Revenue for the six-month period ended 31 March 2007 comprising annual recurring fees and performance fees, increased by 25% to R423 million from R338 million for the comparable period to 31 March 2006. These fees are prior to the deduction of distribution costs and fees paid to financial intermediaries. Coronation Fund Managers has traditionally followed a variable cost business model which results in lower profit volatility. Total operating costs inclusive of variable costs such as remuneration, distribution fees and administration costs increased by 25% to R257 million, resulting in an increase in profit from fund management to R187 million, up 28% from R146 million for the six-month period to 31 March 2006. Earnings per share, however, increased by 49% to 36c and headline earnings per share increased by 43% to 34.7c. The higher rate of increase was due to a lower effective tax rate and to the positive impact of the share buyback programme during the second half of 2006, when 35 million ordinary shares were bought back and cancelled.
Distribution
A capital repayment of 20cps will be distributed to shareholders
Prospects
Coronation strive to achieve consistent and superior investment performance both for the benefit of its clients and to sustain its sound business model that extends beyond financial market cyclicality. However, the company caution stakeholders against straight-line projections. Although the positive economic outlook signals greater opportunities for Coronation Fund Managers, management must highlight that the performance of the domestic equity market over the past four years has been exceptional. The board are cognisant that a significant portion of Coronation's revenue is attributable to the financial markets which by their nature can be volatile and cyclical. However, management are confident that the group is well placed to weather the ebbs and flows of the markets. The business has a diversified and loyal client base, a great investment track record, strong cash flows, healthy balance sheet, aligned interest between all stakeholders, a diversified revenue stream and is singularly focused on fund management.
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
