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ALEXANDER FORBES GROUP HOLDINGS LIMITED - Unaudited interim results and cash dividend announcement for the six months ended 30 September 2018

Release Date: 11/12/2018 08:00
Code(s): AFH     PDF:  
 
Wrap Text
Unaudited interim results and cash dividend announcement for the six months ended 30 September 2018

Alexander Forbes Group Holdings Limited
Registration number: 2006/025226/06
Tax reference number: 9404/921/15/8
JSE share code: AFH
ISIN: ZAE000191516
(Incorporated in the Republic of South Africa)


UNAUDITED INTERIM RESULTS AND CASH DIVIDEND ANNOUNCEMENT
for the six months ended 30 September 2018


EXECUTIVE OVERVIEW
Alexander Forbes is dedicated to delivering outstanding employee benefits solutions, administrative 
services and investment management solutions for institutional clients and to securing the financial 
well-being of individual members. We do this by offering a broad range of retirement, consulting, 
asset management, insurance and wealth management solutions. 

The operating environment has been difficult over the reporting period, with the domestic economy 
having entered a technical recession. Underlying economic activity remains weak due to low business 
and consumer confidence combined with sustained levels of high formal unemployment. Broad-based job 
shedding in all sectors has resulted in fewer members added for retirement benefits in formal employment. 

In an increasingly competitive and low growth environment, Alexander Forbes continues to be a trusted 
advisor to our customers by leveraging our core strengths in employee benefits, administrative services 
and investment management solutions. These core strengths are complemented with innovative product 
offerings, member education, enhanced member interaction tools and improved customer service levels.

Under the leadership of Dawie de Villiers, Alexander Forbes' newly appointed group chief executive, 
the group is reviewing its market positioning and business model to unlock the inherent value potential 
within the group. The review will focus on strengthening our competitive position in the employee 
benefits, savings and retirement markets and position the business appropriately for profitable growth 
together with commensurate returns on capital invested.

HIGHLIGHTS
-  Operating income increased by 6% to R1 908 million with resilient performance across key business 
   areas, largely attributable to: 
   -  Consulting and retirements up 7%
   -  Investments up 16%
   -  Emerging markets up 10%.
-  The group concluded a review of the strategic roadmap and related projects within the IT programme 
   which resulted in: 
   -  the termination of the contract with the primary implementation partner 
   -  R287 million impairment of capitalised software development assets 
   -  R52 million one-off operating expenses relating to the termination of the contract. 
-  Profit from operations before non-trading and capital items is down 3% to R442 million: 
   -  excluding the one-off operating expense of R52 million, the profit from operations of the group 
      would be 9% higher than the comparable prior-year period.
-  Profit from continuing operations for the period was down 115%, reflecting a loss of R45 million. 
-  The business continues to generate strong cash flows, reporting a 5% year-on-year increase in cash 
   generated from operations to R492 million.
-  An interim dividend of 18 cents per share has been declared reflecting the group's optimism with 
   regards to the sustainability of cash flows.


OVERVIEW OF FINANCIAL RESULTS


FINANCIAL HIGHLIGHTS 
                                                                                           Unaudited
                                                                  2018/2017      Six months ended 30 September
In millions of South African rands (Rm)                            % change        2018        2017        2016
Operating income (1) (from continuing operations)                         6       1 908       1 799       1 748
Profit from operations (before non-trading and capital items)            (3)        442         455         435
Trading margin                                                     (210 bps)      23.2%       25.3%       24.9%
Operating leverage (2)                                             (360 bps)      (3.0%)       0.6%        0.1%
                        
(Loss)/profit from continuing operations                               (115)        (45)        309         306
Headline earnings per share (3) (cents)                                 (23)       16.7        21.7        27.0
Normalised headline earnings per share (cents)                          (24)       19.2        25.1        30.8
Interim dividend (cents)                                                  -          18          18          17
                        
Cash generated (from continuing operations)                               5         492         470         490
Closing AuA and AuM (in billions of South African rands)                  2         371         363         342
                        
(1)  Operating income represents revenue net of direct expenses.
(2)  Operating leverage is defined as the difference in growth of operating income against growth of 
     operating expenses.
(3)  The weighted average number of shares in issue (net of treasury shares) decreased to 1 245 million 
     (2017: 1 279 million) due to the share buy-back programme implemented over the last 12 months.


FINANCIAL REVIEW 
Operating income
The 6% year-on-year increase in operating income from continuing operations to R1 908 million reflects 
the resilience of Alexander Forbes in the current economic climate. A number of business initiatives 
are showing results including:
-  8% increase in operating income in healthcare consulting due to an increase in the regulated cap 
   commission income and new business wins;
-  Improved product mix as well as closer collaboration with Mercer in our Investments business 
   resulting in a 16% growth in operating income;
-  4% growth in gross written premiums and improvements in the loss ratio in the short-term insurance 
   segment resulting in an 8% increase in operating income; and
-  10% growth in the Emerging markets business led by the Retirements segment in Botswana.

Despite a 16% increase in annualised premium income in the Group risk segment, the operating income 
was impacted by higher reserves related to the increase in disability claims experience.

Operating expenses
The increase in operating expenses of 9% is largely attributable to the costs incurred for the 
termination of the IT contract with the primary implementation partner. The corresponding operating 
expense of R52 million is due to the ramping down of resources assigned to the project as well as 
the settlement agreed for the termination of the contract. Excluding this expense, the group's 
operating expenses would have been contained to 5% on the comparable period in the prior year. 
The cost-to-income ratio for the period of 76.8% has deteriorated from 74.7% in the comparable 
prior-year period. Excluding the costs associated with the termination of the IT contract the cost-
to-income ratio would have decreased to 74.1%.

Profit from operations (before non-trading and capital items)
Profit from operations before non-trading and capital items has decreased by 3% to R442 million 
compared to the first six months of last year. Excluding the above-mentioned R52 million operating 
expenses corresponding to the termination of the IT contract, profit from operations would be 
R494 million, representing an increase of 9% over the comparable prior-year period.

Non-trading and capital items
Non-trading and capital items increased substantially to R385 million (2017: R73 million), as a 
result of the impairment of capitalised software development assets of R287 million. The impairment 
of the software development assets follows the group's review of the IT programme and includes the 
impairment of all development associated with the primary implementation partner. The non-trading 
and capital items also include the ongoing accounting for amortisation of intangible 
assets amounting to R34 million (2017: R46 million) as well as the results of the insurance 
cell-captive facility which are consolidated into the group's results. The accounting for the 
amortisation and impairment has no impact on the cash flows of the group during the period.

Investment income
Investment income, which is earned from the regulatory capital and surplus cash position of the group, 
declined by R43 million, down 30% to R100 million from the comparable prior-year period due to lower 
surplus cash, largely as a result of the distribution of this cash to shareholders. In addition, 
investment income of R13 million (2017: R14 million) related to individual policyholder investments 
is recorded in the group's income statement due to the fund level taxes and for which an equal tax 
liability is raised. This policyholder income (and related tax liability) is excluded from our 
normalised earnings when assessing the group's own investment income. 

Finance costs
The finance costs of R36 million (2017: R48 million) are largely due to costs associated with the 
group's revolving credit facility. The facility is linked to the JIBAR interest rate and the 
borrowings against this facility remain unchanged from the year-end at R719 million. The decline in 
finance costs is due to the decrease in the hedge cost associated with the IT systems development.

Reported profit arising from accounting for policyholder investments in treasury shares
The reported profit of R20 million (2017: loss of R11 million) arising from the accounting for 
policyholder investments as treasury shares for the period is separately disclosed on the face of 
the income statement. In terms of International Financial Reporting Standards (IFRS), any 
Alexander Forbes shares acquired by underlying asset managers and held by the group's multi-manager 
investment subsidiary for policyholders (the shares) are required to be accounted for in the group's 
consolidated financial statements as treasury shares and results in the elimination of any fair value 
gains or losses made on the shares. Refer to note 14. This accounting treatment has the effect that 
fair value movements in respect of linked investment policy assets and liabilities that would 
normally be off-set (and economically should be off-set) are not being matched in the income 
statement. The resultant mismatch between the asset and liability movement does not reflect the 
economic substance of the transactions. The impact of this mismatch results in an accounting profit 
or loss that is reported in the group's consolidated income statement, whereas no actual economic 
profit or loss will ever be realised by the group. 

Profit before taxation
After non-trading and capital items, finance charges and the effect of the policyholder investments 
explained above, the group's profit before taxation from continuing operations of R141 million is 
70% lower than the comparable prior-year period. The effective tax rate excluding the policyholder 
tax is 135% largely due to the non-deductible impairment of capitalised software development assets. 

This resulted in a loss from continuing operations of R45 million (2017: profit of R309 million).

Headline earnings
Excluding the impairment of software development assets, the group reported headline earnings of 
R208 million, representing a 25% decline on the comparable prior-year period. The weighted average 
number of shares decreased 3% to 1 245 million (2017: 1 279 million) as a result of the share 
buy-back programme which was approved by shareholders and implemented over the last 12 months. 
Headline earnings per share decreased by 23% to 16.7 cents per share (2017: 21.7 cents per share).

Cash flow and capital resources
The group's cash flows continue to be predictably strong with cash generated from operations of 
R492 million up 5% against the comparable period last year. The group maintains a surplus cash balance 
of R1.2 billion after the annual dividend of R307 million paid to shareholders during the period.

The financial position of the group remains strong and all regulated entities within the group comply 
with current solvency, liquidity and regulatory capital adequacy requirements. As at 30 September 2018 
the consolidated regulatory capital requirement of the group was R1.6 billion which is in line with 
the balance at 31 March 2018. Using the measures and interpretations under the Solvency Assessment 
and Management (SAM) standard, the group has a surplus of R1.1 billion (before the proposed interim 
dividend distribution).

INTERIM DIVIDEND 
Taking into account the group's current and projected regulatory position, the available cash in the 
group as well as the highly cash-generative nature of the group, a dividend declaration has been considered.

The board of directors have declared an interim gross cash dividend of 18 cents (14.4 cents net of 
dividend withholding tax) per ordinary share for the six months ended 30 September 2018, unchanged from 
the comparable prior-year period. 

The dividend has been declared from income reserves. A dividend withholding tax of 20% will be 
applicable to all shareholders who are not exempt. The issued number of shares at the date of 
declaration is 1 341 426 963. 

