| Tue 16 Nov 2004, 12:11 | | Results for the year ended 30 September 2004 |
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Coronation - Reviewed financial results for the year ended 30 September 2004 and
further cautionary announcement
Coronation Fund Managers
(Incorporated in the Republic of South Africa)
(Registration Number: 1973/009318/06)
Share Code: CML
ISIN: ZAE000047353
(`Coronation`)
- Assets under management up 19% to R63.7 billion
- Return on equity of 67%
- Headline earnings of R130 million
- Strong cash flow, dividend of 25 cents per share
Reviewed financial results for the year ended 30 September 2004
Results
Coronation has in its first full year as a listed company proved its ability to
deliver superior investment performance to clients, generate profit and provide
strong dividend flows to shareholders. For the year ended 30 September 2004,
headline earnings totalled R130 million and headline earnings per share were 34
cents based on the 382 274 930 shares in issue throughout the period. Assets
under management increased by 19% from R53.7 billion at 30 September 2003 to
R63.7 billion at 30 September 2004.
Our performance for the past year is pleasing. The most important aspect has
been the level of investment returns that we have delivered for our clients.
Within institutional we rank in the upper quartile of all recognised performance
surveys. Our equity investment performance in particular has been exceptional,
adding alpha of 10% (active return over that of the market) for the year, while
on the retail side our consistency of superior investment returns across the
full range of collective investment funds (unit trusts) is evidenced in our
first place position in the Plexus Survey as at 30 September 2004.
The remarkable recovery in the local equity market combined with the strength in
the local economy and exceptional investment performance provided a favourable
backdrop to the 19% increase in assets under management.
Institutional
The South African retirement savings industry has been characterised by a lack
of growth in the total asset pool and a greater emphasis on a move from
traditional balanced mandates to specialist mandates. Strong financial markets
provided support across portfolios and this contributed to an increase in
institutional assets under management from R40.8 billion at 30 September 2003 to
R49.6 billion at 30 September 2004. This represents growth of 22% and a 12%
share of the total retirement fund market.
The outstanding performance track record of our fixed interest portfolios has
entrenched Coronation not only as a leader in equity, balanced and global funds
of funds, but as a leading manager of specialist fixed interest investing.
We have also seen heightened interest in our international multi-manager
business as trustees begin to recognise the risk diversification benefits
provided by the inclusion of funds of hedge funds in an overall portfolio. We
await further regulatory guidance from the Financial Services Board on the
situation regarding hedge funds in the South African market.
Retail
The collective investments (unit trust) industry grew by 39% over the period
fuelled by strong domestic equity performance. A marked improvement in the flow
of assets into equity and managed funds was recorded, and absolute, property,
managed fixed interest and money market funds continued to attract investments.
The strength in the rand continued to deter investors from investing offshore
and, as a result, rand-denominated foreign funds continued to suffer outflows.
The combination of positive market conditions and strong support from
Coronation`s traditional client base resulted in a more than R2 billion increase
in assets under management. As at 30 September 2004, assets under management
totalled R8.7 billion which is an increase of 42% over the past financial year.
Investments into managed funds have continued at an accelerated pace; a pattern
which is reflected in the significant inflows to the Coronation managed funds:
Capital Plus, Absolute, Strategic Income and Market Plus. Furthermore, investors
continue to seek the returns produced by the listed property market and this is
mirrored in the inflows to the Coronation Property Equity fund.
The business benefited greatly from the exceptional investment performance
produced by the Coronation fixed interest team and we continue to be a market
leader in absolute return funds, both in terms of inflows and investment
performance. Our equity funds also delivered exceptional results for clients as
the ranking tables recorded strong consistent investment performance across the
range. In the Plexus Survey of consistency of performance, we ranked first as at
30 September 2004. This marks Coronation`s 16th consecutive first or second
placing in this quarterly survey.
International
The international business continued to perform well in what has been a very
difficult market environment where many hedge and absolute return funds have
been under considerable pressure. Assets under management remain stable at US$1
billion.
A particular highlight of the period has been our growing acceptance by
international investment consultants and institutional investors, and the long
awaited breakthrough in attracting international (non-South African) assets from
a number of European pension fund clients. This affirms our strategy of organic
growth in building a sustainable offshore business.
