| Tue 10 May 2005, 8:33 | | RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005 |
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Coronation - Reviewed interim results for the group for the six months ended 31
March 2005
Coronation Fund Managers Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1973/009318/06)
(ISIN: ZAE000047353)
(Share code: CML)
REVIEWED INTERIM RESULTS FOR THE GROUP FOR THE SIX MONTHS ENDED 31 MARCH 2005
Assets under management increase to R70 billion
Revenue up 39% to R262.7 million
Net income attributable to shareholders up 25% to R75.3 million
Headline earnings per share up 22% to 19.6 cents per share
Thys du Toit, CEO commented: `The business has again produced a strong set of
financial results on the back of strong recurring income and superior investment
return. Coronation has a strong balance sheet and is committed to producing
strong consistent investment performance, appropriate products and delivering
excellent service to our clients.`
Enquiries:
Coronation Fund Managers 021 680 2400
Thys du Toit 021 680 2015
John Snalam 021 680 2094
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
Nicola White 083 293 1146
RESULTS
Coronation Fund Managers Limited (`Coronation` or `the company`), one of South
Africa`s largest independent fund management companies, has again produced a
strong set of financial results.
Revenue for the six month period ended 31 March 2005 was up 39% to R262.7
million from R188.9 million for the comparable period in the previous year.
Fixed fees increased to R151.6 million from R127.8 million with strong
investment performance resulting in performance fees of R96.4 million.
Operating expenditure of R148.3 million included R28 million of restraint
payments to senior management and staff. Excluding these amounts, the increase
in operating expenditure over the comparable prior period was limited to 18%.
Net income attributable to shareholders increased by 25% to R75.3 million from
R60.5 million. Headline earnings per share improved 22% to 19.6 cents.
The effective tax rate increased from 31% to 35%. This was mainly as a result of
the secondary tax on companies (STC) on the dividend paid in December 2004.
Coronation`s cash generation remained strong with cash and cash equivalents
comprising a large portion of the balance sheet.
ASSETS UNDER MANAGEMENT
Total assets under management increased by 18% from R59.3 billion at 31 March
2004 to R70.0 billion at 31 March 2005.
Coronation`s collective investment funds (unit trusts) achieved net inflows of
R800 million during the period. Domestic retail assets under management
currently exceed R9.9 billion, representing growth of 52% over the past year.
Institutional assets under management grew by 16% to R53.5 billion. This is in
spite of some net outflows on the back of specific fund restructurings.
Assets under management internationally exceeded US$1 billion and the
international business continued to deliver satisfactory investment performance
within its niche alternative strategies arena.
INVESTMENT PERFORMANCE
Our ability to produce consistently strong investment returns for clients across
asset classes and mandates is best reflected in the industry accolades we
received and the rankings we achieved during the period:
The local unit trust business was awarded the ACI/Raging Bull Best Unit Trust
Company of the Year for consistency of investment performance across the entire
product spectrum over one, three and five years. Our dominance in the quarterly
Plexus Survey, upon which this award is based, was again confirmed in our first
place ranking for the quarter ended 31 March, making this the 18th consecutive
quarter that Coronation has taken first or second position in this survey.
We received eight individual gold medals at the Standard & Poor`s Investment
Fund Awards.
We were ranked first over one year in the Alexander Forbes SA Large Manager
Watch and third over three years in the period to end March 2005. We were ranked
second over one year in the Alexander Forbes Global Large Manager Watch.
The Coronation Global Equity Alternative Strategy Fund was named the Best Global
Equity Fund for 2004 by InvestHedge at the annual Fund of Hedge Fund Awards
recently held in New York.
TRANSFORMATION
We formalised our commitment to achieving black participation in the equity of
the business through the creation of the Imvula Trust, a broad-based black
economic empowerment vehicle. Current and future permanent black staff now
collectively own 10% of both the South African and international operations.
We continue to devote significant resources to employment equity and skills
development, procurement, enterprise development and corporate social
investment. This has resulted in previously disadvantaged South Africans playing
an increasingly important role in the decision making of the business and will,
in the years ahead, contribute to the economic success of the company.
STAFF OWNERSHIP
Eleven percent of the equity of Coronation was sold to senior management and
staff by Coronation Investments & Trading Limited. This has reinstated the
equity ownership culture that has been integral to the company`s success.
PROSPECTS
Coronation is about a singular focus on managing money for institutional and
individual clients. Staff now own more than 20% of the business, ensuring that
their interests are aligned with the interests of clients and shareholders, and
enhancing our long-term competitiveness and sustainability.
We have a strong balance sheet and a team of talented and committed people who
share a passion and drive for excellence. Our investment team is operating at
full strength and we remain committed to producing strong consistent investment
performance, innovative products and delivering excellent service to our
clients.
FINANCIALS
Basis of preparation and accounting policies
The condensed consolidated interim financial report for the six months ended 31
March 2005 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 2004.
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 2005 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.
Events subsequent to the balance sheet date
Shareholders are referred to the announcement dated 26 January 2005 regarding
Coronation`s broad-based black economic empowerment transaction (effective 1
April 2005) and to the announcement and circular dated 24 March 2005 regarding
the proposed distribution of 25 cents per Coronation share. This special
distribution was approved on 9 April 2005. Coronation disposed of its 49%
interest in Kagiso Asset Management with effect from 1 April 2005. The proceeds
from this transaction amounted to R5.7 million.
DIVIDEND
Coronation`s policy is to declare one dividend per annum, payable after the
announcement of the year-end results.