The salient dates for the dividend will be as follows:
-  Last day of trade to receive a dividend: Tuesday, 8 January 2019
-  Shares commence trading 'ex' dividend: Wednesday, 9 January 2019
-  Record date: Friday, 11 January 2019
-  Payment date: Monday, 14 January 2019

Share certificates may not be dematerialised or rematerialised between Wednesday, 9 January 2019 and 
Friday, 11 January 2019, both days inclusive.


DIVISIONAL REVIEW OF OPERATIONS


During the financial year ended 31 March 2018 the group decided to align its financial reporting with 
the way it operates and to reflect its operational focus, performance management and support structures 
within the business. The group reports its internal segmental reporting as follows:

Institutional:
-  Corporate & employee benefits
-  Investments
Retail:
-  Wealth and investments
-  Retail insurance
Emerging markets
Administration only
Corporate

To allow for year-on-year segment report comparison, the 2017 interim information has been adjusted 
to reflect these changes retrospectively.

INSTITUTIONAL CLIENTS
Corporate & employee benefits
Corporate & employee benefits provides retirements administration, asset and actuarial consulting, 
healthcare consulting and administration, as well as group risk solutions to our institutional clients.

                                       Operating income                      Profit from operations 
                                   net of direct expenses            before non-trading and capital items
Rm                            Sept 2018           %   Sept 2017        Sept 2018           %   Sept 2017
Consulting and retirements          585           7         545               81         (11)         91
Group risk                           27         (29)         38               (3)      <(100)         15
Corporate & employee benefits       612           5         583               78         (26)        106

Corporate & employee benefits delivered a 5% growth in operating income to R612 million. The operating 
income of this division was negatively impacted by the South African macroeconomic environment and a 
further decline of the formal workforce. Profit from operations before non-trading and capital items 
declined 26% to R78 million.

Consulting and retirements
This segment includes consulting and actuarial, healthcare consulting and retirements.

Our consulting teams provide advice to our clients with comprehensive employee benefits solutions 
which assist in embedding sustainable long-term relationships and trust. Greater success can be 
attributed to closer collaboration with Mercer to deliver a global benefits management proposition 
to both Alexander Forbes and Mercer global clients.

The operating income from consulting and actuarial increased 5% when compared to the comparable 
prior-year period, largely attributable to the renewed focus on multicarrier consulting and the 
full year financial impact of client wins from the previous financial year. 

Operating income from the healthcare consulting business increased 8% when compared to the 
comparable prior-year period, resulting from an increase in the regulated cap for commission income 
for broking services and annualised value of new business wins in the previous financial year. 
Strategic partnerships with external parties that were concluded in the previous financial year are 
making a positive contribution, particularly in our health risk management business where we focus 
on managing absenteeism and incapacity in the workplace.

Alexander Forbes Retirement Funds (AFRF), which is reported under our Retirements segment, remains 
a market leader in the umbrella funds industry providing relevant and cost-effective solutions to 
the South African market. Operating income from Retirements increased by 9% year-on-year, largely 
driven by conversions from Administration only clients. This growth has resulted in the increase in 
the number of active member records up 1% year-on-year and the growth in the number of umbrella funds 
clients (participating employers), up 5% year-on-year. 

Closing assets under management (AuM) for the umbrella funds increased by 9% to R79.8 billion at 
30 September 2018. This can be attributed to a combination of market performance and asset inflows.

In line with default regulations, we launched our enhanced Alexander Forbes Retirement Income Solutions 
(AFRIS) in February 2018 to complement our Retirements service offering, which has retained assets of 
R1.4 billion at 30 September 2018.

AF Empower has partnered with an online learning platform - Degreed and secured sole rights for Africa 
to deliver innovative learning solutions to our corporate clients, thereby extending our business-to-
business value proposition. The platform aims to foster a continuous learning culture and improved 
career development. 

The Consulting and retirements costs increased 11% to R504 million (2017: R454 million) during the 
period largely attributable to an increase in various client service and marketing initiatives 
undertaken in the period. This increase in costs has resulted in a decrease of 11% in profit from 
operations before non-trading and capital items for the period to R81 million (2017: R91 million).

Group risk
Group risk grew annualised premium income by 16% to R621 million at 30 September 2018. As previously 
reported the business went through a process of enhancing actuarial data associated with the reserving 
for claims, providing additional margin for claims incurred but not yet notified and for pending claims. 
In addition, a decision to strengthen the balance sheet has resulted in higher reserves impacting the 
underwriting results. An industry-wide increase of 22% in disability claims has further impacted our 
assumptions, therefore requiring additional reserving. Operating income for the Group risk business 
has declined 29% to R27 million as a result of these adjustments.

The operating expenses within this division have increased 30% (R7 million) from the comparable prior-year period. 
This increase is as a result of the decision to discontinue providing retail life policies and the 
related shared costs being absorbed in Group risk. 

Investments 
AF Investments is a multi-manager investment provider that manages investments to achieve client-specific 
outcomes with a greater degree of certainty. AF Investments manage investments through asset allocation, 
strategic allocation and manager selection and further leverages its research, investment skills and 
capability through partnerships and strategic alliances with Mercer to provide effective management of 
risk within portfolios. 

Operating income grew by 16% for the six months to 30 September 2018, supported by strong market 
performance, delivery on investment strategies and an improvement in the net blended margin. 

                                       Operating income                      Profit from operations 
                                   net of direct expenses            before non-trading and capital items
Rm                            Sept 2018           %   Sept 2017        Sept 2018           %   Sept 2017
Investments                         388          16         335              217          17         186

The reported total Assets under Administration and Management (AuA and AuM) was R371.1 billion at 
30 September 2018. The assets are segregated as follows:

                                      30 September 2018                       30 September 2017            
Rbn                       Institutional      Retail       Total    Institutional      Retail       Total
Assets under Management           255.0        60.1       315.1            248.2        56.7       304.9
Assets under Administration        50.7         5.3        56.0             51.1         7.0        58.1
Total AuA and AuM                 305.7        65.4       371.1            299.3        63.7       363.0

AuM grew by 3% year-on-year while total AuA and AuM grew by 2% year-on-year. For the six months ended 
30 September 2018 the blended market return was 7.4%, underpinned by positive equity market performance 
in the initial months of the financial year. Our flagship portfolio, Performer, grew by 15% year-on-year 
to R118.4 billion as at 30 September 2018.

The blended net margin improved to 25.2 bps, a 2.5 bps increase from 30 September 2017 and 1.7 bps 
increase from 31 March 2018. Margin enhancement was achieved by offering additional services, lowering 
direct product costs and developing new initiatives including alternative asset classes, fund of hedge 
funds as well as private market funds. AF Investments has also enhanced the offshore offering in 
conjunction with strategic alliance partner Mercer and has brought the smart beta capabilities in-house.

A summary of the cash flows for the six months to 30 September 2018 is shown below. 
                                      30 September 2018                       30 September 2017            
Rbn                       Institutional      Retail       Total    Institutional      Retail       Total
Controllable                       (2.0)          -        (2.0)             4.6           -         4.6
New business                        1.6           -(1)      1.6              5.8           -(1)      5.8
Outflows owing to client losses    (3.6)          -        (3.6)            (1.2)          -        (1.2)
Uncontrollable                     (2.8)       (0.1)       (2.9)            (4.6)       (0.9)       (5.5)
Ongoing contributions              20.8         5.0(1)     25.8             12.8         3.2(1)     16.0
Withdrawals for benefit payments  (23.6)       (5.1)      (28.7)           (17.4)       (4.1)      (21.5)
Withdrawal from platform           (0.9)          -        (0.9)               -           -           -
Net cash outflows                  (5.7)       (0.1)       (5.8)               -        (0.9)       (0.9)
                                    
(1)  The ongoing contribution in Retail represents the capture of outflows from Institutional members 
     in line with our retail strategy. This represents new business flows to the Retail division.

Net cash outflows were experienced over the period of R5.8 billion for Investments. For the Institutional 
business, R1.6 billion new business AuM flowed in the period with a further R2.5 billion assets awaiting 
transfer pending approval from regulators. Further outflows are anticipated from the platform business 
as we continue to de-emphasise this lower-margin business. Uncontrollable cash outflows continue to be 
negative, influenced by factors prevalent across the retirement fund industry. 

Extensive work has been undertaken in the period to define the sales culture and process of the business. 
In addition strong senior staff appointments have been made to lead strategies and strengthen the 
business skills. The 15% increase in expenses include the costs associated with the strengthened team. 
Profit from operations increased 17% to R217 million for the period under review.

RETAIL CLIENTS
The Retail clients division helps our members optimise their financial well-being along their life 
journey through an advice-led strategy of focusing on the needs of individuals. The division's key 
focus is to create, grow and protect the assets and wealth of our members and individual clients. 

                                       Operating income                      Profit from operations 
                                   net of direct expenses            before non-trading and capital items
Rm                            Sept 2018           %   Sept 2017        Sept 2018           %   Sept 2017
Wealth and investments              447           5         424              194           4         186
Retail insurance                    279           3         271               90          50          60
Retail clients                      726           4         695              284          15         246

During the period under review, the Retail clients' division grew operating income by 4% to R726 million 
and profit from operations increased by 15% to R284 million. The increase in operating profit was driven 
by an increase in new business in the Financial planning consultants (FPC) division and improved 
underwriting results in short-term insurance business. 

Wealth and investments
Operating income grew by 5% to R447 million for the six months ended 30 September 2018. While continuing 
to drive cost-efficiencies, the business has invested in new resources and skills to drive future growth 
and innovation. This has led to a 4% increase in profit from operations to R194 million. 

Under the current economic conditions, more South Africans are choosing to take their retirement funds 
in cash rather than preserving these funds for the future. Consequently, during the period under 
review, assets being preserved on exit and retirement decreased to 55% from 57% in the prior year. 

In a challenging market where members are pressured to preserve their wealth when changing employers 
and tempted to withdraw funds, member education activities are required to ensure that both the short 
and long-term needs of members are met. The members accessed through these education activities 
increased to 25 000 in the period under review from 18 000, while financial well-being sessions at 
our corporate clients increased to 2 160 interventions from 1 404.

The continued presence and success of FPC has resulted in an improvement to the capture rate of 
preserved exit and retirement flows to 42% from 41% in the prior year. 

In addition to the assets under management and administration reflected in the table above 
(in Investments), the division also advises clients whose assets are not administered by 
Alexander Forbes. The total assets under advisement increased by 5% to R71.1 billion in the period 
under review. 

Retail insurance 
The retail insurance businesses reported a 3% increase in operating income to R279 million. Profit 
from operations improved by 50% to R90 million.

