| Mon 29 Nov 2010, 16:28 | | AFP - Alexander Forbes Equity Holdings - Unaudited interim results for the six |
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AFP
AFP
AFP - Alexander Forbes Equity Holdings - Unaudited interim results for the six
months ended 30 September 2010
Alexander Forbes Equity Holdings (Proprietary) Limited
(Registration number: 2006/025226/07)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010
- Income from operations, net of direct product costs, remains in line with
previous period at R2.1 billion
- Profit from operations before non-trading items up 4% to R484 million
- Loss after finance and tax improves by 30% to R55 million
- Strategic growth initiatives showing traction, particularly in the
individual client sector.
REVIEW OF ACTIVITIES
Alexander Forbes Equity Holdings (Proprietary) Limited ("AFEH") is the
ultimate holding company of the Alexander Forbes group of companies ("the
group") and its financial results are made publicly available solely for
purposes of further informing the financial results of the listed Alexander
Forbes Preference Share Investments Limited, which holds a 26.5% stake in
AFEH.
Overall the group results for the first six months of the financial year have
been solid but still lack the targeted level of growth in top line revenue.
The strategic growth areas are showing strong positive traction and delivered
pleasing growth, but this has been offset by difficult trading conditions in
the more mature parts of the business where cost control and efficiency gains
were primarily the drivers to retain margins.
Gross income from operations of R2.4 billion increased marginally by 2% while
income from operations, net of direct product costs, is in line with the
comparable six month period of the previous financial year. The stronger Rand
impacted negatively on this overall result as the Africa region and the
International region delivered net revenue growth in local currency of 7% and
2% respectively. The recovery in equity markets supported the results in both
Investment Solutions and the Financial Services businesses.
Operating expenses of R1.7 billion decreased by 2% in Rand terms. We continue
to balance disciplined cost management in the established business areas with
investment in the strategic growth areas, particularly to support our
expansion in the individual client market. As a result, operating expenses in
the Africa region grew by 8% and International, in local currency terms, by
1%.
Profit from operations before non-trading items increased to R484 million, up
by 4% compared to the first six months of the previous year. We are achieving
the expected turnaround in the consolidated result after finance costs, with a
decrease in the loss for the period after interest and taxation of R55 million
decreasing by 30% and headline loss per ordinary share for the period of 19
cents being halved.
A brief commentary on the operating results for each of the main businesses
follows.
- SA Risk & Insurance Services
Income from operations increased by 3% to R551 million for the 6 month period,
however trading profit decreased by 8% to R148 million. In line with our
strategic drive into the retail market, we continued to invest in sales
capacity targeting the retail (individual household and motor insurance
market) and the commercial insurance broking businesses. As a result, we
achieved good sales growth with new retail business 23% above the comparative
period. We also experienced good growth in our insurance businesses,
Alexander Forbes Insurance and Guardrisk. More modest year on year
improvement from Commercial broking and subdued results from Corporate broking
and Alexander Forbes Compensation Technologies (AFCT). Organic revenue growth
in the Corporate and Commercial insurance broking areas was 4%. The modest
organic growth was the result of highly competitive insurance broking markets,
softer rates and the impact of lower economic growth which reduced client
demand for insurance cover. A robust new business pipeline bodes well for the
second half of the financial year.
The declining interest rate environment had an adverse impact on operational
interest income.
The cell captive insurer, Guardrisk, continues to invest in innovation and has
brought several new products to market over the past 6 months. This resulted
in good organic growth, notwithstanding the macro-economic environment.
AFCT, our compensation claims administrator, was impacted by processing delays
at several of its healthcare clients and the public sector strike. As a
result, performance was largely in line with the comparative period.
In response to the lower than expected revenue growth in some areas, we have
focused on tight expense management across the business although we continue
to invest in sales and technical skills to position the business to take full
advantage of an economic up-turn in Africa.
