Integrated Annual Report 2015

Directors’ report

Extended business review

We are an international specialist bank and asset manager that provides a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia as well as certain other countries. Investec focuses on delivering distinctive profitable solutions for its clients in three core areas of activity namely, Asset Management, Wealth & Investment and Specialist Banking.

The strategic report in volume one provides an overview of our strategic position, performance during the financial year and outlook for the business. It should be read in conjunction with the sections here in volume one and here in volume two which elaborate on the aspects highlighted in this review.

The directors' report deals with the requirements of the combined consolidated Investec group, comprising the legal entities Investec plc and Investec Limited.


Authorised and issued share capital

Investec plc and Investec Limited

Details of the share capital are set out in note 42 to the annual financial statements

Investec plc

During the year, the following shares were issued:

Investec plc did not repurchase any of its ordinary shares during the financial year ended 31 March 2015.

Investec Limited

During the year, the following shares were issued:

On 23 June 2014, Investec Limited redeemed 81 variable rate redeemable cumulative preference shares at R1 million per share (R0.60 par and premium of R999 999.40 per share).

Investec Limited did not repurchase any of its ordinary shares during the financial year ended 31 March 2015.

At 31 March 2015, Investec Limited held 21 162 694 shares in treasury (2014: 19.0 million). Investec plc held 8 325 971 million shares in treasury (2014: 10.6 million). The maximum number of shares held in treasury by Investec Limited during the period under review was 24 708 870.

Financial results

The combined results of Investec plc and Investec Limited are set out in the annual financial statements and accompanying notes for the year ended 31 March 2015. The preparation of these combined results was supervised by the group risk and finance director, Glynn Burger.


Ordinary dividends

Investec plc

An interim dividend was declared to shareholders as follows:

The dividends were paid on 29 December 2014.

The directors have proposed a final dividend to shareholders registered on 31 July 2015, of 11.5 pence (2014: 11.0 pence) per ordinary share, which is subject to the approval of the members of Investec plc at the annual general meeting which is scheduled to take place on 6 August 2015 and, if approved, will be paid on 14 August 2015, as follows:

Investec Limited

An interim dividend of 146.0 cents per ordinary share (2013: 131.0 cents) was declared to shareholders registered on 12 December 2014 and was paid on 29 December 2014.

The directors have proposed a final dividend of 216 cents per ordinary share (2014: 196.0 cents) to shareholders registered on 31 July 2015 to be paid on 14 August 2015. The final dividend is subject to the approval of members of Investec Limited at the annual general meeting scheduled to take place on 6 August 2015.


Preference dividends

Investec plc

Non-redeemable, non-cumulative, non-participating preference shares

Preference dividend number 17 for the period 1 April 2014 to 30 September 2014, amounting to 7.52055 pence per share, was declared to members holding preference shares registered on 5 December 2014 and was paid on 15 December 2014.

Preference dividend number 18 for the period 1 October 2014 to 31 March 2015, amounting to 7.47945 pence per share, was declared to members holding preference shares registered on 12 June 2015 and will be paid on 22 June 2015.

Rand-denominated non-redeemable, non-cumulative, non-participating preference shares

Preference dividend number 7 for the period 1 April 2014 to 30 September 2014, amounting to 433.55137 cents per share, was declared to members holding Rand-denominated non-redeemable, non-cumulative, non-participating preference shares registered on 5 December 2014 and was paid on 15 December 2014.

Preference dividend number 8 for the period 1 October 2014 to 31 March 2015, amounting to 438.17123 cents per share, was declared to members holding preference shares registered on 12 June 2015 and will be paid on 22 June 2015.

Preferred securities

The seventh annual distribution, fixed at 7.075%, on the €200 million fixed/floating rate, guaranteed, non-voting, non-cumulative perpetual preferred callable securities issued by Investec Tier 1 (UK) LP on 24 June 2005, is due and will be paid on 24 June 2014.

Investec Limited

Non-redeemable, non-cumulative, non-participating preference shares

Preference dividend number 20 for the period 1 April 2014 to 30 September 2014, amounting to 354.91885 cents per share, was declared to shareholders holding preference shares registered on 5 December 2014 and was paid on 15 December 2014.

Preference dividend number 21 for the period 1 October 2014 to 31 March 2015, amounting to 358.70081 cents per share, was declared to shareholders holding preference shares registered on 12 June 2015 and will be paid on 22 June 2015.

Class ILRP1 redeemable non-participating preference shares

Preference dividend number 4 for the period 1 April 2014 to 30 June 2014, amounting to 1256.38415 cents per share, was declared to shareholders holding preference shares on 25 July 2014 and was paid on 28 July 2014

Preference dividend number 5 for the period 1 July 2014 to 30 September 2014, amounting to 1298.95394 cents per share, was declared to shareholders holding preference shares on 24 October 2014 and was paid on 27 October 2014.

Preference dividend number 6 for the period 1 October 2014 to 31 December 2014, amounting to 1303.46388 cents per share, was declared to shareholders holding preference shares on 23 January 2015 and was paid on 26 January 2015.