Gross written premium in the Alexander Forbes short-term insurance business increased by 4% to 
R823 million for the period, with the business continuing to grow based on competitive product 
offerings and improved service levels. New business has increased by 11% in the motor and household 
portfolio compared to the comparable prior-year period. The loss ratio for motor and household 
business ended on 66.1% for the six months ended 30 September 2018, an improvement on the 67.3% 
reported in the comparable prior-year period. It should be noted that the loss ratio is seasonal 
with higher claims expected over the fourth quarter; despite this management is on track to meet 
the annual targeted loss ratio. 

The group has made a strategic decision to discontinue providing AF Life individual insurance policies 
as of 1 July 2018. The existing policies will continue to be serviced but no new policies will be 
written. The operations of the business have been adjusted to reflect this decision, which resulted 
in a decrease in operating expenses. The declining in-force book has resulted in an increase in 
reserves which have been included in the results.

As a result of a focus on process improvement, productivity enhancement and the discontinuing of 
AF Life individual insurance, the Insurance cluster has shown a 10% decrease in operating expenses 
from the comparable prior-year period. Profit from operations increased 50% year-on-year to 
R90 million. Further investment into the short-term insurance distribution capability is expected 
in the second half of the year.

EMERGING MARKETS (COVERING ALL OPERATIONS IN AFRICA OUTSIDE SOUTH AFRICA)
                                       Operating income                      Profit from operations 
                                   net of direct expenses            before non-trading and capital items
Rm                            Sept 2018           %   Sept 2017        Sept 2018           %   Sept 2017
Emerging markets                                    
Namibia                              78           3          76               24          20          20
Botswana                             44          22          36               12        >100           4
Other EM countries                    5          67           3               (2)         67          (6)
AFEM head office                      -           -           -              (12)          8         (13)
Total                               127          10         115               22        >100           5

Emerging Markets operates in Botswana, Namibia, Nigeria, Uganda and Zambia. 

Namibia and Botswana collectively contribute over 90% of the operating income, with the remainder 
coming from smaller operations in Nigeria, Uganda and Zambia. Emerging markets delivered improved 
performance with operating income up by 10% compared with the comparable prior-year period which was 
led by the Retirements segment in Botswana. Namibia's performance remained fairly muted, with operating 
income up 3% over the comparable prior-year period as a result of the continued economic recession 
coupled with increased competitive pressure. Cost savings of 5% mostly on non-client facing activities 
over the comparable prior-year period were realised through greater efficiency.

Sustainable growth is an ongoing challenge in the industry. Multinational clients require greater 
agility in their partnerships as they navigate their business footprint across Africa. In collaboration 
with Mercer, Alexander Forbes has successfully launched Arrive, a global benefits proposition with 
promising opportunities across our portfolio. 

Administration only
                                       Operating income                      Profit from operations 
                                   net of direct expenses            before non-trading and capital items
Rm                            Sept 2018           %   Sept 2017        Sept 2018           %   Sept 2017
Administration only                  55         (23)         71                -           -           -

The Administration only segment is separately reported from the consulting division in Corporate & employee 
benefits and reflects the revenue earned from clients where fees are earned based on administration services 
only. The client relationship for these clients resides with the Operations and administration department. 
The strategic objective in this division is to assess the value proposition for standalone clients. 
This is achieved by considering simplicity, standardisation, improved governance, effective communication 
and improved financial well-being outcomes for individual members. Approximately 75% of the revenue 
decline during the period under review is as a result of the Administration only clients being converted 
to the umbrella funds within Retirements.

Costs are allocated from the operations department to all client-facing departments. The cost allocation 
incorporates the fees earned from Administration only clients and as such the division does not reflect 
any profit from operations. 

Corporate
                                       Operating income                      Profit from operations 
                                   net of direct expenses            before non-trading and capital items
Rm                            Sept 2018           %   Sept 2017        Sept 2018           %   Sept 2017
Corporate costs                       -           -           -             (154)         97         (78)

Corporate costs include the office of the group chief executive and group chief financial officer, the group 
strategy office as well as costs associated with the listed holding company including non-executive directors' 
fees. The Corporate costs also include the consulting costs and project costs associated with the group's 
implementation of strategy. The significant increase in Corporate costs are due to the costs associated 
with the termination of the IT contract amounting to R52 million. In addition, the group has incurred 
consulting costs relating to the review of the legal and capital structure.

PROSPECTS
Alexander Forbes continues to be a trusted brand with market-leading businesses offering a strong value 
proposition to our clients. The business is well placed to use this foundation to build trust and continue 
to make a difference in the lives of our clients and members. 

The second half of the year is expected to bring additional challenges including the impact of client 
losses experienced in the period under review and ongoing competitive pressure. 

Under the leadership of Dawie de Villiers, Alexander Forbes' newly appointed group chief executive, 
the group is in the process of undertaking a strategic review with the aim to ensure its relevance 
in South Africa, to assess the opportunities for growth and unlock the value potential across the group. 

The strategic review is intended to strengthen our competitive position and allow sustainable performance 
in our employee benefits, savings and retirement markets, anchored on our value proposition as providers 
of advice-led solutions. The review will be concluded and presented to the board by the end of the 
current financial year.

Alexander Forbes is confident about the prospects of growth and development within South Africa and 
believes that the group is well placed to capitalise on the changes in the employee benefits environment 
in the long term.

CHANGE IN DIRECTORATE
Mr T Dloti was appointed as independent non-executive director effective 1 August 2018. The services 
of Mr AA Darfoor as group chief executive were terminated effective 25 September 2018 and Mr DJ de Villiers 
replaced Mr AA Darfoor as group chief executive effective 1 November 2018. Ms N Ford-Hoon (Fok) resigned 
as the group chief financial officer with effect from 31 December 2018. 

CORPORATE GOVERNANCE
The company's application of the principles contained in the King IV Report on Corporate Governance for 
South Africa (King IV) is disclosed in the King IV report available on the company's website. No material 
changes in application have occurred since the publication of that report as part of the FY2018 annual 
reporting suite of documents. 

On behalf of the board of directors


N Nyembezi                  DJ de Villiers
Chairman                    Group chief executive

11 December 2018


The Alexander Forbes Group Holdings Limited (the group) condensed consolidated interim results, 
including the statement of financial position, income statement, statement of other comprehensive 
income, statement of changes in equity and statement of cash flows, for the six months ended 
30 September 2018 (results) are prepared in accordance with the requirements of the JSE Limited 
(JSE) Listings Requirements, the requirements of International Financial Reporting Standards (IFRS) 
and its interpretations as adopted by the International Accounting Standards Board, the South African 
Institute of Chartered Accountants' (SAICA) Financial Reporting Guides as issued by the Accounting 
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards 
Council, the presentation requirements of IAS 34 Interim Financial Reporting and the requirements 
of the South African Companies Act applicable to condensed financial statements. 

The group's results are prepared in accordance with the going concern principle under the historical 
cost basis as modified by the fair value accounting of certain assets and liabilities where required 
or permitted by IFRS. This report is presented in South African rand, which is the presentation 
currency of the group. All amounts are stated in millions of rand (Rm), unless indicated otherwise.

The accounting policies applied in the preparation of these condensed consolidated interim results 
are in terms of IFRS and are consistent with the accounting policies applied in the preparation of 
the group's previous audited consolidated annual financial statements, except as modified by the 
adoption of IFRS 9 Financial Instruments (IFRS 9) and IFRS 15 Revenue from Contracts with Customers 
(IFRS 15). The group adopted IFRS 9 and IFRS 15 with effect from 1 April 2018. 

The group has, as permitted by both IFRS 9 and IFRS 15, elected not to restate its comparative 
financial statements. Consequently, comparability will not be achieved by the fact that the comparative 
financial information has been prepared on a different basis. The impact of adopting IFRS 9 has been 
applied retrospectively with a cumulative adjustment to the group's opening 1 April 2018 reserves. 

Any financial information contained in this announcement that may be construed as forecast information 
has not been reviewed or reported on by the group's external auditors. Additionally, these interim 
results have not been audited or reviewed by the group's external auditors. The group's 2018 annual 
financial information has been extracted from the underlying audited consolidated annual financial 
statements for the year ended 31 March 2018. The directors of the group take full responsibility 
for the preparation of this report. 

In terms of the JSE Listings Requirements, the group no longer posts a physical copy of this 
announcement to its shareholders. Investors are referred to http://www.alexanderforbes.co.za where a 
detailed analysis of the group's financial results for Alexander Forbes Group Holdings Limited, 
can be found. 

These condensed consolidated financial statements were compiled under the supervision of 
Naidene Ford-Hoon (Fok), CA(SA), the group chief financial officer. 

The results were made publicly available on 11 December 2018.


CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2018
                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
Rm                                                        Notes        2018        2017        2018
Continuing operations                        
Fee and commission revenue                                    4       2 088       2 000       4 090
Insurance revenue                                             5       1 283       1 189       2 505
Interest revenue - effective interest method                  4          26          19          47
Total revenue                                                         3 397       3 208       6 642
Direct expenses attributable to fee and commission revenue    4        (528)       (533)     (1 070)
Insurance claims, commissions and withdrawals                 5        (917)       (835)     (1 774)
Net expenses from reinsurance contracts                       5         (44)        (41)       (151)
Operating income net of direct expenses                               1 908       1 799       3 647
Operating expenses                                                   (1 466)     (1 344)     (2 661)
Profit from operations before non-trading and capital items             442         455         986
Non-trading and capital items                                 6        (385)        (73)       (476)
Operating profit                                                         57         382         510
Investment income                                             7         100         143         225
Finance costs                                                 8         (36)        (48)        (97)
Reported profit/(loss) arising from accounting for 
  policyholder investments in treasury shares                14          20         (11)        (24)
Share of profit of associate (net of tax)                                 -           2           -
Profit before taxation                                                  141         468         614
Income tax expense                                            9        (186)       (159)       (308)
Income tax expense relating to group profits                           (173)       (145)       (319)
Income tax (expense)/credit relating to policyholder 
  investment returns                                                    (13)        (14)         11
(Loss)/profit for the period from continuing operations                 (45)        309         306
Discontinued operations                        
(Loss)/profit from discontinued operations (net of tax)      10          (2)         15          21
(Loss)/profit for the period                                            (47)        324         327
                        
Attributable to:                        
Owners of the company                                                   (50)        282         240
Non-controlling interest                                                  3          42          87
                                                                        (47)        324         327
                        
Basic (loss)/earnings per share (cents)                      11        (4.0)       22.0        18.9
Diluted basic (loss)/earnings per share (cents)              11        (4.0)       22.0        18.8


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2018
                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
Rm                                                                     2018        2017        2018
(Loss)/profit for the period                                            (47)        324         327
                        
Other comprehensive income:                        
Foreign currency translation differences of foreign operations           45          28          (9)
Cash flow hedge                                                          43           3         (37)
Other comprehensive income that may be reclassified to 
  profit or loss (1)                                                     88          31         (46)
Remeasurement of post-employment benefit obligation                       -           -           3
Other comprehensive income that will not be reclassified 
  to profit or loss (1)                                                   -           -           3
Total comprehensive income for the period                                41         355         284
                        
Total comprehensive income attributable to:                        
Owners of the company                                                    31         313         201
Non-controlling interest                                                 10          42          83
Total comprehensive income for the period                                41         355         284
                        
(1) Net of related taxes.


