Alexander Forbes. Photo: Africa news agency.
JOHANNESBURG – Alexander Forbes new chief executive Dawie de Villiers has given himself until March to come up with a new blueprint to reinvigorate the company after its profit from continuing operations plunged 115percent in the six months ended September on the back of a failed IT upgrade project.

The company swung from a profit of R324million in the comparative period to a loss of R45m in the period under review.

The firm said it wrote off R287m in impairment of capitalised software development assets and R52m one-off operating expenses relating to the termination of the IT contract.

The group's headline earnings per share also plunged 23percent to 16.7cents per share.

De Villiers said the company had in the past few years abandoned its core business and wanted it to refocus on what it did best. “At its core, the company should be an advice-led business with superior advice services for corporates and individuals. We kind of drifted away from being an advisory business and if we set up the business that way we will surely succeed,” he said

“The business is also too complex. I committed to the board and clients that by March I will come with a plan that will inform our future strategy and simplify our business for the market to better understand what we are doing.”

De Villiers took over the group's reins last month after the company’s erstwhile Andrew Darfoor was unceremoniously fired in September.

At the time, the company said it had fired Darfoor due to a “loss of confidence and trust” in his leadership.

The huge impairments over the failed IT upgrade has raised speculation that Darfoor was dismissed over the ill-fated programme.

Darfoor has since taken his dismissal to the Commission for Conciliation, Mediation and Arbitration

The company's board and Darfoor did not respond to questions sent to them yesterday.

De Villiers could not be drawn to comment on who was to blame for the losses incurred in the R1billion IT project, merely saying the idea was “big” and aimed at overhauling the group's IT system to give it a competitive edge. “We rather decide on what direction we want the firm to take and use IT as an enabler than just to invest in IT for the sake of it.”

The group also said its performance in the period was hamstrung by the sustained levels of high formal unemployment, which resulted in fewer members added for retirement benefits in formal employment.

Asief Mohamed, the chief investment officer of Aeon Investment Management, said the group needed to sort out its internal handicaps to effectively compete. “The company is losing its market share and there is an urgent need to overhaul its IT system to meet clients’ needs and keep up with its competitors,” he said.

The group's stock inched up 0.41percent to R4.90, valuing the group at just over R6.5bn. The company's share price has, however, plunged 29percent this year.

BUSINESS REPORT