Alexander Forbes upbeat despite volatile market

Diversified financial services group Alexander Forbes had a tough trading environment in the six months to September characterised by volatile equity markets and headwinds in the South African economy.

The increase in unemployment and retrenchments in its client base and the resulting withdrawals in savings that impacted results also hit the group. The share price slid by as much as 16 percent to R6.35 on the market’s uncertainty about continued profitability, given the uncertain labour and economic environment.

Alexander Forbes, which declared a dividend of 15c a share, said it saw an increase in operating income from continuing operations which was up 9 percent to R2.6bn, while profit from continuing operations before non-trading and capital items increased by 2 percent to R552 million.

Headline earnings a share increased 126 percent to 26c a share due to listing and transaction costs in the prior year. The group also gained from continued rand weakness, which declined 9 percent in the average rand/sterling rate, increasing rand profit 29 percent from operations of R126m for the period under review.

AfriNet, the company’s subsidiary that covers all operations in Africa outside of South Africa, increased operating income by 17 percent to R161m for the six months and profit from operations rose 24 percent to R31m.

The group said this result was driven by strong organic growth across both the retail and institutional businesses with retail the stronger performer, increasing its operating income net of direct expenses contribution to 19 percent, from 13 percent in the same period a year ago on the back of a very successful and growing distribution base in Kenya, Botswana and Namibia.