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2018
                                                                    30 Sept     30 Sept      31 Mar
Rm                                                        Notes        2018        2017        2018
ASSETS                        
Financial assets held under multi-manager investment 
  contracts                                                  14     307 400     298 859     296 758
Financial assets of insurance and cell-captive facilities               392         313         352
Property and equipment                                                  160         188         174
Purchased and developed computer software                     6         134         302         400
Goodwill                                                              3 038       3 355       3 038
Intangible assets                                                       356         421         390 
Investment in associates                                                  -          11           -
Deferred tax assets                                                     180         151         175
Financial assets                                             15         119         526         445
Insurance receivables                                                 1 423       1 204       1 339
Trade and other receivables                                             363         411         299
Cash and cash equivalents                                             5 884       5 970       5 794
Assets of disposal groups classified as held for sale        10          86          70          82
Total assets                                                        319 535     311 781     309 246
                        
EQUITY AND LIABILITIES                        
Owners of the company                                                 5 632       6 448       6 010
Non-controlling interest                                                283         251         287
Total equity                                                          5 915       6 699       6 297
Financial liabilities held under multi-manager investment 
  contracts                                                  14     307 439     298 944     296 825
Liabilities of insurance and cell-captive facilities                    392         313         352
Borrowings                                                              719         725         719
Employee benefits                                                       172         166         162
Deferred tax liabilities                                                117         178         119
Provisions                                                    6         410         306         304
Finance lease liabilities                                                 -          72          51
Operating lease liabilities                                             202         192         197
Insurance payables                                                    3 523       3 464       3 572
Trade and other payables                                                630         710         634
Liabilities of disposal groups classified as held for sale   10          16          12          14
Total liabilities                                                   313 620     305 082     302 949
Total equity and liabilities                                        319 535     311 781     309 246
                        


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2018
                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
Rm                                                                     2018        2017        2018
Cash flows from operating activities                        
Cash generated from operations                                          492         470       1 013
Net interest received                                                    50          87         151
Taxation paid                                                          (234)       (127)       (333)
Dividends paid                                                         (307)       (600)       (829)
Net cash flows (paid to)/received from insurance and 
  policyholder contracts                                               (115)        390         348
Net cash flows (paid to)/received from policyholder 
  investment contracts                                                 (124)        167      (1 920)
Cash flows from operating activities - discontinued operations           (1)          1          16
Net cash (outflow)/inflow from operating activities                    (239)        388      (1 554)
                        
Cash flows from investing activities                        
Payments for intangible assets                                            -           -          (3)
Net cash inflow/(outflow) on financial assets                           354        (174)       (145)
Payments for capital expenditure incurred on property, 
  equipment and computer software                                       (56)       (173)       (321)
Net cash inflow/(outflow) from investing activities                     298        (347)       (469)
                        
Cash flows from financing activities                        
Purchase of shares in terms of share buy-back transaction               (91)       (200)       (276)
Payments of lease liabilities                                           (51)          -          (9)
Purchase of shares in terms of share incentive schemes                    -           -         (57)
Payments to non-controlling interests                                   (10)         (9)        (14)
Net cash outflow from financing activities                             (152)       (209)       (356)
                        
Decrease in cash and cash equivalents                                   (93)       (168)     (2 379)
Cash and cash equivalents at the beginning of the period             13 702      16 087      16 087
Effects of exchange rate changes on cash and cash equivalents            62          40          (6)
Cash and cash equivalents at the end of the period                   13 671      15 959      13 702
                        
Analysed as follows:                        
Cash and cash equivalents of continuing operations                    5 884       5 970       5 794
Cash held under multi-manager investment contracts                    7 755       9 967       7 887
Cash held under insurance cell-captive contracts                         14          13           6
Cash and cash equivalents of disposal groups held for sale               18           9          15
                                                                     13 671      15 959      13 702
                        
                        


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2018
                                                                                          Accumu-                Non-con-
                                                        Share    Treasury       Other       lated                trolling       Total
Rm                                                    capital      shares    reserves      profit       Total    interest      equity
At 31 March 2017                                        6 192        (160)       (336)      1 205       6 901         218       7 119
Total comprehensive income                                  -           -          31         282         313          42         355
Profit for the period                                       -           -           -         282         282          42         324
Other comprehensive income                                  -           -          31           -          31           -          31
Total transactions with owners                              -        (129)        (37)       (600)       (766)         (9)       (775)
Shares purchased in terms of the share schemes 
  and share buy-back programme (1)                          -        (200)          -           -        (200)          -        (200)
Settlement of share incentive schemes (2)                   -          39         (39)          -           -           -           -
Movement of treasury shares in policyholder assets          -          32           -           -          32           -          32
Dividends paid                                              -           -           -        (600)       (600)         (9)       (609)
Movement in share-based payment reserve                     -           -           2           -           2           -           2
At 30 September 2017                                    6 192        (289)       (342)        887       6 448         251       6 699
                                          
Total comprehensive income                                  -           -         (72)        (40)       (112)         41         (71)
Profit for the period                                       -           -           -         (42)        (42)         45           3
Other comprehensive income                                  -           -         (72)          2         (70)         (4)        (74)
Total transactions with owners                              -        (103)        455        (678)       (326)         (5)       (331)
Shares purchased in terms of the share schemes 
  and share buy-back programme (3)                          -         133          -           -          133          -          133
Movement of treasury shares in policyholder assets          -          30           -           -          30           -          30
Dividends paid                                              -           -           -        (229)       (229)         (5)       (234)
Movement in share-based payment reserve                     -           -           6           -           6           -           6
Transfer to retained earnings (4)                           -           -         449        (449)          -           -           -
At 31 March 2018                                        6 192        (392)         41         169       6 010         287       6 297
                                          
(1)  The group purchased Alexander Forbes Group Holdings Limited shares to the value of R200 million, at an average price of R6.76 per 
     share, in a general buy-back approved by shareholders.
(2)  During the period R26 million of the conditional share incentive scheme and R13 million of the forfeitable share scheme vested. 
     Both amounts relate to the 2014 tranche. 
(3)  The group purchased Alexander Forbes Group Holdings Limited shares to the value of R76 million, at an average price of R7.10 per share, 
     in a general buy-back approved by shareholders. In addition shares to the value of R57 million were purchased for the shareholder-
     approved share incentive schemes.
(4)  During the period the group transferred a redemption reserve amounting to R449 million into accumulated profits. This reserve arose in 
     prior years on the redemption of preference shares. The transfer has a nil impact on total equity, however, results in a reduction 
     in accumulated profits.                                          

                                                                                          Accumu-
                                                                                            lated                Non-con-
                                                        Share    Treasury       Other      (loss)/               trolling       Total
Rm                                                    capital      shares    reserves      profit       Total    interest      equity
At 31 March 2018                                        6 192        (392)         41         169       6 010         287       6 297
IFRS 9 transition adjustments (1)                           -           -           -         (36)        (36)         (4)        (40)
Adjusted balance - 1 April 2018                         6 192        (392)         41         133       5 974         283       6 257
Total comprehensive income                                  -           -          81         (50)         31          10          41
(Loss)/profit for the period                                -           -           -         (50)        (50)          3         (47)
Other comprehensive income                                  -           -          81           -          81           7          88
Total transactions with owners                              -         (79)         13        (307)       (373)        (10)       (383)
Shares purchased in terms of the share schemes 
  and share buy-back programme (2)                          -         (91)          -           -         (91)          -         (91)
Settlement of share incentive schemes (3)                   -           4          (4)          -           -           -           -
Movement of treasury shares in policyholder assets          -           8           -           -           8           -           8
Dividends paid                                              -           -           -        (307)       (307)        (10)       (317)
Movement in share-based payment reserve                     -           -          17           -          17           -          17
At 30 September 2018                                    6 192        (471)        135        (224)      5 632         283       5 915
                                          
(1)  Refer to note 2.2.
(2)  The group purchased Alexander Forbes Group Holdings Limited shares to the value of R91 million during the period, at an average 
     price of R5.27 per share, in a general buy-back approved by shareholders. In addition shares to the value of R65 million 
     (12.5 million shares) were transferred from the treasury shares to the shareholder-approved share incentive schemes.
(3)  During the period R4 million relating to the 2015 tranche of the forfeitable share scheme vested.


CONDENSED CONSOLIDATED GROUP SEGMENTAL INCOME AND PROFIT ANALYSIS
For the six months ended 30 September 2018
                                                     Operating income                  Profit from operations 
                                                  net of direct expenses        before non-trading and capital items
Rm                                             2018           %        2017        2018           %        2017
Corporate & employee benefits                   612           5         583          78         (26)        106
Consulting and retirements                      585           7         545          81         (11)         91
Group risk                                       27         (29)         38          (3)      <(100)         15
Investments                                     388          16         335         217          17         186
Institutional clients                         1 000           9         918         295           1         292
                                    
Wealth and investments                          447           5         424         194           4         186
Retail insurance                                279           3         271          90          50          60
Retail clients                                  726           4         695         284          15         246
                                    
Emerging markets                                127          10         115          22        >100           5
Administration only                              55         (23)         71           -           -           -
Corporate                                         -           -           -        (154)         97         (78)
Total group before items below                1 908           6       1 799         447          (4)        465
                                    
Normalised earnings before non-trading items  1 908           6       1 799         447          (4)        465
Accounting for property leases                    -           -           -          (5)        (50)        (10)
Total group                                   1 908           6       1 799         442          (3)        455
                                    
Rm                                                                                 2018           %        2017
Normalised earnings before non-trading items                                        447          (4)        465
Non-trading and capital items (excluding amortisation of PPA intangible assets
  and professional indemnity insurance cell-captive results)                       (317)                    (28)
Investment income (excluding policyholder investment income)                         87                     129
Finance costs                                                                       (36)                    (48)
Share of profit of associates (net of tax)                                            -                       2
Normalised profit before tax                                                        181         (65)        520
Normalised income tax expense                                                      (194)                   (161)
Normalised (loss)/profit after tax                                                  (13)      <(100)        359
Loss from discontinued operations                                                    (2)                      -
Normalised (loss)/profit for the period                                             (15)      <(100)        359
Attributable to non-controlling interest                                             (3)                    (39)
Normalised (loss)/profit attributable to shareholders                               (18)      <(100)        320
                                    
Normalised (loss)/earnings per share (cents)                                       (1.4)      <(100)       24.7
Normalised headline earnings per share (cents)                                     19.2         (24)       25.1
Normalised weighted average number of shares in issue (million)                   1 255                   1 296
                                    
During the financial year ended 31 March 2018 the group decided to simplify its financial reporting to align with 
the way it operates. The segmental analysis above, which is consistent with 31 March 2018, represents a change 
from the segmental report presented at 30 September 2017. Owing to this change the prior year's numbers have 
been restated to provide the appropriate comparative numbers. Refer to Annexure A for the detailed group segmental 
and profit analysis.


