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CML
CML
CML - Coronation Fund Managers - Reviewed Preliminary Financial Results For The
Year Ended 30 September 2009
Coronation Fund Managers
(Incorporated in the Republic of South Africa)
Registration number: 1973/009318/06
JSE share code: CML
ISIN: ZAE000047353
Reviewed preliminary financial results for the year ended 30 September 2009
- Assets under management increase to R155 billion, up 24%
- Diluted headline earnings per share of 60.5 cents, up 24%
- Total dividend per share of 50 cents, up 9%
The strength of this year`s results belies the extreme levels of volatility
across world markets and the continued high levels of distrust amongst the
majority of market participants. 2009 was a year in which the mask of a trending
bull market was firmly removed. At a time when many questioned the value added
by the investment industry Coronation remained firm in its philosophy of
investing with a long-term time horizon. As a result we generated significant
alpha across all client portfolios, confirming Coronation`s position as one of
the country`s best performing fund management companies.
Results
Assets under management ended the year at R155 billion (September 2008: R125
billion) on the back of strong institutional inflows, excellent investment
performance and a turnaround in world markets in the second half of the year.
Profit for the year to 30 September 2009 is up 19% to R211 million (2008: R178
million). Headline earnings per share increased by 26% to 66.4 cents (2008: 52.9
cents) and diluted headline earnings per share by 24% to 60.5 cents (2008: 48.6
cents).
Cash returned to shareholders
In line with our distribution policy we continue to reward shareholders through
regular and significant distributions of free cash flow generated. The final
cash dividend for the 2009 financial year will be R116 million (2008: R95
million), equivalent to a cash dividend per share of 37 cents, making a total of
50 cents per share for the 2009 financial year (2008: 46 cents per share).
In compliance with the requirements of the JSE Limited, the following dates are
applicable:
Last day to trade cum dividend Friday, 4 December 2009
Shares trade ex dividend Monday, 7 December 2009
Record date Friday, 11 December 2009
Payment date Monday, 14 December 2009
Share certificates may not be dematerialised or rematerialised between Monday, 7
December 2009, and Friday, 11 December 2009, both dates inclusive.
Institutional
As the turmoil of the financial crisis drew a clear separation between managers
within the institutional space, Coronation`s skill and discipline in delivering
strong long-term performance confirmed its standing as an industry leader. Our
balanced portfolios rank 1st in the Alexander Forbes Global Large Manager Watch
and 2nd in the SA Survey for the year to end September 2009. Over the medium to
longer-term 3 and 5-year periods we are ranked 3rd across both surveys.
The changing market conditions for assets specifically in our Absolute Return
investment universe saw the re-opening of this highly successful fund range. The
dual objective of capital preservation and return optimisation of our absolute
funds is best illustrated by the Coronation Global Absolute Fund. This fund has
yielded a compelling active return of 18.8% per annum, which is almost 5% ahead
of its benchmark, since inception in August 1999. To complete the range we added
a new low-risk fund, Coronation Inflation Plus, which launched in March 2009.
Retail
We saw a major acceleration in new business as sentiment changed in the final
quarter of the financial year, and driven by excellent performance, the greatest
beneficiaries of these flows were our equity funds and multi-asset funds. We
remain the 6th largest long-term fund manager of the now R747 billion unit trust
industry.
A key illustration of our ability to generate alpha is publicly available in the
unit trust ranking tables to end September 2009. The Coronation Top 20 Fund is
the best performing equity fund in the country, ranking no. 1 across all
meaningful time periods. For the one year, it significantly outperformed the
FTSE/JSE Top 40 Index benchmark by more than 16% and since inception in 2000 has
outperformed the index by 8.2% per annum Similarly, the Coronation Balanced Plus
and Coronation World Equity (ZAR) funds have strong performance track records,
ranking 2nd over 3 years and 1st over the longer-term 5-year period and since
inception. All funds in the Coronation core range rank in the top two positions
of the respective fund categories since inception.
