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AFP
AFP
AFP - Alexander Forbes Preference Share Investments Limited - Unaudited interim
results for the six months ended 30 September 2008
ALEXANDER FORBES PREFERENCE SHARE INVESTMENTS LIMITED
Registration number: 2006/031561/06
Share code: AFP
ISIN code: ZAE000098067
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008
Review of activities
Alexander Forbes Preference Share Investments Limited ("AF Pref") was
incorporated on 10 October 2006. The sole purpose of the company is to
incorporate the special purpose vehicle through which existing shareholders of
Alexander Forbes Limited could remain invested following the private equity
buyout of the Alexander Forbes group.
AF Pref holds 26,5% of the ordinary shares in Alexander Forbes Equity Holdings
(Proprietary) Limited ("AFEH"), which acquired the entire issued share capital
of Alexander Forbes Limited effective 26 July 2007 ("the effective date")
following the implementation of a scheme of arrangement in terms of section 311
of the Companies Act No 61 of 1973, as amended ("the scheme of arrangement").
Details of the scheme of arrangement are provided in the pre-listing statement
issued by AF Pref on 10 July 2007. AF Pref also owns 31,8% of the preference
shares in AFEH and 100% of the Pay-in-Kind ("PIK") debentures issued by a
subsidiary of AFEH, Alexander Forbes PIK Funding (Proprietary) Limited ("AF
PIK"), the latter investment forming part of the financing arrangement of the
scheme of arrangement. The interests in the ordinary shares, preference shares
and PIK debentures were acquired on the effective date.
AF Pref changed its financial year end to 31 March to coincide with the
financial year end of AFEH and its subsidiaries. AF Pref`s prior year results
are therefore presented for seven months ended 30 September 2007, but include
only two months of trading results covering the period from the effective date
of acquisition of AFEH on 26 July 2007 up to the first interim reporting date of
30 September 2007.
In terms of the South African Companies Act No. 61 of 1973, directors are
required to provide a valuation of the associate investment in Alexander Forbes
Equity Holdings (Proprietary) Limited. The directors are of the opinion that the
value of the investment in AFEH is R700 million. This value has resulted in an
impairment of the investment of R162 million over and above the equity accounted
loss for the period. This reduction in value is in line with the downgrade of
equity valuations across the market. In arriving at the value, the directors
used current information available acknowledging the extremely volatile market
conditions prevailing and believe that an appropriately conservative approach
should be followed.
This results announcement should be read in conjunction with the results
announcement of AFEH which is made available to all AF Pref preference
shareholders.
AF Pref has issued two instruments, namely redeemable participating preference
shares and unsecured fixed rate debentures, which together constitute a linked
unit listed on the JSE Limited. The preference shares give the holder the see-
through economic and voting rights in the pro rata underlying investment in the
equity of AFEH and the debentures give the holder the see-through economic
rights in the pro rata underlying PIK debentures investment in AF PIK.
As detailed in the pre-listing statement issued on 10 July 2007, AF Pref does
not anticipate receiving any dividends in the foreseeable future from its
investment in AFEH. AF Pref therefore does not intend to declare any dividends
for the foreseeable future.
JRP Doidge S Gaskell
Director Director
21 November 2008
Abridged income statement
for the six months ended 30 September 2008
7 mths 13 mths
(2 mths (8 mths
6 mths trading) trading)
30 Sep 30 Sep 31 Mar
2008 2007 2008
Notes Rm Rm Rm
Impairment of investment (167) - -
in associate
Operating loss (167) - -
Other interest income 1 - -
Interest income - PIK 73 24 90
debentures
Interest expense (73) (24) (90)
- Debentures
Share of loss of associate (123) (3) (44)
Loss before taxation (284) (3) (44)
Taxation expense - - -
Loss for the period (284) (3) (44)
Attributable to:
Ordinary shareholders 2 - - -
Preference shareholders 2 (284) (3) (44)
(284) (3) (44)
Headline loss per share
(cents)
- per ordinary share 3 - - -
- per preference share 4 (190) (3) (50)
Basic loss per share
(cents)
- per ordinary share 3 - - -
- per preference share 4 (284) (3) (44)
Abridged balance sheet at 30 September 2008
30 Sep 30 Sep 31 Mar
2008 2007 2008
Notes Rm Rm Rm
ASSETS
Investment in associate 5 700 1 118 1 077
Investment in PIK 913 774 840
debentures
Cash and cash equivalents 94 1 1
Total assets 1 707 1 893 1 918
EQUITY AND LIABILITIES
Ordinary shareholders` - - -
equity
Preference shareholders` 1 122 1 122 1 122
interest - component of
linked units
Accumulated loss (328) (3) (44)
Total equity 794 1 119 1 078
Debentures - component of 913 774 840