SUMMARY NOTES
For the six months ended 30 September 2018

1.   BASIS OF PREPARATION
     The Alexander Forbes Group Holdings Limited (the group) condensed consolidated interim results, 
     including the statement of financial position, income statement, statement of other comprehensive 
     income, statement of changes in equity and statement of cash flows, for the six months ended 
     30 September 2018 (results) are prepared in accordance with the requirements of the JSE Limited 
     (JSE) Listings Requirements, the requirements of International Financial Reporting Standards 
     (IFRS) and its interpretations as adopted by the International Accounting Standards Board, 
     the South African Institute of Chartered Accountants' (SAICA) Financial Reporting Guides as 
     issued by the Accounting Practices Committee and Financial Pronouncements as issued by the 
     Financial Reporting Standards Council, the presentation requirements of IAS 34 Interim Financial 
     Reporting and the requirements of the South African Companies Act applicable to condensed financial 
     statements. 

     The group's results are prepared in accordance with the going concern principle under the 
     historical cost basis as modified by the fair value accounting of certain assets and liabilities 
     where required or permitted by IFRS. This report is presented in South African rand, which is 
     the presentation currency of the group. All amounts are stated in millions of rand (Rm), unless 
     indicated otherwise.

     The accounting policies applied in the preparation of these condensed consolidated interim 
     results are in terms of IFRS and are consistent with the accounting policies applied in the 
     preparation of the group's previous audited consolidated annual financial statements, except 
     as modified by the adoption of IFRS 9 Financial Instruments (IFRS 9) and IFRS 15 Revenue from 
     Contracts with Customers. The group adopted IFRS 9 and IFRS 15 with effect from 1 April 2018. 

     The group has, as permitted by both IFRS 9 and IFRS 15, elected not to restate its comparative 
     financial statements. Therefore comparability will not be achieved due to the fact that the 
     comparative financial information has been prepared on a different basis. The impact of adopting 
     IFRS 9 has been applied retrospectively with an adjustment to the group's opening 1 April 2018 
     accumulated profits. For more detail refer to notes 2.1 and 2.2.

     These interim results have not been audited or independently reviewed by the group's external 
     auditors. The group's 2018 annual financial information has been extracted from the underlying 
     audited consolidated annual financial statements for the year ended 31 March 2018. The directors 
     of the group take full responsibility for the preparation of this report. 

     These condensed consolidated financial statements were compiled under the supervision of 
     Naidene Ford-Hoon (Fok), CA(SA), the group chief financial officer.            
                  
2.   CHANGES IN SIGNIFICANT ACCOUNTING POLICIES AND PRESENTATION            
     This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15 
     Revenue from Contracts with Customers on the group's financial statements and discloses the new 
     accounting policies that have been applied from 1 April 2018, where they are different to those 
     applied in prior periods. The changes in accounting policies are also expected to be reflected 
     in the group's consolidated financial statements for the year ending 31 March 2019. The effect 
     of initially applying these standards are mainly attributed to an increase in impairment losses 
     recognised on financial assets as well as reclassification of payments to customers from direct 
     expenses to fee and commission revenue.            
                  
     2.1  IFRS 15 Revenue from Contracts with Customers - fee and commission revenue            
          IFRS 15 establishes a comprehensive framework for determining whether, how much and when 
          revenue is recognised. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and 
          related interpretations. The group has adopted IFRS 15 using the cumulative effect method 
          (with practical expedients), however with no material financial effect of initially 
          applying this standard recognised at the date of initial application, 1 April 2018. 
          Accordingly, the information presented for 2017 has not been restated - i.e. it is 
          presented, as previously reported, under IAS 18, IAS 11 and related interpretations. 
          The adoption of IFRS 15 has resulted in fee and commission revenue of R2 088 million and 
          related direct expenses of R528 million being reported in the current period compared to 
          fee and commission revenue of R2 097 million and related direct expenses of R537 million 
          had the previous accounting standard been applied. The impact on operating income net of 
          direct expenses is nil.

          The details of the new significant accounting policies and the nature of the changes to 
          previous accounting policies in relation to the group's various goods and services are set 
          out below. Under IFRS 15 revenue is recognised when a customer obtains control of the goods 
          or services. Determining the timing of the transfer of control - at a point in time or over 
          time - requires judgement.            


          Type of product/service      Nature, timing of satisfaction of performance obligations, significant payment terms          Impact of change in accounting policy

          Consulting fees;             Consulting fees - comprise fees earned in respect of advisory services. Fees derived          IFRS 15 did not have a significant
          Administration fees          from consulting services are recognised over time as the customer receives benefits           impact on the group's interim results.
          (Consulting and              as services are performed. Prior to the adoption of IFRS 15 revenue from consulting
          administration)              services was recognised based on the stage of completion as the related services
                                       were rendered. There are no differences between the amounts recognised under IFRS 15
                                       and those that would have been recognised under previous accounting standards.
                                       Consulting contracts do not have significant financing arrangements and no discounts
                                       are provided to clients.

          Actuarial consulting fees    Actuarial consulting fees - comprise fees earned in respect of actuarial reports and          IFRS 15 did not have a significant
          (Consulting)                 other ad hoc reports prepared for our clients. Actuarial consulting arrangements              impact on the group's interim results.
                                       bear a fixed fee which is only payable on delivery of an actuarial report. Fees
                                       derived from actuarial consulting services are recognised at a point in time as the
                                       customer receives benefit on delivery of the actuarial report. Prior to the adoption
                                       of IFRS 15 revenue from consulting services was recognised based on the stage of
                                       completion as the related services were rendered.

          Insured commission income    Insured commission income - is derived from brokerage services and consulting                 IFRS 15 did not have a significant
          (Commission)                 services. The revenue relating to brokerage services is recognised on placement of a          impact on the group's interim results.
                                       client. The consulting services portion is amortised over the term of the contract
                                       which is normally a year. The commission is received upfront and management has
                                       concluded, based on history, that that it is highly probable that there will not
                                       be a significant reversal of revenue. There are no differences between the amounts
                                       recognised under IFRS 15 and those that would have been recognised under previous
                                       accounting standards.

          Healthcare commission        Healthcare commission income - comprises commissions earned in respect of healthcare          IFRS 15 did not have a significant
          income (Commission)          products. Prior to IFRS 15 the company recognised the income on a monthly basis. The          impact on the group's interim results.
                                       brokerage services contracts are renewable on an annual basis.

                                       Under IFRS 15 the company has identified a single performance obligation which
                                       is satisfied over time. The company shall continue to recognise and record the
                                       commission income on a monthly basis. Consequently, there are no differences between
                                       the amounts recognised under IFRS 15 and those that would have been recognised under
                                       previous accounting standards.

                                       Payments made to healthcare clients were classified as direct costs. On the adoption
                                       of IFRS 15 these costs are now deducted from the fees generated from those clients,
                                       thereby reducing the amount of revenue that would have been recognised. The effect
                                       on operating income net of direct expenses is nil.

          Transition management fees   Transition management fees - comprise fees earned for services provided in relation           IFRS 15 did not have a significant
          (Asset based)                to the transfer of investment assets. Prior to IFRS 15 transition management fees             impact on the group's interim results.
                                       were recognised in income on transfer by reference to the net asset value of the
                                       assets transferred.

                                       Under IFRS 15 the company has identified a single performance obligation which is
                                       satisfied at a point in time. The company shall continue to recognise transition
                                       management fees in income on transfer of investment assets by reference to the net
                                       asset value of the assets transferred.

          Multi-manager investment     Multi-manager investment fees - comprise fees earned for multi-manager investment             IFRS 15 did not have a significant
          fees (Asset based)           and administration. Under IFRS 15 management has identified one performance                   impact on the group's interim results.
                                       obligation, being ongoing investment management and administration services the 
                                       reason being that initial administration fees cannot be associated with services
                                       provided at inception of the contract. Consequently, initial administration fees
                                       will continue to be brought to book upon inception of the investment contract and
                                       recognised on a straight-line basis over the expected period of the contract.

                                       Ongoing investment management and administration services are considered a series
                                       of distinct services that are substantially the same and have the same pattern
                                       of transfer to the client. These are recognised over time and determined on a
                                       daily basis. Consequently, there are no differences between the amounts recognised
                                       under IFRS 15 and those that would have been recognised under previous accounting
                                       standards.

     2.2  IFRS 9 Financial Instruments
          IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities 
          and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial 
          Instruments: Recognition and Measurement.

          The effect of adopting IFRS 9 on the carrying amounts of financial assets at 1 April 2018 
          relates solely to the new impairment requirements, as described further below.

          Loan receivable
          The group has a loan receivable currently carried at R29 million. Under the previous accounting 
          standard (IAS 39) there was no objective evidence that this loan receivable was impaired. 
          IFRS 9 contains a new impairment model which will result in earlier recognition of losses. 
          The likely outcomes for the collection of this receivable are variable with a greater likelihood 
          that the group will suffer credit losses to the full value of the loan receivable. Consequently, 
          this loan receivable has been provided for in full and against opening accumulated profits.

          Long-outstanding trade receivable
          One of the subsidiaries has a long-outstanding trade receivable amounting to R11 million. 
          Under the previous accounting standard (IAS 39) there was no objective evidence that the 
          counterparty to the trade receivable was unable to pay. IFRS 9 contains a new impairment 
          model which will result in earlier recognition of losses. In applying the new guidance 
          management expects a greater likelihood that the group will suffer credit losses to the 
          full value of the trade receivable. Consequently, this trade receivable has been provided 
          for in full and against opening accumulated profits.

