Wrap Text
AFP - Alexander Forbes Equity Holdings Proprietary Limited - Unaudited
interim results for the six months ended 30 September 2011
ALEXANDER FORBES PREFERENCE SHARE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2006/031561/06)
ISIN code: ZAE000098067
Share code: AFP
Alexander Forbes Equity Holdings Proprietary Limited
(Incorporated in the Republic of South Africa)
Registration number: 2006/025226/07
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011
- Income from operations, net of direct product costs, up 10% to R2
billion
- Profit from operations before non-trading items increase by 14%
to R484 million
- Strong trading profit performance by the core Financial Services
and Investment Solutions businesses, up 17% and 16% respectively
- Loss after finance costs and tax of continuing operations
increased by 6% to R84 million
- Strategic growth initiatives continue to show traction,
particularly in the individual client sector.
REVIEW OF ACTIVITIES
Alexander Forbes Equity Holdings Proprietary Limited ("AFEH") is the
ultimate holding company of the Alexander Forbes group of companies ("the
group") and its financial results are made publicly available solely for
purposes of further informing the financial results of the listed Alexander
Forbes Preference Share Investments Limited, which holds a 26.5% stake in
the issued ordinary shares of AFEH and also holds certain other instruments
issued by the company and its subsidiaries.
Following the announcement made on 31 August 2011 regarding the proposed
sale of our Risk Services businesses, these businesses have now been
treated as discontinued operations for purposes of this results
announcement. Certain regulatory approvals, such as competition
commissions in SA and other African countries, are still awaited while
other conditions precedent to the transaction are currently being dealt
with. Despite these outstanding matters, in view of management, the
transaction is at a stage where treatment as a discontinued operation from
an accounting perspective is applicable. The results of discontinued
operations are shown separately from continuing operations.
Overall the group`s results for the first six months of the financial year
have been pleasing and in particular it has been encouraging to see the
growth in top line revenue for the period. As previously reported, the
strategic growth areas continue to show strong positive traction and
delivered pleasing growth while, as expected, the more mature parts of the
business are still feeling the effects of the global economic uncertainties
and lower economic growth rates in both SA and the UK. Operating income
from continuing operations, net of direct product costs, totalled over R2
billion, an increase of 10% from the comparable six month period of the
previous financial year. Growth in income in all the retail (individual
client) market segments combined increased by 12% but this was offset by
somewhat lower growth in the larger but more mature areas of our business.
Operating expenses of R1.5 billion increased by 8% for the period under
review. We continue to balance disciplined cost management in the
established business areas with investment in the strategic growth areas,
particularly to support our expansion in the individual client market. In
addition, it is anticipated that the sale of the Risk Services business
will, in the short term, result in certain stranded centralised cost which
is reflected in the restated numbers following the treatment of that
operational segment as a discontinued operation. These stranded costs will
over time be rebased or will provide additional capacity for future growth
particularly in areas such as IT infrastructure.
Profit from continuing operations before non-trading items increased by 14%
to R484 million from the comparable six month period of the previous
financial year. The loss after finance cost and taxation from continuing
operations has increased by 6% to R84 million. This loss should be viewed
in light of the ongoing accounting amortisation of intangible assets which
arose from the business combination (acquisition by the current
shareholders in 2007) amounting to R87 million for the six month period
(refer note 5).
A brief commentary on the operating results for each of the main businesses
follows. We have expanded the segmental reporting to include the Guardrisk
group and Alexander Forbes Insurance as separate reportable segments in
line with the operational changes made following the announcement of the
potential sale of the Risk Services businesses. In addition, Alexander
Forbes Compensation Technologies, is now included in the SA Financial
Services operational segment to also be in line with its revised
operational management.
- SA Financial Services
Income from operations increased by 7% to R715 million for the six month
period and trading profit increased by 17% to R155 million. Strong new
business growth was achieved in all the major divisions. A very pleasing
number of new client appointments were gained in our core retirement funds
division and healthcare broking business during the six months. Client
retention has remained strong despite a competitive operating environment.
Growth in members under administration in our retirement fund
administration business was particularly strong and grew by 12% compared to
the previous period. In addition, we administer the monthly payments to
pensioners where numbers increased by 7%. We continue to invest in
operational efficiencies in our administration areas with a focus on
improving the client experience and automation of manual processes.
