| Tue 12 May 2009, 7:06 | | CML - Coronation Fund Managers - Reviewed interim results for the six months |
|
CML
CML
CML - Coronation Fund Managers - Reviewed interim results for the six months
ended 31 March 2009
Coronation Fund Managers Limited
(Incorporated in the Republic of South Africa)
Registration number: 1973/009318/06
Share code: CML
ISIN: ZAE000047353
("Coronation" or "the company")
Reviewed interim results for the six months ended 31 March 2009
- Assets under management of R120 billion (September 2008: R125 billion)
- Profit from fund management R122 million (-22%)
- Diluted headline earnings per share 20.2 cents (-16%)
Amidst the ongoing global financial crisis, Coronation produced a solid set of
results for the six months ended 31 March 2009. This financial performance and
resilience in assets under management is underpinned by the strength of
investment philosophy that sees Coronation singularly focused on fund
management.
Results
Reflected in the decline in revenue of 14% to R363 million for the six-month
period ended 31 March 2009 is the extremely difficult operating environment. The
containment of fixed costs, and the variable cost model, positively impacted
operating costs which declined by 14% to R231 million (March 2008: R269
million). Earnings per share of 22.6 cents are 18% lower than the 2008 interim
figure of 27.4 cents and diluted headline earnings per share of 20.2 cents are
16% lower (March 2008: 24 cents).
Assets under management
In the six-month period characterised by dramatic falls across world markets,
(FTSE/JSE All Share Index -13%, MSCI World Index -20%), the decline in assets
under management of 4% to R120 billion (September 2008: R125 billion) shows
encouraging resilience. During this interim reporting period we attracted a
number of new institutional client mandates totalling R21.3 billion. Of this
figure, R13.4 billion is not reflected in the stated total assets under
management.
Investment excellence
Markets continue to exhibit extreme levels of volatility, with the FTSE/JSE All
Share Index reaching a trough at 17 814 points on 20 November 2008; a level last
seen three years prior. Against this backdrop we are confident in the strength
of our investment performance relative to industry peers and fund benchmarks.
- Our balanced portfolios rank 2nd over the one, three and five-year periods in
the Alexander Forbes SA Large Manager Watch to end March 2009, while our global
portfolios are 2nd over the one-year and 3rd over three and five years in the
Alexander Forbes Global Manager Watch.
- All funds in the core range of unit trusts rank in the top two positions of
their respective categories on an annualised basis since inception to end March
2009, and all have outperformed their benchmarks.
- The Coronation World Equity Fund of Funds and Coronation Bond Fund were
recognised as industry leaders, each receiving a Morningstar/Financial Mail 2009
sector award.
International?
The market extremes reached in the final quarter of the 2008 calendar year
resulted in a decision to close the Coronation Relative Value Fund of Funds. As
a consequence, seven individuals were retrenched in the period. We continue to
manage equity-related hedge fund strategies out of London, with the balance of
our global portfolios managed from Cape Town, specifically the Global Emerging
Markets and Africa portfolios as well as the Coronation Latitude Fund.
Furthermore, the Africa portfolios were successfully launched to potential
international investors in London in early March.
Private equity
The first closing of the Coronation Peotona Private Equity Fund, scheduled for
early 2009, has been extended on the basis of encouraging prospects.
Transformation
On 15 December 2008, Coronation was independently verified by KPMG as
maintaining its status as a Level 4 contributor on the Broad-Based Black
Economic Empowerment (B-BBEE) Scorecard in terms of the B-BBEE Act 53 of 2003;
the Generic Scorecards of the Codes of Good Practice on B-BBEE and other
applicable guidelines issued by the Department of Trade and Industry or other
legislation as provided for in the Codes.
Board changes
Mr Winston Floquet retired as an independent non-executive director in January
2009 and Mr Gavan Ryan retired from his position as chairman in March 2009. Both
gentlemen are highly regarded in the industry and have made significant
contributions to the success of the group since listing in 2003. Mr Ryan is
succeeded as chairperson by independent non-executive director, Mr Shams Pather
who has served as a non-executive director since 2005.
