Alexander Forbes expects profit increase, drop in headline earnings | Fin24
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Alexander Forbes expects profit increase, drop in headline earnings

Jun 01 2018 12:16

Financial services group Alexander Forbes said on Thursday it was expecting an increase of 4% to 6% in profit before non-trading and capital items.

In a statement, the group said the increase for the year ended March 31 would amount to R977m - R995m, higher than the R937m recorded in the last period.

However, headline earnings per share (HEPS) were likely to decrease by 15% to 20%, from R683 million reported in the prior year.

Alexander Forbes is expecting to announce its full year financial results on June 11.

The decline was attributed to the group’s disposal of its 60% interest in Lane Clark and Peacock LLP, together with its subsidiaries in Ireland and the Netherlands, according to the company.

Lane Clark and Peacock LLP is a financial, actuarial and business consulting firm, with a focus on pensions, investment, insurance and business analytics.

Alexander Forbes further said that it reported the earnings of these entities for eight months, as well as the R788m proceeds of the sale the previous year.

A goodwill impairment of R317m was recorded as result of poor performance of the group’s long-term insurance business, AF Life.

"The AF Life business remains below optimal scale with growth expected to take place over the medium to long-term," the group said.

It was forecast that the cost per policy was likely to remain high, affecting the profitability of the business. 

"In addition, a reduction in cash flows was experienced, driven by heightened claims experience in the business and industry in general," the group said.

Earnings per share for the period were expected to be between 16.1 cents and 21.8 cents per share, a decrease from the prior year of 81% to 86%. 

Headline earnings per share for the period were likely to be between 43.1 cents and 45.7 cents per share, a decrease of between 14% and 19%.

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