UnitedKingdomandEurope
Investec entered the UK private banking market in 1992 with the acquisition of Allied Trust Bank Limited,a domestic bankwith apredominantly retail bankingproduct and serviceoffering, aswell as limited lendingcapability. Since that date, Investec has grown its Private Banking operations organically and through selectacquisitions.TheUKoperation is based in London,with supportoffices inManchester, theChannel Islands,Switzerlandand Ireland.Asat31March2010, Investec’sUKandEuropeanprivatebankingoperationhadaloanportfolioof£3.6billion(also£3.6billionfortheyearended31March2009),retaildepositsof£6.3billion(£4.1billionfortheyearended31March2009)andthirdpartyassetsunderadviceof£1.8billion(£1.4billionfortheyearended31March2009).
SouthAfrica
InvestecoperatesoneofSouthAfrica’sleadingprivatebanksandhasofficesin10citiesinSouthAfrica.Asat31 March 2010, Investec’s South African private banking operation had a loan portfolio of R85.5 billion(£7.7billion) (R84billionor£6.2billion for theyearended31March2009), retaildepositsofR51.2billion(£4.6billion)(R40.6billionor£3billionfortheyearended31March2009)andthirdpartyassetsunderadviceofR20.9billion(£1.9billion)(R21.9billionor£1.6billionfortheyearended31March2009).
Australia
InvestecreceivedabankinglicenceinAustraliainAugust2002whichopenedupmanyopportunitiesincludingthe expansion of the Private Banking division. In Australia the division specialises in property investmentbanking,investmentmanagementservices,moneymarketactivitiesand,morerecently,growthandacquisitionfinanceandspecialisedlending.TheacquisitionofExperienPtyLtdinlate2007hasenabledthedivisiontobuildrelationshipswithspecialistsinthemedicalandaccountingfields,furtherestablishingInvestec’sbankingplatformandexpandingitsbrandfootprinttoawidertargetaudience.Asat31March2010,Investec’sAustralianprivatebankingoperationhadaloanportfolioofA$2.7billion(£1.6billion)(A$2.6billionor£1.2billionfortheyearended31March2009),retaildepositsofA$1.4billion(£0.9billion)(alsoA$1.4billionor£0.7billionfortheyearended31March2009)andthirdpartyassetsunderadviceofA$0.6billion(£0.4billion)(A$0.5billionor£0.2billionfortheyearended31March2009).
Private Banking product and service offering
Investec’sprincipalprivatebankingproductandserviceofferingincludesthefollowing:
Structuredpropertyfinance
Thissub-divisionfocusesonprovidingseniordebtandequityforresidentialandcommercialtransactions.
Specialisedlending
Thespecialisedlendingpracticeprovidesstructuredfinancefacilitiestoindividuals.IntheUKthefocusisonfoursectors:publiclylistedequities;theprivateequityindustry;thesportsandmediaindustry;andmovableassets.InSouthAfricatheofferingincludesmarginlendingandthefinancingofnon-standardassets.
Growthandacquisitionfinance
This sub-division works with entrepreneurs, management teams and private equity houses to implementacquisitionandgrowth strategies for theirbusinesses through theuseofpreferredequity, integrated financeand/orasset-basedlending.
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Trustandfiduciaryservices
InvestecTrustoperateswithinthefiduciarymarket,asabank-ownedtrustcompanywiththeindependencetooperatewithpartnersbestsuitedtotheneedsofclients.InvestecTrustoffersacomprehensiverangeofservicestoitstargetmarketofhighnetworthindividualsincludingtrusteeandexecutorshipservices,companyformationandmanagement,trustadvice,internationaltaxplanningandqualifyingemployeeshareownershiptrusts.
Banking
TheofferinginSouthAfricacomprisesawiderangeofonshoreandoffshorebankingservicesfromarangeofjurisdictions inmultiple currencies, including lending, foreign exchange, daily transactional banking, mortgagesandtreasury.Thetreasuryareaspanscurrencydeposits,moneymarketdeposits,structureddepositsandcashmanagementservices.
TheUKbankingofferingtargetspensionfunds,discretionaryassetmanagers,professionalintermediaries,ownermanaged businesses and private clients. The onshore and offshore product range includes deposits, foreignexchange, interest rate instruments and principal protected deposits. Savings and transactional accounts forindividualsandsmallbusinessesalsoformpartoftheoffering.ThemortgagerangeincludesUKmainresidenceandinvestmentpropertymortgages,overseaspropertymortgagesandmulti-currencyloans.Allmortgagesaresecuredagainstassetssuchasresidentialproperty,investmentportfoliosandoffshoredeposits.
Investment Banking
Investecengagesinarangeofinvestmentbankingactivitiesandpositionsitselfasanintegratedbusinessfocusedonlocalclientdeliverywithinternationalaccess.Theseactivitiescomprisecorporatefinance,institutionalresearch,salesandtradingandprincipalinvestments.ThekeymarketsofoperationaretheUKandSouthAfrica,althoughtherearealsolimitedactivitiesinAustralia.Thedivision’smissionstatementis‘tobeanintegratedentrepreneurialinvestmentbankingbusiness’.
TheInvestmentBankingdivisionwasthethirdlargestcontributortoInvestec’soperatingprofit,havingaccountedfor £41.6 million (£28.2 million for the year ended 31 March 2009), or 9.6 % (7.1 % for the year ended31March2009)ofsuchoperatingprofitfortheyearended31March2010.Thedivision’sCorporateFinanceand Institutional Research Sales and Trading operations contributed 16.6 % (56.3 %. for the year ended31March2009) andPrincipal Investments contributed83.4% (43.7% for the yearended31March2009)fortheperiod.
UnitedKingdom
InvestecoperatesitsUKInvestmentBankingdivisionunderthenameInvestecInvestmentBankingandSecurities.InvestecenteredtheUKinvestmentbankingmarketin1998,followingitsacquisitionofGuinnessMahon,whichincludedasecuritiesandinvestmentbankinghouse,HendersonCrosthwaiteInstitutionalBrokers.
ThefocusoftheInvestmentBankingdivisionintheUKisprimarilyoncorporatefinanceandinstitutionalbrokingactivities, in both cases specialising inmid-market companies. The division also provides institutional brokingservicestolargecapitalisationcompanieswhereInvestechasstrongresearchcapabilitiesand,additionally,hasprincipalinvestments(currentlyasmallmanagedprivateequityportfolio).
Corporatefinance
Investecprovidesfinancialadvisoryservices,particularlyformergersandacquisitions.Thesub-divisionalsoadvisesonandparticipatesinequitymarketfundraisingsforitsclients.Investec’scorporateclientlistcomprises95quotedcompaniesandanumberofprivatecompanyadvisoryroles.Fortheyearended31March2010,thesub-divisionadvisedon15(20fortheyearended31March2009)mergersandacquisitionstransactionswithacombinedvalueof£0.6billion(£3.5billionfortheyearended31March2009)andcompleted11fundraisings(13fortheyearended31March2009)raisinginaggregate£297million(£599millionfortheyearended31March2009).Investeccontinuestoexpanditsclientbase.
Institutionalbroking
Institutional broking activities in the UK are carried out under the name of Investec Securities. The divisionprovidesresearch,sales,tradingandmarketmakingservicestoarangeofUKandinternationalinstitutionalclients.Ateamof29equityanalystscompileresearchcoverageonapproximately250companiesintheUKfocusingon29sectors.Investecalsoactsasmarketmakertoapproximately125smalltomidcapstocksandofferspricemakinginselectedlargecapstocks.
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Principalinvestments
InvestecinheritedaUKmanagedprivateequityportfolioaspartoftheGuinnessMahonandHambrosacquisitionsin1998andcontinuestodivestitselfofthisspecificportfolioofinvestments.Thesub-divisioncontinuestoseekappropriateinvestmentopportunitiestoenableittoleverageofftheskillsandknowledgebaseoftheGroup.Asat31March2010,theaggregatebookvalueoftheUKPrincipal Investmentsportfoliowasapproximately£64million(£72millionfortheyearended31March2009).
SouthAfrica
InvestechasestablisheditselfasoneofSouthAfrica’sleadingdomesticcorporatefinancehouses,focusingontheprovisionofcorporateadvisoryservicestolargeandmid-capitalisationcompanies.Inaddition,asaresultofthelocalknowledgeandexpertiseithasdeveloped,Investechasbeenwellplacedtotakeadvantageofopportunisticdirect investments largely in connection with corporate advisory transactions in which it has been involved.Investecalsoprovidesinstitutionalresearchsalesandtradingservices,whichisdevelopedfollowingitsacquisitionofFergussonBrosin1996.
Corporatefinance
Since1999,therehasbeenrelativelylittledomesticcapitalmarketsactivityinSouthAfrica.Accordingly,Investechasfocusedonthedevelopmentofitsdomesticfinancialadvisorybusiness,inparticularregardingblackeconomicempowermenttransactions,mergersandacquisitions,divestitures,restructuringsandtheprovisionofinnovativeandcreativedealstructuresandadvice.TheCorporateFinancesub-divisionwasrankedsecondinvolumeoflisted mergers and acquisitions transactions and first in general corporate finance by volume in DealmakersMagazineSurveyforCorporateFinance(2009calendaryear).ThisisthesixthyearoutofthelastseventhatInvestechavebeenawardedthe“M&AGoldMedal”.TheSponsorsub-divisionwasrankedfirstinvolumeofmergers and acquisitions transactions and second in general corporate finance in the Dealmakers MagazineSurvey for Sponsors (2009 calendar year). This is the seventh consecutive year that Investec has won thisaward.TheCorporateFinanceandSponsorsub-divisionswerealsobothrankedfirstinvolumeofmergersandacquisitionstransactionsinthe“Ernst&YoungreviewforM&A”(2008calendaryear).
Institutionalresearchsalesandtrading
OperatingunderthenameInvestecSecuritiesLimited,Investecoffersanintegratedresearch,salesandexecutioncapabilityinSouthAfricanstocksfordomesticandinternationalfundmanagerswithaninterestin,andexposureto,SouthAfrica.Thesub-division isalsorepresentedintheUKandUnitedStatestopromoteSouthAfricanstockstoaglobalemergingmarketclientbase.
Principalinvestments
Asaresultofitsin-depthmarketknowledgeandlocalexpertise,Investeciswellpositionedtotakedirectpositionsinpredominantly JSE listedshareswhere itbelieves that themarket ismispricing thevalueof theunderlyingportfolioofassets.Theseinvestmentsarealwayscarefullyresearchedpriortoanypositionbeingtaken.Thesub-divisioncontinuestopursueopportunitiestohelptocreateandgrowblackownedandcontrolledcompanies.Investecalsoactivelyseeksandselectsexpansionandbuy-outinvestmentsasprincipalinunlistedSouthAfricancompanies. Investmentsareselectedbasedonthetrackrecordofthemanagement,theattractivenessoftheindustryandtheabilitytobuildvaluefortheexistingbusinessbyimplementinganagreedstrategy.
As at 31 March 2010, the South African Principal Investments portfolio had an aggregate book value ofapproximatelyR4.9billion(£439million)(R4.3billionor£325millionfortheyearended31March2009).
Australia
InvestecenteredtheAustralianinvestmentbankingmarketinMarch2001withtheacquisitionofWentworthAssociates,oneoftheleadingcorporatefinanceboutiquesinAustralia.ThisacquisitionprovidedaplatformtodevelopInvestec’scorporatefinanceandprivateequitysubdivisionsinAustralia.InvestecalsohasalimitedprivateequityoperationthatsourcestransactionsprincipallyfromitsrelationshipswithprivateandquotedAustralianbusinesses.
As at 31 March 2010, the total value of Private Equity funds managed was A$460 million (£277 million)(A$460millionor£222millionfortheyearended31March2009)andthevalueoftheAustralianPrincipalInvestments portfolio was A$27 million (£16 million) (A$60 million or £29 million for the year ended31March2009).
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Capital Markets
Investec’sCapitalMarketsdivisionprovidesawiderangeofspecialistproducts,servicesandsolutionstoselectcorporateclients,publicsectorbodiesandinstitutions.ThedivisionundertakesthebulkofInvestec’swholesaledebt,structuring,proprietarytrading,capitalmarketsandderivativesbusiness,andwasthelargestcontributortoInvestec’soperatingprofitfortheyearended31March2010.Operatingprofitfortheyearended31March2010was£179.1million(£141.4millionfortheyearended31March2009),representing41.4%(35.6%fortheyearended31March2009)ofInvestec’stotal.
Thedivisionisfocussedonanumberofproductareasincluding:assetandliabilitymanagement;treasuryproductsanddistribution;financialproducts;structuredandassetfinance;projectandinfrastructurefinance;commoditiesand resource finance; interest rate trading; foreignexchange trading; structuredequity andequityderivativestrading.
Mostofthedivision’soperatingincomeisattributabletoitsoperationsintheUKandSouthAfrica,althoughtherearealsolimitedactivitiesinAustralia.TheAustralianbusinesshasfurthereditspresenceinthisareafollowingtheacquisitionofthebankingoperationsofNMRothschild&SonsAustraliaLimitedinJuly2006.
Thedivisionfocusesonthefollowingactivities:
Assetandliabilitymanagement
ThisareaprovidesSouthAfricanRand,sterling,euro,AustralianDollarandUSDollarfundingtotheGroupandmanagesliquidityandinterestrateriskfortheGroup.
Treasuryproductsanddistribution
TheUKdivisionoffersabroadrangeoftreasuryproductsandservicestothecorporateandpublicsectormarkets,including spot, forward exchange, currency swaps and options, principally in G7 currencies. The CorporateTreasuryinSouthAfricaofferscorporateandcommercialclientsadirectdealingcapabilitywithasinglepointofcontactforbothforeignexchangerequirements,andshort-terminternationalanddomesticmoneymarketproducts.
Financialproducts
TheUKdivisionisinvolvedinfinancialengineering,preferenceshareinvestmentsandstructures,equitiesscriplending,creditderivativesandthedevelopmentofinvestmentproducts.InSouthAfricathesub-divisioncomprisesfour businesses which offer derivative hedging solutions to clients in the interest rate and foreign exchangeenvironment,provide scrip lending servicesonanagencybasis, structureanddistribute investmentproductsto individualsand institutions,manage Investec’spreferenceshare investmentsand funding thereofaswellasstructureequitysolutionsforindividuals,corporatesandblackeconomicempowermentconsortia.
Structuredandassetfinance
Thisareafocusesonstructuredandconventionallendinganddebtcapitalmarkets,includingsecuritisationandadvice,bondoriginationandprincipalfinanceacrossvariousassetclasses.Structuredlendingincludesassetfinanceandleasing,preferencesharefinance,mezzaninedebtfinancing,leveragedbuy-outfundingandfinancingsolutionsforcorporate,governmentandpublicsectorclients.InAugust2007,InvestecplcacquiredKensingtonGroupplc(“Kensington”)asaplatformtoenhancethesecuritisationactivitiesoftheCapitalMarketsdivision.Kensingtonisaspecialistlender,whosecurrentofferingincludesprime,self-certifiedandbuy-to-letmortgages.
Projectandinfrastructurefinance
Thissub-divisionprovidesadvisoryservices,debtarrangingandunderwritingandequityraisingintheinfrastructure,powerandindustrialsectorswithafocusonhealthcare,telecoms,defenceprojects,transportandpower.
Commoditiesandresourcefinance
Thisareaisactiveinthepreciousandbasemetals,minerals,oilandgassectors.Thebusinessoperatesacrossthedebt-equityspectrumandincludesadvisoryservices,debtarrangingandunderwriting,structuringandprovidinghedgingsolutions.
Interestratetrading
Products include forward rate agreements, interest rate swaps,moneymarket instruments, government andcertainpublicsectorbonds,interestrateoptionsandrepurchaseagreements.InSouthAfrica,Investecactsasamarketmakerandtradesasprincipal.
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Foreignexchangetrading
Investec is a participant (in the UK) and market maker (in Southern Africa) in the spot, forward exchange,currencyswapsandcurrencyderivativesmarkets(optionsandfutures),principallyinRandandG7currenciesandcertainemergingmarketscurrencies.
Structuredequity
Structured equity capabilities have been available across Irish and UK markets since the Structured EquitiesDesk inLondonwas setup in July2007.Thedesksundertake structuring, finance,product issuance,marketmaking,arbitrageandprincipaltradinginequitiesandequityderivatives.Theteammanufacturesanddeliversacomprehensivesuiteofsolutionstotheretailandwholesalemarkets.Thefocusofthebusinessistodevelopcloserelationshipswithclients,creatingproductsynergieswhereverpossible.
Equityderivativestrading
InvestecinSouthAfricatradesmajorequityindexoptions,certainsinglestockoptions,equitystructuredproducts,futuresindexarbitrageandequitywarrants.Thesub-divisionprovideshedgingandstructuringservicesdirectlyto financial intermediaries and institutions and indirectly via the FinancialMarkets (described above) area tocompaniesandindividuals.
Group Services and Other Activities
GroupServicesincludestheCentralServicesandCentralFundingfunctions,whileOtherActivitiespredominantlyincludestheInternationalTradeFinancebusiness.GroupServicesandOtherActivitiesaccountedforaprofitof£31.7millionfortheyearended31March2010(£31.8millionfortheyearended31March2009).Forthesameperiod,CentralServicesincurrednetcostsof£73.2million(£66.1millionfortheyearended31March2009),CentralFundingcontributedoperatingprofitof£97.7million(£90.7millionfortheyearended31March2009)andInternationalTradeFinancecontributedoperatingprofitof£7.2million(also£7.2millionfortheyearended31March2009).
CentralServices
CentralServices ismadeupoffunctionalareasthatprovideservicescentrallyacrossallof Investec’sbusinessoperations.ConsistentwithInvestec’sphilosophyofoperatingasasingleorganisation,CentralServicesprovidesintegratingmechanismsbetweenthebusinessoperations.Whiletheseservicesdonotformpartoftheoperatingdivisions,thereisapolicyinplacewherebyaportionofthesecostsareallocatedtothedivisions.
Central Services include: Group Risk Management, Group Information Technology, Group Finance, InvestorRelations,GroupMarketingandOrganisationDevelopment.Othergroupsupportservicesinclude:HeadOffice,InternalAuditandCompliance,Legal,CompanySecretarial,Tax,InformationandBusinessIntelligenceCentre,RegulatoryandFacilities.Therearecertaincoststhatarestrategicinnatureandwhichhavenotbeenallocatedtotheoperatingdivisions.
CentralFunding
Investec’sbusinessmodel involvesmaintainingacentralpoolofcapital,with theaimofobtainingeconomiesofscaleforcorporateinvestments,fundingandoverallmanagement.Investecusesvarioussourcesoffunding,dependingonthespecificfinancialandstrategicrequirementsthattheGroupfacesatthetime.Thefundsraisedareappliedtowardsmakingacquisitions,fundingcentralservicesanddebtobligations,andpurchasingcorporateassetsandinvestmentsnotallocatedtotheprincipaloperatingdivisions.
OtherActivities–InternationalTradeFinance
Investecacquired its InternationalTradeFinancebusiness,ReichmansCapital, inSouthAfrica in1990.Clientsaresmalltomedium-sizedownermanagedbusinesses.Thesub-divisionofferstrade,assetanddebtorfinancetoprovideclientswithworkingcapitalandfundingfortheacquisitionofassets,andtofacilitategrowth.
2.3 General commentary for the year ended 31 March 2010
OverthepastyearInvestechasconcentratedonimprovingthequalityofitsbalancesheetwhilstatthesametimemovingtheorganisationontothefrontfoot.Thishasresultedinasatisfactoryyearendperformance,withastrengtheningofbothliquidityandcapitalandanincreaseinadjustedearningspershare.ThefoundationisnowinplaceforfurthergrowthbothinInvestec’snoncapitalintensiveassetmanagementbusinessesaswellasinitscorespecialistbankingbusinesses.Althoughtheeconomicsituationremainsuncertainthebusinessisorientedtowardscapturingavailableopportunitiesinallitscoregeographies.
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2.4 Outlook as provided by the Directors of the Company on 18 November 2010, in the results released for the six months to 30 September 2010
Investec’s operational performance is reflective of its forward-focused approach over the past year and theongoingefforttobuilditsbrandthroughoutthefinancialcrisis.Whilethepaceofeconomicrecoveryvariesacrosstheworld,andtheregulatoryenvironmentremainschallenging,thesystemhasstabilisedandactivitylevelsarestartingtoimprove.
The strength and resilience of the Investec franchise, together with a solid balance sheet position, providesappropriate flexibility to support existing businesses and allows it to capture opportunities arising from therealignmentofthefinancialservicesindustry.
2.5 Historical financial information
Relevantfinancialinformation,extractedfromtheannualfinancialstatementsofInvestecforthethreefinancialyearsended31March2008,2009and2010,aswellasforthesixmonthsended30September2010issetoutinAnnexure1tothisPre-listingStatement.