Market positioning
The substance and quality of our business is better than ever before. In the 17
months as a listed entity we have proved to be a sustainable, independent and
profitable business. We employ 138 people and generate profits after tax of R126
million. Coronation is the second largest independent fund manager in South
Africa (independent of a bank or life company).
Transformation
We are pleased to report that our transformation task team has made considerable
progress regarding employment equity and skills development, procurement,
enterprise development and corporate social investment. Our staff composition is
now 44% black and we continue to focus efforts on recruiting black staff at
senior and executive management level. With regard to ownership and control, we
continue to pursue corporate action to further enhance our credentials and are
currently reviewing the existing structure of the board.
Prospects
Coronation has developed a strong brand in its target markets and ranks high as
one of South Africa`s most successful and most innovative fund management
companies.
At the time of listing, we stated that `we will remain focused on the core
competencies of providing consistent superior investment performance, innovative
products and exceptional client service, and to retain a high return on capital
and maintain the low level of fixed costs`. This has been, and will remain, our
long-term focus.
Coronation will continue to adapt to the changing market and client environment,
while remaining undiluted in our focus on fund management.
Financial statements
The financial statements for Coronation 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.
Dividend
It is the intention to declare dividends annually at the discretion of the Board
of Directors. Notice is hereby given that a final cash dividend of 25 cents per
ordinary share has been declared for the year ended 30 September 2004. 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, 3 December 2004
Shares trade ex dividend Monday, 6 December 2004
Record date Friday, 10 December 2004
Payment date Monday, 13 December 2004
Share certificates may not be dematerialised or rematerialised between Monday, 6
December 2004 and Friday, 10 December 2004, both days inclusive. In terms of the
requirements of the Companies Act, the directors confirm that after the payment
of the distribution, Coronation will be able to pay its debts as they become due
in the ordinary course of business, and its consolidated assets, fairly valued,
will exceed its consolidated liabilities.
Further cautionary announcement
Further to the cautionary announcements dated 27 July 2004, 6 September 2004 and
18 October 2004, shareholders are advised that negotiations are still in
progress which, if successfully concluded, may have a material effect on the
price of Coronation`s securities.
Accordingly, shareholders are advised to continue exercising caution when
dealing in Coronation securities until a further announcement is made.
Gavan Ryan Thys du Toit Derek McDonald
Chairman Chief Executive Officer Company Secretary
Cape Town 15 November 2004
Group income statement
Reviewed Audited
12 months 5 months
30 Sept 2004 30 Sept 2003
R`000 R`000
Revenue 389 025 164 533
Management and service fees 263 308 108 218
Performance fees, trading income and initial
charges 119 965 41 398
Interest income 6 906 4 232
Investment income 17 29
Other income (1 171) 10 656
Operating expenses (217 597) (83 767)
Interest expense (1 993) (3 170)
Net income before taxation 169 435 77 596
Income tax (43 014) (17 027)
Net income after taxation 126 421 60 569
Share of associates` retained income 116 300
Net income attributable to shareholders 126 537 60 869
Earnings per share (cents)
Attributable 32.8 15.9
Headline 33.9 15.9
Diluted earnings per share (cents)
Attributable 32.5 15.9
Headline 33.5 15.9
The final dividend for 2003 was 12 cents per
share.
The proposed final dividend for 2004 is 25
cents per share.
