Alexan­der Forbes be­gins a five-year jour­ney

Zambian Business Times - - BUSINESS REVIEW -

- con­tin­ued Dar­foor re­ferred ex­ten­sively in the pre­sen­ta­tion to the "size of the prize". It may sound like a game-show cliché but it refers to the pos­si­bil­ity of strip­ping riches out of the bal­ance sheet. He says there is cap­i­tal to un­lock and the gear­ing level is too con­ser­va­tive at 11%.

Since relist­ing in 2014, it has gen­er­ated R4bn in cash and paid out R2bn in div­i­dends. This past year it paid out R829m in div­i­dends and spent R276m on share buy­backs.

In a traf­fic-light as­sess­ment of the re­sults, Dar­foor gives the group just one red light, for re­turn on equity of 9.8% (the tar­get is at least 12%). There are two green lights: one for con­tain­ing core cost growth to 3% and an­other for the gen­er­ous div­i­dend cover of 1.2 times.

But he says there is a lot more work to do, on op­er­at­ing in­come and profit growth of just 5% and a cost-to-in­come ra­tio still steep at 70.9%.

Forbes con­tin­ues to mint cash but high growth re­mains elu­sive.

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