Photo: Simphiwe Mbokazi
Photo: Simphiwe Mbokazi
DURBAN - Financial services group Alexander Forbes has conceded that it was still nowhere near its full potential, despite improving its results for the six months to the end of September.

Chief executive Andrew Darfoor said the group would focus on building on the pro- gress made in the past year.

“We are back in the game, but we still have much to do. We have focused the business on our crystal-clear investment thesis of ‘cash flow plus growth’ and are beginning to see the benefits of this reflected in our performance across key group operating metrics,” Darfoor said.

The group adopted and refreshed its Ambition 2022 strategy early this year. It said its focus was now on creating value through being a trusted partner, achieve revenue growth at or above market levels and deliver positive operating leverage. The group said this should translate into improved operating profit growth, margin enhancement and improved cash flows.

The group reported a 3% increase in operating income from continuing operations to R1.8 billion, up from R1.75bn last year. It said profit from operations increased 4% before non-trading and capital items to R239 million. However, headline earnings per share declined 20% to 21.7 cents compared with last year.

The group said operating expenses remained contained at 2%, while trading margins improved to 25.3%, up 40 basis points and positive operating leverage was once again delivered.

“We have delivered more more customer-focused solutions, more consistency in delivering positive operating leverage, more trading margins, more operating profit, which, alongside more efficient profit-to-cash conversion, has led to more dividends,” Darfoor said.

The group declared a 6percent increase in dividends to 18c a share.

Alexander Forbes has a portfolio of businesses in South Africa and select emerging markets. The group operates various divisions in the group, which consist of institutional clients, retail clients, emerging markets, administration and operations, and technology.

The institutional clients division delivered R916m of operating income, which is 5percent higher than the prior period, while retail clients also delivered a 5percent increase in operating income to R690m, with the majority of growth being delivered by the insurance business and the short-term insurance business.

The group said the emerging-markets business comprised institutional and retail operations in Africa.

Year-on-year performance remained challenged, with operating income down by 8%. Costs were contained at 3% year-on-year, driven by improved expenses and operational efficiency initiatives.

The group said performance in emerging markets was largely led by the SADC region, Namibia and Botswana. It said Nigeria, Uganda and Zambia reflected smaller operations in terms of revenue contribution and have structured changes to their businesses.

Under the administration division, the operating income declined 16%, largely as a result of the loss of a large standalone client who chose to in-source their administration.

The group’s operations and technology division continued to focus on driving efficiencies in services provided to its clients. This division is focused on improving standard operating procedures as well as automation.

Investment income of R143m, compared with last year’s R93m, was generated from the corporate cash balances managed through the group’s treasury department.

Alexander Forbes’s shares rose 1.26% to close at R6.45 on the JSE yesterday.

-BUSINESS REPORT