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CML - Coronation Fund Managers Limited - Reviewed interim results for the six

Release Date: 17/05/2011 07:05
Code(s): CML
Wrap Text

CML - Coronation Fund Managers Limited - Reviewed interim results for the six months ended 31 March 2011 Coronation Fund Managers Limited (Incorporated in the Republic of South Africa) Registration number: 1973/009318/06 JSE share code: CML ISIN: ZAE000047353 ("Coronation") Reviewed interim results for the six months ended 31 March 2011 Assets under management of R231 billion Diluted headline earnings per share of 81.7 cents Interim dividend per share of 80 cents Coronation Fund Managers produced another set of exceptional results for the six months to 31 March 2011. The FTSE/JSE All Share Index closed the period just 3% off its May 2008 peak, however this masks high levels of volatility driven by significant global events in the first quarter of 2011. The local market returned 10.7% for the six-month period, while the MSCI World and MSCI Emerging Markets Indices returned 14.4% and 9.6% (in dollar terms) respectively. During this time Coronation produced outstanding investment performance across all client portfolios. Enquiries: Coronation Fund Managers: 021 680 2000 Hugo Nelson, CEO: 021 680 2041 Anton Pillay, COO: 021 680 2480 John Snalam, CFO: 021 680 2094 CapitalVoice Johannes van Niekerk: 082 921 9110 Results Revenue has increased by 32% to R865 million. This has resulted in a 32% increase in profit for the period to R299 million, and growth in diluted headline earnings per share of 26% to 81.7 cents (March 2010: 64.8 cents). Assets under management Strong inflows, particularly to the retail business, excellent stock picking and asset allocation, combined with a positive market environment to increase assets under management to R231 billion (September 2010: R203 billion - restated). Long-term performance Our philosophy of investing with a long time horizon continued to generate alpha that resulted in strong investment returns for all our clients. This consistency of performance was recognised in our being named Best Large Fund House at the FM/Morningstar South Africa Awards. - Both our domestic balanced and global balanced portfolios ranked 1st over three years and 2nd over five years in the Alexander Forbes SA and Global Large Manager Watch Surveys respectively to end March 2011. Likewise, our flagship multi-asset Coronation Balanced Plus Fund was the no.'1 balanced unit trust fund in the country for the five-year period to end March, ranked by Morningstar. The fund has outperformed its market-related benchmark by 2.4% per annum since inception in April 1996. - For individual investors seeking long-term capital growth, our concentrated equity fund, Coronation Top 20 has outperformed its market benchmark by an impressive 7% per annum since inception in October 2000. Our flagship absolute fund, Coronation Capital Plus continued to deliver on its dual objective of income and growth, outperforming inflation by an annualised 8.6% since inception in July 2001. Similarly, our lower risk options produced strong returns: Coronation Balanced Defensive was the no.'1 conservative fund in the country for the year to end March 2011, and our flagship fixed interest fund, Coronation Strategic Income has beaten cash by 2.4% per annum since inception in July 2001. International Global markets corrected in March 2011, which created the opportunity to add to positions where we see value. Since inception in July 2000, the institutional portfolio Coronation Global Equity Fund of Funds has outperformed the MSCI World Index by 2.3% per annum net of all fees. The Coronation Global Capital Plus Fund has outperformed its global cash benchmark by 9.3% per annum gross of all fees since inception in September 2009. Within our specialist units, the Coronation Global Emerging Markets Fund ranked no.'2 in its peer group of 42 funds to end March 2011. Launched almost three years ago in July 2008, the fund has outperformed the MSCI Emerging Markets Index by 7.8% per annum gross of all fees. Despite the heightened challenges inherent in Africa, our Africa portfolios attracted great interest from investors over the period and continue to build a strong performance track record. Since inception in October 2008, the Coronation Africa Frontiers Fund has outperformed the FTSE/JSE Africa Top 30 Ex SA Index by 30.1% per annum gross of all fees. Interim cash dividend We continue to reward shareholders through regular and significant distributions of free cash flow generated. We endeavour to distribute at least 75% of after-tax cash profit. Taking into account projected cash requirements, we have increased the interim dividend to 80 cents per share for the period. In compliance with the Listings Requirements of the JSE Limited, the following dates are applicable: Last