ALEXANDER FORBES SOUTH AFRICA
ALEXANDER FORBES SOUTH AFRICA
Financial Well-Being:
Secured PRODUCTION: William Denstone
Today, Alexander Forbes is one of Africa’s leading financial services organisations, offering integrated retirement, investment, life and insurance solutions which serve to create, grow and protect clients’ investments. “Alexander Forbes is committed to creating solutions, growing relationships, and protecting our clients’ wealth and assets,” the group sets out. 2 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
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Strongly rooted in South Africa with headquarters in Sandton, the Alexander Forbes Group’s roots can be traced back almost 85 years to the first half of the twentieth century. It has been active in South Africa, which remains its main focus, since 1935, having grown its market share to now encompass sub-Saharan Africa and the Channel Islands. The majority of its operating income and profit from operations, 93% and 97% respectively, is derived from South Africa, with Emerging Markets remaining a key long-term growth prospect for the group as it continues to diversify and grow. “As a business, we’re constantly moving forward,” the group states. “We were born from an entrepreneurial spirit.” Through a combination of innovating, challenging and disrupting conventions the group
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aims to lead and shape the African investment industry. Alexander Forbes currently has a presence across eight countries and employs more than 3000 people. “We help our clients to secure a lifetime of financial well-being and security,” Alexander Forbes sums up of its global aims. “Our vision is to be Africa’s most innovative, forward-thinking and trusted global investment provider, steering our diverse clients on a comfortable journey towards holistic financial well-being.” RESULTS TAKE A HIT Alexander Forbes has long demonstrated an ability to shift and evolve in response to the dynamic investment market - it is one of the elements that has kept it at the top for so long. It is a complex and rapidly evolving world in which it operates, and progress has been the result
// OUR VISION IS TO BE AFRICA’S MOST INNOVATIVE, FORWARD-THINKING AND TRUSTED GLOBAL INVESTMENT PROVIDER // of a deep understanding of and engagement with so many diverse clients, across different savings and investment pools, to help them achieve consistent and responsible investment outcomes. No business has been immune to the pressures of the current market uncertainty, and Alexander Forbes is having to be more resilient and creative than ever before in order to stave off the negative effects on
ALEXANDER FORBES SOUTH AFRICA
Committed to ensuring a South Africa where 90% of learners pass mathematics, science and languages with at least 50% by 2030
the bottom line. A tumultuous 2018 was capped by the announcement in December of a R45m loss in the company’s interim financial results. However, there is more to such an apparently bleak picture than meets the eye. The revelations came after the company was rocked by the failure of a software program that cost a colossal R339m, which was expected to have a significant impact on the interim results. Quick to react, Alexander Forbes is scrapping the ill-fated project, which was aimed at changing the company’s IT infrastructure.
// THE BUSINESS HAS BEEN RESILIENT THROUGH A VERY TOUGH ECONOMY //
The cancellation of the project certainly cost dearly, but the financial services company was still able to report operating income up 6% to R1.9 billion in the six months to September. Profit from operations declined by 3% to R442 million but, had the company not written off the R52 million worth of operating expenses, operating profit would in fact have increased by 9%. “This was the major drag on earnings,” new CEO Dawie De Villiers told CNBC Africa. “We ended a contract with our IT provider so there were exit payments that had to be made to get us out of it. This was a big program that we embarked on more than two years ago that just didn’t work out for us and didn’t deliver what we wanted from it. “IT is one of the major things that
underpins our business and enables us do it well,” De Villiers was keen to point out. “Now, we will decide where we want the business wants to go and then use IT to get us there, rather than just for the sake of it.” LOOKING FORWARD “Under the circumstances we are pleased,” said de Villiers to MoneyWeb of the period under review. “The business has been resilient through a very tough economy. One must understand the effect that SA’s low GDP growth has on our business. Add to that employment levels – we fight hard to service a client, but when job shedding takes place that has a negative effect on our bottom line.” The growth in operating income was generated by strong performance across the business. In particular,
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INDUSTRY FOCUS: FINANCE
// WE NEED A SIMPLE STRATEGY THAT EVERYONE BUYS INTO AND THAT THE MARKET UNDERSTANDS // Investments grew 16%, Consulting & Retirements grew 7%, and Emerging Markets grew by 10%. The group will have surplus cash of R1.2 billion after the annual dividend of R307 million is paid to shareholders. Turning its attention to what
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is to come, Alexander Forbes has a number of strategies to further bolster the recovery, both in place and in development. Perhaps top among them is Ambition 2022, a five-year strategic plan, “designed to transform our business by unlocking its potential and characterised by our strategic anchor of ‘a lifetime of financial well-being and security’ and an investment thesis of generating strong ‘cash flow plus growth.” It represents a shift from a business-to-business model to one that is characterised by a broader focus on servicing corporates, public sector, smaller businesses and individuals. Additionally, Dawie de Villiers
has given himself until March to come up with a new blueprint to reinvigorate the company and refocus on what it does best, feeling that in recent years it has somewhat abandoned its core business. “At its core, the company should be an advice-led business with superior advice services for corporates and individuals,” de Villiers stated. “We kind of drifted away from being an advisory business and if we set up the business that way we will surely succeed. “The business is also too complex. I committed to the board and clients that by March I will come with a plan that will inform our future
ALEXANDER FORBES SOUTH AFRICA
strategy and simplify our business for the market to better understand what we are doing. “A lot of the business is performing well, but it is important to regroup. We need a simple strategy that everyone buys into and that the market understands.” NEW MARKETS The collaboration with 100% blackowned healthcare consultancy firm Evo Financial Services gives Alexander Forbes an invaluable opportunity to contribute to the B-BBEE profile of the health consulting business landscape. The sub-contracting consulting work has
an initial value of R12- million. “Alexander Forbes is committed to finding suitable channels to strengthen our supply chain, deliver shareholder return and in turn contribute to South Africa’s growth,” said Alexander Forbes Health Managing Director, Butši Tladi. In this partnership, Evo will benefit from operational support from Alexander Forbes in specialised areas such as actuarial, risk management and call centre capability. “The partnership with Evo will enable Alexander Forbes to penetrate markets in which we are currently under-represented,” said Tladi. “Evo already has an
exciting pipeline of business opportunities and our collaboration will improve their conversion rates and fast-track their ambition to become a formidable player in the industry,” Tladi concluded. “We recognise our responsibility to facilitate and support empowering opportunities in line with the national agenda of developing and growing a robust economy.”
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Published by CMB Media Group Chris Bolderstone – General Manager E. chris@cmb-media.co.uk Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU T. +44 (0) 20 8123 7859 E. info@cmb-media.co.uk www.cmb-media.co.uk CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. Š CMB Media Group Ltd 2019
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ENTERPRISE AFRICA
MAR CH 2019