Alexander Forbes earnings slide on savings and retirement market pressure
Financial services company Alexander Forbes on Tuesday (18 June) reported a drop in headline earnings for the 12 months ended March 2019.
“Savings and retirement markets are under pressure and we did not perform to expectation, resulting in lost business in some segments. We are addressing this shortfall and note the impact of lost revenue on operating income,” the company said.
Operating income from continuing operations climbed 4% to R3.13 billion with sustained growth from investments (up 7%), consulting and retirements (up 6%) and wealth and investments (up 4%).
Operating profit declined to R447 million, from R674 million, while normalised headline earnings per share of 45 cents, was 14% lower than 52.4 cents before.
Headline earnings per share, for the total group, declined 1% to 44 cents, Alexander Forbes said. Profit from operations for the total group – before non-trading and capital items – was down 7% to R915 million.
The group said it also faced internal challenges during the year under review.
“The departure of the former chief executive officer and members of the executive team brought closure but also signalled the need for a strategic review of the group.
“The incoming chief executive officer was mandated by the board to conduct a review of the group’s operating model and growth strategy,” it said.
Revised strategy
In March 2019, the group announced a revised strategy that refocuses the business on providing advice-led integrated retirement solutions and holistic wealth management.
The revised strategy resulted in the decision to exit the insurance businesses and sub-scale African operations – which have been classified as discontinued.
“South Africa as our primary market will remain our core focus, and we will continue to service clients across Africa through the advice-led solution platform ‘ARRIVE’ in close collaboration with Mercer. There are no further plans for in-country investments in the rest of Africa and we are exiting sub-scale markets such as Uganda and Zambia,” Alexander Forbes said.
Cash generated from continuing operations remained strong at R821 million, the group said.
Alexander Forbes said that assets under administration (AuA) and Assets under management (AuM) of R342 billion, were down 4% year on year.
The group declared a final dividend of 12 cents per share, bringing the total dividend for the year to 30 cents, reverting to a cover ratio of 1.5 times. A special dividend of 30 cents per share was declared.
“As we embark on this new chapter, we do so in an economic environment that will likely remain constrained for the foreseeable future,” it said.
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