day to trade: Friday, 3 June 2011 Shares trade ex dividend: Monday, 6 June 2011 Record date: Friday, 10 June 2011 Payment date: Monday, 13 June 2011 Share certificates may not be dematerialised or rematerialised between Monday, 6 June 2011, and Friday, 10 June 2011, both dates inclusive. Prospects Our philosophy of investing for the long term supports the sustainability of our business through the investment cycle. The past 18 months have been exceptional for our business and we therefore caution against future revenue growth expectations. The investment environment is likely to remain challenging in the foreseeable future, but we believe the best way of adding value to all our stakeholders is by staying singularly focused. External audit review The external auditors, Ernst & Young Inc., reviewed the condensed statement of financial position of Coronation Fund Managers Ltd Group as at 31 March 2011 and the related condensed statement of comprehensive income, changes in equity and cash flows for the six-month period then ended, and other explanatory notes, from which this information has been extracted. The review has been conducted in accordance with the International Standard on Review Engagements 2410. Copies of the unqualified report of Ernst & Young Inc. is available for inspection at the registered office of the company. Shams Pather Chairman Hugo Nelson Chief Executive Officer Anton Pillay Chief Operating Officer Cape Town 17 May 2011 Condensed consolidated statement of comprehensive income Six months Six months Full year reviewed reviewed audited 31 March 31 March 30 Sept
2011 2010 % 2010 R`000 R`000 Change R`000 Fund management activities Revenue 864 716 654 825 32% 1 351 979 Other income 18 381 1 730 3 814 Operating expenses (445 789) (338 006) 32% (717 646) Share-based payment expense (2 061) (9 588) (14 059) Other expenses (443 728) (328 418) (703 587) Results from operating 437 308 318 549 37% 638 147 activities Finance and dividend income 4 638 13 655 21 480 Finance expense (3 160) (5 250) (8 851) Net finance costs 1 478 8 405 12 629 Share of profit of associate - - (net of tax) 1 173 Profit from fund management 439 959 326 954 35% 650 776 Income attributable to 9 583 34 583 policyholder linked assets and 19 998 investment partnerships Net fair value gains on 18 296 49 191 policyholder and investment 28 199 partnership financial instruments Administration expenses borne (8 713) (14 608) by policyholders and investors (8 201) in investment partnerships Profit before income tax 449 542 346 952 685 359 Income tax expense (150 455) (120 421) (244 983) Taxation on shareholder (140 872) (100 423) (210 400) profits Taxation on policyholder (9 583) (19 998) (34 583) investment contracts Profit for the period 299 087 226 531 32% 440 376 Other comprehensive income Foreign currency translation 1 153 (10 268) differences for foreign (1 318) operations Net change in fair value of 1 745 683 available-for-sale financial (2 631) assets Net change in fair value of - (9) available-for-sale financial - assets transferred to profit or loss Other comprehensive 2 898 (9 594) income/(expense) for the (3 949) period (net of income tax) Total comprehensive income for 301 985 222 582 430 782 the period Profit attributable to: - equity holders of the 298 842 223 997 33% 437 108 company - non-controlling interest 245 2 534 3 268 Profit for the period 299 087 226 531 440 376 Total comprehensive income attributable to: - equity holders of the 301 740 220 048 37% 427 514 company - non-controlling interest 245 2 534 3 268 Total comprehensive income for 301 985 222 582 430 782 the period Earnings per share (cents) - basic 94.9 71.2 33% 138.9 - diluted 86.9 64.8 34% 127.9 Note to the statement of comprehensive income Headline earnings per share (cents) - basic 89.2 71.2 25% 138.9 - diluted 81.7 64.8 26% 128.0 Dividend per share (cents) - interim 80 51.0 57% 51.0 - final 76.0 Condensed consolidated statement of financial position Reviewed Reviewed Audited 31 March 31 March 30 Sept
2011 2010 2010 R`000 R`000 R`000 Assets Goodwill and intangible assets 1 087 772 1 097 309 1 097 309 Equipment 13 925 14 133 13 993 Deferred tax asset 2 496 4 309 4 900 Investments backing policyholder funds 27 379 486 21 301 229 23 930 963 and investments held through investment partnerships Investment securities 28 965 26 168 28 274 Investment in associate 30 147 - - Trade and other receivables 289 820 305 454 227 006 Cash and cash equivalents 148 147 108 521 300 638 Total assets 28 980 758 22 857 123 25 603 083 Liabilities Interest-bearing borrowing 64 300 98 144 82 000 Deferred tax liabilities 22 548 19 994 22 528 Policyholder investment contract 27 357 188 21 281 235 23 908 436 liabilities and liabilities to holders of interests in investment partnerships Income tax payable 44 625 45 313 3 215 Trade and other payables 193 261 214 406 337 759 Total liabilities 27 681 922 21 659 092 24 353 938 Net assets 1 298 836 1 198 031 1 249 145 Equity Total equity attributable to equity 1 297 417 1 188 063 1 238 443 holders of the company Non-controlling interest 1 419 9 968 10 702 Total equity 1 298 836 1 198 031 1 249 145 Condensed consolidated statement of cash flows Six months Six months Full year reviewed reviewed audited