                                                                                         Six months
                                                                                            30 Sept 
          Rm                                                                                   2018
          Opening accumulated profits      
          Recognition of expected credit losses under IFRS 9 (net of related taxes)             (36)
          Impact at 1 April 2018                                                                (36)
            
          Non-controlling interest      
          Recognition of expected credit losses under IFRS 9 (net of related taxes)              (4)
          Impact at 1 April 2018                                                                 (4)
            
          Financial assets      
          As reported                                                                           119
          IFRS 9 expected credit losses                                                          29
          Amounts without adoption of IFRS 9                                                    148
            
          Trade and other receivables      
          As reported                                                                           363
          IFRS 9 expected credit losses                                                          11
          Amounts without adoption of IFRS 9                                                    374

     2.3  Changes in presentation of 'Operating income net of direct expenses'                  
          As part of a financial statement enhancement exercise aimed at assisting the user to better 
          estimate the amounts, nature and timing of cash flows, management has revised the presentation 
          of the income statement with a focus on amounts included in the determination of operating 
          income net of direct expenses. This revision has resulted in the group presenting total 
          revenue for the first time. Management wants to emphasise that this revised presentation 
          does not affect the caption 'operating income net of direct expenses'. This change in 
          presentation has no impact on taxes and non-controlling interest as it is merely a 
          reclassification between items of 'operating income net of direct expenses'.

          The impact of the reclassification is as follows and is reflected in 2.3.1 and 2.3.2 below:
          -  Insurance revenue comprising gross written premiums and commission earned has been 
             reclassified from net income from insurance operations.
          -  The net expenses from reinsurance contracts have been reclassified from net income from 
             insurance operations and disclosed as a separate direct expense.
          -  Interest revenue determined using the effective interest method has been separately 
             presented - reclassified from fee and commission income as well as from net income from 
             insurance operations.                  
                        
          2.3.1  Restatement of operating income net of direct expenses for 30 September 2017
                        
                                                             Reported in                          As
                                                             the current             Re-  previously
                 Rm                                              results  classification    reported
                 Fee and commission income                         2 000              (2)      2 002
                 Insurance revenue                                 1 189           1 189           -
                 Net income from insurance operations                  -            (330)        330
                 Interest revenue - effective interest method         19              19           -
                 Total revenue                                     3 208               *           *
                 Direct expenses attributable to fee and 
                   commission income                                (533)              -        (533)
                 Insurance claims, commissions and withdrawals      (835)           (835)          -
                 Net expenses from reinsurance contracts             (41)            (41)          -
                 Operating income net of direct expenses           1 799               -       1 799
                        
                 * Not shown on the face of the income statement.                  

          2.3.2  Restatement of operating income net of direct expenses for 31 March 2018

                                                             Reported in                          As
                                                             the current             Re-  previously
                 Rm                                              results  classification    reported
                 Fee and commission income                         4 090              (4)      4 094
                 Insurance revenue                                 2 505           2 505           -
                 Net income from insurance operations                  -            (623)        623
                 Interest revenue - effective interest method         47              47           -
                 Total revenue                                     6 642               *           *
                 Direct expenses attributable to fee and 
                   commission income                              (1 070)              -      (1 070)
                 Insurance claims, commissions and withdrawals    (1 774)         (1 774)          -
                 Net expenses from reinsurance contracts            (151)           (151)          -
                 Operating income net of direct expenses           3 647               -       3 647


3.   EXCHANGE RATES                  
     Certain transactions of the group occur in foreign currencies. In the current year the most 
     significant foreign currency is the Great British pound. These transactions have been translated 
     using the exchange rates below. Other less material foreign subsidiaries have been translated 
     to rand in line with IAS 21 The Effects of Changes in Foreign Exchange Rates, using the weighted 
     average rates for income statement items and the closing rates for items in the statement of 
     financial position.                  

                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
                                                                       2018        2017        2018
     Weighted average R:GBP rate                                       18.3        17.0        17.0
     Closing R:GBP rate                                                18.5        18.1        16.6
                        
     *  Not shown on the face of the income statement.                  


4.   FEE AND COMMISSION REVENUE
     The group's operations and main revenue streams are those described in the last annual financial 
     statements. The group's revenue is derived from contracts with customers, except for insurance 
     revenue. The nature and effect of initially applying IFRS 15 on the group's interim financial 
     statements are disclosed in note 2.                                                            
                                                                  
     Disaggregation of revenue                                                            
     Primary segments   
                                                                                 Emerging        Administration                                                 
                                       Institutional          Retail              markets              only                Total      
     Rm                                2018     2017      2018      2017      2018      2017      2018      2017      2018      2017 
     Secondary segments                                                                         
     Consulting and retirements         789      747         -         -         -         -         -         -       789       747 
     Investments                        435      409         -         -         -         -         -         -       435       409 
     Wealth and investments               -        -       693       664         -         -         -         -       693       664 
     Emerging markets                     -        -         -         -       111       102         -         -       111       102
     Administration only                  -        -         -         -         -         -        60        78        60        78 
     Total                            1 224    1 156       693       664       111       102        60        78     2 088     2 000 
                                                                  
     Revenue by type                                                                       
     Consulting                          99      101       387       369        20        21        18        24       524       515 
     Administration                     316      293         -         -        76        66        42        54       434       413 
     Commission                         145      138         6         5         -         -         -         -       151       143 
     Asset based                        664      624       299       289        15        15         -         -       978       928 
     Other                                -        -         1         1         -         -         -         -         1         1 
     Total                            1 224    1 156       693       664       111       102        60        78     2 088     2 000 
                                                                   
     Region                                                                       
     South Africa                     1 222    1 150       638       624         -         -        60        78     1 920     1 852 
     Namibia                              -        -         -         -        61        63         -         -        61        63 
     Botswana                             -        -         -         -        45        36         -         -        45        36 
     Jersey and Channel Islands           2        6        55        40         -         -         -         -        57        46 
     Other                                -        -         -         -         5         3         -         -         5         3 
     Total                            1 224    1 156       693       664       111       102        60        78     2 088     2 000 
                                                                  
     Timing of revenue recognition                                                                       
     Products transferred at a 
       point in time                     18       23         -         -         8         3         -         -        26        26 
     Services transferred over time   1 206    1 133       693       664       103        99        60        78     2 062     1 974 
     Total                            1 224    1 156       693       664       111       102        60        78     2 088     2 000 
                                                                  
     Fee and commission revenue       1 224    1 156       693       664       111       102        60        78     2 088     2 000 
     Plus: Net insurance income 
       excluding interest income         24       39       274       253        24        21         -         -       322       313 
     Insurance revenue                  302      246       893       855        88        88         -         -     1 283     1 189 
     Insurance claims, commissions 
       and withdrawals                 (294)    (189)     (565)     (580)      (58)      (66)        -         -      (917)     (835)
     Net expenses from reinsurance 
       contracts                         16      (18)      (54)      (22)       (6)       (1)        -         -       (44)      (41)
     Plus: Interest revenue 
       - effective interest method       16        7        10        12         -         -         -         -        26        19 
     Interest from insurance operations  14        5        10        12         -         -         -         -        24        17
     Other interest                       2        2         -         -         -         -         -         -         2         2
     Less: Direct expenses (1)         (264)    (284)     (251)     (234)       (8)       (8)       (5)       (7)     (528)     (533)
     Operating income net of 
       direct expenses                1 000      918       726       695       127       115        55        71     1 908     1 799 
                                                                  
     (1)  Direct expenses relate to sub-agent expenses, commissions paid and asset management fees.


                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
     Rm                                                                2018        2017        2018
5.   NET INCOME FROM INSURANCE OPERATIONS                  
     Insurance revenue (1)                                            1 283       1 189       2 505
     Investment revenue from insurance operations (also refer 
       to note 4)                                                        24          17          43
     Less: Insurance claims, commissions and withdrawals               (917)       (835)     (1 774)
     Less: Net expenses from reinsurance contracts                      (44)        (41)       (151)
     Amounts ceded to reinsurers                                       (690)       (688)     (1 473)
     Insurance claims and benefits covered through 
       reinsurance contracts                                            646         647       1 322
     Net income from insurance operations                               346         330         623
      

6.   NON-TRADING AND CAPITAL ITEMS                  
     Non-trading:                  
     Professional indemnity insurance cell-captive result               (34)          1         (25)
     Amortisation of intangible assets arising from 
       business combination                                             (34)        (46)        (80)
     Costs relating to strategic consulting engagement                  (26)        (22)        (34)
     Goodwill written off                                                 -           -        (317)
     Impairment/write-off of software (2)                              (287)         (6)        (17)
     Other                                                               (4)          -          (3)
     Total non-trading and capital items                               (385)        (73)       (476)

        
7.   INVESTMENT INCOME                  
     Interest income                                                     76         108         210
     Investment and dividend income                                      11          21          31
     Foreign exchange losses on intergroup loans                          -           -          (5)
     Investment income from general operations                           87         129         236
     Investment returns linked to policyholder tax expense               13          14         (11)
     Total investment income                                            100         143         225
                        
     (1)  Insurance revenue for short-term insurance includes reinsurance commissions of R185 million 
          (Sept 2017: R162 million, Mar 2018: R345 million).
     (2)  Following a thorough review of the strategic roadmap and related projects within the 
          IT programme by management, the group has decided to terminate the contract with the primary 
          implementation partner resulting in an onerous provision amounting to R52 million. 
          In addition, the group assessed the recoverability of software in development and concluded 
          that no future economic benefit will flow and consequently impaired software amounting to 
          R287 million.                  

                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
     Rm                                                                2018        2017        2018
8.   FINANCE COSTS                  
     Finance costs derived from financial liabilities classified 
       and carried at amortised costs:                  
     Interest on revolving credit facility                              (29)        (30)        (60)
     Cost of hedging (1)                                                 (3)         (9)        (17)
     Other interest costs                                                (4)         (9)        (20) 
     Total finance costs                                                (36)        (48)        (97)
                        
                        
9.   INCOME TAX EXPENSE                  
     South African income tax                  
     Current tax                                                       (193)       (152)       (335)
     Current period                                                    (168)       (149)       (322)
     Prior period                                                       (25)         (3)        (13)
     Deferred tax                                                        31          15          39
     Current period                                                      28          15          34
     Prior period                                                         3           -           5
     Foreign income tax                  
     Current tax - current period                                        (7)         (6)        (16)
     Deferred tax - current period                                        -           1           -
     Foreign withholding tax                                             (2)         (3)         (7)
     Securities transfer tax                                             (2)          -           -
     Income tax expense relating to group profits                      (173)       (145)       (319)
                        
     Income tax (expense)/credit on policyholder investment returns     (13)        (14)         11
     Current tax - current period                                        (6)        (19)        (44)
     Deferred tax - current period                                       (7)          5          55
                        
     Total income tax expense                                          (186)       (159)       (308)
                        
     (1)  These costs represent the movement in forward points on a foreign exchange contract 
          relating to the IT programme. This forward exchange contract was closed out during the period.                  


