| Mon 12 May 2003, 14:39 | | Interim results for the six months ended 31 March |
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Coronation Holdings Limited -
Coronation Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1902/001739/06)
JSE share codes:
Ordinary shares CRH ISIN: ZAE000001772
"N" ordinary shares CRN ISIN: ZAE000010369
Interim results for the six months ended 31 March 2003
Core earnings of 216 cents per share.
Core earnings attributable to shareholders of R165 million.
Group results
The Coronation Group recorded core earnings per share of 216 cents for the six
months ended 31 March 2003, a decline of 18% over the same period last year. The
Group raised impairment and related provisions of R90 million against its energy
investments and R167 million against its aircraft leasing investments, reducing
core earnings of R165 million to an attributable loss for the period of R92
million. These impairments were highlighted in the trading update announced on 3
March 2003.
The operating environment over the last six months was characterised by
continuing high interest rates, weak markets and a dramatic strengthening of the
rand. The rand strength had an adverse impact on a number of areas of the
business; the majority of the provision against the aircraft leasing business
was required as a result of the strength of the rand, the Investments segment
incurred currency losses on the translation of offshore funds, the rand value of
the funds under management internationally decreased and the foreign currency
translation reserve declined by R542 million over the period.
Coronation Capital and Coronation Fund Managers delivered satisfactory operating
performances for the period with increases in core income over the comparable
period last year.
Coronation Fund Managers
Coronation Fund Managers produced attributable earnings of R114 million for the
six months to end March 2003, an increase of 15% over the same period last year.
Coronation Fund Managers continued to attract net inflows into both
institutional and retail funds by capitalising on its unique product range and
superior investment performance track record. Total assets under management
currently amount to R48,5 billion (2002: R56 billion). The decline in assets
under management from 30 September 2002 was the result of weak equity markets,
locally and internationally, and the negative effect of the strengthening of the
rand on the value of assets under management internationally.
During the period Coronation Management Company, the unit trust business,
received the coveted Association of Unit Trusts/Personal Finance Raging Bull
Award for the best Unit Trust Company of 2002. It was also placed first overall
in the Plexus survey for the fourth consecutive quarter, in the quarter to 31
March 2003. Coronation Fund Managers" institutional portfolios were ranked
fourth over one-year, and third over three- and five-year periods, to 31 March
2003, in the Alexander Forbes Global Manager Watch Survey.
While market conditions are not conducive to attracting substantial new assets,
Coronation Fund Managers is one of the premier asset management groups in South
Africa, and its ability to produce consistent long-term investment performance
for clients and to profitably adapt to changing market circumstances stand it in
good stead for the future.
Coronation Capital
Coronation Capital produced core earnings of R78 million for the six-month
period to end March 2003, an increase of 44% over the same period last year.
Impairment and related provisions of R257 million raised against the investments
in the international energy and aircraft leasing businesses resulted in an
attributable loss for the period of R179 million. Coronation Capital has
discontinued its international structured finance business.
The investment banking and equity arbitrage areas continued to perform well and
satisfactory contributions were made by a number of trading areas. Coronation
Capital is being restructured to increase the focus on these activities.
The minority shareholders in Coronation Capital were bought out at a cost of
R195 million with effect from 1 October 2002, and Coronation Capital is now a
wholly owned subsidiary of Coronation Holdings Limited ("Corohold").
While we expect the current difficult market conditions to continue, Coronation
Capital has a solid capital base and a team of people who have the ability to
generate strong returns.
Investments
The Investments segment returned a loss of R27 million for the period, a
substantial decrease from the contribution of R91 million for the same period
last year. The loss incurred by this segment was primarily as a result of
foreign exchange translation losses of R61 million and a substantial decline in
interest income.
The aggressive share buy-back programme in the previous financial year and the
first part of the current period resulted in a return of R976 million of capital
to shareholders which, together with the dividend paid in December 2002 of R185
million, substantially decreased the funds held by the Investments segment. This
in turn resulted in the decline in interest income.
Headline earnings
The Group recorded headline earnings of R31 million (2002: R244 million) for the
period. Headline earnings per share were 41c (2002: 264c). Headline earnings
were calculated by deducting the non-capital portion of the impairment and
related provisions against the aircraft leasing business (R134 million) from
core earnings (R165 million).
Accounting policies
The interim financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. The accounting policies
applied in the interim financial statements are consistent with those applied in
the annual financial statements for the year ended 30 September 2002, with the
exception of a change in policy arising from the Group"s adoption of AC 133:
Financial Instruments: Recognition and Measurement. The adoption of AC 133
resulted in a credit to opening retained income of R16 million.
Looking forward
The Corohold Board announced a restructuring of the Group in March 2003.
The restructuring was proposed to address the fact that the Corohold share has
traded at a discount to its estimated fair value for a considerable period and
to position the underlying businesses more appropriately to ensure their success
in current and anticipated future markets. The Corohold Board is of the view
that a direct listing of Coronation Fund Managers will provide considerable
advantages to the company and its businesses and, in contrast, that the
investment banking businesses are more appropriate to an unlisted environment.
The Corohold restructuring is designed both to unlock direct value for
shareholders and to provide shareholders with an opportunity to exit the Group"s
investment banking operations. Shareholders who wish to remain invested in the
investment banking business are able to do so by investing in Coronation
Investments & Trading Limited, the unlisted company which is to acquire the
majority of the Corohold assets other than Coronation Fund Managers.
Circulars setting out details of the restructuring and convening the necessary
meetings have been posted to shareholders.
