Wrap Text
Reviewed preliminary financial results for the year ended 30 September 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 PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2013
- Assets under management of R492 billion, up 45%
- Diluted headline earnings per share of 416 cents, up 110%
- Total dividend per share of 416 cents
Coronation Fund Managers celebrates its 20th year in business with an outstanding set of results for the 12 months to 30 September 2013.
The environment remained very supportive in the period under review, with equity markets around the world delivering high returns
(MSCI World Index up 21% and FTSE/JSE All Share Index up 27%). However, volatility was high, with emerging markets selling off during the
third quarter of the financial year on the US Federal Reserves announcement of possible quantitative easing tapering. These markets then
rallied strongly in September when no change was made, producing 1.3% (as measured by the MSCI Emerging Markets Index) for the financial
year. The rand fell 17.2% against the US dollar to close the period under review at R10.03, and 21.2% against the euro to close at R13.55.
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
The continuation of excellent investment performance and the substantially increased asset base, as reported in the first half of the year,
led to an 84% increase in revenue to R3.6 billion for the financial year. This resulted in an increase in profit from fund management of
102% to R2 billion and diluted headline earnings per share of 110% to 416 cents (September 2012: 197.8 cents). If the effect of Secondary
Tax on Companies (STC) in the 2012 financial year is removed, as a result of the introduction of Dividends Tax (DT), the increase in diluted
headline earnings per share is 102%.
BUSINESS UPDATE
Anchored by its unwavering commitment to investing for the long term, the business produced market-beating returns in a strong (yet highly
volatile) market environment, attracting significant net inflows of R54 billion, including direct flows into international products of
R17 billion. For the year ended 30 September 2013, our total assets under management grew by 45% to R492 billion (September 2012:
R339 billion), including an increase in our international assets under management to R80 billion.
The business is built around two primary client market segments. The institutional business offers local and international mandates to
South African and international investors, while our retail offering focuses on a range of domestic and international unit trust funds for
local investors.
Institutional
The institutional business enjoyed strong support during the financial year, attracting total net inflows of R20.7 billion. R13.2 billion
of this figure constituted direct flows from South African and global clients into our international pooled and segregated mandates.
As a long-term manager, we believe that the true measure of investment performance is over meaningful periods of five years and longer.
We are proud of our domestic and global balanced portfolios having recorded 1st quartile performances over longer-term reporting periods of
5 and 10 years in the respective Alexander Forbes SA Large Manager WatchTM and Global Large Manager Watch surveys as at end September 2013.
The power of compounding is critical to long-term wealth creation, and we are pleased to report that over its 20-year track record the
Coronation Houseview Equity Portfolio has returned an annualised alpha of 3.6% (gross of fees) since inception in October 1993. Likewise,
our first-to-market absolute portfolio, Global Absolute (launched August 1999), has generated alpha of 5.6% p.a. (gross of fees).
The uptake from global capital allocators into our Global Emerging Markets and Africa mandates reflects the solid performance track records
established by these portfolios over the past five years. Since inception in July 2008, the Coronation Global Emerging Markets Fund has
outperformed its benchmark by 9.3% p.a. (gross of fees), placing it 2nd in a global peer group of 63 funds as at end September 2013
(Source: Bloomberg data net of fees). Likewise, the Coronation Africa Frontiers Portfolio has generated an exceptional annualised
outperformance of 11.5% (gross of fees) of its benchmark since inception in October 2008.
Retail
The retail business attracted a significant portion of the flows into the South African collective investment schemes industry. Total net
inflows for the financial year registered R33.3 billion. Coronation remains the 2nd largest manager of long-term retail assets in the
country, with a market share of 13.6% (September 2012: 11.2%).
During the period, Coronation was named Raging Bull Best Domestic Management Company of the Year and Morningstar Best Large Fund House
(for the third consecutive year). These industry accolades are supported by the 1st quartile rankings achieved across all domestic and
international flagship funds in their respective Morningstar categories since launch to 30 September 2013. Highlights include:
Coronation Top 20, the no. 1 equity fund since inception in October 2000, which has outperformed its benchmark by a strong 6.5% p.a.
(after fees) since launch
Coronation Balanced Plus, the no. 1 balanced fund in South Africa since launch in April 1996, which has outperformed its average
competitor by 2.8% p.a. (after fees)
Coronation Capital Plus, which has delivered a return ahead of inflation of 8.6% p.a. (after fees) since inception in July 2001
Coronation Balanced Defensive, the no. 1 conservative fund in South Africa since inception in February 2007, which has outperformed
inflation by 4.9% (after fees)
Coronation Strategic Income, which has outperformed cash by on average 3.0% p.a. (after fees) since inception in July 2001
Coronation Global Opportunities [ZAR] Feeder Fund (formerly named Coronation World Equity [ZAR]), which has outperformed the global
equity market by 1.9% p.a. (after fees) since launch in August 1997
TRANSFORMATION
On 28 February 2013, Coronations broad-based black economic empowerment partner, the Imvula Trust (Imvula), acquired a direct ownership
of 10% in Coronation in exchange for Imvulas shareholding in the unlisted Coronation Investment Management (Pty) Ltd. Imvula, the
beneficiaries of which comprise all black staff, was created in April 2005. Coronation is a Level III contributor as measured by the
Department of Trade and Industrys Broad-Based Black Economic Empowerment Codes of Good Practice (issued by Empowerdex).