3. DIRECTORS
3.1 Directors
Thefullnames,ages,nationalities(ifnotSouthAfrican),addresses,occupationsandprofilesoftheDirectorsaresetoutbelow:
3.1.1 Hugh S Herman (70)# (Non-executiveChairman–appointed1994)
Businessaddress:InvestecBankLimited,100GraystonDrive,Sandown,Sandton,2196
Qualifications:BA,LLB,LLD(HonorisCausa)
Hughpractisedas a lawyerbefore joiningPicknPay, a leadingSouthAfrican retail group,wherehebecameManagingDirector.HejoinedInvestecin1994.HisdirectorshipsincludeInvestecBankLimited,Investec Bank (UK) Limited, Growthpoint Properties Limited, Metaf Investment Holdings (Pty Ltd,PicknPayHoldingsLimitedandPicknPayStoresLimited.
3.1.2 Stephen Koseff (59) (ChiefExecutiveOfficer–appointed1986)
Businessaddress:InvestecBankLimited,100GraystonDrive,Sandown,Sandton,2196
Qualification:BCom,CA(SA),HDipBDP,MBA
Stephen joined Investec in1980.Hehashaddiverseexperiencewithin InvestecasChiefAccountingOfficer and General Manager of Banking, Treasury and Merchant Banking. His directorships includeInvestecBankLimited,InvestecBank(UK)Limited,TheBidvestGroupLimited,andRensburgSheppardsplc.
3.1.3 Bernard Kantor (61) (ManagingDirector–appointed1987)
Businessaddress:Investecplc,2GreshamStreet,London,EC2V7QPUK
Qualification:CTA
Bernard joined Investec in1980.Hehashaddiverseexperiencewithin InvestecasaManagerof theTradingdivision,MarketingManagerandChiefOperatingOfficer.HisdirectorshipsincludeInvestecBankLimited,InvestecBank(UK)Limited,PhumelelaGamingandLeisureLimitedandRensburgSheppardsplc.
3.1.4 Glynn R Burger (54) (ExecutiveDirector–appointed2002)
Businessaddress:InvestecBankLimited,100GraystonDrive,Sandown,Sandton,2196
Qualification:BAcc,CA(SA),HDipBDP,MBL
ExecutiveDirectorresponsibleforFinanceandRisk.GlynnjoinedInvestecin1980.HehashaddiverseexperiencewithinInvestecasChiefAccountingOfficer,GroupRiskManagerandJointManagingDirectorforSouthAfrica.HisdirectorshipsincludeInvestecBankLimited.
3.1.5 Hendrik du Toit (49) (ExecutiveDirector–appointed2010)
Businessaddress:Investecplc,2GreshamStreet,London,EC2V7QPUK
Qualification:BCom,BCom(Hons),MCom,MPhil(Cantab)
HendrikjoinedInvestecin1991andistheChiefExecutiveOfficerofInvestecAssetManagement.HisdirectorshipsincludeInvestecAssetManagement(Pty)LimitedandInvestecAssetManagementLimited.
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3.1.6 Samuel E Abrahams (72) (Non-executiveDirector–appointed1996)
Businessaddress:c/oInvestecBankLimited,100GraystonDrive,Sandown,Sandton,2196
Qualifications:FCA,CA(SA)
SamuelisaformerinternationalpartnerandSouthAfricanManagingPartnerofArthurAndersen.HiscurrentdirectorshipsincludeFoschiniLimited,InvestecBankLimited.
3.1.7 George F O Alford* (62) (Non-executiveDirector–appointed2002)
Businessaddress:c/oInvestecplc,2GreshamStreet,London,EC2V7QPUK
Qualifications:BSc(Econ),FCIS,FIPD,MSI
GeorgeisformerHeadofPrivateBankingandHeadofPersonnelatKleinwortBensonGroupandwasa senior advisor to theUKFinancial ServicesAuthority.Hisdirectorships include InvestecBank (UK)Limited.
3.1.8 Cheryl A Carolus (52) (Non-executiveDirector–appointed2005)
Businessaddress:c/oInvestecBankLimited,100GraystonDrive,Sandown,Sandton,2196
Qualifications:BA(Law)BEd
Cheryl actedas theSouthAfricanHighCommissioner toLondonbetween1998and2001andwasChief Executive Officer of South African Tourism. Her directorships include De Beers ConsolidatedMinesLimited,GoldFieldsLimited,SouthAfricanAirways(Pty)Limited,Mercedes-BenzSouthAfrica(Pty) Limited, WWF South Africa and International, The IQ Business Group (Pty) Limited, FennerConveyorBeltingSouthAfrica (Pty)Limited,PonahaloCapital (Pty)Ltd, InvestecAssetManagementHoldings(Pty)Ltd,ExecutiveChairpersonofPeotonaGroupHoldings(Pty)LimitedanddirectorofanumberofthePeotonaGroupcompanies.
3.1.9 Peregrine KO Crosthwaite* (61) (Non-executiveDirector–appointed2010)
Businessaddress:c/oInvestecplc,2GreshamStreet,London,EC2V7QPUK
Qualifications:MA(Hons)
PerryisaformerpartnerofHendersonCrosthwaiteLimitedandthefoundingdirectorofHendersonCrosthwaiteInstitutionBrokers.HewaspreviouslyadirectorofInvestecBankplc.HiscurrentdirectorshipsincludeJupiterGreenInvestmentTrust,MelroseplcandTolunaplc.
3.1.10 Bradley Fried* (45) (Non-executiveDirector–appointed2010)
Businessaddress:c/oInvestecplc,2GreshamStreet,London,EC2V7QPUK
Qualifications:BComCA(SA),MBA
BradleyjoinedInvestecin1999andhasheldthepositionsofjointheadofinvestmentbankingandChiefExecutiveofInvestecBankplc.HeisontheAuditCommitteeofHMTreasuryandisChiefExecutiveinResidenceatJudgeBusinessSchool.HeisManagingPartnerofGrovepointCapitalLLP.
3.1.11 Haruko Fukuda OBE* (64) (Non-executiveDirector–appointed2003)
Businessaddress:c/oInvestecplc,2GreshamStreet,London,EC2V7QPUK
Qualification:MA(Cantab),DSc
HarukowaspreviouslyChiefExecutiveOfficeroftheWorldGoldCouncil.ShewasasenioradviseratLazard.SheisformervicechairmanofNikkoEuropeplcandapartnerofJamesCapel&CoandaformerdirectorofABVolvoandofForeignandColonial InvestmentTrustplc.She iscurrentlyadirectorofAberdeenAsianSmallerCompaniesInvestmentTrustplc,andisanadvisortoMetroAG.
3.1.12 Ian R Kantor** (64) (Non-executiveDirector–appointed1980)
Businessaddress:Herengracht537,1017BVAmsterdam,TheNetherlands
Qualification:BSc(Eng),MBA
IanisformerChiefExecutiveofInvestecBankLimited,resigningin1985andrelocatingtotheNetherlands.His current directorships include Insinger de Beaufort Holdings SA (where he is Chairman of themanagementboardand inwhich Investecholdsan8.6% interest),Bank InsingerdeBeaufortNVandInvestecBank(UK)Limited.
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3.1.13 M Peter Malungani (52) (Non-executiveDirector–appointed2002)
Businessaddress:Suite702,NedbankGardens,33BathStreet,Rosebank,2196
Qualification:BCom,MAP,LDP
PeterisChairmanofPeuGroupProprietaryLimited.HeisChairmanofPhumelelaGamingandLeisureLimited,PeuGroup(Pty)LimitedandInvestecAssetManagementHoldings(Pty)Limited.
3.1.14 Sir David Prosser#* (66) (Non-executiveDirectorandSeniorIndependentDirector–appointed2006)
Businessaddress:c/oInvestecplc,2GreshamStreet,London,EC2V7QPUK
Qualification:BSc(Hons),FIA
SirDavidwaspreviouslyGroupChiefExecutiveofLegal&GeneralGroupPLC,joiningLegal&Generalin1988asGroupDirector(Investments)becomingDeputyChiefExecutiveinJanuary1991andGroupChiefExecutive inSeptember1991.SirDavidwaspreviouslyChairmanoftheFinancialServicesSkillsCouncilandiscurrentlyadirectorofEpsomDownsRacecourseLimitedandtheRoyalAutomobileClubLimited.
3.1.15 Peter R S Thomas (65) (Non-executiveDirector–appointed1981)
Businessaddress:10OrangeStreet,Sunnyside,AucklandPark,Johannesburg,2092
Qualification:CA(SA)
Peter is a Chartered Accountant and former Managing Director of The Unisec Group Limited. HiscurrentdirectorshipsincludeInvestecBankLimited,JCILimitedandanumberofunlistedcompanies.
3.1.16 Fani Titi (48)# (Non-executiveDirector–appointed2004)
Businessaddress:AbconHouse,FairwayOfficePark,52GrosvenorRoad,BryanstonEast,2152
Qualification:BSc(Hons),MA,MBA
Fani isChairmanof InvestecBankLimited andwas the former chairmanofTisoGroupLimited.Hiscurrent directorships include AECI Limited, Tshiya Group (Pty) Limited, Investec Employee BenefitsLimitedandInvestecAssetManagementHoldings(Pty)Limited.# Effective17November2011,HughHermanwillberetiringfromtheboardsofInvestecLimitedand
Investecplc.FaniTitiandSirDavidProsserwillassumetheroleofjointChairmanonthesamedate.
* British
**Dutch
3.2 Qualifications, borrowing powers and appointment of Directors
TherelevantprovisionsoftheArticlesofAssociationofInvestecplcgoverningtheappointment,qualification,remunerationandborrowingpowersofDirectorsaresetoutinAnnexure2tothisPre-listingStatement.
3.3 Remuneration of Directors
The remuneration received by the Directors in respect of their directorships in Investec is disclosed in theAnnualReportofInvestecfortheyearended31March2010whichisavailableforinspectioninaccordancewithparagraph14ofthisPre-listingStatementandisavailableontheGroup’swebsite(www.investec.com).
TherewillbenovariationintheDirectors’remunerationasaresultofthisofferforsubscriptionor/andlisting.
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3.4 Directors’ interests
Directors’ shareholdings in Investec plc and Investec Limited shares at 31 December 2010
Percentage Percentage Beneficial and non- of shares in Beneficial and non- of shares in beneficial interest issue1 beneficial interest issue1
Investec Investec Investec InvestecDirector plc2 plc Limited3 Limited
31 Dec 31 Mar 31 Dec 31 Dec 31 Mar 31 Dec 2010 2010 2010 2010 2010 2010
Executive Directors
SKoseff 4 839 133 4 839 133 0.9% 1 809 330 1 809 330 0.7%BKantor4 48 525 48 525 – 3 801 000 4 863 500 1.4%GRBurger 2 402 135 2 402 135 0.5% 1 037 076 1 037 076 0.4%ATapnack7 – – – – 203 192 –HduToit8 – – – 604 740 0.2%
Total number 7 289 793 7 289 793 1.6% 7 252 146 7 913 098 2.9%
Non-executive Directors
HSHerman 1 369 915 1 369 915 0.3% 760 470 760 470 0.3%SEAbrahams 20 000 20 000 – – – –GFOAlford 10 000 3 100 – – – –CACarolus – – – – – –HFukudaOBE 5 000 5 000 – – – –GMTHowe – – – – – –IRKantor5 3 509 545 3 509 545 0.7% 325 325 –SirCKeswick7 – 15 750 – – 9 250 –MPMalungani6 – – – 3 288 890 3 288 890 1.2%SirDProsser 10 000 10 000 – – – –PRSThomas 365 810 415 855 0.1% 500 180 955 –FTiti – – – – – –BFried8 – – – 400 000 – 0.2%PKOCrothwaite8 132 908 – – – – –
Total number 5 423 178 5 349 165 1.1% 4 450 185 4 239 890 1.6%
Total number 12 728 721 12 638 958 2.7% 11 702 331 12 152 988 4.5%
Notes:
1. Thetotalnumberof Investecplcand InvestecLimitedshares in issueasat31December2010was538.8millionand272.8million,respectively.
2. ThemarketpriceofanInvestecplcshareat31December2010was£5.27(31March2010:£5.39).
3. ThemarketpriceofanInvestecLimitedshareat31December2010wasR56.16(31March2010:R62.49).
4. Inadditiontohisshareholdingsreflectedinthetableabove,BKantorhasaninterestinoptionsoverInvestecLimitedshares.Nooptionswereexercisedbetween31March2010andthelatestpracticabledate.
5. Inadditiontohisshareholdingsreflectedinthetableabove,IRKantorhasaninterestinoptionsoverInvestecLimitedshares.Nooptionswereexercisedbetween31March2010andthelatestpracticabledate.
6. InNovember2003,InvestecLimitedconcludedanempowermenttransactionwithTisoGroup(“Tiso”),PeuGroupProprietaryLimited(“Peu”),abroad-basedEntrepreneurshipDevelopmentTrustandanEmployeeShareTrustintermsofwhichtheyacquireda25.1%stakeintheissuedsharecapitalofInvestecLimited.MPMalunganiistheChairmanofPeu.
7. ATapnackandSirCKeswickresignedfromtheboardeffective15December2010and13August2010,respectively.
8. HduToit,BFriedandPCrothwaitewereappointedtotheboardon15December2010,1April2010and18June2010,respectively.
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Directors’ interests in the listed Investec plc Sterling perpetual preference shares at 31 December 2010
Investec plc Investec Limited Investec Bank Limited
31 Dec 31 March 31 Dec 31 March 31 Dec 31 MarchDirector 2010 2010 2010 2010 2010 2010
Executive
SKoseff1 101 198 101 198 3 000 3 000 4 000 4 000
Non-executive
HSHerman2 – – – – 1 135 1 135
Notes:
ThemarketpriceofanInvestecplcSterlingperpetualpreferenceshare, InvestecLimitedpreferenceshareandanInvestecBankLimitedpreferenceshareasat31March2010wasR47.05(2009:R34.00),R91.00(2009:R75.80)andR98.70(2009:R82.00).
1. SKoseffacquiredaninterestinthepreferencesharesofInvestecBankLimitedon13August2003atapriceofR100.00.
2. HSHermanacquiredaninterestinthepreferencesharesofInvestecBankLimitedon13August2003atapriceofR100.00.
3.5 Directors’ declaration
AlloftheDirectorshaveconfirmedthattheyhavenotbeen:
•disqualifiedbyanycourtfromactingasadirectorofacompanyorfromactinginthemanagementorconductoftheaffairsofanycompany;
•convictedofanoffenceresulting fromdishonesty, fraudorembezzlementoranyoffenceunder legislationrelatingtotheSACompaniesAct;
•adjudgedbankruptorenteredintoanyvoluntarycreditorsliquidationorbeensequestratedinanyjurisdictionorbeenadirectorofanycompanyatthetimeorwithinthe12monthsprecedinganyofthefollowingeventstakingplace:receiverships,compulsoryliquidations,creditorsvoluntaryliquidations,administrations,companyvoluntaryarrangementsoranycompositionorarrangementwithcreditorsgenerallyoranyclassofcreditors;or
•barredfromentryintoanyprofessionoroccupation.
3.6 Directors’ interests in contracts
NoDirectorofInvestechadanymaterialbeneficialinterestintransactionseffectedbyInvestecduringthecurrentor immediatelyprecedingyear,or inanearlier financialyearandwhichremain inanyrespectoutstandingorunperformed,exceptasdisclosedintheInvestecAnnualReportfortheyearended31March2010whichreportisavailableforinspectioninaccordancewithparagraph14ofthisPre-listingStatementandisavailableontheGroup’swebsite(www.investec.com).
3.7 Corporate Governance
Investec’svaluesandphilosophiesaretheframeworkagainstwhichitmeasuresbehaviourandpracticessoastoassessthecharacteristicsofgoodgovernance.TheGroup’svaluesrequirethatDirectorsandemployeesbehavewithintegrity,displayingconsistentanduncompromisingmoralstrengthandconductinordertopromoteandmaintaintrust.
Soundcorporategovernance is implicit in theGroup’svalues,culture,processes, functionsandorganisationalstructure.Structuresaredesignedtoensurethatourvaluesremainembeddedinallbusinessesandprocesses.InvesteccontinuallyrefinesthesestructuresandawrittenStatementofValuesservesasitsCodeofEthics.
Theboardisoftheopinionthat,basedonthepracticesdisclosedthroughoutthisreport,whichwereinoperationduringtheyearunderreview,InvestechascompliedwiththePrinciplesofGoodGovernanceandCodeofBestPracticecontainedinSection1oftheLondonCombinedCode(2008),excludingthefollowing:
• IndependenceoftheChairman:Asreportedintheannualfinancialstatements,theChairmanoftheboardisnotconsideredtobeindependent,butcontinuestoenhancehisstatusasanon-executivedirector.
• Boardevaluation:Asat31March2010,thelastevaluationoftheboard,asrequiredbytheLondonCombinedCodeA.6,wasconductedin2008.Anevaluationoftheboard,itscommitteesandindividualDirectorswasconductedinthelatterpartof2010andwillbeconductedannuallygoingforward.
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KingIIIwasreleasedon1September2009andcameintoeffecton1March2010,withcompanieshavingtoapplytheprinciplesinrespectoffinancialyearscommencingonorafter1March2010.AdetailedexercisewasundertakentobenchmarkInvestec’spracticesagainsttheprinciplesrequiredunderKingIII.TheexerciseindicatedthatinsubstanceInvestecappliesmostoftheprinciples,andtheCompanyistakingstepstoaddresstheareasthatwerenotappliedasat31March2010.ThefollowingprinciplesofKingIIIwerenotbeingappliedbyInvestecasat31March2010:
• Theboard shouldconsiderbusiness rescueproceedingsorother turnaroundmechanismsas soonas theCompanyisfinanciallydistressed.
• Theboardshouldelectachairmanoftheboardwhoisanindependentnon-executivedirector(referabove)
• Theevaluationoftheboard, itscommitteesandthe individualDirectorsshouldbeperformedeveryyear(referabove).
• Companiesshoulddisclosetheremunerationofthethreemosthighlypaidemployees.
• Sustainabilityreportinganddisclosureshouldbeindependentlyassured.
For a full report of the Investec’s corporate governance policies, potential investors are referred to theInvestec’sAnnualReportfortheyearended31March2010whichisavailableforinspectioninaccordancewithparagraph14ofthisPre-listingStatementandmayalsobeobtainedfromInvestec’swebsite(www.investec.com).
4. SHARE CAPITAL OF INVESTEC PLC
Investecplchas,inaccordancewiththeUKCompaniesAct,abolishedtheconceptofauthorisedsharecapitalwitheffectfromAugust2010.Assuch,onlytheissuedcapitaloftheCompanyhasbeenprovidedbelow:
4.1 Issued share capital before the offer for subscription
Issued
537177588ordinarysharesof£0.0002each £107 435
272836668specialconvertingsharesof£0.0002each £54 567
1UKDANshareof£0.001 –
1UKDASshareof£0.001 –
1specialvotingshareof£0.001 –
15081149non-redeemable,non-cumulative,non-participatingSterlingpreferencesharesof£0.01each,listedontheJSEandtheCISX £150 812
Note:Duetotheduallistedstructure,theordinarysharesabovearelistedonboththeJSEandtheLSE.TheabovepreferencesharesarelistedontheJSEandtheCISX.
4.2 Issued share capital after the offer for subscription
ThetablebelowisforillustrativepurposesonlyandsetsouttheissuedcapitalofInvestecplcaftertheofferforsubscriptionbasedontheexamplesetoutinparagraph2.2ofthe“Salientfeatures”sectionofthisPre-listingStatement:
Issued
537177588ordinarysharesof£0.0002each £107 435
272836668specialconvertingsharesof£0.0002each £54 567
1UKDANshareof£0.001 –
1UKDASshareof£0.001 –
1specialvotingshareof£0.001 –
15081149non-redeemable,non-cumulative,non-participatingSterlingpreferencesharesof£0.01each,listedontheJSEandtheCISX £150 812
3 000 000non-redeemable,non-cumulative,non-participatingRanddenominatedpreferencesharesofR0.001each* R3 0000
*ThenumberofRandperpetualpreferencesharesissuedhasbeendeterminedusingthebestavailableestimateofsharestakenup,basedonanissuepriceofR100 andacouponrateof8.55%.
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At the Annual General Meeting of Investec plc on Thursday 12 August 2010, a special resolution waspassed togrant renewable general authority to Investecplc tomakemarketpurchasesofSterlingperpetualpreferencesharesofInvestecplcwhichareinissuefromtimetotimeintermsoftheSACompaniesActandJSEListingsRequirements.
Additionally,atthemeetingreferredtoabove,anordinaryresolutionwaspassedtoplacetheunissuedSterlingperpetual preference shares under the control of the Directors until the 2011 Annual General Meeting ofInvestec.
4.3 Alterations to share capital
InvestecplcmayfromtimetotimeseektoraiseadditionalcapitalbyissuingfurtherRandperpetualpreferenceshares,whichwill rankparipassuwithoneanotheraswellaswiththeexistingSterlingperpetualpreferenceshares.SuchRandperpetualpreferenceshareswillalsobelistedontheJSE,subjecttotheapprovaloftheJSE.
