Trading results of operations increased to R791 million for the year. This result was achieved on the back of 11% revenue growth, with income from operations exceeding R5 billion for the first time in the history of the group. The International Risk Services business continued to experience difficult trading conditions during the current year. As detailed below, we are currently reviewing the optimal positioning of International Risk Services to capitalise on the number of growth and development opportunities. Trading results from the group's other operations increased 15% in comparison to the previous year.

The group's multi-manager investment subsidiary, Investment Solutions, recorded 23% revenue growth in its African operations. There was even stronger growth in the trading result up 29% to R264 million resulting from the operational gearing which is integral to the Investment Solutions' business model. Average assets under management increased 33% with closing assets in South Africa reaching R114 billion at 31 March 2006. The business benefited from strong equity market growth and net new business inflows which totalled R3 billion for the year. Relative investment performance continued to be competitive with most portfolios in line with or ahead of their benchmarks.

The UK Investment Solutions business, which was launched to the market in September 2003, continued to attract new clients with assets under management doubling to total £890 million at 31 March 2006. This business is gathering momentum as it approaches £1 billion of assets under management with a competitive three-year investment performance track record. The trading loss recorded by this business is a reflection of the investment made in growing its client and asset base.

Global assets under management totalled R124 billion at year end.

The Africa Risk & Insurance Services business delivered a trading result of R187 million, which is marginally down on the previous year. This was achieved despite a R12 million decrease in operational interest income, a R16 million reduction in contribution from Personal Lines insurance and against a backdrop of difficult industry conditions. Excluding operational interest and the reduced contribution from Personal Lines insurance, the Africa Risk & Insurance business recorded 7% revenue growth and 11% growth in profits. This is a most credible result given the trading conditions prevailing during the year and the results recorded within its industry.

The main contributors to the good trading result were the core Corporate Broking business, Guardrisk (cell captive insurance), the Afrinet network (insurance broking businesses in 10 African countries outside South Africa) and Alexander Forbes Compensation Technologies (claims facilitation for medical providers).

Importantly, good new business gains continued to be recorded by the core Corporate Broking business during the year with a number of large corporate and parastatal appointments. In addition, the business has been successful in attracting additional key client facing staff.

The Africa Financial Services business recorded strong revenue growth with trading results from operations up 12% to R219 million for the year. This growth was driven by a strong performance from the core Actuarial Consulting business with increased revenue from special projects, including those relating to legislative change. The Retirement Funds Administration business delivered a solid result with members under administration increasing to almost 1,5 million at year end.

The Umbrella Fund Retirement business recorded strong growth with members under administration growing 35% to over 97 000 at year end. This business is expected to continue to record strong growth into the future. The other main contributors to the strong growth in trading result were: Health Care Consultants and Health Management Solutions; HomePlan, which increased its pension backed lending book by R550 million to R2.1 billion during the year; and Financial Planning Consultants, which benefited from new business written and strong equity markets during the year.

The International Risk Services business continued to trade in difficult conditions, including rate reductions experienced in a number of insurance classes particularly in Professional Indemnity insurance. The business also incurred costs in implementing positive changes, defending its market position and hiring new production talent thereby negatively impacting short-term profitability. However, revenue decreased only marginally as a result of the factors mentioned above due to positive underlying growth particularly in the International and Specialist lines. Trading results from operations decreased to £1.6 million for the year.

Following a thorough review by the new management team led by Stewart McCulloch, and material actions taken thus far, a number of growth and development opportunities are now being actively pursued. Further, the management team has recently been significantly strengthened with the addition of Mike Hammond (former CEO of JLT Risk Solutions) who has recently joined the group as deputy executive chairman of International Risk Services.

To optimally position International Risk Services to capitalize on the current market opportunities in its sector, the group and senior management team of the business are currently considering the structural options to best support enhanced growth opportunities. These include the possibility of involving a new private investor in International Risk Services alongside Alexander Forbes. Discussions are being held with a few select investors in this regard and, in the event that this option is pursued, it is likely that Alexander Forbes' shareholding in International Risk Services will reduce.

