28th Nov 2008 09:00
UNAUDITED CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008
Zebra Capital Plans Retails Structured Products Programme
Investec Finance plc
(Incorporated in England and Wales)
(Company Registration Number: 4111949)
Interim Management Report
Investec Finance plc (the 'Company') is a wholly owned subsidiary of Investec Bank (UK) Limited ("IBUK") which is in turn a wholly-owned subsidiary of Investec plc (the 'Investec Group'), which is listed on the London Stock Exchange. The principal activity of Investec Finance plc is to engage in financial arrangements and transactions and to assist in financing the operations of the Investec Group. In previous years the Company has issued Guaranteed Subordinated Step-Up notes, a fixed coupon sterling bond, a Euro denominated floating rate note and has issued Euro Commercial Paper. In the current year the Company has continued to issue Euro commercial paper. In each case the proceeds have been on-lent to the Company's parent on similar terms so as to minimise liquidity and interest rate risk. The Company will continue to operate in this capacity for the foreseeable future.
On May 9, 2008, the Company launched a GBP3,000,000,000 Zebra Capital Plans Retail Structured Products Programme (the 'Programme'). In terms of the Programme, the Company may from time to time issue notes (the 'Notes') that are linked to the performance of one or more Preference Shares issued by Zebra Capital II Limited, a company incorporated in the Cayman Islands. The payment of all amounts due in respect of the Notes will be unconditionally and irrevocably guaranteed by IBUK on an unsubordinated basis. After each issue, applications will be made for the Notes to be admitted to listing on the Official List of the FSA and to trading on the Regulated Market of the London Stock Exchange. As a result, and in terms of the Programme, the Company is required to publicly release its results.
During the period, 7 notes have been issued in terms of the Programme raising circa £3 million. A further three launches are forecast for the second half of the year.
Any market risk with respect to the performance of the Preference Shares is hedged with IBUK. Any liquidity risk or foreign currency risk is eliminated as the terms and currency of the Notes are matched with the terms and currency of the lending to IBUK. As such, all material principal risks and uncertainties are mitigated.
This announcement includes an un-audited condensed set of Financial Statements produced by the Company for the six months ended 30 September 2008. This document will also be available on Investec's website at www.investec.com/GroupLinks/InvestorRelations/.
Enquires and further information:
Investec Company Secretarial
Investec Bank (UK) Limited
Telephone: 020 7597 45412 Gresham Street, London, EC2V 7QPUnited Kingdom
28 November 2008
statement of directors' responsibilities
The directors are responsible for preparing the condensed financial statements in accordance with applicable law and regulations.
FSA Disclosure Rules and Transparency Rules require the directors to prepare condensed financial statements for the half-year. Under Company law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to:
ensure that the interim management report includes a fair review of the important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six months of the financial year;
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the condensed financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
By order of the Board of Directors
Alan Tapnack
Director
28 November 2008
pROFIT AND LOSS ACCOUNT
for the six months ended 30 September 2008
|
Six months to |
Six months to |
Year to |
||||
|
30 September |
30 September |
31 March |
||||
|
2008 |
2007 |
2008 |
||||
|
Notes |
£000 |
£000 |
£000 |
|||
|
Interest receivable from parent undertaking |
20,674 |
29,116 |
55,248 |
|||
|
Interest payable |
2 |
(20,091) |
(28,697) |
(54,185) |
||
|
Amortisation of bond costs |
(546) |
(522) |
(1,044) |
|||
|
Fee income from parent undertaking |
356 |
- |
- |
|||
|
Administration expenses |
3 |
(333) |
- |
- |
||
|
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION |
60 |
(103) |
19 |
|||
|
Taxation |
4 |
- |
- |
- |
||
|
PROFIT/(LOSS) FOR THE PERIOD |
60 |
(103) |
19 |
The above activities are continuing.
There are no recognised gains or losses in the period other than those passed through the profit and loss account.