- SA Financial Services
Income from operations increased by 6% to R620 million for the six month
period with trading profit increasing by 9% above the prior year to R126
million. Despite continued tough trading conditions, the business was able to
increase its market share in most areas of its operations. Particularly strong
new business successes were achieved in the retirement fund administration
business, with in excess of 29 new appointments secured. Excellent new
business success was also achieved by our Healthcare division. Strong new
business has been supplemented by good client retention levels.
We believe strongly that effective and easy to understand communication is
critical to help members make informed decisions. We were therefore pleased
to be awarded the IRF 2010 Communication Challenge award in the Umbrella
Retirement Fund category.
During the period, we widened our distribution capability by making certain
products and services available to third party financial planners and employee
benefit consultants. AF Access was launched to provide consultants with an
alternative umbrella fund offering for their clients and initial interest has
been very good.
Continued focus on developing the individual savings and advice business has
shown pleasing results and has also benefited from the strong growth in equity
markets over the period. We continue to invest in building a stronger retail
brand and deepening our relationships with our individual clients.
Alexander Forbes Life, our long term insurance business, has experienced
strong new premium income growth. However, the business continues to be
affected by low margins in the group life insurance market.
Following what are believed to be structural shifts in the lending markets, we
reviewed our pension backed lending business, Homeplan, and disposed of our
share to our joint venture partners shortly after the end of the period under
review.
- Investment Solutions
Assets under management increased from R151 billion at March 2010 to R160
billion at September 2010 driven largely by the recovery in equity markets.
Income from operations, net of direct product cost, increased by 1% to R223
million for the six months while trading profit was down 6% to R124 million,
reflecting our continuing investment in expertise and the reduced income from
hedging. The increase in revenue does not reflect the growth in assets under
management mainly due to the fact that the previous year`s income was partly
hedged against the equity market downturn experienced in prior years. New
business flows have been encouraging for the period although ongoing benefit
payments to fund members remain relatively high, reflecting the underlying
pressure the South African economy is still facing.
The results reflect a focus during the period on increasing the depth in
expertise throughout the organisation, the restructuring of the operations
area to achieve optimal efficiencies as well as on achieving superior
investment performance. It is pleasing to note that most of our investment
portfolios
are ahead of their respective benchmarks over medium to long term measurement
periods.
- AfriNet (covering all operations in Africa outside of South Africa)
The first six months saw strong competition in all the regions that AfriNet
operates and the Rand continued to strengthen against many of the base trading
currencies year to date. The Risk Services businesses were affected by
increased competition and softer rates and had a disappointing first 6 months.
This was somewhat offset by pleasing results from the Financial Services
businesses. Challenging operating environments still remain the key issue for
most of our operations. Despite this backdrop, our operations remain
resilient.
Income from operations for the six month period increased by 3% to R143
million. Expenses increased by 2% to R114 million. The trading result of R30
million is 3% ahead of the previous year. At constant exchange rates, the
trading results would be approximately 15% ahead of prior year.
Our focus remains on revenue growth and ensuring efficient operations with
good governance in all areas. Our strategic initiatives in the Healthcare
business in Kenya and Alexander Forbes Insurance in Namibia are both starting
to bear fruit. We continue to look for expansion opportunities on the African
continent.
- International Financial Services
The International operations continued to improve its performance, with income
from operations increasing by 1% to GBP52.5 million for the six months and
trading results of GBP4.8 million, GBP2 million or 71% up on the prior year.
The businesses continued to benefit from new client wins and strong client
retention. The significant cost saving measures implemented over the past two
years drove the improved performance with Alexander Forbes Financial Services
(AFFS) returning to profitability.
The United Kingdom and Europe continue to be affected by the uncertain
economic environment. Unemployment and wage inflation appear to have
stabilised providing clients with the confidence to focus on employee benefits
once again. Fees remain under pressure as clients manage their costs.
However, demand for pension de-risking solutions and advice on the impact of
recent taxation and pending pension changes, remains strong.
