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Trading statement for the year ended 31 March 2018
ALEXANDER FORBES GROUP HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2006/025226/06)
JSE Share Code: AFH
ISIN: ZAE000191516
(“Alexander Forbes” or “the group”)
TRADING STATEMENT FOR THE YEAR ENDED 31 MARCH 2018
Alexander Forbes is currently finalising its financial results for the year ended 31 March
2018 (“the period”), which will be released on the Stock Exchange News Service (“SENS”) and
on the company’s website at www.alexanderforbes.co.za on or about 11 June 2018.
Based on the information currently available to the group, profit from operations before non-
trading and capital items is expected to be between 4% to 6% (R977 million to R995 million)
higher than the R937 million reported for the year ended 31 March 2017 (“prior year”). This
expected increase reflects, in particular, operating and expense efficiencies combined with
revenue growth across key business lines aligned to our Ambition 2022 strategy.
Headline earnings for the period are likely to decrease by between 15% and 20% from R683
million reported in the prior year to between R546 and R580 million, as a consequence of the
following events that have been previously notified to shareholders:
- On 19 December 2016, the group announced the disposal of its 60% interest in Lane Clark
and Peacock LLP together with its subsidiaries in Ireland and the Netherlands (“LCP”)
for a total consideration of GBP75.4 million. The group has reported the earnings of
these businesses for 8 months of the prior year, as well as the profit on sale which
amounted to R788 million, as discontinued operations.
- In addition, on 20 January 2017, the shareholders approved the sale of 10% of the
group’s Africa operations to African Rainbow Capital Proprietary Limited. The earnings
of the group for 31 March 2018 reflect the increase in the non-controlling interest
resulting from this transaction.
Furthermore, the board of directors of Alexander Forbes has decided to impair goodwill
amounting to R317 million in relation to the AF Life (long-term insurance) business. The
goodwill asset linked to AF Life arose from the private equity acquisition of the group in
2007, the impairment has no impact on cash flows or growth of the insurance business. This
impairment is reversed from earnings per share in determining headline earnings per share.
The AF Life business remains below optimal scale with growth expected to take place over the
medium to long-term. Consequently, the cost per policy is likely to remain high over this
time, which has an adverse effect on the profitability of the business. In addition, a
reduction in cash flows was experienced, driven by heightened claims experience in the
business and industry in general. The goodwill impairment is therefore a result of the
subscale growth expected, higher reserving requirements, the increase in regulatory capital
required and the increase in claims experience, all of which reduce the expected cash
generation from this business.
As a result of the non-cash goodwill impairment charge recognised in the current year
earnings per share for the period is expected to be between 16.1 cents and 21.8 cents per
share, a decline on the prior year of 81% to 86%. The corresponding 2017 prior year reporting
period included the profit on sale of the disposed businesses reflecting earnings per share
of 114.5 cents. Headline earnings per share for the period is likely to be between 43.1 cents
and 45.7 cents per share, a decrease of between 14% and 19% for the year ended 31 March 2018.
This is to be compared with 53.4 cents per share in the prior period.
This trading statement is issued in accordance with paragraph 3.4(b) of the JSE Limited
Listings Requirements. The financial information on which it is based has not been reviewed
or reported on by the group's external auditors.
31 May 2018
Sandton
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
CONTACT INFORMATION
Investor Relations Media
Zakira Amra Lynn Stevens
Telephone: +27 11 269 0799 Telephone: +27 11 269 0024
Email: InvestorRelations@aforbes.com Email: stevensly@aforbes.com
ABOUT ALEXANDER FORBES
Alexander Forbes is a diversified financial services group headquartered in South Africa
providing a broad range of retirements, health, investments, insurance and wealth management
solutions to both corporate clients and individuals through an integrated platform. Alexander
Forbes is listed on the Johannesburg Stock Exchange (“JSE”), and its primary clients span
both the private and public sector market segments, including employers, retirement, health,
investment and other special purpose funds on the institutional side, and individual members
and beneficiaries of these funds, as well as the wider individual market, on the retail side.
Alexander Forbes’ principal geographic focus is in South Africa, where it has been operating
since 1935, sub-Saharan Africa, the UK and other select emerging market jurisdictions.
Date: 31/05/2018 07:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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