| Tue 13 Nov 2007, 7:00 | | CML - Coronation - Reviewed Preliminary Financial |
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CML
CML
CML - Coronation - Reviewed Preliminary Financial Results For The Year
Ended 30 September 2007 and dividend declaration
Coronation Fund Managers Limited
(Incorporated in the Republic of South Africa)
(Registration number 1973/009318/06)
ISIN: ZAE000047353
Share code: CML
("Coronation" or "the Company")
REVIEWED PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2007
- Earnings per share of 81.4 cents, up 57%
- Headline earnings per share of 79.6 cents, up 53%
- Profit for the year of R285 million, up 45%
- Cash of R522 million returned to shareholders
Thys du Toit commented: "Our clients have enjoyed exemplary returns over all
periods. Many of our newer investment initiatives have been performing well,
in particular our fixed interest unit as well as our hedge fund products.
Naturally a significant portion of our revenue is attributable to the level
of financial markets and performance of the domestic equity market which
over the past five years has been exceptional. However, the renewed
vulnerability in the outlook for financial markets suggests cautious revenue
and profit growth expectations."
Enquiries:
Coronation Fund Managers 021 680 2000
Hugo Nelson, CEO
Thys du Toit
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
Nandile Ngubentombi 082 825 8004
RESULTS
Coronation, one of the country`s leading fund management companies,
entrenches its industry standing with a strong set of results for the 2007
financial year. Against the backdrop of favourable domestic market
conditions all business areas recorded high rates of growth.
For the year under review, assets under management increased by 33% from
R101 billion at 30 September 2006 to R134 billion at 30 September 2007. The
profit for the year is up 45% to R285 million (2006: R196 million). Headline
earnings per share increased by 53% to 79.6 cents (2006: 51.9 cents) and
diluted headline earnings per share by 55% to 72.7 cents (2006: 46.8 cents).
CAPITAL STRUCTURE
During 2007, Coronation continued the share buy-back programme initiated in
June 2006. In the period July to August 2007 a total of 35 504 593 shares
were bought back at a total cost of R300 million. These shares were all
cancelled. Together with additional shares issued during the year in terms
of the conversion of 4 560 000 convertible preference shares and the
exercise of 2 099 990 options granted to staff in December 2003, this
resulted in a weighted average number of shares in issue for the financial
year of 348 893 885 (2006: 376 670 543). Actual shares in issue at 30
September 2007 were 320 732 799 (2006: 349 577 402; 2005: 382 274 930).
CASH RETURNED TO SHAREHOLDERS
As in past years, Coronation continues to reward shareholders with generous
distributions. The final distribution for the 2007 financial year will be
R151 million which equates to a cash dividend of 47 cents per share.
Together with the interim distribution of 20 cents per share in May 2007
(total 67 cents per share), this represents an increase of 26% over the
distribution for the 2006 financial year (53 cents per share). Inclusive of
the amounts spent on share buy-backs, Coronation has returned R385 million
(share buy-back R200 million and cash distribution of R185 million) in 2006
and will be returning R522 million (share buy-back R300 million and cash
distribution of R222 million) in 2007.
The final dividend distribution will be paid out of the distributable
reserves of Coronation.
In compliance with the JSE Limited Listings Requirements, the following
dates are applicable:
Last day to trade Friday, 7 December 2007
Shares trade ex distribution Monday, 10 December 2007
Record date Friday, 14 December 2007
Payment date Tuesday, 18 December 2007
Share certificates may not be dematerialised or rematerialised between
Monday, 10 December 2007, and Friday, 14 December 2007, both dates
inclusive.
INVESTMENT PERFORMANCE
The past financial year has again favoured South African investors as the
bull market continued into its fifth consecutive year. The strength of
investment performance across all client portfolios reflects Coronation`s
philosophy of investing with a long-term time horizon and the
appropriateness of our product range across a wide range of asset classes.
Coronation`s clients have enjoyed exemplary returns over all periods
confirming Coronation`s status as one of the top performing fund managers in
South Africa.
Institutional
We delivered exemplary investment performance on behalf of institutional
clients. Coronation has along with the industry experienced net outflows due
to contractual dissaving and the asset allocation consequences of an equity
bull market, compounded by our relatively mature market share.
Strong long-term performance in our flagship domestic balanced portfolios
has placed us 2nd over five years in the Alexander Forbes SA Large Manager
Watch to end September 2007, and 3rd over the shorter one and three-year
periods. Similarly, the consistency of our superior performance in fixed
interest is noted in our upper quartile position in the Alexander Forbes SA
Bond Manager Watch for the same period.
