| Mon 17 May 2004, 9:07 | | REVIEWED INTERIM RESULT |
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CORONATION FUND MANAGERS LIMITED - REVIEWED INTERIM RESULTS FOR SIX MONTHS ENDED
31 MARCH 2004
Coronation Fund Managers Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1973/009318/06)
ISIN: ZAE000047353
JSE Share code: CML
REVIEWED INTERIM RESULTS FOR THE GROUP FOR THE SIX MONTHS ENDED 31 MARCH 2004
- Assets under management up 10% to R59,3 billion
- Revenue up to R188,9 million from R164,5 million
- Net income before tax down 7%
RESULTS
Coronation Fund Managers ("Coronation"), a leading fund management company, has
again demonstrated its ability to produce solid operating earnings. Revenue for
the six-month period ended March 2004 was R188,9 million, up from R164,5 million
for the previous five-month period to 30 September 2003. Assets under management
increased by 10% from R53,7 billion at September 2003 to R59,3 billion at 31
March 2004. Diluted headline earnings of 16 cents per share was 16% lower and
net income before tax of R86,6 million was 7% lower than the grossed up figures
for the preceding five months to 30 September 2003.
The South African business benefited from its diversified product range,
domestic performance fees, stronger financial markets and most importantly from
strong investment performance, particularly in the retail market where the
strength and consistency of returns across the product range received much
industry recognition. The international business, which operates in the
alternative strategies arena, continues to produce good performance and has
started to benefit from the increase in demand for this niched product type.
The effective tax rate increased from 21,9% to 31,1%, adversely affecting net
income attributable to shareholders. This was mainly as a result of the
secondary tax on companies ("STC") on the dividend paid in December 2003, and a
decrease in the proportion of income earned in tax jurisdictions subject to a
lower corporate tax rate than that of South Africa. In addition, the earnings
contribution of the international business in rands, relative to the domestic
contribution, decreased from 37% in 2003 to 13% in the current reporting period
due to rand strength and the lack of international performance fees.
TRANSFORMATION
We are happy to report that significant progress has been made in implementing a
sustainable transformation programme at Coronation. The Financial Sector Charter
has been used as a guideline for this process.
PROSPECTS
Formerly the "darling" of the nineties, the fund management industry now finds
itself under growing pressure. Notwithstanding the short-term recovery in
financial markets, the squeeze on margins continues with many of the mid-sized
participants with insufficient scale in the savings industry coming under
terminal pressure.
As an established investment product provider with a well diversified range of
products, we believe we are well positioned for a strong future. We were the
first to introduce absolute return products to both institutional and retail
investors and continue to be the market leader in South Africa. Furthermore, the
outstanding performance produced by our fixed interest franchise firmly
establishes Coronation as a key competitor, and provides the business with
strong growth opportunities. In response to margin pressure, we have succeeded
in introducing performance fees across a wide range of products which will make
our earnings more lumpy, but should raise margins over the medium and long term.
The depth, skill, knowledge and structure of Coronation have never been better
aligned to meeting the needs of our clients, and we are confident in the future
prospects for the business. We remain committed to the long-term focus of
generating quality recurring income through our commitment to good consistent
investment performance, exceptional client service and maintaining our
reputation as a leader in the fund management industry.
FINANCIALS
Basis Of Preparation And Accounting Policies
The condensed consolidated interim financial report for the six months ended 31
March 2004 has been prepared in compliance with the South African Statement of
Generally Accepted Accounting Practice applicable to Interim Financial
Reporting, the Listings Requirements of the JSE Securities Exchange South Africa
and the South African Companies Act, 1973, as amended. The accounting policies
applied in the presentation of the interim financial report are consistent with
those applied for the year ended 30 September 2003. As Coronation only acquired
the shares in Coronation Investment Management (Pty) Ltd on 30 April 2003, the
comparative figures do not include the consolidated results of these
subsidiaries prior to acquisition.
Related Party Transactions
Coronation and its subsidiaries, in the ordinary course of business, enter into
various service and investment transactions with associates and other entities
in which the group has a material interest. These transactions are under terms
no less favourable than those arranged with third parties.
Independent Review By The Auditors
The condensed consolidated balance sheet at 31 March 2004 and the related
condensed consolidated statements of income, changes in equity and cash flow for
the six months then ended have been reviewed by our auditors, KPMG Inc. Their
unqualified review report is available for inspection at the registered office
of the company.
CHANGES TO THE BOARD OF DIRECTORS
Anthony Gibson was appointed as an executive director to the board with effect
from 10 February 2004.
DIVIDEND
Coronation"s policy is to declare one dividend per annum, payable after the
announcement of the year-end results.
CAUTIONARY ANNOUNCEMENT
The cautionary announcement issued with the trading update on 1 April 2004 is
hereby withdrawn.
