Alexander Forbes Group Holdings Limited · JSE:AFH

Alexander Forbes — H1 2003 Earnings Presentation

33 slides from Alexander Forbes's earnings presentation, September 2002

  1. Slide 1: Interim Results to 30 September 2002

     Interim Results to 30 September 2002

  2. Slide 2: Financial highlights

    Financial highlights • Revenue up 31% • Organic revenue and profit growth up 23% • Core headline EPS up 22% 

  3. Slide 3: Strategic developments

    Strategic developments • Lane Clark & Peacock (LCP) acquisition • Agree to acquire Schroders’ pension business • Millennium Consolidated Investment (MCI) to lead purchase of 30% of Alexander Forbes South Africa • Offer to Investment Solutions minorities 

  4. Slide 4: Core Headline Earnings Per Share growth

    Core Headline Earnings Per Share growth % pa 50 44 40 40 29 31 28 30 27 27 22 20 20 10 0 1999 2000 2001 2002 Sep-02 Interim Full Year 

  5. Slide 5: Proportion of revenue from international operations

    Proportion of revenue from international operations 70% 57% 61% 60% 54% 50% 50% 40% 30% 20% 10% 0% Mar '01 Sep '01 Mar '02 Sep '02  Percentage ex Africa

  6. Slide 6: Regional structure

    Regional structure 

  7. Slide 7: Group profile

    Group profile Region Employees Countries Africa 3,316 12 UK / Europe 1,597 4 Asia 172 8 Latin America 317 5 5,402 29  Excludes associates

  8. Slide 8: Shareholding at 30 September 2002

    Shareholding at 30 September 2002 22% Other - 5% Share SA Trusts 4% Investec 8% Other - Non SA 7% Coronation 8% Genesis IM 11% RMB 12% Stanlib 8% Old Mutual 15% Sanlam 

  9. Slide 9: 

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  10. Slide 10: 

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  11. Slide 11: SA Global Company

    SA GLOBAL COMPANY

  12. Slide 12: Financial results

    Financial results 6 months to 30 September 2002 Sep Sep 2002 2001 Rm IncreaseRm Revenue from operations 2,43631% 1,855 Net operating expenses (1,933)(1,457) Operating profit 50326% 398 Operational interest income 5946 Trading profit 56227% 444 Trading profit ratio 23%24% 

  13. Slide 13: Revenue growth

    Revenue growth Reported Organic UK Financial Services +8%+8% Lane Clark & Peacock +100%0% Latin America +5%-13% Other Operations +28%+28% Total +31%+23% 

  14. Slide 14: Trading profit growth

    Trading profit growth Reported Organic UK Financial Services -56%-56% Lane Clark & Peacock +100%0% Latin America +160%+100% Other Operations +26%+26% Total +27%+23% 

  15. Slide 15: Trading profit growth - UK

    Trading profit growth - UK Rand Sterling growth growth Financial Services -56%-65% Lane Clark & Peacock +100%+100% Direct Marketing +12%-10% Risk Services +34%+8% Total +23%0% 

  16. Slide 16: Core headline earnings

    Core headline earnings Sep Sep 20022001 Rm IncreaseRm Trading profit 56227% 444 Net finance costs (38)(23) Profit before associates 52424% 421 Associates 2129 Profit before non-trading items 54521% 450 Minority interests and taxation* (208)(175) Core headline profits 33723% 275  (*excludes taxati

  17. Slide 17: Earnings per share

    Earnings per share Sep Sep 2002 2001 cents Increasecents Core headline earnings per share 97.122% 79.7 Add: Unrealised currency gain net of taxation 1.711.6 Headline earnings per share 98.88% 91.3 Add: Goodwill amortisation and other capital items (14.9)(9.6) Earnings per share 83.93% 81.7 

  18. Slide 18: Balance sheet

    Balance sheet Sep Mar 2002 Change2002 Rm RmRm Ordinary shareholder funds 808+37 771 - before goodwill effects 2,5402,448 - goodwill written off (1,732)(1,677) Outside shareholders’ funds 228+6 222 Long-term liabilities 2,536+383 2,153 Provisions 240-74 314 Capital employed 3,812+352 3,460 

  19. Slide 19: Balance sheet (continued)

    Balance sheet (continued) Sep Mar 2002 Change2002 Rm RmRm Fixed assets 255+24 231 Goodwill 1,718+4031,315 Associates 258-181 439 Investments and loans 891-95 986 Cash 3,792-42 3,834 Loan note liabilities (406)+295(701) Other net current liabilities (2,696)-52(2,644)  Employment of capital 3,812+3