4.4 Rights attaching to Rand perpetual preference shares
TheRandperpetualpreferencesharesarenon-redeemable,non-cumulativeandnon-participatinganddividendsarepayablesemi-annuallyonadateatleastsevenbusinessdayspriortothedateonwhichInvestecpaysfinaland interimordinarydividends to itsordinaryshareholders, ifany,but, ifdeclared, shallbepayable,not laterthan120businessdaysafter31Marchand30Septemberofeachyear,respectively.ThefulltermsoftheRandperpetualpreferencesharesaresetoutinAnnexure3tothisPre-listingStatement.Thebelowsummaryfoundinparagraphs4.4.1,4.4.2and4.4.3ofthisPre-listingcircularisnotconclusiveorexhaustive,andpotentialinvestorsshouldrefertothesaidAnnexureforfullparticularsofthetermsandconditionsofthepreferenceshares.
4.4.1 Voting rights
Preferenceshareholderswillonlybeentitledtovoteduringperiodswhenapreferencedividend(whichhasbeendeclared)oranypartofitremainsinarrearandunpaidaftersixmonthsfromtheduedatethereoforwhenresolutionsareproposedwhichdirectlyaffectanyrightsattachingtotheRandperpetualpreferencesharesortheinterestsofRandperpetualpreferenceshareholdersoraresolutionisproposedtowinduporinrelationtothewinding-upoftheCompanyorforthereductionofitscapital.
4.4.2 Entitlements to dividends
TheDirectorsmayresolvetodeclareandpayinfullorinpartdividendsontheRandperpetualpreferenceshares.IftheDirectorsdonotresolvetopay suchdividends, holderswillnothaveanyrighttoreceiveanyunpaiddividends. Further,asamatterofUKcompany law,theDirectorsarenotpermittedtodeclareorpayanydividendsontheRand perpetualpreferencesharesunlesssuchdividendscanbepaidoutofprofitsavailablefordistributionandpermittedbylawtobedistributed.
Subjecttotheabove,theholdersoftheRandperpetualpreferencesharesreceiveasemi-annualdividendbasedonthecouponrate(beingequivalentto95%multipliedbytheprimerate)multipliedbythedeemedvalue,onadailybasisandpayableintwosemi-annualinstalments.AnordinarydividendisnotexpectedtobedeclaredbyInvestecplcatanytime whiletheRandperpetualpreferenceshares exist unlessthelastoccurring Randperpetualpreference sharedividendwasdeclaredand is expected tobe,orhasbeen, paid in full.The termsandconditionsof theRandperpetualpreference shares require certainamountstoberetainedinreservebytheCompany insuchcircumstances. Thedeemedvalueforthepurposeof calculating apreferencedividend shall beanamountofR100,notwithstanding theactualissuepriceofaRandperpetualpreferenceshare.ThefulltermsandconditionsoftheRandperpetualpreferencesharesaresetoutintheArticlesoftheCompany whenreadtogetherwiththetermsandconditionsoftheRandperpetualpreferencesharesassetoutinAnnexure3tothisdocument.
AlldividendstothepreferenceshareholderswillbedeclaredandpaidinRand.
InthecaseofSouthAfricanresidentpreferenceshareholders,intermsofthedraft2011TaxationLawsAmendmentBills,aproposedDividendsTax isexpectedtobecomeoperationalasof1April2012(viaMinisterialnoticeintheGovernmentGazette). Subjecttospecificexemptions,SouthAfricanresidentswill thus most likely be subject to 10% dividends tax on the dividends paid in relation to the Randperpetualpreferenceshares,withnoadditional incometaxarisingonsuchdividends.Thepreferencedividendrateof95%ontheprimeratewillnotbeadjustedwhenDividendsTaxbecomeseffective.Theissueyieldhasalreadytakenthistaxintoconsiderationwhendeterminingtheappropriatepricingforthisinstrument.
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Proposedlegislationindicatesthatthedividendspaid,inrelationtotheRandperpetualpreferenceshareslistedontheJSE,tononSouthAfricanresidentswillbeexemptfromthedividendstax.
Your attention is drawn to the fact that this legislation has not yet been finalised. All applicants must obtain their own advice in connection with the taxation consequences relating to their investment in the Rand perpetual preference shares.
4.5 InvestecplchasapremiumlistingontheLSEandhas537177588ordinarysharesoutstanding.
5. CONTROLLING AND MAJOR SHAREHOLDERS OF INVESTEC PLC AND INVESTEC LIMITED
TheCompany’sentireissuedordinarysharecapitalislistedontheLSEandtheJSE.SofarasInvestecplcisaware,asat31January2011,thefollowingaretheonlyshareholdersholdingmorethan5%ofInvestecplc’sissuedordinarysharecapitalandaccordinglythereisnocontrollingshareholderinInvestecplcasdefinedintheListingsRequirementsoftheJSE:
Number of PercentageShareholder shares held shareholding
PublicInvestmentCorporation(ZA) 75598487 14.1OldMutualAssetManagers(ZA) 28780013 5.4
Cumulative total 104 378 500 19.5
6. DETAILS OF THE OFFER FOR SUBSCRIPTION
6.1 Salient terms of the Rand perpetual preference shares
Deemedvaluefordividendpurposes R100
PrimeRate 9%
PreferenceDividendRate 95%
Initialannualdividendyieldbasedonthedeemedvalue 8.55%
MinimumRandvalueofsubscriptionpersubscriberactingasprincipal R1 000 000
Maximumamounttoberaisedintermsoftheofferforsubscription R750 000 000
6.2 Times and dates of the opening and closing of the offer for subscription
Openingdateoftheofferforsubscription(12:00) 17 June 2011
Closingdateoftheofferforsubscription(17:00) 22 June 2011
Proposedlistingdate(09:00) 29 June 2011
ApplicantsapplyingfordematerialisedRandperpetualpreferencesharesmustinformtheirCSDPorbrokeroftheirapplicationbythecut-offtimestipulatedbytheirCSDPorbrokerintermsoftheiragreement.
6.3 Condition to the listing
ApplicationhasbeenmadetotheJSEtolisttheRandperpetualpreferencesharesintheSpecialistSecurities–“PreferenceShares”sector.ThenumberofRandperpetualpreferencesharestobelistedwillbedeterminedontheclosingdateoftheoffer.ThelistingissubjecttotheconditionthatInvestecplcmeetstherequirementsoftheJSEinrespectoftherequisitespreadofpreferenceshareholders,beingaminimumof50publicshareholders,excludingemployeesandtheirassociates.
TheJSE’sapprovalofthelistingoftheRandperpetualpreferencesharesisnottobetakeninanywayasanindicationofthemeritsofInvestecplc.TheJSEhasnotverifiedtheaccuracyandtruthofthecontentsofthedocumentationandtotheextentpermittedbylaw,theJSEwillnotbeliableforanyclaimofwhateverkind.
ClaimsagainsttheJSEGuaranteeFundmayonlybemadeinrespectoftradingintheseRandperpetualpreferencesharesontheJSEandinaccordancewiththetermsoftherulesoftheGuaranteeFund,andcaninnowayrelatetotheissueofpreferencesharesbyInvestecplc.
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6.4 Applications
ApplicationstosubscribeforRandperpetualpreferencesharesintermsoftheofferforsubscriptionmustbemadeinaccordancewiththeapplicationproceduresetoutbelow:
6.4.1 Application form
ApplicationsforcertificatedRandperpetualpreferencesharesmayonlybemadeontheapplicationform(blue),whichaccompaniesthisPre-listingStatement,andinaccordancewiththerequirements,termsandconditionssetoutintheapplicationformandthisPre-listingStatement.ApplicationsforRandperpetualpreferencesharessubmittedthroughCSDPsorbrokersmustbemadeinaccordancewiththeagreementgoverningtherelationshipwiththeCSDPorbrokerandbythecut-offtimestipulatedbythem.
ApplicationformsandfurthercopiesofthisPre-listingStatementcanbeobtainedduringnormalbusinesshoursprior to theclosingof theoffer for subscription from InvestecLimitedat100GraystonDrive,Sandown,Sandton,2196aswellastheSponsorsandtheTransferSecretaries,theaddressesofwhicharesetoutinthe“CorporateinformationrelatingtoInvestecplc”sectionofthisPre-listingStatement.
6.4.2 Minimum value and number
InvestorswillsubscribeforaRandvalueofperpetualpreferenceshares.TheminimumRandvalueofsubscriptionpersubscriberactingasprincipalisR1000000.Applicationsmustbemadeforaminimumnumberof1000Randperpetualpreference sharesper subscriberactingasprincipal. Subject to theprovisionsinparagraph6.4.6ofthisPre-listingstatement,theissuepriceperRandperpetualpreferencesharewillbeatthedeemedvalueofR100.Theinitialannualdividendyieldperpreferencesharewillbedeterminedontheclosingdateoftheofferforsubscriptionaccordingtothefollowingformula:
Primeratexpreferencedividendratexdeemedvalue
Initialannualdividendyield% = Deemedvalue
6.4.3 Fractions
FractionsofRandperpetualpreferenceshareswillnotbeissued.Ifafractiondoesarise,acashrefundwillbemade.
6.4.4 Applications irrevocable
Applicationswillbe irrevocableandmaynotbewithdrawnoncereceivedby Investecplcand/or theTransferSecretaries.
6.4.5 Copies
Copiesorreproductionsoftheapplicationformwillnotbeaccepted.
6.4.6 Reservation of rights
TheDirectorsofInvestecplcreservetherighttoacceptorrefuseanyapplication(s),eitherinwholeorinpartinaccordancewiththeproceduresetoutinparagraph6.8ofthisPre-listingStatement,ortoabateanyorallapplication(s)(whetherornotreceivedtimeously)insuchmannerastheymay,intheirsoleandabsolutediscretion,determine.NotethatthisreservationofrightsappliestoanyoftheapplicationsfortheRandperpetualpreferenceshareduringthesubscriptionperiod.
The Directors have the right to increase the amount of permanent capital raised through the issueofRandperpetualpreference sharesbyundertaking a separateprivateplacementofRandperpetualpreferencesharesduringorsubsequenttotheoffer forsubscription.The issuepriceof theseprivateplacementsmaybenegotiatedbetweenpartiesdependingonthemarketconditionsatthetime.
Atthedateofoffer forsubscription,nooptionsorpreferentialrightsofanykindhavebeengranted,proposedorarrangedwithanypersonstosubscribefortheRandperpetualpreferenceshares.
6.4.7 Receipts
Receiptswillnotbeissuedforapplications,applicationmoniesorsupportingdocumentsreceived.
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6.4.8 Minors and deceased estates
Nodocumentaryevidenceofcapacitytoapplyneedaccompanytheapplicationform,butInvestecplcreservestherighttocalluponanyapplicanttosubmitsuchevidencefornoting,whichevidencewillbeheldonfilewiththeTransferSecretariesorreturnedtotheapplicantattheapplicant’srisk.
Randperpetualpreferencesharesmaynotbeappliedforinthenameofadeceasedestate.
6.4.9 Submission of application forms
6.4.9.1 CertificatedRandperpetualpreferenceshares
Submissionofapplicationformsmayonlybemadeeitherbyhanddeliveryorpostaldeliveryassetoutbelow:
Handdelivery
Application formsmustbedeliveredbyhand inasealedenvelope,marked“Investec plc: Offer for Subscription”,togetherwiththepaymentreferredtobelow,toComputershareInvestorServicesProprietaryLimited,GroundFloor,70MarshallStreet,Johannesburg,2001,soastobereceivedbynolaterthan17:00onWednesday,22June2011.
Postaldelivery
Applicationformsmustbeposted,attheriskoftheapplicantconcerned,inasealedenvelope,marked“Investec plc: Offer for Subscription”, togetherwiththepaymentreferredtobelow,toComputershareInvestorServicesProprietaryLimited,POBox61763,Marshalltown,2107,soastobereceivedbynolaterthan17:00onWednesday22June2011.
6.4.9.2 DematerialisedRandperpetualpreferenceshares
In respect of those applicants opting for dematerialised Rand perpetual preference shares,applicationformsmustbesenttotheapplicants’dulyappointedCSDPorbroker,inthemannerandtimestipulatedintheagreementgoverningtheirrelationshipwithsuchCSDPorbroker,togetherwiththemethodofpaymentasstipulatedinsuchagreement.TheCSDPorbrokerwillthenprocesssuchapplicationselectronicallywiththeTransferSecretaries.
Nolateapplicationswillbeaccepted,unlessapprovedbytheDirectorsofInvestecplc.
6.4.10 Payment
6.4.10.1 CertificatedRandperpetualpreferenceshares
Eachapplication formmustbeaccompaniedbypaymentof thetotalmonetaryvalueof theRandperpetualpreferencesharesappliedforbywayofachequeorbanker’sdraftinRands,uptoamaximumofR5000000(fivemillionRand),crossed“nottransferable”withthewords“orbearer”deletedanddrawninfavourof“Investec plc: Offer for Subscription”.Suchchequesand/orbanker’sdraftswillbedepositedimmediatelyforpayment.Shouldanychequeorbanker’sdraftbedishonoured,theDirectorsofInvestecplc,intheirabsolutediscretion,mayregardtherelevantapplicationasrevokedortakesuchotherstepsinregardtheretoastheydeemfit.
6.4.10.2 DematerialisedRandperpetualpreferenceshares
Eachapplicationmustbemadetothesubscriber’sCSDPorbroker intermsoftherelevantcustody agreement. Paymentof the totalmonetary valueof theRandperpetual preferencesharesappliedforinRandswillbemadeintermsoftheexistingagreementwiththeappointedCSDPorbroker.Thedeliveryversuspaymentmethodwillapply.
6.4.11 Application monies
TheamountpayableinrespectoftheapplicationforRandperpetualpreferencesharesintermsoftheofferforsubscriptionispayableinfullinthecurrencyofSouthAfrica.
AllmoniesreceivedinrespectofapplicationsforcertificatedRandperpetualpreferenceshareswillbeheldbyInvestecplcinadesignated“trust”accountwitharegisteredSouthAfricanbankuntilthelistinghasbecomeunconditional.Iftheconditionreferredtoinparagraph6.3ofthisPre-listingStatementisnotmetbytheclosingdateoftheofferforsubscription,orifthereareover-subscriptions,orInvestecplcdeterminesinitsabsolutediscretionnottoproceedwiththeofferforsubscription,suchmonieswillberefundedintotheaccountoftheshareholder,withoutinterest,withinsevenbusinessdaysofsuchdate.
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6.4.12 Issue of Rand perpetual preference shares
PerpetualpreferencesharesappliedforandsubscribedforintermsofthisPre-listingStatementwillbeissuedattheexpenseofInvestecplc.
AllRandperpetualpreferenceshares issued intermsofthisPre-listingStatementwillbeallottedandissuedsubjecttotheprovisionsoftheArticlesofAssociationofInvestecplc.
6.4.13 Trading of Rand perpetual preference shares
TheJSEsettlestradesthroughStrate.TheprincipalfeaturesofStrateareasfollows:
• tradesexecutedontheJSEmustbesettledonaT+5basis,beingfivebusinessdaysafterthedateofthetrade;
• therearepenaltiesforlatesettlement;
• electronicrecordofownershipreplacessharecertificatesandphysicaldeliverythereof;and
• allinvestorsarerequiredtoappointeitherabrokerorCSDPtoactontheirbehalfandtohandletheirsettlementrequirements.
TheRandperpetual preference shareswill be listedon the listing date against receipt of applicationmoniesfromaCSDPorbroker.TheRandperpetualpreferenceshareswhichwillonlybeissuedafterthecloseoftheofferforsubscriptionandfollowingtheirlistingwillbetradedontheJSEinelectronic(dematerialised)form.ApplicantswhoappliedfordematerialisedRandperpetualpreferencesharesandwhowishtoholdRandperpetualpreferencesharesincertificatedformshouldrematerialisetheirRandperpetual preference shares after the close of the offer for subscription. This will incur a cost. Anypreference shareholder who rematerialises his Rand perpetual preference shareswill not be able totradesuchRandperpetualpreferenceshares.Shouldhewishtodoso,hewillhavetodematerialisethecertificatedRandperpetualpreferenceshares.
6.5 Selling restrictions
General
Noactionhasbeenorwillbetakeninanyjurisdiction,exceptSouthAfrica,thatwouldpermitapublicofferingoftheRandperpetualpreferenceshares,orpossessionordistributionofthisdocumentoranyotherofferingmaterial in any country or jurisdiction other than South Africa where action for that purpose is required.Accordingly,theRandperpetualpreferencesharesmaynotbeofferedorsold,directlyorindirectly,andneitherthisdocumentnoranyotherofferingmaterialoradvertisementinconnectionwiththeRandperpetualpreferencesharesmaybedistributedorpublishedinorfromanycountryor jurisdictionotherthanSouthAfricaexceptundercircumstancesthatwillresultincompliancewithanyandallapplicablerulesandregulationsofanysuchcountryorjurisdiction.Personsintowhosepossessionthisdocumentcomesshouldinformthemselvesaboutandobserveanyrestrictionsonthedistributionof thisdocumentandtheoffer forsubscriptioncontained inthisdocument.Anyfailuretocomplywiththeserestrictionsmayconstituteaviolationofthesecuritieslawsofanysuch jurisdiction.ThisdocumentdoesnotconstituteanoffertosubscribeforanyoftheRandperpetualpreferencesharesofferedherebytoanypersoninanyjurisdictiontowhomitisunlawfultomakesuchofferorsolicitationinsuchjurisdiction.
United States
TheRandperpetualpreferenceshareshavenotbeenandwillnotberegisteredundertheUSSecuritiesActof1933(the“SecuritiesAct”)and,subjecttocertainexceptions,maynotbeofferedorsoldwithintheUnitedStates.TheRandperpetualpreferencesharesarebeingofferedandsoldoutsideoftheUnitedStatesinrelianceonRegulationSoftheSecuritiesAct.
In addition, until 40days after the commencementof theofferingof theRandperpetual preference sharesanofferorsaleofRandperpetualpreferenceshareswithintheUnitedStatesbyanydealer(whetherornotparticipatingintheoffering)mayviolatetheregistrationrequirementsoftheSecuritiesActifsuchofferorsaleismadeotherwisethaninaccordancewithRule144AundertheSecuritiesAct.
European Economic Area
InrelationtoeachRelevantMemberStateanoffertothepublicofanyRandperpetualpreferenceshareswhichare thesubjectof theofferingcontemplatedbythisPre-listingStatementmaynotbemade in thatRelevant
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MemberStatesaveforanofferpursuanttoanyofthefollowingexemptionsundertheProspectusDirective,iftheyhavebeenimplementedinthatRelevantMemberState:
• tolegalentitieswhichareauthorisedorregulatedtooperateinthefinancialmarketsor,ifnotsoauthorisedorregulated,whosecorporatepurposeissolelytoinvestinsecurities;
• toanylegalentitywhichhastwoormoreof:(1)anaverageofatleast250employeesduringthelastfinancialyear; (2) a totalbalance sheetofmore than€43000000and (3) anannualnet turnoverofmore than€50000000,asshowninitslastannualorconsolidatedaccounts;
• to fewer than 100 natural or legal persons (other than qualified investors as defined in the ProspectusDirective);or
• inanyothercircumstancesfallingwithinArticle3(2)oftheProspectusDirective,
providedthatnosuchofferofRandperpetualpreferencesharesshallresultinarequirementforthepublicationbyInvestecplcortheleadsponsorofaprospectuspursuanttoArticle3oftheProspectusDirective.
Forthepurposesofthisprovision,theexpressionan“offerforsubscription”inrelationtoanyRandperpetualpreferencesharesinanyRelevantMemberStatemeansthecommunicationinanyformandbyanymeansofsufficientinformationonthetermsoftheofferandanyRandperpetualpreferencesharestobeofferedsoastoenableaninvestortodecidetopurchaseanyRandperpetualpreferenceshares,asthesamemaybevariedinthatRelevantMemberStatebyanymeasureimplementingtheProspectusDirectiveinthatRelevantMemberState.
United Kingdom
Members of the public in the United Kingdom are not eligible to take part in the offer for subscription.ThisdocumentandthetermsandconditionssetouthereinaredirectedintheUnitedKingdomonlyatpersonswho:(i)haveprofessionalexperienceinmattersrelatingtoinvestmentsfallingwithinArticle19(5)oftheFinancialServicesandMarketsAct2000(FinancialPromotion)Order2005(the‘Order’);or(ii)arepersonsfallingwithinArticle49(2)(a)to(d)oftheOrderor(iii)arepersonstowhomitmayotherwisebelawfullycommunicated(allsuchpersonsreferredtoin(i)to(iii)togetherbeingreferredtoas‘RelevantPersons’).ThisdocumentandthetermsandconditionssetoutinthisdocumentmustnotbeactedonorreliedonbypersonsintheUnitedKingdomwhoarenotrelevantpersons.AnyinvestmentorinvestmentactivitytowhichthisdocumentandthetermsandconditionssetoutinthisdocumentrelatesisavailableintheUnitedKingdomonlytoRelevantPersonsandwillbeengagedinonlywithRelevantPersons.
6.6 Exchange Control Regulations
SetoutbelowisasummaryoftheExchangeControlRegulationsrelatingtotheofferforsubscriptionandtheacquisitionofRandperpetualpreferencesharesafterthelisting.
Investecplcisconsideredtobeaforeignentityandassuch,prevailingexchangecontrolregulationswillapplytotheacquisitionofRandperpetualpreferencesharesbySouthAfricanresidentshareholders.
Thissummaryis intendedasaguideonlyandisthereforenotcomprehensive. Ifyouareinanydoubtinthisregard,youshouldconsultanappropriateprofessionaladviser.