Insurers are reducing commission and AFFS, particularly, has responded by
targeting larger clients than its traditional SME client base, with increasing
success off its realigned cost base. In addition, the business continues to
make good progress in growing its renewable income in anticipation of the
implementation of the Financial Service Authority`s Retail Distribution
Review. This will impact on AFFS`s initial commission revenues, particularly
from the implementation of new defined contribution schemes as of 2013.
Alexander Forbes Trustee Services continues to perform strongly with profits
in line with expectations.
Lane Clark & Peacock ended the first six month period performing below the
previous year`s strong levels but broadly in line with expectation both in the
United Kingdom and Europe, with continued good client wins across all lines of
business. However, fee pressures impacted across the board. The Swiss
business, in particular, was impacted during the first quarter but the
business has taken the appropriate actions to restore performance.
- International Investment Solutions
Assets under management grew from GBP1.5 billion at March 2010 to GBP1.6
billion during the six months mainly through growth in Group assets, in line
with a strategy of consolidating the management of the Group`s international
assets in-house. This is materially up from GBP1.2 billion at the same point
last year. As a result, net revenue for the period increased by 42% to GBP1.7
million with trading profit of GBP0.1 million, up from a trading loss of
GBP0.6 million for the same period last year. International Investment
Solutions is
now consistently trading profitably, having achieved the required critical
mass of assets under management and it continues to focus on delivering
pension and investment solutions to both the United Kingdom and the South
African markets.
Regulatory capital changes
The introduction of the new capital adequacy requirements for long-term
insurers by the Financial Services Board (FSB) took effect in June 2010.This
is an interim measure in advance of the implementation of the Solvency
Assessment and Management framework expected in 2013. The new requirement
had a significant impact on the level of capital required to be carried in
particular by Investment Solutions as the required capital is determined based
on the level
of liabilities. This requirement is irrespective of whether those liabilities
are solely as a result of linked investment contracts (as in the case of
Investment Solutions where no underwriting risk is taken) or long term
insurance liabilities where actual underwriting risk is taken.
In addition, the new capital adequacy requirements for financial advisory and
intermediary (FAIS registered) businesses from the end of December 2010 will
also have a significant impact on the level of cash required to be retained in
the businesses to meet these capital requirements.
The necessary capital has been introduced as required in these regulated
entities throughout the group and further introduction is being made in line
with the phasing in requirements of the FSB. The net effect of these
requirements in the current financial year is approximately R316 million
additional capital injection across various entities. In most instances, this
capital is required to be backed by cash or near cash assets in terms of the
regulatory assets spreading requirements which has, and will have, a
significant impact on the available free cash resources of the group. This
impact is largely felt in the current financial year with further but far less
onerous phasing in requirements over the next two years. As a result of this
higher than expected capital requirement in the current financial year, the
group has decided to not make interest payments in respect of the High Yield
term loan
of historically rolled up interest coupons and that the six month`s interest
coupon due on the 18 December 2010 will be held back to ensure that the
group`s cash flow needs are met in the near future. Although further impact is
expected in future years, it is estimated to be far less onerous than the
introductory phase. Normal service of the interest on the High Yield term
loan will in all probability resume in the next financial year.
Prospects
Over the past ten months we have made statements about our growth aspirations
over the next four years and beyond. Clearly such ambitious growth plans will
be implemented with the appropriate caution and responsibility, and we will
ensure that during that time we protect our profitability while simultaneously
driving investment in the business, to ultimately achieve top-line revenue
growth. Balancing both these equations will ensure not only the long term
sustainability of the group but also the delivery of superior shareholder
value creation. Periodically, environmental and economic factors outside of
our control may dictate where our emphasis should lie. However, we remain
committed to our stated long term growth ambitions. Our strategic growth
areas and plans are well defined and managing the pace of transformation of
our business in those areas, without forfeiting our strong position in the
more mature areas of business, is of paramount importance.