Group income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Mar 2003 % 31 Mar 2002 30 Sept 2002
R million change R million R million
Operating income 426 (16) 508 1 172
Fee income 309 281 701
Trading income 130 117 276
Investment income 26 29 64
Other (loss)/income (39) 81 131
Operating expenses (266) (5) (281) (586)
Net interest income 67 70 116
Interest received 86 109 211
Interest paid (19) (39) (95)
Net operating income 227 297 702
Net impairments, related
provisions and disposal (257) (3) (19)
surpluses
Net (loss)/income before (30) 294 683
taxation
Taxation (54) (74) (162)
Net (loss)/income after (84) 220 521
taxation
Share of associates" income - 4 2
Net (loss)/income (84) 224 523
Outside shareholders"
interest (8) 23 (20)
Net (loss)/income (92)
attributable to shareholders (137) 247 503
Core earnings adjustments 257 (3) 23
Impairment of investments,
goodwill and capital assets:
- Capital impairments 123 37 147
- Non-capital impairments and
related provisions 134 - -
257 37 147
Realisation on
decapitalisation of
subsidiary - (40) (40)
Surplus on disposal of
businesses - - (88)
257 (3) 19
Attributable to outside
shareholders - - 4
Core earnings 165 (32) 244 526
Shares in issue (millions)
Ordinary shares 25 30 28
"N" ordinary shares 50 62 55
Total number of shares 75 92 83
Weighted average number of
shares in issue (millions) 76 92 90
(Loss)/earnings per share
(cents):
- Attributable (121) (145) 267 557
- Core 216 (18) 264 583
Group cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Mar 2003 31 Mar 2002 30 Sept 2002
R million R million R million
Net (loss)/income before taxation (30) 294 683
Adjustments for non-cash items 329 (162) 261
Cash flow from operations 299 132 944
Net receipts from/(funding of)
operating assets, taxation and
dividend 860 (424) (1 244)
Net cash inflow/(outflow) from
operating activities 1 159 (292) (300)
Net cash inflow from investing
activities 284 77 636
Net cash (outflow)/inflow from
financing activities (688) 44 (695)
Net increase/(decrease) in cash and
cash equivalents 755 (171) (359)
Net cash and cash equivalents at
beginning of period 1 762 1 605 1 605
Exchange rate adjustments (542) 416 516
Net cash and cash equivalents at end
of period 1 975 1 850 1 762
Group balance sheet
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Mar 2003 % 31 Mar 2002 30 Sept 2002
R million change R million R million
ASSETS
Non-current assets
Property, plant and
equipment 62 206 199
Intangible assets 9 8 9
Investment in
associates 34 165 46
Investments and long-
term receivables 1 377 1 897 1 681
Deferred taxation 21 32 20
1 503 2 308 1 955
Current assets
Liquid and trading
assets 1 500 4 755 2 882
Other receivables 176 501 486
Cash and cash
equivalents 1 975 1 850 1 762
3 651 7 106 5 130
Total assets 5 154 (45) 9 414 7 085
EQUITY AND LIABILITIES
Equity
Ordinary shareholders"
funds 3 625 5 037 4 816
Outside shareholders"
interests 170 389 341
3 795 (30) 5 426 5 157
Non-current liabilities
Long-term liabilities 305 471 401
Deferred taxation 74 56 72
379 527 473
Current liabilities
Trading liabilities 465 2 940 756
Other payables 515 521 699
980 3 461 1 455
Equity and liabilities 5 154 (45) 9 414 7 085
Net asset value per 4 835 3 4 675 5 838
share (cents)
The following period
end exchange rates were
applied:
US dollar (US$) 7,8643 11,3250 10,5362
Euro 8,5855 9,8612 10,4171
Sterling 12,4401 16,1352 16,5713
Group statement of changes in equity
Non-
Share distri- Distri-
capital and butable butable
R million premium reserves reserves Total
Balance at 1 October 2001 as
previously reported 2 061 349 1 930 4 340
Change in accounting policy for
dividends - - 233 233
Balance at 1 October 2001 as 2 061 349 2 163 4 573
restated
Foreign exchange translation
difference - 416 - 416
Revaluation of investment in
subsidiary - 34 - 34
Net income attributable to
shareholders - - 238 238
Dividends paid - - (224) (224)
Issue of shares to outside
shareholders - 4 (4) -
Balance at 31 March 2002 2 061 803 2 173 5 037
Net movement to 30 September 2002 (588) 104 263 (221)
Balance at 1 October 2002 1 473 907 2 436 4 816
AC 133 revaluation adjustments - - 16 16
Repurchase of shares (388) - - (388)
Foreign exchange translation
difference - (542) - (542)
Net loss attributable to
shareholders - - (92) (92)
Dividends paid - - (185) (185)
Issue of shares to outside
shareholders - 1 (1) -
Balance at 31 March 2003 1 085 366 2 174 3 625
Segment core earnings for the six months ended 31 March 2003
2003
Local International Total
R million % % %
Coronation Fund
Managers 49 30 65 39 114 69
Coronation Capital 63 38 15 9 78 47
Investments 1 1 (28) (17) (27) (16)
Total 113 69 52 31 165 100
2002
Local International Total
R million % % %
Coronation Fund
Managers 65 27 34 14 99 41
Coronation Capital 53 22 1 - 54 22
Investments 45 18 46 19 91 37
Total 163 67 81 33 244 100
Directors: C B Brayshaw Chairman, D L Barnes Chief Executive Officer, G R Tipper
Chief Operating Officer, M T Rutherford, G M C Ryan, A Watson
Registered office:
Coronation Place, Freestone Park, 135 Patricia Road, Sandown 2196
Postal address: PO Box 652643, Benmore 2010
Transfer secretaries:
Computershare Investor Services Limited, 70 Marshall Street, Johannesburg 2001
Website: www.coronation.co.za
Cape Town
12 May 2003
Issued by Sponsor:
Deutsche Securities (SA) (Proprietary) Limited
Date: 12/05/2003 02:15:28 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
