Wrap Text
Reviewed preliminary financial results for the year ended 30 September 2012
CORONATION FUND MANAGERS
(Incorporated in the Republic of South Africa)
Registration number: 1973/009318/06
JSE share code: CML
ISIN: ZAE000047353
("Coronation" or "the company")
Reviewed preliminary financial results for the year ended 30 September 2012
- Assets under management of R339 billion, up 37%
- Diluted headline earnings per share of 197.8 cents, up 12%
- Total dividend per share of 206 cents
Coronation Fund Managers delivered a solid set of results for the year to 30 September 2012. The business again
recorded significant net inflows, entrenching its position within the institutional market and consolidating its
standing as the 2nd largest manager of long-term funds in the collective investment schemes industry.
Assets under management increased by 37% to R339 billion (September 2011: R247 billion), benefitting from net
inflows of R41.5 billion and strong capital markets. While the major indices ended the year in strong positive
territory, volatility was high as market participants responded to stimulatory measures taken by central
bankers around the world. The consequent abundance of liquidity saw the MSCI World Index returning 22.3%
(in US dollars), the MSCI Emerging Markets Index 17.3% (in US dollars) and the FTSE/JSE All Share Index 24.4%
(in rands). The rand remained relatively strong, falling 2.6% against the US dollar to close at R8.30.
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 increased by 14% to R2.0 billion (September 2011: R1.7 billion) on the back of strong growth in assets
under management. In line with the variable cost model employed by Coronation, total operating costs increased
by 21% to R1.0 billion. Profit from fund management increased by 7% to R979 million and diluted headline
earnings per share by 12% to 197.8 cents (September 2011: 176.1 cents).
Institutional
The institutional business enjoyed exceptional growth, attracting net inflows of R17.6 billion; an increase
of 77% over last year’s strong R9.9 billion. This is a significant achievement given the relative maturity of
the market.
As an independent fund manager, our reputation depends on our ability to outperform the market. Given the size
of our institutional business, domestic equity market capacity pressures are felt more acutely. Thus, following
the closure of our SA Equity products to new clients on 31 March 2012, the Balanced and Absolute Return product
ranges are to close on 31 December 2012. The closures do not impact existing clients or our unit trust business.
Our institutional SA Fixed Interest, Hedge and International fund ranges remain open to new clients.
In terms of investment performance, the domestic balanced portfolios ranked 2nd over 5 and 10 years in the
Alexander Forbes (AF) SA Large Manager WatchTM survey to end September 2012, while our global balanced portfolios
ranked 2nd over 5 years and 4th over 10 years in the AF Global Large Manager WatchTM survey. Our longest running
absolute portfolio, Coronation Global Absolute, outperformed its benchmark of inflation plus 6% by an annualised
5.3% since inception to end September 2012.
During the year we received Imbasa Yegolide Awards for Equities Manager of the Year, Absolute Returns Manager of
the Year, Bond Manager of the Year and Overall Investment/Asset Manager of the Year. These awards are under the
auspices of the Principal Officers’ Association in South Africa.
Retail
The retail business again attracted one of the highest levels of net inflows in the collective investment schemes
industry. This can be attributed to strong long-term investment performance and deepening market support. Net
inflows of R23.9 billion were directed largely to our multi-asset funds as well as our flagship flexible fixed
interest fund, Coronation Strategic Income.
For the second consecutive year, Coronation was named Best Large Fund House at the 2012 Morningstar South Africa
Awards. All funds in the domestic flagship fund range delivered to mandate, recording top quartile performances
over 1, 3 and 5 years and since launch to end September 2012 in their respective Morningstar categories.
Highlights include:
– Coronation Top 20, which has outperformed its benchmark by an impressive 6.6% per annum since launch
in October 2000;
– Coronation Balanced Plus, the no. 1 balanced fund in South Africa since launch in April 1996, which has
outperformed its average competitor by 2.4% per annum over this period;
– Coronation Capital Plus, which has outperformed inflation by 8.3% per annum since inception in July 2001;
– Coronation Balanced Defensive, the no. 1 conservative fund in South Africa for the 5-year period to
end September 2012, which has outperformed inflation by 4.4% per annum over this period; and
– Coronation Strategic Income, which has outperformed cash by 3% per annum since launch in July 2001.
International
Assets under management increased by 62% to USD4.4 billion, supported by growth in our institutional and retail
businesses. In addition, the excellent performances from our specialist Africa and Global Emerging Markets units
continued to attract interest from global capital allocators. Since inception in October 2008, the Coronation
Africa Frontiers Fund has outperformed its benchmark by 10.2% per annum (gross of fees), while the Coronation
Global Emerging Markets Fund has produced an annualised outperformance of almost 7% (gross of fees) ahead of
benchmark since inception in July 2008.
