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ALEXANDER FORBES GROUP HOLDINGS LIMITED - Investor update on strategic review

Release Date: 26/03/2019 10:00
Code(s): AFH     PDF:  
 
Wrap Text
Investor update on strategic review

Alexander Forbes Group Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 2006/025226/06)
JSE share code: AFH
ISIN: ZAE000191516
(‘Alexander Forbes’ or ‘the company’)

INVESTOR UPDATE ON STRATEGIC REVIEW

Alexander Forbes initiated a strategic review in December 2018 to ensure
relevance in its core markets, assess growth opportunities and unlock the value
potential of the company.

Chief Executive Dawie de Villiers says, ‘Alexander Forbes continues to be the
premier adviser of choice by partnering with corporates on employee benefits and
with individuals in their journey to financial well-being. The strategic review
will accelerate the competitive position we already occupy in our core business
of consulting, administration and investments.’

POINT OF DEPARTURE
Alexander Forbes is a market-leading provider of integrated retirement solutions
and holistic wealth management. Our proud history has won us numerous awards and
accolades for our contribution to the South African retirement industry. Through
our best-in-class retirement fund administration, we serve more members than any
of our competitors in this market. We have built our premium brand through an
in-depth understanding of the employee benefit industry and have provided
innovative solutions to our clients, making us the partner of choice.

FUTURE GROWTH VISION
We have identified five key deliverables to sustain our growth vision:

   1. Best advice for clients
      Across global markets, corporates have identified employee benefits as a
      key strategic tool to attract and retain talent. In the current
      environment, Alexander Forbes sees an increasing demand in advising clients
      to implement holistic employee benefit programmes successfully and,
      importantly, educating individual members on the importance of saving and
      investing for retirement.

   2. Measurable client benefits
      Our clients rely on us to provide advice that is in their best interests
      and will generate measurable benefits. Our advice-led value proposition
      leverages our scale and provides innovative retirement and preservation
      solutions for members, at institutional pricing.

   3. Pan-Africa solutions
      Our clients across Africa want to benefit from our proven advice and
      expertise wherever they are present and do not require us to have an in-
      country presence. Our strategic partnerships across the African continent
      will deliver the value expected from a leading brand.

   4. Focused business model
      Our business model will focus on the core businesses of consulting,
      administration and investments. Reduced complexity means we will be able
      to allocate more capacity towards client engagement, increase agility,
      leverage partnerships and deliver an integrated value proposition.

   5. Capital-light
      Through our focused business model, we aim to decrease our regulatory
      requirements through a capital-light business that delivers a superior
      return on capital for shareholders. We will return surplus capital to
      shareholders taking cognisance of potential investment opportunities that
      lie ahead.

Chief Executive Dawie de Villiers says, ‘We are confident that the combination
of these deliverables will differentiate us in the market, unlocking our growth
opportunities which are premised on long-term trusted client relationships and
superior benefits for our members.’

WAY FORWARD
Giving effect and impetus to the execution of the strategy which will deliver
sustained business growth, requires that the company transitions to a new
operating model.

1. Through a single Alexander Forbes brand, we will strengthen the ‘client-
   centric – one company’ approach through the integration of the different
   business lines Corporate & Employee Benefits (comprising Consulting,
   Retirements and Health), Investments, Retail (Financial Planning Consultants
   and Individual Client Administration), and Emerging Markets. This model will
   include:
     i.   One jointly orchestrated client-facing team, with divisional experts
    ii.   A hub for innovative solutions development and product enablement
   iii.   A joint platform for services, including fund administration and shared
          services

2. Our target operating model recognises that Alexander Forbes has some of the
   best people whose skills, experience and learning orientation are a key
   differentiator in the market. With an enhanced employee value proposition,
   the company will continue to attract and retain the best talent in the market.

3. While South Africa is considered our primary market, Alexander Forbes will
   service its clients across Africa through its advice-led solution platform
   ‘ARRIVE’ in close collaboration with Mercer. We have seen early success in
   this client-led strategy and will accelerate our efforts across our joint
   client base. There are no further plans for in-country investments in the
   rest of Africa, and sub-scale markets such as Uganda will be exited.

ACCELERATION OF STRATEGY: MERGERS AND ACQUISITION
1. Strengthening consulting, administration and investments
   Alexander Forbes will look to expand the consulting, administration and
   investments businesses to leverage synergies and scale opportunities, and to
   ensure we retain our position as the market leader who provides best value
   for our clients. Alexander Forbes will be exploring opportunities to acquire
   a similar focused employee benefit business that supports our strategy, the
   addition of which will enhance our ability to add value for clients and
   shareholders.

2. Exit insurance cluster
   In line with our strategic principles of an advice-led and capital-light
   model, we will be commencing a process to seek a buyer for our insurance
   businesses (Group Risk, Retail Life, and Short-term). The disposal of these
   premium businesses will be based on a value proposition that balances
   appropriate solutions for our clients, protects and values the employees who
   have contributed to the success of these businesses, and realises fair value
   to our shareholders. A new owner will be able to continue its success and
   fuel future growth through additional investment.

Further details will be made available as discussions progress.

MANAGEMENT
Management changes arising from the revision of the strategy are being addressed,
together with the reassignment of internal portfolios.

Chief Executive, Dawie de Villiers commented: ‘The strategic review allowed us
to refocus and simplify, but also identify a broad set of growth opportunities
that capitalise on our proven strengths and expertise as the premier provider of
retirement solutions for members. Through active change management, working
across the organisation as one, we will drive our range of strategic initiatives
to deliver optimal value for all our stakeholders at Alexander Forbes.’

Further details on the implementation of the strategic review will be included
with the annual results for the year ending 31 March 2019, scheduled for release
on SENS on or about 18 June 2019.

CONFERENCE CALL DETAILS
Management will host a conference call at 14:00 (South African time) on Thursday
28 March 2019. Details for the call will be made available under the Investors
section on the company website www.alexanderforbes.co.za/investorrelations. A
recording of the conference call will be made available on the company’s website
as soon as it is available.

Carina Wessels
Executive: Governance, Legal and Compliance

26 March 2019
Sandton

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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