| Mon 12 Nov 2001, 0:00 | | Coronation Holdings Limited - Audited Results For |
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September 2001
Audited Results for the year ended 30 September 2001
* Headline earnings of 608 cents per share
* Attributable and headline earnings per share down 28%
* Net asset value per share up 16% to R46,60
* Dividend of R2,40 per share
Results
The Coronation Group recorded net income attributable to shareholders of
R551 million for the year ended 30 September 2001. Headline earnings
totalled R572 million and headline earnings per share were 608 cents. This
is a reduction in attributable and headline earnings of 28% over last year.
The year under review was characterised by weak and volatile markets, which
impacted negatively on the local and international trading activities of the
Coronation Group. The operating environment was the most uncertain
experienced by the Group since its inception. Against this background, the
underlying operating businesses of the Group, Coronation Fund Managers (CFM)
and Coronation Capital, continue to produce satisfactory results.
Attributable income from Investments declined, inter alia, due to lower
income from the Group's associate, African Harvest Limited.
Group Restructuring
Coronation's strategic approach has consistently focused on building well-
defined businesses in the fields of asset management and investment banking
which service the needs of select market niches. Accordingly, the Group
restructured its business in September 2001 so that Coronation Global ceased
to be an independent business unit and Coronation Fund Managers and
Coronation Capital are each now responsible for their respective South
African and international businesses. This global integration aims to
provide CFM and Coronation Capital with a strong incentive to expand and
grow their international business operations and will enable them to
leverage resources and core competencies across their businesses on a global
basis.
Coronation Fund Managers
CFM has once again produced outstanding results. This was despite the poor
market conditions which negatively affected asset management businesses both
in regard to investment performance and in their ability to gather assets
under management. Locally, CFM produced attributable and headline earnings
of R135 million. International asset management activities contributed a
further R106 million. Local assets under management remained stable at R47
billion and international assets under management now exceed US$1 billion.
Over the year, CFM continued its focus of generating superior investment
performance for its clients both locally and abroad. CFM was able to gain
significant competitive advantage by developing new value-added product
offerings that capitalised on the current environment. As at 30 September
2001 the unit trust company was placed second in the Plexus Survey which
measures the consistency of investment performance across a manager's entire
product range over three, two and one year periods. The segregated
institutional portfolios were ranked second for one, three and five year
periods in the Alexander Forbes Global Large Manager Watch survey.
To complement CFM's proven track record in the management of equity assets,
the business has built up significant capabilities in non-equity markets
i.e. fixed income, property and quantative fund management.
Coronation Capital
Coronation Capital strives to create an entrepreneurial environment in which
innovative teams of skilled people can pursue opportunities with high growth
potential. Coronation Capital's opportunistic approach, combined with a
flexible business model and a diverse earnings base, has enabled the
business to succeed in a difficult global trading environment, achieving a
return on equity of 30,5% for the financial year ended 30 September 2001.
Attributable earnings for the year under review amounted to R241 million.
Expenses were well controlled and an improved ratio of operating expenses to
total income of 8,83% was achieved, exclusive of incentive provisions.
All the operating divisions maintained their performance record with
positive earnings contributions for a third successive year. Particularly
strong earnings growth from the Investment Banking, Derivative Structuring
and Property divisions contributed to the healthy return on shareholders'
equity.
Coronation Capital ended the year with shareholders' funds of approximately
R1 billion. While capital preservation remains a priority in these volatile
markets, its strong financial position and high liquidity levels should
provide ample support for its operating divisions to produce exceptional
returns on shareholders' funds by pursuing high growth opportunities and
continuing to diversify the earnings base with the addition of new business
units.
International
Earnings after tax from international operations grew by 5% to R232 million,
comprising 42% of total earnings. The net asset value of the international
business increased significantly as a result of the continuing depreciation
of the rand, again justifying the Group's strategy of diversifying its
business internationally. During the past year, Coronation Capital
established two new businesses, Coronation Energy in the UK and Coronation
Leasing in Ireland. Of the total shareholder equity, 47% is now based
internationally.
