Coronation Fund Managers Limited · JSE:CML
Coronation Fund Managers — FY2008 Earnings Presentation
43 slides from Coronation Fund Managers's earnings presentation, Nov 11, 2008
Slide 1: 2008 Results Reviewed
2008 Results Reviewed 11 November 2008
Slide 2: Agenda
Agenda Overview of company Financial results Business review Institutional Personal Investments Prospects
Slide 3: Overview
CORONATION & FUND MANAGERS Overview
Slide 4: Overview 2008 FYE
Overview 2008 FYE Assets under management of R125 billion (-7%) Cash of R186 million returned to shareholders (R40 million through share buy-back) Diluted headline earnings per share of 48.6 cents (-33%) Distribution of 46 cents per share (-31%)
Slide 5: Market movements
Market movements September 2008 3 months 6 months 12 months Economic group % % % All Share -20.6 -17.9 -18.0 All Share -21.63 -19.44 -20.44 (Capital Return) All Share 1.07 1.55 2.44 (Dividend Return) Resource 20 -38.3 -30.1 -24.0 Small Cap -1.5 -15.3 -23.4 Industrials 2.9 -7.2 -13.6 Financials 11.9
Slide 6: Assets under management
Assets under management 2003 – 30 September 2008 160,000 140,000 133,730 124,990 120,000 101,440 100,000 81,930 80,000 63,759 60,000 53,697 40,000 20,000 0 2003 2004 2005 2006 2007 2008 Sept Sept Sept Sept Sept Sept
Slide 7: Reconciliation of AUM
Reconciliation of AUM YTD Opening market value 133.73 Net flows -3.91 Charges -0.73 Currency effect 2.84 Capital appreciation -6.94 Closing market value 124.99
Slide 8: Total net margin
Total net margin as at 30 September 2008 1.20% 1.00% 0.97% 0.87% 0.80% 0.75% 0.68% 0.69% 0.70% 0.64% 0.58% 0.59% 0.60% 0.52% 0.52% 0.40% 0.20% 0.00% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 9: Financial summary
Financial summary Revenue R804 million (-16%) Profit from Fund Management R277 million (-36%) PAT R178 million (-38%) Cash generated from operations R328 million
Slide 10: Share price
Share price 31 Jul – 15 Aug 13 Nov Buyback – 35.5m Ex div : 47cpu 3 Feb Ex div : 36cpu 4 Jun 13 May Ex div : 20cpu Ex div : 16cpu 26 Jun – 3 Sept Buyback – 8.2m 11 Dec 29 Jan Ex div : 53cpu SENS Trading Update 15 Jun – 25 Aug Buyback : 35m Source: I-Net Bridge
Slide 11: Share buy-back
Share buy-back Details Total consideration R39.6m (incl. costs) Date 26 June – 3 September Number purchased 8.2 million Average price R4.81 (incl. costs) No of shares in issue post buy-back Currently 315,8 million
Slide 12: Company structure
Company structure at 30 September 2008 Coronation Fund Managers Ltd 90% Coronation Investment 10% The Imvula Trust Management ( Pty) Pty) Ltd 100% 100% 100% 100% 100% Coronation Coronation Life Coronation Asset Coronation Investment Management Company Assurance Company CFM (Isle of Man) Ltd Manageme
Slide 13: Financial Review
CORONATION & FUND MANAGERS Financial Review
Slide 14: Earnings
Earnings Change % 2008 2007 Attributable earnings (39) 172,942 283,887 EPS (34) 53.9 81.4 Headline earnings (39) 169,782 277,871 HEPS (34) 52.9 79.6 Diluted HEPS (33) 48.6 72.7 Weighted average shares in issue - 30 Sept (8) 321,080,742 348,893,885 Actual shares in issue - 30 Sept (2) 315,774,163 320
Slide 15: Earnings (continued)
Earnings (continued) Change % 2008 2007 Cost to income (14) 66.2% 57.2% EBITDA (34) 295,352 448,725 Market capitalisation (35) 1,815,701 2,780,753 Share price @ 30 September (34) 5.75 8.67 Price earnings per share (0) 10.9 10.9 PE earnings – share price/HEPS
Slide 16: Shares in issue
Shares in issue 2008 2007 Opening balance - 1 October 320,732,799 349,577,402 Issued during the year 3,253,352 6,659,990 Bought back and cancelled -8,211,988 -35,504,593 Closing balance - 30 September 315,774,163 320,732,799 Weighted average - 30 September 321,080,742 348,893,885
