| Wed 19 Nov 2003, 8:37 | | result for the 5 months ended 30 September 2003 |
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Coronation Fund Managers Limited - Reviewed results for the new group for the 5
months ended 30 September 2003
Coronation Fund Managers Limited
(Registration number: 1973/009318/06)
Share code: CML
ISIN: ZAE000047353
("Coronation Fund Managers")
- Solid maiden earnings
- Strong cash flow, dividend of 12 cents per share
Reviewed results for the new group for the 5 months ended 30 September 2003
Results
Coronation Fund Managers is a leading fund management company offering a
comprehensive range of traditional South African fund management investment
products and alternative multi-manager international investment products to
institutional and individual investors.
In difficult market conditions, it is pleasing to report that Coronation Fund
Managers has delivered a solid performance in its maiden set of results as a
listed group. For the five months ended 30 September 2003, headline earnings
totalled R60,9 million and annualised headline earnings per share were 38,3
cents based on the 382 274 930 shares in issue throughout the period.
Assets under management increased by 11,6% to R53,7 billion (30 April 2003:
R48,1 billion). The South African business produced a good performance as a
result of strong recurring income and superior local investment returns. The
results of the international business were subdued due to the strengthening
rand, an increase in costs and lower performance fees.
- SA Institutional
The South African institutional savings industry has been characterised by a
lack of growth in the total asset pool and a greater emphasis on absolute
returns. Within this context, it is encouraging that Coronation Fund Managers"
total institutional assets under management remained steady during the period.
Our absolute return products continued to attract good inflows and grew from
R3,5 billion in April to R6 billion at 30 September 2003. Coronation Fund
Managers currently has a market share in excess of 10% in the private retirement
fund market. However, our share of the government and parastatal retirement fund
market is low and represents an exciting growth area.
Within the retirement fund industry, there has been a move from traditional
balanced mandates towards specialist mandates. Coronation Fund Managers is well
placed in this regard - over the last 10 years we have developed a wide range of
products with superior track records in different asset classes.
Over the long term, our global balanced portfolios remain in the upper quartile
of recognised performance surveys. Our performance in this category over shorter
time periods has slipped slightly due to the short-term underperformance of our
international product, the Coronation Global Equity Fund. Our domestic balanced
performance, however, has continued to improve and is ranked second over one
year to 30 September 2003 in the Alexander Forbes SA Large Manager Watch Survey.
Our range of absolute products has performed well and is likely to meet all its
inflation-plus benchmarks. Most of our benchmark portfolios outperformed their
quantitative benchmarks and targets, thus meeting clients" investment
objectives.
- SA Retail
Business conditions in the domestic unit trust industry stabilised during the
period under review and assets under management grew by 17,6%, to more than R200
billion for the six months to 30 September 2003. However, more than 90% of new
net inflows to the industry continued to be directed into money market funds.
Net new business into managed, equity and foreign funds, which are Coronation"s
traditional focus areas, remained subdued. There has also been a change in the
asset mix of our unit trust business in that we experienced outflows from our
foreign funds while achieving significant inflows into our absolute return,
general equity and money market funds.
Our unit trust funds continued to perform significantly better than the industry
average, and we retained our top position in the Plexus Survey of consistency of
performance for the fifth consecutive quarter as at 30 September 2003. We were
particularly pleased with the performance produced by our flagship domestic
equity fund, the Coronation High Growth Fund.
The environment for conducting offshore investment business on behalf of South
African investors remains difficult. As a result of our large offshore component
of assets under management in the retail business, continued rand strength and
global market volatility had a significant impact on revenues earned in the
period under review.
Our flagship foreign fund, the Coronation International Active Fund of Funds,
was adversely affected through its exposure to the Lancer Offshore Fund. Despite
this difficulty, the fund performed according to its benchmark, substantially
preserving US dollar capital for the 12 months to 30 September 2003.
- International
Assets under management in our international multi-manager business remained in
excess of US$1 billion over the period. Our focus since establishing the
business in December 2000 has been to develop a credible investment team and a
robust investment process. This has now been successfully accomplished and is
evidenced by solid investment performance across all funds.
