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CML
CML
CML - Coronation - Reviewed preliminary financial results for the year ended 30
September 2010
Coronation Fund Managers Limited
(Incorporated in the Republic of South Africa)
Registration number: 1973/009318/06
JSE share code: CML
ISIN: ZAE000047353 ("Coronation")
Reviewed preliminary financial results for the year ended
30 September 2010
- Assets under management of R198 billion, up 28%
- Diluted headline earnings per share of 128 cents, up 112%
- Total dividend per share of 127 cents, up 154%
Coronation consolidated its standing as a leader in the asset management
industry with excellent results for the 12 months to 30 September 2010. Our
outstanding investment performance in highly volatile market conditions, and
appropriate product positioning attracted significant flows in all areas of the
business. The increase in market share to 7.5% (September 2009: 5.5%) of long-
term funds by the retail business takes us from 6th to 3rd largest long-term
fund manager in the country. While global markets remained volatile, the
FTSE/JSE All Share Index closed the period just 5% shy of its May 2008 peak.
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
Results
Revenue increased by 61% to R1.35 billion. Together with a continued focus on
cost control measures, this resulted in a 109% increase in profit for the period
to R440 million; translating into growth in diluted headline earnings per share
of 112% to 128 cents (September 2009: 60.5 cents).
Assets under management
Excellent stock selection, asset allocation and robust net inflows, underpinned
by the recovery in the domestic market resulted in assets under management
reaching R198 billion (September 2009: R155 billion).
A philosophy of long-term investing
The defining characteristic of Coronation`s investment philosophy is our long
time horizon. In a market obsessed with short-term performance we find
compelling opportunity that allows us to consistently produce strong investment
returns for clients over the long term.
- Within the institutional space the Coronation absolute portfolios rank 1st
across all reported time periods in the Alexander Forbes (AF) Conservative
Global Manager Watch, while our domestic balanced portfolios are 1st over one
year and 3rd over the three and five year periods in the AF SA Large Manager
Watch. Similarly, the AF Global Large Manager Watch places our global balanced
portfolios 2nd over one and three years and 3rd over five years to 30 September
2010.
- The strength of performance in our domestic flagship unit trust range has
attracted unprecedented interest from investors. The Coronation Top 20 Fund
celebrates its 10-year anniversary with a phenomenal 7.52% p.a. outperformance
of the FTSE/JSE Top 40 Index and the Coronation Balanced Plus Fund is the no. 1
balanced fund in the country over five years as measured by Morningstar to 30
September 2010. Likewise, Coronation Balanced Defensive is the top-performing
fund in its category since inception more than three years ago in February 2007,
while our flagship fixed interest fund, Coronation Strategic Income has
outperformed cash by 2.5% p.a. since inception in 2001.
- While global markets remain under pressure the international fund range has
delivered strong performances for both institutional and individual investors.
The Coronation World Equity (ZAR) fund of funds has substantially outperformed
the MSCI World Index by 2.47% p.a. (in US dollars) since inception in August
1997; Coronation Global Emerging Markets Flexible has beaten the MSCI Emerging
Markets Index by 5.3% p.a. since its launch in December 2007, and the low-risk
managed fund, Coronation Latitude (ZAR) has outperformed its cash plus benchmark
by 10.83% p.a. since September 2008. Furthermore, with a resounding 32.15% p.a.
outperformance of the FTSE/JSE Africa Top 30 Ex SA Index since inception in
October 2008, the Coronation Africa Frontiers fund contributed to Coronation
being named `Best Africa Manager of the Year` at the 2010 Africa investor Index
Series Awards.
Final dividend
We continue to reward shareholders through regular and significant distributions
of free cash flow generated. We endeavour to distribute at least 75% of after-
tax cash profit. Taking into account projected cash requirements, this year we
have increased the final dividend to 76 cents per share. Together with the
interim dividend of 51 cents per share, this amounts to a total dividend of 127
cents per share for the year.
In compliance with the Listings Requirements of the JSE Limited (JSE), the
following dates are applicable:
Last day to trade: Friday, 26 November 2010
Shares trade ex dividend: Monday, 29 November 2010
Record date: Friday, 3 December 2010
Payment date: Monday, 6 December 2010
Share certificates may not be dematerialised or rematerialised between Monday,
29 November 2010, and Friday, 3 December 2010, both dates inclusive.
Prospects
We have a robust business strategy and model that is sustainable through the
various market cycles and remain committed to delivering superior long-term
returns for all our stakeholders. The recovery in the domestic markets created
the perfect platform from which to demonstrate our skill as a long-term
investor; finding opportunity and remaining single-minded in our pursuit of
alpha. The past year was exceptional and we therefore caution against future
revenue growth expectations.