We continue to see strong growth in our umbrella retirement fund offering
with our flagship fund, The Alexander Forbes Retirement Fund, is now one of
the largest funds of its kind in the market. The new umbrella fund
offering, AF Access, for the independent financial advisory market
continues to gain traction in the market.
Our retail investment platform has been well received and enjoyed strong
net new cash flows with significant new business flows written in the year
and assets under management on our retail administration platform totaling
R30 billion at 30 September 2011. In line with our focus on the retail
(individual client) segment of the market, we continued to increase the
size of our internal advisory force during the six month period. Alexander
Forbes Life achieved strong new business growth, from a relatively low
base, increasing premiums by 35%. The underwriting result for the group
life book is seeing an improvement as the volumes in this business grow.
- Investment Solutions
Income from operations increased by 16% to R260 million for the six month
period and trading profit increased by 16% to R144 million. This was
driven by the increase in assets under management from R183 billion at 31
March 2011 to R190 billion at 30 September 2011 driven by a recovery,
albeit volatile, in equity markets.
New business flows have been encouraging during the six month period
although the ongoing benefit payments to fund members remain relatively
high, reflecting the underlying pressure the South African economy still
continues to face. It is pleasing to note that most of our investment
portfolios are ahead of their respective benchmarks over medium to long
term measurement periods.
We continue to focus on increasing the depth in expertise throughout the
business, restructuring of the operations area to achieve optimal
efficiencies as well as on achieving superior investment performance.
- SA Risk Services
Income from operations increased by 1% to R270 million for the six month
period and trading profit increased by 16% to R59 million. Continued
difficult economic conditions impacting on most of our clients and their
demand for insurance cover, softer rates and highly competitive insurance
broking markets resulted in the low income growth in the business.
Specialist segments, such as construction projects, reported lower income
than the comparative period while income for the commercial broking
division has been flat year on year. Trading margin in the Corporate
broking business improved as a result of good retention rates on recurring
business and improved levels of new business.
Tight expense management continued in the business, mainly from efficiency
initiatives implemented across the businesses. This has been balanced with
the need to continue investing in technical and specialist skills to ensure
that the business remains the provider of choice for current and
prospective clients.
This business, along with the risk services businesses throughout our
AfriNet operations, are the subject of the sale transaction and is now
reflected as discontinued operations in line with relevant accounting
standards.
- Alexander Forbes Insurance ("AF Insurance")
Gross premiums increased by 13% over the same period to R444 million, a
good achievement in light of the competition in the motor and household
insurance market. Net income from operations increased by 12% to R140
million for the six month period and trading profit increased by 5% to R39
million. Income growth was marginally lower than growth in premium income
due to a reduction in operational interest income from the current low
interest environment.
We continued to invest in the sales capacity within the business increasing
our sales team by 40% since September 2010 and focused on our strategic
partnerships in the motor vehicle space. As a result, new business written
during the six months increased by a very pleasing 31%.
Underwriting results worsened in this six month period from new motor
portfolios and large claims in the first quarter of the year. Underwriting
remains an area of focus for management although the absolute level of risk
assumption in the business still remains relatively low.
- Guardrisk
Income from operations increased by 11% to R153 million for the six month
period and trading profit increased by 11% to R70 million. Strong new
business growth was achieved in the Corporate Risk Services division as
well as good organic growth in the Life division. New clients incepting
during the second half of the previous financial year in the Volume and
Affinity and Underwriting Managers divisions performed better than
expected. We continued to focus on strategies to grow revenue of existing
clients in our retail sector. Underwriting results were negatively
impacted by increased reinsurance costs.
Lost business and new business growth in the Guardrisk Allied Products and
Services division remains a challenge as a result of highly competitive
markets. Strategies are being implemented to increase business retention
and new business growth in this part of the business
Tight expense management continued in the business resulting in a healthy
and stable trading margin. Increased resource requirements as a result of
the implementation and demands of the regulatory Solvency Assessment
Management (SAM) initiative resulted in an increase in personnel cost to
further enhance our technical capabilities.
