Wrap Text
Reviewed interim results for the six months ended 31 March 2013
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 interim results for the six months ended 31 March 2013
- Assets under management of R409 billion
- Diluted headline earnings per share of 163.4 cents
- Interim dividend per share of 163 cents
Coronation Fund Managers produced an excellent set of results for the six months to 31 March 2013, underpinned by a substantial increase
in assets under management and very strong investment performance.
Assets under management increased by 21% to R409 billion (September 2012: R339 billion), driven by total net inflows of R21.9 billion
and rising global markets. Led by equity markets in the US and Japan, the MSCI World Index returned 10.7% (in US dollar terms) for the
six months to end March 2013. Following a slightly negative return in the second half of the six-month period, the MSCI Emerging Markets
Index produced 4% (in US dollar terms). The FTSE/JSE All Share Index also recorded a weaker second quarter, yet continued to reach new
highs, producing a return of 13.1% (in rand terms) for the period. Notwithstanding the favourable yield-seeking global environment, the
rand depreciated by 10.1% against the US dollar over the period to close at R9.23.
Enquiries:
Coronation Fund Managers: 021 680 2000
Anton Pillay, CEO: 021 680 2480
John Snalam, CFO: 021 680 2094
Capital Voice
Johannes van Niekerk: 082 921 9110
Results
Excellent investment performance and a substantially increased asset base led to a 62% increase in revenue to R1 475 million for
the six-month period. This resulted in an increase in diluted headline earnings per share of 88% to 163.4 cents (March 2012: 86.7 cents).
If the effect of Secondary Tax on Companies (STC) in the comparative period is removed, as a result of the introduction of Dividends
Tax (DT), the increase in diluted headline earnings per share is 72%.
Institutional
The institutional business attracted net inflows of R3.6 billion over the period. Over 3, 5 and 10 years both our domestic and global
balanced portfolios ranked in the 1st quartile of the respective Alexander Forbes SA Large Manager WatchTM and Global Large Manager WatchTM
surveys as at 31 March 2013. Since Coronations inception 20 years ago, our Houseview Equity portfolio has generated an annualised alpha
of 3.4% (gross of fees), while our longest running absolute portfolio, Coronation Global Absolute, has outperformed its inflation plus 6%
benchmark by an annualised 5.5% (gross of fees) since inception to end March 2013.
The Balanced and Absolute Return product ranges closed to new investors on 31 December 2012.
Retail
The retail business attracted net inflows of R15.5 billion over the period. Coronation is the 2nd largest manager of long-term unit trust
funds in South Africa and was named Raging Bull Domestic Management Company of the Year and Morningstar Best Large Fund House (for the third
consecutive year). First quartile returns were recorded across the entire domestic flagship fund range over 3 years, 5 years and since launch
to 31 March 2013 in their respective Morningstar categories. Highlights include:
Coronation Top 20, which has outperformed its benchmark by a strong 6.4% per annum (net of fees) since inception 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 2.7% per annum (net of fees) over this period;
Coronation Capital Plus, which has delivered returns 8.5% ahead of inflation per annum (net of fees) since inception in July 2001;
Coronation Balanced Defensive, South Africas no. 1 conservative fund for the five-year period to end March 2013, which has outperformed
inflation by 4.5% per annum (net of fees); and
Coronation Strategic Income, which has outperformed cash by 3% per annum (net of fees) since launch in July 2001.
International
International assets under management increased by 24% to $5.3 billion. Since inception in October 2008, the Coronation Africa Frontiers
Fund has outperformed its benchmark by 11.2% per annum (gross of fees), while the Coronation Global Emerging Markets Fund has produced an
outperformance of 8.3% per annum (gross of fees) since launch in July 2008. We continue to gain traction across the entire fund range and
are proud of the 2.9% outperformance (gross of fees) of our global balanced fund, Coronation Global Managed, which recently reached its
three-year track record.
