Diversified financial services provider Alexforbes delivered an improved interim dividend on Monday, supported by a robust balance sheet for the six months to end-September.
The group reported cash generated from continuing operations of R373m, with available cash at R657m.
Added to this was a sound capital position, with a regulatory surplus of R957m. The group also highlighted its cover ratio of 1.9 times being “comfortably above” the 1.2 times target solvency cover ratio.
The group said its board believed that this cash and capital position would still provide sufficient liquidity and capital strength after the payment of the interim dividend.
Profit from operations before nontrading and capital items was up 13% at R447m, as the group succeeded in expanding its assets under management. Total closing assets grew 25% year on year to R568bn, with average assets under management up 17% at R544bn.
Headline earnings per share (HEPS) showed a similar improvement, with HEPS from continuous operations increasing 6% to 28.7c, while HEPS from total operations were up 3% at 28.4c.
As higher average assets under management benefited from a positive market performance, it drove a 12% year-on-year increase in operating income, which rose to R2.14bn for the period, further supported by the consolidation of acquisitions completed in previous financial years.
CEO Dawie de Villiers said the group declared an interim dividend of 22c per ordinary share, 10% higher than in the previous comparable period thanks to the group’s current and projected regulatory position, high cash generation and available cash.
The company has been rewarding shareholders over the past years since a change in strategy led by De Villiers started to bear fruit. Its main shareholder, African Rainbow Capital (ARC) Investments, said in October: “We purchased our 42% stake in the company for approximately R3bn and have since received over R2.5bn in dividends and returned capital, achieving an annualised return on our investment of about 30%.”
Alexforbes reported “unprecedented” volumes of claims in the first few weeks after the two-pot retirement reform came into effect, with the number of attempted logins to the group’s digital system “far surpassing our expectations”.
“Alexforbes has played a leading role in advocating for, and shaping, the two-pot system, which will transform the future of retirement outcomes for all members for the better,” De Villiers said.
“There have been lessons for us on this journey and we continue to scale up our technological capabilities to serve our 1.1-million members. We are uniquely placed at the intersection of regulatory shift, employee benefits and retail. This is an incredible opportunity to make an affect on people’s lives.
“The two-pot system has been the single biggest item of reform in the history of SA’s retirement ecosystem. It presents the opportunity to engage, educate and help retirement fund members throughout their respective retirement journeys and not just at exit, as is the case with retirement benefits counselling.”
The group said it continued to invest in digital infrastructure so members could easily access their information, get appropriate advice and transact with confidence.
With Kabelo Khumalo
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