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CML
CML
CML - Coronation Fund Managers - Reviewed Interim Results For The Six Months
Ended 31 March 2010
Coronation Fund Managers Limited
(Incorporated in the Republic of South Africa)
Registration number: 1973/009318/06
JSE share code: CML
ISIN: ZAE000047353
("Coronation Fund Managers" or "the company" or "the Group")
Reviewed interim results for the six months ended 31 March 2010
Assets under management of R176 billion
Diluted headline earnings per share of 64.8 cents
Interim dividend per share of 51 cents
Coronation Fund Managers produced an exceptional set of results for the six
months to end 31 March 2010. The business benefited from superior investment
performance across all client portfolios, strong institutional and retail flows,
and the continued containment of fixed operating costs. Our undiluted focus on
asset management and investing for the long term contributed significantly to
these results.
Enquiries
Coronation Fund Managers 021 680 2000
Hugo Nelson, CEO 021 680 2041
Anton Pillay, COO 021 680 2480
John Snalam, CFO 021 680 2094
CapitalVoice
Johannes van Niekerk 082 921 9110
Results
Revenue has increased by 80% to R655 million. Together with a continued focus on
cost control measures, this has resulted in a 210% increase in profit for the
period to R227 million; translating into growth in diluted headline earnings per
share of 221% to 64.8 cents (March 2009: 20.2 cents).
Assets under management
Led by global emerging markets, world financial markets have rebounded strongly
from their lows of March 2009. From a close of 20 363 points at end March 2009,
the FTSE/JSE All Share Index reached a level of 28 747 on 31 March 2010, just 9%
shy of its all time high. The recovery in the domestic market, combined with
excellent investment performance and strong asset growth, has resulted in assets
under management reaching R176 billion (September 2009: R155 billion).
Investment excellence
At Coronation Fund Managers sustainable performance over meaningful time periods
(typically five years and longer) is vital to both our clients and our business.
This is reflected in our investment philosophy of investing with a long-term
time horizon and has resulted in the following performance highlights:
- Both our domestic and global balanced portfolios rank 2nd over three
years and 3rd over five years in the Alexander Forbes SA and Global
Large Manager Watch Surveys to end March 2010. Similarly, our absolute
portfolios rank 3rd over three years and 1st over five years in the
Conservative Global Manager Watch for the same period.
- These rankings are echoed in the consistent top-quartile returns of our
core domestic range of unit trust funds, developed to meet the specific
needs of South African investors. Since inception, the Coronation Top
20 and Equity funds have outperformed their market benchmarks by 7.7%
and 5% respectively per annum. Likewise, our flagship multi-asset
Balanced Plus Fund has outperformed its market-related benchmark by
2.42% per annum since inception, making it one of the top performing
multi-asset funds over the past 5-year period. Within our lower-risk
multi-asset fund grouping, Capital Plus has outperformed inflation by
an annualised 8.86% since inception, and Balanced Defensive has
delivered top-decile performance in its category since inception.
Within our fixed interest range, Strategic Income has beaten cash by
2.35% per annum since inception.
- Our success in managing global assets is highlighted in the
institutional portfolio, Coronation Global Equity Fund of Funds which,
over the past 10-year period has outperformed the MSCI World Index by
2.47% per annum, net of all fees. Similarly, the relatively new risk-
profiled Global Capital Plus Fund (formerly Global Latitude) launched
in November 2008 has performed exceptionally well, outperforming the
MSCI World Index by 15.59% per annum since inception.
International
Our specialist Global Emerging Markets and Africa units continue to build
impressive performance track records. Since launch in July 2008, the Global
Emerging Markets Fund has outperformed the MSCI Emerging Markets Index by 8.09%
per annum. This outperformance places the fund in second position out of a total
of 40 international peers over the period. Similarly, the Africa Frontiers Fund,
with a since launch return of 25.36% per annum, has outperformed the FTSE/JSE
Africa Top 30 Ex SA Index by a staggering 42.85% per annum.
Initiatives
PPS Investments has recorded strong growth in assets under management over the
period and continues to gain traction in the market.
On 28 February 2010 we exited from our private equity partnership in our
capacity as general partner, as a result of low local investor appetite for
private equity as an alternate asset class. We remain invested in the private
equity fund as a limited partner, which achieved a successful first close on 1
March 2010.
Interim cash dividend
We continue to reward shareholders through regular and significant distributions
of free cash flow generated. We 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. This amounts to a dividend distribution of 51 cents per
share.