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
Chairman
Hugo Nelson
Chief Executive Officer
Anton Pillay
Chief Operating Officer
Cape Town
9 November 2010
Condensed consolidated statement of comprehensive income
Reviewed Audited
30 Sept 30 Sept
2010 % 2009
R`000 Change R`000
Fund management activities
Revenue 1 351 979 61 842 030
Other income/(expenses) 3 814 (1 427)
Operating expenses (717 646) 43 (501 857)
Share-based payment expense (14 059) (21 441)
Other expenses (703 587) (480 416)
Results from operating activities 638 147 88 338 746
Finance and dividend income 21 480 10 913
Finance expense (8 851) (22 513)
Share of loss of equity accounted - (1 960)
investee (net of income tax)
Profit from fund management 650 776 100 325 186
Income attributable to policyholder 34 583 27 155
linked assets and investment
partnerships
Net fair value gains on policyholder 49 191 41 042
and investment partnership financial
instruments
Administration expenses borne by (14 608) (13 887)
policyholders and investors in
investment partnerships
Profit before income tax 685 359 352 341
Income tax expense (244 983) (141 472)
Taxation on shareholder profits (210 400) (114 317)
Taxation on policyholder investment (34 583) (27 155)
contracts
Profit for the year 440 376 109 210 869
Other comprehensive expense for the (9 594) (694)
year (net of income tax)
Foreign currency translation (10 268) (6 853)
differences for foreign operations
Net change in fair value of 683 4 595
available-for-sale financial assets
Net change in fair value of (9) 1 564
available-for-sale financial assets
reclassified to profit or loss
Total comprehensive income for the 430 782 210 869
year
Profit attributable to:
- equity holders of the company 437 108 111 207 379
- non-controlling interest 3 268 3 490
Profit for the year 440 376 210 869
Total comprehensive income
attributable to
- equity holders of the company 427 514 107 206 685
- non-controlling interest 3 268 3 490
Total comprehensive income for the 430 782 210 175
year
Earnings per share (cents)
- basic 138.9 111 65.8
- diluted 127.9 113 60.0
Note to the statement of
comprehensive income
Headline earnings per share (cents)
- basic 138.9 109 66.4
- diluted 128.0 112 60.5
Dividend per share (cents)
- interim 51.0 292 13.0
- final 76.0 105 37.0
Condensed consolidated statement of financial position
Reviewed Audited
30 Sept 30 Sept
2010 2009
R`000 R`000
Assets
Goodwill and intangible assets 1 097 309 1 097 309
Equipment 13 993 15 495
Deferred tax asset 4 900 5 183
Investments backing policyholder funds and 23 930 963 19 204 524
investments held through investment
partnerships
Investment securities 28 274 19 606
Loan receivable - 39 140
Trade and other receivables 227 006 165 107
Cash and cash equivalents 300 638 99 672
Total assets 25 603 083 20 646 036
Liabilities
Interest-bearing borrowing 82 000 106 144
Deferred tax liabilities 22 528 14 854
Policyholder investment contract liabilities
and liabilities to holders of interests in
investment partnerships 23 908 436 19 189 670
Income tax payable 3 215 26 181
Trade and other payables 337 759 203 169
Bank overdraft - 22 074
Total liabilities 24 353 938 19 562 092
Net assets 1 249 145 1 083 944
Equity
Total equity attributable to equity holders 1 238 443 1 075 655
of the company
Non-controlling interest 10 702 8 289
Total equity 1 249 145 1 083 944
Condensed consolidated statement of cash flows
Reviewed Audited
30 Sept 30 Sept
2010 2009
R`000 R`000
Cash flows from operating activities
Profit for the period 440 376 210 869
Income tax expense 244 983 141 472
Non-cash and other adjustments (801) 41 605
Operating profit before changes in working 684 558 393 946
capital
Working capital changes 73 507 (20 620)
Cash generated from operations 758 065 373 326
Interest paid (9 685) (23 092)
Income taxes paid (259 992) (139 224)
Net cash from operating activities 488 388 211 010
Net cash from investing activities 48 686 30 026
Cash flows from financing activities (303 766) (146 494)
- dividends to shareholders (280 940) (146 025)
- other (22 826) (469)
Net increase in cash and cash equivalents 233 308 94 542
Cash and cash equivalents at beginning of year 77 598 (10 091)
Exchange rate adjustments (10 268) (6 853)
Cash and cash equivalents at end of year 300 638 77 598
Diluted number of shares (thousand)
Reviewed Audited
30 Sept 30 Sept
2010 2009
Weighted average number of shares in issue 314 733 315 100
Shares to be issued
- December 2003 options - 99
- BEE transaction 34 116 33 381
Diluted weighted average number of shares in 348 849 348 580
issue
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 2008 260 594 17 540 569 148 146 864
Total comprehensive income for
the year
Profit for the year 207 379
Other comprehensive income
Currency translation (6 853)
differences
Revaluation of financial
assets available-for-sale
- Net change in fair value
- Reclassified to profit or
loss on disposal
Total other comprehensive - (6 853) - -
income
Total comprehensive income for - (6 853) 207 379 -
the year
Transactions with owners
recorded directly in equity
Share-based payments 21 441
Transfer to retained earnings 37 992 (37 992)
Dividends paid (136 768)
Shares issued 462
Shares repurchased and (6 017)
cancelled
Increase in equity
Total transactions with owners (5 555) - (98 776) (16 551)