Change in directorate
There have been no changes to the board of directors since the publication of
our results for the year ended 31 March 2010 on 15 June 2010. Changes to the
directorate since the year ended 31 March 2010 that have been previously
reported are the resignation of Mr Gideon Nkadimeng and his replacement by Mr
Shakes Matiwaza on 5 May 2010 as non-executive director on the board. Mr Kojo
Mills, who was Mr Nkadimeng`s alternate director was accordingly appointed as
Mr Matiwaza`s alternate director on the same date. Mr Barend Petersen was
appointed independent non-executive director on 10 June 2010. The board would
again like to thank Mr Nkadimeng for his valuable contribution over the past
three years and welcomes Messrs Matiwaza and Petersen.
M S Moloko E Chr Kieswetter
Chairman Group chief executive
29 November 2010
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2010
30 Sep 30 Sep 12
months
31 Mar
2010 2009 2010
Notes Rm Rm Rm
Continuing operations
Fee and commission income 3 2 260 2 231 4 726
Net income from insurance 4 169 146 309
operations
Direct expenses attributable to fee (281) (221) (586)
and commission income
Operating income net of direct 2 148 2 156 4 449
expenses
Operating expenses (1 664) (1 690) (3 418)
Profit from operations before non- 484 466 1 031
trading and capital items
Non-trading and capital items 5 (69) (77) (179)
Operating profit 415 389 852
Investment income 29 49 80
Finance costs 6 (426) (409) (841)
Share of net profit / (loss) of 3 (1) 2
associates (net of income tax)
Profit before taxation 21 28 93
Income tax expense (76) (107) (174)
Loss for the period from continuing (55) (79) (81)
operations
Discontinued operations
(Loss)/profit on discontinued 7 - (8) 3
operations (net of income tax)
Accumulated loss for the period (55) (87) (78)
Loss attributable to:
Equity holders (72) (109) (129)
Non-controlling interest 17 22 51
(55) (87) (78)
Headline loss per ordinary share 8 (19) (38) (29)
(cents)
Basic loss per ordinary share 8 (19) (29) (34)
(cents)
Number of ordinary shares (million)
Issued 377 377 377
Weighted average (from effective 377 377 377
date)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
for the six months ended 30 September 2010
30 Sep 30 Sep 12
months
31 Mar
2010 2009 2010
Notes Rm Rm Rm
Loss for the period (55) (87) (78)
Foreign currency translation (4) (112) (142)
differences of foreign operations
Changes in fair value of cash flow (13) (90) (203)
hedges
Portion of fair value hedge recycled - (24) 60
to profit or loss
Taxation effect on the fee income - - (3)
hedge
Other comprehensive loss for the period (17) (226) (288)
(net of income tax)
Total comprehensive loss for the period (72) (313) (366)
Total comprehensive loss attributable
to:
Equity holders (87) (319) (407)
Non-controlling shareholders 15 6 41
Total comprehensive loss for the period (72) (313) (366)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 September 2010
30 Sep 30 Sep 31 Mar
2010 2009 2010
Notes Rm Rm Rm
ASSETS
Financial assets held under multi- 169 268 150 518 161 660
manager investment contracts
Financial assets of cell captive 7 432 7 530 7 582
insurance facilities
Housing loans secured by retirement - 750 -
fund assets
Property and equipment 200 201 205
Purchased and developed computer 158 198 166
software
Goodwill 5 258 5 335 5 258
Intangible assets 1 814 2 005 1 900
Investments in associates 9 6 5 7
Deferred tax assets 152 146 158
Financial assets 281 401 285
Insurance receivables 611 422 528
Trade and other receivables 767 988 1 115
Cash and cash equivalents 2 652 2 344 2 480
Assets of disposal group classified 141 - 944
as held for sale
Total assets 188 740 170 843 182 288
EQUITY AND LIABILITIES
Equity holders` funds 2 083 2 259 2 171
Non-controlling interest 163 178 179
Total equity 2 246 2 437 2 350
Financial liabilities held under 169 217 150 474 161 614
multi-manager investment contracts
Liabilities of cell captive 7 432 7 530 7 582
insurance facilities
Securitisation funding for housing - 750 -
loans
Borrowings 5 770 5 414 5 597
Employee benefits 165 160 158
