
The JSE-listed financial services company Alexforbes has reported an 8% rise in profit for the six months ending 30 September 2024, along with the declaration of an interim dividend of 22 cents per share, representing a 10% increase from the prior year.
In a statement on Sens issued on Monday, the group disclosed that its total closing assets, which include assets under administration and management, reached R568 billion, marking a 25% increase compared to the same timeframe in 2023.
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Read: Alexforbes sees strong growth with a 16% increase in AuM
The group’s share price climbed to R7.53 during early morning trading, reflecting a 1.76% increase from Friday’s close.
Headline earnings per share from total operations were reported at 28.4 cents, a 3% rise compared to the previous period. The group’s operating income surged by 12% to R2.1 billion, driven by the consolidation of past acquisitions and increased average assets under management, benefiting from favorable market conditions, according to the statement.
“Our overall return to shareholders over the past four years is 46.9% per annum, a testament to our strategic execution by our committed team, even amidst challenging market conditions,” remarked CEO Dawie de Villiers.
Listen: Acquisition-led profit growth has led Alexforbes to increase its dividend
Rising Costs
Operating expenses increased by 11% to R1.7 billion during the period, influenced by acquisition-related costs, higher personnel and technology expenses, and escalated costs associated with the new two-pot system.
The group highlighted that personnel costs represented 63% of total operating expenses and increased by 12% year-over-year due to the necessity for improved client service teams to manage existing clients and prepare for higher administration claims related to the two-pot system.
Additionally, technology expenses rose by 13% year-on-year owing to expenses linked to the two-pot system implementation, software and licensing fees, and greater dependence on outsourced services.
Alexforbes has previously indicated that significant costs are associated with the rollout of the two-pot retirement system, which became effective on 1 September 2024.
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Insights on Two-pot System
Following the implementation of the new regime, Alexforbes conducted a survey of 8,224 members, revealing the following insights:
- About 350,000 members (approximately 32% of the membership) have lodged claims totaling around R6.5 billion pre-tax.
- The average claim is approximately R19,000 before tax implications.
- A total of 340,000 claims have been processed, amounting to around R4.6 billion after considering tax consequences.
- The number of claims processed within the first two months surpassed the usual volume seen over two years.
Read:
FSCA seeks explanations for elevated two-pot withdrawal fees
Estimated two-pot admin fees could reach R1.25 billion in the first half-year
Among the members surveyed who made claims:
- 86% indicated satisfaction with their withdrawal decisions.
- 96% acknowledged the impact on their long-term retirement outcomes, with the same percentage aware of the tax implications of their withdrawals.
- 50% used their emergency savings pot claims to reduce debt.
- 30% utilized their claims for essential living costs.
- 13% allocated their emergency savings pot claims for significant household purchases.
- 63% plan to make another claim.
- 37% do not intend to submit additional claims.
Read: Projected two-pot withdrawals to exceed R5 billion for state finances
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