Group balance sheet
Reviewed Audited
as at as at
30 Sept 2004 30 Sept 2003
R`000 R`000
Assets
Equipment 5 684 5 889
Investment in associates 3 706 7 563
Financial investments 120 575 136 205
Long-term receivable 1 660 -
Non-current assets 131 625 149 657
Financial investments 6 690 6 859
Securities held for trading 14 378 39 339
Trade receivables 65 727 33 887
Other receivables 20 967 6 287
Cash and cash equivalents 143 667 157 029
Current assets 251 429 243 401
Total assets 383 054 393 058
Equity and liabilities
Ordinary share capital 38 38
Preference share capital 1 1
Share premium 93 561 93 561
Non-distributable reserve (9 242) (3 916)
Distributable reserve 141 373 60 523
Total shareholders` interest 225 731 150 207
Policyholders` funds 11 386 588 10 623 395
Linked assets backing policyholders` funds (11 386 (10 623 395)
588)
Interest-bearing borrowing 38 871 118 009
Deferred tax liability 11 661 35 402
Non-current liabilities 50 532 153 411
Trade payables 69 046 78 464
Taxation owing 37 745 10 976
Current liabilities 106 791 89 440
Total equity and liabilities 383 054 393 058
Group cash flow statement
Reviewed Audited
12 months 5 months
30 Sept 2004 30 Sept 2003
R`000 R`000
Net cash inflow/(outflow) from operating
activities 78 629 (187 811)
Operating profit before working capital
changes 185 204 79 079
Working capital changes (24 644) (240 560)
Cash return on investments 4 930 1 091
Taxation paid (39 986) (4 012)
Dividends paid (46 875) (23 409)
Net cash outflow from investing activities (76 863) (1 566)
Net cash (outflow)/inflow from financing
activities (9 784) 8 503
Net decrease in cash and
cash equivalents (8 018) (180 874)
Cash and cash equivalents at
beginning of year 157 029 (113)
Cash obtained on acquisition of business - 341 233
Exchange rate adjustments (5 344) (3 217)
Cash and cash equivalents at end of year 143 667 157 029
Group statement of changes in equity
Reviewed Audited
12 months 5 months
30 Sept 2004 30 Sept 2003
R`000 R`000
Equity at beginning of year 150 207 23 083
Issue of share capital - 37
Issue of preference shares - 1
Premium on issue of share capital - 85 040
Share issue expenses - (4 569)
Premium on issue of preference shares - 13 071
Currency translation differences (5 326) (3 916)
Net income for the year 126 537 60 869
Revaluation reserve 1 188 -
Dividends paid (46 875) (23 409)
Equity at end of year 225 731 150 207
Earnings per share
Reviewed Audited
12 months 5 months
30 Sept 2004 30 Sept 2003
R`000 R`000
Earnings per share
Undiluted
Weighted average number of shares in issue
(thousand) 382 275 382 275
Earnings attributable to shareholders,
calculated as follows:
Net income for the year 126 537 60 869
Less: Dividend on convertible cumulative
redeemable preference shares (1 002) -
Earnings attributable to ordinary
shareholders 125 535 60 869
Diluted earnings attributable to
shareholders, calculated as follows:
Net income for the year 126 537 60 869
Add: Secondary tax on companies - dividend on
convertible cumulative redeemable
preference shares 125 -
Diluted earnings attributable to ordinary
shareholders 126 662 60 869
Headline earnings per share
Undiluted
Earnings attributable to shareholders,
calculated as follows:
Attributable earnings 125 535 60 869
Add: Capital expenses 2 207 -
Write-down of investment in associate 1 315 -
Loss on scrapping of equipment 450 56
Headline earnings 129 507 60 925
Diluted headline earnings 130 634 60 925
Diluted number of shares
Weighted average number of shares in issue
(thousand) 382 275 382 275
Shares to be issued on conversion of
convertible cumulative redeemable
preference shares 7 600 -
Weighted average number of shares in issue for
diluted earnings per share (thousand) 389 875 382 275
Segmental information
Reviewed Reviewed
South African International Reviewed
operations operations Group
12 months 12 months 12 months
2004 R`000 R`000 R`000
Segment revenue 323 986 65 039 389 025
Segment net income
before taxation 144 120 25 315 169 435
Segment assets 258 743 124 311 383 054
% contribution to headline
earnings 84 16 100
Audited Audited
South African International Audited
operations operations Group
5 months 5 months 5 months
2003 R`000 R`000 R`000
Segment revenue 109 797 54 736 164 533
Segment net income before
taxation 49 312 28 284 77 596
Segment assets 242 975 150 083 393 058
% contribution to headline
earnings 63 37 100
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 Investor Services 2004 (Pty) Ltd, 70 Marshall Street, Johannesburg
2001
JSE share code: CML
ISIN: ZAE000047353
Website: www.coronation.com
Date: 16/11/2004 12:00:16 PM
Produced by the JSE SENS Department
