Tak­ing a big hit in a tough year

It was known that there would be write-offs, but for a R4.5bn mar­ket cap com­pany, the num­bers were huge

Financial Mail - - MONEY&INVESTING - Stephen Cranston [email protected]

We will prob­a­bly never know the pre­cise cir­cum­stances around An­drew Dar­foor’s dis­missal as Alexan­der Forbes CEO in Sep­tem­ber.

But the re­sults for the six months to Sep­tem­ber gave some hints. It was widely known that there would be write-offs, as the board had de­cided to dis­con­tinue the R1bn IT project in which Sapi­ens was the lead con­trac­tor.

But for a R4.5bn mar­ket cap com­pany, the num­bers were huge. There was a R52m can­cel­la­tion fee paid out in cash to Sapi­ens, which was taken through the in­come state­ment, as well as a R287m soft­ware im­pair­ment on the bal­ance sheet.

Wal­lie van der Walt, a port­fo­lio man­ager at Abax In­vest­ments, ques­tions the qual­ity of due dili­gence car­ried out be­fore Forbes em­barked on the project, es­pe­cially as it doesn’t have the re­sources to spend on IT in the quan­ti­ties that the large banks do.

David Talpert, an an­a­lyst at Av­ior Cap­i­tal Mar­kets, says his con­tacts at Alexan­der Forbes now say that the ex­ist­ing sys­tems are more than ad­e­quate af­ter all, es­pe­cially in the core in­sti­tu­tional busi­ness.

Dawie de Vil­liers, for­mer head of San­lam Em­ployee Ben­e­fits, took over as CEO in Novem­ber. On Tues­day he an­nounced the res­ig­na­tion of three mem­bers of the com­mit­tee: CEO of Alexan­der Forbes In­vest­ments Leon Greyling; chief risk of­fi­cer Vishnu Naicker; and head of hu­man re­sources Chris­tian Schaub. More heads are ex­pected to roll.

De Vil­liers is com­mit­ted to sim­pli­fy­ing the group and lev­er­ag­ing its core strengths. He says the health-care con­sult­ing, for ex­am­ple, which in­creased in­come by 8%, is much stronger than its coun­ter­part at San­lam.

Louis Chetty, fi­nan­cials an­a­lyst at Stan­lib, says that in spite of its strong brand and high suite to in­de­pen­dent fi­nan­cial ad­vis­ers.

“We are an ad­vice-led busi­ness, so the pri­or­ity should be on get­ting our fi­nan­cial plan­ning busi­ness right. Why does it have a smaller foot­print than our in­sti­tu­tional busi­ness?

“I am not sure that there would be the right align­ment be­tween our­selves and an in­de­pen­dent.”

De Vil­liers says he does not in­tend to set up an agency force in the San­lam mould, but it has scope to of­fer more re­tail prod­ucts to its 1.2-mil­lion mem­bers. Its In­come So­lu­tion in-fund preser­va­tion fund and liv­ing an­nu­ity has gath­ered R1.4bn since its launch in Feb­ru­ary.

Talpert calls the op­er­at­ing re­sult “de­cent”: up 9% be­fore non­trad­ing items and head of­fice costs. Alexan­der Forbes In­vest­ments, the old In­vest­ment So­lu­tions, con­tin­ued to be the best per­former, with op­er­at­ing profit up 17% to R217m, even though as­sets un­der man­age­ment were up just 3% to R315bn. Its main fund, Per­former, is still a pop­u­lar op­tion, grow­ing 15% to R118bn. The unit has been able to cut costs and waste less man­age­ment time by sub­con­tract­ing its in­ter­na­tional as­set man­age­ment to

Freddy Mavunda

Dawie de Vil­liers: Took over as CEO in Novem­ber

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