Page 28 - Capricorn IAR 2020

OUR STAKEHOLDERS AND HOW WE CREATE VALUE
Capricorn Asset Management
Despite the challenges posed by COVID-19, CAM continued growing fee income due to new inflows and rotation into higher fee generating funds. Investors are switching to more conservative asset classes during these uncertain times, which will see the average asset management fee decline.
Assets under management increased 14.2% to N$31.3 billion – a significant growth milestone.
Some outflows, specifically from corporate clients, are not expected to be replenished in the short term as these entities use funds to sustain themselves in the lower growth environment.
CAM launched the Capricorn Global High Yield Fund this year.
The fund invests in high-quality US dollar denominated short-term bonds and money markets to provide a South African rand hedge without the associated volatility of equity markets.
We improved our client administration system capabilities, reworked our client service charter and enhanced portfolio risk management, and achieved the desired risk-adjusted returns for most portfolios.
Clients continue to migrate to the digital platform with 38% of clients now registered. More the 70% of clients receive their statements via the security-enhanced digital delivery system. Currently 20% of client transactions are processed on a straight-through basis. These factors enabled CAM to reduce paper use 47%.
Capricorn Capital
Capricorn Capital did not deliver the value we anticipated. To address the lack of performance and outlook, the business was restructured into two divisions – advisory and specialised finance – to be more streamlined and attuned to client and market needs.
Entrepo
Despite the major slowdown in economic activity in Namibia as
a result of COVID-19, Entrepo once again delivered solid performance and increased profit after tax by 18.0% to N$202.6 million, thereby making an increasing contribution to Group profit.
New business inflows and income margins were satisfactory in difficult trading conditions and management expenses remained tightly controlled. New business is sourced from an established and expanding branch infrastructure, and from a mobile sales office and online application capability.
We welcomed Leonard Louw on 1 January 2020 as the new chief executive officer of Entrepo as Leeba Fouche took up the role of Group non-executive chairman.
GROUP CEO’S REPORT FINANCIAL DIRECTOR’S REVIEW
26
CASE STUDY
Taking mobile money to the
next level
SPENN, a mobile money application, was launched in February 2020 in partnership with Norwegian firm Blockbonds. SPENN enhances the money wallet concept. It is a viral cash and money transfer solution which is independent from an ATM or bank.
Accessible through a smartphone, SPENN users can create free accounts to do free transfers and payments to anyone, anywhere. It offers a point-of-sale solution and allows users to find businesses that use SPENN. SPENN Power users can use the app to earn money by offering other users the opportunity to top up and cash out their SPENN account through the Power user. The latter receives commissions for cash-out transactions
– replacing the need for ATMs and other cash withdrawal points.
Since its launch, SPENN registered 257,034 users. It has proven to meet customer needs and helped us deliver on Cavmont Bank’s promise to continue banking the unbanked.
Other
Income from associates decreased by 12.3% (2019: 18.9% decrease). Santam maintained its leading market position under difficult social and economic conditions. The lockdown and economic slowdown negatively impacted premium growth as new business acquisition reduced significantly. The challenging economic conditions in Namibia contributed to severe price competition in the general insurance market. Targeted interventions were introduced to contain operational costs.
Low investor confidence resulted in lower investment inflows for Sanlam in Namibia. The life insurer experienced increased new business strain and showed only marginal growth.
Santam and Sanlam continue to focus on synergies with key stakeholders, optimised efficiencies and stringent cost management.
Our investment in Paratus is positioned for long term value creation. The investment rationale was driven by the convergence between financial services and telecommunications and the exponential growth in the demand for data. The first step was to shift our internal networks to Paratus to gain efficiencies in infrastructure with an operational and cost benefit for the Group. Our next priority will be to gain similar cost and efficiency benefits in the Group’s data centres.