10.  DISCONTINUED OPERATIONS                  
     The operations of Alexander Forbes East Africa (East Africa) were classified as a discontinued 
     operation during the year ended 31 March 2017. The assets and liabilities of this operation 
     were classified as assets and liabilities of a disposal group classified as held for sale. 
     Certain delays caused by circumstances beyond the control of the group have resulted in 
     East Africa still being presented as a discontinued operation. Progress has been made during 
     the period in concluding the transaction with the sale of the operation imminent.
                        
                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
     Rm                                                                2018        2017        2018
     Assets and liabilities of disposal group classified 
       as held for sale                  
     Long-term assets                                                    20           5          25
     Deferred tax assets                                                  1           1           1
     Trade and other receivables                                         44          53          33
     Other current assets                                                 3           2           8
     Cash and cash equivalents                                           18           9          15
     Total assets                                                        86          70          82
     Deferred tax liabilities                                             -           -           2
     Provisions                                                           1           -           1
     Trade and other payables                                            15          12          11
     Total liabilities                                                   16          12          14
                        
     Summary income statement from discontinued operations                  
     Operating income net of direct expenses                              -          27          81
     Operating expenses                                                  (3)        (20)        (66)
     Operating (loss)/profit before non-trading and capital items        (3)          7          15
     Investment income                                                    1           1           -
     Non-trading and capital items                                        -          10           8
     Operating (loss)/profit                                             (2)         18          23
     Share of profit of associate (net of tax)                            -           -           2
     (Loss)/profit before taxation                                       (2)         18          25
     Income tax expense                                                   -          (3)         (4)
     (Loss)/profit from discontinued operations                          (2)         15          21
                        
                        
11.  EARNINGS PER SHARE                  
     11.1  Basic earnings per ordinary share                  
           Basic earnings per share is calculated by dividing the profit for the period attributable 
           to equity holders by the weighted average number of ordinary shares in issue during the period.
                        
     11.2  Headline earnings per ordinary share                  
           Headline earnings per share is calculated by excluding applicable non-trading and capital 
           gains and losses from the profit attributable to ordinary shareholders and dividing the 
           resultant headline earnings by the weighted average number of ordinary shares in issue 
           during the period. Headline earnings is defined in Circular 4/2018 issued by the South African 
           Institute of Chartered Accountants.                   
                        
     11.3  Diluted basic earnings per ordinary share                  
           Diluted basic earnings per ordinary share is calculated by adjusting the profit attributable 
           to equity holders for any changes in income or expense that would result from the conversion 
           of dilutive potential ordinary shares and dividing the result by the weighted average 
           number of ordinary shares increased by the weighted average number of additional ordinary 
           shares that would have been outstanding, assuming the conversion of all dilutive potential 
           ordinary shares.                   
                        
                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
                                                                       2018        2017        2018
     11.4  Number of shares (million)                  
           Weighted average number of shares                          1 341       1 341       1 341
           Weighted average shares held by policyholders classified 
             as treasury shares                                          (9)        (16)        (14)
           Weighted average treasury shares                             (87)        (46)        (58)
           Weighted average number of shares in issue (net of 
             treasury shares)                                         1 245       1 279       1 269
           Dilutive shares                                               15           5           6
           Diluted weighted average number of shares                  1 260       1 284       1 275
                        
           Actual number of shares in issue                           1 341       1 341       1 341
           Actual treasury shares                                      (110)        (79)        (95)
           Shares in issue net of treasury shares                     1 231       1 262       1 246
                        
     11.5  Calculation of basic and headline earnings from total 
             operations (Rm)                  
           (Loss)/profit attributable to owners of the company          (50)        282         240
           Adjusting items:                  
           - Impairment of goodwill and intangible assets               258           -         332
           - Other capital items                                          -          (5)         (9)
           Headline earnings for the period                             208         277         563
                        
           Earnings per share from total operations                  
           Basic (loss)/earnings per share               (cents)       (4.0)       22.0        18.9
           Headline earnings per share                   (cents)       16.7        21.7        44.4
           Diluted basic (loss)/earnings per share       (cents)       (4.0)       22.0        18.8
           Diluted headline earnings per share           (cents)       16.5        21.6        44.2
                        
           The group has an approved share scheme for employees that may result in dilution on both 
           earnings per share and headline earnings per share at the future date of vesting. 
           The dilutive effect is conditional on employee retention and performance during the period 
           for each award. The above dilutive effect is calculated based on the performance of the 
           company for the current year in relation to the performance criteria.

           In addition, the group may issue AFH shares to the empowerment shareholder in future in 
           terms of the circular issued to shareholders on 2 December 2016. The group has assessed 
           the impact of this potential issue of shares and concluded that no material dilution 
           exists in this reporting period.                  


                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
     Rm                                                                2018        2017        2018
12.  CAPITAL EXPENDITURE FOR THE PERIOD                                  61         192         345
                        
                        
13.  OPERATING LEASE COMMITMENTS                  
     Due within one year                                                179         178         184
     Due between one and five years                                     778         756         755
     Due after five years                                               232         447         354
     Total operating lease commitments                                1 189       1 381       1 293
                        
     Capital expenditure and commitments will be funded from internal cash resources.
                        
14.  FINANCIAL ASSETS AND LIABILITIES HELD UNDER MULTI-MANAGER INVESTMENT CONTRACTS
     The policyholder assets held by the group's multi-manager investment subsidiary, AF Investments, 
     in South Africa and Namibia are recognised on the statement of financial position in terms of IFRS. 
     These assets are directly matched by linked obligations to policyholders. 

     As a result of the group being listed, the investments by underlying asset managers in the listed 
     shares of the group are recognised as treasury shares and all fair value adjustments recognised 
     on these treasury shares are reversed, while the corresponding fair value adjustments of the 
     liability continue to be recognised in the income statement. The resultant profit for the 
     period of R20 million (2017: R11 million loss) has been disclosed separately on the face of 
     the income statement. This treatment also affects the number of shares in issue, the impact 
     of which is disclosed in note 11. 

     Below is a reconciliation of the assets held under multi-manager investment contracts with the 
     linked liabilities under such contracts:                  
                        
                                                                 Six months  Six months   12 months
                                                                    30 Sept     30 Sept      31 Mar
     Rm                                                                2018        2017        2018
     Total financial assets held under multi-manager investment 
       contracts (per statement of financial position)              307 400     298 859     296 758
     Reversal of adjustments made under IFRS:                  
     Alexander Forbes shares held as policyholder assets and 
       reclassified in the group statement of financial position 
       as treasury shares                                                65         105          73
     Financial effects of accounting for policyholder investments 
       as treasury shares - prior years                                  (6)        (31)        (30)
     Financial effects of accounting for policyholder investments 
       as treasury shares - current year                                (20)         11          24
     Total financial liabilities held for policyholders under 
       multi-manager investment contracts                           307 439     298 944     296 825
                        
                              
15.  FINANCIAL ASSETS                        
     15.1  Total financial assets                  
           Non-current financial assets                                  67          89          90
           Current financial assets                                      52         437         355
                                                                        119         526         445
                              
     15.2  Analysis of financial assets                  
           Financial assets classified as available for sale              -          12          14
           Financial assets designated as fair value through 
             profit or loss (1)                                          68         284         264
           Financial assets classified at amortised costs                51          77          85
           Derivative financial assets (2)                                -         153          82
                                                                        119         526         445
                              
           (1)  The decline in financial assets designated as fair value through profit or loss is due 
                to the group's investment in unit trusts which are readily convertible to known 
                amounts of cash and are subject to an insignificant risk of changes in value, thereby 
                qualifying to be classified as cash and cash equivalents.
           (2)  The derivative financial asset relating to the IT programme was closed out during the period.                  
                              
                              
16.  FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS                        
     16.1  Financial risk factors                  
           The group's activities expose it to a variety of financial risks: market risk (including 
           currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), 
           credit risk and liquidity risk. 

           The summary consolidated financial statements do not include all financial risk management 
           information and disclosures required in the annual financial statements and this disclosure 
           should be read in conjunction with the group's annual financial statements as at 31 March 2018.

           There have been no material changes in the risk management or in any risk management 
           policies since the year-end.                  
                              
     16.2  Liquidity risk                  
           Compared to the 31 March 2018 year-end, there was no material change in the contractual 
           undiscounted cash outflows for financial liabilities.                   
                              
     16.3  Fair value hierarchy                        
           The group classifies fair value measurements using a fair value hierarchy that reflects the 
           significance of the inputs used in making the measurements. The fair value hierarchy has 
           the following levels:
           -  Level 1: Quoted prices in active markets for identical assets or liabilities.
           -  Level 2: Inputs other than quoted prices that are observable for the asset or liability, 
                       either directly or indirectly.
           -  Level 3: Inputs for valuation that are not based on observable market data (that is, 
                       inputs are unobservable).

           The table below analyses financial instruments carried at fair value, by valuation method.                         
                                    
           Rm                                                                   Level 1     Level 2     Level 3       Total
           30 September 2018                        
           Financial assets measured at fair value                        
           Financial assets held under multi-manager investment contracts       186 050     107 813       5 782     299 645
           Financial assets of insurance cell-captive facilities                    210         168           -         378
           General operations                                                         -       1 056          14       1 070
           Total financial assets measured at fair value                        186 260     109 037       5 796     301 093
                                    
           Cash held under multi-manager investment contracts                         -       7 755           -       7 755
           Cash held under insurance cell-captive contracts                           -          14           -          14
                                                                                      -       7 769           -       7 769
                                    
           Financial liabilities measured at fair value                        
           Financial liabilities held under multi-manager investment contracts        -     301 657       5 782     307 439
           Financial assets of insurance cell-captive facilities                      -         392           -         392
           Total financial liabilities measured at fair value                         -     302 049       5 782     307 831


           Rm                                                                   Level 1     Level 2     Level 3       Total
           31 March 2018                        
           Financial assets measured at fair value                        
           Financial assets held under multi-manager investment contracts       176 993     107 014       4 864     288 871
           Financial assets of insurance cell-captive facilities                    178         168           -         346
           General operations                                                         -         346          14         360
           Total financial assets measured at fair value                        177 171     107 528       4 878     289 577
                                    
           Cash held under multi-manager investment contracts                         -       7 887           -       7 887
           Cash held under insurance cell-captive contracts                           -           6           -           6
                                                                                      -       7 893           -       7 893
                                    
           Financial liabilities measured at fair value                        
           Financial liabilities held under multi-manager investment contracts        -     291 937       4 888     296 825
           Financial assets of insurance cell-captive facilities                      -         352           -         352
           Total financial liabilities measured at fair value                         -     292 289       4 888     297 177

           Transfers between Levels 1 and 2            
           Movements in financial assets associated with multi-manager investment contracts and 
           cell-captive insurance facilities are directed by clients. These movements are a result 
           of investments and withdrawals made. There were no transfers between Levels 1 and 2 during 
           the year which were as a result of a change in valuation methodology.            
                       
