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Alexander Forbes Limited - Adoption Of Share Option Accounting
Release Date: 07/06/2004 07:31:00 Code(s): AFB
ALEXANDER FORBES LIMITED - ADOPTION OF SHARE OPTION ACCOUNTING
Alexander Forbes Limited
(Incorporated in the Republic of South Africa)
(Registration number 1958/001974/06)
Sharecode: AFB
ISIN code: ZAE 000018230
Announcement - 7 June 2004
Adoption of share option accounting
A new South African accounting standard, AC139, was approved on 27 May 2004,
which requires accounting for share option costs through the income statement
with effect from the group`s financial year ending 31 March 2006. In the
interests of good governance, the group intends to apply early adoption of the
new accounting standard in its financial statements for the year ending 31 March
2005. This will be implemented by way of a change in accounting policy with
restatement of the prior year financial statements. The pro forma financial
effects thereof are set out below.
The share option expenses in respect of options granted to date are as follows:
Financial years ending 31 Share option
March expense
Rm
1999 10
2000 56
2001 83
2002 106
2003 89
2004 56
2005 29
The pro-forma financial effects of share option expenses on earnings as
previously reported are as follows:
Financial year ending 31 March
2000 2001 2002 2003 2004
Rm Rm Rm Rm Rm
Headline earnings as previously 316 424 640 557 521
reported
Adjustment for changes in accounting (5) (3) (1) (2) 0
policy
adopted in the 2004 year
Headline earnings before share 311 421 639 555 521
option expenses
Share option expenses* (56) (83) (106) (89) (56)
Headline earnings after share option 255 338 533 467 465
expenses
(* excludes any potential tax relief thereon)
Weighted average number of shares 333 339 342 342 345
(millions)
Headline earnings per share (Rands)
- before share option expenses 0.93 1.24 1.87 1.62 1.51
% change 33% 50% (13%) (7%)
- after share option expenses 0.76 1.00 1.56 1.36 1.35
% change 30% 56% (13%) (1%)
Attributable earnings per share
(Rands)
- before share option expenses 1.06 1.25 1.62 1.20 1.02
% change 19% 29% (26%) (15%)
- after share option expenses 0.89 1.01 1.31 0.94 0.86
% change 14% 30% (28%) (9%)
Following the adoption of share option accounting, it will be necessary to
allocate share option expenses properly to the relevant operating companies
within the group. This will require a change to the group`s share option
schemes, which will require shareholder approval. It is important to note that
no changes will be made to the number of shares under option or the price at
which options have been granted.
It is intended that a circular will be distributed to shareholders and a general
meeting held on or about 30 July 2004 to consider the necessary proposal.
Sandton
4 June 2004
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