Coronation’s ability in managing global assets was recognised as follows:
- Best Africa Fund Manager for the second time at the prestigious annual Africa investor Index Series Awards
held in New York;
- Raging Bull Award for the Coronation Global Emerging Markets Fund in the category Best Offshore Global Equity
Fund available to South African investors based on performance over three years to end December 2011; and
- Coronation Global Managed ranked by Morningstar as the no. 1 foreign multi-asset unit trust fund in
South Africa for the 12 months to end September 2012.
Transformation
On 29 August 2012, we announced that Coronation’s broad-based black economic empowerment partner, the Imvula
Trust (Imvula), had settled its remaining debt. The exchange of the Imvula investment in Coronation Investment
Management (Pty) Ltd to listed Coronation shares will be completed once the final version of the Financial
Sector Charter has been gazetted. In terms of the Department of Trade and Industry’s Code of Good Practice on
Broad-based Black Economic Empowerment, Coronation is rated a Level III contributor.
Final 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. Dividends declared after 31 March 2012 are
subject to a 15% Dividends Tax (DT), where applicable.
Accounting for projected cash requirements, a final gross dividend of 111 cents per share has been declared,
resulting in a net dividend of 94.35 cents per share for shareholders subject to DT. Together with the interim
gross dividend of 95 cents per share, this amounts to a total gross dividend of 206 cents per share for the year.
No STC credits are available to be utilised.
In compliance with the Listings Requirements of the JSE Limited, the following dates are applicable:
Last day to trade Friday, 30 November 2012
Shares trade ex dividend Monday, 3 December 2012
Record date Friday, 7 December 2012
Payment date Monday, 10 December 2012
Share certificates may not be dematerialised or rematerialised between Monday, 3 December 2012, and
Friday, 7 December 2012, both dates inclusive.
In terms of the DT effective 1 April 2012, the following additional information is disclosed:
(a) the local DT rate is 15%;
(b) the number of ordinary shares in issue at the date of this declaration is 314 819 192;
(c) Coronation’s tax reference number is 9675 107 719.
Prospects
We pursue a single philosophy of investing for the long term across all client portfolios. In the current low
growth, low inflation environment the search for alpha is critical to achieving strong long-term returns for
all stakeholders. In the year ahead, we will continue to pursue our strategy of consolidating our institutional
business and nurturing our international and retail franchises.
External audit review
The external auditors, Ernst & Young Inc., reviewed the preliminary condensed statement of financial position
of Coronation Fund Managers Limited Group as at 30 September 2012 and the related condensed statement of
comprehensive income, changes in equity and cash flows for the 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.
are available for inspection at the registered office of the company.
Shams Pather Hugo Nelson Anton Pillay
Chairman Chief Executive Officer Chief Operating Officer
Cape Town
13 November 2012
Condensed consolidated statement of comprehensive income
Reviewed Audited
30 Sept 30 Sept
2012 % 2011
R’000 Change R’000
Fund management activities
Revenue 1 975 256 14 1 725 910
Other income 2 802 21 407
Operating expenses (1 016 479) 21 (838 056)
Share-based payment expense (3 239) (4 856)
Other expenses (1 013 240) (833 200)
Results from operating activities 961 579 6 909 261
Finance and dividend income 17 966 12 263
Finance expense (4 765) (5 262)
Share of income of equity accounted investee 4 180 2 365
Profit from fund management 978 960 7 918 627
Income attributable to policyholder linked assets
and investment partnerships 42 889 19 518
Net fair value gains on policyholder and investment partnership financial
instruments 57 866 34 431
Administration expenses borne by policyholders and investors
