Johannesburg - Alexander Forbes, Africa's largest independent pension-fund administrator, said full-year profit fell after it set aside money to compensate clients who were cheated out of profits made by pooling their accounts.
Net income dropped to R12 million, or 3 cents a share, in the 12 months through March 31, from R413 million, or R1.05 a share, a year earlier, the company said in a statement to the Johannesburg Stock Exchange on Tuesday.
Revenue rose 11 percent to R5 billion.
The company's core earnings a share figure, which excludes the effect of the bulking provision and other one-time items, rose 3 percent to R1.16 a share, it said. Alexander Forbes paid 59 cents a share to its investors, a 12 percent drop on the dividend it paid a year ago, the company said.
Alexander Forbes admitted on May 25 to cheating customers of profits made by pooling bank accounts and offered them R368 million in compensation and another R12 million for a consumer education fund. The company, which failed to share the benefits of bulking bank accounts with 1 700 of its pension-fund clients between 1996 and 2004, has set aside another R100 million to cover further claims.
"This has been one of the most difficult periods in Alexander Forbes's 70 year history, with significant issues raised concerning the historic transparency of income earned by our South African Financial Services business," the company said in the statement.
"We failed to live up to our history of dedicated client service in this area of our business, which we sincerely regret."
The company has almost completed a review of its business with auditors Ernst & Young and South African law firm Deneys Reitz, it said. The review identified "a limited number of additional potential historical exposures," for which provisions have been made, the company added. - Bloomberg