- AfriNet (covering all operations in Africa outside of South
Africa)
Income from operations increased by 4% to R149 million for the six month
period and trading profit decreased by 17% to R29 million. In the six
months period, our AfriNet operations faced tough competition, increase in
regulatory capital requirement, decline in foreign direct investment and
political evolutions. This impacted on both our Financial Services and
Risk Services businesses in AfriNet, with both showing disappointing
results from poor new business and slow economic activity. Our Financial
Services operation in Kenya is showing some exciting growth in revenue
however a challenging operating environment remains the key hurdle in most
of our operations.
The short term insurance broking operations within the AfriNet network are
included in the sale transaction mentioned earlier and consequently also
included in discontinued operations.
- International Financial Services
Income from operations increased by 8% to GBP56.7 million for the six month
period and trading profit increased by 2% to GBP4.9 million. The United
Kingdom and European operations continued to be affected by the uncertain
economic environment with unemployment in the UK at a 17 year high at 8.1%.
Due to financial pressures on employers, as well as other pending
legislative changes, many employers are adopting a wait and see approach to
employee benefit related expenditure. Despite this, we continued to win
significant new clients and capitalise on the demand for consulting and
investment advice, and de-risking solutions.
LCP, in particular, continued its strong growth. Alexander Forbes
Financial Services made good progress in improving its quality of earnings
through a mixture of new services, larger clients and recurring, as opposed
to historic upfront, commission, in anticipation of the implementation of
the Retail Distribution Review in 2013. Alexander Forbes Trustee Services
continued to perform strongly in line with prior year.
- International Investment Solutions
Income from operations increased by 35% to GBP2.3 million for the six month
period and trading profit increased to GBP0.4 million. This was supported
by an increase in assets under management of GBP0.3 billion, to total
GBP1.9 billion at 30 September 2011. The focus continues to be to grow UK-
sourced assets under management through delivery of both DB and DC pension
and other investment solutions.
Regulatory capital changes
As previously reported, the introduction of the new capital adequacy
requirements for long-term insurers by the Financial Services Board (FSB)
took effect in June 2010. This is an interim measure in advance of the
implementation of the Solvency Assessment and Management framework (SAM)
expected to be implemented in 2013. The new requirement has a significant
impact on the level of capital required to be carried in particular by
Investment Solutions as the required capital is determined based on the
level of liabilities. This requirement is irrespective of whether those
liabilities are solely as a result of linked investment contracts (as in
the case of Investment Solutions where no underwriting risk is taken) or
long term insurance liabilities where actual underwriting risk is taken.
In addition, the new capital adequacy requirements for financial advisory
and intermediary (FAIS registered) businesses from the end of December 2010
impacted on the level of cash required to be retained in the businesses to
meet these capital requirements.
The larger part of these capital requirements have been made in the
previous financial year. An additional amount of R39 million was
introduced in the current period in line with the phasing in requirements
and business growth. In addition to the above requirements, the FSB
indicated that the implementation of consolidated or group supervision is
likely to be introduced during 2012. As a consequence, the current capital
structure of the group is being reviewed to ensure that it best meets the
long term regulatory and operational requirements of the group.
The group intends to make full payment of the interest on the High Yield
Term Loan for the six months ending 18 December 2011.
Prospects
As noted previously, our strategic growth plans are being implemented with
the caution and responsibility appropriate in these uncertain economic
circumstances and given the group`s debt servicing requirements. Balancing
the protection of our profitability while simultaneously driving investment
in the business, to achieve top-line revenue growth will ensure the long
term sustainability of the group and the delivery of superior client and
shareholder value creation. Periodically, environmental and economic
factors outside of our control may dictate where our emphasis should lie.
However, we remain committed to our stated long term growth ambitions. Our
strategic growth areas and plans are well defined and managing the pace of
transformation of our business in those areas, without forfeiting our
strong position in the more mature areas of business, is of paramount
importance.
Change in directorate
There have been additional changes to the board of directors since the
publication of our results announcement for the year ended 31 March 2011,
on 14 June 2011. The board regrets to advise of the resignations of
Messrs: T Matiwaza and VR Ngalwana with effect from 30 September 2011. Mr
MD Collier was appointed independent Director on 1 August 2011, and Mr D
Ngobeni was welcomed to the board, as a non-executive director, with Mr JS
Masondo as his alternate on 24 November 2011. The board would like to
thank the outgoing directors for their valuable contribution and welcome
the appointees for accepting their new roles.
