Alexforbes reports double-digit decline in half-year Heps

Pension funds administrator Alexforbes reported a double-digit decline in half-year headline earnings on Monday, as profits took a hit and the company raked up higher operating expenses.

For the six-month period through to the end of September, the company’s headline earnings per share (Heps) fell 15% to 16.1 cents, resulting from a decrease in profits from operations and an increase in its non-trading and capital items. Heps is a key profit measure for most corporates in SA.

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During the period, the company saw lower-than-expected market performance and incurred higher operating expenses leading to a fall of 9% in profit from operations (before non-trading and capital items), which amounted to R354 million.

“Our performance over this period occurred within the context of challenging trading conditions and general negative market performance,” Alexforbes said.

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It said it was negatively affected by the underperformance of investment markets, with the JSE having yielded losses of 13.7% during the reporting period. That and volatility brought on by global factors, as well as increased load shedding in the country, soured markets, and its results.

“The cumulative blended market return across our portfolios was negative 4.1% over the same period,” the company said.

As a result, total assets were down 5% from 31 March 2022 decreasing to R412 billion, while average assets are up 3% year on year, to R425 billion, Alexforbes said.

It added that it expects the headwinds to persist for the remainder of its financial year, citing that it also anticipates that it will benefit when markets gain a sense of normalcy.

Despite the challenges, the financial services company raised its interim dividend by 25% to 15 cents per share, adding that its cash position remained robust, with surplus funds over regulatory capital of more than R1.2 billion.

Operating income from continuing operations rose 8% to R1.7 billion helped by new business worth R86 million in annualised revenue across its core businesses.

Alexforbes said it had R5.2 billion in new business flows within the individual consulting segment, while AFRIS, its flagship default solution saw R2.4 billion in new business.

It also had R6.4 billion in new institutional assets in the investment business, which also includes R5 billion in platform assets.

Alexforbes CEO Dawie de Villiers said the company produced a credible performance in the face of volatile markets.

“[It] demonstrates the stability of our core businesses. I am pleased to note the positive impact of new business on our top line and expect further contributions from our organic and inorganic growth plans. I have full confidence that our investment portfolios are well positioned despite the short-term challenges experienced across the market over the past six months,” he said.

“We are committed to our strategy and have made meaningful strides towards becoming the most impactful provider of financial advice to individuals and institutions,’’ said De Villiers said.

Alexforbes’s share price traded marginally down (-0.21%) by around midday on Monday, at R4.69 a share.