Five-year review             2006* Rm   2005* Rm   2004** Rm    2003** Rm    2002** Rm    Summarised group income statement           Income from operations 5 369  4 858  4 404  4 543  3 986  Other income 71  107  133  454  373  Total income 5 440  4 965  4 537  4 997  4 359  Operating expenses (5 094) (4 229) (3 684) (4 291) (3 514) Operating profit 346  736  853  706  845              Analysed as follows:           Trading results of operations 791  772  775  805  638  Profit from direct marketing entity in run-off 41  68  99  160  140  Consolidation of group cell captive insurance arrangement (1) 23  -  -  -  Impairment charges and other capital items (19) (21) (27) -  -  Goodwill amortisation and other capital items -  -  -  (144) (90) Exceptional gains and losses (466) (106) 6  (115) 157  Operating profit 346  736  853  706  845  Net interest (costs)/income (5) (63) (172) (117) (65) Interest and investment income 87  54  79  110  130  Finance costs (92) (117) (251) (227) (195) Net fair value gain (offset by taxation expense attributable to policyholders) 18  9  -  -  -  Effect of accounting for policyholder investments as treasury shares under IFRS (81) (30) -  -  -  Share of net profits of associates 17  5  9  29  61  Profit before taxation 295  657  690  618  841  Taxation           – Taxation expense (220) (190) (211) (221) (315) – Taxation attributable to policyholders' funds (18) (9)       Profit for the year 57  458  479  397  526              Attributable to:           – Ordinary shareholders 12  413  439  322  448  – Minority interests 45  45  40  75  78  Profit for the year 57  458  479  397  526              Reconciliation to headline earnings:           Profit attributable to ordinary shareholders 12  413  439  322  448  Adjusted for:           – Impairment charges and other capital items 19  21  27  144  90  – Share of headline adjusting items of associates (14) 2        – Less: taxation and minority interest thereon -  -  (1) -  (5)             Headline earnings attributable to ordinary shareholders 17  436  465  466  533  Adjusted for:           – Profit from direct marketing entity in run-off (41) (68) (99) (160) (140) – Exceptional gains and losses 466  106  (6) 115  (157) – Loss arising from accounting for policyholder    investments as treasury shares under IFRS 81  30  -  -  -  – Reversal of interest effects of exchangeable bonds -  38  126  139  121  – Tax effects on above items 13  (23) (6) (31) 53  Core earnings attributable to ordinary shareholders 536  519  480  529  410              Summarised group balance sheet           Ordinary shareholders' funds 1 531  1 995  1 140  950  756  Minority interests 82  102  107  120  222  Financial liabilities of investment contracts, cell captive insurance facilities and housing loans 124 098  89 329  64 890  46 302  44 982  Borrowings 678  760  1 829  2 503  2 153  Retirement benefit obligations 236  308  170  187  285  Deferred tax liabilities 95  55  3  1  29  Deferred consideration for acquisitions 191  187  120  -  -  Provisions 680  176  71  98  123  Other liabilities 3 519  3 628  3 426  3 893  6 253  Total equity and liabilities 131 110  96 540  71 756  54 054  54 803  Financial assets of investment contracts, cell captive insurance facilities and housing loans 123 852  89 156  64 890  46 302  44 982  Property, equipment and software 251  290  289  241  231  Goodwill and other intangibles 2 139  2 193  2 002  1 929  1 315  Other assets 2 065  2 273  2 438  3 187  4 441  Cash and cash equivalents 2 803  2 628  2 137  2 395  3 834  Total assets 131 110  96 540  71 756  54 054  54 803              Summarised cash flow statement           Cash from trading operations 958  931  934  1 115  984  Cash from direct marketing entity in run-off 41  68  -  -  -  Movement in working capital and insurance balances 243  76  (184) (878) (55) Taxation and distributions to shareholders (449) (466) (439) (598) (339) Cash flows from investing activities (931) (198) (171) (1 267) (649) Cash flows from financing activities 453  (123) (197) 793  279  Net cash flows 315  288  (57) (835) 220  Foreign subsidiary translation adjustment (140) (16) (201) (604) 928  Net movement in cash balances 175  272  (258) (1 439) 1 148              Ordinary share performance           Earnings per share           – basic earnings (cents) 3  105  127  94  131  – headline earnings (cents) 4  111  135  136  156  – core earnings (cents) 116  113  139  155  120  Diluted earnings per share           – basic earnings (cents) 3  104  127  93  126  – headline earnings (cents) 4  110  134  134  150  Proposed distribution per share (cents) 59  67  67  67  61  Dividend cover (times) 2,0  2,0  2,0  2,0  2,6  Dividend yield (%) 3,9% 5,9% 6,6% 6,5% 4,7% Share price (R)           – average 13,71  10,81  11,24  13,59  15,47  – closing 14,95  11,40  10,20  10,35  13,10  Number of shares in issue           – issued (net of treasury shares) (millions) 443  445  345  345  343  – weighted average (millions) 443  394  345  342  342  – diluted weighted average (millions) 447  396  347  347  356  Net asset value per share (cents) 364  532  361  313  286  Adjusted net asset value per share (cents) 389  552  361  313  286              Profitability           Trading margin (%) 15  16  18  18  16  Effective rate of taxation (%) 27  27  29  29  34  Return on average equity (%)           – core earnings 15  16  17  24  13  Foreign subsidiaries translation rate (R : £1)           Weighted average rate 11,3  11,5  12,1  14,7  14,3  Closing rate 10,8  11,7  11,6  12,5  16,2  Liquidity and gearing           Interest cover (times) 158  12  5  7  10  Gearing level (%) 38  34  160  263  285  Current ratio (times) 0,8  1,3  1,2  1,2  1,1  Employees           Number of employees (excluding associates) 5 771  5 714  5 495  5 420  5 363    *   The group adopted International Financial Reporting Standards (IFRS) in the current year and the figures for 2005 and 2006 financial years have been presented accordingly. **   The figures for the 2004, 2003 and 2002 financial years are as reported in previous years, namely before the adoption of IFRS.   More detailed information on the performance of the Alexander Forbes share price on the JSE Limited can be obtained elsewhere in this annual report.   Definitions   Headline earnings Profit for the year excluding impairment charges and other gains or losses of a capital nature and their related tax effects.   Core earnings Headline earnings excluding the profit from direct marketing entity in run-off, exceptional gains and losses, loss arising from accounting for policyholder investments as treasury shares under IFRS, reversal of interest effects of exchangeable bonds and their related tax defects.   Distribution per share Distribution to shareholders in the form of dividend and capital reductions attributable per issued share.   Dividend cover Core earnings per share divided by dividend per share.   Dividend yield Distribution per share divided by closing share price.   Net asset value per share Total equity (being ordinary shareholders’ funds and minority interests) divided by weighted average number of issued shares (net of treasury shares).   Adjusted net asset value per share Net asset value per share excluding the effect of accounting for policyholder investments as treasury shares under IFRS.   Trading margin Trading result as a percentage of income from operations.   Effective rate of taxation Taxation as a percentage of core earnings before tax.   Return on average equity Core earnings as a percentage of average ordinary shareholders’ funds.   Interest cover Trading results of operations divided by net interest costs.   Gearing level Borrowings divided by total adjusted equity.   Current ratio Current assets divided by current liabilities.         back | next   |