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Investor update on strategic review
Alexander Forbes Group Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 2006/025226/06)
JSE share code: AFH
ISIN: ZAE000191516
(‘Alexander Forbes’ or ‘the company’)
INVESTOR UPDATE ON STRATEGIC REVIEW
Alexander Forbes initiated a strategic review in December 2018 to ensure
relevance in its core markets, assess growth opportunities and unlock the value
potential of the company.
Chief Executive Dawie de Villiers says, ‘Alexander Forbes continues to be the
premier adviser of choice by partnering with corporates on employee benefits and
with individuals in their journey to financial well-being. The strategic review
will accelerate the competitive position we already occupy in our core business
of consulting, administration and investments.’
POINT OF DEPARTURE
Alexander Forbes is a market-leading provider of integrated retirement solutions
and holistic wealth management. Our proud history has won us numerous awards and
accolades for our contribution to the South African retirement industry. Through
our best-in-class retirement fund administration, we serve more members than any
of our competitors in this market. We have built our premium brand through an
in-depth understanding of the employee benefit industry and have provided
innovative solutions to our clients, making us the partner of choice.
FUTURE GROWTH VISION
We have identified five key deliverables to sustain our growth vision:
1. Best advice for clients
Across global markets, corporates have identified employee benefits as a
key strategic tool to attract and retain talent. In the current
environment, Alexander Forbes sees an increasing demand in advising clients
to implement holistic employee benefit programmes successfully and,
importantly, educating individual members on the importance of saving and
investing for retirement.
2. Measurable client benefits
Our clients rely on us to provide advice that is in their best interests
and will generate measurable benefits. Our advice-led value proposition
leverages our scale and provides innovative retirement and preservation
solutions for members, at institutional pricing.
3. Pan-Africa solutions
Our clients across Africa want to benefit from our proven advice and
expertise wherever they are present and do not require us to have an in-
country presence. Our strategic partnerships across the African continent
will deliver the value expected from a leading brand.
4. Focused business model
Our business model will focus on the core businesses of consulting,
administration and investments. Reduced complexity means we will be able
to allocate more capacity towards client engagement, increase agility,
leverage partnerships and deliver an integrated value proposition.
5. Capital-light
Through our focused business model, we aim to decrease our regulatory
requirements through a capital-light business that delivers a superior
return on capital for shareholders. We will return surplus capital to
shareholders taking cognisance of potential investment opportunities that
lie ahead.
Chief Executive Dawie de Villiers says, ‘We are confident that the combination
of these deliverables will differentiate us in the market, unlocking our growth
opportunities which are premised on long-term trusted client relationships and
superior benefits for our members.’
WAY FORWARD
Giving effect and impetus to the execution of the strategy which will deliver
sustained business growth, requires that the company transitions to a new
operating model.
1. Through a single Alexander Forbes brand, we will strengthen the ‘client-
centric – one company’ approach through the integration of the different
business lines Corporate & Employee Benefits (comprising Consulting,
Retirements and Health), Investments, Retail (Financial Planning Consultants
and Individual Client Administration), and Emerging Markets. This model will
include:
i. One jointly orchestrated client-facing team, with divisional experts
ii. A hub for innovative solutions development and product enablement
iii. A joint platform for services, including fund administration and shared
services
2. Our target operating model recognises that Alexander Forbes has some of the
best people whose skills, experience and learning orientation are a key
differentiator in the market. With an enhanced employee value proposition,
the company will continue to attract and retain the best talent in the market.
3. While South Africa is considered our primary market, Alexander Forbes will
service its clients across Africa through its advice-led solution platform
‘ARRIVE’ in close collaboration with Mercer. We have seen early success in
this client-led strategy and will accelerate our efforts across our joint
client base. There are no further plans for in-country investments in the
rest of Africa, and sub-scale markets such as Uganda will be exited.
ACCELERATION OF STRATEGY: MERGERS AND ACQUISITION
1. Strengthening consulting, administration and investments
Alexander Forbes will look to expand the consulting, administration and
investments businesses to leverage synergies and scale opportunities, and to
ensure we retain our position as the market leader who provides best value
for our clients. Alexander Forbes will be exploring opportunities to acquire
a similar focused employee benefit business that supports our strategy, the
addition of which will enhance our ability to add value for clients and
shareholders.
2. Exit insurance cluster
In line with our strategic principles of an advice-led and capital-light
model, we will be commencing a process to seek a buyer for our insurance
businesses (Group Risk, Retail Life, and Short-term). The disposal of these
premium businesses will be based on a value proposition that balances
appropriate solutions for our clients, protects and values the employees who
have contributed to the success of these businesses, and realises fair value
to our shareholders. A new owner will be able to continue its success and
fuel future growth through additional investment.
Further details will be made available as discussions progress.
MANAGEMENT
Management changes arising from the revision of the strategy are being addressed,
together with the reassignment of internal portfolios.
Chief Executive, Dawie de Villiers commented: ‘The strategic review allowed us
to refocus and simplify, but also identify a broad set of growth opportunities
that capitalise on our proven strengths and expertise as the premier provider of
retirement solutions for members. Through active change management, working
across the organisation as one, we will drive our range of strategic initiatives
to deliver optimal value for all our stakeholders at Alexander Forbes.’
Further details on the implementation of the strategic review will be included
with the annual results for the year ending 31 March 2019, scheduled for release
on SENS on or about 18 June 2019.
CONFERENCE CALL DETAILS
Management will host a conference call at 14:00 (South African time) on Thursday
28 March 2019. Details for the call will be made available under the Investors
section on the company website www.alexanderforbes.co.za/investorrelations. A
recording of the conference call will be made available on the company’s website
as soon as it is available.
Carina Wessels
Executive: Governance, Legal and Compliance
26 March 2019
Sandton
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 26/03/2019 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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