in investment partnerships (14 977) (14 913)
Profit before income tax 1 021 849 938 145
Income tax expense (337 794) (314 295)
Taxation on shareholder profits (294 905) (294 777)
Taxation on policyholder investment contracts (42 889) (19 518)
Profit for the year 684 055 10 623 850
Other comprehensive income 3 280 19 890
Foreign currency translation differences for foreign operations 217 20 627
Net change in fair value of available-for-sale financial assets 3 134 (737)
Net change in fair value of available-for-sale financial assets
reclassified to profit or loss (71) –
Total comprehensive income for the year 687 335 643 740
Profit attributable to:
– equity holders of the company 684 090 10 623 977
– non-controlling interest (35) (127)
Profit for the year 684 055 623 850
Total comprehensive income attributable to
– equity holders of the company 687 370 7 643 867
– non-controlling interest (35) (127)
Total comprehensive income for the year 687 335 643 740
Earnings per share (cents)
– basic 217.3 10 198.2
– diluted 197.8 9 181.3
Note to the statement of comprehensive income
Headline earnings per share (cents)
– basic 217.3 13 192.4
– diluted 197.8 12 176.1
Dividend per share (cents)
– interim 95.0 19 80.0
– final 111.0 21 92.0
Diluted number of shares (Thousand)
Reviewed Audited
30 Sept 30 Sept
2012 2011
Weighted average number of shares in issue 314 819 314 819
Shares to be issued
– BEE transaction 34 798 34 693
Diluted weighted average number of shares in issue 349 617 349 512
Condensed consolidated statement of financial position
Reviewed Audited
30 Sept 30 Sept
2012 2011
R’000 R’000
Assets
Goodwill and intangible assets 1 087 772 1 087 772
Equipment 13 131 14 839
Investment in equity accounted investees 32 779 31 338
Deferred tax asset 6 015 8 069
Investments backing policyholder funds and investments held through investment partnerships 53 669 044 31 566 179
Investment securities 111 911 28 467
Trade and other receivables 321 049 242 450
Cash and cash equivalents 426 120 393 169
Total assets 55 667 821 33 372 283
Liabilities
Interest-bearing borrowing – 42 800
Deferred tax liabilities 30 913 18 629
Policyholder investment contract liabilities and liabilities to holders of interests in investment
partnerships 53 638 780 31 547 550
Income tax payable 13 157 9 860
Trade and other payables 509 577 361 916
Total liabilities 54 192 427 31 980 755
Net assets 1 475 394 1 391 528
Equity
Share capital and premium 255 907 255 907
Retained earnings 1 070 304 992 922
Reserves 147 471 140 952
Total equity attributable to equity holders of the company 1 473 682 1 389 781
Non-controlling interest 1 712 1 747
Total equity 1 475 394 1 391 528
Condensed consolidated statement of cash flows
Reviewed Audited
30 Sept 30 Sept
2012 2011
R’000 R’000
Cash flows from operating activities
Profit for the year 684 055 623 850
Income tax expense 337 794 314 295
Non-cash and other adjustments (18 482) (12 598)
Operating profit before changes in working capital 1 003 367 925 547
Working capital changes 70 362 10 361
Cash generated from operations 1 073 729 935 908
Interest paid (6 065) (6 773)
Income taxes paid (320 159) (314 718)
Net cash from operating activities 747 505 614 417
Cash flows from investing activities
Finance and dividend income 17 966 12 263
Conversion of subsidiary to associate – (1 305)
Acquisition of equipment (5 563) (6 991)
Purchases of investment securities (77 666) (930)
Net cash from investing activities (65 263) 3 037
Cash flows from financing activities
Dividends to shareholders (605 680) (495 351)
Repayment of interest-bearing borrowing (42 800) (39 200)
Other (1 028) (10 999)
Net cash from financing activities (649 508) (545 550)
Net increase in cash and cash equivalents 32 734 71 904
Cash and cash equivalents at beginning of year 393 169 300 638
Exchange rate adjustments 217 20 627
Cash and cash equivalents at end of year 426 120 393 169
The cash flows above represent cash and cash equivalents of shareholders only. Cash and cash equivalents
of policyholders are not available for use by the group.
