Alexander Forbes - Reviewed Financial Results for the year ended 31 March 2006

Reviewed Financial Results for the year ended 31 March 2006

Review of Operations

Income Statement

Segmental Analysis

Balance Sheet

Highlights

Statement of Changes in Equity

Cash Flow Statement

Notes

Downloads

Reviewed Financial Results for the year ended 31 March 2006

Notes

Basis of preparation

The abridged financial information has been prepared in accordance with, and complies with International Financial Reporting Standards (“IFRS”) and the South African Companies Act of 1973, as amended.
The accounting policies are consistent with those applied in the 2005 financial year except for the changes resulting from the adoption of IFRS. Details relating to these changes were presented with the group's interim results announcement published on 14 November 2005. An additional announcement with regards to policyholder investments accounted for as treasury shares under IFRS was issued on 3 April 2006.

		31 March 2006	31 March 2005
2.	Exchange rates
	The income statements and balance sheets of foreign subsidiaries have been translated to Rands as follows:
	Weighted average R:£ rate	11,3	11,5
	Closing R:£ rate	10,8	11,7
		31 March 2006 Rm	31 March 2005 Rm
3.	Income from operations
	Fee and commission income	5 076	4 622
	Operational interest income from insurance broking activities	63	64
	Interest and other finance income from financing operations	111	63
	Less: Directly related interest expense	(33)	–
	Net premium and investment income from insurance operations	622	386
	Less: Net claims and transfers to policyholders’ funds	(470)	(277)
	Total income from operations	5 369	4 858
4.	Exceptional gains and losses
	Non-recurring restructuring costs (International Risk Services)	14	(111)
	Non-trading currency gain	–	5
	Proposed client settlements for historical bulking practices	(380)	–
	Provision for additional potential historical exposures	(100)	–
	Total exceptional gains and losses	(466)	(106)
5.	Net interest and investment income
	Interest income	70	48
	Dividend income from preference share investments	17	6
	Total interest and investment income	87	54
	Finance costs – bank borrowings	(52)	(57)
	Finance costs – exchangeable bonds	–	(40)
	Other finance costs	(40)	(20)
	Total net interest and investment income	(5)	(63)
6.	Effects of accounting for policyholder investments as treasury shares under IFRS
	Increase in value of shares held on behalf of policyholders	(69)	(20)
	Dividends received on shares held on behalf of policyholders	(12)	(10)
	Total effects	(81)	(30)
	As advised to shareholders in the SENS statement of 3 April 2006, the IFRS requirement to account for Alexander Forbes shares held on behalf of policyholders as treasury shares results in a mismatch in accounting for the asset and liability movement, which does not reflect the economic substance of the transactions.
	As shown above, this mismatch has resulted in the reporting of a R81 million accounting expense in the current year (2005: R30 million expense), whereas no actual economic loss will ever be realised by the group.
	Adjusted measures of headline earnings per share (referred to as core earnings per share) and net asset value per share, which exclude the effects of accounting for policyholder investments as treasury shares, have been presented in order to accurately reflect the underlying economic substance of the transactions and provide meaningful reporting to shareholders.
7.	Investment in associates
	Carrying value in balance sheet	68	66
	Directors’ valuation of associates	99	102
8.	Capital expenditure and commitments
	Depreciation and amortisation for the year	113	122
	Capital expenditure for the year	92	132
	Operating lease commitments
	– Due within one year	190	213
	– Thereafter	976	1 204
		1 166	1 417

Distribution to shareholders

The directors have recommended a distribution to shareholders of 59 cents per share by way of a reduction in share premium for the year ended 31 March 2006. The terms and conditions of the capital reduction are subject to specific approval by the shareholders at the forthcoming annual general meeting, to be held on 8 August 2006.

In compliance with the requirements of STRATE, the following dates are applicable:

Last date to trade cum the distribution	Friday, 25 August 2006
Date trading commences ex the distribution	Monday, 28 August 2006
Record date	Friday, 1 September 2006
Date of payment	Monday, 4 September 2006

Shares may not be dematerialised or rematerialised between Monday, 28 August 2006 and Friday, 1 September 2006 both days inclusive.

Review report

Our auditors PricewaterhouseCoopers Inc, have reviewed the abridged financial information in this report for the year ended 31 March 2006. A copy of their unqualified review report is available on request.