Alexander Forbes continues turnaround with solid results

Alexander Forbes posted a positive set of interim results for the six months to end-September, as it continues with the implementation of its much-vaunted turnaround strategy

Financial and risk services group Alexander Forbes posted a positive set of interim results for the six months to end-September, as it continues with the implementation of its much-vaunted turnaround strategy. However, while the group’s retirements business unit reported strong growth, its emerging markets business was under strain in challenging political and macro-economic environments.

 

The group reported a 3% increase in operating income from continuing operations to R1.8 billion, up from R1.75bn last year. Profit from operations increased 4% before non-trading and capital items to R239 million. Headline earnings per share declined 20% to 21.7 cents compared with last year. An interim dividend of 18c per share was declared, up 6% on account of the group’s strong cash position, which is at a surplus of R1.5m.

 

CEO Andrew Darfoor said the group’s turnaround strategy was “intensifying”, but maintained that there was still along way to go before its full potential was unlocked.

“We are back in the game but we still have much to do. Looking ahead, although we have made progress, turnarounds are rarely linear and the improving results should be tempered by the realism that the business still has issues to address and is performing nowhere near its full potential,” he said.

 

The results are Darfoor's third set of financials since being appointed to the helm in September 2016 appointment after the departure of long-serving predecessor Edward Kieswetter left the group facing uncertainty. At the time former chairman Sello Moloko expressed concern about deteriorating results and market consternation about its negative operating leverage.

 

Established in 1935, Alexander Forbes is a specialised financial services group with its head office in Sandton, South Africa and business interests in Africa, Europe and the Middle East. It employs almost 4 000 people. Naidene Ford-Hoon was appointed Group CFO on 1 September 2017, taking over the reigns from former CFO of the Year Deon Viljoen. Prior to this, she was group CFO of the South African Reserve Bank from 2010 to 2017.

 

Alexander Forbes adopted and refreshed its Ambition 2022 strategy early this year with a focus on creating value through being a trusted partner, achieving revenue growth at or above market levels and delivering positive operating leverage. It is hoped that the new structure will realise improved operating profit growth, margin enhancement and improved cash flows.

 

During the period under review, the group moved to make appointments in senior management and worked to convert profits from operations into cash.

 

Going forward, Darfoor said the group would be looking to improve operational performance and customer experience – “more customer-focused solutions, more consistency in delivering positive operating leverage, more trading margins, more operating profit”.

 

Darfoor added that the group would also be exploring big data and analytics in an effort to be more disruptive.

“We plan on using big data to be more disruptive in the areas of predictive analytics, taking advantage of our brand strength to drive further efficiency through improved automation. Putting the customer at the centre of our value proposition remains key,” he said.