Consolidated statement of changes in equity
Share Foreign Share-
capital currency based
and translation Retained payment
R'000 premium reserve earnings reserve
Balance at 30 September 2010 255 907 419 866 019 113 559
Total comprehensive income for the year
Profit for the year 623 977
Other comprehensive income
Currency translation differences 20 627
Revaluation of available-for-sale financial assets
Net change on fair value
Reclassified to profit or loss on disposal
Total other comprehensive income 20 627
Total comprehensive income for the year 20 627 623 977
Transactions with owners recorded directly in equity
Share-based payments 4 856
Transfer to retained earnings 311 (311)
Dividends paid (495 111)
Imvula units acquired by the Imvula Trust (2 274)
Loss of control of subsidiary
Increase in equity of subsidiary
Total transactions with owners (497 074) 4 545
Balance at 30 September 2011 255 907 21 046 992 922 118 104
Total comprehensive income for the year
Profit for the year 684 090
Other comprehensive income
Currency translation differences 217
Revaluation of available-for-sale financial assets
Net change on fair value
Reclassified to profit or loss on disposal
Total other comprehensive income 217
Total comprehensive income for the year 217 684 090
Transactions with owners recorded directly in equity
Share-based payments 3 239
Dividends paid (605 680)
Imvula units acquired by the Imvula Trust (1 028)
Total transactions with owners - - (606 708) 3 239
Balance at 30 September 2012 255 907 21 263 1 070 304 121 343
Consolidated statement of changes in equity (continued)
Issued
capital and
reserves
attributable
to equity
holders Non-
Revaluation of the controlling Total
R'000 reserve company interest equity
Balance at 30 September 2010 2 539 1 238 443 10 702 1 249 145
Total comprehensive income for the year
Profit for the year 623 977 (127) 623 850
Other comprehensive income
Currency translation differences 20 627 20 627
Revaluation of available-for-sale financial assets (737) (737) (737)
Net change on fair value (737) (737) (737)
Reclassified to profit or loss on disposal
Total other comprehensive income (737) 19 890 19 890
Total comprehensive income for the year (737) 643 867 (127) 643 740
Transactions with owners recorded directly in equity
Share-based payments 4 856 4 856
Transfer to retained earnings
Dividends paid (495 111) (103) (495 214)
Imvula units acquired by the Imvula Trust (2 274) (2 274)
Loss of control of subsidiary (9 425) (9 425)
Increase in equity of subsidiary 700 700
Total transactions with owners (492 529) (8 828) (501 357)
Balance at 30 September 2011 1 802 1 389 781 1 747 1 391 528
Total comprehensive income for the year
Profit for the year 684 090 (35) 684 055
Other comprehensive income
Currency translation differences 217 217
Revaluation of available-for-sale financial assets 3 063 3 063 3 063
Net change on fair value 3 134 3 134 3 134
Reclassified to profit or loss on disposal (71) (71) (71)
Total other comprehensive income 3 063 3 280 3 280
Total comprehensive income for the year 3 063 687 370 (35) 687 335
Transactions with owners recorded directly in equity
Share-based payments 3 239 3 239
Dividends paid (605 680) (605 680)
Imvula units acquired by the Imvula Trust (1 028) (1 028)
Total transactions with owners - (603 469) - (603 469)
Balance at 30 September 2012 4 865 1 473 682 1 712 1 475 394
Reconciliation of headline earnings
Reviewed Audited
30 Sept 30 Sept
2012 2011
R’000 R’000
Earnings attributable to ordinary shareholders 684 090 623 977
Effect of adjustments (78) (18 136)
Profit on disposal of equipment (7) (6)
Gain on loss of control of subsidiary – (18 130)
Profit on disposal of available-for-sale financial assets (71) –
Total tax effect of adjustments 9 1
Headline earnings attributable to ordinary shareholders 684 021 605 842
Condensed consolidated segment report
Africa International Group
Reviewed Audited Reviewed Audited Reviewed Audited
30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept
2012 2011 2012 2011 2012 2011
R’000 R’000 R’000 R’000 R’000 R’000
Segment external revenue 1 642 811 1 531 729 332 445 194 181 1 975 256 1 725 910
Segment operating expenses (942 158) (770 937) (74 321) (67 119) (1 016 479) (838 056)
Segment profit 700 653 760 792 258 124 127 062 958 777 887 854
Share of income of equity
accounted investee 4 180 2 365 – – 4 180 2 365
Net financial income/(expense) 18 217 28 078 (2 214) 330 16 003 28 408
Profit from fund management 723 050 791 235 255 910 127 392 978 960 918 627
Segment assets 55 466 684 33 182 681 201 137 189 602 55 667 821 33 372 283
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, as well as
the AC 500 standards as issued by the Accounting Practices Board or its successor, the requirements of the
South African Companies Act, Act 71 of 2008 and the Listings Requirements of the JSE. The condensed consolidated
financial statements do not include all of the information required for full annual financial statements.
These condensed consolidated financial statements have been prepared in accordance with the historical cost
basis 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. The accounting policies applied
in the presentation of the condensed consolidated financial statements are in terms of IFRS and are consistent
with those presented in the previous annual financial statements.
These preliminary reviewed results have been prepared under the supervision of Financial Manager, A Rhoda CA(SA).
2. Related party transactions
The group, in the ordinary course of business, entered into various sale and purchase transactions at an arm’s
length basis at market rates with related parties.
3. South African Revenue Services (SARS) matters
From time to time, as is common with other organisations, companies within the group are subject to review by
SARS, or may have matters awaiting clarification with SARS. The board is confident that the possibility of any
liability arising from these open matters is remote.
Directors
S Pather (Chairman)*, H A Nelson (CEO), J G February*, J D McKenzie*, A C Pillay (COO), J A Snalam, 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
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Date: 13/11/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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