Interim cash dividend
We continue to reward shareholders through regular and significant distributions
of free cash flow generated. We have decided to pay an interim cash dividend of
13 cents, which is calculated on the same basis as previous years. Our practice
is to make distributions equal to 75% of after-tax profits generated during the
period, increased to take account of the non-cash impact of share-based payment
charges that will not result in the issue of additional shares. We have also
added back the R10.3 million dividend tax paid during the period (which relates
to earnings generated in the previous financial year). This would amount to a
dividend distribution of 19 cents per share, but at this interim stage we will
only distribute two thirds of that, which is consistent with the methodology of
the previous comparable period.
In compliance with the Listings Requirements of the JSE Limited, the following
dates are applicable:
LAST DAY TO TRADE FRIDAY, 29 MAY 2009
SHARES TRADE EX DIVIDEND MONDAY, 1 JUNE 2009
RECORD DATE FRIDAY, 5 JUNE 2009
PAYMENT DATE MONDAY, 8 JUNE 2009
SHARE CERTIFICATES MAY NOT BE DEMATERIALISED OR REMATERIALISED BETWEEN MONDAY, 1
JUNE 2009 AND FRIDAY, 5 JUNE 2009 BOTH DATES INCLUSIVE.
Prospects
There is little doubt that the bear market will continue for a sustained period.
While the markets may experience some respite in the near term, one cannot be
certain as to the point at which the cycle will turn. That said, a very
encouraging development (at the time of writing) is that the S&P 500 recovery
has now put it in positive territory for the calendar year.
The points on which we can be certain are that we have the right strategy and
business model. Coronation is acknowledged as a leader in the industry and while
investors` time horizons have been truncated by this bear market, we are
confident that when the market turns our clients will be well positioned for the
upswing.
Independent review by the auditors
KPMG Inc., the group`s independent auditor, has reviewed the condensed
consolidated interim financial statements contained in this report. Their
unmodified review report is available for inspection at the company`s registered
office.
Shams Pather Hugo Nelson John Snalam
Chairman Chief Executive Officer Company Secretary
Cape Town
12 May 2009
Condensed consolidated income statement
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
2009 2008 % 2008
R`000 R`000 Change R`000
Fund management activities
Revenue 363 361 421 104 (14%) 803 632
Financial income 4 386 11 804 (63%) 14 568
Finance and dividend income 5 749 8 195 11 431
Other (expenses)/income (1 363) 3 609 3 137
Operating expenses (230 857) (269 058) (14%) (525 087)
Share-based payment expense (10 603) (13 354) (33 661)
Other expenses (220 254) (255 704) (491 426)
Finance expense (14 697) (7 863) (16 441)
Profit from fund management 122 193 155 987 (22%) 276 672
Expense attributable to (231) (749) (5 650)
policyholder linked assets and
investment partnerships
Net fair value gains on 3 310 4 449 1 679
policyholder and investment
partnership financial instruments
Administration expenses borne by (3 541) (5 198) (7 329)
policyholders and investors in
investment partnerships
Profit before income tax 121 962 155 238 271 022
Income tax expense (48 910) (64 970) (93 434)
Taxation on shareholder profits (49 141) (65 719) (99 084)
Taxation on policyholder 231 749 5 650
investment contracts
Profit for the period 73 052 90 268 (19%) 177 588
Attributable to:
- equity holders of the company 71 200 88 181 (19%) 172 943
- minority interest 1 852 2 087 4 645
Profit for the period 73 052 90 268 177 588
Earnings per share (cents)
- basic 22.6 27.4 (18%) 53.9
- diluted 20.5 24.7 (17%) 49.5
Note to the income statement
Headline earnings per share
(cents)
- basic 22.3 26.6 (16%) 52.9
- diluted 20.2 24.0 (16%) 48.6
Distribution per share (cents)
- interim distribution 13.0 16.0 (19%) 16.0
- final distribution 30.0
Condensed consolidated statement of changes in equity
R`000 Share Foreign Retained Share-