Transformation
Coronations broad-based black economic empowerment partner, the Imvula Trust (Imvula), acquired 10% of Coronation in exchange for its
shareholding in the unlisted Coronation Investment Management (Pty) Limited. For this purpose, the JSE granted the listing of 34 979 910
Coronation ordinary shares, with effect from 28 February 2013. Imvula was created in April 2005 to achieve a direct ownership for all
black staff in Coronation and its subsidiaries.
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.
Accounting for projected cash requirements, an interim gross dividend of 163 cents per share has been declared, resulting in a net dividend
of 138.55 cents per share for shareholders subject to DT. 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, 31 May 2013
Shares trade ex dividend Monday, 3 June 2013
Record date Friday, 7 June 2013
Payment date Monday, 10 June 2013
Share certificates may not be dematerialised or rematerialised between Monday, 3 June 2013, and Friday, 7 June 2013, both dates inclusive.
Dividends declared after 31 March 2012 are subject to DT, where applicable. In terms of the DT, the following additional information is
disclosed:
The local DT rate is 15%
The number of ordinary shares in issue at the date of this declaration is 349 799 102
Coronations tax reference number is 9675 107 719
Prospects
The strong returns posted by equity markets and exceptional investment performance generated during the period have had a highly positive
impact on revenue. Although our short-term prospects appear robust, we would like to remind investors that our business is cyclical. Our
revenues are highly geared to market returns and the alpha we deliver in the funds we manage. We are mindful that the alpha we generate
is lumpy and there will be years where the performance fees earned do not significantly contribute to revenue. It is also our expectation
that the markets will deliver lower returns in the future.
As always, we will remain unwavering in our pursuit of long-term value through the cycle and in serving our clients in what is likely
to be a more difficult market environment.
External audit review
The external auditors, Ernst & Young Inc., reviewed the condensed statement of financial position of Coronation Fund Managers Limited Group
as at 31 March 2013 and the related condensed statement of comprehensive income, changes in equity and cash flows for the period then ended,
and other explanatory notes. 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 Anton Pillay John Snalam
Chairman Chief Executive Officer Chief Financial Officer
Cape Town
14 May 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
2013 2012 % 2012
R000 R000 Change R000
Fund management activities
Revenue 1 475 048 911 929 62 1 975 256
Other income 1 604 562 2 802
Operating expenses (716 423) (470 700) 52 (1 016 479)
Share-based payment expense (1 213) (1 427) (3 239)
Other expenses (715 210) (469 273) (1 013 240)
Results from operating activities 760 229 441 791 72 961 579
Finance and dividend income 11 011 7 797 17 966
Finance expense (233) (1 487) (4 765)
Share of profit of equity-accounted
investee 3 025 2 182 4 180
Profit from fund management 774 032 450 283 72 978 960
Income attributable to policyholder
linked assets and investment partnerships 48 525 22 286 42 889
Net fair value gains on policyholder
and investment partnership financial
instruments 67 458 31 753 57 866
Administration expenses borne by
policyholders and investors in
investment partnerships (18 933) (9 467) (14 977)
Profit before income tax 822 557 472 569 74 1 021 849
Income tax expense (250 536) (175 773) (337 794)
Taxation on shareholder profits (202 011) (153 487) (294 905)
Taxation on policyholder
investment contracts (48 525) (22 286) (42 889)
Profit for the period 572 021 296 796 93 684 055
Other comprehensive income
Foreign currency translation differences
for foreign operations 8 447 (2 996) 217
Net change in fair value of
available-for-sale financial assets 4 012 2 287 3 134
Net change in fair value of
available-for-sale financial assets
reclassified to profit or loss (1 396) (71)
Other comprehensive income/(expense)
for the period 11 063 (709) 3 280
