A financial services company listed on the JSE, Alexforbes, has reported an 8% growth in profit for the half-year period ending 30 September 2024, alongside the declaration of an interim dividend of 22 cents per share, marking a 10% increase from the previous year.

In a statement on Sens issued on Monday, the company announced that its total closing assets, which include assets under administration and management, reached R568 billion, reflecting a 25% rise when compared to the same time frame in 2023.

Read: Alexforbes registers strong gains with 16% AuM increase

The share price of the group climbed to R7.53 during early morning trading, representing a 1.76% rise from the previous Friday.

Headline earnings per share from total operations were reported at 28.4 cents, a 3% uplift from the prior period. Operating income for the group soared 12% to R2.1 billion, bolstered by the consolidation of previous acquisitions and an increase in average assets under management, benefiting from positive market conditions, as highlighted in the statement.

“Our overall return to shareholders over the last four years is 46.9% per annum, thanks to the strategic efforts of our dedicated team even amidst challenging operational circumstances,” commented CEO Dawie de Villiers.

Listen: Acquisition-driven profit growth has led to an increase in Alexforbes’ dividend

Rising Costs

During this period, operating expenses climbed by 11% to R1.7 billion, reflecting costs arising from acquisitions, heightened personnel and technology expenditures, and increased costs linked to the two-pot system.

The group noted that personnel costs constituted 63% of total operating expenses, rising by 12% year-over-year due to the necessity for enhanced client service teams addressing current clients and gearing up for increased administration claims associated with the two-pot system.

Technology expenditures rose by 13% year-on-year as a result of costs related to the two-pot system’s implementation, software, and licensing fees, alongside a greater dependence on outsourced services.

Previously, Alexforbes had indicated substantial costs related to the rollout of the two-pot retirement system, which became effective on 1 September 2024.

Insights on the Two-Pot System

After the implementation of the new system, Alexforbes conducted a survey among 8,224 members, revealing:

• About 350,000 members (approximately 32% of the membership) have submitted claims totaling around R6.5 billion before tax.
• The average claim is estimated at roughly R19,000 before tax considerations.
• A total of 340,000 claims have been processed, resulting in about R4.6 billion post-tax.
• The number of claims processed in just two months has surpassed the two-year average claim volume.

Read:

FSCA seeks explanations for elevated two-pot withdrawal fees

Two-pot administrative fees could reach R1.25 billion in the first six months

Among the members who claimed:

• 86% expressed satisfaction with their decision to withdraw.
• 96% acknowledged that their long-term retirement prospects would be impacted, and the same percentage understood they would incur taxes on their withdrawals.
• 50% utilized their emergency savings pot claim to alleviate debt.
• 30% allocated their emergency savings pot claim for critical living expenses.
• 13% directed their emergency savings pot claim toward major household purchases.
• 63% plan to make additional claims.
• 37% do not intend to submit further claims.

Read: Two-pot withdrawals are set to exceed R5 billion for state coffers

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