capital currency Earnings based
and translation payment
premium reserve reserve
Balance at 30 September 2007 289 026 4 191 600 066 113 203
Currency translation differences 13 502
Revaluation of financial assets
available-for-sale
- Net change in fair value
- Transferred to profit or loss
on disposal
Net income recognised directly 13 502
in equity
Profit for the period 88 181
Total recognised income and 13 502 88 181
expense for the period
Share-based payments 13 354
Dividends paid (156 473)
Shares issued 9 031
Balance at 31 March 2008 298 057 17 693 531 774 126 557
Currency translation differences (153)
Revaluation of financial assets
available-for-sale
- Net change in fair value
- Transferred to profit or loss
on disposal
Net income recognised directly (153)
in equity
Profit for the period 84 762
Total recognised income and (153) 84 762
expense for the period
Share-based payments 20 307
Dividends paid (47 388)
Shares issued 2 112
Shares repurchased and cancelled (39 575)
Balance at 30 September 2008 260 594 17 540 569 148 146 864
Currency translation differences 7 215
Revaluation of financial assets
available-for-sale
- Net change in fair value
- Transferred to profit or loss
on disposal
Net income recognised directly 7 215
in equity
Profit for the period 71 200
Total recognised income and 7 215 71 200
expense for the period
Share-based payments 10 603
Transfer to retained earnings 37 992 (37 992)
Dividends paid (95 875)
Shares issued 462
Shares repurchased and cancelled (6 017)
Increase in equity
Balance at 31 March 2009 255 039 24 755 582 465 119 475
Condensed consolidated statement of changes in equity (continued)
R`000 Revaluation Issued Minority Total
Reserve capital Interest Equity
and reserves
attributable
to equity
holders
of the
company
Balance at 30 September 2007 1 876 1 008 362 4 398 1 012 760
Currency translation 13 502 13 502
differences
Revaluation of financial assets (521) (521) (521)
available-for-sale
- Net change in fair value 1 862 1 862 1 862
- Transferred to profit or loss (2 383) (2 383) (2 383)
on disposal
Net income recognised directly (521) 12 981 12 981
in equity
Profit for the period 88 181 2 087 90 268
Total recognised income and (521) 101 162 2 087 103 249
expense for the period
Share-based payments 13 354 13 354
Dividends paid (156 473) (156 473)
Shares issued 9 031 9 031
Balance at 31 March 2008 1 355 975 436 6 485 981 921
Currency translation (153) (153)
differences
Revaluation of financial assets (5 649) (5 649) (5 649)
available-for-sale
- Net change in fair value (4 393) (4 393) (4 393)
- Transferred to profit or loss (1 256) (1 256) (1 256)
on disposal
Net income recognised directly (5 649) (5 802) (5 802)
in equity
Profit for the period 84 762 2 558 87 320
Total recognised income and (5 649) 78 960 2 558 81 518
expense for the period
Share-based payments 20 307 20 307
Dividends paid (47 388) (4 348) (51 736)
Shares issued 2 112 2 112
Shares repurchased and (39 575) (39 575)
cancelled
Balance at 30 September 2008 (4 294) 989 852 4 695 994 547
Currency translation 7 215 7 215
differences
Revaluation of financial assets (3 764) (3 764) (3 764)
available-for-sale
- Net change in fair value (2 905) (2 905) (2 905)
- Transferred to profit or loss (859) (859) (859)
on disposal
Net income recognised directly (3 764) 3 451 3 451
in equity
Profit for the period 71 200 1 852 73 052
Total recognised income and (3 764) 74 651 1 852 76 503
expense for the period
Share-based payments 10 603 10 603
Transfer to retained earnings
Dividends paid (95 875) (7 082) (102 957)
Shares issued 462 462
Shares repurchased and (6 017) (6 017)
cancelled
Increase in equity 5 598 5 598
Balance at 31 March 2009 (8 058) 973 676 5 063 978 739
Condensed consolidated balance sheet
Reviewed Reviewed Audited
31 March 31 March 30 Sept
R`000 2009 2008 2008
Assets
Goodwill and intangible assets 1 097 309 1 097 309 1 097 309
Equipment 18 160 11 895 20 684
Investment in associate 1 960 1 960 1 960
Deferred tax asset 9 339 3 854 5 181
Investments backing policyholder funds and 17 170 081 19 805 338 19 207 633