On behalf of the board of directors
M S Moloko E Chr Kieswetter
Chairman Group Chief Executive Officer
Johannesburg
28 November 2011
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2011
30 30 12
Sep Sep months
31 Mar
2011 2010 2011
Notes Rm Rm Rm
Continuing operations
Fee and commission income 3 2 129 1 974 4 214
Net income from insurance operations 4 221 169 368
Direct expenses attributable to fee and (344) (312) (639)
commission income
Operating income net of direct expenses 2 006 1 831 3 943
Operating expenses (1 (1 (2
522) 406) 938)
Profit from operations before non- 484 425 1 005
trading and capital items
Non-trading and capital items 5 (87) (62) (137)
Operating profit 397 363 868
Investment income 7 21 50
Finance costs 6 (399) (391) (785)
Share of net (loss) / profit of (1) 1 -
associates (net of income tax)
Profit/(loss) before taxation 4 (6) 133
Income tax expense (88) (73) (192)
Loss for the period from continuing (84) (79) (59)
operations
Discontinued operations
Profit from discontinued operations (net 7 19 24 31
of finance costs and income tax)
Loss for the period (65) (55) (28)
Loss attributable to:
Equity holders (85) (72) (75)
Non-controlling interest 20 17 47
(65) (55) (28)
Headline loss per ordinary share (cents) 8 (22) (19) (16)
Basic loss per ordinary share (cents) 8 (22) (19) (20)
CONDENSED CONSOLIDATED STATEMENT OF OTHER
COMPREHENSIVE INCOME
for the six months ended 30 September
2011
30 30 12
Sep Sep months
31 Mar
2011 2010 2011
Rm Rm Rm
Loss for the period (65) (55) (28)
Foreign currency translation 79 (4) 10
differences of foreign operations
Changes in fair value of cash flow (40) (13) (19)
hedges
Portion of fair value hedge recycled to 41 - 66
profit or loss
Other comprehensive profit/(loss) for the 80 (17) 57
period (net of income tax)
Total comprehensive profit/(loss) for the 15 (72) 29
period
Total comprehensive profit attributable
to:
Equity shareholders (15) (88) (29)
Non-controlling shareholders 30 16 58
Total comprehensive profit/(loss) for the 15 (72) 29
period
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 September 2011
30 30 31 Mar
Sep Sep
2011 2010 2011
Notes Rm Rm Rm
ASSETS
Financial assets held under multi- 190 169 183
manager investment contracts 277 268 483
Financial assets of cell captive 8 519 7 432 7 738
insurance facilities
Property and equipment 167 200 201
Purchased and developed computer 143 158 151
software
Goodwill 4 716 5 258 5 258
Intangible assets 1 517 1 814 1 728
Investments in associates 9 1 6 8
Deferred tax assets 131 152 145
Financial assets 774 281 426
Insurance receivables 840 611 713
Trade and other receivables 943 767 930
Cash and cash equivalents 2 819 2 652 3 093
Assets of disposal group classified as 7 1 341 141 25
held for sale
Total assets 212 188 203
188 740 899
EQUITY AND LIABILITIES
Equity holders` funds 2 127 2 083 2 142
Non-controlling interest 149 163 172
Total equity 2 276 2 246 2 314
Financial liabilities held under multi- 190 169 183
manager investment contracts 249 217 452
Liabilities of cell captive insurance 8 519 7 432 7 738
facilities
Borrowings 6 013 5 770 5 828
Employee benefits 157 165 165
Deferred tax liabilities 548 590 574
Provisions 362 328 392
Operating lease liability 50 191 67
Deferred income 55 17 120
Insurance payables 2 347 1 818 2 148
Trade and other payables 1 034 883 1 101
Liabilitites of disposal group 7 578 83 -
classified as held for sale
Total liabilities 209 186 201
912 494 585
Total equity and liabilities 212 188 203
188 740 899
Total equity per above 2 276 2 246 2 314
Number of ordinary share in issue 377 377 377
(millions)
Net asset value per ordinary share 604 596 614
(cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2011
30 30 12
Sep Sep months
31 Mar
2011 2010 2011
Rm Rm Rm
Cash flow from operating activities
Cash generated from operations 590 452 1 162
Net finance costs paid (84) (124) (235)
Cash settlement of cash management and (9) (14) (16)
