ALEXANDER FORBES GROUP HOLDINGS LIMITED - Trading statement for the year ended 31 March 2019

Trading statement for the year ended 31 March 2019

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” or “group”)


TRADING STATEMENT FOR THE YEAR ENDED 31 MARCH 2019


Alexander Forbes is in the process of finalising its full year financial results for the year ended 31 March 2019
(“current period”) which will be released on the Stock Exchange News Service (“SENS”) and on the company’s
website at www.alexanderforbes.co.za on or about 18 June 2019.

This trading statement is issued in accordance with paragraph 3.4(b) of the JSE Limited Listings Requirements.
The financial information on which it is based has not been reviewed and reported on by the group's external
auditors.

Certain decisions taken as a result of the revised strategy have resulted in changes to the composition of the
company’s earnings. The revised strategy resulted in the decision to exit the insurance businesses and as well
sub-scale African operations. Consequently, these businesses have been classified as discontinued operations
during the current period.

The main areas affecting earnings include the following items that have been previously announced:

    •    The results for the year ended 31 March 2018 (“previous comparable period”) reflect the goodwill write-
         off amounting to R317 million relating to the Group risk (long-term insurance) business. The goodwill
         written-off is reversed from earnings per share in determining headline earnings per share.
    •    The results for the six months ended 30 September 2018, reflect the capitalised software development
         assets write-off amounting to R287 million. The software write-off has been recorded in non-trading and
         capital items and will be adjusted for in the calculation of headline earnings.
    •    The company also incurred a cost of R50 million on the termination of the IT contract. Owing to the
         nature of the costs these impacted both earnings and headline earnings.

Furthermore, the following factors influence the attributable earnings for the current period:

    •    A profit of R8 million (2018: loss of R24 million) arising from the accounting for policyholder investments
         (related to any Alexander Forbes shares acquired by underlying asset managers and held by the
         group’s multi-manager investment subsidiary for policyholders); and
    •    Profit realised from the disposal of the East African operations, which were classified as discontinued in
         the previous comparable period. The profit on disposal is adjusted for in the calculation of headline
         earnings.

Based on the information currently available to the company, shareholders are advised that the financial results
for the current period are expected to be:

                                              Estimated                 Reported
                                              March 2019               March 2018      Estimated range
                                               (cents)                   (cents)         change (%)
 Total operations
 Headline earnings per share                  42.7 – 45.3                    44.4          -3.8 to 2.0%
 Earnings per share                           26.2 – 27.8                    18.9         38.6 to 47.1%
 Continuing operations (1)
 Headline earnings per share                  31.5 – 33.5                    34.5         -8.7 to -2.9%
 Earnings per share                           21.0 – 22.2                    33.3       -36.9 to -33.3%
 
 1. Prior year numbers restated for the effects of discontinued operations


The earnings per share for total operations is expected to increase by between 7.3 and 8.9 cents per share for
the current period, which is between 38.6% and 47.1% higher than the 18.9 cents per share reported for the
previous comparable period. Headline earnings per share for total operations, after adjusting for both the goodwill
and software in development cost write-offs respectively, is expected to be between 42.7 and 45.3 cents per
share which is between 3.8% lower and 2.0% higher than the 44.4 cents per share in the previous comparable
period.

The earnings per share for the continuing operations is expected to decrease by between 11.1 and 12.3 cents
per share for the current period, which is between 36.9% and 33.3% lower than the 33.3 cents per share reported
for the previous comparable period. Headline earnings per share for the continuing operations, after adjusting for
the software in development cost write-off, is expected to be between 31.5 and 33.5 cents per share which is
between 8.7% and 2.9% lower than the 34.5 cents per share in the previous comparable period


Alexander Forbes remains positive about its operational strength, customer support for its brand and is
committed to delivering on its longer-term strategic priorities.


Carina Wessels
Group General Counsel and Company Secretary


4 June 2019
Sandton


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

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