NVFH 2020 Integrated Annual Report

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NVest Financial Holdings Limited and its subsidiaries | (Registration number 2008/015990/06)Annual Financial Statements for the year ended 29 February 2020Notes to the Annual Financial Statements [continued]GroupCompanyFigures in Rand Notes 2020 2019 2020 20196. Investment property [continued]The significant inputs and assumptions in respect of the valuation process are developed in close consultation withmanagement. The valuation process and fair value changes are reviewed by the group audit committee and the board ofdirectors at each reporting date. The directors confirm that there have been no material changes to the assumptions appliedby the registered valuers.For property (including owner occupied), totalling R276 537 950 (2019: R163 904 035), where external valuations were notobtained, the valuation was based on income capitalisation based on current rentals for a 12 month period, discounted atmarket related capitalisation rates. The following assumptions were used:Capitalisation rates of between 9.25 % and 11% were used depending on the type of building and the location thereof. Theaverage capitalisation rate came to 9.68%.For revaluations not performed by external valuers, the directors have used capitalisation rates, comparable with thecapitalisation rates used by South African Property Owners Association (SAPOA). As one of South Africa’s largest valuationfirms, SAPOA annually values property portfolios which include shopping centres, agricultural property, residential, commercialand industrial property. SAPOA also undertakes municipal property valuations, as well as specialised valuations such as hotels,hospitals, bare dominiums, airports etc. The capitalisation rates take into account the location and type of property. Changesin capitalisation rates attributable to changes in market conditions can have a significant impact on property valuations. A 25basis point increase in the average capitalisation rate to 9.93%, will decrease the value of investment property by R15.1 million.A 25 basis point decrease in the capitalisation rate to 9.43%, will increase the value of investment property by R2.4 million.The valuations were determined using income capitalisation based on current rentals for a 12 month period, based oncontractual increases ranging between 7% - 10%, and significant unobservable inputs. These inputs include:Vacancy rates: Based on current and expected future market conditions.Maintenance costs: Including necessary investments to maintain functionality of the property for its expected useful life.Capitalisation rates: Based on location size and quality of the properties and taking into account market data at the valuationdate.Owner occupied property of R65 136 185 was disclosed as Property, plant and equipment - please refer to note 4.The fair value measurement qualifies as a level 3 input in terms of IFRS 13 Fair Value Adjustment. Refer to note 34 Fair ValueInformation regarding the fair value hierarchy for Investment Property.Amounts recognised in profit and loss for the yearRental income from investment property 43,382,284 51,437,629 - -Direct operating expenses from rental generating property (16,635,190) (20,841,901) - -26,747,094 30,595,728 - -The below operating lease asset was calculated in compliance with IFRS 16 on a straight line basis.Investment property 274,255,654 306,121,662 - -Operating lease asset- current 2,391,485 1,627,262 - -- non current 3,274,435 6,906,762 - -Fair value obtained 279,921,574 314,655,686 - -NVest Financial Holdings Limited | INTEGRATED ANNUAL REPORT 2020 100
NVest Financial Holdings Limited and its subsidiaries | (Registration number 2008/015990/06)Annual Financial Statements for the year ended 29 February 2020Notes to the Annual Financial Statements [continued]GroupCompanyFigures in Rand Notes 2020 2019 2020 20197. GoodwillGroup 2020 2019CostAccumulatedimpairmentCarryingvalueCostAccumulatedimpairmentCarryingvalueGoodwill 87,439,055 (430,743) 87,008,312 87,439,055 (430,743) 87,008,312Reconciliation of goodwill - Group - 2020OpeningbalanceChangesClosingbalanceIndependent Executor and Trust Proprietary Limited 1,029,071 - 1,029,071NFB Private Wealth Management Proprietary Limited 18,249,826 - 18,249,826NFB Finance Brokers Gauteng Proprietary Limited 54,036,408 - 54,036,408NFB Finance Brokers Western Cape Proprietary Limited 32,811 - 32,811NFB Insurance Brokers (Border) Proprietary Limited 3,029,540 - 3,029,540NVest Properties Limited 2,393,697 - 2,393,697NFB Finance Brokers Port Elizabeth Proprietary Limited 4,834,766 - 4,834,766NVest Securities Proprietary Limited 3,402,194 - 3,402,19487,008,313 - 87,008,313Reconciliation of goodwill - Group - 2019OpeningbalanceImpairmentlossIndependent Executor and Trust Proprietary Limited 1,029,071 - 1,029,071NFB Private Wealth Management Proprietary Limited 18,249,826 - 18,249,826NFB Finance Brokers Gauteng Proprietary