31 March 31 March 30 Sept 2011 2010 2010 R`000 R`000 R`000 Cash flows from operating activities Profit for the period 299 087 226 531 440 376 Income tax expense 150 455 120 421 244 983 Non-cash and other adjustments (15 523) (1 309) (801) Operating profit before changes in working 434 019 345 643 684 558 capital Working capital changes (206 142) (89 520) 73 507 Cash generated from operations 227 877 256 123 758 065 Interest paid (4 193) (5 701) (9 685) Taxation paid (106 621) (95 275) (259 992) Net cash from operating activities 117 063 155 147 488 388 Net cash from investing activities 1 485 3 175 48 686 Cash flows from financing activities (272 192) (126 081) (303 766) - dividends to shareholders (243 494) (119 400) (280 940) - other (28 698) (6 681) (22 826) Net (decrease)/increase in cash and cash equivalents (153 644) 32 241 233 308 Cash and cash equivalents at beginning of period 300 638 77 598 77 598 Exchange rate adjustments 1 153 (1 318) (10 268) Cash and cash equivalents at end of period 148 147 108 521 300 638 Consolidated statement of changes in equity R`000 Share Foreign Retained Share- capital and currency earnings based
premium translation payment reserve reserve Balance at 30 September 255 039 10 687 677 751 130 313 2009 Total comprehensive income for the period Profit for the period 223 997 Other comprehensive income Currency translation (1 318) differences Revaluation of available-for-sale financial assets - Net change in fair value Total other - (1 318) - - comprehensive income Total comprehensive - (1 318) 223 997 - income for the period Transactions with owners recorded directly to equity Share-based payments 9 588 Transfer to retained 26 509 (26 509) earnings Dividends paid (118 096) Shares issued 868 Increase in equity of subsidiary Total transactions with 868 - (91 587) (16 921) owners Balance at 31 March 255 907 9 369 810 161 113 392 2010 Total comprehensive income for the period Profit for the period 213 111 Other comprehensive income Currency translation (8 950) differences Revaluation of available-for-sale financial assets - Net change in fair value - Reclassified to profit or loss on disposal Total other (8 950) comprehensive income Total comprehensive (8 950) 213 111 - income for the period Transactions with owners recorded directly to equity Share-based payments 4 471 Transfer to retained 4 304 (4 304) earnings Dividends paid (161 557) Total transactions with - - (157 253) 167 owners Balance at 30 September 255 907 419 866 019 113 559 2010 Total comprehensive income for the period Profit for the period 298 842 Other comprehensive income Currency translation 1 153 differences Revaluation of available-for-sale financial assets - Net change in fair value Total other 1 153 comprehensive income Total comprehensive 1 153 298 842 - income for the period Transactions with owners recorded directly to equity Share-based payments 2 061 Transfer to retained 311 (311) earnings Dividends paid (243 254) Imvula units acquired (1 573) by the Imvula Trust Loss of control of subsidiary Total transactions with - - (244 516) 1 750 owners Balance at 31 March 255 907 1 572 920 345 115 309 2011 Consolidated statement of changes in equity (continued) R`000 Revalu- Issued Non- Total ation capital and controlling equity reserve reserves interest attributable
to equity holders of the company
Balance at 30 September 1 865 1 075 655 8 289 1 083 944 2009 Total comprehensive income for the period Profit for the period 223 997 2 534 226 531 Other comprehensive income Currency translation (1 318) (1 318) differences Revaluation of available-(2 631) (2 631) (2 631) for-sale financial assets - Net change in fair (2 631) (2 631) (2 631) value Total other (2 631) (3 949) - (3 949) comprehensive income Total comprehensive (2 631) 220 048 2 534 222 582 income for the period Transactions with owners recorded directly to equity Share-based payments 9 588 9 588 Transfer to retained - - earnings Dividends paid (118 096) (1 305) (119 401) Shares issued 868 868 Increase in equity of - 450 450 subsidiary Total transactions with - (107 640) (855) (108 495) owners Balance at 31 March 2010 (766) 1 188 063 9 968 1 198 031 Total comprehensive income for the period Profit for the period 213 111 734 213 845 Other comprehensive income Currency translation (8 950) (8 950) differences Revaluation of available-3 305 3 305 3 305 for-sale financial assets - Net change in fair 3 314 3 314 3 314 value - Reclassified to profit (9) (9) (9) or loss on disposal Total other 3 305 (5 