Johannesburg - Diversified financial services group Alexander Forbes had a tough trading environment in the six months to September characterised by volatile equity markets and headwinds in the South African economy.
The group was also hit by the increase in unemployment and retrenchments in its client base and the resulting withdrawals in savings that impacted results. The share price slid by as much as 16 percent to R6.35 on the market’s uncertainty about continued profitability given the uncertain labour and economic environment.
The company’s share price closed down 13.82 percent at R6.55 on the JSE yesterday, which valued the company at R8.8 billion.
Alexander Forbes, which declared a dividend of 15c a share, said it saw an increase in operating income from continuing operations which was up 9 percent to R2.6bn, while profit from continuing operations before non-trading and capital items increased by 2 percent to R552 million.
Headline earnings a share increased 126 percent to 26c a share due to listing and transaction costs in the prior year.
The group also gained from continued rand weakness which declined 9 percent in the average rand/sterling rate, increasing rand profit 29 percent from operations of R126m for the period under review.
AfriNet, the company’s subsidiary which covers all operations in Africa outside of South Africa, increased operating income by 17 percent to R161m for the six months and profit from operations rose 24 percent to R31m.
The group said this result was driven by strong organic growth across both the retail and institutional businesses with retail the stronger performer, increasing its operating income net of direct expenses contribution to 19 percent, from 13 percent in the same period a year ago on the back of a very successful and growing distribution base in Kenya, Botswana and Namibia.
“It is pleasing to note that the geographic spread of profit contribution has improved, with the east African operations having grown their contribution to 30 percent of AfriNet’s profit from operations for the half year.
“The Kenyan operation has delivered consistent growth in profit from operations over the last three years and we expect this trend to continue. The Ugandan operation, while still in the early stages of start-up, continues to grow the client franchise and deepen the brand in east Africa,” the group said.
The continuing operations of the International Financial Services business comprise the consulting actuarial business of Lane Clarke & Peacock with operations in the UK, Ireland and the Netherlands, as well as Alexander Forbes Channel Islands.
The unit increased operating income by 9 percent to £43.5m (R948m) for the six months and profit from operations rose by 23 percent to £6.4m.
BUSINESS REPORT