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AFP
AFP
AFP - Alexander Forbes Preference Share Investments - Abridged reviewed results
for the year ended 31 March 2009
Alexander Forbes Preference Share Investments Limited
(Incorporated in the Republic of South Africa)
Registration number: 2006/031561/06
ISIN code: ZAE000098067
Share code: AFP
Abridged reviewed results for the year ended 31 March 2009
Review of activities
Alexander Forbes Preference Share Investments Limited ("AF Pref" or "the
company") 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 A 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 in the prior year to coincide
with the financial year end of AFEH and its subsidiaries. AF Pref`s prior year
results are therefore presented for thirteen months ended 31 March 2008, but
include only eight months of trading results covering the period from the
effective date of acquisition of AFEH on 26 July 2007 up to the prior year end
reporting date of 31 March 2008.
This results announcement is further informed by the results announcement of the
unlisted AFEH which is also made available to all AF Pref preference
shareholders.
The operating loss reported by AFEH and as a result the loss equity accounted by
AF Pref mainly as a result of the amortisation write-offs of intangible assets
and goodwill which arose on consolidation following the acquisition by the
private equity consortium of the profitable Alexander Forbes operating group.
The operating group reported a trading loss for the year under review. Interest
costs relating to the funding structure also further increase the loss reported
by the ultimate holding company. It should be noted that these amortisation
charges, impairment write-offs and a significant component of the interest costs
are non-cash items.
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
17 June 2009
Sandton
Alexander Forbes Preference Share Investments Limited
Abridged income statement for the year ended 31 March 2009
12 13 mths
mths (8 mths
trading)
31-Mar 31-Mar
2009 2008
Notes Rm Rm
Operating expenses 3 (1) -
Operating loss (1) -
Finance income 4 168 90
Finance cost 5 (151) (90)
Share of loss of associate (after tax) (125) (44)
Loss before taxation (109) (44)
Taxation expense 6 (3) -
Loss for the year (112) (44)
Attributable to:
Ordinary shareholders - -
Preference shareholders (112) (44)
(112) (44)
Headline loss per share (cents)
- per ordinary share 7 - -
- per preference share 8 (20) (50)
Basic loss per share (cents)
- per ordinary share 7 - -
- per preference share 8 (112) (44)
Alexander Forbes Preference Shares Investments Limited
Abridged Balance Sheet at 31 March 2009
31-Mar 31-Mar
2009 2008
Notes Rm Rm
ASSETS
Investment in associate 9 824 1 077
Investment in PIK debentures 991 840
Accounts receivable 1 -
Cash and cash equivalents 96 1
Total assets 1 908 1 918
EQUITY AND LIABILITIES
Ordinary shareholders` equity - -
Preference shareholders` interest - 1 122 1 122
component of linked units
Non distributable reserves
(44) -
Accumulated loss (157) (44)
Total equity 921 1 078
Debentures - component of linked units 991 840
Total liabilities 991 840
Total equity and liabilities 1 912 1 918
Total equity per above 921 1 078
Number of ordinary shares in issue 1 1
Net asset value per ordinary share 921 1 078
Alexander Forbes Preference Share Investments Limited
Abridged cash flow statement for the year ended 31 March 2009
12 mths 13 mths
(8 mths
trading)
31-Mar 31-Mar
2009 2008
Notes Rm Rm
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated 15 -
Taxation paid (3) -
Net cash inflow from operating activities 12 -
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of associate investment - (1 026)
Repayment of equity underwrite 83 (95)
Acquisition of PIK debentures investment - (750)
Net cash inflow(outflow) from investing 83 (1
activities 871)
CASH FLOWS FROM FINANCING ACTIVITIES
Preference shares issued - 1 122
Debentures issued - 750
Net cash inflow from financing activities - 1 872
Net movement in cash and cash equivalents 95 1
Cash and cash equivalents at beginning of 1 -
year
CASH AND CASH EQUIVALENTS AT YEAR END 96 1
Alexander Forbes Preference Share Investments Limited
Abridged statement of changes in equity for the year ended 31 March 2009
Ordinary Preference Other non Accumu- Total
shareholders` shareholders distribut lated loss equity
equity* ` interest able
Reserves
Rm Rm Rm Rm Rm
At 28 February - - - - -
2007
Shares issued on
the effective - 1 122 - - 1 122
date, 26 July
2007
Loss for the - - - (44) (44)
period
At 31 March 2008 - 1 122 - (44) 1 078
Share of - - - (1) (1)
purchase price
allocation
adjustment
Share of post - - (44)
acquisition (44) -
movement in
equity of
associate
Loss for the - - - (112) (112)
year
At 31 March 2009 - 1 122 (44) (157) 921
* The issued
ordinary share
capital of the
company at 28
February 2007,
March 2008 and
31 March 2009 is
R1
Preference Share notes
1. Basis of preparation
These abridged 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.