645) (5 645) comprehensive income Total comprehensive 3 305 207 466 734 208 200 income for the period Transactions with owners recorded directly to equity Share-based payments 4 471 4 471 Transfer to retained - - earnings Dividends paid (161 557) - (161 557) Total transactions with - (157 086) - (157 086) owners Balance at 30 September 2 539 1 238 443 10 702 1 249 145 2010 Total comprehensive income for the period Profit for the period 298 842 245 299 087 Other comprehensive income Currency translation 1 153 1 153 differences Revaluation of available-1 745 1 745 1 745 for-sale financial assets - Net change in fair 1 745 1 745 1 745 value Total other 1 745 2 898 2 898 comprehensive income Total comprehensive 1 745 301 740 245 301 985 income for the period Transactions with owners recorded directly to equity Share-based payments 2 061 2 061 Transfer to retained - - earnings Dividends paid (243 254) (103) (243 357) Imvula units acquired by (1 573) (1 573) the Imvula Trust Loss of control of (9 425) (9 425) subsidiary Total transactions with - (242 766) (9 528) (252 294) owners Balance at 31 March 2011 4 284 1 297 417 1 419 1 298 836 Earnings per share Six months Six months Full year
reviewed reviewed audited 31 March 31 March 30 Sept 2011 2010 2010 Weighted average number of ordinary shares in issue during the period 314 819 192 314 646 591 314 733 128 Weighted average number of ordinary shares potentially in issue 349 391 630 347 731 074 348 848 803 R`000 R`000 R`000
Earnings attributable to shareholders 299 087 226 531 440 376 Non-controlling interest (245) (2 534) (3 268) Earnings attributable to ordinary shareholders 298 842 223 997 437 108 Loss on disposal of financial assets available-for-sale - 107 Profit on disposal of equipment - (7) Gain on loss of control of subsidiary (18 131) Headline earnings attributable to ordinary shareholders 280 711 223 997 437 208 Actual number of shares in issue at the end of the period 314 819 192 314 819 192 314 819 192 Condensed consolidated segment report Africa Six months R`000 reviewed Audited 31 March 30 Sept 2011 2010 2010 Segment external revenue 773 226 582 076 1 219 401 Segment income before tax and finance 379 039 288 945 563 118 income/expense Condensed consolidated segment report (continued) International
Six months reviewed Audited 31 March 30 Sept R`000 2011 2010 2010 Segment external revenue 91 490 72 749 132 578 Segment income before tax and finance income/expense 39 888 27 874 71 215 Condensed consolidated segment report (continued) Group Six months reviewed Audited 31 March 30 Sept
R`000 2011 2010 2010 Segment external revenue 864 716 654 825 1 351 979 Segment income before tax and finance income/expense 418 927 316 819 634 333 Notes to the condensed consolidated financial statements 1. Basis of preparation and accounting policies The financial information has been prepared in accordance with IAS 34 Interim Financial Reporting, the requirements of the South African Companies Act, Act 61 of 1973, as amended, and the Listings Requirements of the JSE Limited (JSE). The condensed consolidated financial statements do not include all of the information required for full annual financial statements. The accounting policies applied in the presentation of the condensed consolidated financial statements are consistent with those applied for the year ended 30 September 2010. These condensed consolidated financial statements have been prepared in accordance with the historical cost convention except for certain financial instruments which are stated at fair value. The condensed consolidated financial statements are presented in rand, rounded to the nearest thousand. 2. Related party transactions The group, in the ordinary course of business, entered into various sale and purchase transactions on an arm`s length basis at market rates with related parties. 3. Investment in associate On 1 October 2010 Coronation disposed of 6.8% of its effective shareholding in Namibia Asset Management Limited and has equity accounted for its 48.05% shareholding from that date. As a result of this disposal, a gain on revaluation of this investment in associate of R18.13 million was recognised in the income statement in accordance with IFRS 3 Business Combinations. Directors: S Pather (Chairman)*, H A Nelson (CEO), J G February*, J D McKenzie*, A C Pillay (COO), A Watson* (* Independent Non-Executive) Registered office: 7th Floor, MontClare Place Cnr Campground and Main Roads Claremont 7708, Cape Town Postal address: PO Box 44684, Claremont 7735, Cape Town Transfer secretaries: Computershare Investor Services (Pty) Limited 70 Marshall Street, Johannesburg 2001 Website: www.coronation.com Cape Town 17 May 2011 Sponsor Deutsche Securities (SA) (Proprietary) Limited Date: 17/05/2011 07:05:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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