Gavan Ryan Thys du Toit Derek McDonald
Chairman Chief Executive Officer Company Secretary
Cape Town
17 May 2004
GROUP INCOME STATEMENT
31 March 30 Sept 31 March
2004 2003 2003
6 months 5 months 6 months
Reviewed Audited Reviewed
R"000 R"000 R"000
REVENUE 188 905 164 533 454
Management and service fees 127 823 108 218 453
Performance fees, trading income and
initial charges 56 575 41 398 -
Interest income 3 163 4 232 1
Investment income 8 29 -
Other income 1 336 10 656 -
OPERATING EXPENSES (99 386) (83 767) (30)
Interest expense (2 944) (3 170) -
NET INCOME BEFORE TAXATION 86 575 77 596 424
Income tax (26 958) (17 027) (128)
NET INCOME AFTER TAXATION 59 617 60 569 296
Share of associates" retained income 867 300 -
Net income attributable to shareholders 60 484 60 869 296
Earnings per share (cents)
Attributable 15,7 15,9
Headline 16,1 15,9
Diluted earnings per share (cents)
Attributable 15,5 15,9
Headline 16,0 15,9
Dividends per share
The final dividend for 2003 was 12
cents per share.
GROUP BALANCE SHEET
31 March 30 Sept
2004 2003
Reviewed Audited
R"000 R"000
ASSETS
Equipment 6 299 5 889
Investment in associates 6 642 7 563
Financial investments 190 145 136 205
Non-current assets 203 086 149 657
Financial investments 10 751 6 859
Securities held for trading 39 420 39 339
Trade receivables 67 851 33 887
Other receivables 7 402 6 287
Deferred tax asset 2 412 -
Cash and cash equivalents 69 885 157 029
Current assets 197 721 243 401
Total assets 400 807 393 058
EQUITY AND LIABILITIES
Ordinary share capital 38 38
Preference share capital 1 1
Share premium 93 561 93 561
Non-distributable reserve (14 698) (3 916)
Distributable reserve 75 134 60 523
Total shareholders" interest 154 036 150 207
Policyholders" funds 11 033 893 10 623 395
Linked assets backing policyholders" funds (11 033 893) (10 623 395)
Interest-bearing borrowings 110 326 118 009
Deferred tax liability 33 098 35 402
Non-current liabilities 143 424 153 411
Trade payables 83 980 78 464
Taxation owing 19 367 10 976
Current liabilities 103 347 89 440
Total equity and liabilities 400 807 393 058
GROUP STATEMENT OF CHANGES IN EQUITY
31 March 30 Sept 31 March
2004 2003 2003
6 months 5 months 6 months
Reviewed Audited Reviewed
R"000 R"000 R"000
Equity at beginning of period 150 207 23 083 23 083
Issue of share capital - 37 -
Premium on issue of share capital - 85 040 -
Share issue expenses - (4 569) -
Issue of preference shares - 1 -
Premium on issue of preference shares - 13 071 -
Currency translation differences (10 782) (3 916) -
Net profit for the period 60 484 60 869 296
Ordinary dividend (45 873) (23 409) -
Equity at end of period 154 036 150 207 23 379
GROUP CASH FLOW STATEMENT
31 March 30 Sept 31 March
2004 2003 2003
6 months 5 months 6 months
Reviewed Audited Reviewed
R"000 R"000 R"000
Cash flows from operating
activities (12 321) (187 811) 116
Operating profit before working
capital changes 90 228 79 079 424
Working capital changes (33 535) (240 560) 160
Cash flows generated from return
on investments 227 1 091 1
Taxation paid (23 368) (4 012) (469)
Dividend paid (45 873) (23 409) -
Cash flows applied to investing
activities (64 041) (1 566) -
Cash flows from financing
activities - 8 503 -
Net (decrease)/increase in cash
and cash equivalents (76 362) (180 874) 116
Cash and cash equivalents at
beginning of period 157 029 (113) (113)
Cash obtained on acquisition of
business - 341 233 -
Exchange rate adjustments (10 782) (3 217) -
Cash and cash equivalents at end
of period 69 885 157 029 3
SEGMENT REPORT
6 months to 31 March 2004
South Africa International
operations operations Group
Reviewed Reviewed Reviewed
R"000 R"000 R"000
Segment revenue 162 122 26 783 188 905
Segment operating expenses (82 347) (19 983) (102 330)
Segment net income before
taxation 79 775 6 800 86 575
% contributions to headline
earnings 92 8 100
CALCULATION OF HEADLINE EARNINGS
31 March 30 Sept
2004 2003
Reviewed Audited
Weighted average number of shares in issue 382 275 382 275
(thousand)
Number of shares in issue for diluted earnings 389 875 382 275
per share (thousand)
R"000 R"000
Reconciliation of headline earnings
Earnings attributable to shareholders,
calculated as follows:
Net income attributable to shareholders 60 484 60 869
Less: Dividend on convertible cumulative (503) -
redeemable preference shares
STC on convertible cumulative redeemable (63) -
preference dividend
Impairment of investment 1 315 -
Loss on scrapping of equipment 450 56
Headline earnings attributable to shareholders 61 683 60 9250
Directors:
G M C Ryan* Chairman, M M du Toit Chief Executive Officer,
W T Floquet*+, A J Gibson, E Molobi*+
* Non-executive
+ Independent
Registered office:
Coronation House,
Boundary Terraces,
1 Mariendahl Lane,
Newlands 7700
Postal address:
PO Box 993,
Cape Town 8000
Registration number:
1973/009318/06
Transfer secretaries:
Computershare Limited,
70 Marshall Street,
Johannesburg 2001
Website: www.coronation.com
Date: 17/05/2004 08:42:11 AM Produced by the JSE SENS Department