It is a very rare occurrence that a single investment house can lay claim to
having the top performing equity fund, foreign equity fund and balanced fund
over five years. We attribute this incredible achievement to our undiluted focus
on delivering long-term returns for all our clients.
International
In extremely difficult market conditions our global fund range produced
extremely strong returns. A particular highlight is the Global Equity Fund of
Funds, which over the one year has outperformed (net of all fees) the MSCI World
Index benchmark by a staggering 16.2%. Within a global context this is a truly
exceptional achievement, and particularly for a globally diversified multi-
managed fund.
Our single manager funds managed by our Cape Town-based Global Emerging Markets
and Africa units also exceeded expectations. Against a 97% jump in the MSCI
Emerging Markets Index from its lows in March, the Coronation Global Emerging
Markets Fund produced an outperformance of almost 6%, returning 25% for the
year. The equally strong performance of the Coronation Africa Fund resulted in a
37% outperformance of the benchmark, Dow Jones Africa Titans 50 Index, for the
year. It also resulted in the fund being awarded runner-up in the Africa
Investor Index Series Awards, which measures performance for the period between
April 2008 and April 2009 (the Coronation Africa Fund was launched in August
2008).
During the course of the year the Coronation Global Latitude Fund was added to
our international offering and a global balanced unit trust, the Coronation
Global Managed Fund, was launched on 29 October 2009.
Changes to the board of directors
Messrs Gavan Ryan (chairman) and Winston Floquet (independent non-executive
director) retired and Mr Thys du Toit (non-executive director) resigned from the
board. Mr Jock McKenzie was appointed non-executive independent director and Mr
Anton Pillay, executive director.
Prospects
Having seen the point of maximum pessimism in March 2009 we now find ourselves
with market participants who are cautiously optimistic. We are pleased with how
our business has responded to the extreme operating environment over the past
year, and remain convinced that our business model is robust and will succeed in
navigating the inevitable challenges of the year ahead.
Independent review by the auditors
KPMG Inc., the company`s independent auditor, has reviewed these preliminary
financial statements and has expressed an unmodified conclusion on the
preliminary financial statements. Their review report which does not extend to
the management comments included in these preliminary financial statements, is
available for inspection at the company`s registered office.
Shams Pather Hugo Nelson John Snalam
Chairman Chief Executive Officer Company Secretary
Cape Town
10 November 2009
Enquiries:
Coronation Fund Managers
Hugo Nelson, CEO 021 680 2041
John Snalam, CFO 021 680 2094
Anton Pillay, COO 021 680 2480
CapitalVoice
Johannes van Niekerk 082 921 9110
Consolidated income statement
Reviewed Audited
2009 Growth 2008
R`000 % R`000
Fund management activities
Revenue 842 030 5 803 632
Financial income 9 486 (35) 14 568
Finance and dividend income 10 913 11 431
Other (expense)/income (1 427) 3 137
Operating expenses (501 857) (4) (525
087)
Share-based payment expense (21 441) (33 661)
Other expenses (480 416) (491
426)
Finance expense (22 513) (16 441)
Share of loss of associate (1 960) -
Income from fund management 325 186 18 276 672
Income/(expense) attributable to 27 155 (5 650)
policyholder linked assets and investment
partnerships
Net fair value gains on policyholder and 41 042 1 679
investment partnership financial instruments
Administration expenses borne by (13 887) (7 329)
policyholders and investors in investment
partnerships
Profit before income tax 352 341 30 271 022
Income tax expense (141 472) (93 434)
Taxation on shareholder profits (114 317) 15 (99 084)
