Coronation reports solid growth
12 November 2012 - Coronation Insights
- Assets under management of R339 billion, up 37%
- Diluted headline earnings per share of 197.8 cents, up 12%
- Total dividend per share of 206 cents
JSE-listed, independent asset manager Coronation Fund Managers (‘Coronation’) today reported annual results for the year to 30 September 2012.
Revenue increased by 14% to R2 billion on buoyant growth in assets under management, up 37% to R339 billion, benefitting from net inflows of R41.5 billion and strong capital markets. While the major indices ended the year in strong positive territory, volatility was high as market participants responded to stimulatory measures taken by central bankers around the world.
The consequent abundance of liquidity saw the MSCI World Index returning 22.3% (in US dollars), the MSCI Emerging Markets Index 17.3% (in US dollars) and the FTSE/JSE All Share Index 24.4% (in rands). The rand remained relatively strong, falling 2.6% against the US dollar to close at R8.30. Total operating costs increased by 21% to R1 billion in line with Coronation’s variable cost model and profit from fund management increased by 7% to R979 million.
Chief executive officer Hugo Nelson commented: “Once again our business recorded significant net inflows, entrenching Coronation’s leading position in the institutional savings market and consolidating our standing as the second largest manager of long-term unit trust funds in South Africa.”
The institutional business enjoyed exceptional growth, attracting net inflows of R17.6 billion; an increase of 77% over last year’s strong R9.9 billion, a significant achievement given the relative maturity of the market.
“As an independent fund manager, Coronation’s reputation depends on its ability to outperform the market. Given the size of our institutional business, domestic equity market capacity pressures are felt more acutely,” Nelson commented. Thus, following the closure of Coronation’s SA Equity products to new clients on 31 March 2012, the Balanced and Absolute Return product ranges are to close on 31 December 2012. The closures do not impact existing clients or the unit trust business. The institutional SA Fixed Interest, Hedge and International fund ranges remain open to new clients. During the year to September 2012 Coronation received Imbasa Yegolide Awards for Equities Manager of the Year, Absolute Returns Manager of the Year, Bond Manager of the Year and Overall Investment/Asset Manager of the Year. These awards are under the auspices of the Principal Officers’ Association in South Africa.
Retail funds attracted net inflows of R23.9 billion, directed largely to the multi-asset funds as well as the flagship flexible fixed interest fund, Coronation Strategic Income. “Our retail business again attracted one of the highest levels of net inflows in the unit trust industry. This can be attributed to strong long-term investment performance and deepening market support,” commented Nelson. In March 2012, Coronation was named Best Large Fund House at the 2012 Morningstar South Africa Awards for the second year in a row. “This accolade was further supported by the performance of our domestic flagship funds as at end September 2012, with all funds in the range delivering to mandate and recording top quartile performances over 1, 3 and 5 years and since launch in their respective Morningstar categories,” added Nelson.
Assets under management increased by 62% to US$4.4 billion, supported by growth in the institutional and retail businesses. In addition, the excellent performances from the specialist Africa and Global Emerging Markets units continued to attract interest from global allocators of capital.
“Our ability in managing global assets was recognised at the prestigious annual Africa investor Index Series Awards ceremony held in New York where Coronation was named Best Africa Fund Manager for a second time,” commented Nelson. In addition, the Coronation Global Emerging Markets Fund received a Raging Bull Award for Best Global Equity Fund available to South African investors based on performance over three years to end December 2011, while the Coronation Global Managed Fund (launched in 2009) was ranked by Morningstar as the no. 1 foreign multi-asset unit trust fund in South Africa for the 12 months to end September 2012.
On 29 August 2012, Coronation announced that its broad-based black economic empowerment partner, the Imvula Trust (Imvula), had settled its remaining debt. The exchange of the Imvula investment in Coronation Investment Management (Pty) Ltd to listed Coronation shares will be completed once the final version of the Financial Sector Charter has been gazetted. In terms of the Department of Trade and Industry’s Code of Good Practice on Broad-based Black Economic Empowerment, Coronation is rated a Level III contributor.
Coronation continues to reward shareholders through regular and significant distributions of free cash flow generated. The company endeavours to distribute at least 75% of after-tax cash profit. A final gross dividend of 111 cents per share has been declared after accounting for projected cash requirements. Together with the interim gross dividend of 95 cents per share this amounts to a total gross dividend of 206 cents per share for the year.
Coronation pursues a single philosophy of investing for the long term across all client portfolios. “In the current low growth, low inflation environment the search for alpha is critical to achieving strong long-term returns for all stakeholders. In the year ahead, we will continue to pursue our strategy of consolidating our institutional business and nurturing our international and retail franchises,” Nelson concluded.
Coronation Fund Managers
Hugo Nelson, CEO
021 680 2041
Louise Pelser, Media relations
021 680 2216
076 282 3995
Johannes van Niekerk
082 921 9110
Institutional fund performance highlights:
Coronation domestic balanced portfolios ranked 2nd over 5 and 10 years in the Alexander Forbes (AF) SA Large Manager Watch™ survey to end September 2012;
Coronation global balanced portfolios ranked 2nd over 5 years and 4th over 10 years in the AF Global Large Manager Watch™ survey; and
Coronation Global Absolute, the company’s longest running absolute portfolio, outperformed its benchmark of inflation plus 6% by 5.3% per annum since inception to end September 2012.
Retail fund performance highlights:
Coronation Top 20, a concentrated equity fund for investors seeking long-term capital growth, has outperformed its benchmark by an impressive 6.6% per annum since launch in October 2000;
Coronation Balanced Plus, the no. 1 balanced fund in South Africa since launch in April 1996, has outperformed its average competitor by 2.4% per annum over this period;
Coronation Capital Plus, the flagship absolute portfolio, has outperformed inflation by 8.3% per annum since inception in July 2001;
Coronation Balanced Defensive, the no. 1 conservative fund in South Africa for the 5-year period to end September 2012, has outperformed inflation by 4.4% per annum over this period, and
Coronation Strategic Income, has outperformed cash by 3% per annum since launch in July 2001International fund performance highlights:
Coronation Africa Frontiers Fund has outperformed its benchmark by 10.2% per annum (gross of fees) since inception in October 2008, and
Coronation Global Emerging Markets Fund has produced an annualised outperformance of almost 7% (gross of fees) ahead of benchmark since inception in July 2008.