           Level 3 reconciliation            
           Level 3 financial assets and liabilities comprise mainly policyholder and cell-owner assets 
           and liabilities. Financial assets and financial liabilities in this level are insignificant 
           in relation to total financial assets and financial liabilities respectively. In addition, 
           the movements in Level 3 financial assets are directly linked to the movements in the 
           linked investment liability. Any fair value gains and losses resulting from policyholder 
           or cell-owner financial assets and financial liabilities have no impact on profit or loss. 
           There was no change in the valuation methodology of Level 3 assets during the period 
           under review.            

           Sensitivity analysis for Level 3 financial assets            
           The following table presents significant inputs to show the sensitivity of Level 3 
           measurements and assumptions used to determine the fair value of the financial assets:
                        
           Instrument                              Valuation technique                        Significant inputs
           Suspended listed equities               Exchange trade price                       Last exchange traded price
           Community property company assets       Discounted cash flow model                 Capitalisation rates and discount rates
           Infrastructure and development assets   Equity                                     Equity
                                                   Distribution discount model, cost,         Interest rates and exchange traded prices
                                                   mark to market, price earnings 
                                                   multiple and liquidation value      
                                                   Debt                                       Debt
                                                   Discounted cash flow model                 Interest rates - fixed and floating
                        
           The group's overall profit or loss is not sensitive to the inputs of the models applied to 
           derive fair value. All Level 3 instruments are linked.
                        
     16.4  Valuation methods and assumptions for valuation techniques             
           There were no material changes in the valuation methods and assumptions for valuation 
           techniques since 31 March 2018. A detailed description of the valuation methods and 
           assumptions for valuation techniques is available in our annual financial statements for 
           the year ended 31 March 2018.             
                        
     16.5  Fair value of financial assets and financial liabilities measured at amortised cost            
           The fair value of the following financial assets and liabilities measured at amortised 
           cost approximate their carrying amount:            
           - Trade and other receivables            
           - Insurance receivables            
           - Cash and cash equivalents             
           - Trade and other payables            
           - Insurance payables            
           - Borrowings            
                        
17.  CRITICAL ASSUMPTIONS AND JUDGEMENTS                  
     In the prior year we referred to a specific matter which was and is still being reviewed by a 
     foreign regulator in respect of a legacy subsidiary business that has been sold. The claim, 
     should any arise, will be as a result of warrantees provided on the original sale of the 
     business. Management has assessed and concluded that it is still too early to determine 
     (i) the likelihood and magnitude of any liability that may arise and (ii) in the event a 
     liability does arise, if it will impact the group. The group is adequately insured for possible 
     claims as a result of such errors and omissions. In addition, management has obtained confirmation 
     from the insurance underwriters indicating that, should a liability arise, the event will be 
     covered subject to the terms and conditions of the policy.                   
                        
18.  EVENTS OCCURRING AFTER REPORTING PERIOD                  
     Subsequent to the reporting period, the group has terminated the contract with the primary 
     implementation partner resulting in an onerous provision amounting to R52 million. 
     This termination was treated as an adjusting event.                  


ANNEXURE A

GROUP SEGMENTAL INCOME AND PROFIT ANALYSIS
For the six months ended 30 September 2018

                                                 Institutional            Institutional             Institutional                Retail                      Retail

                                                Consulting and                Group                                            Wealth and                    Retail 
                                                  retirements                  risk                   Investments              investments                  insurance
Rm                                           2018       %   2017       2018       %   2017       2018       %   2017       2018       %   2017       2018       %   2017
Operating income net of direct expenses       585       7    545         27     (29)    38        388      16    335        447       5    424        279       3    271 
Operating expenses before accounting for 
  property lease (1)                         (504)     11   (454)       (30)     30    (23)      (171)     15   (149)      (253)      6   (238)      (189)    (10)  (211) 
Normalised operating profit before 
  non-trading and capital items                81     (11)    91         (3)  <(100)    15        217      17    186        194       4    186         90      50     60 
Normalised non-trading and capital items        -    (100)   (17)         -       -      -          -       -      -          -       -      -          -       -      - 
Normalised operating profit                    81       9     74         (3)  <(100)    15        217      17    186        194       4    186         90      50     60 
Normalised net finance income                  (4)    (43)    (7)         4       -      4         43      (9)    47          1   <(100)    (4)        (5)      -     (5) 
Share of profit of associates                   -       -      -          -       -      -          -       -      -          -       -      -          -       -      - 
Normalised profit before tax from 
  continuing operations                        77      15     67          1     (95)    19        260      12    233        195       7    182         85      55     55 
Taxation (2)                                  (24)     14    (21)         -   <(100)    (6)       (81)     13    (72)       (60)      7    (56)       (26)     53    (17) 
Normalised (loss)/profit for the period 
  from continuing operations                   53      15     46          1     (92)    13        179      11    161        135       7    126         59      55     38 
                                                                                                 
(Loss)/profit for the year from 
  continuing operations                        53      15     46          1     (92)    13        179      11   161         135       7    126         59      55     38 
                                                                                                
Depreciations and amortisation (1)            (11)     (8)   (12)        (2)      -     (2)        (9)     10    (10)       (14)      8    (13)       (15)     15    (13)
                                                                                                
(1)  Operating expenses before accounting for property lease includes depreciation and amortisation.
(2)  Due to the differences between the group's segmental structure and the legal entity structure, the taxation amount has been computed using the group's normalised 
     effective tax rate. Where the segmental structure and legal entity structure align, the actual tax charge has been disclosed.
(3)  The trading margin and cost-to-income is computed using operating expenses inclusive of share scheme costs and accounting for property lease.
                                                                                                
                                                                        
                                                                             Emerging               Administration 
                                                                              markets                    only                    Corporate                    Total            
Rm                                                                     2018       %   2017       2018       %   2017       2018       %   2017       2018       %     2017
Operating income net of direct expenses                                 127      10    115         55     (23)    71          -       -      -      1 908       6    1 799 
Operating expenses before accounting for property lease (1)            (105)     (5)  (110)       (55)    (23)   (71)      (154)     97    (78)    (1 461)(3)  10   (1 334)(3) 
Normalised operating profit before non-trading and capital items         22    >100      5          -       -       -      (154)     97    (78)       447      (4)     465 
Normalised non-trading and capital items                                 (4)      -      -          -       -       -      (313)   >100    (11)      (317)   >100      (28) 
Normalised operating profit                                              18    >100      5          -       -       -      (467)   >100    (89)       130     (70)     437 
Normalised net finance income                                             -    (100)     2          -       -       -        12     (73)    44         51     (37)      81 
Share of profit of associates                                             -    (100)     2          -       -       -         -       -      -          -    (100)       2 
Normalised profit before tax from continuing operations                  18     100      9          -       -       -      (455)   >100    (45)       181     (65)     520 
Taxation (2)                                                             (8)   >100     (3)         -       -       -         5     (64)    14       (194)     20     (161) 
Normalised (loss)/profit for the period from continuing operations       10      67      6          -       -       -      (450)   >100    (31)       (13)  <(100)     359 
                                                                         
Adjustments                                                                                                                 (32)    (36)   (50)       (32)    (36)     (50) 
Amortisation of intangible assets arising from business combination                                                         (34)    (26)   (46)       (34)    (26)     (46) 
Professional indemnity insurance cell-captive results                                                                       (34)  <(100)     1        (34)  <(100)       1 
Accounting for property lease                                                                                                (5)    (50)   (10)        (5)    (50)     (10) 
Reported profit/(loss) arising from accounting for policyholder investment in treasury shares                                20   <(100)   (11)        20   <(100)     (11) 
Tax effects on above adjustments                                                                                             21      31     16         21      31       16 
(Loss)/profit for the year from continuing operations                    10      67      6          -       -       -      (482)   >100    (81)       (45)  <(100)     309
                                                                        
Depreciations and amortisation (1)                                       (3)      -     (3)         -       -       -        (2)      -      -        (56)      6      (53) 
                                                                        
                                                                                                                           Trading margin (3)(%)      23.2   (210bps) 25.3
                                                                                                                           Cost-to-income (3)(%)      76.8    210bps  74.7
 
(1)  Operating expenses before accounting for property lease includes depreciation and amortisation.
(2)  Due to the differences between the group's segmental structure and the legal entity structure, the taxation amount has been computed using the group's normalised 
     effective tax rate. Where the segmental structure and legal entity structure align, the actual tax charge has been disclosed.
(3)  The trading margin and cost-to-income is computed using operating expenses inclusive of share scheme costs and accounting for property lease.


CORPORATE INFORMATION

ALEXANDER FORBES GROUP HOLDINGS LIMITED
Registration number: 2006/025226/06
Tax reference number: 9404/921/15/8
JSE share code: AFH
ISIN: ZAE000191516
(Incorporated in the Republic of South Africa) 

Independent directors
N Nyembezi (Chairman), MD Collier, RM Head, M Ramplin, NG Payne, BJ Memela-Khambula, T Dloti

Non-executive directors
DJ Anderson, WS O'Regan, NB Radebe

Executive directors
DJ de Villiers (Group Chief Executive)
N Ford-Hoon (Fok) (Group Chief Financial Officer) (Resigned effective 31 December 2018)

Group general counsel and company secretary
CH Wessels

Investor relations
Z Amra

Registered office
Alexander Forbes, 115 West Street, Sandown, 2196

Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
PO Box 61051, Marshalltown, 2107

Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
1 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton, 2196

Website
http://www.alexanderforbes.co.za

Date of issue: 11 December 2018



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