The international active asset management operation maintained its solid
track record in managing European equities, and the alternative strategy
(hedge fund) multi-management operation is now the third largest multi-
manager of alternative investment strategies in the UK.
As at 30 September 2001, the Coronation Peak Fund had produced a positive
annualised US dollar-based return of 19,2% since inception (January 1999)
compared to the benchmark's return of negative 10,4% over the same period.
The Coronation International Active Fund of Funds was the top performing
rand based foreign fund with a return of 22,7%, compared to its benchmark,
the MSCI World Index's return of 15,7%, over the three year period ended 30
September 2001, and the Coronation Global Equity Fund outperformed its
benchmark, the MSCI World Index, by 28,6% in US dollar terms for one year
ended 30 September 2001. These sterling performances generated performance
fees which had a major impact on Global's profitability.
The divisions which were previously part of Coronation Global and now fall
under Coronation Capital showed a decline in earnings from R122 million to
R56 million, reflecting substantial declines in trading and investment
income.
Investments
The contribution to Group income from Investments, including income from
African Harvest, was 2%. The Group's share of African Harvest's earnings
declined from R94 million last year to R0,3 million this year. This
reduction in earnings was as a result of an impairment of investments,
particularly investments in associates, of R60 million, and a high level of
expenses.
The underlying businesses of African Harvest Capital, including African
Harvest Securities and African Harvest Fund Managers, continued to do well
despite a difficult operating environment. Having firmly established itself
as a mainstream player in managing third party assets, the fund management
business now manages in excess of R10 billion in assets.
African Harvest has committed itself to:
- significantly reducing expense levels;
- withdrawing from private equity and strategic investment activities; and
- instituting an expanded share purchase scheme which will enable staff to
acquire a 10% stake in the business at net asset value.
In addition the African Harvest board is considering a return of R280
million of capital to shareholders and an increase in the beneficial
shareholding of empowerment parties in the company is being addressed.
During the year Coronation repurchased and cancelled a total of 972 600 of
its own ordinary and `N' ordinary shares.
Prospects
The outlook for global financial markets remains uncertain. As a result of
its outstanding teams of people, a strong balance sheet, and a significant
cash holding, the Coronation Group remains confident of developing its
position in the financial services sector. The Group will remain a niche
player, with flexible focused teams who are able to adapt to changing
circumstances. We remain committed to investing in people who have the
ability to generate new sources of profitability and positive returns for
clients and shareholders.
There is now a large deployment of capital and a substantial investment in
people offshore and strong emphasis will be placed on growing the offshore
business.
STRATE
As fully explained in a letter to shareholders dated 20 August 2001,
Coronation Holdings was transferred to the STRATE environment on Monday, 22
October 2001. Trading for electronic settlement commenced on Monday, 12
November 2001, with electronic settlement taking place on Monday,
19 November 2001. Existing share certificates will no longer be good for
delivery for the transactions entered into on or after Monday, 12 November
2001.
Dividend Declaration
In line with management's policy of reducing the dividend cover, a dividend
of 240 cents per ordinary and `N' ordinary share (2000: 150 cents) has been
declared. The last day to trade ("cum" the dividend) in order to participate
in the dividend will be Friday, 30 November 2001. The shares of Coronation
Holdings will commence trading ("ex" dividend) on Monday, 3 December 2001
and the record date will be Friday, 7 December 2001. Dividends will be paid
to members on Monday, 10 December 2001. Share certificates may not be
dematerialised/rematerialised between Monday, 26 November 2001 and Friday, 7
December 2001, both days inclusive.
