Our World according to Alexander Forbes

Alexander Forbes released their results for the year to the end of March as the embattled group came to terms with a R368m repayment to certain clients, a R12m penalty/donation to the FSB, and a further provision of R100m.

In spite of these traumas outgoing group CEO Rael Gordon was on hand to explain that the group delivered 11% revenue growth, with revenues exceeding R5bn.

According to their financial results the group reported a 3% growth in core earnings per share, and a distribution of 59c per share to shareholders.

Gordon reported that most businesses had good growth except for the Risk Services business which affected the group to the tune of a 12% reduction in core earnings from 15%.

A lot of action has been taken in this area in the past, with expenditure invested in a defensive strategy to protect their business when some key staff left. There are also discussions underway with several potential shareholders.

He mentioned that he will continue to focus on the international business, with an increased focus foreign expenditure. He confirmed that he will remain on board until certain international projects are completed.

In Africa the bulking issue did play a role in results 1996 to 2004 although clients benefited to the tune of R2bn including interest earned. Then there is the question of some outstanding retirement fund tax (RFT) and interest will cost the business R380m.

Incoming group CEO Moyo (elect) doesnt expect the R380m amount they have set aside to redress certain practices, to be exceeded. He did confirm that they had identified several other historical practices that wont affect future business and a provision was recently approved by the board to the tune of R100m.

There is a review of these historical practices, although more detail was not forthcoming, it was mentioned that the review is almost completed. Gordon was also quick to point out that they wouldnt pre-empt the review and also more importantly want to talk to their clients first.

The deadline for the review appears to be 31 July.

It appears that the there is also an allowance for interest, built into the R100m, while it appears that the issue really is about disclosure.