Total comprehensive income for the period 583 084 296 087 687 335
Profit attributable to:
equity holders of the company 571 636 295 878 93 684 090
non-controlling interest 385 918 (35)
Profit for the period 572 021 296 796 684 055
Total comprehensive income attributable to:
equity holders of the company 582 699 295 169 97 687 370
non-controlling interest 385 918 (35)
Total comprehensive income for the period 583 084 296 087 687 335
Earnings per share (cents)
basic 178.2 94.0 90 217.3
diluted 163.5 86.7 89 197.8
Note to the statement of comprehensive income
Headline earnings per share (cents)
basic 178.1 94.0 89 217.3
diluted 163.4 86.7 88 197.8
Dividend per share (cents)
interim 163.0 95.0 72 95.0
final 111.0
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
31 March 31 March 30 Sept
2013 2012 2012
R000 R000 R000
Assets
Goodwill and intangible assets 1 087 772 1 087 772 1 087 772
Equipment 11 439 13 404 13 131
Investment in equity-accounted investees 32 152 30 782 32 779
Deferred tax asset 99 565 2 650 6 015
Investments backing policyholder funds
and investments held through investment
partnerships 64 047 311 40 276 713 53 669 044
Investment securities 108 288 104 482 111 911
Trade and other receivables 503 162 286 159 321 049
Cash and cash equivalents 415 305 215 746 426 120
Total assets 66 304 994 42 017 708 55 667 821
Liabilities
Interest-bearing borrowing 20 300
Deferred tax liabilities 70 002 29 423 30 913
Policyholder investment contract liabilities
and liabilities to holders of interests in
investment partnerships 63 978 394 40 247 627 53 638 780
Income tax payable 86 530 6 836 13 157
Trade and other payables 496 275 320 305 509 577
Total liabilities 64 631 201 40 624 491 54 192 427
Net assets 1 673 793 1 393 217 1 475 394
Equity
Total equity attributable to equity holders
of the company 1 671 696 1 390 552 1 473 682
Non-controlling interest 2 097 2 665 1 712
Total equity 1 673 793 1 393 217 1 475 394
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
2013 2012 2012
R000 R000 R000
Cash flows from operating activities
Profit for the period 572 021 296 796 684 055
Income tax expense 250 536 175 773 337 794
Non-cash and other adjustments (44 005) (14 105) (18 482)
Operating profit before changes in working capital 778 552 458 464 1 003 367
Working capital changes (195 437) (84 563) 70 362
Cash generated from operations 583 115 373 901 1 073 729
Interest paid (211) (2 244) (6 065)
Income taxes paid (231 624) (162 584) (320 159)
Net cash from operating activities 351 280 209 073 747 505
Net cash from investing activities 15 356 (65 175) (65 263)
Cash flows from financing activities (385 898) (318 325) (649 508)
dividends to shareholders (385 901) (295 292) (605 680)
repayment of interest-bearing borrowing (22 500) (42 800)
other 3 (533) (1 028)
Net (decrease)/increase in cash and cash equivalents (19 262) (174 427) 32 734
Cash and cash equivalents at beginning of period 426 120 393 169 393 169
Exchange rate adjustments 8 447 (2 996) 217
Cash and cash equivalents at end of period 415 305 215 746 426 120
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
Issued
capital and
reserves
attributable
Share Foreign Share- to equity Non-
capital currency based Re- holders con-
and translation Retained payment valuation of the trolling Total
R000 premium reserve earnings reserve reserve company interest equity
Balance at 30 September 2011 255 907 21 046 992 922 118 104 1 802 1 389 781 1 747 1 391 528
Total comprehensive income
for the period
Profit for the period 295 878 295 878 918 296 796
Other comprehensive income
Currency translation differences (2 996) (2 996) (2 996)
Revaluation of available-for-sale
financial assets 2 287 2 287 2 287
net change on fair value 2 287 2 287 2 287
- reclassified to profit or loss
on disposal - - -
Total other comprehensive income (2 996) 2 287 (709) (709)
Total comprehensive income
for the period (2 996) 295 878 2 287 295 169 918 296 087
Transactions with owners recorded
directly in equity
Share-based payments 1 427 1 427 1 427
Dividends paid (295 292) (295 292) (295 292)
Imvula units acquired by
the Imvula Trust (533) (533) (533)
Total transactions with owners (295 825) 1 427 (294 398) (294 398)
Balance at 31 March 2012 255 907 18 050 992 975 119 531 4 089 1 390 552 2 665 1 393 217