employee benefit commitments
Taxation paid (118) (125) (225)
Operating cash flows 379 189 686
Movement in working capital and insurance 208 (87) 424
balances
Net cash inflow from operating activities 587 102 1 110
Cash (outflow)/inflow from investing (403) 110 (204)
activities
Cash outflow from financing activities (189) (111) (269)
Cash (outflow)/inflow from policyholder (11 (8 845
investment contracts 128) 707)
Cash inflow/(outflow) from discontinued 122 70 (95)
operations
Net movement in cash and cash equivalents (11 (8 1 387
011) 536)
Cash and cash equivalents at beginning of 22 20 20 690
period 066 690
Foreign subsidiaries translation adjustment 53 6 (11)
Cash and cash equivalents at end of period 11 12 22 066
108 160
Analysed as follows:
Cash and cash equivalents of discontinued 461 104 17
operations
Cash and cash equivalents of continuing 2 819 2 652 3 093
operations
Cash held under multimanager investment 6 696 8 571 18 469
contracts
Cash held under cell captive insurance 1 132 833 487
facilities
11 12 22 066
108 160
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2011
Share Non- Accumulated loss
capital distributable
and reserve
premium
Rm Rm Rm
At 31 March 2010 3 261 (313) (777)
(Loss)/Profit for - - (72)
the period
Other - (16) -
comprehensive
loss
Total - (16) (72)
comprehensive
loss
Movement in - 6 (6)
contingency
reserve for short-
term insurance
company
Other movements - - -
in non-
controlling
interest
At 30 September 3 261 (323) (855)
2010
(Loss)/Profit for - - (3)
the period
Other - 62 -
comprehensive
profit
Total - 62 (3)
comprehensive
loss
Movement in - 9 (9)
contingency
reserve for short-
term insurance
company
Other movements - - -
in non-
controlling
interest
At 31 March 2011 3 261 (252) (867)
(Loss)/Profit for - - (85)
the period
Other - 70 -
comprehensive
profit
Total - 70 (85)
comprehensive
loss
Movement in - 4 (4)
contingency
reserve for short-
term insurance
company
Other movements - - -
in non-
controlling
interest
At 30 September 3 261 (178) (956)
2011
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2011
Equity Non-controlling Total equity
holders` interest
Rm Rm Rm
At 31 March 2010 2 171 179 2 350
(Loss)/Profit for (72) 17 (55)
the period
Other (16) (1) (17)
comprehensive
loss
Total (88) 16 (72)
comprehensive
loss
Movement in - - -
contingency
reserve for short-
term insurance
company
Other movements - (32) (32)
in non-
controlling
interest
At 30 September 2 083 163 2 246
2010
(Loss)/Profit for (3) 30 27
the period
Other 62 12 74
comprehensive
profit
Total 59 42 101
comprehensive
loss
Movement in - - -
contingency
reserve for short-
term insurance
company
Other movements - (33) (33)
in non-
controlling
interest
At 31 March 2011 2 142 172 2 314
(Loss)/Profit for (85) 20 (65)
the period
Other 70 10 80
comprehensive
profit
Total (15) 30 15
comprehensive
loss
Movement in - - -
contingency
reserve for short-
term insurance
company
Other movements - (53) (53)
in non-
controlling
interest
At 30 September 2 127 149 2 276
2011
SEGMENTAL RESULTS
for the six months ended 30 September 2011
Operating income net of Profit from
direct expenses operations before
non-trading and
capital items
30 Sep Var. 30 Sep 30 Var. 30
Sep Sep
2011 % 2010 2011 % 2010
Africa (Rm)
SA Financial Services 715 7% 669 155 17% 132
Investment Solutions 260 16% 224 144 16% 124
SA Risk Services 270 1% 268 59 16% 51
AF Insurance 140 12% 125 39 5% 37
Guardrisk 153 11% 138 70 11% 63
AfriNet 149 4% 143 24 (17%) 29
Total Africa (Rm) 1 687 8% 1 567 491 13% 436
International (GBPm)
Financial Services 56.7 8% 52.5 4.9 2% 4.8
Investment Solutions 2.3 35% 1.7 0.4 300% 0.1
Total International (GBPm) 59.0 9% 54.2 5.3 8% 4.9
Total International (Rm) 647 6% 611 65 16% 56
Total Group (Rm) 2 334 7% 2 178 556 13% 492
Less: Discontinued (328) (5%) (347) (72) 7% (67)
operations(refer note 7)
Total continuing 2 006 10% 1 831 484 14% 425
operations (Rm)