Balance at 30 September 2009 255 039 10 687 677 751 130 313
Total comprehensive income for
the year
Profit for the year 437 108
Other comprehensive income
Currency translation (10 268)
differences
Revaluation of financial
assets available-for-sale
- Net change in fair value
- Reclassified to profit or
loss on disposal
Total other comprehensive - (10 268) - -
income
Total comprehensive income for - (10 268) 437 108 -
the year
Transactions with owners
recorded directly in equity
Share-based payments 14 059
Transfer to retained earnings 30 813 (30 813)
Dividends paid (279 653)
Shares issued 868
Increase in equity of
subsidiary
Total transactions with owners 868 - (248 840) (16 754)
Balance at 30 September 2010 255 907 419 866 019 113 559
Consolidated statement of changes in equity (continued)
R`000 Re- Issued Non- Total
valuation capital Controlling equity
reserve and interest
reserves
attributable
to equity
holders
of the
company
Balance at 30 September 2008 (4 294) 989 852 4 695 994 547
Total comprehensive income
for the year
Profit for the year 207 379 3 490 210 869
Other comprehensive income
Currency translation (6 853) (6 853)
differences
Revaluation of financial 6 159 6 159 6 159
assets available-for-sale
- Net change in fair value 4 595 4 595 4 595
- Reclassified to profit or 1 564 1 564 1 564
loss on disposal
Total other comprehensive 6 159 (694) - (694)
income
Total comprehensive income 6 159 206 685 3 490 210 175
for the year
Transactions with owners
recorded directly in equity
Share-based payments
21 441 21 441
Transfer to retained - -
earnings
Dividends paid (136 768) (9 257) (146 025)
Shares issued 462 462
Shares repurchased and (6 017) (6 017)
cancelled
Increase in equity 9 361 9 361
Total transactions with - (120 882) 104 (120 778)
owners
Balance at 30 September 2009 1 865 1 075 655 8 289 1 083 944
Total comprehensive income
for the year
Profit for the year 437 108 3 268 440 376
Other comprehensive income
Currency translation (10 268) (10 268)
differences
Revaluation of financial 674 674 674
assets available-for-sale
- Net change in fair value 683 683 683
- Reclassified to profit or (9) (9) (9)
loss on disposal
Total other comprehensive 674 (9 594) - (9 594)
income
Total comprehensive income 674 427 514 3 268 430 782
for the year
Transactions with owners
recorded directly in equity
Share-based payments 14 059 14 059
Transfer to retained -
earnings
Dividends paid (279 653) (1 305) (280 958)
Shares issued 868 - 868
Increase in equity of 450 450
subsidiary
Total transactions with - (264 726) (855) (265 581)
owners
Balance at 30 September 2010 2 539 1 238 443 10 702 1 249 145
Reconciliation of headline earnings
Reviewed Audited
30 Sept 30 Sept
2010 2009
R`000 R`000
Earnings attributable to ordinary shareholders 437 108 207 379
Effect of adjustments 122 1 939
Loss on disposal of equipment 131 375
(Profit)/loss on disposal of available-for-sale (9) 1 564
financial assets
Total tax effect of adjustments (22) (238)
Headline earnings attributable to ordinary 437 208 209 080
shareholders
Condensed consolidated segment report
Africa
Reviewed Audited
30 Sept 30 Sept
2010 2009
R`000 R`000
Segment external revenue 1 219 401 782 568
Segment operating expenses (656 283) (452 108)
Segment profit 563 118 330 460
Net financial income/(expense) 16 818 (7 646)
Profit from fund management 579 936 322 814
Condensed consolidated segment report (continued)
International
Reviewed Audited
30 Sept 30 Sept
2010 2009
R`000 R`000
Segment external revenue 132 578 59 462
Segment operating expenses (61 363) (51 709)
Segment profit 71 215 7 753
Net financial income/(expense) (375) (5 381)
Profit from fund management 70 840 2 372
Condensed consolidated segment report (continued)
Group
Reviewed Audited
30 Sept 30 Sept
2010 2009
R`000 R`000
Segment external revenue 1 351 979 842 030
Segment operating expenses (717 646) (503 817)
Segment profit 634 333 338 213
Net financial income/(expense) 16 443 (13 027)
Profit from fund management 650 776 325 186
Notes to the condensed consolidated financial statements
1. Basis of preparation and accounting policies
The financial information has been prepared in terms of the framework concepts
and recognition and measurement principles of International Financial Reporting
Standards (IFRS) and the presentation and disclosure requirements of 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 financial statements are in terms of IFRS. The group adopted 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 have no impact on the current period. Except for these
adoptions, the policies are consistent with those applied for the year ended 30
September 2009.
The group applies revised IAS1 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, and
non-owner changes in equity in the consolidated statement of comprehensive
income. This presentation has been applied in these condensed interim financial
statements as of and for the year ended 30 September 2010.
Comparative information has been re-presented so that it also conforms 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 (COO), 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
9 November 2010
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Date: 09/11/2010 07:05:08 Produced by the JSE SENS Department.
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