Deferred tax liabilities 590 703 615
Provisions 328 565 650
Deferred income 208 246 210
Insurance payables 1 818 1 458 1 610
Trade and other payables 883 1 106 1 074
Liabilitites of disposal group 83 - 828
classified as held for sale
Total liabilities 186 494 168 406 179 938
Total equity and liabilities 188 740 170 843 182 288
Total equity per above 2 246 2 437 2 350
Number of ordinary share in issue 377 377 377
(millions)
Net asset value per ordinary share 596 646 623
(cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2010
30 Sep 30 Sep 12
months
31 Mar
2010 2009 2010
Rm Rm Rm
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 509 426 1 291
Net finance costs paid (159) (107) (318)
Cash settlement of cash management and (14) (19) (36)
employee benefit commitments
Taxation paid (134) (130) (220)
Operating cash flows 202 170 717
Movement in working capital and 33 (68) (113)
insurance balances
Net cash inflow from operating 235 102 604
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Net movement in subsidiaries and 57 28 45
businesses disposed
Net movement in financial assets (13) (26) (53)
Proceeds from sale of other financial 18 1 5
assets
Proceeds on disposal of property and 3 - 58
equipment
Capital expenditure for the period (40) (45) (95)
Net cash inflow /(outflow) from 25 (42) (40)
investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings repaid (97) (449) (694)
Proceeds on foreign currency swap - 374 374
agreements closed out
Payments to non-controlling interest (32) (22) (67)
Net cash outflow from financing (129) (97) (387)
activities
CASH FLOWS FROM POLICYHOLDER
INVESTMENT CONTRACTS
Premium inflows 15 168 14 510 30 558
Investments made net of (8 750) (23 085) (10 537)
disinvestments
Movement in insurance liabilities 115 176 (24)
Investment withdrawals/ benefit (15 240) (14 097) (31 884)
payments
Net cash outflow from policyholder (8 707) (22 496) (11 887)
investment contracts
Net cash inflow/(outflow) from 40 (4) 48
discontinued operations
Net movement in cash and cash (8 536) (22 537) (11 662)
equivalents
Cash and cash equivalents at 20 690 32 493 32 493
beginning of period
Foreign subsidiaries translation 6 (110) (141)
adjustment
CASH AND CASH EQUIVALENTS AT END OF 12 160 9 846 20 690
PERIOD
Analysed as follows:
Cash and cash equivalents of 104 77 99
discontinued operations
Cash and cash equivalents of 2 652 2 266 2 480
continuing operations
Cash held under multimanager 8 571 6 585 17 393
investment contracts
Cash held under cell captive 833 918 718
insurance facilities
12 160 9 846 20 690
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2010
Share Non- Accumu Equity Non- Total
capital distrib lated holders controlling equity
and utable loss interest
premium reserve
Rm Rm Rm Rm Rm Rm
At 31 March 2009 3 261 (47) (636) 2 578 205 2 783
(Loss)/Profit for - - (109) (109) 22 (87)
the period
Other - (210) - (210) (16) (226)
comprehensive
loss
Total - (210) (109) (319) 6 (313)
comprehensive
loss
Movement in - 3 (3) - - -
contingency
reserve for short-
term insurance
company
Other movements - - - - (33) (33)
in non-
controlling
interest
At 30 September 3 261 (254) (748) 2 259 178 2 437
2009
(Loss)/Profit for - - (20) (20) 29 9
the period
Other - (68) - (68) 6 (62)
comprehensive
loss
Total - (68) (20) (88) 35 (53)
comprehensive
loss
Movement in - 9 (9) - - -
contingency
reserve for short-
term insurance
company
Other movements - - - - (34) (34)
in non-
controlling
interest
At 31 March 2010 3 261 (313) (777) 2 171 179 2 350
(Loss)/Profit for - - (72) (72) 17 (55)
the period
Other - (16) - (16) (1) (17)
comprehensive
loss
Total - (16) (72) (88) 16 (72)
comprehensive
loss
Movement in - 6 (6) - - -
contingency
reserve for short-
term insurance
company
Other movements - - - - (32) (32)
in non-
controlling
interest
At 30 September 3 261 (323) (855) 2 083 163 2 246
2010
SEGMENTAL RESULTS
for the six months ended 30 September 2010
Operating income Profit from
net of direct operations before
product cost non-trading and
capital items
30 Var. 30 30 Var. 30
Sep Sep Sep Sep
2010 % 2009 2010 % 2009
Africa (Rm)
