Coronation Fund Managers Limited · JSE:CML
Coronation Fund Managers — H1 2006 Earnings Presentation
37 slides from Coronation Fund Managers's earnings presentation, May 16, 2006
Slide 1: 2006 Interim Results
2006 Interim Results 16 May 2006
Slide 2: Agenda
Agenda • Corporate structure and shareholding • Key themes • Business review – Investment performance – Assets under management • Financials • Environment • Future focus 2006 Interim Results
Slide 3: Corporate structure and shareholding
Corporate structure and shareholding 2006 Interim Results
Slide 4: Corporate structure
Corporate structure 15% Coronation Staff Coronation Fund Managers Ltd Imvula Capital (Pty) Ltd 90% 100% Coronation Investment 10% Management (Pty) Ltd The Imvula Trust 100% 100% 100% 100% 100% 47.14% Coronation Fund Coronation Asset Coronation Coronation Life CFM International Managers Namibian Harv
Slide 5: Shareholding
Shareholding As at 31 March 2006 31.45% 23.39% 15.00% 5.72% 3.40% 21.04% Allan Other CIT Staff STANLIB* PIC Gray* (<5% ea) Coronation Fund Managers * On behalf of clients 2006 Interim Results
Slide 6: Key themes
Key themes 2006 Interim Results
Slide 7: Strong financial results
Strong financial results • Assets under management exceed R94 billion • Revenue of R311 million, up 23% • Income from fund management of R146 million, up 33% • Headline earnings per share of 24,2 cents, up 27% • Profit for the period before IFRS 2 up 58% 2006 Interim Results
Slide 8: Assets under management
Assets under management 100.00 94.17 90.00 81.95 80.00 70.00 63.76 60.00 53.70 50.00 40.00 30.00 20.00 10.00 0.00 September 2003 September 2004 September 2005 March 2006 2006 Interim Results
Slide 9: Reconciliation of assets under management
Reconciliation of assets under management 31 March 30 September 31 March 2006 2005 2005 Opening market value 81,95 70,04 63,76 Net flows -0,42 -1,54 -2,96 Capital appreciation 13,13 13,53 9,75 Other (charges, currency effect) -0,49 -0,08 -0,51 Closing market value 94,17 81,95 70,04 2006 Interim Resu
Slide 10: Funds under management
Funds under management December 2004 December 2005 March 2006 (R’m) (R’m) (R’m) Institutional 59,287 70,786 76,916 Retail 9,866 15,740 17,250 Total 69,153 86,526 94,166 Mandate Breakdown Balanced Funds 28,237 30,747 26,093 Absolute Funds 9,098 15,213 15,227 Hedge Funds 0,008 0,211 0,241 Core Equity
Slide 11: Business review
Business review 2006 Interim Results
Slide 12: Institutional – Performance rankings
Institutional – Performance rankings SA Large Manager Watch - 3 years ended 31 March 2006 Allan Gray 40.48% Prudential 40.16% Coronation 39.73% OMAM 39.28% Investec 38.54% Median 38.13% Sanlam 37.86% RMBAM 37.70% Stanlib 36.09% Metropolitan 35.75% Source: Alexander Forbes 2006 Interim Results
Slide 13: Institutional – Performance rankings
Institutional – Performance rankings Coronation Houseview Equity - 3 years ended 31 March 2006 Investec Value 54.97% ABVEST Deep Value fund 52.86% Coronation Houseview Equity 50.54% Fraters Equity 50.45% Allan Gray 50.11% Stanlib Value Fund 48.91% RMBAM Equity Moderate Active 47.53% Prudential Deep
Slide 14: Retail - Performance rankings
Retail - Performance rankings PlexCrown – Overall CIS manager ranking March 2006 December 2005 Investec 3.8747 3.7497 Coronation 3.7497 4.0413 Oasis 3.5831 3.2498 Nedgroup 3.4372 3.3747 Old Mutual 3.1873 3.0873 Futuregrowth 2.9998 2.8748 RMB 2.9283 2.8956 Sanlam 2.8998 2.7248 Prudential 2.8748 2.999
Slide 15: International – Performance tables
International – Performance tables YTD 12 month 24 month % Ranking % Ranking % Ranking Relative Value 3.66 8/46 9.05 10/46 6.84 9/46 Global Equity Alternative 2.99 9/29 13.26 7/28 9.76 9/28 Strategy (€) Global Equity FoF’s 9.56 2/42 26.73 2/41 18.22 5/42 MSCI World Index 6.72 18.61 14.77 2006 Interi
Slide 16: Retail – Assets under management
Retail – Assets under management R17.2bn as at 31 March 2006 (excluding third-party assets) Managed Cash funds funds 5,748 1,451 Fixed interest funds 4,085 Equity funds 4,192 International funds 1,633 Source: ACI Statistics 2006 Interim Results
Slide 17: CIS industry
CIS industry Market share: Long-term single managers only Ranking excluding cash and dividend income type funds September 2005 March 2006 1 Allan Gray (17%, 144bp increase) R28.6bn R38.5bn 2 Investec (14%, 80bp increase) R23.0bn R30.2bn 3 Old Mutual (13%, 30bp increase) R23.7bn R30.0bn 4 Stanlib (12
Slide 18: International - Assets under management