Limited 54,036,408 - 54,036,408NFB Finance Brokers Western Cape Proprietary Limited 32,811 - 32,811NFB Insurance Brokers (Border) Proprietary Limited 3,029,540 - 3,029,540NVest Properties Limited 2,393,697 - 2,393,697NVest Property Services Proprietary Limited 430,623 (430,623) -NFB Finance Brokers Port Elizabeth Proprietary Limited 4,834,766 - 4,834,766NVest Securities Proprietary Limited 3,402,194 - 3,402,194Total87,438,936 (430,623) 87,008,313The goodwill arose on acquisitions of the companies and is tested for impairment on an annual basis. The recoverable amount ofthe cash generating unit (CGU) has been based on a value-in-use calculation taking into account cost to sell. To calculate this,cashflow projections are based on financial budgets approved by management covering a five year period. A terminal value wascalculated by applying a growth factor of 6% as this better reflects the nature of the revenue generating capacity of the CGU.The discount rate uses the pre-tax weighted average cost of capital (WACC) which reflects the risks specific to the CGU’s concerned.The key assumptions used in the value-in-use calculations are as follows:Discount rate (WACC): 19.52% - 22.52%Long term growth factor: 6.00%Fair value hierarchy: Level 3 inputThe calculations indicate that no impairment is necessary to the carrying value of goodwill. If the above rates were changed by+/- 1%, there would still be no impairment.The carrying amounts of the goodwill presented above do not exceed the recoverable amount.NVest Financial Holdings Limited | INTEGRATED ANNUAL REPORT 2020 101
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GroupAwards2019 Morningstar Award-
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Contents06 Chairman’s Report08 Ch
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01ABOUTNVESTHOLDINGSNVest Financial
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As a consequence of all of these th
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those of the previous year and, sec
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SubsidiaryFeb 2020RevenueFeb 2019Re
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worldwide, resulting in an economic
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REVENUE - FEB 2020REVENUE (R)Invest
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ANTHONY DENIS GODWIN (60)CHIEF EXEC
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DR LANA JOY WELDON (46)INDEPENDENT
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Siviwe Relebohile Kwatsha (41)Group
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Name:Rob MastersLocation:NFB PWM EL
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Name:Melany AnnandaleLocation:NFB I
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02GROUPAFFAIRSNVest Financial Holdi
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199019941995Beyond our borders. NFB
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Our BusinessSummaryBrand Core Produ
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The evolutionof the NFB Brand1985NA
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NFB Private Wealth Management -the
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NFB Private Wealth Management- triu
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Loaves & Fishes NetworkDeep poverty
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NVest Financial Holdings Limited |
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Corporate Governance& Sustainabilit
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needs of the Board in considering s
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A detailed report of the Social and
Page 53 and 54: Legal Compliance: The inherentrisk
Page 55 and 56: PART 5.2: Strategy, performance and
Page 57 and 58: Principle 9Evaluations of the perfo
Page 59 and 60: • the Group’s risk management a
Page 61 and 62: (bb) the Organisation for Economic
Page 63 and 64: • internal audit policy including
Page 65 and 66: Remuneration andNominationsCommitte
Page 67 and 68: an incentive basis (mainly through
Page 69 and 70: Directors Responsibilitiesand Appro
Page 71 and 72: IndependentAuditor’s ReportIndepe
Page 73 and 74: Key audit matterGoodwill assessment
Page 75 and 76: material uncertainty exists, we are
Page 77 and 78: GeneralInformationNVest Financial H
Page 79 and 80: NVest Financial Holdings Limited an
Page 103: NVest Financial Holdings Limited an
Page 131 and 132: GeneralInformationCompany NameDate
Page 133 and 134: Notice of AnnualGeneral Meeting & P
Page 135 and 136: Explanatory note for ordinary resol
Page 137 and 138: person/s authorised by the board),
Page 139 and 140: In order for this resolution to be
Page 141 and 142: Special Resolution Number 1 -Genera
Page 143 and 144: (c)) and in terms of the memorandum
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NVFH 2020 Integrated Annual Report

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