SA Risk & Insurance 551 3% 536 148 (8%) 161
Services
SA Financial Services 620 6% 587 126 9% 116
Investment Solutions 223 1% 222 124 (6%) 132
Afrinet (Africa 143 3% 139 30 3% 29
excluding-South Africa)
Total Africa (Rm) 1 537 4% 1 484 428 (2%) 438
International (GBPm)
Financial Services 52.5 1% 52.1 4.8 71% 2.8
Investment Solutions 1.7 42% 1.2 0.1 117% (0.6)
Total International 54.2 2% 53.3 4.9 123% 2.2
(GBPm)
Total International (Rm) 611 (9%) 672 56 100% 28
Total Group (Rm) 2 148 - 2 156 484 4% 466
Depreciation & Assets
Amortisation
30 Var. 30 30 Sep Var. 30 Sep
Sep Sep
2010 % 2009 2010 % 2009
Africa (Rm)
SA Risk & Insurance 7 (13%) 8 9 636 (1%) 9 738
Services
SA Financial 7 - 7 25 229 28% 19 730
Services
Investment 1 - 1 158 420 14% 139 218
Solutions
Afrinet (Africa 3 - 3 1 822 18% 1 546
excluding-South
Africa)
Total Africa (Rm) 18 (5%) 19 195 107 15% 170 232
International (GBPm)
Financial Services 0.7 (13%) 0.8 102.5 8% 95.2
Investment - - - 998.6 3% 969.2
Solutions
Total International 0.7 (13%) 0.8 1 101.1 3% 1 064.4
(GBPm)
Total International 9 (10%) 10 12 150 (3%) 12 511
(Rm)
Unallocated:
Corporate Services 16 7% 15 1 185 103% 584
Goodwill - - 5 258 (1%) 5 335
Consolidation - - (24 960) 40% (17 819)
elimination
Total Group (Rm) 43 (2%) 44 188 740 10% 170 843
NOTES
for the six months ended 30 September 2010
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
interim results are consistent with those detailed in the
financial statements issued by Alexander Forbes Equity Holdings
(Proprietary) Limited for the year ended 31 March 2010.
30 Sep 30 Sep 31 Mar
2010 2009 2010
2. Exchange rates
The income statements and balance
sheets of significant foreign
subsidiaries have been translated to
Rands as follows:
Weighted average R:GBP rate 11.3 12.7 12.3
Closing R:GBP rate 11.0 11.8 11.1
30 Sep 30 Sep 12
months
31 Mar
2010 2009 2010
Rm Rm Rm
3. Fee and commission Income
Brokerage fees and commission income 275 288 600
Fee income from consulting and 1 444 1 476 3 047
administration services
Revenue from investment activities 507 429 1 000
Interest income from lending 15 9 20
operations
Operational interest income 14 21 37
Other 5 8 22
2 260 2 231 4 726
4. Net income from insurance operations
Insurance premiums earned 2 051 1 662 3 481
Less: amounts ceded to reinsurers (1 478) (1 167) (2 416)
Investment income from insurance 56 67 128
operations
Less: insurance claims and (1 219) (980) (2 228)
withdrawals
Plus: insurance claims and benefits 759 564 1 344
covered by reinsurance contracts
169 146 309
30 Sep 30 Sep 12
months
31 Mar
2010 2009 2010
Rm Rm Rm
5. Non-trading and other capital items
Non trading:
Professional indemnity insurance (1) 4 26
cell
Amortisation of intangible assets (94) (95) (191)
arising from business combination
Fees relate to High-yield term - (22) (25)
loan restructure
Movements in provisions relating 26 - 30
to client settlement, claims and
warrantees
Capital items:
Goodwill impairment losses - - (75)
Capital gain on sale of - 36 56
subsidiary & other
Total impairment losses and other (69) (77) (179)
capital items
6. Finance costs
Finance costs requiring servicing (151) (156) (359)
Accrued interest not requiring (275) (253) (482)
servicing
(426) (409) (841)
7. Discontinued operations
The group has discontinued certain non core business divisions
as part of its strategic plan. These businesses were
classified as discontinued operations in the previous financial
reporting period. The sales processes of all these businesses
previously classified as discontinued operations have now been
concluded. Based on the requirements of IFRS 5 the comparative
income statement has been re-presented to show the discontinued
operation separately from continuing operations. Assets and
liabilities held at period end in discontinued operations have
been classified as assets and liabilities of disposal group
held for sale. The segmental report has also been re-presented
to show the effect of discontinued operations. Comparative
information has been restated to also include operations
classified as discontinued subsequent to 30 September 2009.