BALANCE SHEET
at 30 September 2008
|
30 September |
31 March |
30 September |
||||
|
2008 |
2008 |
2007 |
||||
|
Notes |
£000 |
£000 |
£000 |
|||
|
CURRENT ASSETS |
||||||
|
Debtors: |
||||||
|
Amounts falling due after one year - subordinated loans |
5 |
554,963 |
546,892 |
554,963 |
||
|
Amounts falling due after one year |
6 |
- |
12,576 |
12,325 |
||
|
Amounts falling due within one year |
6 |
81,561 |
101,906 |
357,067 |
||
|
636,524 |
661,374 |
924,355 |
||||
|
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
7 |
(64,540) |
(99,256) |
(355,300) |
||
|
NET CURRENT ASSETS |
571,984 |
562,118 |
569,055 |
|||
|
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
8 |
(571,893) |
(562,087) |
(569,146) |
||
|
NET ASSETS |
91 |
31 |
(91) |
|||
|
CAPITAL AND RESERVES |
||||||
|
Called up share capital |
9 |
50 |
50 |
50 |
||
|
Profit and loss account |
10 |
41 |
(19) |
(141) |
||
|
EQUITY SHAREHOLDERS' FUNDS |
11 |
91 |
31 |
(91) |
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
at 30 September 2008
1. ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with the accounting policies set out in the Company's audited Financial Statements as at 31 March 2008, except as noted below.
Derivative instruments
All derivatives instruments of the company are recorded on the balance sheet at fair value. Positive and negative fair values are reported as assets and liabilities respectively.
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at their fair value. Derivative contracts are carried at their fair values by reference to market prices. Transactions are recorded on a trade date basis. Changes in the fair value are recognised immediately in the profit and loss account.
2. interest payable
|
Six months to |
Six months to |
Year to |
|||
|
30 September |
30 September |
31 March |
|||
|
2008 |
2007 |
2008 |
|||
|
£000 |
£000 |
£000 |
|||
|
Interest payable on Subordinated Step-up Notes |
7,750 |
7,750 |
15,500 |
||
|
Interest payable on Subordinated Callable Step-up Notes |
10,937 |
10,937 |
21,935 |
||
|
Interest payable on debt securities in issue - short term |
1,006 |
9,642 |
16,038 |
||
|
Interest payable on debt securities in issue - medium term |
378 |
368 |
712 |
||
|
Interest payable on retail deposits |
20 |
- |
- |
||
|
20,091 |
28,697 |
54,185 |
3. administrative expenses
Administration expenses incurred relate to the GBP3,000,000,000 Zebra Capital Plans Retail Structured Products Programme launched by the Company on May 9, 2008.
The auditors' remuneration has been borne by another Group company. The company has no employees.
4. TAXation
|
30 September |
30 September |
31 March |
|||
|
2008 |
2007 |
2008 |
|||
|
£000 |
£000 |
£000 |
|||
|
Taxation |
- |
- |
- |
The effective rate for the year is different from the standard rate of UK corporation tax due to the following items:
|
30 September |
30 September |
31 March |
|||
|
2008 |
2007 |
2008 |
|||
|
£000 |
£000 |
£000 |
|||
|
Tax on profit/(loss) on ordinary activities at UK rate of 28% (30%:2007) |
17 |
(31) |
6 |
||
|
Losses surrendered (from)/to fellow group companies for nil proceeds |
(17) |
31 |
(6) |
||
|
- |
- |
- |
5. Debtors - Amounts falling due after one year
|
30 September |
31 March |
30 September |
||||
|
Subordinated loans to parent undertaking |
2008 £000 |
2008 £000 |
2007 £000 |
|||
|
At beginning of period |
546,892 |
546,831 |
546,831 |
|||
|
Movement in accrued interest |
8,071 |
61 |
8,132 |
|||
|
At end of period |
554,963 |
546,892 |
554,963 |
The net proceeds of two issues of Step-up Notes by the company have been lent to the immediate parent undertaking, IBUK, on a subordinated basis.
1. The term of the first loan is 1 March 2016 but it may be redeemed at any time after 1 March 2011. The interest rate on the loan is fixed at 8.1618% until 1 March 2011 and interest is paid annually. After 1 March 2011 the interest rate will be reset in line with the interest rate on the Step-up Notes.
