Alexander Forbes earnings hit by Covid
ALEXANDER Forbes expected its earnings to continue to feel the impacts of the Covid-19 outbreak in the medium term, with top line growth expected to be under pressure for the next 18 to 24 months, it said yesterday.
This comes after the diversified financial services group reported a 5 percent decline in profit from continuing operations to R382 million for the six months to end September, knocked by a 3 percent decline in operating income to R1.54 billion.
The group declared an interim dividend of 13 cents a share, which was 28 percent lower compared to 18c declared last year. It said the hard lockdown in South Africa during April and May had resulted in very limited business and economic activities apart from the designated essential services.
However, Alexander Forbes responded by transitioning to virtual client engagements and continued to adapt and evolve to the new uncertain environment.
“We continue to serve our clients remotely and with the easing of lockdown restrictions since August we have a balance of virtual and face-to-face interactions, driven by our clients’ preferences,” the group said.
The group reported a 6 percent increase in headline earnings per share (Heps) from continuing operations to 18.8c a share, but Heps from total operations fell by 41 percent to 14.5c.
Its assets under administration and assets under management increased by 3 percent year-on-year to R353bn and were 14 percent higher since March, owing to higher market returns and an increase in new business flows during the period.
Chief executive Dawie de Villiers said despite the tough trading conditions that the business has faced in the past six months, its core business remains stable. “Alexander Forbes proactively responded to clients’ needs, particularly during the Covid-19 pandemic, by intensifying our engagement and ensuring that we continued to provide outstanding service and solutions, through our advice-led approach. We remain confident in
our advice-led strategy and believe that continued delivery against our objectives will reflect positively in the performance of the business over the medium-term,” De Villiers said.
Its cash generated from continuing operations declined by 31 percent to R335 million, due to an increase in working capital while its capital position remains strong with a regulatory surplus of R1.45bn, although it was down by 29.5 percent by year-end as a result of the payment of the special dividend in July.
De Villiers said the group had shown its resilience and agility under the reporting period.
“We are happy with the results under these circumstances. The Covid19 has created havoc in the global markets and we were not immune to these challenges,” he said.
Looking ahead, De Villiers said their underlying business remained stable, their solvency was sound and their value proposition was strong and they were a more agile and integrated company, better enabled to respond to the challenges that lie ahead.
Alexander Forbes shares closed 4.28 percent lower at R3.80 on the JSE yesterday.