In a challenging economic environment, Alexander Forbes Group Holdings Limited has announced robust financial results for the six months ended 30 September 2023. The company’s deliberate implementation of its strategic plan has resulted in a 13% increase in operating income, reaching R1,911 million. Notably, acquisitive growth contributed 4% to the top-line growth, emphasizing high levels of client retention and increased average asset balances.
Operating income witnessed a significant boost, climbing to R1,911 million, reflecting the success of the strategic initiatives. Acquisitions, client retention efforts, and elevated average asset balances played pivotal roles in this remarkable 13% surge.
While operating income saw substantial growth, operating expenses also increased by 15%, reaching R1,559 million. This rise is attributed to corporate activity over the past 18 months, including fully consolidated acquisitions. Excluding the impact of stranded costs and lease adjustments, organic growth in operating expenses stood at 8% year on year.
Profit for the period from continuing operations saw an impressive 66% improvement, reaching R339 million. Factors contributing to this surge include trading performance, increased income from interim support services for disposed businesses, lower amortization of intangible assets, improved results from professional indemnity insurance, and enhanced investment income.
Shareholders will be pleased to note a 33% year-on-year increase in the interim cash dividend, now standing at 20 cents per share compared to 15 cents in 2022.
On June 1, 2023, Alexander Forbes acquired a majority interest in TSA Administration, an independent provider of institutional group risk insurance administration services. This move aligns with the company’s strategic intent to expand service offerings to intermediaries, complementing existing business lines.
Further reinforcing its strategic position, the group entered into a binding agreement with OUTsurance Holdings Limited on November 8, 2023, to purchase 100% of the shares in OUTvest Proprietary Limited. OUTvest, an award-winning digital wealth platform, is set to be integrated into Alexander Forbes’ environment, enhancing the company’s digital capabilities.
Key financial metrics underscore the company’s robust performance, including a regulatory surplus of R1,774 million, a cover ratio comfortably above the target solvency cover ratio, and available cash of R863 million.
Alexander Forbes anticipates a positive net impact from the implementation of the two-component (two-pot) system, fostering greater engagement and opportunities for asset retention. The integration of OUTvest’s digital wealth management capability is expected to bring significant efficiencies to the company’s financial advisers and retail clients.
To diversify revenue streams, the company is launching a discretionary fund management (DFM) capability in the latter half of the financial year. Automation and technological transformation, particularly in core administration processes, are being implemented to enhance competitiveness and client service.
With a strong new business pipeline and a focus on consolidating into its umbrella fund, Alexander Forbes is well-positioned to compete aggressively for market share. The company’s unique advice-led umbrella fund proposition, emphasizing objectivity, simplicity, and performance, has been well-received in the market.
In line with its dividend policy, Alexander Forbes declared an interim gross cash dividend of 20 cents per ordinary share (16 cents net of dividend withholding tax) for the six months ended September 30, 2023.
Shareholders should take note of the salient dates for the final dividend, including the last day of trade to receive the dividend on January 2, 2024, and the payment date on January 8, 2024.
With a reconfigured and focused core business, Alexander Forbes is well-positioned for new business growth and acquisitions, supported by a solid foundation.
The company is embracing technological transformation, with a focus on automation and efficiency. Robotic process automation has already proven successful in enhancing competitiveness and client service.
The implementation of the two-pot system presents opportunities for greater engagement with members, and the company is actively exploring ways to connect with and serve its clients better.
Alexander Forbes is committed to acting as a force for good, consulting with retirement funds and employers on sustainability matters. Meaningful strides have been made in designing the retirement fund of the future and formalizing climate policies.
Alexander Forbes’ interim results for the six months ended September 30, 2023, reflect a strategic approach to navigating challenges, delivering strong financial performance, and making key acquisitions. With a focus on technology, diversification, and sustainability, the company is well-positioned for future growth and success.