International - Assets under management March 2006 December 2005 SA Institutional $716m $638m SA Retail $188m $192m Other $282m $262m Fund of hedge funds $735m $767m Long-only fund of funds $451m $325m Total $1 186m $1 092m 2006 Interim Results
Slide 19: Financials
Financials 2006 Interim Results
Slide 20: Condensed consolidated income statement
Condensed consolidated income statement - separately reflecting the effect of IFRSs Six months Six months Full year % 2006 2005 2005 change R’000 R’000 R’000 Revenue 310,535 251,650 547,718 Financial Income 19,392 9,499 30,640 Operating expenses (152,531) (149,833) (302,011) Income from fund managem
Slide 21: Overview – including and excluding IFRSs
Overview – including and excluding IFRSs March 2006 March 2005 % change Headline EPS (including IFRSs) Normal 24,2 19,0 27 Diluted 21,5 18,7 15 Headline EPS (excluding IFRSs) Normal 31,0 19,6 58 Diluted 27,7 19,3 44 NAV per share 54,4 54,4 2006 Interim Results
Slide 22: Overview
Overview March 2006 March 2005 % change Cost to income 55.8% 58.1% 4 (including IFRSs) Cost to income 48.0% 56.5% 15 (excluding IFRSs) ROE (annualised) 86.9% 67.4% 29 2006 Interim Results
Slide 23: Total fee %
Total fee % 1.27% 1.23% 0.88% 0.81% 0.72% 0.70% 0.61% 0.56% 2005 2006 International Institutional Retail Total 2006 Interim Results
Slide 24: Funds subject to performance fees as % of AUM
Funds subject to performance fees as % of AUM March 2006 March 2005 Institutional 60% 58% Retail 39% 31% International 77% 73% Total 58% 55% 2006 Interim Results
Slide 25: Expenses
Expenses March 2006 March 2005 % R’000 R’000 change Share-based payment expenses 25,822 2,210 Personnel 100,584 109,698 (8) Restraints of trade 2,550 28,275 Other 98,034 81,423 20 Other costs 51,947 40,135 29 Total 178,353 152,043 17 2006 Interim Results
Slide 26: IFRS 2 effect
IFRS 2 effect March 2006 September 2006 Year 2007 R’000 R’000 R’000 December 2003 options 953 953 912 Imvula transaction 3,064 2,942 5,802 CIT transaction 1 11,344 11,344 22,177 - February 2005 CIT transaction 2 4,078 4,078 5,490 - September 2005 Preference shares 6,384 6,384 4,256 Total 25,823 25,7
Slide 27: Coronation International
Coronation International Consolidated Income Statement March 2006 March 2005 % $’000 $’000 change Income 4,368 5,290 (17.4) Expenses 1,994 3,080 (35.3) Staff 1,068 2,010 (46.8) Other 926 1,070 (13.5) Profit before tax and bonus 2,374 2,210 7.4 2006 Interim Results
Slide 28: Imvula Trust - Value of the transaction
Imvula Trust - Value of the transaction (R’m) Value of shares 264 (10% of Coronation market capitalisation) Value of debt 145 Net Asset Value 116 2006 Interim Results
Slide 29: Environment
Environment 2006 Interim Results
Slide 30: Retail – Total industry assets
Retail – Total industry assets March 2001 March 2006 Money Market Equity Money 28% 31% Market 35% Equity 40% Asset Asset Fixed Allocation Allocation Interest 23% Fixed Interest 6% 18% 19% Source: ACI Statistics 2006 Interim Results
Slide 31: Institutional - Pension net outflows remain
Institutional- Pension net outflows remain Inflation-adjusted pension net flows (R’bn) Source: SARB Bulletin, BJM Research 2006 Interim Results
Slide 32: Major strategic environmental issues
Major strategic environmental issues • Low barriers to entry in collective investment schemes industry • Fragmentation – “small is beautiful” • Mandate complexity • Corporate governance issues - rising shareholder activism by fund boards of trustees • Life company vulnerability • “Barbell” pressure
Slide 33: “Barbell” pressure
“Barbell” pressure Source: National Statistics, BCG analysis, with adjustments by Morgan Stanley Research 2006 Interim Results
Slide 34: Major strategic environmental issues
Major strategic environmental issues • Industry pressure • Higher focus required: Houseview portfolios vs. multi-product strategy • Times have been good? 2006 Interim Results
Slide 35: Future focus
Future focus 2006 Interim Results
Slide 36: Future focus – Coronation well positioned
Future focus – Coronation well positioned • Great track record and brand • Focused on fund management • Mid-sized player • Scope for new products / asset classes • No “life company” legacy • Alignment of interests (clients, staff, shareholders) • Desire to build a sustainable business 2006 Interim R
Slide 37: Thank you
CORONATION & FUND MANAGERS Thank you 16 May 2006
Coronation Fund Managers — H1 2006 Earnings Presentation on 6ix