Alexander Forbes - Annual Report 2006

Notes to the group financial statements
for the year ended 31 March 2006

56.	Related party disclosure
	List of related party relationships
	Major shareholders
	The group is listed in the JSE Limited and does not have a single controlling shareholder. VenFin Limited own approximately 25% of the issued share capital of the group and has representation on the Alexander Forbes Limited board of directors. The shares of the group are widely held by public and non-public shareholders. Details of the shareholders of the group are provided in the shareholders information section of this annual report.
	Other shareholdings
	A non-executive director, Mr MC Ramaphosa, has an interest in Shanduka (Pty) Limited which is the majority shareholder of Alexander Forbes Empowerment Holdings (Pty) Limited. Alexander Forbes Empowerment Holdings (Pty) Limited has a 30% interest in the South African business of the group.
	Subsidiaries and joint ventures
	Details of subsidiaries and joint ventures which are considered material to the group are contained in Annexure B.
	Associates
	Details of associates of the group are contained in Annexure C.
	Post employment beneﬁt plans
	Details of retirement beneﬁt plans are contained in the relevant note to these ﬁnancial statements.
	Directors
	Details of the directors of the company are provided in the Directors’ Report.
	Key management personnel
	Key management personnel have been deﬁned as group executive directors on the Alexander Forbes Limited board and executive directors on the Alexander Forbes South Africa and International boards.
	Summary of related party transactions

	56.1	Transactions with shareholders
		There have been no transactions with any shareholders other than in the ordinary course of business, as clients of the group.
	56.2	Transactions with other shareholdings
		A fee is paid to Shanduka (Pty) Limited for services rendered by Mr MC Ramaphosa and other Shanduka employees to the South Africa business of Alexander Forbes. These fees totalled R2,7 million (2005: R1,5 million) in the ﬁnancial year.
	56.3	Transactions with subsidiaries and joint ventures
		Details of dividends and fees received from subsidiary companies are provided in the company ﬁnancial statements. The company has loans to and from its subsidiary companies, details of which are provided in Annexure B. All transactions and balances with subsidiaries are eliminated on consolidation in line with the group’s accounting policies. There have been no material transactions with joint ventures during the year.
	56.4	Transactions with associates
		The group receives dividend income from its associate companies, as detailed in the relevant associate note to these ﬁnancial statements. The company’s associate, Medscheme Limited, performs the administration function of the South African group’s medical aid scheme. This is in the ordinary course of business, as a client of Medscheme Limited.
	56.5	Transactions with post employment beneﬁt plans
		Contributions to retirement beneﬁt plans amount to R82 million (2005: R67 million) as detailed in the relevant note to these ﬁnancial statements. There are no amounts outstanding at year end.
	56.6	Transactions with directors
		Remuneration is paid to directors in the form of fees to independent and non-executive directors and remuneration to executive directors of the company, as determined by the Remuneration Committee. The Remuneration Committee consists entirely of non-executive directors. As a committee of the board, the committee determines, agrees and develops the general policy on executive directors’ and senior management’s remuneration. The objective is to ensure that such remuneration is fair, responsible and appropriate and that the remuneration scales, including share and other incentive schemes and conditions of employment, are market-related and at levels sufﬁcient to attract, retain and motivate individuals of quality, taking account of the fact that the group is an international business. The Remuneration Committee is also mandated to determine the criteria necessary to measure the performance of the executive directors in discharging their responsibilities. Non-executive directors’ remuneration is recommended by the Remuneration Committee, for approval by the board. There are no management, consulting, technical or other fees, nor any commission paid, to directors other than what is disclosed in this note to the ﬁnancial statements.

	Salaries	Benefits and allowances	Retirement fund contributions	Incentive payment	Total 2006	Total 2005
Directors’ remuneration paid during the financial year by subsidiary companies is set out below.
Directors’ remuneration
Executive directors
RI Gordon	£575	£24	£58	£210	£867	£1 092**
J Percy-Davis*					—	£417
QJ Heaney*					—	£43
MG Ilsley	R2 756	R205	R349	R1 700	R5 010	R7 073**
JH Vickers***	R828	R164	R104	R1 124	R2 220	—

*	Messrs J Percy-Davis and QJ Heaney resigned from the Alexander Forbes Limited board of directors during the 2005 ﬁnancial year.
**	Prior year remuneration for Messrs RI Gordon and MG Ilsley includes a restricted share award granted in the prior year.
***	The remuneration for Mr JH Vickers is the pro-rata portion from the date when he joined the Alexander Forbes Limited board of directors, namely on 7 October 2005

Medium term incentive plans

Medium term incentive plans have been put in place for Messrs RI Gordon, MG Ilsley and JH Vickers. These plans are based on a number of criteria, including the growth in headline earnings per share as well as the increase in shareholder value over the period of the incentives. The amounts payable under these incentives are due to be paid after March 2007 in respect of Mr RI Gordon, after March 2006 and March 2008 in respect of Mr MG Ilsley and after March 2008 in respect of Mr JH Vickers.

	Fees 2006 '000	Fees 2005 '000
Independent and non-executive directors
JVH Robins (Deputy chairman)	£98	£90
MP Nicholls	£58	£34
PL Heinamann (Chairman)	R850	R850
TRT Bohlmann	R530	R500
JJ Durand	R200	—
WE Lucas-Bull***	—	—
MC Ramaphosa	R138	R130
GGH Todd*	R395	R480
AF van Biljon**	R120	—
PJJ van der Walt	R490	R420

*	Mr GGH Todd resigned from the Alexander Forbes Limited board of directors on 27 July 2005
**	Mr AF van Biljon joined the Alexander Forbes Limited board of directors with effect from 7 October 2005
***	Mrs WE Lucas-Bull joined the Alexander Forbes Limited board of directors on 5 May 2006, hence after the 2006 financial year

	Weighted average exercise price	2006 Number of outstanding share options	2005 Number of outstanding share options
Share options have been issued to executive directors in prior financial years and the details of outstanding share options for these directors at the year end is set out below.
Directors’ interests in options over shares
Executive directors
RI Gordon
Share option exercisable at end of year	R10,99	883	495
Share option vesting within one year	R11,13	388	388
Share options vesting thereafter	R11,13	388	776
		1 659	1 659
MG Ilsley
Share options exercisable at end of year	R11,78	821	677
Share options vesting within one year	R12,35	144	144
Share options vesting thereafter	R11,90	100	244
		1 065	1 065
JH Vickers*
Share options exercisable at end of year	R11,90	100	—
Share options vesting within one year	R11,90	50	—
Share options vesting thereafter	R11,90	50	—
		200	—

*	This represents the share options held by Mr JH Vickers from when he joined the Alexander Forbes Limited board of directors on 7 October 2005

No share options were granted to executive directors during the current or previous financial years.

No independent or non-executive directors have share options.

		2006 Rm	2005 Rm
56.7	Transactions with key management personnel
	Compensation paid to key management personnel is presented below:
	Short-term employee benefits (salary, bonus and other benefits)	65	49
	Post employment benefits	3	3
	Other long-term employee benefits	2	2
	Termination benefits	—	—
	Share-based payments	3	6
		73	60
	The year on year increase in compensation paid to key management personnel results from additional executive appointments made during the year in South Africa and the United Kingdom.

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