C B Brayshaw D L Barnes P H Vogel
Chairman Chief Executive Officer Company Secretary
Group income statement
for the year ended 30 September 2001
2001 % change 2000
R million R million
Operating revenue 923 (6) 984
Operating expenses (383) 27 (301)
Net interest income 147 130
Net income before taxation 687 813
Taxation 79 87
Net income after taxation 608 (16) 726
Share of associates' income - 70
Net income 608 796
Outside shareholders' interest 57 31
Net income attributable to
Shareholders 551 (28) 765
Headline earnings is determined
after adjustments for:
Share of associates' loss - attributable
to capital impairments/disposals 32 40
Profit on sale of associates (11) (12)
Headline earnings 572 (28) 793
Shares in issue (millions)
Ordinary shares 30 30
`N' ordinary shares 63 64
Total number of shares 93 94
Weighted average number of
shares (millions) 94 94
Earnings per share (cents)
Attributable 586 (28) 815
Headline 608 (28) 845
Group cash flow statement
for the year ended 30 September 2001
2001 2000
R million R million
Net income before taxation 687 814
Adjustments for non-cash items 1 (27)
Operating income 688 787
Net funding of operating assets, taxation
and dividend (368) (483)
Net cash inflow from operating activities 320 304
Net cash (outflow)/inflow from investing activities (224) 198
Net cash (outflow)/inflow from financing activities (179) 82
Net (decrease)/increase in cash and cash equivalents (81) 584
Net cash and cash equivalents at beginning of year 1 927 1 352
Foreign exchange translation differences 284 (9)
Net cash and cash equivalents at end of year 2 130 1 927
Group balance sheet
as at 30 September 2001
2001 % change 2000
R million R million
ASSETS
Non-current assets
Property, plant and equipment 118 12
Intangible assets 10 -
Investment in associates 470 576
Investments and long term receivables 1 682 1 155
Deferred taxation 12 -
2 292 1 743
Current assets
Liquid and trading assets 2 078 1 396
Other receivables 537 579
Cash and cash equivalents 2 130 1 928
4 745 3 903
Total assets 7 037 25 5 646
EQUITY AND LIABILITIES
Equity
Ordinary shareholders' funds 4 340 3 775
Outside shareholders' interest 185 80
4 525 3 855
Non-current liabilities
Long term liabilities 367 256
Deferred taxation 39 39
406 295
Current liabilities
Trading liabilities 1 535 779
Other payables 571 717
2 106 1 496
Equity 7 037 5 646
Net asset value per share 46,60 16 40,15
Group statement of changes in equity
for the year ended 30 September 2001
2001 2000
R million R million
Opening balance 3 775 3 318
Foreign exchange translation differences 284 (9)
Net result of unbundling/disposal of associates (1) (183)
Net income attributable to shareholders 551 765
Dividend (224) (141)
Issue of share capital 5 25
Buy back of share capital (50) -
Closing balance 4 340 3 775
Analysis of operating Revenue and net interest
2001 2000
% of % of
R million total R million total
Fee income 496 46 401 36
Arbitrage and structures 162 15 160 14
Trading 75 7 256 22
Investment income 190 18 167 16
Operating revenue 923 86 984 88
Interest received 198 189
Interest paid (51) (59)
Total 1 070 100 1 114 100
Business segments
2001
Local International Total
R million R million R million
Asset Management 135 106 241
Investment Banking/Financial Services 241 56 297
Investments (57) 70 13
Net income attributable to shareholders 319 232 551
2000
Local International Total
R million R million R million
Asset Management 123 28 151
Investment Banking/Financial Services 238 122 360
Investments 182 72 254
Net income attributable to shareholders 543 222 765
Directors: C B Brayshaw Chairman, D L Barnes Chief Executive Officer, G R
Tipper Chief Operating Officer, P L Campher, M T Rutherford, G M C Ryan, A
Watson
Registered office: Ground Floor, The Bridle, 38 Wierda Road West, Wierda
Valley, Sandton
Postal address: PO Box 652643, Benmore 2010
Transfer secretaries: Mercantile Registrars Limited, 6th Floor, 94 President
Street, Johannesburg 2001
Registration number: 1902/001739/06
JSE share code: Ordinary shares: CRH ISIN number: ZAE 000001772
`N' Ordinary shares CRN ISIN number: ZAE 000010369
Website: www.coronation.co.za