Taxation on policyholder investment (27 155) 5 650
contracts
Profit for the year 210 869 19 177 588
Attributable to:
- equity holders of the company 207 379 20 172 943
- minority interest 3 490 4 645
Profit for the year 210 869 177 588
Earnings per share (cents)
- basic 65.8 22 53.9
- diluted 60.0 21 49.5
Note to the income statement
Headline earnings per share (cents)
- basic 66.4 26 52.9
- diluted 60.5 24 48.6
Dividends per share (cents)
- interim dividend 13.0 16.0
- final dividend 37.0 30.0
Total dividend 50.0 9 46.0
Shares in issue (millions) 314.6 315.8
Weighted average number of ordinary shares 315.1 321.1
(millions)
Weighted average number of ordinary shares 348.6 354.9
(diluted) (millions)
Diluted number of shares (thousands)
Reviewed Audited
2009 2008
Weighted average number of shares in issue 315 100 321 081
Shares to be issued
- December 2003 options 99 191
- BEE transaction 33 381 33 625
Diluted weighted average number of shares 348 580 354 897
in issue
Consolidated statement of changes in equity
R`000 Share Foreign Accumulated Share-based
capital and currency earnings payment
share translation reserve
premium reserve
Balance at 30 September 289 026 4 191 600 066 113 203
2007
Currency translation 13 349
differences
Revaluation of financial
assets available-for-
sale
- Net change in fair
value
- Transferred to profit
or loss on disposal
Net income recognised 13 349
directly in equity
Profit for the year 172 943
Total recognised income 13 349 172 943
and expense for the year
Share-based payments 33 661
Dividends paid (203 861)
Shares issued 11 143
Shares repurchased and (39 575)
cancelled
Balance at 30 September 260 594 17 540 569 148 146 864
2008
Currency translation (6 853)
differences
Revaluation of financial
assets available-for-
sale
- Net change in fair
value
- Transferred to profit
or loss on disposal
Net income recognised (6 853)
directly in equity
Profit for the year 207 379
Total recognised income (6 853) 207 379
and expense for the year
Share-based payments 21 441
Transfer to accumulated 37 992 (37 992)
earnings
Dividends and capital (136 768)
distribution paid
Shares issued 462
Shares repurchased and (6 017)
cancelled
Increase in equity
Balance at 30 September 255 039 10 687 677 751 130 313
2009
Consolidated statement of changes in equity (continued)
R`000 Revalua-tion Issued Minority Total equity
reserve capital and interest
reserves
attribu-
table to
equity
holders of
the company
Balance at 30 September 1 876 1 008 362 4 398 1 012 760
2007
Currency translation 13 349 13 349
differences
Revaluation of (6 170) (6 170) (6 170)
financial assets
available-for-sale
- Net change in fair (2 531) (2 531) (2 531)
value
- Transferred to profit (3 639) (3 639) (3 639)
or loss on disposal
Net income recognised (6 170) 7 179 7 179
directly in equity
Profit for the year 172 943 4 645 177 588
Total recognised income (6 170) 180 122 4 645 184 767
and expense for the
year
Share-based payments 33 661 33 661
Dividends paid (203 861) (4 348) (208 209)
Shares issued 11 143 11 143
Shares repurchased and (39 575) (39 575)
cancelled
Balance at 30 September (4 294) 989 852 4 695 994 547
2008
Currency translation (6 853) (6 853)
differences
Revaluation of 6 159 6 159 6 159
financial assets
available-for-sale
- Net change in fair 4 595 4 595 4 595
value
- Transferred to profit 1 564 1 564 1 564
or loss on disposal
Net income recognised 6 159 (694) (694)
directly in equity
Profit for the year 207 379 3 490 210 869
Total recognised income 6 159 206 685 3 490 210 175
and expense for the
year
Share-based payments 21 441 21 441
Transfer to accumulated - -
earnings
Dividends and capital (136 768) (9 257) (146 025)
distribution paid
Shares issued 462 462
Shares repurchased and (6 017) (6 017)
cancelled
Increase in equity - 9 361 9 361
Balance at 30 September 1 865 1 075 655 8 289 1 083 944
2009
Consolidated balance sheet
Reviewed Audited
2009 2008
