NVFH 2020 Integrated Annual Report

The overall position in terms of revenue growth and the
increased cost of sales translated into a profit before tax of
R 90.41 million (2019: R 89.45 million).
Prudent cost management remains a priority for the business
and this discipline was another feature for the year under
review. Cost of Sales increased by 1.12% (R1.3 million) which
was broadly in line with expectation and is proportionate
to the overall growth of the business. As in prior years, the
increase in costs is a product of variable costs growing in line
with revenue, costs associated with operating in the listed
environment such as Legal, Regulatory and Compliance
costs, as well as increased investment in Marketing which
was identified as a strategic priority.
The Company remains highly cash generative. Net cash
from operating activities increased by 3.6% from R68.6 million
in 2019 to R71.1 million for the year under review. NVest
continues to hold substantial cash reserves of R196.2 million
(which includes R159 471 432 in cash and cash equivalents
and R36 689 681 held in liquid investments at fair value). The
strategic intention is to apply these reserves predominantly in
acquisitions going forward to ensure a more attractive yield
than what these funds currently earn on call.
Headline Earnings decreased to R64.51 million (2019: R65.95
million) and Headline Earnings Per Share decreased slightly
to 21.30 cents per share (2019: 21.78 cents per share), largely
due to the tough market and operating environment.
Non-current liabilities reduced substantially by R49 million
due to the maturity of a number of commercial notes during
the next financial period, resulting in these commercial notes
being disclosed as current liabilities. There were no other
material changes to assets or liabilities from the prior period.
It is worth noting that the adoption of IFRS16 during the 2020
financial year has necessitated the recognition of both
Right-of-use assets (Non-Current Assets) and Lease Liabilities
(both Non-Current Liabilities and Current Liabilities) with
depreciation and finance charges recognised through the
Statement of Profit and Loss and Other Comprehensive
Income. The adoption of this IFRS Standard did not have a
material impact on the Annual Financial Statements for the
2020 Financial Year.
OPERATIONAL REVIEW:
During the year under review the NVest Group consisted of
ten wholly or majority owned subsidiaries located in Gauteng,
East London, Port Elizabeth and Cape Town. The core business
operations are NFB Private Wealth Management, NFB Asset
Management and NVest Securities Stockbroking.
The core proposition is strengthened by complementary
business subsidiaries aimed at providing a holistic financial
service offering, which includes a short-term insurance
brokerage, a property investment business and a wills and
estates business. This collection of businesses provides a
unique offering to clients as well as a diverse set of income
streams that adds to the sustainability of our business model.
The controlled downscaling of our Property Services business
as well as the Western Cape Private Wealth Management
subsidiary has gone according to plan. The strategic intention,
however, remains to re-establish a meaningful presence in
the Western Cape to grow our Private Wealth Management
distribution in that geography over time.
The Group subsidiaries during the year under review were as
follows:
• NFB Private Wealth Management (Pty) Limited (previously
NFB Finance Brokers Eastern Cape (Pty) Limited)
Private Wealth Management (NVest holds 100%)
• NFB Finance Brokers Gauteng (Pty) Limited
Private Wealth Management (NVest holds 100%)
• NFB Finance Brokers Port Elizabeth (Pty) Limited
Private Wealth Management (NVest holds 100%)
• NFB Finance Brokers Western Cape (Pty) Limited
Private Wealth Management (NVest holds 100%)
• NFB Asset Management (Pty) Limited
Asset Management (NVest holds 100%)
• NFB Insurance Brokers (Border) (Pty) Limited
Short Term Insurance (NVest holds 82%)
• NVest Securities (Pty) Limited
Stockbroking (NVest holds 100%)
• NVest Properties Limited
Commercial Property (NVest holds 100%)
• NVest Property Services (Pty) Limited
Property Brokerage and Services (NVest holds 100%)
• Independent Executor and Trust (Pty) Limited
Fiduciary, Wills and Estate Planning/Trust Administration
(NVest holds 70%)
The three separate and wholly owned NFB Private Wealth
Management subsidiaries, NFB Private Wealth Management
(Pty) Limited, NFB Finance Brokers Port Elizabeth (Pty)
Limited and NFB Finance Brokers Gauteng (Pty) Limited
executed steps over the past year to amalgamate into one
consolidated Private Wealth Management business – NFB
Private Wealth Management (Pty) Limited.
The first phase of amalgamation, being the operational
consolidation and streamlining of the separate subsidiary
boards and executive teams into one centrally led Private
Wealth Management business under the NFB brand, took
place during the course of 2019. The next phase being the
legal amalgamation became effective as of 1 June 2020.
The strategic rationale for the amalgamation is to create
the appropriate legal structure to leverage economies of
scale and to facilitate growth on a national as opposed to
a regional level.
All of the subsidiary businesses listed above are separate
legal entities with their own Boards and dedicated
Management teams. Overall strategic direction across the
Group of companies emanates directly from the Group
Executive Management Committee (“Group Exco”) at
NVest Financial Holdings Limited Level which includes a
good representation of business Managing Directors.
I would like to pay tribute to the members of the Group
Exco team and thank them for their efforts during the past
year as we continue to grow and strengthen the business
in all respects.
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NVest Financial Holdings Limited | INTEGRATED ANNUAL REPORT 2020