Performance and financial results positive; corporate citizenship is key
24 November 2020
- Assets under management: R569 billion
- Diluted headline earnings per share: 398.5 cents
- Total dividend per share: 383.0 cents
Cape Town, 24 November 2020 – Long-term valuation-driven asset manager Coronation Fund Managers today announced its annual results for the 12 months to end-September 2020. The Covid-19 pandemic and the economic consequences of the unprecedented national lockdowns have marked the period under review as a defining point in human history. South Africa, which was precariously positioned going into the crisis, faces unique headwinds that require swift policy intervention. In the October Medium-term Budget Policy Statement, it became clear that conditions have continued to deteriorate. Although National Treasury made firm commitments to retain fiscal sustainability, the execution risks remain high.
Said CEO Anton Pillay, ‘A collective effort between government, the private sector and citizens is required to walk South Africa up the steep path away from a debt trap. Globally, risk levels are elevated, as it is still unknown as to how the pandemic will play out. 2020 has been a year that has challenged every sector of business and society, and due to the exceptional efforts of all of our employees, we are grateful to have been in a position to honour our commitments to all our stakeholders, from our clients and shareholders to our employees, service providers and the communities in which we operate.’
REVENUE UP; EFFECT OF INDUSTRY-WIDE OUTFLOWS OFFSET BY PERFORMANCE
Against this unusual backdrop, revenue for the 12 months ended 30 September 2020 increased by 10.7% to R3.6 billion (September 2019: R3.3 billion) and net profit is up 16.6%. Total operating expenses are up 8.6% as compared to the 2019 financial year. Fixed costs are up 12.8%, reflecting our continuing investment into technology and information systems infrastructure, which is key to delivering on our promise of business excellence.
Diluted and basic headline earnings per share increased by 16.6% for the period to 398.5 cents (September 2019: 341.9 cents). Fund management earnings are used by management to measure operating financial performance, which excludes the net impact of fair value gains and losses, and related foreign exchange, on investment securities held by the Group measured according to IFRS 9. Fund management earnings per share increased 14.2% for the period to 383.1 cents (September 2019: 335.5 cents).
Over the 12 months to end-September 2020, the key asset classes included in our client portfolios are in positive territory, although domestic asset returns remain depressed. The FTSE/JSE All Share Index delivered 2.0%, and the All Bond Index returned 3.6%, while the MSCI All Country World Index and MSCI Emerging Markets Index returned 22.3% and 22.4% in rands, respectively.
Coronation’s closing assets under management (AUM) as at 30 September 2020 are flat at R569 billion (September 2019: R571 billion) reflecting the effect of positive performance across our funds and strategies, offsetting the impact of net client outflows. As a large player within the domestic savings industry, net client outflows should be expected in periods when economic conditions are tough, and investor sentiment is negative.
BUSINESS UPDATE AND CORPORATE CITIZENSHIP
Coronation is a large, independent asset manager and custodian of the savings of millions of South Africans, as well as several international retirement funds, endowments and family offices – a responsibility that we take very seriously. As an investment-led business, our focus is to grow the value of the client assets entrusted to us over the long-term, rather than growing the pool of assets under our management. As an active corporate citizen, the company is committed to contributing to the health and prosperity of South African society and the economy.
Said Pillay, ‘We have been in the privileged position of being able to operate efficiently throughout lockdown and we have not had to retrench or furlough employees. Business activity has continued as usual, with service levels to our clients unchanged and productivity unaffected.
‘In response to the socioeconomic consequences of Covid-19, Coronation and its employees supported several Covid-19 relief initiatives and our employees rank first in the private sector in terms of corporate payroll donations to the Solidarity Fund. We’ve also supported our third-party service providers and implemented a weekly payment schedule for our SMME suppliers.’ As a long-term business with sustainability at its core, Coronation continues to deepen its focus on stewardship, and this year achieved the highest Principles for Responsible Investing ratings of either A or A+ in all categories. The company is a B-BBEE Level 2 contributor and will retain its focus on promoting and building an inclusive financial services industry that is representative of South Africa.
Analyst enquiries: Johannes van Niekerk, CapitalVoice
082 921 9110
Media enquiries: Fiona Kalk, Coronation
021 680 2584
We manage R569 billion (September 2019: R571 billion) on behalf of our South African and global institutional clients.
South African institutional clients
We manage a meaningful share of assets in the local pension fund industry, representing a total AUM of R251 billion (September 2019: R265 billion), making us one of the largest independent managers of pension assets in the country. Net outflows were in line with our estimate of those experienced by the South African asset management industry, which we believe is a good outcome given the current economic challenges facing the savings industry.
We manage a total of R79 billion (September 2019: R66 billion) in our global strategies on behalf of leading international retirement funds, endowments and family offices. Following very strong performance in the 2019 calendar year, we have experienced inflows into the Global Emerging Markets Strategy.
With retail assets totalling R239 billion (September 2019: R240 billion), we are a leading independent manager of South Africa’s household savings and investment pool. AUM recovered strongly in the second half of the financial year, and our retail fund range delivered good relative performance over this period.