Alexander Forbes Group Holdings lifted its interim dividend 25% to 15 cents a share in the six months to September 30, after operating income increased 8% year on year to R1.69 billion.
Normalised headline earnings per share increased 27% to 15.5 cents. There was R5.2bn in new business flows in the individual consulting segment, and R2.4bn in new business into Africa, the flagship default solution.
Two admin mandates gained would expand the member base by over 37 000 members. Some R6.4bn (including R5bn in platform assets) in new institutional assets were received in the investments business, with an additional R2.5bn pending regulatory approvals.
Profit from operations (before non-trading and capital items) fell 9% year on year to R354m, owing to lower-than-expected market performance and higher operating expenses.
Headline earnings per share from continuing operations fell 15% year on year to 16.1 cents, owing to the decrease in profit from operations and an increase in non-trading and capital items.
“Our capital position remains robust with a surplus of own funds over regulatory capital of R1.21bn. The group cover ratio of 1.9 times is well above the policy solvency cover ratio of 1.2 times. Average assets increased by 3% to R425 billion,” the group said yesterday.
CEO Dawie de Villiers said: “This is a credible performance in the face of volatile markets and demonstrates the stability of our core businesses. I am pleased to note the positive impact of new business on our top line and expect further contributions from our organic and inorganic growth plans.”
He said the investment portfolio was well positioned, despite short-term challenges across the market over the past six months.
“We are committed to our strategy and have made meaningful strides towards becoming the most impactful provider of financial advice to individuals and institutions,” he said.
Investment markets had performed below expectations, the JSE all-share index produced a negative 13.7% return for the six months to September, coupled with increased volatility due to global geopolitics and local electricity supply disruptions.
“The cumulative blended market return across our portfolios was negative 4.1% over the same period,” said De Villiers.
“While we anticipate these headwinds to persist for the remainder of the financial year, we also expect to benefit when markets normalise,” he said.
The 8% increase in operating income comprised 11% growth from the retirements business and 17% from healthcare consulting.
The growth in operating income was underpinned by the benefits of new business from the prior financial year fully materialising in the top line, higher average assets, client retention and protection of margin.
Management efforts to win new business and improve top-line growth continued to be effective and the group achieved new business of R86m in annualised revenue during the period, said De Villliers.
Operating expenses of R1.36bn increased 14% year on year, reflecting growth in capacity and inflationary pressure. The increase in personnel costs aligned with approved vacancies being filled and the earlier inflationary increase. In addition, technology costs were higher due to unfavourable exchange rates, increased depreciation on software deployed and higher development costs.
“Alexforbes’s intention is to double the size of the retail investments book in the next five years by leveraging regulatory change, digital transformation, its foothold at institutional clients and scaling up its retail advice. We anticipate a number of key developments will be implemented during the remainder of the year, moving us towards this vision,” he said.
BUSINESS REPORT