Preference dividend number 7 for the period 1 January 2015 to 31 March 2015, amounting to 1275.12771 cents per share, was declared to shareholders holding preference shares on 24 April 2015 and was paid on 28 April 2015.

Redeemable cumulative preference shares

Dividends amounting to R19 970 856 (2014: R23 731 999.98) were paid on the redeemable cumulative preference shares.


Directors and secretaries

Details of directors and secretaries of Investec plc and Investec Limited are reflected here in volume one.

In accordance with the UK Corporate Governance Code, the entire board will offer itself for re-election at the 2015 annual general meeting.

OC Dickson, GFO Alford and MP Malungani did not offer themselves for re-election at the annual general meeting held on 7 August 2014.

Sir David Prosser retired from the board on 8 August 2014.

CR Jacobs, Lord Malloch-Brown and KL Shuenyane were appointed as directors on 8 August 2014. On 1 November 2014 and 1 January 2015 respectively, ZBM Bassa and LC Bowden were appointed as directors.

The appointments of CR Jacobs, Lord Malloch-Brown, KL Shuenyane, ZBM Bassa and LC Bowden terminate at the end of the annual general meeting on 6 August 2015, but being eligible will offer themselves for election.

The company secretary of Investec plc is David Miller.

As from 1 July 2014, the company secretary of Investec Limited is Niki van Wyk. Benita Coetsee resigned with effect from 30 June 2014.


Directors and their interests

Directors' shareholdings and options to acquire shares are set out here in volume one.

The register of directors' interests contains full details of directors’ shareholdings and options to acquire shares.


Corporate governance

The group's corporate governance board statement and governance framework are set out here in volume one.


Share incentives

Details regarding options granted during the year are set out here.


Audit committees

The audit committees comprising independent non-executive directors meet regularly with senior management, the external auditors, Operational Risk, Internal Audit, Compliance and the Finance division, to consider the nature and scope of the audit reviews and the effectiveness of our risk and control systems.

Further details on the role and responsibility of the audit committee are set out here.


Auditors

Ernst & Young LLP have indicated their willingness to continue in office as auditors of Investec plc and Ernst & Young Inc. and KPMG Inc. have indicated their willingness to continue in office as joint auditors of Investec Limited.

A resolution to reappoint them as auditors will be proposed at the annual general meeting scheduled to take place on 6 August 2015.


Contracts

Refer here in volume one for details of contracts with directors.


Subsidiary and associated companies

Details of principal subsidiary and associated companies are reflected here.


Major shareholders

The largest shareholders of Investec plc and Investec Limited are reflected here in volume one.


Special resolutions

Investec plc

At the annual general meeting held on 7 August 2014, special resolutions were passed in terms of which:

Investec Limited

At the annual general meeting held on 7 August 2014, the following special resolutions were passed in terms of which:

Accounting policies and disclosure

Accounting policies are set having regard to commercial practice and comply with applicable United Kingdom and South African law and International Financial Reporting Standards.

The parent company accounts of Investec plc continue to be prepared under UK Generally Accepted Accounting Practice (UK GAAP).

These policies are set out here.


Financial instruments

Detailed information on the group’s risk management process and policy can be found in the risk management report here.

Information on the group’s hedge accounting policy and the use of derivatives and hedges can be found here and in notes 23 and 53.


Employees

Our policy is to recruit and promote on the basis of aptitude and ability, without discrimination of any kind. Applications for employment by disabled people are always considered bearing in mind the qualifications and abilities of the applicants.

In the event of employees becoming disabled, every effort is made to ensure their continued employment. Our policy is to adopt an open management style, thereby encouraging informal consultation at all levels about aspects of our operations, and motivating staff involvement in our performance by means of employee share schemes.

We are committed to ensuring the health, safety and welfare of our employees and to providing and maintaining safe working conditions. We have health and safety policies in all regions of operation that cover all legislated requirements and additional benefits are provided for staff where possible. We constantly seek to improve both policies and the execution of health and safety standards in all our offices.

This takes the form of staff education, regular fire drills and maintenance of an open door policy with regard to dialogue on the issue. Where appropriate, the appointment of individuals responsible for various areas of health and safety is made.

Further information is provided here in volume one


Political donations and expenditure

Investec plc did not make any donations for political purposes in the UK or the rest of the EU, nor did it make any political donations to political parties or other political organisations, or to any independent election candidates, or incur any political expenditure during the year. Invested Limited made political donations totalling R1 million in 2015 (2014: R2.5 million).


Environment, including greenhouse gas emissions

We are committed to pursuing sound environmental policies in all aspects of our business and seek to encourage and promote good environmental practice among our employees and within the community in which we operate.

Further information can be found here in volume one.


Going concern

Refer here in volume one for the directors’ statement in relation to going concern


Research and development

In the ordinary course of business, Investec develops new products and services in each of its business divisions.


Additional information for shareholders

Schedule A to the directors' report is a summary of certain provisions of Investec plc's current Articles of Association and applicable English law concerning companies (the UK Companies Act 2006).

The board considers that this integrated annual report and annual financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group's performance, business model and strategy.

On behalf of the boards of Investec plc and Investec Limited

Fani Titi Stephen Koseff
Chairman Chief executive officer

10 June 2015

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