South African private individuals
SouthAfricanprivate individuals aswell as former SouthAfrican residentswhohave emigrated fromSouthAfricawillbeabletoinvestintheRandperpetualpreferencesharesthatarelistedontheJSEwithoutrestriction.Consequently,anacquisitionofInvestecplcRandperpetualpreferencesharesbyaSouthAfricanindividualwillnotaffectsuchindividual’sannualoffshoreinvestmentallowanceofR4000000.
South African institutional investors
SouthAfrican retirement funds, long-term insurers, collective investment schememanagement companies aswellasinvestmentmanagerswhohaveregisteredwithExchangeControlasinstitutionalinvestorsforExchangeControl purposeswill be able to invest in theRandperpetual preference shares using their existing foreigninvestmentallowance.Retailassetsrefertoassetsreceivedbysuchinstitutionalinvestors.
South African corporate entities
Similartoprivateindividuals,SouthAfricancorporateentitiesareabletoinvestinthepreferenceshareswithoutrestriction.Fortheproceduretoobtainregulatoryapproval for foreign investments,SouthAfricancorporateentitiesshouldconsulttheirprofessionaladvisers.
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Exchange Control provisions applicable to South African residents in respect of acquisition issues and rights issues by UK companies that are listed on the JSE
SouthAfricaninstitutionalinvestorswillbeallowedtoexercisetheirrightsintermsofanysubsequentrightsofferofRandperpetualpreferenceshares.
SouthAfricaninstitutionalinvestorswillbegivenaperiodof12 monthstorealigntheirportfoliosshouldtheybeinexcessoftheiroffshoreinvestmentallowancesasaresultofexercisingtheirrights.
Non-residents of the common monetary area
Non-residentsofthecommonmonetaryareamayacquireRandperpetualpreferencesharesontheJSE,providedthatpaymentisreceivedinaforeigncurrencyorRandfromanon-residentaccount.ThereisnorestrictiononthenumberofRandperpetualpreferencesharestheychoosetoinvestin.
6.7 Underwriting and minimum subscription
The offer for subscription is not underwritten. The offer for subscription is not conditional on Investec plcreceiving applications for aminimumaggregate subscription. The listingwill occur, regardless of the amountraised,subjectonlytotheconditionreferredtoinparagraph6.3ofthisPre-listingStatement.Subscriptionscanonlybemadeatanacquisitioncost,forasingleaddresseeactingasprincipal,ofnotlessthanR1000000.
6.8 Over-subscriptions
TheDirectorsofInvestecplcreservetherighttoacceptorrefuseallsubscriptions,inwholeorpart.
Ifapplicable,applicationsmaybereducedonanequitablebasis,asdeterminedbytheDirectors intheirsolediscretion,subjecttotheminimumsubscriptionamountofR1000000,forasingleaddresseeactingasprincipal.
6.9 Brokerages and commissions
Marketrelatedcommissionswithinaspecifiedrangewillbepayabletobrokersand/oragentswhoplaceRandperpetualpreferenceshares.Thesewillbenegotiatedindividuallywiththebrokers.
7. EXPENSES OF THE OFFER FOR SUBSCRIPTION AND LISTING
Theestimatedcostsof thetransactionareR7625456beforeVAT.Thebreakdownof theseestimatedcostsareoutlinedbelow:
Estimated costDescription R
InvestecCorporateFinance–Advisorandsponsor 2 575 000Ince–Publishingandprinting 50 000Computershare–TransferSecretary 30 000Strate–Electronicsettlementagent 26 450JSEdocumentationandlistingfee 156 006Capitalraisingfees–1.5%ofexpectedcapitalraised 4 500 000Linklaters–LegalCounsel 288 000
Total 7 625 456
8. ADVISERS’ INTERESTS
NoneoftheadvisersofInvestecplchadaninterestintheissuedsharecapitalofInvestecplcat28February2011.
9. MATERIAL CHANGES
OtherthanintheordinarycourseofbusinessorassetoutinthisPre-listingStatement,therehavebeennomaterialchangesinthefinancialortradingpositionoftheGroupthathaveoccurredsincethereleaseofInvestec’sinterimresultsforthe6monthsended30September2010.
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10. MATERIAL CONTRACTS, ACQUISITIONS OR DISPOSALS AND BORROWINGS
Allmaterialcontracts,acquisitionsordisposalsandparticularsofborrowingsbyInvestecinthepastthreeyears,appearintheannualfinancialstatementsofInvestecfortheyearsending31March2008,2009and2010,whichareavailableforinspectionasperparagraph14ofthisPre-listingStatement.
11. DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors, whose names and details are given in paragraph 3.1 of this Pre-listing Statement, collectively andindividually,accept full responsibility for theaccuracyof the informationcontained in thisPre-listingStatementandcertifythat,tothebestoftheirknowledgeandbelief,therearenofactsthathavebeenomittedwhichwouldmakeanystatementhereinfalseormisleading,andthattheyhavemadeallreasonableenquiriesinthisregardandthatthisPre-listingStatementcontainsallinformationrequiredbylawandtheJSEListingsRequirements.
12. LITIGATION STATEMENT
TheDirectorsarenotawareofanylegalorarbitrationproceedings(includinganysuchproceedingsthatarependingor threatened),whichmayhaveor havehad amaterial impacton the financial positionof theGroupduring the12monthsprecedingthedateofthisPre-listingStatement.
13. EXPERTS’ CONSENTS
TheinvestmentbankandjointsponsorandleadsponsorhaveconsentedinwritingtoactinthecapacitiesstatedandtotheirnamesbeingincludedinthisPre-listingStatementandhavenotwithdrawntheirconsentpriortothepublicationofthisPre-listingStatement.
14. DOCUMENTS AVAILABLE FOR INSPECTION
CopiesofthefollowingdocumentswillbeavailableforinspectionattheofficesofInvestecLimitedat100GraystonDrive,Sandown,Sandton2196,SouthAfrica,duringnormalbusinesshours(excludingSaturdays,SundaysandSouthAfricanpublicholidays)fromthedateofissueofthisPre-listingStatementuptoandincludingWednesday,29June2011:
• theArticlesofAssociationofInvestecplcandsubsidiaries;
• theAnnualReportsof Investecfortheyearsended31March2008,31March2009and31March2010whichcontain the audited annual financial statements of Investec for the three financial years ended 31March 2008,31March2009and31March2010andNoticesofAnnualGeneralMeetings;
• financialresultsfortheyearended31March2011;
• writtenconsentsoftheinvestmentbankandsponsortotheinclusionofitsnameinthisPre-listingStatementinthecontextandforminwhichtheyappear;and
• asignedcopyofthisPre-listingStatement.
SIGNED IN SANDTON BY OR ON BEHALF OF ALL THE DIRECTORS OF INVESTEC PLC ON 7 MARCH 2011.
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Annexure 1
HISTORICAL FINANCIAL INFORMATION ON INVESTEC
Thefinancialinformationforthethreefinancialyearsended31March2008,31March2009and31March2010setoutbelowhasbeenextractedfromInvestec’sannualfinancialstatementsfortheyearsended31March2008,31March2009and31March2010,respectively.ThesefinancialstatementsweresignedoffbyErnst&YoungLLP(statutoryauditors)andErnst&YoungInc.(registeredauditors),andwereallissuedwithoutqualification.ForafullreportoftheCompany’sauditedfinancialstatements,potentialinvestorsarereferredtoInvestec’sAnnualReportswhichareavailableforinspectioninaccordancewithparagraph14of thisPre-listingStatementandwhichmayalsobeobtained from Investec’swebsite(www.investec.com).
ACCOUNTING POLICIES
Basis of presentation
TheGroup financial statements are prepared in accordancewith International Financial Reporting Standards (IFRS), asadoptedbytheEuropeanUnion(EU)whichcomplywiththeIFRSsasissuedbytheInternationalAccountingStandardsBoard.At31March2010,IFRSstandardsasendorsedbytheEUareidenticaltocurrentIFRSsapplicabletotheGroup.TheGroupfinancialstatementshavebeenpreparedonahistoricalcostbasis,exceptforinvestmentproperties,availableforsaleinstruments,derivativefinancialinstruments,financialassetsandfinancialliabilitiesheldatfairvaluethroughprofitandlossorsubjecttohedgeaccounting,liabilitiesforcashsettledsharebasedpaymentsandpensionfundsurplusesanddeficitsthathavebeenmeasuredatfairvalue.
Accountingpoliciesappliedareconsistentwiththoseoftheprioryear,exceptfortheadoptionofthefollowingamendments:
• IFRS7–ImprovingDisclosuresaboutFinancialInstruments,anamendmenttoIFRS7
TheGrouphasappliedtheimprovementthatrequiresenhanceddisclosuresaboutfinancialinstruments.Theamendedstandardrequiresadditionaldisclosureaboutfairvaluemeasurementandliquidityrisk.
• IAS1–PresentationofFinancialStatements(revised)
Adoptionofthisstandardhasresultedinthereformattingofthestatementoftotalrecognisedgainsandlossesintoastatementofcomprehensiveincome.
ThesechangeshavehadnoimpactontherecognitionandmeasurementpoliciesappliedbytheGroup.
Basis of presentation – interim financial information
Theaccountingpoliciesappliedinthepreparationoftheresultsfortheperiodended30September2010areconsistentwiththoseadoptedinthefinancialstatementsfortheyearended31March2010,exceptfortheadoptionoftherevisedIFRS3–BusinessCombinations.Thisstandardisapplicabletoallbusinesscombinationseffectivefrom1April2010intheGroupaccounts.Themainchangearisingfromtheadoptionisthatacquisitionrelatedcostsareexpensedintheperiodinwhichthecostsareincurredandtheservicesrendered,exceptforcostsrelatedtotheissueofdebt(recognisedaspartoftheeffectiveinterestrate)andthecostofissueofequity(recogniseddirectlyinshareholders’equity).
These preliminary condensed consolidated financial statements have been prepared in terms of the recognition andmeasurementcriteriaofInternationalFinancialReportingStandards,andthepresentationanddisclosurerequirementsofIAS34,InterimFinancialReporting
Restatements
Offsetting of financial instruments
TheGroupappliesapolicyofoffsettingfinancialassetsandfinancialliabilitieswhenthereisbothanintentiontosettleonanetbasis(orsimultaneously)andalegalrighttooffsetexists.Withregardtoderivativeinstruments,theGroupidentifiedthatincertainisolatedinstancesoffsettingwasappliedinpriorfinancialperiodstoderivativeassetsandliabilitieswhereitisnotmarketpracticetosettlenet,whilstthelegalrighttosettlenetexists.Theimpactofthisrestatementonthebalancesheetofthetwoprioryearsandthe30September2009balancesheetisnotedbelow:
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31 March 31 March 30 September £’000 2009 2008 2009
RestatedDerivativefinancialinstrumentassets 1843143 1425587 1677224Derivativefinancialinstrumentliabilities 1456561 1001900 1377955
As previously reportedDerivativefinancialinstrumentassets 1582908 1305264 1453804Derivativefinancialinstrumentliabilities 1196326 881577 1154535
Change to previously reportedDerivativefinancialinstrumentassets 260235 120323 223420Derivativefinancialinstrumentliabilities 260235 120323 223420
Theaboverestatementshadnoimpactonequity,northenetcashpositionandareconsistentwiththerestatementsasdisclosedinthe2010annualreport.
Offsetting of intergroup interest received and interest paid
Onreview,itwasdetectedthatthegrossinterestincomeandexpense,asreportedat31March2010,hadnotappropriatelynettedcertainintergroupinterestincomeandexpensebetweenthetwolineitems.Whilstnetinterestincomewascorrectlyreported,therestatementtointerestreceivedandpaidisnotedbelow:
GBP’000 31 March 2010
RestatedInterestincome 2041153Interestexpense (1428067)
Net interest income 613 086
As previously reportedInterestincome 2726011Interestexpense (2112925)
Net interest income 613 086
Changes to previously reportedInterestincome (684858)Interestexpense 684858
Net interest income –
Theabove changehasno impact to the income statement (other than asnotedabove), balance sheetnor cash flowstatement.
Basis of consolidation
Investecconsistsoftwoseparatelegalentities,beingInvestecplcandInvestecLimitedthatoperateunderaDualListedCompany(DLC)structure.TheeffectoftheDLCstructureisthatInvestecplcanditssubsidiariesandInvestecLimitedanditssubsidiariesoperatetogetherasasingleeconomicentity,withneitherassumingadominantroleandaccordinglyarereportedasasinglereportingentityunderIFRS.
All subsidiariesandspecialpurposevehicles inwhich theGroupholdsmorethanonehalfof thevotingrightsoroverwhichithastheabilitytocontrol(eitherdirectlyorinsubstance)areconsolidatedfromtheeffectivedatesofacquisition(thatisfromwhencontrolexists)anduptotheeffectivedatesoflossofcontrol,exceptentitieswhichareclassifiedasnon-currentassetsheldforsale.Subsidiariesclassifiedasnon-currentassetsheldforsaleareconsolidatedinonelineitemasdiscontinued operations.
Entities,otherthansubsidiaryundertakings,inwhichtheGroupexercisessignificantinfluenceoveroperatingandfinancialpolicies,aretreatedasassociates.IntheGroupaccounts,associatesareaccountedforusingtheequitymethodfromthedatethatsignificantinfluencecommencesuntilthedatethatsignificantinfluenceceases,exceptasnotedbelow.
Thecombinedconsolidated financial statements include theattributableshareof theresultsandreservesofassociatedundertakings.TheGroup’sinterestsinassociatedundertakingsareincludedintheconsolidatedbalancesheetatcostplusthepostacquisitionchangesintheGroup’sshareofthenetassetsoftheassociate.
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In circumstanceswhere associatesor joint ventureholdings arise inwhich theGrouphas no strategic intention, theseinvestmentsareclassifiedas“venturecapital”holdingsandaredesignatedasheldatfairvaluethroughprofitandloss.
Allintergroupbalances,transactionsandunrealisedgainsandlosseswithintheGroupareeliminatedtotheextentthattheydonotreflectanimpairmenttotheasset.
Segmental reporting
AnoperatingsegmentisacomponentoftheGroupthatengagesinbusinessactivitiesfromwhichitmayearnrevenuesandincurexpenses,includingrevenuesandexpensesthatrelatetotransactionswithanyoftheGroups’othercomponents,whoseoperatingresultsarereviewedregularlybytheboardandforwhichdiscretefinancialinformationisavailable.
TheGroup’ssegmentalreportingispresentedintheformofabusinessanalysis.
ThebusinessanalysisispresentedintermsoftheGroup’ssixprincipalbusinessdivisionsandGroupServicesandOtherActivities.
AgeographicalanalysisisalsopresentedintermsofthemaingeographiesinwhichtheGroupoperatesrepresentingtheGroup’sexposuretovariouseconomicenvironments.
ForfurtherdetailontheGroup’ssegmentalreportingbasisrefertopages53to101oftheDivisionalreviewsectionoftheannualreport.
Goodwill
Goodwillrepresentsthenetexcessofthepurchaseconsiderationoverthefairvalueofnetidentifiableassetsofentitiesacquired. Goodwill is capitalised and tested for impairment at balance sheet dates or when there is an indication ofimpairment.Goodwillisallocatedtocashgeneratingunitsforthepurposesoftestingimpairmentbasedonthesynergiesexpectedinthebusinesscombination,withanyimpairmentsarisingbeingrecognisedimmediatelyintheincomestatement.Impairmentsrecognisedarenotreversedinsubsequentperiods.
IncircumstanceswheretheGroupacquiresaninterestinthenetfairvalueoftheacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesoverthecostoftheacquisition,theGroupreassesstheidentificationandmeasurementofallassetsandliabilities(includingcontingentliabilities)followingwhichanyremainingexcessisrecognisedimmediatelyinprofitandloss.
GoodwillarisingisdenominatedinthefunctionalcurrencyoftheforeignoperationandistranslatedtothepresentationcurrencyoftheGroup(poundsterling)attheapplicableclosingrate.
Goodwillarisingoninvestmentinassociatesisincludedwithintheinvestmentinassociates.
Share-based payments to employees
TheGroupengagesinequity-settledshare-basedpaymentsandincertainlimitedcircumstancescash-settledshare-basedpaymentsinrespectofservicesreceivedfromemployees.
Thefairvalueoftheservicesreceived inrespectofequity-settledshare-basedpayments isdeterminedbyreferencetothefairvalueofthesharesorshareoptionsonthedateofgranttotheemployee.Thecostoftheshare-basedpayment,togetherwithacorrespondingincreaseinequity,isrecognisedoverthevestingperiodofthegrantintheincomestatementonastraight-linebasis,basedonanestimateoftheamountofinstrumentsthatwilleventuallyvest.
Aliabilityandexpenseinrespectofcash-settledshare-basedpaymentsisrecognisedoverthevestingperiodofthegrantintheincomestatementonastraight-linebasis,basedonthefairvalueoftheinstrumentthatwilleventuallyvest.Theliabilityisrecognisedatthecurrentfairvalueateachbalancesheetdate,basedonanestimateofthenumberofinstrumentsthatwilleventuallyvest.Subsequenttovestingtheliabilityismeasuredatfairvalue,withgainsandlossesrecognisedintheincomestatementuntilsuchtimeastheliabilityissettled.
Fairvaluemeasurementsarebasedonoptionpricingmodels,takingintoaccounttherisk-freeinterestrate,volatilityoftheunderlyingequityinstrument,expecteddividendsandcurrentshareprices.
Wherethetermsofanequity-settledawardaremodified,theminimumexpenserecognisedinstaffcostsistheexpenseasifthetermshadnotbeenmodified.Anadditionalexpenseisrecognisedforanymodificationwhichincreasesthetotalfairvalueoftheshare-basedpaymentarrangement,orisotherwisebeneficialtotheemployeeasmeasuredatthedateofmodification.
Foreign currency transactions and foreign operations
ThepresentationcurrencyoftheGroupisPoundsSterling,beingthefunctionalcurrencyofInvestecplc.ThefunctionalcurrencyofInvestecLimitedisSouthAfricanRand.
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Foreignoperationsaresubsidiaries,associates,jointventuresorbranchesoftheGroup,theactivitiesofwhicharebasedinafunctionalcurrencyotherthanthatofreportingentity.ThefunctionalcurrencyofGroupentitiesisdeterminedbasedontheprimaryeconomicenvironmentinwhichtheentityoperates.
Onconsolidation,theresultsandfinancialpositionofforeignoperationsaretranslatedintothepresentationcurrencyoftheGroupasfollows:
• Assetsandliabilitiesforeachbalancesheetpresentedaretranslatedattheclosingrateatthedateofthebalancesheet
• Incomeandexpenseitemsaretranslatedatexchangeratesrulingatthedateofthetransaction
• Allresultingexchangedifferencesarerecognisedinothercomprehensiveincome(foreigncurrencytranslationreserve),whichisrecognisedintheincomestatementondisposaloftheforeignoperation
• Cashflowitemsaretranslatedattheexchangeratesrulingatthedateofthetransaction.
Foreigncurrencytransactionsaretranslatedintothefunctionalcurrencyoftheentityinwhichthetransactionarisesbasedonratesofexchangerulingatthedateofthetransaction.Ateachbalancesheetdateforeigncurrencyitemsaretranslatedasfollows:
• Foreigncurrencymonetaryitems(otherthanmonetaryitemsthatformpartofthenetinvestmentinaforeignoperation)aretranslatedusingclosingrates,withgainsandlossesrecognisedintheincomestatement
• Exchange differences arising on monetary items that form part of the net investment in a foreign operation aredeterminedusingclosingratesandrecognisedasaseparatecomponentofequity(foreigncurrencytranslationreserve)uponconsolidation,andisrecognisedintheincomestatementupondisposalofthenetinvestment
• Non-monetaryitemsthataremeasuredathistoricalcostsaretranslatedusingtheexchangeratesrulingatthedateofthetransaction.
Revenue recognition
Revenueconsistsofinterestincome,feeandcommissionincomeandprincipaltransactions.
Interest income is recognised in the income statement using the effective interest method. Fees charged on lendingtransactionsareincludedintheeffectiveyieldcalculationtotheextentthattheyformanintegralpartoftheeffectiveinterestyield,butexcludesthosefeesearnedforaseparatelyidentifiablesignificantact,whicharerecogniseduponcompletionoftheact.Feesandcommissionschargedinlieuofinterestarerecognisedasincomeaspartoftheeffectiveinterestrateontheunderlyingloan.
Theeffectiveinterestmethodisbasedontheestimatedlifeoftheunderlyinginstrument,and,wherethisestimateisnotreadilyavailable,thecontractuallife.
Feeandcommissionincomeincludesfeesearnedfromprovidingadvisoryservicesaswellasportfoliomanagement.Allsuchfeeandcommissionincomeisrecognisedasrevenuewhentherelatedservicesareperformed.Feeandcommissionincomeisonlyrecognisedwhenitcanbeestimatedreliably.
Principal transaction income includes trading profits, dividend income, gains and losses on financial assets and liabilitiesdesignatedasheldatfairvalueandfairvaluegainsandlossesoninvestmentproperties.DividendincomeisrecognisedwhentheGroup’srighttoreceivepaymentisestablished.