While we traditionally have been known as domestic balanced and domestic
equity managers, many of our newer investment initiatives have been
performing well, in particular, our fixed interest unit as well as our hedge
fund products. The Coronation Multi-Strategy Arbitrage Fund closed to new
investors in December 2006, while the Coronation Granite Fixed Income Fund
continues to attract inflows and industry attention. The fund won the `South
Africa Hedge Fund Award` for the Best Fixed Income Hedge Fund for 2006.
Following the success of the hedge fund range and the growth in demand by
international investors to access our fund management expertise, an emerging
markets unit has recently been established.
Retail
Domestic retail assets grew by 44%, surpassing the industry growth rate of
30%, bringing total assets under management to R25.7 billion (2006: R17.8
billion). Our share of new cash flows into long-term single manager funds
for the year ended 30 September 2007, totalled R4.5 billion, which
represents a 19% share of investment flows into this market.
Investment performance remains exceptional. In the financial year we took
2nd place in the Personal Finance/Raging Bull Unit Trust Company of the Year
Award for 2006 and six `Best in Sector` awards at the 2007 Financial
Mail/Standard & Poor`s Fund Awards where we were also named runner-up in the
Best Larger Group category. All funds in the core fund range rank 1st in
their respective peer groups since inception.
The popularity of the Coronation Strategic Income Fund places it as the
largest managed income fund in South Africa, and the Coronation Capital Plus
Fund retains its position as the largest absolute return fund in the
country.
International
We are pleased to report that Coronation International, our global multi-
manager business, increased assets under management by 46%, to end the year
at $1.75 billion (2006: $1.2 billion). This is partly due to new investment
mandates sourced from Southern Africa.
This growth in assets is particularly attributable to $416 million inflows
to the Coronation Global Equity Fund of Funds, which comfortably
outperformed the benchmark MSCI World Index for the year and is well
positioned in its peer group. All funds across both the traditional and
alternative fund ranges produced favourable returns in extremely volatile
global market conditions.
OWNERSHIP AND TRANSFORMATION
The strength of our business is reliant on the diversity, collective energy,
passion and excellence of our people; this is supported by 55% of our total
South African staff complement being black. Our effective staff shareholding
is now 31% (2006: 28%). The Imvula Trust, our equity empowerment partner,
the beneficiaries of which are all current and future black staff, has a net
asset value of R152 million (2006: R86 million). Total black staff
shareholding is 13%.
Our progress in creating broad-based sustainable black economic empowerment
is illustrated in our being awarded The Eric Molobi Most Progressive Company
Award by ABSIP, having again achieved an `A` rating by EmpowerDEX and being
placed runner-up in the financial services category of The Community Growth
Socially Responsible Investing Awards.
NEW CHIEF EXECUTIVE OFFICER
As per the SENS announcement dated 9 November 2007, Hugo Nelson, deputy
chief executive officer, has been appointed as executive director and chief
executive officer with effect from 8 November 2007. Thys du Toit, chief
executive officer since 1997, will remain an executive director of the
Company and will primarily focus on opportunities to diversify revenue
streams in the retail business.
PROSPECTS
Coronation remains focused on fund management. Since inception we have
strengthened our foothold in each of our chosen markets and are confident in
the sustainability of the business. Naturally a significant portion of our
revenue is attributable to the level of financial markets and performance of
the domestic equity market over the past five years, which has been
exceptional. However, the renewed vulnerability in the outlook for financial
markets suggests cautious revenue and profit growth expectations.
FINANCIAL STATEMENTS
The results have been reviewed by the Company`s auditors, KPMG Inc. A copy
of their review report is available for inspection at the Company`s
registered office.