Gavan Ryan Thys du Toit Derek McDonald
Chairman Chief Executive Officer Company Secretary
Cape Town 10 May 2005
Group income statement
31 March 31 March 30 Sept
2005 2004 2004
6 months 6 months 12 months
Reviewed Reviewed Audited
R`000 R`000 R`000
Revenue 262 719 188 905 389 025
Management and service fees 151 625 127 823 263 308
Performance fees, trading income and 103 247 56 575 119 965
initial charges
Interest income 4 840 3 163 6 906
Investment income 19 8 17
Other income 2 988 1 336 (1 171)
Operating expenses (148 346) (99 386) (217 597)
Interest expense (196) (2 944) (1 993)
Net income before taxation 114 177 86 575 169 435
Income tax (39 744) (26 958) (43 014)
Net income after taxation 74 433 59 617 126 421
Share of associates` retained income 874 867 116
Net income attributable to shareholders 75 307 60 484 126 537
Earnings per share (cents)
Attributable 19.6 15.7 32.8
Headline 19.6 16.1 33.9
Diluted earnings per share (cents)
Attributable 19.3 15.5 32.5
Headline 19.3 16.0 33.5
Group balance sheet
31 March 30 Sept
2005 2004
Reviewed Audited
R`000 R`000
Assets
Equipment 5 626 5 684
Investment in associates 4 580 3 706
Financial investments 77 813 120 575
Deferred tax asset 5 466 -
Long-term receivable 1 660 1 660
Non-current assets 95 145 131 625
Financial investments 8 029 6 690
Securities held at fair value 16 610 14 378
Trade receivables 80 427 65 727
Other receivables 13 324 20 967
Cash and cash equivalents 110 099 143 667
Current assets 228 489 251 429
Total assets 323 634 383 054
Equity and liabilities
Ordinary share capital 38 38
Preference share capital 1 1
Share premium 93 561 93 561
Non-distributable reserve (11 412) (9 242)
Distributable reserves 125 725 141 373
Total shareholders` interest 207 913 225 731
Policyholders` funds 12 425 630 11 386 588
Linked assets backing policyholders` funds (12 425 630) (11 386 588)
Interest-bearing borrowing - 38 871
Deferred tax liability - 11 661
Non-current liabilities - 50 532
Trade payables 82 471 69 046
Taxation owing 32 778 37 745
Shareholder for dividend 472 -
Current liabilities 115 721 106 791
Total equity and liabilities 323 634 383 054
Group statement of changes in equity
31 March 31 March 30 Sept
2005 2004 2004
6 months 6 months 12 months
Reviewed Reviewed Audited
R`000 R`000 R`000
Equity at beginning of period 225 731 150 207 150 207
Currency translation differences (2 170) (10 782) (5 326)
Net income attributable to 75 307 60 484 126 537
shareholders
Dividends paid (96 041) (45 873) (46 875)
Revaluation of available-for-sale 5 086 - 1 188
financial investments
Equity at end of period 207 913 154 036 225 731
Group cash flow statement
31 March 31 March 30 Sept
2005 2004 2004
6 months 6 months 12 months
Reviewed Reviewed Audited
R`000 R`000 R`000
Cash flows from operating (39 067) (12 321) 53 079
activities
Operating profit before working 110 880 90 228 188 542
capital changes
Working capital changes 2 797 (33 535) (53 532)
Cash flows generated from return 4 663 227 4 930
on investments
Taxation paid (61 838) (23 368) (39 986)
Dividend paid (95 569) (45 873) (46 875)
Cash flows from/(applied to) 7 669 (64 041) (51 313)
investing activities
Cash flows from financing - - (9 784)
activities
Net decrease in cash and cash (31 398) (76 362) (8 018)
equivalents
Cash and cash equivalents at 143 667 157 029 157 029
beginning of period
Exchange rate adjustments (2 170) (10 782) (5 344)
Cash and cash equivalents at end 110 099 69 885 143 667
of period
Segment report
6 months to 31 March 2005
South Africa International
operations operations Group
Reviewed Reviewed Reviewed
R`000 R`000 R`000
Primary
Segment revenue 231 188 31 531 262 719
Segment operating expenses (125 780) (22 762) (148 542)
Segment net income before 105 408 8 769 114 177
taxation
% contributions to headline 90 10 100
earnings
6 months to 31 March 2004
South Africa International
operations operations Group
Reviewed Reviewed Reviewed
R`000 R`000 R`000
Primary
Segment revenue 162 122 26 783 188 905
Segment operating expenses (82 347) (19 983) (102 330)
Segment net income before 79 775 6 800 86 575
taxation
% contributions to headline 92 8 100
earnings
31 March 31 March
2005 2004
6 months 6 months
Reviewed Reviewed
R`000 R`000
Secondary
Segment revenue
Institutional 166 350 126 606
Retail 64 838 35 516
International 31 531 26 783
262 719 188 905
Calculation of headline earnings
31 March 31 March 30 Sept
2005 2004 2004
Reviewed Reviewed Audited
Weighted average number of 382 275 382 275 382 275
shares in issue (thousand)
Number of shares in issue for 389 875 389 875 389 875
diluted earnings per share
(thousand)
Headline earnings attributable
to shareholders, calculated as
follows:
Net income attributable to 75 307 60 484 126 537
shareholders
Less: Dividend on convertible (472) (503) (1 002)
cumulative redeemable preference
shares
STC on convertible cumulative - (63) -
redeemable preference dividend
Capital expenses - - 2 207
Write-down of investment in - 1 315 1 315
associate
(Profit)/Loss on (26) 450 450
disposal/scrapping of equipment
Headline earnings attributable 74 809 61 683 129 507
to shareholders
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) Limited, 70
Marshall Street, Johannesburg 2001
Website: www.coronation.com
Date: 10/05/2005 07:30:20 AM
Produced by the JSE SENS Department