Slide 17: Funds subject to performance fees as a % of AUM
Funds subject to performance fees as a % of AUM 2008 2007 Institutional 57% 58% Retail 40% 44% International 88% 78% TOTAL 57% 57% Funds % Benchmark CAPI, SWIX, FINDI, ALBI, MSCI, Relative benchmark performance fees 43% performance over cash & median or 75h percentile Absolute benchmark performance
Slide 18: Earnings summary – 2nd vs 1st half
Earnings summary – 2nd vs 1st half Change Apr-Sept-08 Oct-Mar-08 % R'000 R'000 Revenue (11) 385,291 432,908 Operating expenses (3) -196,438 -203,128 Distribution payments (21) -47,903 -60,399 IFRS2 charges 51 -20,266 -13,395 PBT (23) 120,684 155,987 Tax (49) -33,364 -65,719 PAT (3) 87,320 90,268
Slide 19: Cash returned to shareholders
Cash returned to shareholders 2008 2007 2006 2005 R'000 R'000 R'000 R'000 Share buy-back 39,576 299,576 200,168 0 Distribution - interim 51,739 71,238 0 0 Special distribution - BEE deal 0 0 0 95,569 Distribution - final 94,732 150,744 185,276 138,197 Cash returned 186,047 521,559 385,444 233,766 No
Slide 20: IFRS2 effect
IFRS2 effect Forecast 2009 2008 2007 2006 R'000 R'000 R'000 R'000 December 2003 options 0 149 637 1,968 Imvula transaction 5,301 12,236 8,969 5,877 CIT transaction 1 (February 2005) 3,814 10,896 15,405 13,132 CIT transaction 2 (April 2005) 4,132 7,754 9,556 9,556 CIT transaction 3 (September 2005) 5
Slide 21: Cost comparison
Cost comparison Change 2008 2007 % R'000 R'000 Total operating expenses (6) 541,528 577,537 Interest Expense 16,441 13,049 Share-based payments 33,661 40,212 Renovation/Offic e move 9,332 702 Impairment of capital assets -72 981 Adjusted costs (8) 482,166 522,594 Variable costs (17) 272,492 329,357
Slide 22: Business Review
CORONATION & FUND MANAGERS Business Review ectes
Slide 23: Institutional performance and New Business
Institutional performance and New Business
Slide 24: Net fund flows
-20.00% -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 20 0 -10.88% 1 -5.59% -8.27% 20 0 -17.65% 2 9.52% 16.20% Net fund flows 20 0 -6.20% 3 2.83% -10.16% 20 0 -6.33% 4 2.79% Private market -5.24% 20 0 -10.19% Official 5 4.39% -7.76% 20 0 1.34% 6 -0.52% Total market -12.16% 20 0 3.53% 7 3.6
Slide 25: Performance
Performance Global Large Manager Watch 3 years ending 30 September 2008 Investec 18.47% Allan Gray 17.69% Coronation 14.99% Oasis 14.93% OMIGSA 14.63% Prudential 14.57% Median 14.34% RMBAM 13.79% Stanlib 12.40% Metropolitan 12.32% Cadiz African Harvest 11.97% Sanlam 11.22% Source: Alexander Forbes
Slide 26: Performance
Performance Global Large Manager Watch 5 years ending 30 September 2008 Investec 24.26% Allan Gray 23.38% Prudential 22.74% OMIGSA 22.72% Coronation 22.66% Median 21.81% RMBAM 21.48% Oasis 21.42% Cadiz African Harvest 20.35% Stanlib 20.12% Metropolitan 19.75% Sanlam 19.55% Source: Alexander Forbes
Slide 27: Performance
Performance SA Large Manager Watch 3 years ending 30 September 2008 Investec 19.21% Allan Gray 18.99% Oasis 16.63% Coronation 16.29% Median 15.37% Prudential 15.23% OMIGSA 14.81% RMBAM 14.69% Stanlib 13.62% Metropolitan 13.60% Cadiz African Harvest 11.63% Sanlam 10.95% Source: Alexander Forbes
Slide 28: Performance
Performance Absolute Return product Periods ending 30 September 2008 Since 1 Year 3 Years inception* Absolute -2.8% 14.6% 19.0% CPIX 13.2% 8.3% 7.0% CPIX +7% 20.2% 15.3% 14.0% *Since inception – August 1999
Slide 29: Performance
Performance Coronation Houseview Equity 3 years ending 30 September 2008 Allan Gray 21.88% ABSA Asset Management Value 20.10% Oasis Specialist Domestic 18.94% Stanlib Value Fund 18.26% Fraters Equity 17.78% Coronation Houseview Equity 17.56% Fraters Specialist Equity 17.23% Investec Value* 16.07% Re
Slide 30: Performance