Given the stability of the client base within the fund of hedge funds business,
management fees remain in line with expectations. The decline in performance
fees and increased costs as a result of additional staffing had an adverse
impact on earnings during the period.
Prospects
Coronation Fund Managers has developed a strong brand and consolidated its
position as one of the leading independent fund managers in the South African
investment management industry. Our strategic focus is to deliver superior
investment performance to our clients.
We have stable and incentivised investment and management teams who operate in
the pursuit of this objective. Attracting, retaining and motivating the best
quality staff remains a key challenge going forward.
Coronation Fund Managers is making progress in implementing a sustainable
transformation programme which will meet the requirements of the recently
released Financial Sector Charter. We look forward to reporting developments on
these initiatives by September 2004.
We remain optimistic about Coronation Fund Managers" potential for growth and
will continue to focus on generating quality recurring income.
Financial statements
The financial statements for Coronation Fund Managers Ltd have been prepared in
compliance with South African Statements of Generally Accepted Accounting
Practice on a going concern basis. The results have been reviewed by the
company"s auditors, KPMG Inc. A copy of their review report is available for
inspection at the company"s registered office.
Acquisition of CIM and its subsidiaries
The acquisition by Coronation Fund Managers of the equity of Coronation
Investment Management (Pty) Ltd ("CIM") (previously Coronation Fund Managers
(Pty) Ltd) and its subsidiaries for a consideration of R1,757 billion, on 30
April 2003, was settled through an issue of shares to Coronation Holdings
Limited ("Corohold"). This transaction was a precursor to the Corohold
restructuring which included the unbundling of Coronation Fund Managers from the
Corohold Group and its listing on the JSE Securities Exchange South Africa with
effect from 13 June 2003.
The pro forma financial statements presented in the pre-listing statement of
Coronation Fund Managers accounted for this acquisition in terms of the purchase
method of accounting as per the accounting pronouncement AC131: Business
Combinations, and as such goodwill of R1,657 billion was recognised. As at 30
April 2003, both Coronation Fund Managers and CIM were wholly-owned subsidiaries
of Corohold as the acquisition was between enterprises under common control. The
decision to recognise goodwill has been reversed as AC131 does not apply to
transactions of this nature.
On the basis that the mechanism used to fund the purchase of the subsidiaries
was an issue of shares at a premium, the difference between the net assets
acquired and the consideration of R1,757 billion has been written off against
share premium at group level in order to reflect the transaction at net asset
value.
As Coronation Fund Managers only acquired the shares in CIM on 30 April 2003,
five months consolidated income is reported.
Dividend
It is the intention to declare dividends annually at the discretion of the Board
of Directors. Notice is hereby given that an initial dividend of 12 cents per
ordinary share (dividend number 1) has been declared for the five month period
ended 30 September 2003. This equates to approximately 75% of the earnings for
the period. In compliance with the requirements of the JSE Securities Exchange
South Africa, the following dates are applicable:
Last date to trade cum dividend Friday, 5 December 2003
Shares trade ex dividend Monday, 8 December 2003
Record date Friday, 12 December 2003
Payment date Monday, 15 December 2003
Share certificates may not be dematerialised or rematerialised between Monday, 8
December 2003, and Friday, 12 December 2003, both days inclusive.
