South African investment giant shooting the lights out

Alexforbes produced a strong set of financial results for the year ended 31 March, with headline earnings per share up 15% year-on-year. 

The company’s strong financial performance came on the back of improved investment performance due to strong growth in local equities and bonds. 

This translated into a higher average assets under management, which was coupled with enhanced client retention. Total assets under management and administration closed at R599 billion, up 14% year on year.

Overall, the company reported an increase in revenue of 11.7% to R5.6 billion and a rise of 13% in operating income to R4.4 billion. 

Crucially, Alexforbes kept a tight lid on growth in expenses, with organic growth in operating expenses rising 6% year-on-year. 

This includes the increased cost of servicing withdrawals under the new two-pot retirement system. 

As a result, the company’s profit for the year rose by 30.9% to R906 million. Profit from continuing operations saw a similar rise to R745 million. 

Alexforbes thus reported an increase in headline earnings per share of 15% to 70.8 cents, while normalised headline earnings, which exclude its discontinued operations, rose 23% to 69.1 cents per share. 

This enabled the company to declare a dividend of 33 cents per share for the year, which, when combined with the interim dividend, is up 10% year-on-year. It also declared a special dividend of 10 cents per share for the financial year. 

CEO Dawie de Villiers also revealed that the company is now providing financial advice to over one million members across its base. 

The company also shows no sign of slowing down, with new institutional business flows for the year amounting to R35 billion. 

The institutional product offering grew its assets under management by 11% while the platform administration offering grew by 26% year on year, resulting in total institutional asset growth of 15% over the year to a value of R492 billion.

New retail business flows increased by 34% to R28 billion, including R2.2 billion in assets under advice for the recently launched discretionary fund management offering, Investment Solutions by Alexforbes. 

Closing retail assets under advisement are up 12% yearly to reach R112 billion. Additionally, retail assets under management are up 11% yearly to reach R107 billion.

Alexforbes also revealed how it is managing to benefit from the implementation of the two-pot retirement system, with it actually improving its top-line revenue from the fees charged for withdrawals. 

With the implementation of the two-pot system taking effect on 1 September 2024, members of retirement funds were able to access a portion of their fund credits. 

Alexforbes anticipates that the two-pot system will improve retirement outcomes for new members by up to 2.5 times on average over the long term. 

While it saw large volumes of withdrawals in the first month from the effective date of the legislation, the months thereafter have seen lower levels of withdrawals, reaching a consistent monthly withdrawal level by year-end.

For the period of 1 September 2024 to 31 March 2025, over 480,000 savings pot claims were processed within an average turnaround of seven working days per claim, with 99% of these being within standard servicing levels. 

These claims amounted to a cumulative gross withdrawal of R7.7 billion, of which R5.5 billion was from Alexforbes portfolios.