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.
After considering projected cash requirements, a final gross dividend of 253 cents per share has been declared for the year ended
30 September 2013, resulting in a net dividend of 215.05 cents per share for shareholders subject to DT. Together with the interim gross
dividend of 163 cents per share, this amounts to a total gross dividend of 416 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, 29 November 2013
Shares trade ex dividend Monday, 2 December 2013
Record date Friday, 6 December 2013
Payment date Monday, 9 December 2013
Share certificates may not be dematerialised or rematerialised between Monday, 2 December 2013 and Friday, 6 December 2013, both dates
inclusive.
Dividends declared after 31 March 2012 are subject to DT, where applicable. In terms of 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
We continue to caution investors that the absolute levels of returns delivered by capital markets are unsustainable and that we expect lower
returns in the future.
Over our 20-year history we have established a robust business. However, as a cyclical business our revenues are highly geared to market
returns and the alpha we deliver in the funds we manage. We remain mindful of the fact that the alpha we generate is lumpy and that alpha
is currently at a cyclical high across many of the funds we manage. There will be years where the performance fees earned do not
significantly contribute to revenue.
The years ahead will undoubtedly present a more difficult investment environment and we will remain focused on creating long-term value
through the cycle for all stakeholders.
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 2013 and the related condensed statement of comprehensive income, changes in
equity and cash flows for the year 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
12 November 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
30 Sept 30 Sept
2013 % 2012
R million Change R million
Fund management activities
Revenue 3 635 84 1 975
Other income 3 3
Operating expenses (1 695) 67 (1 016)
Share-based payment expense (6) (3)
Other expenses (1 689) (1 013)
Results from operating activities 1 943 102 962
Finance and dividend income 27 18
Finance expense (5)
Share of income of equity-accounted investee 5 4
Profit from fund management 1 975 102 979
Income attributable to policyholder linked assets
and investment partnerships 88 106 43
Net fair value gains on policyholder and investment partnership
financial instruments 133 58
Administration expenses borne by policyholders and investors
in investment partnerships (45) (15)
Profit before income tax 2 063 1 022
Income tax expense (606) (338)
Taxation on shareholder profits (518) (295)
Taxation on policyholder investment contracts (88) (43)
Profit for the year 1 457 113 684
Other comprehensive income (to be reclassified to profit
or loss in future periods) 24 3
Foreign currency translation differences for foreign operations 21
Net change in fair value of available-for-sale financial assets 4 3
Net change in fair value of available-for-sale financial assets
reclassified to profit or loss (1)
Total comprehensive income for the year 1 481 687
Profit attributable to:
equity holders of the company 1 455 113 684
non-controlling interest 2
Profit for the year 1 457 684
Total comprehensive income attributable to:
equity holders of the company 1 479 115 687
non-controlling interest 2
Total comprehensive income for the year 1 481 116 687
Earnings per share (cents)
basic 434.0 100 217.3
diluted 416.1 110 197.8
Note to the statement of comprehensive income
Headline earnings per share (cents)
basic 433.9 100 217.3
diluted 416.0 110 197.8
Dividend per share (cents)
interim 163.0 72 95.0
final 253.0 128 111.0
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
30 Sept 30 Sept
2013 2012
R million R million
Assets
Goodwill and intangible assets 1 088 1 088
Equipment 16 13
Investment in equity-accounted investees 34 33
Deferred tax asset 111 6
Investments backing policyholder funds and investments held
through investment partnerships 70 269 53 669
Investment securities 175 112
Trade and other receivables 946 321
Cash and cash equivalents 294 426
Total assets 72 933 55 668
Liabilities
Deferred tax liabilities 78 31
Policyholder investment contract liabilities and liabilities
to holders of interests in investment partnerships 70 191 53 639
Taxation payable 11 13
Trade and other payables 646 510
Total liabilities 70 926 54 193
Net assets 2 007 1 475
Equity
Share capital and premium 256 256
Retained earnings 1 570 1 070
Reserves 177 147
Total equity attributable to equity holders of the company 2 003 1 473
Non-controlling interest 4 2
Total equity 2 007 1 475
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS*
Restated
Reviewed Audited
30 Sept 30 Sept
2013 2012
R million R million
Cash flows from operating activities
Profit for the year 1 975 979
Non-cash and other adjustments (17) (7)
Operating profit before changes in working capital 1 958 972
Working capital changes (489) 70
Cash flows from policyholder and investment partnership activities 5 399 4 931
Cash generated from operations 6 868 5 973
Interest paid (6)
Income taxes paid (626) (288)
Net cash from operating activities 6 242 5 679
Cash flows from investing activities
Finance and dividend income 27 18
Acquisition of equipment (12) (5)
Purchases of investment securities (56) (78)
Net cash from investing activities (41) (65)
Cash flows from financing activities
Repayment of interest-bearing borrowing (43)
Other (1)
Dividends to shareholders (955) (606)
Net cash from financing activities (955) (650)
Increase in cash and cash equivalents 5 246 4 964
Net (decrease)/increase in cash and cash equivalents shareholders (153) 33
Net increase in cash and cash equivalents policyholders
and investment partnerships 5 399 4 931
Cash and cash equivalents at beginning of year 9 809 4 845
Cash and cash equivalents at beginning of year shareholders 426 393
Cash and cash equivalents at beginning of year policyholders
and investment partnerships 9 383 4 452
Exchange rate adjustments 21
Cash and cash equivalents at end of year 15 076 9 809
Cash and cash equivalents at end of year shareholders 294 426
Cash and cash equivalents at end of year policyholders
and investment partnerships 14 782 9 383
* The above cash flows and comparatives include the policyholder and investment partnership activities which were previously excluded.