In compliance with the Listings Requirements of the JSE Limited (JSE), the
following dates are applicable:
Last day to trade Friday, 21 May 2010
Shares trade ex dividend Monday, 24 May 2010
Record date Friday, 28 May 2010
Payment date Monday, 31 May 2010
Share certificates may not be dematerialised or rematerialised between Monday,
24 May 2010, and Friday, 28 May 2010, both dates inclusive.
Prospects
We are extremely pleased with how Coronation Fund Managers has performed over
the past six-month period but, while markets have strongly rebounded, we expect
continued volatility.
Volatile markets create opportunities for the patient investor and we are
confident that our robust investment process and philosophy will continue to
deliver superior long-term returns for all our stakeholders.
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
Chairman
Hugo Nelson
Chief Executive Officer
John Snalam
Company Secretary
Cape Town
6 May 2010
Condensed consolidated statement of comprehensive income
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
2010 2009 % 2009
R`000 R`000 Change R`000
Fund management activities
Revenue 654 825 363 361 80% 842 030
Other income/(expenses) 1 730 (1 363) (1 427)
Operating expenses (338 006) (230 857) 46% (501 857)
Share-based payment expense (9 588) (10 603) (21 441)
Other expenses (328 418) (220 254) (480 416)
Results from operating 318 549 131 141 143% 338 746
activities
Finance and dividend income 13 655 5 749 10 913
Finance expense (5 250) (14 697) (22 513)
Net finance costs 8 405 (8 948) (11 600)
Share of loss of equity
accounted investees (net of
income tax) - - (1 960)
Profit from fund management 326 954 122 193 168% 325 186
Income/(expense) attributable
to policyholder linked assets
and investment partnerships 19 998 (231) 27 155
Net fair value gains on
policyholder and investment
partnership financial
instruments 28 199 3 310 41 042
Administration expenses borne (8 201) (3 541) (13 887)
by policyholders and
investors in investment
partnerships
Profit before income tax 346 952 121 962 352 341
Income tax expense (120 421) (48 910) (141 472)
Taxation on shareholder (100 423) (49 141) (114 317)
profits
Taxation on policyholder (19 998) 231 (27 155)
investment contracts
Profit for the period 226 531 73 052 210% 210 869
Other comprehensive income
Foreign currency translation (1 318) 7 215 (6 853)
differences for foreign
operations
Net change in fair value of (2 631) (2 905) 4 595
available-for-sale financial
assets
Net change in fair value of - (859) 1 564
available-for-sale financial
assets transferred to profit
or loss
Other comprehensive (3 949) 3 451 (694)
(expense)/income for the
period (net of income tax)
Total comprehensive income 222 582 76 503 210 175
for the period
Profit attributable to:
- equity holders of the 223 997 71 200 215% 207 379
company
- non-controlling interest 2 534 1 852 3 490
Profit for the period 226 531 73 052 210 869
Total comprehensive income
attributable to:
- equity holders of the
company 220 048 74 651 195% 206 685
- non-controlling interest 2 534 1 852 3 490
Total comprehensive income 222 582 76 503 210 175
for the period
Earnings per share (cents)
- basic 71.2 22.6 215% 65.8
- diluted 64.8 20.5 216% 60.0
Note to the statement of
comprehensive income
Headline earnings per share
(cents)
- basic 71.2 22.3 219% 66.4
- diluted 64.8 20.2 221% 60.5
Dividend per share (cents)
- interim 51.0 13.0 292% 13.0
- final 37.0
Condensed consolidated statement of financial position
Reviewed Reviewed Audited
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Assets
Goodwill and intangible assets 1 097 309 1 097 309 1 097 309
Equipment 14 133 18 160 15 495
Investment in equity accounted - 1 960 -
investees
Deferred tax asset 4 309 9 339 5 183
Investments backing policyholder 21 301 229 17 170 081 19 204 524
funds and investments held through
investment partnerships
Investment securities 26 168 28 822 19 606
Loan receivable - 39 137 39 140
Trade and other receivables 305 454 110 608 165 107
Cash and cash equivalents 108 521 108 997 99 672
Total assets 22 857 123 18 584 413 20 646 036
Liabilities
Interest-bearing borrowing 98 144 109 025 106 144
Deferred tax liabilities 19 994 1 729 14 854
Policyholder investment contract
liabilities and liabilities to
holders of interests in investment
partnerships 21 281 235 17 168 352 19 189 670
Income tax payable 45 313 44 494 26 181
Trade and other payables 214 406 138 697 203 169
Bank overdraft - 143 377 22 074
Total liabilities 21 659 092 17 605 674 19 562 092
Net assets 1 198 031 978 739 1 083 944
Equity
Total equity attributable to 1 188 063 973 676 1 075 655
equity holders of the company
Non-controlling interest 9 968 5 063 8 289
Total equity 1 198 031 978 739 1 083 944