investments held through investment
partnerships
Investment securities 28 822 56 831 36 312
Loan receivable 39 137 - 39 137
Trade and other receivables 110 608 108 607 111 496
Cash and cash equivalents 108 997 120 423 108 453
Total assets 18 584 413 21 206 217 20 628 165
Liabilities
Interest-bearing borrowing 109 025 115 777 110 419
Deferred tax liabilities 1 729 28 509 12 702
Policyholder investment contract 17 168 352 19 777 104 19 195 113
liabilities and liabilities to holders of
interests in investment partnerships
Income tax payable 44 494 86 979 26 083
Trade and other payables 138 697 215 927 170 757
Bank overdraft 143 377 - 118 544
Total liabilities 17 605 674 20 224 296 19 633 618
Net assets 978 739 981 921 994 547
Total equity attributable to equity holders 973 676 975 436 989 852
of the company
Minority interest 5 063 6 485 4 695
Total equity 978 739 981 921 994 547
Condensed consolidated statement of cash flows
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
R`000 2009 2008 2008
Profit for the period 73 052 90 268 177 588
Income tax expense 48 910 64 970 93 434
Non-cash and other adjustments 22 524 13 870 74 866
Operating profit before changes in working 144 486 169 108 345 888
capital
Working capital changes (30 843) 29 671 (18 125)
Cash generated from operations 113 643 198 779 327 763
Interest paid (15 026) (8 039) (16 704)
Income taxes paid (34 839) (90 928) (214 448)
Net cash from operating activities 63 778 99 812 96 611
Net cash from investing activities 14 624 45 405 12 802
Net cash used in financing activities (109 906) (157 430) (251 987)
- distributions to shareholders (102 957) (156 473) (208 209)
- other (6 949) (957) (43 778)
Net decrease in cash and cash equivalents (31 504) (12 213) (142 574)
Cash and cash equivalents at beginning of (10 091) 119 134 119 134
period
Exchange rate adjustments 7 215 13 502 13 349
Cash and cash equivalents at end of period (34 380) 120 423 (10 091)
Condensed consolidated segment report
Africa International
Six months Full year Six months Full year
reviewed audited reviewed audited
31 March 30 Sept 31 March 30 Sept
R`000 2009 2008 2008 2009 2008 2008
Segment 336 538 368 963 724 825 26 823 52 141 78 807
revenue
Segment 134 162 137 130 271 932 (1 658) 14 916 6 613
results
The comparative 2008 international figures have been shown on a "gross" basis
which does not eliminate intersegment revenue. In line with the final 2008
financial year segment reporting, however, the 31 March 2009 figures eliminate
intersegment revenue.
Condensed consolidated segment report (continued)
Group
Six months Full year
reviewed audited
31 March 30 Sept
R`000 2009 2008 2008
Segment revenue 363 361 421 104 803 632
Segment results 132 504 152 046 278 545
Earnings per share
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
2009 2008 2008
Weighted average number of ordinary 315 636 428 321 597 285 321 080 742
shares in issue during the period
Weighted average number of ordinary 347 521 924 356 936 439 354 896 612
shares potentially in issue
R`000 R`000 R`000
Earnings attributable to shareholders 73 052 90 268 177 588
Minority interest (1 852) (2 087) (4 645)
Earnings attributable to ordinary 71 200 88 181 172 943
shareholders
Profit on disposal of financial assets (859) (2 459) (3 011)
available-for-sale
Loss/(profit) on disposal of equipment 20 (103) (150)
Headline earnings attributable to 70 361 85 619 169 782
ordinary shareholders
Actual number of shares in issue at 314 565 858 323 369 480 315 774 163
the end of the period
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. 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 interim financial statements are consistent with those applied for
the year ended 30 September 2008.
These condensed consolidated interim 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 interim
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.
Cape Town
12 May 2009
Issued by sponsor:
Deutsche Securities (SA) (Proprietary) Limited
Date: 12/05/2009 07:06:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