These cash flows represent net contributions and withdrawals by policyholders and investment partnerships and the related investing
activities. Comparative amounts have been restated accordingly. Cash and cash equivalents of policyholders and investment partnerships
are not available for use by the group.
CONDENSED 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
R million premium reserve earnings reserve reserve company interest equity
Balance at 30 September 2011 256 21 993 118 2 1 390 2 1 392
Total comprehensive income
for the year
Profit for the year 684 684 684
Other comprehensive income
Currency translation
differences
Revaluation of available-
for-sale
financial assets 3 3 3
net change on fair value 3 3 3
Total other comprehensive income 3 3 3
Total comprehensive income for
the year 684 3 687 687
Transactions with owners recorded
directly in equity
Share-based payments 3 3 3
Dividends paid (606) (606) (606)
Imvula units acquired by the
Imvula Trust (1) (1) (1)
Total transactions with owners (607) 3 (604) (604)
Balance at 30 September 2012 256 21 1 070 121 5 1 473 2 1 475
Total comprehensive income for
the year
Profit for the year 1 455 1 455 2 1 457
Other comprehensive income
Currency translation differences 21 21 21
Revaluation of available-for-sale
financial assets 3 3 3
net change in fair value 4 4 4
reclassified to profit or loss
on disposal (1) (1) (1)
Total other comprehensive income 21 3 24 24
Total comprehensive income for
the year 21 1 455 3 1 479 2 1 481
Transactions with owners
recorded directly to equity
Share-based payments 6 6 6
Dividends paid (920) (920) (920)
Distributions to Imvula Trust
beneficiaries (35) (35) (35)
Total transactions with owners (955) 6 (949) (949)
Balance at 30 September 2013 256 42 1 570 127 8 2 003 4 2 007
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Audited
30 Sept 30 Sept
2013 2012
R million R million
Earnings attributable to ordinary shareholders 1 455 684
Effect of adjustments
Profit on disposal of available-for-sale financial assets (1)
Loss on loss of control of the Imvula Trust 1
Headline earnings attributable to ordinary shareholders 1 455 684
DILUTED NUMBER OF SHARES
Reviewed Audited
30 Sept 30 Sept
2013 2012
'000 '000
Weighted average number of shares in issue 335 328 314 819
Shares to be issued
BEE transaction 14 434 34 798
Diluted weighted average number of shares in issue 349 762 349 617
Africa International Group
Restated Restated
Reviewed Audited Reviewed Audited Reviewed Audited
30 Sept 30 Sept 30 Sept 30 Sept 30 Sept 30 Sept
R million 2013 2012 2013 2012 2013 2012
Segment external revenue 2 871 1 598 764 377 3 635 1 975
Segment operating expenses (1 310) (844) (385) (172) (1 695) (1 016)
Segment profit 1 561 754 379 205 1 940 959
Share of income of equity accounted investee 5 4 5 4
Net financial income/(expense) 30 18 (2) 30 16
Profit from fund management 1 596 776 379 203 1 975 979
Income attributable to policyholder linked assets
and investment partnerships 88 43
Profit before income tax 2 063 1 022
Segment assets 1 172 671 259 201 1 431 872
Investments backing policyholder funds and investments
held through investment partnerships and other assets 71 502 54 796
Total assets 72 933 55 668
Comparatives have been restated for international business previously reported as Africa.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and accounting policies
The financial information has been prepared in accordance with the framework concepts and the measurements and recognition
requirements of the International Financial Reporting Standards; the 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 million. The accounting policies applied in the presentation of the condensed consolidated financial statements are in
terms of IFRS and, except as stated, 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 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 Proprietary Limited, 70 Marshall Street, Johannesburg 2001
WEBSITE
www.coronation.com
SPONSOR
Deutsche Securities (SA) Proprietary Limited
Date: 12/11/2013 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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