Condensed consolidated statement of cash flows
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
2010 2009 2009
R`000 R`000 R`000
Cash flows from operating activities
Profit for the period 226 531 73 052 210 869
Income tax expense 120 421 48 910 141 472
Non cash and other adjustments (1 309) 22 524 41 605
Operating profit before changes in 345 643 144 486 393 946
working capital
Working capital changes (89 520) (30 843) (20 620)
Cash generated from operations 256 123 113 643 373 326
Interest paid (5 701) (15 026) (23 092)
Income taxes paid (95 275) (34 839) (139 224)
Net cash from operating activities 155 147 63 778 211 010
Net cash from investing activities 3 175 14 624 30 026
Cash flows from financing activities (126 081) (109 906) (146 494)
- dividends to shareholders (119 400) (102 957) (146 025)
- other (6 681) (6 949) (469)
Net increase/(decrease) in cash and 32 241 (31 504) 94 542
cash equivalents
Cash and cash equivalents at 77 598 (10 091) (10 091)
beginning of period
Exchange rate adjustments (1 318) 7 215 (6 853)
Cash and cash equivalents at end 108 521 (34 380) 77 598
of period
Consolidated statement of changes in equity
R`000 Share Foreign Retaine Share-
capital currenc d based
and y trans- earning payment
premium lation s reserve
reserve
Balance at 30 September 2008 260 594 17 540 569 148 146 864
Total comprehensive income for the
period
Profit for the period 71 200
Other comprehensive income
Currency translation differences 7 215
Revaluation of financial assets
available-for-sale
- Net change on fair value
- Transferred to profit or loss on
disposal
Total other comprehensive income - 7 215 - -
Total comprehensive income for the - 7 215 71 200 -
period
Transactions with owners recorded
directly to equity
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
Total transactions with owners (5 555) - (57 (27
883) 389)
Balance at 31 March 2009 255 039 24 755 582 465 119 475
Total comprehensive income for the
period
Profit for the period 136 179
Other comprehensive income
Currency translation differences (14
068)
Revaluation of financial assets
available-for-sale
- Net change on fair value
- Transferred to profit or loss on
disposal
Total other comprehensive income - (14 - -
068)
Total comprehensive income for the - (14 136 179 -
period 068)
Transactions with owners recorded
directly to equity
Share-based payments 10 838
Dividends paid (40
893)
Increase in equity
Total transactions with owners - - (40 10 838
893)
Balance at 30 September 2009 255 039 10 687 677 751 130 313
Total comprehensive income for the
period
Profit for the period 223 997
Other comprehensive income
Currency translation differences (1 318)
Revaluation of financial assets
available-for-sale
- Net change on fair value
- Transferred to profit or loss on
disposal
Total other comprehensive income - (1 318) - -
Total comprehensive income for the - (1 318) 223 997 -
period
Transactions with owners recorded
directly to equity
Share-based payments 9 588
Transfer to retained earnings 26 509 (26
509)
Dividends paid (118
096)
Shares issued 868
Increase in equity of subsidiary
Total transactions with owners 868 - (91 (16
587) 921)
Balance at 31 March 2010 255 907 9 369 810 161 113 392
Consolidated statement of changes in equity (continued)
R`000 Revalua- Issued Non- Total
tion capital and controllin equity
reserve reserves g interest
attributabl
e to equity
holders of
the company
Balance at 30 September 2008 (4 294) 989 852 4 695 994 547
Total comprehensive income for
the period
Profit for the period 71 200 1 852 73 052
Other comprehensive income
Currency translation 7 215 7 215
differences
Revaluation of financial
assets available-for-sale (3 764) (3 764) (3 764)
- Net change on fair value (2 905) (2 905) (2 905)
- Transferred to profit or (859) (859) (859)
loss on disposal
Total other comprehensive (3 764) 3 451 - 3 451
income
Total comprehensive income for (3 764) 74 651 1 852 76 503
the period
Transactions with owners
recorded directly to equity
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
Total transactions with owners - (90 827) (1 484) (92 311)
Balance at 31 March 2009 (8 058) 973 676 5 063 978 739
Total comprehensive income for
the period
Profit for the period 136 179 1 638 137 817
Other comprehensive income
Currency translation (14 068) (14 068)
differences
Revaluation of financial 9 923 9 923 9 923
assets available-for-sale
- Net change on fair value 7 500 7 500 7 500
- Transferred to profit or 2 423 2 423 2 423
loss on disposal
Total other comprehensive 9 923 (4 145) - (4 145)
income
Total comprehensive income for 9 923 132 034 1 638 133 672
the period
Transactions with owners
recorded directly to equity
Share-based payments 10 838 10 838