  20. Slide 20: Cash position

    Cash position Sep 2002 Rm Cash per balance sheet 3,792 Utilisation: • Insurer balances (2,167) • Collateral deposits for loan notes (406) • Other net current liabilities (529) • Solvency/capital requirements (237) Cash available for investment* 453  (*R170 million held by Investment Solutions; R2

  21. Slide 21: Gearing and cover

    Gearing and cover Sep Mar 2002 2002 Rm Rm Long term liabilities (a) 2,5362,153 Equity before goodwill effects (b) 2,5402,448 Gearing (a) / (b) 99%88% Trading profit (c) 562884 Net finance costs (d) 3864 Interest cover (c) / (d) 15 times14 times Cash flows from operations 7591,086*  * full year

  22. Slide 22: Global operating environment

    Global operating environment • Risk Services ­ Hardening insurance market ­ Tighter capacity constraints • Financial Services ­ Economic slowdown (job losses) ­ Turbulent markets • Other influencing factors ­ Exchange rate ($/£) and Latin America ­ Indemnity premiums escalating significantly 

  23. Slide 23: Alexander Forbes - Africa

    Alexander Forbes - Africa REVENUE PROFIT Rm Sep Sep Sep Sep 2002 2001 2002 2001 Risk Services 357 341 112 90 Financial Services 374 332 94 82 Investment Solutions 224 177 78 61 • Risk Services strong profit growth • Strong recovery in personal lines business • Investment Solutions good growth despit

  24. Slide 24: Africa associates

    Africa associates • Pre-tax profit contribution – R21m • Declined 28% • Primarily: ­ Medscheme (19% shareholding) ­ Thebe Risk & Benefits Healthcare (49% shareholding) 

  25. Slide 25: Alexander Forbes – UK / Europe

    Alexander Forbes – UK / Europe REVENUE PROFIT Rm Sep Sep Sep Sep 2002 2001 2002 2001 Risk Services 762 525 157 117 Financial Services 214 198 11 25 Lane Clark & Peacock 126 - 15 - Direct Marketing 220 145 75 67 • Results include benefit of Rand depreciation • Risk Services benefiting from hard marke

  26. Slide 26: Alexander Forbes - Asia

    Alexander Forbes - Asia Rm Sep Sep Sep Sep 2002 2001 2002 2001 Asia 55 38 17 7 • Strong regional performance • Some good business gains • Additional contribution to UK Wholesale 

  27. Slide 27: Alexander Forbes – Latin America

    Alexander Forbes – Latin America Rm Sep Sep Sep Sep 2002 2001 2002 2001 Latin America 104 99 3 (5) • Regional economic difficulties continue • Local currencies have weakened • Turnaround due to restructure in Argentina • Small profit from Brazil and Mexico • Additional contribution to UK Wholesale 

  28. Slide 28: Corporate activity

    Corporate activity • Short-term focus ­ Empowerment transaction ­ Investment Solutions ­ Schroders acquisition ­ Head office remains in SA with listing • Medium-term focus ­ Alternative access to capital required ­ Acquisitions to expand our footprint • Continued cautious approach 

  29. Slide 29: Empowerment transaction (Earn out scenarios)

    Empowerment transaction (Earn out scenarios) 100% % 63% Earn Out 28% 0% 14.4% 18% 22% 25.6%  7 year compound annual growth rate

  30. Slide 30: Corporate governance

    Corporate governance • Majority non-executive directors • Additional appointments: ­ Cyril Ramaphosa ­ John Robins ­ Peter van Niekerk • Separate Chairman and Group Chief executive • Separate Board sub-committees for Audit, Remuneration, Acquisition and Underwriting Risk • Shareholder approval reque

  31. Slide 31: Alexander Forbes Strategic positioning

    Alexander Forbes Strategic positioning • Independent, fast growing provider of financial and risk services with niche dominance in selected regions and business areas 

  32. Slide 32: Growth focus

    Growth focus • South Africa ­ Empowerment positioning creates additional opportunity across all business lines • International ­ Capitalise on hard insurance market ­ Focused management in underperforming areas ­ Significant opportunities in DC admin and MultiManager 

  33. Slide 33: Thank you

     Thank you

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