12 mths 13 mths
(8 mths
trading)
31-Mar 31-Mar
2009 2008
Rm Rm
3. Operating expenses
Includes an amount for audit fees payable to
external auditors of R161 737
(2008: R77 753)
4. Finance income
Income in respect of BEE and management 8
underwrite -
Interest income on held-to-maturity 151
financial asset (PIK debenture) 90
Interest on cash balances 9 -
168 90
5. Finance cost
Interest cost on financial liability (151) (90)
held at amortised cost (debenture)
6. Taxation expense
South African income tax
Current tax (3) -
The standard South African income tax rate for companies is
reconciled to the company`s actual tax rate as follows:
Income tax rate for companies 28.0% 29.0%
Adjusted for the effects of:
Share of net loss of associate (stated (30.7%)
net of taxation) (29.0%)
Effective tax rate per income statement (2.7%) 0.0%
12 mths 13 mths
(8 mths
trading)
31-Mar 31-Mar
2009 2008
Rm Rm
Notes (continued)
7. 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).
8. Reconciliation of headline earnings
per preference share
Earnings attributable to preference (112) (44)
shareholders (IAS 33 earnings)
Adjusting items:
Equity accounted share of impairment 92 (10)
losses of associate net of capital
gains (IAS 31)
Equity accounted share of - 6
discontinued operation of associate
(IAS 31)
Tax effect of above adjustment - (2)
Headline loss attributable to (20) (50)
preference shareholders
Weighted average number of preference 100 100
shares in issue (mills)
Headline loss per preference share (20) (50)
(cents)
9. Investment in associate
Investment in AFEH
Cost 1 026 1 026
Equity underwrite - 95
Subscription for shares in respect of -
management underwrite 12
Share of cumulative post acquisition -
movement equity of associate (44)
Equity accounted results (170) (44)
Carrying value in balance sheet 1 077
824
Directors` valuation of associate 895 1 121
The directors are of the opinion that
the value of the investment in AFEH
of R895 million (2008: R1 121
million) is appropriate.
The consolidated results of AFEH are
available to all shareholders of AF
Pref and are published in a separate
announcement.
10. Post acquisition reserves
The post acquisition reserve
movements include foreign exchange
translation reserves and the
accounting for the fair value of
various cash flow hedges in AFEH. The
movement comprise of R4m in fair
value of cash flow hedges, negative
R17m in foreign exchange movements
and negative R31m relating to
movements in share premium as a
result of post acquisition
transaction cost in 2008.
11. Events subsequent to balance sheet
date
On the 22nd of May 2009 certain
shareholders of AFEH entered into a
transaction to repurchase the high
yield term loan and various related
instruments issued by Alexander
Forbes Funding (Proprietary) Limited.
The restructuring of the term loan,
and the subsequent amendments to
certain terms of the loan, result in
significant benefit to the group.
Amongst other benefits the new terms
will provide additional flexibility
necessary to continue the groups`
strategic development. A further
announcement containing additional
details of the transaction and an
intended offer to participate will be
made public in due course.
Review Opinion
Our auditors, PricewaterhouseCoopers Inc., have reviewed the abridged financial
information in this report for the year ended 31 March 2009. A copy of their
unqualified review report is available at the registered office of the company
upon request.
Independent directors:
J R P Doidge (resigned 12/6/2009, appointed as alternate to Tim Fearnhead), Tim
Fearnhead (appointed 12/6/2009), S Gaskell
Company secretary:
J E Salvado
Transfer secretaries:
Computershare Investor Services (Pty) Limited.
5th Floor, The Terraces, 25 Protea Road, Claremont, 7708
Investor relations:
J E Salvado
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: 17/06/2009 13:20:24 Produced by the JSE SENS Department.
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