The International Financial Services businesses achieved revenue growth of 24% delivering a trading result of £10,3 million up 39% on the previous year. The actuarial consulting business acquired in 2002, Lane Clark & Peacock, recorded exceptional growth in revenue and profits, benefiting from increased demand for its services in the UK and Swiss markets resulting from continuing pensions market turmoil and legislative change.

The UK-based pensions IFA (Independent Financial Advisory) business also recorded double digit revenue and profit growth with a strong sales performance in the final quarter of the financial year.

The UK-based DC Link Administration business, acquired in 2002, incurred a trading loss but achieved 40% growth in members under administration with members totalling 57,000 at year end.

The continuing UK Direct Marketing operation achieved a break even result as a result of marketing spend incurred during the year. The part of the UK Direct Marketing operations which, as previously advised, is in runoff is shown separately from trading results of operations in the income statement.

Core earnings per share An adjusted measure of headline earnings per share, core earnings per share, has been presented in order to facilitate a more meaningful assessment of the group's trading performance. This adjusted measure:

(A reconciliation is provided of the calculation of headline and core earnings per share below the abridged income statement contained in this announcement.)

Core earnings per share totalled 116 cents for the current year, representing a 3% increase compared to the previous year. As detailed above, growth was adversely impacted by the trading results of International Risk Services. Excluding this business, core earnings per share increased 15%, reflecting the strong trading performance across most of the group's operations.

Proposed distribution to shareholders The overall growth in the group's core operations, as reflected by the growth in core earnings per share, have enabled the Board to propose a 59 cent per share distribution to shareholders. This represents a 12% decrease compared to the distribution for the previous year, reflecting the reduced profit contribution from International Risk Services and the UK direct marketing entity in run-off. The distribution is in line with the previously communicated policy of 2 times dividend cover (based on core earnings per share).

Change in directorate As previously announced, Rael Gordon has indicated his intention to step down from the position of Group Chief Executive. The board is pleased that he has agreed to remain involved for a period in the management of the international part of the group, which is managed from the UK.

The Africa Managing Director, Peter Moyo, has been appointed Group Chief Executive with effect from 1 July 2006. He will continue to be based in Johannesburg. The board is delighted to have an executive of his calibre take over the leadership of the group.

As previously advised, the group has performed a review in relation to the practice within the South African Financial Services business of bulking of retirement funds' current banking accounts and related business practices. This review included the engagement of lawyers, Deneys Reitz and independent auditors, Ernst & Young. A sub-committee consisting of non-executive directors of the Alexander Forbes Limited Board was appointed to consider the findings of the review and to make recommendations to the Board in this regard. After consultation with the FSB, the first part of this process has been substantially concluded and has resulted in an estimated settlement to clients of R380 million. The wider review is nearing completion; this has identified a limited number of additional potential historical exposures for which a further provision of R100 million has been raised. These amounts have been fully provided in the group's results for the current year. Importantly, the exposures identified primarily relate to historical practices which do not have a material effect on current earnings.

Notwithstanding the strong trading results from most of the group's operations, this has been one of the most difficult periods in Alexander Forbes' 70 year history with significant issues raised concerning the historic transparency of income earned by our South African Financial Services business. We failed to live up to our history of dedicated client service in this area of our business, which we sincerely regret. We recognise that the proposed settlement to clients represents only the first step in restoring the trust of our clients. The implementation of additional compliance procedures is underway and we have introduced a number of significant changes to ensure transparency in all dealings with our clients. We do not underestimate the task of restoring the trust of our clients and staff, but are fortunate to have a pool of talented people committed to the task of setting the industry standard.

Shareholders are referred to the announcement dated 6 June 2006, which provided information regarding the possibility of involving a new private investor in the International Risk Services business alongside Alexander Forbes. The announcement also provided information regarding the receipt of a number of unsolicited approaches from various parties about the possibility of concluding a transaction with the group. Following these approaches, the group has commenced discussions with private equity parties regarding a potential transaction to acquire 100% of the group. The discussions are in an early stage and may or may not result in a transaction.

As a result of the potential transactions mentioned above, shareholders are advised to continue to exercise caution when trading in the Alexander Forbes’ securities until a further announcement is made.