Alex Forbes share bonus boost
Group says special dividend subject to approval by SARB financial surveillance department
ALEXANDER Forbes’s share price leapt by more than 6 percent on the JSE yesterday after the financial services group declared a special dividend of 50 cents a share for the year to end March.
However, the group said the special dividend was subject to approval by the financial surveillance department of the South African Reserve Bank.
The group’s share price increased to R4.30 after the announcement, but later in the day the share price closed at R4.20.
Alexander Forbes was cash-flunk after selling its short-term insurance business to Momentum Metropolitan Holdings last year and gained a profit of R861 million on the disposal.
The group also debunked the recent trend among the listed companies of holding a dividend payment as a result of the Covid-19 outbreak.
In addition to the special dividend, the group also declared a final dividend of 12c, resulting in a total dividend of 30c during the year. During the year, Alexander Forbes also completed exiting its non-core businesses and adopted a simplified business structure.
Chief executive Dawie de Villiers said the decision to de-risk their business model, simplify their structure and adopt an advice-led, client-centric strategy was gaining traction.
“Our focus on our core offering will further enhance shareholder value, while combining our market-leading integrated consulting framework with a capital-light strategy has allowed us to reshape a new Alexander Forbes,” De Villiers said. In the results, Alexander Forbes reported a 1 percent increase in operating income from continuing operations to R3.15 billion, while profit from continuing operations,
Selati Sugar.
It said orders for its products plummeted after the government implemented the Covid-19 level 5 lockdown restrictions as restaurants were not allowed to operate during the period. However, since the beginning of June, restaurants were allowed for collections and deliveries under level 3 of the lockdown regulations. before non-trading and capital items, was flat at R757m, due to a muted growth in operating income.
Alexander Forbes also wrote off R1.15bn in goodwill and a further R47m in related intangible assets, included as non-trading and capital items, that reflect the uncertainty of
“The lingering impact of the pandemic on consumer demand, as well as the sovereign downgrade earlier in the year will also necessitate an evaluation of the carrying values of the group’s assets for possible impairments,” the group said.
RCL said it would give further details on its performance as soon as it had a reasonable degree of certainty projected income arising from the Covid-19 pandemic. Its headline earnings per share declined by 20 percent to 35.4c, and cash generated from continuing operations was R936m.
Alexander Forbes also offers integrated retirement, investment, life and insurance solutions to its clients. on the expected Heps and earnings per share ranges for the current financial year. But the group said it remained well capitalised and was managing liquidity as a priority during the pandemic.
The group is expected to release the full-year results in August.
RCL shares declined 0.11 percent on the JSE yesterday to close at R9.30.
NINETY One share price traded in the negative territory for the better part of yesterday despite the global asset manager launching a R10 billion Ninety One SA Recovery Fund in association with Ethos Private Equity to help the South African economy with recovery post Covid-19.
The fund’s objective is to support the preservation of the country’s productive capacity and economic recovery from the effects of the Covid-19 pandemic while also seeking an attractive return for investors.
Ninety One share price declined by almost 2 percent to R46.18 a share in intraday trade before closing at R47.07.
Yesterday Ninety One said the country has seen growing evidence of the devastating impact of the protracted lockdown on the economy in the last few weeks.
“There is now a body of evidence suggesting that the contraction in gross domestic product (GDP) could be as severe as 10 percent, and the country looks set to experience the worst recession in living memory. If productive capacity is not preserved, South Africa could experience an L-shaped recession, whereby it takes a decade for the economy to return to its 2019 size,” the group said.
Last month, the South African Reserve Bank estimated that the country’s GDP is likely to contract by 7 percent in 2020.
Ninety One listed separately in March on the London Stock Exchange and the JSE and it manages more than R2.29 trillion in assets as at the end of March.
Ninety One founder and chief executive Hendrik du Toit said the lockdown, while necessary to protect the nation’s health, had been akin to putting the economy into an induced coma.
“South Africa faces a once-in-a-generation economic challenge. The SA Recovery Fund is a market-led impact initiative to mitigate the negative economic impact of the Covid-19 pandemic, while seeking a commercial return. With this fund, we would like to support quality businesses and protect the nation’s productive capacity, which will in turn preserve thousands of jobs and support the South African tax base,” Du Toit said.
Ninety One is targeting a first close of the fund next month, with funding to be raised through two closes from South African institutional investors and the group said the fund aims to achieve a positive impact with attractive returns through a clear set of investment outcomes.
Stuart Mackenzie, the chief executive of Ethos Private Equity, said the SA Recovery Fund provided Ethos with a unique opportunity to partner with Ninety One on a critical funding initiative at an important moment for the nation.
“Our experience and institutional capabilities in private equity ideally position us to play a value-adding role in the execution of the Ninety One SA Recovery Fund’s investment strategy,” Mackenzie said.