Dividends paid (40 893) (2 175) (43 068)
Increase in equity 3 763 3 763
Total transactions with owners - (30 055) 1 588 (28 467)
Balance at 30 September 2009 1 865 1 075 655 8 289 1 083
944
Total comprehensive income for
the period
Profit for the period 223 997 2 534 226 531
Other comprehensive income
Currency translation
differences (1 318) (1 318)
Revaluation of financial (2 631) (2 631) (2 631)
assets available-for-sale
- Net change on fair value (2 631) (2 631) (2 631)
- Transferred to profit or - -
loss on disposal
Total other comprehensive (2 631) (3 949) - (3 949)
income
Total comprehensive income for (2 631) 220 048 2 534 222 582
the period
Transactions with owners
recorded directly to equity
Share-based payments 9 588 9 588
Transfer to retained earnings - -
Dividends paid (118 096) (1 305) (119
401)
Shares issued 868 868
Increase in equity of - 450 450
subsidiary
Total transactions with owners - (107 640) (855) (108
495)
Balance at 31 March 2010 (766) 1 188 063 9 968 1 198
031
Earnings per share
Six months Six months Full year
reviewed reviewed audited
31 March 31 March 30 Sept
2010 2009 2009
Weighted average number of ordinary 314 646 591 315 636 315 099
shares in issue during the period 428 676
Weighted average number of ordinary 347 731 074 347 521 348 579
shares potentially in issue 924 796
R`000 R`000 R`000
Earnings attributable to shareholders 226 531 73 052 210 869
Non-controlling interest (2 534) (1 852) (3 490)
Earnings attributable to ordinary 223 997 71 200 207 379
shareholders
(Profit)/loss on disposal of - (859) 1 421
financial assets available-for-sale
Loss on disposal of equipment - 20 280
Headline earnings attributable to 223 997 70 361 209 080
ordinary shareholders
Actual number of shares in issue at 314 819 192 314 565 314 565
the end of the period 858 858
Condensed consolidated segment report
Africa
Six months Audited
Reviewed 30 Sept
31 March
R`000 2010 2009 2009
Segment external revenue 582 076 336 538 782 568
Segment income/(loss)
before tax and finance
income/expense 288 945 134 162 332 420
Condensed consolidated segment report (continued)
International
Six months Audited
Reviewed 30 Sept
31 March
R`000 2010 2009 2009
Segment external revenue 72 749 26 823 59 462
Segment income/(loss) 27 874 (1 658) 7 753
before tax and finance
income/expense
Condensed consolidated segment report (continued)
Group
Six months Audited
Reviewed 30 Sept
31 March
R`000 2010 2009 2009
Segment external revenue 654 825 363 361 842 030
Segment income/(loss) 316 819 132 504 340 173
before tax and finance
income/expense
Notes to the condensed consolidated financial statements
1. Basis of preparation and accounting policies
The financial information has been prepared in accordance with IAS 34 Interim
Financial Reporting, as well as the AC 500 standards as issued by the Accounting
Practices Board or its successor, the requirements of the South African
Companies Act, Act 61 of 1973, as amended, and the Listings Requirements of the
JSE. 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 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.
The accounting policies applied in the presentation of the condensed
consolidated interim financial statements are in terms of International
Financial Reporting Standards ("IFRS") and are consistent with those applied for
the year ended 30 September 2009.
There were no changes in the accounting policies (as published in the annual
report), except for the adoption of the revised IFRS 3 Business Combinations
(2008) and the amendment to IAS 27 Consolidated and Separate Financial
Statements (2008), which are to be applied prospectively and had no impact in
the current period.
The Group applies revised IAS 1 Presentation of Financial Statements (2007),
which became effective as of 1 January 2009. As a result, the Group presents in
the consolidated statement of changes in equity all owner changes in equity,
whereas all non-owner changes in equity are presented in the consolidated
statement of comprehensive income. This presentation has been applied in these
condensed interim financial statements as of and for the six-month period ended
on 31 March 2010.
Comparative information has been re-presented so that it also is in conformity
with the revised standard. Since the change in accounting policy only impacts
presentation aspects, there is no impact on earnings per share.
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 and Main Roads,
Claremont 7708, Cape Town
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
6 May 2010
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Date: 06/05/2010 07:05:04 Produced by the JSE SENS Department.
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