Efficient earnings prediction indicates market revival
(Chairman comments on latest US banking regulations)
The worst of the economic slump of the past 18 months may be over judging by a substantial increase in predicted headline earnings per share at asset management house Efficient Financial Holdings. At the newly listed company’s first Annual General Meeting in Pretoria on Friday, headline earnings per share for the 6 months ending in February 2010, was estimated to increase from the previous 1.08 cents per share to between 2.7 and 3.2 cents.
Like most financial service providers Efficient Financial Holdings (EFH) took a substantial knock in the turmoil of the economic crisis, seeing earnings tumble from 11.71 cents to 1.08 cents per share between Sept 2008 and August 2009. According to Chairman Dr. Steve Booysen the about-face in the latest earnings estimate is a firm indication that markets are on the road to recovery.
When asked about US President Barack Obama’s controversial plan to restrict banks from making speculative investments, Booysen, a former ABSA CEO said that “banking will become a boring place and will no longer attract top talent and creativeness if this happens”. To Booysen overregulation of the banking industry presents an opportunity for investment houses. He believes investment houses will become the future powerbrokers of the deal-making economy.
EFH has positioned itself to capture a greater share of the retail market in 2010 and the primary weapon in its arsenal is its new Naviga investment product. Naviga’s heavyweight investment committee alone should be persuasive for individual investors. High profile economists Dawie Roodt and Mike Schüssler, both serve on the committee, so does University of Pretoria Professor in Financial Management Hugo Lambrechts.
Naviga takes the investment decision out of the hands of a single asset manager by spreading assets between 5 or more asset management houses. This is likely to appeal to investors who have become more risk averse in the aftermath of the recent market crisis.
EFH management also undertook to continue with diligent expense control. During the stormy financial year ended in August 2009, the company kept expenses below inflation with the majority of directors and top management forfeiting annual salary increases and bonuses.
During Friday’s AGM the board passed a special resolution granting it the authority to repurchase shares. In the main repurchased shares will be used to implement a share incentive scheme for EFH employees. “We intend to attract and retain top people in the industry, the incentive scheme is one of the vehicles we have adopted to achieve this,” says Managing Director Heiko Weidhase.
To honour the company’s commitment to “green” its operations, the AGM took place by way of a broadband video conference with shareholders in Cape Town. A substantial number of EFH shareholders are based in Cape Town and says Financial Director Anton De Klerk, “This way we maximize inclusivity, without increasing our carbon footprint through air travel.”