Performance SA Bond Manager Watch 3 years ending 30 September 2008 Tri-Linear Fixed Income 8.20% Futuregrowth Yield Enhanced 8.09% Investec Dynamic Bond Portfolio 7.86% Prescient Bond QuantPlus 7.82% Coronation Active Bond Portfolio 7.49% Advantage Moderate Bond FOF 7.42% RMBAM Bond Portfolio 7.41%
Slide 31: Retail Performance and New Business
Retail Performance and New Business
Slide 32: Coronation Personal Investments
Coronation Personal Investments Business performance in 2008 Industry assets remained flat, but in our niche market declined by 11% to R296bn We lost 0.85% market share, to 7.1% as a result of asset losses in Strategic Income Fund (clients de-risking to cash, relative underperformance) Thematic equi
Slide 33: CIS industry
CIS industry Distribution of assets by niche market Assets Under Management Sept 08 Sept 07 Long-term single manager net flows 294,834 330,616 Fund of Funds 66,553 67,455 Institutional Multi-Managers 36,983 34,885 Institutional Single Managers 107,198 108,352 Money market & Enhanced cash 171,870 147
Slide 34: CIS industry
CIS industry Market share: Long-term single managers only Ranking excl. cash and dividend income funds % Movement Market share Sept 08 Sept 07 1 Allan Gray 1.02% 23.0% 67,936 72,796 2 Investec (0.02)% 12.7% 37,494 42,117 3 Old Mutual (1.29)% 9.3% 27,395 34,976 4 Nedgroup (0.13)% 8.3% 24,414 27,806 5
Slide 35: Unit trust assets
Unit trust assets R22.8bn as at 30 September 2008 Net Flows: Cash funds, 1,836 12 months to September 2008: Managed funds, 8.0% 10,058 Strategic Income: -R1.5 billion 44.0% Capital Plus/Absolute: -R1.1 billion Fixed interest funds, 5,363 Financial: -R627 million 23.5% Balanced Plus & Balanced Defens
Slide 36: Prospects
CORONATION & FUND MANAGERS Prospects
Slide 37: Dramatic recent developments
Dramatic recent developments Global financial crisis escalated to a global run on the banks Paralysed banking system was in need of desperate rescue measures Several large financial firms have gone bankrupt Markets sold-off aggressively Co-ordinated global efforts to provide liquidity to banking sys
Slide 38: Global stock markets in US$
Global stock markets in US$ Decline from peak 3 year CAGR US S&P -42.7% -8.1% UK FTSE 100 -54.1% -9.1% Nikkei -45.5% -9.5% German Dax -54.1% -2.5% Russia -77.9%- -14.9% China -70.3% +5.2% India -66.8% +1.1% South Africa (ALSI) -60.8% -8.9% MSCI World -46.8% -7.3% MSCI EM -63.7% -6.1% Updated: 24 Oct
Slide 39: Don’t let yourself get too negative after a big sell-off…
Don’t let yourself get too negative after a big sell-off… Markets always turn before Markets the always underlying turn before economy… the underlying economy… …usually at the point of maximum …usually pessimism at the point of maximum pessimism Source: I-Net Bridge
Slide 40: Global equities
Global equities 40 MSCI World The last time equity 35 ratings were this low was early 1980s 30 25 20 15 10 5 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 MSCI World Source: Datastream
Slide 41: Dividend yields now higher than bond yields in Europe
Dividend yields now higher than bond yields in Europe European Valuations 2 Div Yield - Bond Yield 12 Germany long bond yield 1 European dividend yield 10 0 -1 8 -2 6 -3 -4 4 -5 Opportunity looks bigger 2 -6 than that of early 80s, 87, 98 -7 and 2003……… 0 Sep-84 Sep-74 Sep-79 Sep-89 Sep-94 Sep-99 Se
Slide 42: Business implications
Business implications Rationale for active management self-evident Significant opportunities to deliver good returns for clients Ideal opportunity to build track records in new products Lead times on new initiatives extended Period of consolidation
Slide 43: Thank you
CORONATION & FUND MANAGERS Thank you
Coronation Fund Managers — FY2008 Earnings Presentation on 6ix