Tradingprofitsareshownnetofthefundingcostoftheunderlyingpositionsandincludestheunrealisedprofitsontradingportfolios,whicharemarkedtomarketdaily.Equityinvestmentsreceivedinlieuofcorporatefinancefeesareincludedintradingsecuritiesandvaluedaccordingly.
Fundingcostsallocatedagainsttradingprofitsaredisclosedinnote8oftheannualreport.
Includedinotheroperatingincomeisrevenuefromconsolidatedprivateequityinvestments.Operatingcostsassociatedwiththeseinvestmentsareincludedinadministrationexpenses.
Financial instruments
Financialinstrumentsareinitiallyrecognisedattheirfairvalueplus,forfinancialassetsorfinancialliabilitiesnotatfairvaluethroughprofitandloss,transactioncoststhataredirectlyattributabletotheacquisitionorissueofthefinancialassetsorfinancialliabilities.
Regularwaypurchaseandsalestransactionsinrespectoffinancialassetsthatrequiredeliveryofafinancialinstrumentwithinthetimeframeestablishedbymarketconventionarerecordedattradedate.
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Financial assets and liabilities held at fair value through profit and loss
Financialinstrumentsheldatfairvaluethroughprofitandlossincludeallinstrumentsclassifiedasheldastradingandthoseinstrumentsdesignatedasheldatfairvaluethroughprofitandloss.
Financialinstrumentsclassifiedasheldfortradingordesignatedasheldatfairvaluethroughprofitandlossarerecordedatfairvalueonthebalancesheetwithchangesinfairvaluerecognisedintheincomestatement.Financialinstrumentsareclassifiedastradingwhentheyareheldwiththeintentionofshort-termdisposal,heldwithintentionofgeneratingshort-termprofits,orarederivativeswhicharenotdesignatedaspartofeffectivehedges.Financial instrumentsdesignatedasheldatfairvaluethroughprofitandlossaredesignatedassuchoninitialrecognitionoftheinstrumentandremaininthisclassificationuntilderecognition.Incertaininstancesdebtinstrumentswhichcontainequityfeaturesaredesignatedasheldatfairvaluethroughprofitandloss.
Financialassetsandliabilitiesaredesignatedasheldatfairvaluethroughprofitandlossonlyif:
• It eliminates or significantly reduces an inconsistent measurement or recognition that would otherwise arise frommeasuringassetsorliabilitiesorrecognisingthegainsandlossesonthemondifferentbases;or
• Agroupoffinancialassets,financialliabilitiesorbothismanagedanditsperformanceisevaluatedonafairvaluebasisinaccordancewithadocumentedriskmanagementorinvestmentstrategy,andinformationabouttheGroupisprovidedinternallyonthatbasistotheGroup’skeymanagementpersonnel;and
• Ifacontractcontainsoneormoreembeddedderivatives(whichsignificantlymodifiesthecashflowsthatwouldberequiredby thecontract and isnot clearlyprohibited fromseparation from thehost contract) and theGrouphasdesignatedtheentirehybridcontractasafinancialinstrumentatfairvaluethroughprofitandloss.
Held-to-maturity financial assets
Held-to-maturityfinancialassetsarenon-derivativefinancialinstrumentswithfixedordeterminablepaymentsandmaturitydateswhichtheGrouphastheintentionandabilitytoholdtomaturity.Held-to-maturityassetsaremeasuredatamortisedcostusingtheeffectiveinterestmethod,lessimpairmentlosses.
Amortisedcostiscalculatedbytakingintoaccountanydiscountorpremiumonacquisitionandfeesthatareanintegralpartoftheeffectiveinterestrate.Theamortisationisincludedininterestincomeintheincomestatement.Thelossesarisingfromimpairmentofsuchinvestmentsarerecognisedintheincomestatement.
Loans and receivables
Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarketandexcludethefollowing:
• ThosethattheGroupintendstotradein,whichareclassifiedasheldfortrading,andthosethattheGroupdesignatesasatfairvaluethroughprofitandloss
• ThosethattheGroupdesignatesasavailableforsale
• Those forwhich the holdermay not recover substantially all of its initial investment, other thanbecauseof creditdeterioration,whichareaccountedforatfairvaluethroughprofitandloss.
Loansandreceivablesaremeasuredatamortisedcost,usingtheeffectiveinterestratemethod,lessimpairmentlosses.Theeffectiveinterestraterepresentstheratethatexactlydiscountsfutureprojectedcashflows,throughtheexpectedlifeofthefinancialinstrument,tothenetcarryingamountofthefinancialinstrument.Includedinthecalculationoftheeffectiveinterestrateisanydiscountorpremiumonacquisitionandfeesthatareanintegralpartoftheeffectiveinterestrate.
Lossesarisingfromimpairmentofsuch investmentsarerecognised inthe incomestatement line“Impairment lossesonloansandadvances”.
Available for sale financial assets
Availableforsalefinancialassetsarethosewhicharedesignatedassuchordonotqualifytobeclassifiedasdesignatedatfairvaluethroughprofitorloss,held-to-maturity,orloansandreceivables.Theyincludestrategicallyheldequityinstrumentsthatarenotassociates,jointventuresorsubsidiariesoftheGroup.Further,certainloansandreceivablesthatareheldatfairvalueduetobeingquotedonanactivemarket,whichareneitheractivelytradednorheldtomaturityinstruments,areclassifiedasavailableforsalefinancialassets.
Financialassetsclassifiedasavailableforsalearemeasuredatfairvalueonthebalancesheet,withunrealisedgainsandlossesrecognisedinothercomprehensiveincome.Whentheassetisdisposedof,thecumulativegainorlosspreviouslyrecognisedinequityisrecognisedintheincomestatement.Interestearnedwhilstholdingavailableforsalefinancialassetsisreported
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as interest incomeusingtheeffective interestrate.Dividendsearnedwhilstholdingavailable forsale financialassetsarerecognisedintheincomestatementwhentherightofpaymenthasbeenestablished.
If an available for sale instrument is determined to be impaired, the respective cumulative unrealised losses previouslyrecognisedinequityareincludedintheincomestatementintheperiodinwhichtheimpairmentisidentified.
Impairmentsonavailableforsaleequityinstrumentsarenotreversedoncerecognisedintheincomestatement.
If,inasubsequentperiod,thefairvalueofadebtinstrumentclassifiedasavailableforsaleincreasesandtheincreasecanbeobjectivelyrelatedtoaneventoccurringaftertheimpairmentlosswasrecognisedintheincomestatement,theimpairmentlossisreversed,limitedtotheimpairmentvaluepreviouslyrecognisedintheincomestatement.
Financial liabilities
Financialliabilitiesareclassifiedasnon-trading,heldfortradingordesignatedasheldatfairvaluethroughprofitandloss.
Non-tradingliabilitiesarerecordedatamortisedcostapplyingtheeffectiveinterestratemethod.
Heldfortradingliabilitiesorliabilitiesdesignatedasheldatfairvaluethroughprofitandloss,aremeasuredatfairvalue.
Valuation of financial instruments
Allfinancialinstrumentsareinitiallyrecognisedatfairvalue.Oninitialrecognition,thefairvalueofafinancialinstrumentisthetransactionpriceunlessitisdeterminedappropriatethatthefairvalueofafinancialinstrumentismoreaccuratelydeterminedby comparisonwithotherobservable currentmarket transactions in the same instrument (i.e.withoutmodificationorrepackaging)orbasedonavaluationtechniquewhosevariablesincludeonlydatafromobservablemarkets.Incircumstanceswhereunobservabledatahasasignificantimpactonthevaluationofafinancialinstrument,theentiredifferencebetweenthemodeldeterminedfairvalueandthetransactionprice isnotrecognisedoninitialrecognition.Thedifferencearisingisrecognisedintheincomestatementoverthelifeofthetransaction,orwheninputsbecomeobservable,orwhenthetransactioniseffectivelyclosedout.
Subsequenttoinitialrecognitionthefollowingfinancialinstrumentsaremeasuredatfairvalue:
• Fixedmaturitysecuritiesclassifiedastrading,heldatfairvaluethroughprofitorlossandavailableforsale
• Equitysecurities
• Privateequityinvestments
• Derivativepositions
• Loansandadvancesdesignatedasheldatfairvaluethroughprofitandloss
• Loansandadvancesdesignatedasavailableforsale
• Financialliabilitiesclassifiedastradingordesignatedasheldatfairvaluethroughprofitandloss.
Subsequenttoinitialrecognition,thefairvalueoffinancialinstrumentsquotedinanactivemarketisbasedonpublishedpricequotations.Wheremarketpricesarenotavailable,fairvalueisdeterminedbydiscountingtheexpectedcashflows,usingmarketinterestratestakingintoaccountthecreditqualityanddurationoftheinvestment.Incertaininstancesmodelpricingmaybeused todetermine fair values. Forprivateequity investments thatarenotpublicly traded,managementusescomparisonstosimilarlistedcompanies,relevantthirdpartyarms’lengthtransactionsandotherdataspecifictotheinvestment.
Impairment of financial assets held at amortised cost
FinancialassetscarriedatamortisedcostareimpairedifthereisobjectiveevidencethattheGroupwouldnotreceivecashflowsaccordingtotheoriginalcontractualterms.Financialassetsareassessedforobjectiveevidenceofimpairmentatleastateachbalancesheetreportingdate.Thetestforimpairmentisbasedeitheronspecificfinancialassetsorcollectivelyonaportfolioofsimilar,homogeneousassets.Overandaboveindividualcollectiveimpairmentsraisedatspecificportfoliolevels,theGrouphas implementedacollective impairmentallowanceatacentral level(withintheGroupServicesandOtherbusinesssegment)thattakesintoaccountmacroeconomicfactors,mainlydrivenbydatarelatedtotheprevailingcreditmarketsandwhichindicateincurredbutnotspecificallyidentifiedlossesacrosstheloanportfolios(thatis,exposuresinallbusinesssegments).Assetsspecificallyidentifiedasimpairedareexcludedfromthecollectiveassessment.
Impairmentsarecreditedtoanallowanceaccountwhich iscarriedagainst thecarryingvalueof financialassets. Interestcontinuestobeaccruedonthereducedcarryingamountbasedontheoriginaleffectiveinterestrateoftheasset.Loanstogetherwiththeassociatedallowancearewrittenoffwhenthereisnorealisticprospectoffuturerecoveryandallcollateralhasbeen realisedorhasbeen transferred to theGroup.Anallowance for impairment isonly reversedwhen there isobjectiveevidencethatthecreditqualityhasimprovedtotheextentthatthereisreasonableassuranceoftimelycollectionofprincipalandinterestintermsoftheoriginalcontractualagreement.
36
The impairment is calculated as the difference between the carrying value of the asset and the expected cash flows(includingnetproceedsonrealisationofcollateral)discountedattheoriginaleffectiverate.
Tocaterforanyshortfallbetweenregulatoryprovisionrequirements(intherespectivejurisdictions)andimpairmentsbasedontheprinciplesabove,atransfer ismadefromdistributabletonon-distributablereserves,beingtheregulatorygeneralriskreserve.Thenon-distributableregulatoryriskreserveensuresthatminimumregulatoryprovisioningrequirementsaremaintained.
Derecognition of financial assets and liabilities
Afinancialassetoraportionthereof,isderecognisedwhentheGroup’srightstocashflowshasexpired;orwhentheGrouphastransferreditsrightstocashflowsrelatingtothefinancialassets,includingthetransferofsubstantiallyalltheriskandrewardsassociatedwiththefinancialassetsorwhencontroloverthefinancialassetshaspassed.
Afinancialliabilityisderecognisedwhenitisextinguished,thatiswhentheobligationisdischarged,cancelledorexpired.
Reclassification of financial instruments
The bank may reclassify, in certain circumstances, non-derivative financial assets out of the ‘Held-for-trading’ categoryandintothe ‘Availableforsale’, ‘Loansandreceivables’,or ’Held-tomaturity’categories. Itmayalsoreclassify, incertaincircumstances,financialinstrumentsoutofthe‘Availableforsale’categoryandintothe’Loansandreceivables’category.Reclassificationsarerecordedatfairvalueatthedateofreclassification,whichbecomesthenewamortisedcost.
Derivative instruments
AllderivativeinstrumentsoftheGrouparerecordedonbalancesheetatfairvalue.Positiveandnegativefairvaluesarereportedasassetsandliabilitiesrespectivelyandareoffsetwhenthereisbothanintentiontosettlenetandalegalrighttooffsetexists.
DerivativepositionsareenteredintoeitherfortradingpurposesoraspartoftheGroup’sassetandliabilitymanagementactivitiestomanageexposurestointerestrateandforeigncurrencyrisks.Bothrealisedandunrealisedprofitsandlossesarisingonderivativesarerecognisedintheincomestatementaspartoftradingincome(otherthancircumstancesinwhichcashflowhedgingisappliedasdetailedbelow).
Derivativeinstrumentstransactedaseconomichedgesbutwhichdonotqualifyforhedgeaccountingandderivativesthatareenteredintofortradingpurposesaretreatedinthesamewayasinstrumentsthatareheldfortrading.
Hedge accounting
TheGroupapplieseitherfairvalueorcashflowhedgeaccountingwhenthetransactionsmeetthespecifiedhedgeaccountingcriteria.Toqualifyforhedgeaccountingtreatment,theGroupensuresthatallofthefollowingconditionsaremet:
• At inceptionof thehedge theGroup formally documents the relationshipbetween thehedging instrument(s) andhedgeditem(s)includingtheriskmanagementobjectivesandthestrategyinundertakingthehedgetransaction
• Thehedgeisexpectedtobehighlyeffectiveinachievingoffsetting,thatiswithinarangeof80%to125%,changesinfairvalueorcashflowsattributabletothehedgedrisk,consistentwiththeoriginallydocumentedriskmanagementstrategyforthatparticularhedgingrelationship
• Forcashflowhedges,aforecastedtransactionthatisthesubjectofthehedgemustbehighlyprobableandmustpresentanexposuretovariationsincashflowsthatcouldultimatelyaffectprofitandloss
• Theeffectivenessofthehedgecanbereliablymeasured,i.e.thefairvalueorcashflowsofthehedgeditemthatareattributabletothehedgedriskandthefairvalueofthehedginginstrumentcanbereliablymeasured
• Thehedgeeffectivenessisassessedonanongoingbasisanddeterminedactuallytohavebeenhighlyeffectivethroughoutthefinancialreportingperiodsforwhichthehedgewasdesignated.
Hedge accounting is discontinuedwhen it is determined that the instrument ceases to be highly effective as a hedge;thederivativeexpires,orissold,terminatedorexercised;whenthehedgeitemmaturesorissoldorrepaid;orwhenaforecastedtransactionisnolongerdeemedhighlyprobable.
Forqualifyingfairvaluehedges,thechangeinfairvalueofthehedginginstrumentisrecognisedintheincomestatement.Changesinfairvalueofthehedgeditemthatisattributabletothehedgedriskarealsorecognisedintheincomestatement.
For qualifying cash flowhedges in respect of non-financial assets and liabilities, the change in fair valueof the hedginginstrument,relatingtotheeffectiveportionisinitiallyrecognisedincomprehensiveincomeandisincludedintheinitialcostofanyasset/liabilityrecognisedorinallothercasesreleasedtotheincomestatementwhenthehedgedfirmcommitment
37
orforecastedtransactionaffectsnetprofit.Iftheforecasttransactionorfirmcommitmentisnolongerexpectedtooccur,thebalanceincludedinothercomprehensiveincomeisreclassifiedtotheincomestatementimmediatelyandrecognisedinprincipaltransactions.
Forqualifyingcashflowhedgesinrespectoffinancialassetsandliabilities,thechangeinfairvalueofthehedginginstrument,whichrepresentsaneffectivehedge,isinitiallyrecognisedinequityandisreleasedtotheincomestatementinthesameperiodduringwhich the relevant financial assetor liability affectsprofitor loss.Any ineffectiveportionof thehedge isimmediatelyrecognisedintheincomestatement.
Embedded derivatives
Totheextentthataderivativemaybeembeddedinahostcontractandthehostcontractisnotcarriedatfairvaluewithchangesinfairvaluerecordedintheincomestatement,theembeddedderivativeisseparatedfromthehostcontractandaccountedforasastandalonederivativeifandonlyif:
• Theeconomiccharacteristicsandrisksoftheembeddedderivativearenotcloselyrelatedtotheeconomiccharacteristicsandrisksofthehostcontractand;
• Aseparateinstrumentwiththesametermsastheembeddedderivativewouldmeetthedefinitionofaderivative.
Offsetting of financial assets and liabilities
Financialassetsandliabilitiesareoffsetwhenthereisbothanintentiontosettleonanetbasis(orsimultaneously)andalegalrighttooffsetexists.
Issued debt and equity financial instruments
Financial instruments issued by the Group are classified as liabilities if they contain an obligation to transfer economicbenefits. Financial instruments issuedby theGroupare classified asequitywhere they conferon theholder a residualinterestintheGroup,andtheGrouphasnoobligationtodelivereithercashoranotherfinancialassettotheholder.Thecomponentsofcompoundissuedfinancialinstrumentsareaccountedforseparatelywiththeliabilitycomponentseparatedfirstandanyresidualamountbeingallocatedtotheequitycomponent.
Equity instruments issued by subsidiaries of Investec plc or Investec Limited are recorded as minority interests onbalancesheet.
Equityinstruments areinitiallymeasurednetofdirectlyattributableissuecosts.
Treasury shares represent issuedequity repurchasedby theGroupwhichhasnotbeencancelled.Treasury shares aredeductedfromshareholders’equityandrepresentthepurchaseconsideration,includingdirectlyattributablecosts.Wheretreasurysharesaresubsequentlysoldorreissued,netproceedsreceivedareincludedinshareholders’equity.
DividendsonordinarysharesarerecognisedasadeductionfromequityattheearlierofpaymentdateorthedatethatitisapprovedbyInvestecplc(inrelationtodividendsdeclaredbyInvestecplc)andInvestecLimited(inrelationtodividendsdeclaredbyInvestecLimited)shareholders.
Sale and repurchase agreements (including securities borrowing and lending)
Wheresecuritiesaresoldsubjecttoacommitmenttorepurchasethem,theyremainonbalancesheet.Proceedsreceivedarerecordedasaliabilityonbalancesheetunder“Repurchaseagreementsandcashcollateralonsecuritieslent”.Securitiesthatarepurchasedunderacommitmenttoresellthesecuritiesatafuturedatearenotrecognisedonthebalancesheet.Theconsiderationpaidisrecognisedasanassetunder“Reverserepurchaseagreementsandcashcollateralonsecuritiesborrowed”.Thedifferencebetweenthesaleandrepurchasepricesistreatedasinterestexpenseandisaccruedoverthelifeoftheagreementusingtheeffectiveinterestratemethod.
Securitiesborrowingtransactionsthatarenotcashcollateralisedarenotincludedinthebalancesheet.Securitieslendingandborrowingtransactionswhicharecashcollateralisedareaccountedforinthesamemannerassecuritiessoldorpurchasedsubjecttorepurchasecommitments.
Financial guarantees
Financialguaranteesareinitiallyrecognisedatfairvalue,beingthepremiumreceived.Subsequenttoinitialrecognition,theliabilityundereachguaranteeismeasuredatthehigheroftheamortisedpremiumandthebestestimateofexpenditurerequiredtosettleanyfinancialobligationarisingasaresultoftheguarantee.Subsequenttoinitialmeasurementallchangesinbalancesheetcarryingvaluearerecognisedintheincomestatement.
38
Instalment credit, leases and rental agreements
Afinance lease isa leasethattransferssubstantiallyalloftherisksandrewards incidentaltoownershipofanasset.Anoperatingleaseisaleaseotherthanafinanciallease.
Whereclassifiedasafinancelease,amountsoutstandingonthesecontracts,netofunearnedfinancecharges,areincludedinloansandadvanceswhereInvestecisthelessorandincludedinliabilitieswhereInvestecisthelessee.Financechargesonfinanceleasesandinstalmentcredittransactionsarecreditedordebitedtoincomeinproportiontothecapitalbalancesoutstandingattherateimplicitintheagreement.
Whereclassifiedasoperatingleases,rentalspayable/receivablearecharged/creditedintheincomestatementonastraightlinebasisovertheleaseterm.Contingentrentals(ifany)areaccruedtotheincomestatementwhenincurred.
Property and equipment
Propertyandequipmentarerecordedatcostlessaccumulateddepreciationandimpairments.
Costisthecashequivalentpaid,orthefairvalueoftheconsiderationgiventoacquireanassetandincludesotherexpendituresthataredirectlyattributabletotheacquisitionoftheasset.
Depreciationisprovidedonthedepreciableamountofeachcomponentonastraight-linebasisovertheanticipatedusefullifeoftheasset.Thedepreciableamountrelatedtoeachassetisdeterminedasthedifferencebetweenthecostandtheresidualvalueoftheasset.Theresidualvalueistheestimatedamount,netofdisposalcoststhattheGroupwouldcurrentlyobtainfromthedisposalofanassetinsimilarageandconditionasexpectedattheendofitsusefullife.