2. The second loan is undated but it may be redeemed at any time after 23 January 2017. The interest rate on the loan is fixed at 6.4578% until 23 January 2017 and the interest is paid semi-annually. After 23 January 2017 the interest rate will be reset in line with the interest rate on the Step-up Notes.
The terms of the Step-up Notes, which are guaranteed by IBUK, are detailed in note 8.
6. DEBTORS
|
|
|
30 September
|
|
31 March
|
|
30 September
|
|
Amounts falling due within one year
|
|
2008
£000
|
|
2008
£000
|
|
2007
£000
|
|
Amounts owed by parent undertaking
|
|
81,561
|
|
101,906
|
|
357,067
|
|
|
|
|
|
|
|
|
|
Amounts falling after one year
|
|
|
|
|
|
|
|
Amounts owed by parent undertaking
|
|
-
|
|
12,576
|
|
12,325
|
Amounts owed by the parent undertaking mainly represent the proceeds of the issue of debt securities which have been lent to the parent at the same interest and repayment terms as the debt securities.
7. CREDITORS FALLING DUE WITHIN ONE YEAR
|
|
|
30 September
|
|
31 March
|
|
30 September
|
|
|
|
2008
£000
|
|
2008
£000
|
|
2007
£000
|
|
Amount owed by parent undertaking
|
|
-
|
|
5
|
|
-
|
|
Customer accounts
|
|
2,299
|
|
-
|
|
-
|
|
Derivative financial instruments
|
|
513
|
|
-
|
|
-
|
|
Debt Securities in issue
|
|
61,728
|
|
99,251
|
|
355,300
|
|
|
|
64,540
|
|
99,256
|
|
355,300
|
Debt securities in issue include a number of instruments issued under the Company's Euro Medium Term Note and Euro Commercial Paper programmes. The largest issue at 30 September 2008 is a 6 month FRN USD 110,000,000 issued on 27 August 2008 and repayable on 27 February 2009 at a rate of 3.95875%.The two largest issues at 30 September 2007 are a 3 year Euro denominated FRN with a face value of EUR 175,000,000 issued on 12 October 2004, which was repaid 12 October 2007 bearing interest at three month Euribor plus 0.45% and a 3 year bond issued on 25 February 2005 with a fixed coupon of 5.25% and a face value of GBP 175,000,000 was repaid 25 February 2008. The largest issue at 31 March 2008 is a 6 month FRN GBP 54,151,000 issued on 19 December 2007 which was repaid 19 June 2008 at a rate of 5.75063%.
8. CREDITORS FALLING DUE after more than ONE YEAR
|
|
|
30 September
|
|
31 March
|
|
30 September
|
|
|
|
2008
£000
|
|
2008
£000
|
|
2007
£000
|
|
Guaranteed Subordinated Step-up Notes
|
|
207,318
|
|
199,243
|
|
206,713
|
|
Guaranteed Undated Subordinated Callable Step-up Notes
|
|
350,520
|
|
350,268
|
|
350,108
|
|
Debt Securities in issue
|
|
14,055
|
|
12,576
|
|
12,325
|
|
|
|
571,893
|
|
562,087
|
|
569,146
|
On 1 March 2004 the company issued GBP 200,000,000 7.75% Guaranteed Subordinated Step-up Notes due 2016 at a discount. Interest is paid annually. The notes are guaranteed by IBUK and are listed on the Luxembourg Stock Exchange. The Step-up Notes may be redeemed by the issuer, at par, at any time after 1 March 2011, subject to the prior consent of the Financial Services Authority. On 1 March 2011 the interest rate will be reset to become the aggregate of 3.5% and the gross redemption yield of the relevant benchmark gilt.