R`000 R`000
Assets
Intangible assets 1 097 309 1 097 309
Equipment 15 495 20 684
Investment in associate - 1 960
Deferred tax asset 5 183 5 181
Investments backing policyholder funds and 19 204 524 19 207 633
investments held through investment
partnerships
Investment securities 19 606 36 312
Loan receivable 39 140 39 137
Trade and other receivables 165 107 111 496
Cash and cash equivalents 99 672 108 453
Total assets 20 646 036 20 628 165
Liabilities
Interest-bearing borrowing 106 315 110 419
Deferred tax liabilities 14 854 12 702
Policyholder investment contract liabilities 19 189 670 19 195 113
and liabilities to holders of interests in
investment partnerships
Income tax payable 26 181 26 083
Trade and other payables 202 998 170 757
Bank overdraft 22 074 118 544
Total liabilities 19 562 092 19 633 618
Net assets 1 083 944 994 547
Equity
Share capital and premium 255 039 260 594
Retained earnings 677 751 569 148
Reserves 142 865 160 110
Total equity attributable to equity holders of 1 075 655 989 852
the company
Minority interest 8 289 4 695
Total equity 1 083 944 994 547
Consolidated statement of cash flows
Reviewed Audited
2009 2008
R`000 R`000
Cash flows from operating activities
Profit for the period 210 869 177 588
Income tax expense 141 472 93 434
Non-cash and other adjustments 41 605 74 866
Operating profit before changes in working 393 946 345 888
capital
Working capital changes (20 791) (18 125)
Cash generated from operations 373 155 327 763
Interest paid (23 092) (16 704)
Income taxes paid (139 224) (214 448)
Net cash from operating activities 210 839 96 611
Net cash from investing activities 39 387 12 802
Cash flows from financing activities
Repayment of interest-bearing borrowings (4 104) (15 346)
Shares repurchased and cancelled (6 017) (39 575)
Shares issued 462 11 143
Dividends and capital distribution paid (146 025) (208 209)
Net cash from financing activities (155 684) (251 987)
Increase/(decrease) in cash and cash 94 542 (142 574)
equivalents
Cash and cash equivalents at beginning of (10 091) 119 134
year
Effect of exchange rate fluctuations on cash (6 853) 13 349
held
Cash and cash equivalents at end of year 77 598 (10 091)
Reconciliation of headline earnings
Reviewed Audited
2009 2008
R`000 R`000
Earnings attributable to ordinary shareholders 207 379 172 943
Effect of adjustments: 1 939 (3 798)
Loss/(profit) on disposal of equipment 375 (159)
Loss/(profit) on disposal of available-for- 1 564 (3 639)
sale financial assets
Total tax effect of adjustments (238) 637
Headline earnings 209 080 169 782
Segment report
Africa
Reviewed Audited
2009 2008
R`000 R`000
Segment revenue 782 568 724 825
Segment operating expenses (452 108) (452 893)
Segment result 330 460 271 932
Net financial expense (7 646) (956)
Profit from fund management 322 814 270 976
Segment report (continued)
International
Reviewed Audited
2009 2008
R`000 R`000
Segment revenue 59 462 78 807
Segment operating expenses (51 709) (72 194)
Segment result 7 753 6 613
Net financial expense (5 381) (917)
Profit from fund management 2 372 5 696
Segment report (continued)
Group
Reviewed Audited
2009 2008
R`000 R`000
Segment revenue 842 030 803 632
Segment operating expenses (503 817) (525 087)
Segment result 338 213 278 545
Net financial expense (13 027) (1 873)
Profit from fund management 325 186 276 672
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 2008.
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.
Directors: S Pather (Chairman)*, H A Nelson (CEO), J G February*, J D McKenzie*,
A C Pillay, A Watson* (* Independent Non-Executive)
Registered office: 7th Floor, MontClare Place, Cnr Campground & Main Roads,
Claremont 7708
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
Cape Town
10 November 2009
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Date: 10/11/2009 07:05:05 Produced by the JSE SENS Department.
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