Gavan Ryan Thys du Toit Derek McDonald
Chairman Chief Executive Company
Officer Secretary
Cape Town
19 November 2003
Group income statement
Reviewed
5 month Audited
period 12 months
ended ended
30 Sept 2003 30 Sept 2002*
R"000 R"000
Revenue 164 533 2 064
Management and service fees 108 218 945
Performance fees, initial charges
and trading income 41 398 (83)
Interest income 4 232 1 202
Investment income 29 -
Other income 10 656 -
Operating expenses (83 767) (74)
Interest expense (3 170) -
Net income before taxation 77 596 1 990
Taxation (17 027) (599)
Net income after taxation 60 569 1 391
Share of associates" retained income 300 -
Net income attributable
to shareholders 60 869 1 391
Earnings per share (cents)
Headline 15,9
Attributable 38,2**
Diluted 38,2**
Headline 38,3**
** Annualised
Headline earnings adjustment
R"000
Net income attributable to shareholders 60 869
Loss on disposal of equipment 56
Headline earnings 60 925
Shares in issue (thousands)
Ordinary shares 382 275
Weighted average number of ordinary shares 382 275
Group balance sheet
Reviewed Audited
as at as at
30 Sept 2003 30 Sept 2002*
R"000 R"000
Assets
Equipment 5 889 -
Investment in associates 5 903 -
Financial investments 143 064 -
Long-term receivables 1 660 1 500
Non-current assets 156 516 1 500
Securities held for trading 39 339 -
Accounts receivable 33 887 -
Other receivables 6 287 23 000
Taxation - 389
Cash and cash equivalents 157 029 -
Current assets 236 542 23 389
Total assets 393 058 24 889
Equity and liabilities
Ordinary share capital 38 1
Preference share capital 1 -
Share premium 93 561 19
Non-distributable reserve (3 916) -
Distributable reserves 60 523 23 063
Total shareholders" interest 150 207 23 083
Policyholders 10 623 402 -
Linked assets (10 623 402) -
Interest-bearing borrowings 118 009 -
Deferred tax liabilities 35 402 -
Non-current liabilities 153 411 -
Accounts payable 78 464 1 693
Taxation 10 976 -
Bank overdraft - 113
Current liabilities 89 440 1 806
Total equity and liabilities 393 058 24 889
Group cash flow statement
Reviewed Audited
5 month period 12 months
ended ended
30 Sept 2003 30 Sept 2002*
R"000 R"000
Cash flows from operating activities
Net income before taxation 77 596 1 990
Adjustments 1 483 (1 202)
Operating profit before working capital
changes 79 079 788
Working capital changes (238 368) 356
Cash (utilised by)/generated from operations (159 289) 1 144
Cash flow generated from investments 1 091 1 202
Taxation paid (11 080) (1 080)
Dividends paid - 30 April 2003 (23 409) (2 000)
Net cash applied to operating activities (192 687) (734)
Cash flows from investing activities (1 259) -
Cash flows from financing activities 13 072 (23 697)
Net increase/(decrease) in cash and cash
equivalents (180 874) (24 431)
Cash and cash equivalents at beginning of
period (113) 24 318
Cash obtained on acquisition of subsidiaries 341 233 -
Exchange rate adjustments (3 217) -
Cash and cash equivalents at end of period 157 029 (113)
Group statement of changes in equity
Reviewed Audited
5 month period 12 months
ended ended
30 Sept 2003 30 Sept
2002*
R"000 R"000
Equity at beginning of period 23 083 21 692
Share capital
Balance at beginning of period 1 1
Issue of share capital 37 -
Balance at end of period 38 1
Preference shares
Balance at beginning of period - -
Issue of preference shares 1 -
Balance at end of period 1 -
Share premium
Balance at beginning of period 19 19
Issue of share capital 85 040 -
Share issue expenses (4 569) -
Issue of preference shares 13 071 -
Balance at end of period 93 561 19
Non-distributable reserve
Balance at beginning of period - -
Currency translation differences (3 916) -
Balance at end of period (3 916) -
Distributable reserves
Balance at beginning of period 23 063 21 672
Net profit for the period 60 869 1 391
Ordinary dividends - 30 April 2003 (23 409) -
Balance at end of period 60 523 23 063
Equity at end of period 150 207 23 083
Segment report
R"000 %
Revenue
Local 109 797 67
International 54 736 33
164 533
Net income before taxation
Local 49 312 64
International 28 284 36
77 596
Net assets
Local 102 048 68
International 48 159 32
150 207
* The comparatives are not meaningful as they relate to the company ultimately
used in the restructuring transaction.
Directors: G M C Ryan* Chairman, M M du Toit Chief Executive Officer, W T
Floquet*+, E Molobi*+
* Non-executive
+ Independent
Registered office: Coronation House, Boundary Terraces, 1 Mariendahl Lane,
Newlands 7700
Postal address: PO Box 993, Cape Town 8000
Transfer secretaries: Computershare Limited, 70 Marshall Street, Johannesburg
2001
JSE share code: CML ISIN: ZAE000047353
Website: www.coronation.com
Date: 19/11/2003 07:02:23 AM Produced by the JSE SENS Department