Thecurrentandcomparativeannualdepreciationratesforeachclassofpropertyandequipmentisasfollows:
Computerandrelatedequipment 20%–30%Motorvehicles 20%–25%Furnitureandfittings 10%–20%Freeholdbuildings 2%Leaseholdimprovements *
* Leasehold improvementsdepreciationratesaredeterminedbyreferencetotheappropriateuseful lifeof itsseparatecomponents, limitedtotheperiodofthe lease.
Nodepreciationisprovidedonfreeholdland,however,similartootherpropertyrelatedassets,itissubjecttoimpairmenttestingwhendeemednecessary.
Routineservicingandmaintenanceofassetsareexpensedasincurred.Subsequentexpenditureisonlycapitalisedif it isprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroup.
Investment property
PropertiesheldbytheGroupwhichisheldforcapitalappreciationorrentalyieldareclassifiedasinvestmentproperties.Investmentpropertiesarecarriedonbalancesheetatfairvalue,withfairvaluegainsandlossesrecognisedintheincomestatementunder“Principaltransactions”.
Fair value of investment property is calculated by taking into account the expected rental stream associated with theproperty,andissupportedbymarketevidence.
Trading properties
Tradingpropertiesarecarriedatthelowerofcostandnetrealisablevalue.
Impairment of non-financial assets
AteachbalancesheetdatetheGroupreviewsthecarryingvalueofnon-financialassets,otherthaninvestmentpropertyanddeferredtaxassetsforindicationofimpairment.Therecoverableamount,beingthehigheroffairvaluelesscosttosellandvalueinuse,isdeterminedforanyassetsforwhichanindicationofimpairmentisidentified.Iftherecoverableamountofanassetislessthanitscarryingvalue,thecarryingvalueoftheassetisreducedtoitsrecoverablevalue.
Impairmentlossesarerecognisedasanexpenseintheincomestatementintheperiodinwhichtheyareidentified.Reversalofimpairmentlossesisrecognisedinincomeintheperiodinwhichthereversalisidentified,totheextentthattheassetisnotrevaluedtoacarryingvaluethatwouldhavebeencalculatedwithoutimpairment.
39
Trust and fiduciary activities
TheGroupactsasatrusteeorinotherfiduciarycapacitiesthatresultintheholding,placingormanagingofassetsfortheaccountofandattheriskofclients.
AsthesearenotassetsoftheGroup,theyarenotreflectedonthebalancesheetbutareincludedatmarketvalueaspartofassetsunderadministration.
Taxation and deferred taxation
Currenttaxpayableisprovidedontaxableprofitsatratesthatareenactedorsubstantivelyenactedandapplicabletotherelevantperiod.
Deferredtaxationisprovidedusingthebalancesheetmethodontemporarydifferencesbetweenthecarryingamountofanassetorliabilityinthebalancesheetanditstaxbase,exceptwheresuchtemporarydifferencesarisefrom:
• Theinitialrecognitionofgoodwill.
• Theinitialrecognitionofanassetorliabilityinatransactionwhichisnotabusinesscombinationandatthetimeofthetransactionhasnoeffectonprofitorloss.
• Inrespectoftemporarydifferencesassociatedwiththeinvestmentsinsubsidiariesandassociates,wherethetimingofthereversalofthetemporarydifferencescanbecontrolledanditisprobablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.
Deferredtaxassetsorliabilitiesaremeasuredusingthetaxratesthathavebeenenactedorsubstantivelyenactedbythebalancesheetdate.
Deferredtaxassetsarerecognisedtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichthedeferredtaxassetcanbeutilised.
Itemsrecogniseddirectlyincomprehensiveincomearenetofrelatedcurrentanddeferredtaxation.
Insurance contracts
InsurancecontractsarethosecontractsinwhichtheGroupassumessignificantinsurancerisk.Thedepositcomponentsofinsurancecontractsareunbundledandaccountedforseparately.
Insurancepremiumsare recognised in income in theperiod inwhich theGroup isentitled to thepremium. InsuranceclaimsarerecognisedintheincomestatementintheperiodinwhichacontractualobligationarisesfortheGrouptomakepaymentunderaninsurancecontract.
Reinsuranceassetsandliabilitiesandassociatedpremiums/claimsarenotoffsetintheincomestatementorbalancesheet.
Insuranceliabilitiesaremeasuredattheiractuarialvalues,andaretestedforadequacyonanannualbasis.Anydeficiencyidentifiedisrecognisedintheincomestatement.
Employee benefits
TheGroupoperatesvariousdefinedcontributionschemesandtwocloseddefinedbenefitschemes.
Inrespectofthedefinedcontributionschemeallemployercontributionsarechargedtoincome,asincurredinaccordancewiththerulesofthescheme,andincludedunderstaffcosts.
Theassetsofthedefinedbenefitschemesaremeasuredattheirmarketvalueatthebalancesheetdateandtheliabilitiesoftheschemesaremeasuredusingtheprojectedunitcreditmethod.Thediscountrateusedtomeasuretheschemes’liabilitiesisthecurrentrateofreturnonanAAcorporatebondatthebalancesheetdateofequivalenttermandcurrencytotheliabilities.Theextenttowhichtheschemes’assetsexceedorfallshortoftheschemes’liabilitiesisshownasasurplusordeficitinthebalancesheet(totheextentthatitisconsideredrecoverable).Actuarialgainsandlossesrelatedtothedefinedbenefitassetorliabilityarerecognisedimmediatelydirectlyincomprehensiveincome.
TheGrouphasnoliabilitiesforotherpostretirementbenefits.
Intangible assets
Intangibleassetsarerecordedatcostlessaccumulatedamortisationandimpairments.
For intangibleassetswitha finite life,amortisation isprovidedonthedepreciableamountofeach intangibleassetonastraight-linebasis over the anticipateduseful lifeof the asset (currently three to eight years). Thedepreciable amount
40
relatedtoeachintangibleassetisdeterminedasthedifferencebetweenthecostandtheresidualvalueoftheasset.Theresidualvalueistheestimatedamount,netofdisposalcosts,whichtheGroupwouldcurrentlyobtainfromthedisposalofanintangibleassetinsimilarageandconditionasexpectedattheendofitsusefullife.
Intangibleassetswithanindefinitelifearenotamortised,howevertheyaretestedforimpairmentonanannualbasis.
Borrowing costs
Borrowingcostsinrespectofpropertydevelopmentsthattakeasubstantialperiodoftimetodevelopforsalearecapitalised.
Provisions, contingent liabilities and contingent assets
Provisionsare liabilitiesofuncertaintimingoramount,andarerecognisedassoonastheGrouphascreateda legalorconstructiveobligationwhichwill leadtoanoutflowofeconomicresourcestosettletheobligationasaresultofapastevent.Contingentassetsandcontingentliabilitiesarenotrecognisedonbalancesheet.
Standards and interpretations issued but not yet effective
Thefollowingstandardsandinterpretations,whichhavebeenissuedbutarenotyeteffective,areapplicabletotheGroup.Thesestandardsandinterpretationshavenotbeenappliedinthesefinancialstatements.TheGroupintendstocomplywiththesestandardsfromtheeffectivedates.
IFRS 9 – Financial Instruments (applicable for reporting periods beginning on or after 1 January 2013)
TheInternationalAccountingStandardsBoard(IASB)hasissuedIFRS9–FinancialInstruments,whichisthefirststepinitsprojecttoreplaceIAS39–FinancialInstruments:RecognitionandMeasurement.IFRS9introducesnewrequirementsforclassifyingandmeasuring financialassets.The IASBexpanded IFRS9during2010toaddnewrequirements for theclassificationandmeasurementoffinancialliabilitiesandimpairmentsoffinancialassets.Futureamendmentswilladdressthederecognitionoffinancialinstrumentsandhedgeaccounting.
TheimplementationofthestandardisexpectedtohaveanimpactontheGroup.TheGroupiscurrentlyevaluatingtheimpactoftheadoptionofthecurrentrequirementsofthestandard.
ThestandardiseffectivefortheGroupfortheyearcommencing1April2014.
Revised IFRS 3 – Business Combinations and consequential amendments to IAS 27 – Consolidated and Separate Financial Statements (applicable for financial years beginning on or after 1 July 2009)
ThemainchangestothestandardthataffectstheGroup’scurrentpoliciesisthatacquisitionrelatedcostsareexpensedintheincomestatementintheperiodsinwhichthecostsareincurredandtheservicesreceived,exceptforcostsrelatedtotheissueofdebt(recognisedaspartoftheeffectiveinterestrate)andthecostofissueofequity(recogniseddirectlyinshareholders’equity).CurrentlytheGrouprecognisesacquisitioncostsaspartofthepurchaseconsideration.
ThestandardwillbeeffectivefortheGroupfortheyearcommencing1April2010.
IAS 24 – Related Parties (applicable for financial years beginning on or after 1 January 2011)
Theamended standard requires commitments, aswell as thenatureof the relationshipbetween relatedparties tobeidentifiedanddisclosed.Theamendedstandardgivesclaritytotherelatedpartydefinitionandothertermsinthestandard.
ThestandardwillbeeffectivefortheGroupfortheyearcommencing1April2011.
Amendments to IAS 32 – Classification of Rights Issues (applicable for financial years beginning on or after 1 February 2010)
The amendment states that rights, options and warrants – otherwise meeting the definition of equity instruments inIAS 32.11–issuedtoacquireafixednumberofanentity’sownnon-derivativeequityinstrumentsforafixedamountinanycurrencyareclassifiedasequityinstruments,providedtheofferismadeproratatoallexistingownersofthesameclassoftheentity’sownnon-derivativeequityinstruments.
TheamendmentiseffectivefortheGroupfortheannualperiodscommencingonorafter1April2010andisnotexpectedtohaveasignificantimpactontheGroup.
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Key management assumptions
InpreparationofthefinancialstatementstheGroupmakesestimationsandappliesjudgementthatcouldaffectthereportedamountofassetsandliabilitieswithinthenextfinancialyear.Keyareasinwhichjudgementisappliedinclude:
• Valuationofunlistedinvestmentsintheprivateequityanddirectinvestmentsportfolios.Keyvaluationinputsarebasedonobservablemarketinputs,adjustedforfactorsthatspecificallyapplytotheindividual investmentsandrecognisingmarketvolatility.Detailsofunlistedinvestmentscanbefoundinnote13,Tradingsecuritiesandnote15,Investmentsecuritiesoftheannualreport.
• Valuationofinvestmentpropertiesisperformedtwiceannuallybydirectorsthatarequalifiedvaluators.Thevaluationisperformedbycapitalisingthebudgetednetincomeofapropertyatthemarketrelatedyieldapplicableatthetime.Refertonote24forthecarryingvalueofinvestmentpropertyoftheannualreport.
• Thedeterminationofimpairmentsagainstassetsthatarecarriedatamortisedcostandimpairmentsrelatingtoavailableforsalefinancialassetsinvolvestheassessmentoffuturecashflowswhichisjudgmentalinnature.
• Determination of interest income and interest expense using the effective interest method involves judgment indeterminingthetimingandextentoffuturecashflows.
42
COMBINED CONSOLIDATED INCOME STATEMENT
For the year to 31 March
Six months to 30 September £’000 2010 2010* 2009 2008
Interestincome 1118360 2041153 2596913 2083380Interestexpense (797186) (1428067) (1902882) (1499960)
Net interest income 321 174 613 086 694 031 583 420
Feeandcommissionincome 389961 612574 592814 614357Feeandcommissionexpense (49467) (67497) (61292) (63061)Principaltransactions 208706 457759 276521 276705Operatingincomefromassociates 3172 11595 12438 12138Investmentincomeonassuranceactivities 17986 94914 74584 89593Premiumsandreinsurancerecoveriesoninsurancecontracts 5028 31938 18773 40849Otheroperatingincome/(loss) 5215 22737 (30240) 50043
Other income 580 601 1 164 020 883 598 1 020 624Claimsandreinsurancepremiumsoninsurancebusiness (20727) (119918) (88108) (120358)
Total operating income net of insurance claims 881 048 1 657 188 1 489 521 1 483 686Impairmentlossesonloansandadvances (122850) (286581) (256173) (114185)
Operating income 758 198 1 370 607 1 233 348 1 369 501Administrativeexpenses (524159) (920694) (803158) (807500)Depreciation,amortisationandimpairmentofproperty,equipmentandintangibles (16719) (36457) (30102) (24330)
Operating profit before goodwill and acquired intangibles 217 320 413 456 400 088 537 671Impairmentofgoodwill (2763) (3526) (32467) (62765)Amortisationofacquiredintangibles (2254) – – –
Operating profit after goodwill and acquired intangibles 212 303 409 930 367 621 474 906Profitarisingfromassociateconvertedtosubsidiary 73465 – – –Writedownofsubsidiariesheldforsale (7942) – –Profitondisposalofgroupoperations – – 721 72855
Profit before taxation 277 826 409 930 368 342 547 761Taxation (43151) (82599) (81675) (127249)
Profit after taxation 234 675 327 331 286 667 420 512Lossesattributabletominorityinterests 10837 18802 5355 28954Write-downofsubsidiariesheldforsaleattributabletominorities 1481 – – –
Earnings attributable to shareholders 246 993 346 133 292 022 391 558
43
Six months to 30 September £’000 2010 2010* 2009 2008
Earnings attributable to shareholders 246 993 346 133 292 022 391 558Impairmentofgoodwill 2763 3526 23790 62765Amortisationofacquiredintangibles 1577 – – –Write-downofsubsidiariesheldforsaleattributabletominorities (1481) – – –Profitarisingfromassociateconvertedtosubsidiary (73465) – – –Profitondisposalofgroupoperations,netoftaxation – – (721) (64345)Write-downofsubsidiariesheldforsale 7942 – – –Preferencedividendspaid (27031) (43860) (47503) (41779)Additionalearningsattributabletootherequityholders 5904 3911 1627 (3504)
Adjusted earnings before goodwill, acquired intangibles and non-operating items 163 202 309 710 269 215 344 695
Earnings per share (pence)–basic 29.7 44.0 38.5 57.7–diluted 27.9 41.5 36.1 54.0
Adjusted earnings per share (pence)–basic 22.1 45.1 42.4 56.9–diluted 20.7 42.5 39.7 53.2
Number of weighted average shares–basic(millions) 739.7 686.3 634.6 606.2
* Asrestatedforreclassificationsdetailedintheaccountingpoliciessectionofthisreport.
44
COMBINED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year to 31 March
For the six months ended 30 September £’000 2010 2010 2009 2008
Profit after taxation 234 675 327 331 286 667 420 512
Fairvaluemovementsoncashflowhedges* 2113 14202 (16293) –(Gains)/lossesonrealisationofavailableforsaleassetsrecycledthroughtheincomestatement* (1624) (8887) 415 –Fairvaluemovementsonavailableforsaleassets* 10527 20370 (4638) (38907)Foreigncurrencyadjustmentsontranslatingforeignoperations 8224 239789 215653 (79591)Pensionfundactuariallosses – (8180) (9722) 7619
Total comprehensive income 253 915 584 625 472 082 309 633Totalcomprehensive(loss)/incomeattributabletominorityshareholders (11351) 9918 21285 17365Totalcomprehensiveincomeattributabletoordinaryshareholders 235472 493073 376020 270327Totalcomprehensiveincomeattributabletoperpetualpreferredsecurities 29794 81634 74777 21941
Total comprehensive income 253 915 584 625 472 082 309 633
*NetoftaxationofGBP3.0million(sixmonthsto30September2009:GBP7.6million,yearto31March2010:GBP10.0million).
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COMBINED CONSOLIDATED BALANCE SHEET
At 31 March
Six months to 30 September £’000 2010 2010 2009 2008*
AssetsCashandbalancesatcentralbanks 1550807 2338234 1105089 788472Loansandadvancestobanks 2257741 2781630 2018089 2153773Cashequivalentadvancestocustomers 527758 581117 396173 504382Reverserepurchaseagreementsandcashcollateralonsecuritiesborrowed 1207255 911432 569770 794153Tradingsecurities 5338673 4221645 2313845 1984580Derivativefinancialinstruments 1970670 1591841 1843143 1305264Investmentsecurities 2915969 1996073 1063569 1130872Loansandadvancestocustomers 18110210 17414691 15390519 12011261Loansandadvancestocustomers–Kensingtonwarehouseassets 1683586 1776525 1897878 2034874Securitisedassets 5150421 5334453 5628347 6082975Interestinassociatedundertakings 22303 104059 93494 82576Deferredtaxationassets 132252 134355 136757 84493Otherassets 1188678 1240624 894062 882209Propertyandequipment 57774 161255 174532 141352Investmentproperties 324672 273038 189156 134975Goodwill 466125 274417 255972 271932Intangibleassets 167506 36620 34402 31506Non-currentassetsclassifiedasheldforsale 122133 – – –
43 194 533 41 172 009 34 004 797 30 419 649
Otherfinancialinstrumentsatfairvaluethroughincomeinrespectof:–Liabilitiestocustomers 5781206 5397014 3358338 2878894–Assetsrelatedtoreinsurancecontracts 2699 2842 1768 805009
48 978 438 46 571 865 37 364 903 34 103 552
LiabilitiesDepositsbybanks 2181563 2439670 3781153 3489032Depositsbybanks–Kensingtonwarehousefunding 1082431 1213042 1412961 1778438Derivativefinancialinstruments 1618990 1193421 1456561 881577Othertradingliabilities 540254 504618 344561 450580Repurchaseagreementsandcashcollateralonsecuritieslent 942699 1110508 915850 382384Customeraccounts/deposits 23493808 21934044 14572568 12133120Debtsecuritiesinissue 1815113 1791869 1014871 777769Liabilitiesarisingonsecuritisation 4488245 4714556 5203473 5760208Currenttaxationliabilities 191560 196965 155395 132656Deferredtaxationliabilities 202938 136974 120135 79172Otherliabilities 1561941 1572760 1264144 1279373Pensionfundliabilities 487 1285 1212 –Liabilitiesdirectlyassociatedwithnon-currentassetsheldforsale 103465 – – –
38 223 494 36 809 712 30 242 884 27 144 309
Liabilitiestocustomersunderinvestmentcontracts 5776517 5392662 3352863 2862916Insuranceliabilities,includingunit-linkedliabilities 4689 4352 5475 15978Reinsuredliabilities 2699 2842 1768 805009
44 007 399 42 209 568 33 602 990 30 828 212Subordinatedliabilities 1173244 1070436 1141376 1065321
45 180 643 43 280 004 34 744 366 31 893 533
46
Six months to 30 September £’000 2010 2010 2009 2008*
EquityCalledupsharecapital 201 195 190 177Perpetualpreferencesharecapital 181 152 151 151Sharepremium 2256628 1928296 1769040 1632634Treasuryshares (55182) (66439) (173068) (114904)Equityportionofconvertibleinstruments – – – 2191Otherreserves 270030 246718 42509 (42057)Retainedincome 999077 846060 658129 433012Shareholders’equityexcludingminorityinterests 3470935 2954982 2296951 1911204
Minority interests 326 860 336 879 323 586 298 815
–Perpetualpreferredsecuritiesissuedbysubsidiaries 311312 314944 295084 251637–Minorityinterestsinpartiallyheldsubsidiaries 15548 21935 28502 47178
Total equity 3 797 795 3 291 861 2 620 537 2 210 019
Total liabilities and equity 48 978 438 46 571 865 37 364 903 34 103 552
47
COMBINED CONSOLIDATED CASH FLOW STATEMENT
For the year to 31 March
Six months to 30 September £’000 2010 2010 2009* 2008
Cashinflowsfromoperations 343799 731000 631378 610450Increaseinoperatingassets (2460557) (3336695) 46724 (655805)Increase/(decrease)inoperatingliabilities 1295406 4115640 (323255) 1080433
Net cash (outflow)/inflow from operating activities (821 352) 1 509 945 354 847 1 035 078Netcash(outflow)frominvestingactivities (10946) (19368) (63670) (65642)Netcash(outflow)/inflowfromfinancingactivities 157453 (127794) (184981) (54893)Effectsofexchangeratechangesoncashandcashequivalents 15889 274915 226277 (97791)
Net (decrease)/increase in cash and cash equivalents (658 956) 1 637 698 332 473 816 752Cashandcashequivalentsatthebeginningoftheperiod 3922047 2284349 1951876 1135124
Cash and cash equivalents at the end of the period 3 263 091 3 922 047 2 284 349 1 951 876
*Asrestatedforreclassificationsdetailedintheaccountingpolicies.
Cashandcashequivalentsisdefinedasincludingcashandbalancesatcentralbanks,ondemandloansandadvancestobanksandcashequivalentadvancestocustomers(allofwhichhaveamaturityprofileoflessthanthreemonths).
