Peter Moyo, CEO of financial and risk services provider Alexander Forbes, says the group is now firmly focused on extracting growth and shareholder value from its businesses in South Africa and internationally.
This follows the conclusion of an independent review of historical business practices across its South African operations and the sale of its international risk services business.
About two months ago it was disclosed that the group, which admitted to profiting from “bulking”, might have to fork out as much as R500-million to compensate customers for business practices that fell short of legal and corporate governance requirements.
This followed an independent investigation of the group by law firm Deneys Reitz and auditors.
Following the probe, Alexander Forbes said it was setting aside a further R20-million to cover potential liabilities from past practices. This was on top of R368-million it had already agreed to repay to customers from whom it profited as a result of “bulking”.
As part of an agreement with the Financial Services Board, an additional R12-million was also contributed by the group to the board’s consumer education fund.
“Alexander Forbes is committed to the highest levels of ethics and governance and consequently responded proactively to the issues raised relating to past business practices.
“A comprehensive independent assessment of past and current practices across our South African operations was completed by Ernst & Young and Deneys Reitz in the period under review. The results of this review were fully disclosed to the regulator and published on our website. The recommendations arising from the review are being implemented,” Moyo said.
“The assessment of business practices is complete. We can now move forward with clients and staff with confidence, and knowing that our group operates under sound business practices,” he added.
“The review and responses thereto have given us confidence that, going forward, all business practices will meet the highest levels of ethics and governance and that appropriate controls will be in place to ensure full compliance.
“In terms of issues relating to past practices, substantial progress is being made with the client-settlement processes and related matters. Following the conclusion of the independent review of our South African operations and the sale of our international risk services business, the group is now firmly focused on extracting growth and shareholder value from our core businesses in South Africa and internationally,” Moyo said.
Alexander Forbes on Monday reported a 26% decline in headline earnings per share for the six months ended September to 42 cents from 57 cents before. Core earnings per share, which was presented to facilitate what the company believes to be a “more meaningful assessment of trading performance”, declined 13% to 55 cents from a previous 63 cents.
Income from operations was up 12% to R2,914-billion, while operating profit declined by 16% to R388-million. — I-Net Bridge