Total comprehensive income
for the period
Profit for the period 388 212 388 212 (953) 387 259
Other comprehensive income
Currency translation differences 3 213 3 213 3 213
Revaluation of available-for-sale
financial assets 776 776 776
net change in fair value 847 847 847
reclassified to profit or
loss on disposal (71) (71) (71)
Total other comprehensive income 3 213 776 3 989 3 989
Total comprehensive income
for the period 3 213 388 212 776 392 201 (953) 391 248
Transactions with owners recorded
directly to equity
Share-based payments 1 812 1 812 1 812
Dividends paid (310 388) (310 388) (310 388)
Imvula units acquired by
the Imvula Trust (495) (495) (495)
Total transactions with owners (310 883) 1 812 (309 071) (309 071)
Balance at 30 September 2012 255 907 21 263 1 070 304 121 343 4 865 1 473 682 1 712 1 475 394
Total comprehensive income
for the period
Profit for the period 571 636 571 636 385 572 021
Other comprehensive income
Currency translation differences 8 447 8 447 8 447
Revaluation of available-for-sale
financial assets 2 616 2 616 2 616
net change in fair value 4 012 4 012 4 012
reclassified to profit or
loss on disposal (1 396) (1 396) (1 396)
Total other comprehensive income 8 447 2 616 11 063 11 063
Total comprehensive income
for the period 8 447 571 636 2 616 582 699 385 583 084
Transactions with owners recorded
directly to equity
Share-based payments 1 213 1 213 1 213
Dividends paid to equity holders (349 449) (349 449) (349 449)
Distributions to Imvula Trust
beneficiaries (36 452) (36 452) (36 452)
Shares issued 3 3 3
Total transactions with owners 3 (385 901) 1 213 (384 685) (384 685)
Balance at 31 March 2013 255 910 29 710 1 256 039 122 556 7 481 1 671 696 2 097 1 673 793
EARNINGS PER SHARE
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
2013 2012 2012
Weighted average number of ordinary
shares in issue during the period 320 777 309 314 819 192 314 819 192
Weighted average number of ordinary
shares potentially in issue 349 724 973 349 643 634 349 616 989
R000 R000 R000
Earnings attributable to shareholders 572 021 296 796 684 055
Non-controlling interest (385) (918) 35
Earnings attributable to ordinary shareholders 571 636 295 878 684 090
Profit on disposal of equipment (6)
Profit on disposal of financial assets
available for sale (1 220) (62)
Loss on loss of control of the Imvula Trust 958
Headline earnings attributable
to ordinary shareholders 571 374 295 878 684 022
Actual number of shares in issue
at the end of the period 349 799 102 314 819 192 314 819 192
CONDENSED CONSOLIDATED SEGMENT REPORT
Africa
Six months Six months
reviewed reviewed Audited
31 March 31 March 30 Sept
R000 2013 2012 2012
Segment external revenue 1 219 968 767 376 1 642 811
Segment profit from fund management
before tax and finance income/expense 555 915 331 695 700 653
CONDENSED CONSOLIDATED SEGMENT REPORT (continued)
International
Six months Six months
reviewed reviewed Audited
31 March 31 March 30 Sept
R000 2013 2012 2012
Segment external revenue 255 080 144 553 332 445
Segment profit from fund management
before tax and finance income/expense 202 710 109 534 258 124
CONDENSED CONSOLIDATED SEGMENT REPORT (continued)
Group
Six months Six months
reviewed reviewed Audited
31 March 31 March 30 Sept
R000 2013 2012 2012
Segment external revenue 1 475 048 911 929 1 975 256
Segment profit from fund management
before tax and finance income/expense 758 625 441 229 958 777
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and accounting policies
The financial information has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting; the
Listings Requirements of the JSE Limited; the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, as well as the South African Companies Act,
Act 71 of 2008. 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 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 on an arms length basis at market rates
with related parties.
Directors
S Pather (Chairman)*, A C Pillay (CEO), J G February*, J D McKenzie*, J A Snalam (CFO), 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: 14/05/2013 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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