48
COMBINED SUMMARISED STATEMENT OF CHANGES IN EQUITY
For the year to 31 March
Six months to 30 September £’000 2010 2010 2009 2008
Balance at the beginning of the period 3 291 861 2 620 537 2 210 019 1 820 416Totalcomprehensiveincome 253915 584625 472082 309633Sharebasedpaymentsadjustments 17708 56942 92848 39182Dividendspaidtoordinaryshareholders (59341) (91946) (143995) (145926)Dividendspaidtoperpetualpreferenceshareholders (27031) (43860) (47503) (41779)Issueofordinaryshares 317464 84178 9764 230664Issueofperpetualpreferenceshares 11893 40869 – –Shareissueexpenses (3753) (3559) – (65)Movementoftreasuryshares (6253) 40974 (58164) (5625)Issueofequityinstrumentsbysubsidiaries 1514 3547 3486 6777Dividendspaidtominorityinterests (182) (578) – (3923)Acquisitionofminorityinterests – 132 665
Balance at the end of the period 3 797 795 3 291 861 2 620 537 2 210 019
49
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 For the six months to 30 September 2010 and Southern Total £’000 Europe Africa Australia group
AssetManagement 18867 30046 – 48913WealthandInvestment 8996 7346 – 16342PropertyActivities (443) 14540 2311 16408PrivateBanking (12486) 14150 (5543) (3879)InvestmentBanking 8816 36845 (3151) 42510CapitalMarkets 88385 40364 4757 133506GroupServicesandOtherActivities (32097) 3119 3335 (25643)
Operating profit after minorities 80 038 146 410 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 YEAR ENDED 31 MARCH 2010
United Kingdom For the year to 31 March 2010 and Southern Total £’000 Europe Africa Australia group
AssetManagement 25335 58077 – 83412WealthandInvestment 11637 14250 – 25887PropertyActivities 825 31582 1072 33479PrivateBanking 6545 29330 1177 37052InvestmentBanking (4399) 45694 273 41568CapitalMarkets 93163 70572 15404 179139GroupServicesandOtherActivities (9407) 40862 266 31721
Operating profit after minorities 123 699 290 367 18 192 432 258
Minority interest – equity (18 802)
Operating profit before goodwill and acquired intangibles 413 45
50
SEGMENTAL GEOGRAPHIC AND BUSINESS ANALYSIS OF OPERATING PROFIT BEFORE GOODWILL, ACQUIRED INTANGIBLES, NON-OPERATING ITEMS AND TAXATION FOR THE YEAR ENDED 31 MARCH 2009
United Kingdom For the year to 31 March 2009 and Southern Total £’000 Europe Africa Australia group
AssetManagement 17149 49037 – 66186WealthandInvestment 12044 12058 – 24102PropertyActivities 774 21769 2138 24681PrivateBanking 42034 35954 2475 80463InvestmentBanking (30810) 66065 (7089) 28166CapitalMarkets 78015 61150 2209 141374GroupServicesandOtherActivities (18316) 47395 2715 31794
Operating profit after minorities 100 890 293 428 2 448 396 766
Minority interest – equity 3 322
Operating profit before goodwill and acquired intangibles 400 088
SEGMENTAL GEOGRAPHIC AND BUSINESS ANALYSIS OF OPERATING PROFIT BEFORE GOODWILL, AQCUIRED INTANGIBLES, NON-OPERATING ITEMS AND TAXATION FOR THE YEAR ENDED 31 MARCH 2008
United Kingdom For the year to 31 March 2008 and Southern Total £’000 Europe Africa Australia group
AssetManagement 24940 51471 – 76411WealthandInvestment 11929 15413 – 27342PropertyActivities 144 36078 99 36321PrivateBanking 91619 56760 18015 166394InvestmentBanking 3995 64775 3756 72526CapitalMarkets 39187 68118 8326 115631GroupServicesandOtherActivities (34205) 46612 1685 14092
Operating profit after minorities 137 609 339 227 31 881 508 717
Minority interest – equity 28 954
Operating profit before goodwill and acquired intangibles 537 671
POST-BALANCE SHEET EVENTS
Acquisition of Rensburg Sheppards plc (Rensburg Sheppards)
On30March2010,itwasannouncedthatInvestecandRensburgSheppardsplchadreachedagreementonthetermsofarecommendedallshareofferunderwhichInvestecwouldacquiretheentireissuedandtobeissuedordinarysharecapitalofRensburgSheppardsplcnotalreadyownedbyit.Followingshareholderandregulatoryapprovalstheacquisitionbecameeffectiveon25June2010.PriortothisdateInvestec’s47.1%interestinRensburgSheppardsplcwasaccountedforasanassociate.Asaresultofrequirementsundernewaccountingrules,theGroupwasrequiredtofairvalueitsexisting47.1%holdinginRensburgSheppard’splcatthepointitacquiredtheremaining52.9%.ThishasresultedinanexceptionalgainofGBP73.5million(netofacquisitioncosts).TheGroupissued37.9millionsharestoacquiretheremainingsharesinRensburgSheppardsplcforaconsiderationofGBP180.4million.ThisconsiderationcombinedwiththeexistingfairvaluedholdingresultedintherecognitionofgoodwillandintangiblesofGBP193.6millionandGBP133.4million,respectively.
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Annexure 2
EXTRACTS FROM THE ARTICLES OF ASSOCIATION OF INVESTEC PLC
11. Rights attaching to shares on issue
SubjecttotheprovisionsoftheStatutes,theprovisionsoftheseArticles(includingArticles61and62)andwithoutprejudicetoanyrightspreviouslyconferredontheholdersofanysharesorclassofsharesforthetimebeingissued,anyshareintheCompanymaybeissuedwithsuchpreferred,deferredorotherspecialrights,orsubjecttosuchrestrictions,whetherasregardsdividend,returnofcapital,votingorotherwise,aseithertheCompanymayfromtimetotimebyordinaryresolutiondetermine,orastheDirectorsmaydetermine,andsubjecttotheprovisionsoftheStatutesandtheseArticlesandwithoutprejudicetoanyrightsattachedtoanyexistingsharesorclassofshares,theCompanymayissueanyshareswhichare,orattheoptionoftheCompanyortheholderareliable,toberedeemed,or create and issue securedorunsecureddebentureson such termsandconditions and in suchmanner as theCompanyortheDirectorsmayfromtimetotimedetermine.
77. Share qualification
ADirectorshallnotberequiredtoholdanysharesinthecapitaloftheCompanybywayofqualification.ADirectorwhoisnotamemberoftheCompanyshallneverthelessbeentitledtoattendandspeakatGeneralMeetings.
78. Directors’ fees
The ordinary remuneration of the Directors shall from time to time be determined by a disinterested quorumof Directors, except that such remuneration, for both executive and non-executive Directors, shall not exceed£1,000,000perannuminaggregateorsuchhigheramountasmayfromtimetotimebedeterminedbyordinaryresolutionoftheCompanyandshall,unlesssuchresolutionotherwiseprovides,bedivisibleamongtheDirectorsastheymayagree,or,failingagreement,equally,exceptthatanyDirectorwhoshallholdofficeforpartonlyoftheperiodinrespectofwhichsuchremunerationispayableshallbeentitledonlytorankinsuchdivisionforaproportionofremunerationrelatedtotheperiodduringwhichhehasheldoffice.AnyfeepayableunderthisArticleshallbedistinctfromanyremunerationorotheramountspayabletoaDirectorunderotherprovisionsoftheseArticlesorpayablebyLimitedunderArticles78to80ofitsMemorandumandArticles.
79. Other remuneration of Directors
AnyDirectorwhoholdsanyexecutiveofficewiththeCompanyorLimited,including,forthispurpose,theofficeofChairmanorDeputyChairmanwhetherornotsuchofficeisheldinanexecutivecapacity,orwhoservesonanycommitteeoftheBoard,orwhootherwiseperformsservicesinrelationtothebusinessoftheCombinedGroupwhichareoutsidethescopeoftheordinarydutiesofaDirector,maybepaidsuchextraremunerationbywayofsalary,commissionorotherwiseormayreceivesuchotherbenefits,including,withoutlimitation,costsassociatedwithresidingoverseas,asadisinterestedquorumofDirectorsmayreasonablydetermine.
80. Directors’ expenses
TheDirectorsmayrepaytoanyDirectorallsuchreasonableexpensesashemayincurinattendingandreturningfrommeetingsoftheBoard,meetingsofanycommitteesappointedpursuanttoArticle103orGeneralMeetingsorotherwiseinconnectionwiththebusinessoftheCompanyorLimited.
81. Directors’ pensions and other benefits
TheDirectorsshallhavepowertopayandagreetopaygratuities,pensionsorotherretirement,superannuation,deathordisabilitybenefitsto,ortoanypersoninrespectof,anyDirectororex-Directorandforthepurposeofprovidinganysuchgratuities,pensionsorotherbenefitstocontributetoanyschemeorfundortopaypremiums.
82. Appointment of executive Directors
TheDirectorsmayfromtimetotimeappointoneormoreoftheirbodytobetheholderofanyexecutiveofficeonsuchtermsandforsuchperiodastheymay,subjecttotheprovisionsoftheStatutes,determineand,withoutprejudicetothetermsofanycontractenteredintoinanyparticularcase,mayatanytimerevokeorvarythetermsofanysuchappointment.
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TheremunerationofanyDirectorappointed toanyexecutiveoffice shallbe fixedbyadisinterestedquorumofDirectorsandmaybebywayofsalary,commission,participationinprofitsorotherwiseandeitherinadditiontoorinclusiveofhisremunerationasaDirector.
84. Age limit
AnyprovisionoftheStatuteswhich,subjecttotheprovisionsoftheseArticles,wouldhavetheeffectofrenderinganypersonineligibleforappointmentorelectionasaDirectororliabletovacateofficeasaDirectoronaccountofhishavingreachedanyspecifiedageorofrequiringspecialnoticeoranyotherspecialformalityinconnectionwiththeappointmentorelectionofanyDirectoroveraspecifiedage,shallnotapplytotheCompany.
87. Re-election of retiring Director
TheCompanyat themeetingatwhichaDirector retiresunderanyprovisionof theseArticlesmaybyordinaryresolutionapprovedinaccordancewithArticle62filltheofficebeingvacatedbyelectingtheretotheretiringDirectororsomeotherpersoneligibleforelection.TheretirementshallnothaveeffectuntiltheconclusionofthemeetingexceptwherearesolutionispassedtoelectsomeotherpersonintheplaceoftheretiringDirectororaresolutionforhisre-electionisputtothemeetingandpassedandaccordinglyaretiringDirectorwhoisre-electedwillcontinueinofficewithoutabreak.
88. Election of two or more Directors
AresolutionfortheelectionoftwoormorepersonsasDirectorsbyasingleresolutionshallnotbemovedatanyGeneralMeetingunlessaresolutionthatitshallbesomovedhasfirstbeenagreedtobythemeetingwithoutanyvotebeinggivenagainstit;andanyresolutionmovedincontraventionofthisprovisionshallbevoid.
90. Election or appointment of additional Director
The Company may by ordinary resolution approved in accordance with Article 62 elect, and without prejudicetheretotheDirectorsshallhavepoweratanytimetoappoint,anypersontobeaDirectoreithertofillacasualvacancyorasanadditionalDirector,but so that: (i) the totalnumberofDirectors shallnot therebyexceed themaximumnumberfixedbyorinaccordancewiththeseArticlesand(ii)theappointmentshallnottakeeffectbeforesuchDirectorhasbeendulyappointedasadirectorofLimited.AnypersonsoappointedbytheDirectorsshallholdofficeonlyuntilthenextAnnualGeneralMeetingandshallthenbeeligibleforelection,savethattheDirectorswhoholdofficeatthedateofadoptionoftheseArticlesshallnotberequiredtoretireatthenextAnnualGeneralMeetingpursuanttothisArticle90andshall,forthepurposesofArticle85,bedeemedtohavebeenelectedon25July2002.
113. Borrowing powers
SubjecttotheprovisionsoftheStatutes,theDirectorsmayexerciseallthepowersoftheCompanytoborrowmoney,toindemnify,toguarantee,tomortgageorchargeitsundertaking,property,assets(presentandfuture)anduncalledcapitaloranypartorpartsthereofandtoissueanydebentures(whethersecured,unsecuredorsubordinatedandwhetherconvertibleintosharesofanyclass)andothersecurities,whetheroutrightorascollateralsecurityforanydebt,liabilityorobligationoftheCompanyorofanythirdparty.
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Annexure 3
TERMS OF THE RAND PERPETUAL PREFERENCE SHARES
1. For purposes of this Annexure A:
(a) “Articles”meansthearticlesofassociationoftheCompanyand“Article”shallmeananyindividuallynumberparagraphwithintheArticles;
(b) “Business Days”meansalldays,excludingSaturdays,SundaysandofficiallydesignatedpublicholidaysintheUnitedKingdomonwhichbanksareopenforbusinessinLondonandJohannesburg;
(c) “Company”meansInvestecplc(incorporatedinEnglandandWaleswithregistrationnumber3633621);
(d) “Deemed Value”meansthedeemedvalueofeachRandperpetualpreferenceshareforthepurposesofthecalculationofthePreferenceDividend,beinganamountofR100.00(onehundredRand)perRandperpetualpreferencesharenotwithstandingtheactualissuepriceofaRandperpetualpreferenceshare(thatisthenominalvalueoftheRandperpetualpreferenceshareplusapremiumordiscountthereon)whichmayvarybecauseofadifferenceinthepremiumordiscountatwhichtheRandperpetualpreferencesharesmaybeissuedfromtimetotime;
(e) “Directors”meanstheDirectorsoftheCompany;
(f) “Issue Date”meansthedateonwhichthefirsttrancheofRandperpetualpreferencesharesare issuedtoinvestors;
(g) “FSA”meanstheUnitedKingdomFinancialServicesAuthorityorsuchotherauthorityhavingprimarysupervisoryauthoritywithrespecttotheCompanyand/oranyofitssubsidiariesfromtimetotime;
(h) “IBL”means InvestecBankLimited (incorporated in theRepublicof SouthAfricawith registrationnumber1969/004763/06);
(i) “JSE”meanstheJohannesburgStockExchange;
(j) “Preference Dividend”meansanon-cumulative,non-participatingpreferencedividend;
(k) “Preference Dividend Accrual Date”means31Marchand30Septemberofeachyear;
(l) “Preference Dividend Payment Date”meansadateatleast7(seven)BusinessDayspriortothedateonwhichtheCompanypaysitsordinarydividends,ifany,inrespectofthesameperiod,butinanyevent,ifdeclared,shallbepayablenotlaterthan120BusinessDaysafter31Marchand30Septemberofeachyear,respectively;
(m) “Preference Dividend Rate”means,subjectto2(e)and2(f)below,arateequalto95%(ninety-fivepercent)ofthePrimeRatefromtimetotime,expressedasanominalannualcompoundedmonthlyrateandconvertedtoanominalannualcompoundedsemi-annualrate;
(n) “Prime Rate”meansIBL’sprimelendingratefromtimetotime(expressedasapercentagerateofinterestperannum,calculateddailyandcompoundedmonthlyonthebasisofa365-dayyearfactorirrespectiveofwhethertheyearisaleapyearornot),ascertified(saveformanifesterror)byanymanagerofIBL,whoseappointmentorauthorityneednotbeproved;
(o) “Rand perpetual preference shares”meansthenon-redeemable,non-cumulative,non-participatingRandperpetualpreferenceshares,denominatedinSouthAfricanRands,issuedbytheCompanyasaseparateclassfromallexistingsharesinissueasclass152withtherights,privileges,restrictionsandconditionsassetoutherein;and
(p) “Sterling perpetual preference shares” means the non-redeemable non-cumulative, non-participatingperpetualpreferenceshares,denominatedinpoundssterling,issuedbytheCompanyasaseparateclassfromallexistingsharesinissueasclass151withtherights,privileges,restrictionsandconditionsassetouttherein.
2. The following are the rights, privileges, restrictions and conditions which attach to the Rand perpetual preference shares:
(a) TheissuepriceforeachtrancheofRandperpetualpreferencesharestobeissuedwillbedeterminedbytheDirectorsatorpriortotheallotmentthereof.
54
(b) EachRand perpetual preference sharewill rank as regards dividends andon a repayment of capital on thewinding-upoftheCompanypriortotheordinarysharesoftheCompany,theplcSpecialConvertingShares,theUKDANShare,theUKDASShare,butparipassuwiththeplcpreferencesharesandtheSterlingperpetualpreferenceshares.TheRandperpetualpreferencesharesshallconferontheholders,onaperRandperpetualpreferenceshareandequalbasis,therightonareturnofcapitalonthewinding-upoftheCompanytoanamountequaltotheaggregateofthenominalvalueandpremiumsinrespectofRandperpetualpreferencesharesissued,dividedbythenumberofRandperpetualpreferencesharesinissue(whichsuchamountmaybemoreorlessthantheirDeemedValue).
(c) EachRand perpetual preference sharemay confer upon the holder thereof the right to receive out of thedistributableprofitsoftheCompanywhichitshalldeterminetodistribute,inprioritytotheordinarysharesoftheCompany,theplcSpecialConvertingShares,theUKDANShareandtheUKDASShare,butparipassuwiththeplcpreferencesharesandtheSterlingperpetualpreferenceshares,thenon-cumulativePreferenceDividendcalculatedintermsof2(d)below.
(d) ThePreferenceDividendshallbecalculated:
(i) bymultiplyingtheDeemedValueoftheRandperpetualpreferencesharesbytheapplicablePreferenceDividendRate,multipliedbythePrimeRate(determinedona365dayyearfactor,irrespectiveofwhethertheyearisaleapyearornot),onadailybasis,inarrear,fortheappropriateperiodreferredtoin2(d)(ii)below;and
(ii) fromandincludingthedatefollowingaPreferenceDividendAccrualDateuptoandincludingthePreferenceDividendAccrualDateimmediatelyfollowing,providedthatthefirstdividendpayment,inrespectofthefirsttrancheofRandperpetualpreferencesharesissued,shallbecalculatedfromandincludingtheIssueDateuptoandincludingthenextPreferenceDividendAccrualDate.
(e) ThePreferenceDividendsshall,ifdeclared:
(i) accrueonthePreferenceDividendAccrualDate,calculatedinaccordancewith2(d)(i)above(withtheresultantfigureroundeddowntothenearestR0.01);
(ii) be payable in Rand on the PreferenceDividend PaymentDate out of the distributable profits of theCompany;and
(iii) failingpaymentontherelevantPreferenceDividendPaymentDate,beconsideredtobeinarrears.
IfaPreferenceDividend isnotdeclaredbytheCompany inrespectoftheperiodtowhichsuchPreferenceDividendAccrualDaterelates,thePreferenceDividendwillnotaccumulateandwillaccordinglyneverbecomepayablebytheCompanywhetherinpreferencetopaymentsonanyotherclassofsharesintheCompanyorotherwise.Fortheavoidanceofdoubt,followingdeclarationanysuchpaymentmaybecancelledbyresolutionoftheDirectorsonanydateuptoandincludingthePreferenceDividendPaymentDate.TheholdersoftheRandperpetualpreferencesharesmaynotenforceanypaymentobligationoftheCompanyunderorarisingfromtheRandperpetualpreferencesharesincluding(withoutlimitation)anydamagesawardedforbreachofanyobligationsoftheCompanyunderorarisingfromtheRandperpetualpreferencesharesotherthanbyinstitutingproceedingsforand/orprovinginthewindingupoftheCompany.Notwithstandingtheforegoing,butalwayssubjecttoapplicablelawandregulationtheCompanyshall,ifitelectsnottodeclareaPreferenceDividendorcancelsapaymentinrespectofanyapplicableperiod,beobligedtoretaininreserve(untilthedateonwhichitnextdeclaresadividendontheRandperpetualpreferenceshares)anamountequivalenttotheaggregateamountofprofitsgeneratedbytheCompanyduringsuchapplicableperiod(subjecttotherightoftheCompanytousesuchretainedamountstomeetitsobligationstoothercreditorsastheyfalldue).
(f) Saveassetoutin2(b)and2(c)above,theRandperpetualpreferencesharesshallnotbeentitledtoanyfurtherparticipationintheprofitsorassetsoftheCompanynoronawinding-uptoanysurplusassetsoftheCompany.
(g) TheholdersoftheRandperpetualpreferencesharesshallbeentitledtoreceivenoticeofandbepresentbutnottovote,eitherinpersonorbyproxy,atanymeetingoftheCompany,byvirtueoforinrespectoftheRandperpetualpreferenceshares,unlesseitherorbothofthefollowingcircumstancesprevailasatthedateofthemeeting:
(i) thePreferenceDividendoranypartthereofremainsinarrearandunpaidasdeterminedinaccordancewith2(e)(iii)aftersixmonthsfromtheduedatethereof;and
(ii) aresolutionoftheCompanyisproposedwhichresolutiondirectlyaffectstherightsattachedtotheRandperpetualpreferencesharesorthe interestsof theholdersthereof,oraresolutionof theCompany is
55
proposedtowinduporinrelationtothewinding-upoftheCompanyorforthereductionofitscapital,inwhicheventtheholdersoftheRandperpetualpreferencesharesshallbeentitledtovoteonlyonsuchresolution.
(h) AteverygeneralmeetingoftheCompanyatwhichholdersofRandperpetualpreferencesharesaswellasotherclassesofsharesarepresentandentitledtovote,aholderofRandperpetualpreferencesharesshallbeentitledtoonevoteperRandperpetualpreferenceshareheld.