On 23 January 2007 the company issued GBP 350,000,000 6.25% Guaranteed Undated Subordinated Step-up Notes callable 2017 at a discount. Interest is paid semi-annually. The notes are guaranteed by IBUK and are listed on the Luxembourg Stock Exchange. The Step-up Notes may be redeemed by the issuer, at par, at any time after 23 January 2007, subject to the prior consent of the Financial Services Authority. On 23 January 2017 the interest rate will be reset to become three month LIBOR plus 2.11% payable quarterly in arrears.
The company issued on 6 June 2006 a 5 year bond with a coupon of 3 month USD LIBOR plus 40 basis points and a face value of USD 25,000,000 repayable 6 June 2011.
9. CALLED UP SHARE CAPITAL
|
|
30 September
|
|
31 March
|
|
30 September
|
|
|
2008
|
|
2008
|
|
2007
|
|
|
£000
|
|
£000
|
|
£000
|
|
Authorised:
|
|
|
|
|
|
|
100,000 (2007 - 100,000) ordinary shares of GBP1 each
|
100
|
|
100
|
|
100
|
|
|
|
|
|
|
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
|
50,000 (2007 - 50,000) ordinary shares of GBP1 each
|
50
|
|
50
|
|
50
|
10. REserves
|
|
30 September
|
|
31 March
|
|
30 September
|
|
|
2008
|
|
2008
|
|
2007
|
|
|
£000
|
|
£000
|
|
£000
|
|
Profit and loss account
|
|
|
|
|
|
|
At beginning of period
|
(19)
|
|
(38)
|
|
(38)
|
|
Profit/(loss) for the period
|
60
|
|
19
|
|
(103)
|
|
|
|
|
|
|
|
|
At end of period
|
41
|
|
(19)
|
|
(141)
|
11. RECONCILIATION OF Movement in SHAREHOLDERS' funds
|
|
30 September
|
|
31 March
|
|
30 September
|
|
|
2008
|
|
2008
|
|
2007
|
|
|
£000
|
|
£000
|
|
£000
|
|
Opening shareholders’ funds
|
31
|
|
12
|
|
12
|
|
Profit/(loss) for the period
|
60
|
|
19
|
|
(103)
|
|
|
|
|
|
|
|
|
Closing shareholders’ funds
|
91
|
|
31
|
|
(91)
|
12. risk management
As a wholly-owned subsidiary of Investec plc, the company falls under the Investec Group's Risk Management Framework which is set out on pages 20 to 79 of Investec plc's 2008 Annual Report. The company's function is to raise finance for the Investec Group and its policy is to on-lend the proceeds of any financial indebtedness to its immediate parent, IBUK, on back to back terms that minimise any liquidity, currency or interest rate risk.
Credit risk
As all funds raised by the company are on-lent to IBUK, the company is therefore dependent on repayment of principal and interest from IBUK for the purposes of meeting its financial obligations. Its financial obligations in respect of the Guaranteed Undated Subordinated Callable Step-up Notes, Guaranteed Subordinated Step-up Notes, fixed coupon sterling bond, Euro denominated floating rate note, Euro Commercial Paper issues and Zebra Capital Plans Retail Structured Products Notes are guaranteed by IBUK.
Liquidity risk
Loans to IBUK are matched in terms of maturity and interest payment dates to those of the related borrowing so as to eliminate any liquidity risk.
Foreign currency risk
Loans to IBUK are denominated in the same currency as the related borrowing so as to ensure that the company is not exposed to foreign currency risk.
Market risk
Any market risk with respect to the performance of the Zebra Capital Plans Retail Structured Products Preference Share Linked Notes is hedged with IBUK. Derivative financial instruments written have been matched with derivative financial instruments purchased from IBUK providing the same terms and conditions and as such mitigating any risk.
13. ULTIMATE parent undertaking
The company's immediate parent undertaking is Investec Bank (UK) Limited.
The company's ultimate parent undertaking and controlling party is Investec plc, a company incorporated in the United Kingdom and registered in England and Wales. The consolidated financial statements of Investec plc and IBUK are available to the public at 2 Gresham Street, London, EC2V 7QP. IBUK is the smallest group and Investec plc is the largest group in which the results of the company are consolidated.
Related Shares:
Investec