Gavan Ryan Hugo Nelson John Snalam
Chairman Chief executive officer Company secretary
Condensed consolidated income statement for the year ended 30 September 2007
Reviewed Audited
2007 Growth 2006
R`000 % R`000
Fund management activities
Revenue 961 996 36 706 238
Financial income 45 914 27 36 054
Interest and dividend income 24 452 21 614
Other income 21 462 14 440
Operating expenses (564 489) 29 (436 593)
Share-based payment expense (40 212) (51 384)
Other expenses (524 277) (385 209)
Interest expense (13 049) (13 005)
Share of profit of associate 1 334 1 799
Income from fund management 431 706 47 294 493
Income attributable to 49 149 43 168
policyholder linked assets and
investment partnerships
Net fair value gains on 54 956 48 982
policyholder and investment
partnership financial instruments
Administration expenses borne by (5 807) (5 814)
policyholders and investors in
investment partnerships
Profit before tax 480 855 337 661
Income tax expense (196 249) (141 207)
Taxation on shareholder profits (147 100) 50 (98 039)
Taxation on policyholder (49 149) (43 168)
investment contracts
Profit for the year 284 606 45 196 454
Attributable to:
- equity holders of the Company 284 035 196 454
- minority interest 571 -
Profit for the year 284 606 196 454
Earnings per share (cents)
- basic 81.4 57 51.9
- diluted 74.3 59 46.8
Note to the income statement
Headline earnings per share
(cents)
- basic 79.6 53 51.9
- diluted 72.7 55 46.8
Capital distribution per share
(cents)
- interim 20 -
- final payable - 53
Dividend distribution per
share(cents)
- final payable 47 -
Total distribution 67 26 53
Diluted number of shares
Reviewed Audited
2007 2006
000`s 000`s
Weighted average number of shares in issue 348 894 376 671
Preference share transaction converted on 24 November 1 145 7 600
2006
December 2003 options 2 002 2 191
BEE Transaction 34 400 38 023
Diluted weighted average number of shares in issue 386 441 424 485
Options outstanding at year end amount to 3 761 686.
Condensed consolidated statement of changes in equity for the year ended 30
September 2007
R`000 Share Foreign Accumulated Share-based
capital and currency earnings payment
premium translation reserve
reserve
Balance at 30 September 1 172 550 (11 247) 121 657 21 607
2005
Currency translation 22 444
differences
Revaluation of
financial assets
available-for-sale
Net income recognised 22 444
directly in equity
Profit for the year 196 454
Total recognised income 22 444 196 454
and expense for the
year
Share-based payment 51 384
reserve
Dividends paid (1 219)
Capital distribution (138 197)
Shares issued 8 967
Shares repurchased and (200 167)
cancelled
Acquisition of minority
interest
Balance at 30 September 843 153 11 197 316 892 72 991
2006
Currency translation (7 006)
differences
Revaluation of
available-for-sale
financial assets
Net income recognised (7 006)
directly in equity
Profit for the year 284 035
Total recognised income (7 006) 284 035
and expense for the
year
Share-based payment 40 212
reserve
Dividends paid (861)
Capital distribution (256 514)
Shares issued 1 963
Shares repurchased and (299 576)
cancelled
Minority interest at
acquisition of
subsidiary
Balance at 30 September 289 026 4 191 600 066 113 203
2007
Condensed consolidated statement of changes in equity for the year ended 30
September 2007 (continued)
R`000 Revaluation Issued Minority Total
reserve capital and interest equity
reserves
attributable
to equity
holders of
the Company
Balance at 30 September 3 289 1 307 856 586 1 308 442
2005
Currency translation 22 444 22 444
differences
Revaluation of 2 514 2 514 2 514
financial assets
available-for-sale
Net income recognised 2 514 24 958 24 958
directly in equity
Profit for the year 196 454 196 454
Total recognised income 2 514 221 412 221 412
and expense for the
year
Share-based payment 51 384 51 384
reserve
Dividends paid (1 219) (1 219)
Capital distribution (138 197) (138 197)
Shares issued 8 967 8 967
Shares repurchased and (200 167) (200 167)
cancelled
Acquisition of minority (586) (586)
interest
Balance at 30 September 5 803 1 250 036 1 250 036
2006
Currency translation (7 006) (7 006)
differences
Revaluation of (3 927) (3 927) (3 927)
available-for-sale
financial assets
Net income recognised (3 927) (10 933) (10 933)
directly in equity
Profit for the year 284 035 571 284 606
Total recognised income (3 927) 273 102 571 273 673
and expense for the
year
Share-based payment 40 212 40 212
reserve
Dividends paid (861) (861)
Capital distribution (256 514) (256 514)
Shares issued 1 963 1 963
Shares repurchased and (299 576) (299 576)
cancelled
Minority interest at 3 827 3 827
acquisition of
subsidiary
Balance at 30 September 1 876 1 008 362 4 398 1 012 760
2007
Condensed consolidated balance sheet as at 30 September 2007