Depreciation & Assets
Amortisation
30 Sep Var. 30 Sep 30 Var. 30
Sep Sep
2011 % 2010 2011 % 2010
Africa (Rm)
SA Financial Services 9 13% 8 31 25% 25
580 229
Investment Solutions 2 100% 1 173 9% 158
143 420
SA Risk Services 5 - 5 1 487 2% 1
453
AF Insurance 1 - 1 345 15% 301
Guardrisk 1 - 1 9 651 22% 7
881
AfriNet 3 - 3 2 071 14% 1
823
Total Africa (Rm) 21 11% 19 218 12% 195
277 107
International (GBPm)
Financial Services 1.1 57% 0.7 130 26% 103
Investment Solutions - - - 1 429 43% 999
Total International (GBPm) 1.1 57% 0.7 1 559 41% 1
102
Total International (Rm) 9 - 9 19 56% 12
009 150
Less: Discontinued (7) 17% (6)
operations
Unallocated:
Corporate Services 23 44% 16 745 (37%) 1
185
Goodwill - - 5 268 - 5
258
Consolidation - - (31 25% (24
elimination* 111) 960
)
Total Group (Rm) 46 20% 38 212 12% 188
188 740
* This amount relates mainly to assets invested by group companies with
Investment Solutions
NOTES
for the six months ended 30 September 2011
1. Basis of preparation
The condensed consolidated financial statements have been
prepared in accordance with, International Financial Reporting
Standards ("IFRS"), and comply with IAS 34 Interim Financial
Reporting, the Listing Requirements of the JSE Limited and the
South African Companies Act No 71 of 2008.
The accounting policies applied in the preparation of these
condensed consolidated financial statements are consistent with
those applied in the annual financial statements for the year
ended 31 March 2011.
These condensed consolidated financial statements were compiled
under the supervision of Deon Viljoen, CA(SA), the Group Chief
Financial Officer.
30 Sep 30 Sep 31 Mar
2011 2010 2011
2. Exchange rates
The income statements and balance
sheets of significant foreign
subsidiaries have been translated to
Rands as follows:
Weighted average R:GBP rate 11.3 11.3 11.1
Closing R:GBP rate 12.2 11.0 10.9
30 Sep 30 Sep 12
months
31 Mar
2011 2010 2011
Rm Rm Rm
3. Fee and commission Income
Brokerage fees and commission income 84 78 168
Fee income from consulting and 1 417 1 323 2 849
administration services
Revenue from investment activities 605 550 1 123
Interest income from lending 16 15 49
operations
Operational interest income 4 3 9
Other 3 5 16
2 129 1 974 4 214
4. Net income from insurance operations
Insurance premiums earned 2 793 2 051 4 462
Less: amounts ceded to reinsurers (1 (1 (3
804) 478) 132)
Investment income from insurance 58 56 107
operations
Less: insurance claims and withdrawals (1 (1 (2
893) 219) 834)
Plus: insurance claims and benefits 1 067 759 1 765
covered by reinsurance contracts
221 169 368
30 Sep 30 Sep 12
months
31 Mar
2011 2010 2011
Rm Rm Rm
5. Non-trading and capital items
Non trading:
Professional indemnity insurance 1 (1) (26)
cell
Amortisation of intangible assets (87) (88) (176)
arising from business combination
Movements in provisions relating - 26 81
to client settlement, claims and
warrantees
Capital items:
Capital gain on sale of subsidiary (1) 1 (16)
& other
(87) (62) (137)
6. Finance costs
Finance costs requiring servicing (245) (130) (307)
Accrued interest not requiring (154) (261) (478)
servicing
(399) (391) (785)
7. Discontinued operations
The Risk Services operations in South Africa and elsewhere in
Africa that are being merged and sold to Marsh Inc.and its
subsidiaries have been classified as discontinued operations
in accordance with IFRS 5. Consequently the results of these
operations are shown separately from continuing operations in
the income statement and statement of cash flows, comparatives
have been restated accordingly. The assets and liabilities of
the Risk Services operations have been classified as held for
sale in the statement of financial position. For purposes of
the balance sheet, in accordance with IFRS 5, comparative
figures have not been restated. The comparatives include other
insignificant discontinued operations that were in existence at
those dates.