(i) NotwithstandingtheprovisionsofArticle11,nosharesinthecapitaloftheCompanyranking,asregardsrightstodividendsor,onawinding-upasregardsreturnofcapital,inprioritytotheRandperpetualpreferenceshares,shallbecreatedorissued,withoutthepriorsanctionofaresolutionpassedataseparateclassmeetingoftheholdersoftheRandperpetualpreferencesharesinthesamemannermutatismutandisasaspecialresolution.AteverymeetingoftheholdersoftheRandperpetualpreferenceshares,theprovisionoftheArticlesrelatingtogeneralmeetingsofordinarymembersshallapply,mutatismutandis,exceptthataquorumatanysuchgeneralmeetingshallbeanypersonorpersonsholdingorrepresentingbyproxyatleasttwooftheRandperpetualpreferenceshares,providedthatifatanyadjournmentofsuchmeetingaquorumisnotsopresent,theprovisionsoftheArticlesrelatingtoadjournedgeneralmeetingsshallapply,mutatismutandis.
(j) SubjecttotheArticles,theprovisionsofapplicablelawandregulationandtherightsconferredonanyotherclassofsharesoftheCompanyandthepriorwrittenapprovaloforconfirmationfromtheFSAthatithasnoobjectiontothepurchase(forso longastheCompanyisrequiredtoobtainsuchconfirmation),theCompanymayatanytimeandfromtimetotime(subjecttothepaymentinfullofthePreferenceDividendontheimmediatelyprecedingPreferenceDividendPaymentDate)purchaseanyRandperpetualpreferencesharesinissueintheopenmarketorbytenderuponsuchtermsandconditionsandatsuchpriceastheDirectorsoracommitteethereofmaydetermine.TheCompanywillnotberequiredtoselecttheRandperpetualpreferencesharestobepurchasedrateablyorinanyparticularmannerasbetweentheholdersofRandperpetualpreferencesharesorasbetweenthemandtheholdersofsharesofanyotherclass(whetherornottheRandperpetualpreferencesharesrankpriortosuchothershares).AnysuchRandperpetualpreferencesharespurchasedbyoronbehalfoftheCompanymaybeheld,reissued,resoldor,attheoptionoftheCompany,cancelledbytheCompany.
(k) ThecreationandissuanceoftheRandperpetualpreferencesharesfromtimetotimeandtherights,privileges,restrictionsandconditionsattachingtothemshallbegovernedbyandconstruedinaccordancewithEnglishlawandtheArticles.
56
Annexure 4
MARKET VALUE OF EXISTING CLASS OF SECURITIES LISTED ON THE JSE
Thefollowingtablesprovidesinformationpertainingtotheaggregatevolumesandvaluestraded,aswellasthehighestandlowestpricestradedontheJSEfortheexistingSterlingperpetualpreferenceshares(JSEsharecode“INPP”).
Dailydataforthesesecuritiesforthe30dayspriortotheissuanceofthiscircularisdisplayedinthebelowtable:
Date High Low Value Volume (cents) (cents) (Rand)
31/12/10 – – – –
03/01/11 – – – –04/01/11 – – – –05/01/11 5100 5095 968864 1900006/01/11 – – – –07/01/11 5050 5050 1010000 2000010/01/11 5100 5100 59109 115911/01/11 5100 5050 203000 400012/01/11 – – – –13/01/11 5100 5095 152980 300014/01/11 5090 5080 516078 1014217/01/11 5092 5090 1083904 2128718/01/11 5090 5000 1561854 3081919/01/11 5100 5070 3047224 5994020/01/11 5119 5000 833861 1640021/01/11 5150 5119 399902 780024/01/11 5195 5085 143926 282525/01/11 5200 5200 6500 12526/01/11 5200 5200 97500 187527/01/11 5395 5300 765752 1442328/01/11 – – – –
Monthlydataforthe12monthspriortotheissuanceofthiscircularisdisplayedinthebelowtable:
Date High Low Value Volume (cents) (cents) (Rand)
31/01/10 4525 4050 16456294 38927628/02/10 6500 4500 12695933 26932031/03/10 4810 4600 7750228 16285230/04/10 4899 4630 9264823 19626931/05/10 5000 4675 5736331 12010830/06/10 4765 4290 4823854 10346931/07/10 4390 4210 8249120 19197131/08/10 4555 4375 6190050 14010030/09/10 5000 4500 4761413 10184931/10/10 5000 4810 4910235 9922230/11/10 5200 5000 5195527 10237131/12/10 5200 5000 4879385 96324
31/01/11 5395 5000 10863942 213045
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Quarterly data for the two years preceding the 12 months prior to the issuance of this circular is displayed in thebelowtable:
Date High Low Value Volume (cents) (cents) (Rand)
31/03/08 11325 9400 68286666 64703630/06/08 9800 8199 64827367 72302030/09/08 9001 7800 50442441 60194131/12/08 7800 3050 80336395 1412317
31/03/09 3700 2450 58526925 187370530/06/09 4300 3155 36185256 104212430/09/09 5000 3920 34401452 74330231/12/09 4560 3851 28910674 658007
31/03/10 6500 4050 36902455 821448
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Annexure 5
SUMMARISED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2011
COMBINED CONSOLIDATED INCOME STATEMENT
For the year to 31 March 2011 £’000
Interestincome 2238783Interestexpense (1557314)
Net interest income 681 469
Feeandcommissionincome 896300Feeandcommissionexpense (108642)Principaltransactions 418686Investmentincomeonassuranceactivities 64834Premiumsandreinsurancerecoveriesoninsurancecontracts 6110Otheroperatingincome 54003
Other income 1 331 291
Claimsandreinsurancepremiumsoninsurancebusiness (57774)
Total operating income net of insurance claims 1 954 986Impairmentlossesonloansandadvances (318230)
Operating income 1 636 756Operatingcosts (1196865)Depreciationonoperatingleasedassets (16447)
Operating profit before goodwill and acquired intangibles 423 444Impairmentofgoodwill (6888)Amortisationofacquiredintangibles (6341)
Operating profit 410 215Profitarisingfromassociateconvertedtosubsidiary 73465Netlossonsaleofsubsidiaries (17302)
Profit before taxation 466 378Taxationonoperatingprofitbeforegoodwill (65075)Taxationonintangiblesandsaleofsubsidiaries 6610
Profit after taxation 407 913Operatinglossesattributabletonon-controllinginterests 10962Lossonsubsidiariesattributabletonon-controllinginterests 1641
Earnings attributable to shareholders 420 516
Earnings per share (pence) –basic 49.7–diluted 46.7
Adjusted earnings per share (pence)–basic 43.2–diluted 40.6
59
COMBINED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year to 31 March 2011 £’000
Profit after taxation 407 913
Other comprehensive income:Fairvaluemovementsoncashflowhedges* 9929Gainsonrealisationofavailable-for-saleassetsrecycledthroughtheincomestatement* (4845)Fairvaluemovementsonavailable-for-saleassets* 27631Foreigncurrencyadjustmentsontranslatingforeignoperations 39588Pensionfundactuarialgains 10157
Total comprehensive income 490 373
Totalcomprehensiveincomeattributabletonon-controllinginterests (10710)Totalcomprehensiveincomeattributabletoordinaryshareholders 458064Totalcomprehensiveincomeattributabletoperpetualpreferredsecurities 43019
Total comprehensive income 490 373
*NetoftaxationofGBP5.7million
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COMBINED CONSOLIDATED BALANCE SHEET
For the year to 31 March 2011 £’000
Assets Cashandbalancesatcentralbanks 1769078Loansandadvancestobanks 1468705Cashequivalentadvancestocustomers 535983Reverserepurchaseagreementsandcashcollateralonsecuritiesborrowed 2467775Tradingsecurities 5114322Derivativefinancialinstruments 1799204Investmentsecurities 3328609Loansandadvancestocustomers 18758524Loansandadvancestocustomers–Kensingtonwarehouseassets 1612181Securitisedassets 4924293Interestsinassociatedundertakings 23481Deferredtaxationassets 114838Otherassets 1410593Propertyandequipment 279801Investmentproperties 379527Goodwill 456608Intangibleassets 136452
44 579 974
Otherfinancialinstrumentsatfairvaluethroughprofitorlossinrespectof: –Liabilitiestocustomers 6361296–Assetsrelatedtoreinsurancecontracts –
50 941 270
Liabilities Depositsbybanks 1858893Depositsbybanks–Kensingtonwarehousefunding 975542Derivativefinancialinstruments 1486419Othertradingliabilities 716556Repurchaseagreementsandcashcollateralonsecuritieslent 1599646Customeraccounts/deposits 24441260Debtsecuritiesinissue 2145213Liabilitiesarisingonsecuritisation 4340864Currenttaxationliabilities 206957Deferredtaxationliabilities 148750Otherliabilities 1411137
39 331 237Liabilitiestocustomersunderinvestmentcontracts 6358732Insuranceliabilities,includingunit-linkedliabilities 2564Reinsuredliabilities –
45 692 533Subordinatedliabilities 1287635
46 980 168
61
For the year to 31 March 2011 £’000
Equity Ordinarysharecapital 208Perpetualpreferencesharecapital 153Sharepremium 2242067Treasuryshares (42713)Otherreserves 315878Retainedincome 1131980
Shareholders’ equity excluding non-controlling interests 3 647 573Non-controllinginterests 313529
–Perpetualpreferredsecuritiesissuedbysubsidiaries 317997–Non-controllinginterestsinpartiallyheldsubsidiaries (4468)
Total equity 3 961 102
Total liabilities and equity 50 941 270
62
COMBINED CONSOLIDATED CASH FLOW STATEMENT
For the year to 31 March 2011 £’000
Cashinflowsfromoperations 779885Increaseinoperatingassets (4071957)Increaseinoperatingliabilities 2689207
Net cash outflow from operating activities (602 865)Netcashoutflowfrominvestingactivities (189974)Netcashinflowfromfinancingactivities 156748Effectsofexchangeratechangesoncashandcashequivalents 101032
Net decrease in cash and cash equivalents (535 059)Cashandcashequivalentsatthebeginningoftheyear 3922047
Cash and cash equivalents at the end of the year 3 386 988
Cashandcashequivalentsisdefinedasincludingcashandbalancesatcentralbanks,ondemandloansandadvancestobanksandcashequivalentadvancestocustomers(allofwhichhaveamaturityprofileoflessthanthreemonths).
COMBINED SUMMARISED STATEMENT OF CHANGES IN EQUITY
For the year to 31 March 2011 £’000
Balance at the beginning of the year 3 291 861Totalcomprehensiveincome 490373Share-basedpaymentsadjustments 69518Dividendspaidtoordinaryshareholders (123630)Dividendspaidtoperpetualpreferenceshareholders (20687)Dividendspaidtoperpetualpreferenceshareholdersincludedinnon-controllinginterests (22332)Dividendspaidtonon-controllinginterests (356)Issueofordinaryshares 325886Issueofperpetualpreferenceshares 16138Shareissueexpenses (3632)Issueofequitybysubsidiaries 1493Acquisitionofnon-controllinginterests (3970)Movementoftreasuryshares (45461)Non-controllinginterestsrelatingtodisposalofsubsidiaries (14099)
Balance at the end of the year 3 961 102
63
SEGMENTAL GEOGRAPHIC AND BUSINESS ANALYSIS OF OPERATING PROFIT BEFORE GOODWILL, ACQUIRED INTANGIBLES, NON-OPERATING ITEMS AND TAXATION FOR THE YEAR ENDED 31 MARCH 2011
United Kingdom and Southern Total £’000 Europe Africa Australia Group
AssetManagement 53002 74306 – 127 308WealthandInvestment 25008 15418 – 40 426PropertyActivities 375 40178 7155 47 708PrivateBanking (84041) 2990 (10390) (91 441)InvestmentBanking 8887 65191 (6716) 67 362CapitalMarkets 139978 92211 9860 242 049GroupServicesandOtherActivities (9583) 9780 797 994
Operating profit after minorities 133 626 300 074 706 434 406
Minority interest – equity (10 962)
Operating profit before goodwill and acquired intangibles 423 444
64 PRINTEDBYINCE(PTY)LTD REF.W2CF12251
(IncorporatedinEnglandandWales)(Registrationnumber3633621)Sharecode:INPPRISIN:GB00B4B0Q974(“Investecplc”or“theCompany”)
APPLICATION FORM
AnofferforsubscriptionofInvestecplcnon-redeemable,non-cumulative,non-participatingRanddenominatedperpetualpreferencesharesofR0.001each(“perpetualpreferenceshares”)subjecttoaminimumsubscriptionofR1000000persingleaddresseeactingasprincipal
Please refer to the instructions at the end of this application form before completing this application form. Thisapplicationform,whencompleted,shouldbesenttotherelevantaddressesbelow:
Certificated Rand perpetual preference shares:
InrespectofthoseplaceesoptingforcertificatedRandperpetualpreferenceshares,toComputershareInvestorServices(Pty)Limitedinanenvelopemarked“Investec plc: Offer for Subscription” togetherwithacheque(crossed“nottransferable”withthewords“orbearer”deleted,andcappedatamaximumvalueofR5million)orbanker’sdraftinSouthAfrican currency and drawn in favour of“Investec plc: Offer for Subscription” either by post (POBox 61763,Marshalltown,2107),orbyhandmarked“Investec plc: Offer for Subscription” (GroundFloor,70MarshallStreet,Johannesburg,2001)tobereceivedbynolaterthan17:00onWednesday 22 June 2011.
Dematerialised Rand perpetual preference shares
InrespectofthoseplaceesoptingfordematerialisedRandperpetualpreferenceshares,applicationsmustbemadetotheirdulyappointedCentralSecuritiesDepositoryParticipant(“CSDP”)orbroker, in themannerandtimestipulated in theagreementgoverningtheirrelationshipwiththeirCSDPorbroker,togetherwiththemethodofpaymentrequiredintermsoftherelevantagreementwithsuchCSDPorbroker.
Eachapplicationsubmittedmustbeinonenameonlyandshowonlyoneaddress.TheDirectorsofInvestecplcreservetherighttoacceptanyapplication,inwholeorinpart(inaccordancewiththeproceduresetoutinparagraph6.8ofthePre-ListingStatement),particularlyiftheinstructionsoverleafandassetoutinthePre-ListingStatementarenotproperlycompliedwith.
TheofferforsubscriptionisforaminimumsubscriptionamountofR1000000,persingleaddresseeactingasprincipal.Investecplcwillrejectanyapplicationthatdoesnotcomplywiththiscondition.
TheissuepriceperRandperpetualpreferenceshareandaccordinglythenumberofRandperpetualpreferencesharestobeissuedtoeachinvestorwillbedeterminedontheclosingdateoftheofferforsubscription.
FractionsofRandperpetualpreferenceshareswillnotbe issued.Subscriberswill receiveacashrefundforany fractionthat arises.
To the Directors:
Investec plc
I/We, theundersigned, confirm that I/wehave full legal capacity tocontractand,having read thePre-listingStatement,hereby irrevocably apply for and request you to accept my/our application for the undermentioned number of RandperpetualpreferencesharesinInvestecplcoranylessernumberthatmay,inaccordancewiththeproceduresetoutinparagraph6.8ofthePre-ListingStatement,beallottedtome/ussubjecttotheArticlesofAssociationofInvestecplc.
I/Weencloseacrossedcheque/banker’sdraftmadeoutinfavourof“Investec plc: Offer for Subscription”,fortheappropriateamountdueintermsofthisapplication.
I/WeunderstandthattheissueofRandperpetualpreferencesharesintermsofthePre-ListingStatementisconditionalonthegrantingofalisting,byWednesday 29 June 2011,orsuchlaterdateastheDirectorsmaydetermine,intheSpecialistSecurities– “PreferenceShares” sectorof the JSELimited (“the JSE”)List,of theRandperpetualpreference sharesofInvestecplc,asmorefullysetoutinthePre-ListingStatement.
Dated
Telephonenumber(officehours)( ) Cellphonenumber
Signature
Assistedby(whereapplicable)
A: RESIDENT INDIVIDUAL BENEFICIARY
Surname of individual or Name of corporate body Mr Mrs Miss Othertitle
First names in full (ifanindividual)*
Identity number
Temporary resident permit number
Passport number
Passport Country
Tax number
Street address* Refundcheque(ifany)andperpetualpreferencesharecertificate(ifapplicable)willbesenttothisaddress Postalcode:
Contact name
Fax number
Telephone number ( )
Cellphone number
Additional identity numbers
B: RESIDENT ENTITY BENEFICIARY
Name of entity*
Registration number*
Owner/Partner identity number
Tax number
VAT number
Entity street address* Refundcheque(ifany)andperpetualpreferencesharecertificate(ifapplicable)willbesenttothisaddress Postalcode:
Entity contact name
Entity email
Entity fax number
Entity telephone number ( )
ECA authority number
Date of ECA
*Mandatoryinformationtobesupplied.
C: NON-SOUTH AFRICAN RESIDENT INDIVIDUAL BENEFICIARY
Surname*
Name*
Passport number*
Passport country*
Street address* Refundcheque(ifany)andperpetualpreferencesharecertificate(ifapplicable)willbesenttothisaddress Postalcode:
Country*
D: NON-SOUTH AFRICAN RESIDENT ENTITY BENEFICIARY
Name*
Entity street address*
Refundcheque(ifany)andperpetualpreferencesharecertificate(ifapplicable)willbesenttothisaddress Postalcode:
Country*
E: ALL APPLICANTS
TOTAL VALUE OF PERPETUAL PREFERENCE SHARES APPLIED FOR SUBSCRIPTIONS MUST BE IN MULTIPLES OF R100.00, SUBJECT TO A MINIMUM OF R1 000 000.00 Randamount*
Total amount of cheque or banker’s draft R (Enterfiguresonly–notwords)
*Mandatoryinformationtobesupplied.
A: ThissectiontobecompletedbySouthAfricanresidentindividuals.
B: ThissectiontobecompletedbySouthAfricanresidententities.
C: Thissectiontobecompletedbynon-SouthAfricanresidentindividuals.
D: Thissectiontobecompletedbynon-SouthAfricanresidententities.
E: Thissectiontobecompletedbyallapplicants.
Please note the Rand perpetual preference shares that will be allocated relative to this application will be in certificated form. Subscribers who wish to receive dematerialised shares must contact their CSDP or broker.
If you do not wish to receive the allocated perpetual preference shares in uncertificated form kindly insert your details in the space provided and the perpetual preference share certificate will be sent to you, per registered post, at your own risk.
N.B. Perpetual preference shares will only be traded on the JSE in electronic form and, as such, all preference shareholders who elect to receive certificated perpetual preference shares will have to dematerialise their certificated perpetual preference shares should they wish to trade therein.
Application for certificated Rand perpetual preference shares:
SUBSCRIBERS WISHING TO RECEIVE CERTIFICATED RAND PERPETUAL PREFERENCE SHARES
IwishtoreceivemyRandperpetualpreferencesharesincertificatedformandIacknowledgethattheseperpetualpreferenceshareswillnotbetradableontheJSEuntildematerialized.
KindlyposttheRandperpetualpreferencesharecertificatetothefollowingaddress:
Name
Address
Application for uncertificated (dematerialised) Rand perpetual preference shares:
SUBSCRIBERS WANTING TO RECEIVE UNCERTIFICATED RAND PERPETUAL PREFERENCE SHARES MUST CONTACT THEIR CSDP OR BROKER.
TheCSDPorbrokerwilladdtheirconfirmationthattheyholdasecuritiesaccountintheirbooksinyournameandforwardanapplication,dulyauthenticated,intermsofStrateforprocessingtheissue.Paymentwillbeeffectedonadeliveryversuspaymentbasis.
RequiredinformationmustbecompletedbyCSDPorbrokerwiththeirstampandsignatureaffixedthereto.
CSDP name
CSDP contact person
CSDP contact telephone number
SCA number
Scrip account number
Settlement bank account number
Stamp and signature of CSDP or broker
INSTRUCTIONS:
1. Applicationsmaybemadeonthisapplicationformonly.Copiesorreproductionsoftheapplicationformwillnotbeaccepted.
2. ApplicationsareirrevocableandmaynotbewithdrawnoncesubmittedtotheTransferSecretaries.
3. Pleaserefertothetermsandconditionsoftheofferforsubscriptionsetoutinparagraph6ofthePre-ListingStatement.Applicantsshouldconsulttheirstockbroker,bankerorotherprofessionaladviserincaseofdoubtastothecorrectcompletionofthisapplicationform.
4. Applicantsmustsubmitonlyoneapplicationformandonechequeorbanker’sdraftinrespectofeachapplication.
5. Receiptswillnotbeissuedforapplicationforms,applicationmoniesoranysupportingdocumentation.
6. Ifanychequeorbanker’sdraftisdishonoured,Investecplcmay,initssolediscretion,regardtherelevantapplicationasinvalidortakesuchotherstepsinregardtheretoasitmaydeemfit.
7. Allalterationsonthisapplicationformmustbeauthenticatedbyafullsignature.
8. BlockedRandmaynot beusedby former residentsof the commonmonetary area (comprising theRepublicsofSouth Africa and Namibia and the Kingdoms of Swaziland and Lesotho) for payment in terms of this offer andreferenceshouldbemadetoparagraph6.6of thePre-ListingStatementwhichdealswithSouthAfricanExchangeControl Regulations.
9. Iftheconditionreferredtoinparagraph6.3ofthePre-ListingStatementisnotmet,allmonieswillbeappropriatelyrefundedwithoutinterestwithinsevenbusinessdaysofsuchdate.
Broker’s stamp (if applicable)