Reviewed Audited
2007 2006
R`000 R`000
Assets
Intangible assets 1 097 309 1 087 772
Equipment 9 171 5 932
Investment in associate 1 960 11 021
Deferred tax asset 1 872 2 044
Investments backing policyholder funds and 18 482 686 15 782 142
investments held through investment
partnerships
Financial assets available-for-sale 66 804 87 327
Financial assets at fair value through 31 154 64 804
profit or loss
Trade and other receivables 168 265 97 637
Cash and cash equivalents 119 134 253 590
Total assets 19 978 355 17 392 269
Liabilities
Interest-bearing borrowing 125 765 139 533
Deferred tax liabilities 47 788 39 906
Policyholder investment contract 18 437 426 15 743 747
liabilities and liabilities to holders of
interests in investment partnerships
Income tax payable 108 702 78 955
Trade and other payables 245 914 140 092
Total liabilities 18 965 595 16 142 233
Net assets 1 012 760 1 250 036
Equity
Issued capital and reserves attributable to 1 008 362 1 250 036
equity holders of the Company
Minority interest 4 398 -
Total equity 1 012 760 1 250 036
Condensed consolidated statement of cash flows for the year ended 30
September 2007
Reviewed Audited
2007 2006
R`000 R`000
Cash flows from operating activities
Profit before tax 480 855 337 661
Non-cash and other adjustments 9 678 11 397
Working capital changes 35 312 45 352
Cash generated from operations 525 845 394 410
Interest paid (13 167) (13 874)
Income taxes paid (158 448) (69 323)
Net cash from operating activities 354 230 311 213
Net cash from investing activities 87 076 13 264
Cash flows from financing activities
Shares issued, repurchased and cancelled (297 613) (191 200)
Capital distribution and dividends paid (257 375) (139 416)
Decrease in interest-bearing borrowings (13 768) (8 467)
Net cash used in financing activities (568 756) (339 083)
Net decrease in cash and cash equivalents (127 450) (14 606)
Cash and cash equivalents at beginning of year 253 590 245 752
Exchange rate adjustments (7 006) 22 444
Cash and cash equivalents at end of year 119 134 253 590
Reconciliation of headline earnings for the year ended 30 September 2007
Reviewed Audited
2007 2006
R`000 R`000
Earnings attributable to shareholders 284 035 196 454
Dividend on convertible cumulative redeemable (149) (926)
preference shares
Earnings attributable to ordinary shareholders 283 886 195 528
Effect of adjustments (6 867) 15
Loss on disposal of equipment 87 15
Profit on disposal of financial asset (6 898) -
available-for-sale
Profit on disposal of investment in subsidiary (56) -
Total tax effect of adjustments 851 (2)
Headline earnings 277 870 195 541
Segment report for the year ended 30 September 2007
Africa International Group
Reviewed Audited Reviewed Audited Reviewed Audited
2007 2006 2007 2006 2007 2006
R`000 R`000 R`000 R`000 R`000 R`000
Segment 880 241 632 833 81 755 73 405 961 996 706 238
revenue
Segment (495 918) (372 776) (68 571) (63 817) (564 489) (436 593)
operating
expenses
Segment 384 323 260 057 13 184 9 588 397 507 269 645
result for
the year
Net financial 22 606 14 444 10 259 8 605 32 865 23 049
income
Share of 1 334 1 799 - - 1 334 1 799
profit of
associate
Income from 408 263 276 300 23 443 18 193 431 706 294 493
fund
management
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and accounting policies
The financial information has been prepared in accordance with the
recognition and measurement principles of International Financial Reporting
Standards (IFRS), the disclosure and presentation requirements of 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 2006.
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. Acquisition of businesses
With effect from 1 February 2007, the group`s effective shareholding in
Namibia Asset Management Limited was increased to 54.9% and it has been
consolidated from that date.
With effect from 1 October 2006, the group sold 49% of its shareholding in
Coronation Fund Managers Botswana (Pty) Ltd, thereby reducing its effective
holding to 51% for the financial year.
The group also owns 49% of Professional Provident Society Investments (Pty)
Ltd and this investment is classified as an associate.
Directors: G M C Ryan* (Chairman), H A Nelson (Chief executive officer), M M
du Toit, W T Floquet*#, L F Stassen, S Pather*#
(* Non-executive # Independent)
Registered office: Coronation House, Boundary Terraces, 1 Mariendahl Lane,
Newlands 7700
Postal address: PO Box 993, Cape Town 8000
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg 2001
Website: www.coronation.com
Cape Town
13 November 2007
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Date: 13/11/2007 07:00:07 Produced by the JSE SENS Department.
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