CFO Kim McFarland: Ninety One remains financially strong despite Covid-19
We are especially proud of the resilience of its people and technology says Kim McFarland.
Ninety One has announced its results for the year ended March 2020, citing that it was a year of meaningful progress in the company’s strategic position as an independent, focused investment manager with significant employee ownership.
The company executed a demerger from Investec and listed on the London and Johannesburg stock exchanges.
According to Ninety One CFO Kim McFarland, the financial year was a “year of two parts” – before and after the impact of Covid-19 on the markets and Ninety One.
“Despite the volatility caused by the pandemic, we delivered net inflows of £6.0 billion, in line with the prior year, representing a torque ratio of 5.4 percent. We reported an increase in profit before tax of 11 percent to £198.5 million, basic earnings per share also increased 11 percent and adjusted earnings per share increased 10 percent.”
Employees of Ninety One now own more than 21 percent of the company, which, according to Kim, leaves the company better aligned with its clients and shareholders. “Our focus will continue to be on delivering investment performance to our clients and value to our shareholders.”
Challenges and Opportunities
“It was a very busy and challenging period,” Kim says. “Over the last year we had to ensure that we effected the separation from Investec effectively and on budget without compromising operational stability. Many services that were shared with Investec had to be brought in-house. We also had to launch a new brand.”
From an investment management perspective, the company’s long-term performance has been impacted by the recent volatility as a result of Covid-19. Value and some momentum strategy performance have also declined since Covid-19 hit the markets “However, market events like this present pockets of opportunity for active managers, even as we expect to see challenging markets ahead as the world economy recovers.”
Kim expects the next few years to provide Ninety One’s investors with compelling long-term opportunities in both developed and emerging markets and risk assets in general.
Ninety One remains financially strong
According to Kim, Ninety One is highly liquid with no debt and a robust balance sheet. The company will target an ordinary dividend payout ratio of at least 50 percent of its profits after tax.
“Perhaps most importantly, we have never been closer to clients, and we are especially proud of how the resilience of our people and technology enabled us to provide all our clients with uninterrupted service and intensified engagement,” she says.
Kim adds that they have handled the fallout from the crisis decisively, by reacting rapidly in response to the impact of the pandemic. “We prioritized the wellbeing of our people and did not furlough or make redundant any of our staff. We have also contributed £2.9 million to relief efforts, and have made a real difference to those impacted by the crisis, particularly in Southern Africa.”