Assets and liabilities of disposal
group classified as held for sale
Property and equipment 19 - -
Purchased and developed computer 2 - -
software
Goodwill 552 - -
Other intangible assets 126 - -
Investment in associates 4 - -
Cash and cash equivalents 461 104 17
Financial assets 7 17 -
Other current assets 170 20 8
Total assets 1 341 141 25
Deferred income 74 - -
Trade, insurance and other payables 440 8 -
Other current liabilities 64 75 -
Total liabilities 578 83 -
Condensed income statement from
discontinued operations
Income from operations 328 347 668
Operating expenses (256) (280) (542)
Operating profit before non-trading 72 67 126
and capital items
Net interest expense (44) (34) (79)
Non-trading and capital items (7) (6) (10)
Share of profits from associates 1 1 3
Profit before tax 22 28 40
Taxation (3) (4) (9)
Net profit for the period 19 24 31
Condensed cash flow from discontinued
operations
Cash (utilised)/generated by 119 125 (75)
operations
Cash (outflow)/inflow from investing (11) 83 78
activities
Cash inflow/(outflow) from financing 14 (138) (98)
activities
Effects of the cash flows 122 70 (95)
8. Calculation of headline loss per share
8.1 Basic loss per ordinary share
Basic loss per share is calculated by dividing the loss for the
period attributable to equity holders by the weighted average
number of ordinary shares in issue during the period.
8.2 Headline loss per ordinary share
Headline loss per share is calculated by excluding all non-
trading and capital gains and losses from the loss attributable
to equity holders and dividing the resultant headline
earnings/loss by the weighted average number of ordinary shares
in issue during the period. Headline earnings/loss are defined
in Circular 3/2009 issued by the South African Institute of
Chartered Accountants.
30 Sep 30 Sep 12
months
31 Mar
2011 2010 2011
Rm Rm Rm
8.3 Calculation of headline loss per
share
Loss attributable to equity holders (85) (72) (75)
(IAS 33 earnings)
Adjusting items
- Impairment losses and other capital 1 (1) 16
items
- Tax effect on above adjustment - - -
Headline attributable loss for the (84) (73) (59)
period
Weighted average number of shares 377 377 377
Basic losses per share (cents) (22) (19) (20)
Headline losses per share (cents) (22) (19) (16)
9. Investments in associates
Carrying value in balance sheet 1 6 8
Directors` valuation of associates 4 24 23
10. Capital expenditure for the period 55 45 95
11. Operating lease commitments
Due within one year 167 168 195
Thereafter 1 659 403 1 798
1 826 571 1 993
Capital expenditure and commitments will be funded from
internal cash resources.
Proprietary
Independent directors: M D Collier, D Konar, H P Meyer, B Petersen
Non-executive directors: L Hall-Kimm (Ms), N C Kolbe (Ms), D Ngobeni,
M C Ramaphosa, A Roux, J A van Wyk , A C de Beer (Alternate), J E Douin
(Alternate), J S Masondo (Alternate), M Z Mzimba (Ms) (Alternate)
Executive directors: M S Moloko (Chairman), E Chr Kieswetter (Group Chief
Executive Officer),
D M Viljoen (Group Chief Financial Officer)
Company secretary & Investor relations: J E Salvado (Ms)
Registered office: Alexander Forbes Place, 61 Katherine Street, Sandown,
Sandton, 2196
Transfer secretaries: Computershare Investor Services (Pty) Limited.
Ground Floor, 70 Marshall Street, Johannesburg.
PO Box 61051, Marshalltown, 2107
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited). 1
Merchant Place, corner Fredman Drive and Rivonia Road, Sandton, 2196
Website: www.alexanderforbes.co.za
Date: 28/11/2011 16:25:05 Supplied by www.sharenet.co.za
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