NVFH 2020 Integrated Annual Report

As a consequence of all of these things, I am extremely
humbled and proud to be associated with the NVest Group,
its people and clients.
The resounding themes that emerge from the pages that
follow include progress in terms of executing operational
alignment and capacity building across our underlying
businesses, consistency in delivering results and resilience in
adapting to fast changing and unprecedented times.
The operating environment presented a challenging
backdrop throughout the year and the South African
economy had a gloomy 2019, characterised by declining
growth and delayed reforms. The local economy is in its
longest downward cycle since 1945, having not expanded
by more than 2% per annum since 2013.
Whilst South Africa’s downward trajectory in terms of fiscal
position is not new, concerns are now rising on the back of
the rapid deterioration over the past two years specifically.
The slowdown in economic growth and revenue receipts,
wasteful public-sector spending, administrative and
efficiency challenges at the South African Revenue Service
and a growing public sector wage bill are the greatest
contributors to alarming debt levels in South Africa.
The global story of 2019 was broadly more positive, especially
towards the end of the year. Global markets rallied at the
end of December 2019 to give the MSCI World Index its
best year of the decade (+27.7%). The continued tension
between China and the US seemed to subside on the back
of “phase 1” of a trade deal just in time to avoid the US
going ahead with a scheduled implementation of 15% tariffs
on $160bn of Chinese imports, and the world breathed a
collective sigh of relief.
NVest has weathered the disruption of lockdown remarkably
well and has delivered respectable results given the
unprecedented context. These results were underpinned
by growth in revenue (up 1.26% to R310.2 million), earnings
per share (up 2.71% to 21.62 cents per share) and net asset
value (up 7.06% to 159.60 cents per share). Total assets under
management and administration decreased marginally
from R30.3 billion as at February 2019 to R30.1 billion as at
29 February 2020. The Board is encouraged by these solid
results in the most testing of conditions and would like to
thank Anthony and his leadership team for their hard work
and commitment to task.
Prospects for 2020 and 2021 have deteriorated considerably
due to the COVID-19 pandemic, but thanks to prudent cost
management, strong leadership and considerable cash
reserves NVest is well positioned to confront these challenges
head on and to leverage the opportunities that will no doubt
emerge in a post COVID environment.
Thanks to the expertise, hard work, discipline and dedication
of everyone who works at NVest we enter the new financial
year well placed to serve our clients and to reward our
shareholders over time for their trust in our collective ability to
continue to exceed expectations.
In closing I would like to convey my profound gratitude
to my fellow Directors. Your continued support has been
unwavering and I greatly appreciate your expertise and
contributions throughout the year.
Enjoy the read, and stay safe.
December 2019 also ushered in some much-needed clarity
as to the UK’s plans for exiting the European Union (EU) as
UK voters delivered a strong mandate to Prime Minister
Boris Johnson to proceed with his proposal of exiting by the
end of January 2020. Johnson’s Labour government saw its
representation in Parliament lifted from 46% to 56% as a result
of the December election, giving them the comfortable
majority needed to execute Brexit. The much needed Brexit
clarity helped the British pound continue a rally which saw it
rise over 10% since its August lows when the UK faced a real
possibility of leaving the EU without a deal.
_______________________
Jonathan Goldberg
Group Chairman
25 May 2020
So 2020 arrived with some renewed hope, on the back
of a clearer Brexit road map, improving US-China trade
relations and generally stronger investor sentiment. And then
COVID-19 became real ...
Much has changed since South Africa’s lockdown was first
announced by President Cyril Ramaphosa in March 2020.
Whilst the extended lockdown has been credited with
buying our country critical time in order to prepare for the
expected rise in COVID infections, the cost to the economy
has been substantial.
As we enter a new phase in the Government’s response and
start to see an easing of restrictions and the re-opening of
the economy, despite a significant climb in the spread of the
virus, the challenge is to adapt to the “new normal” and to
find ways to engage and remain relevant to our clients in a
vastly different environment.
“...I am extremely
humbled and
proud to be
associated with
the NVest Group,
its people and
clients. ”
NVest Financial Holdings Limited | INTEGRATED ANNUAL REPORT 2020 7