linked units
Total liabilities 913 774 840
Total equity and 1 707 1 893 1 918
liabilities
Total equity per above 794 1 119 1 078
Number of ordinary shares 1 1 1
in issue
Net asset value per 794 1 119 1 078
ordinary share
Abridged cash flow statement
for the six months ended 30 September 2008
7 mths 13 mths
(2 mths (8 mths
6 mths trading) trading)
30 Sep 30 Sep 31 Mar
2008 2007 2008
Rm Rm Rm
CASH FLOWS FROM OPERATING
ACTIVITIES
Interest received 1 - -
CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of associate - (1 121) (1 121)
investment
Repayment of equity underwrite 92 - -
Acquisition of PIK debentures - (750) (750)
investment
Net cash inflow / (outflow) from 92 (1 871) (1 871)
investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Preference shares issued - 1 122 1 122
Debentures issued - 750 750
Net cash inflow from financing - 1 872 1 872
activities
Net movement in cash and cash 93 1 1
equivalents
Cash and cash equivalents at 1 - -
beginning of period
CASH AND CASH EQUIVALENTS AT END 94 1 1
OF PERIOD
Abridged statement of changes in equity
for the six months ended 30 September 2008
Ordinary Preference Accumu-
shareholders` shareholders` lated Total
equity interest loss equity
Rm Rm Rm Rm
At 28 February - - - -
2007
Shares issued on - 1 122 - 1 122
the effective
date, 26 July 2007
Loss for the - - (3) (3)
period
At 30 September - 1 122 (3) 1 119
2008
Loss for the - - (41) (41)
period
At 31 March 2008 - 1 122 (44) 1 078
Loss for the - - (284) (284)
period
At 30 September - 1 122 (328) 794
2008
NOTES
1. Basis of preparation
These interim results have been prepared in accordance with,
and comply with, International Financial Reporting Standards
("IFRS"), including IAS 34 Interim Financial Reporting, and
the South African Companies Act No 61 of 1973, as amended.
The accounting policies applied in the preparation of these
results are consistent with those detailed in the financial
statements issued by AF Pref for the period ended 31 March
2008. There have been no new standards or interpretations,
which have had a material effect on the results.
2. Earnings attributable to ordinary shareholders and
preference shareholders
The economic rights to return of capital and dividends for
ordinary and preference shareholders are detailed in section
5 of the pre-listing statement issued by AF Pref on
10 July 2007.
7 mths 13 mths
(2 mths (8 mths
6 mths trading) trading)
30 Sep 30 Sep 31 Mar
2008 2007 2008
Rm Rm Rm
3. Reconciliation of headline
earnings per ordinary share
Basic earnings and headline
earnings per ordinary share
are both nil as a result of
the preferential economic
rights of preference
shareholders (refer pre-
listing statement of AF
Pref).
4. Reconciliation of headline
earnings per preference
share
Earnings attributable to (284) (3) (44)
preference shareholders
(IAS 33 earnings)
Adjusting items:
Share of impairment charge 94 - (10)
and other capital items of
associate
Equity accounted share of - - 6
discontinued operation of
associate (IAS 31)
Tax effect of above - - (2)
adjustment
Headline earnings (190) (3) (50)
attributable to preference
shareholders
Weighted average number of 100 100 100
preference shares in issue
(millions)
Headline earnings per (190) (3) (50)
preference share (cents)
30 Sep 30 Sep 31 Mar
2008 2007 2008
Rm Rm Rm
5. Investment in associate
Investment in AFEH:
Cost 1 121 1 121 1 121
Equity underwrite paid (92) - -
Net cost of investment 1 029 1 121 1 121
Equity accounted results of (73) (3) (44)
associate
Share of impairment charges (94) - -
and other capital items of
associate
Impairment of investment in (162) - -
associate
Carrying value in balance 700 1 118 1 077
sheet
Directors` valuation of 700 1 121 1 121
associate
The directors are of the opinion that the value of the investment in AFEH is
R700 million. This value has resulted in an impairment of the investment of R162
million over and above the equity accounted loss for the period. This reduction
in value is in line with the downgrade of equity valuations across the market.
In arriving at the value, the directors used current information available
acknowledging the extremely volatile market conditions prevailing and believe
that an appropriately conservative approach should be followed.
The consolidated results of AFEH are available to all shareholders of AF Pref
and are published in a separate announcement.
Independent directors:
J R P Doidge, S Gaskell
Company secretary:
J E Salvado
Transfer secretaries:
Computershare Investor Services (Pty) Limited.
Ground Floor, 70 Marshall Street, Johannesburg.
PO Box 61051, Marshalltown, 2107
Investor relations:
D Kotzen
Registered office:
6th Floor, Mariendahl House, Newlands on Main, Main Road,
Newlands, Cape Town, 7000
Sponsor:
Rand Merchant Bank, a division of FirstRand Bank Limited.
1 Merchant Place, corner Fredman Drive and Rivonia Road, Sandton, 2196
Date: 24/11/2008 07:05:02 Produced by the JSE SENS Department.
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