The net effect of this restatement was a decrease in income
from continuing operations of R95 million and a decrease in
expenses of R89 million resulting in a reduction of trading
profit of continuing operations of R6 million. A further
decrease in interest expense of R3 million and tax expense of
R6 million in continuing operations result in the net increase
in loss from discontinued operations of R3 million (from the
previously reported R5 million loss to restated R8 million
loss).
8. Calculation of headline loss per
share
8.1 Basic loss per ordinary share
Basic loss per share is calculated by dividing the loss for the
period attributable to equity holders by the weighted average
number of ordinary shares in issue during the period.
8.2 Headline loss per ordinary share
Headline loss per share is calculated by excluding all non-
trading and capital gains and losses from the loss attributable
to equity holders and dividing the resultant headline
earnings/loss by the weighted average number of ordinary shares
in issue during the period. Headline earnings/loss are defined
in Circular 3/2009 issued by the South African Institute of
Chartered Accountants.
30 Sep 30 Sep 12
months
31 Mar
2010 2009 2010
Rm Rm Rm
8.3 Calculation of headline loss per
share
Loss attributable to equity (72) (109) (129)
holders (IAS 33 earnings)
Adjusting items
- Impairment losses and other - (36) 19
capital items
- Tax effect on above adjustment - - -
Headline attributable loss for the (72) (145) (110)
period
Weighted average number of shares 377 377 377
(from effective date)
Basic losses per share (cents) (19) (29) (34)
Headline losses per share (cents) (19) (38) (29)
30 Sep 30 Sep 12
months
31 Mar
2010 2009 2010
Rm Rm Rm
9. Investments in associates
Carrying value in balance sheet 6 5 7
Directors` valuation of associates 24 17 24
10. Capital expenditure for the period 40 45 95
11. Operating lease commitments
Due within one year 168 127 192
Thereafter 403 412 501
571 539 693
Capital expenditure and commitments will be funded from
internal cash resources.
Directors:
Independent directors: D Konar, V R Ngalwana, B Petersen
Non-executive directors: A C de Beer (Alternate), J E Douin (Alternate), L
Hall-Kimm, N C Kolbe (Alternate), T Matiwaza, K A Mills (Alternate), M C
Ramaphosa, A Roux, P Schmid, J A van Wyk
Executive directors: M S Moloko (Chairman), E Chr Kieswetter (Group chief
executive), D M Viljoen (Group finance director)
Company secretary & Investor relations: J E Salvado
Registered office: Alexander Forbes Place, 61 Katherine Street, Sandown,
Sandton, 2196
Transfer secretaries: Computershare Investor Services (Pty) Limited. Ground
Floor, 70 Marshall Street, Johannesburg.
PO Box 61051, Marshalltown, 2107
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited). 1 Merchant
Place, corner Fredman Drive and Rivonia Road, Sandton, 2196
Date: 29/11/2010 16:28:01 Produced by the JSE SENS Department.
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