SOUTH AFRICA – Alexander Forbes has made its chairman an executive while appointing an acting CEO after the sudden resignation on Monday of CEO Edward Kieswetter.
No successor was in place, so chairman Sello Moloko and chief financial officer Deon Viljoen have taken over as executive chairman and interim CEO respectively.
Mr Kieswetter on Monday said he had been reflecting on his personal life and future for some time.
“I finally decided that I should approach the board and give them notice of my intention to retire at the end of the next financial year (March 2017).”
He had discussed the move with the board and it wanted a smooth transition.
A decision was made for him to take early retirement effective on Monday.
Mr Kieswetter had been instrumental in helping Alexander Forbes repair its reputation after a scandal involving the stripping of pensions.
He led the process that saw international trade buyer Mercer invest in the firm following an exit by a private equity consortium and was at the helm when Alexander Forbes relisted on the JSE in 2014.
In the first six-month reporting period after the listing Alexander Forbes managed to grow revenue in the high teens. Revenue continued to grow in double-digits but tapered in the six months ended September 2015.
“I think Ed (Kieswetter) was perfect at the time when he came (in) to realign the group. He sorted out the business,” said an analyst.
Mr Kieswetter was available to work on projects, Mr Moloko said.
The departure of Mr Kieswetter, who has been CEO for the past six years, leaves the next CEO with the challenge of having to grow income faster and cut down costs.
In the six months ended September 2015 operating expenses rose 12% to R2bn, while income rose 9% to R2.6bn. The group’s operating margin deteriorated to 21.5% compared to 23.1% in the previous year. “Naturally we are concerned, we wanted to see results. We wanted to see an improvement,” Mr Moloko said on Monday.
“One of the things that the market has spoken about is the negative operating leverage … addressing the top-line growth,” he said.
Mr Moloko said Mr Viljoen, who has been group chief financial officer since 2007, had to execute the strategy to manage costs and grow income.
Mr Moloko said the company was not looking at cutting staff and had already started looking for efficiencies.
Mr Kieswetter’s family lives in Singapore. Before he stepped down, Mr Kieswetter said, the board had agreed that he could work from Singapore for some of the time.
“I appreciated the board’s willingness to help accommodate my personal situation.”
Mr Moloko said that the board felt making “that concession was appropriate”.
Mr Kieswetter said he could now balance his professional and personal life and advance his interests in education group The Da Vinci Institute.
Last year Mr Kieswetter bought a majority stake in the private higher education institution, founded in 2004.
Whoever replaces Mr Kieswetter will also have the task of restoring market confidence in the company’s share price.
Alexander Forbes’ share price is about 30% lower than the R7.50 mark that the company listed at in July 2014.
Asked what he thought of the share price Mr Moloko added: “The investors are feeling unhappy. Going forward we would like to improve that situation.
“There are plans and strategies that Deon (Viljoen) is going to implement for sustainable growth going forward.”
Alexander Forbes’ share price closed more than 7% higher at R5.77 on Monday.