Coronation Fund Managers Limited · JSE:CML
Coronation Fund Managers — FY2019 Earnings Presentation
39 slides from Coronation Fund Managers's earnings presentation, Nov 19, 2019
Slide 1: Coronation - Trust is Earned
combos CORONATION ({) TRUST IS EARNED™
Slide 2: 2019 Reviewed Annual Results
2019 Reviewed Annual Results FOR THE YEAR ENDED 30 SEPTEMBER 2019 19 November 2019 Anton Pillay, CEO Mary-Anne Musekiwa, CFO 2
Slide 3: Agenda
Agenda Operating environment Highlights Business update Financial results Closing comments Questions Annexure A: Performance 3
Slide 4: Operating environment
Operating environment CORONATION TRUST IS EARNED™
Slide 5: Global macro view
Global macro view UNCERTAINTY CREATING CHALLENGING TIMES & OPPORTUNITIES Economics - Across global economies, growth has decelerated since late 2018 - Inflation not seen as an issue in the developed world - Persistent trade war talks and strong US dollar negative for emerging economies - Resurgence
Slide 6: South African macro view
South African macro view TRANSITIONING TOWARDS PAINFUL STABILISATION Political landscape in transition: need to deliver sustainable policies that are necessary to improve domestic growth & confidence Weak growth in 2019 provides little hope of improvement in economy or fiscal metrics - achieving str
Slide 7: Capital markets
Capital markets REMAIN VOLATILE & SENSITIVE TO SHORT-TERM NEWS FLOW 3 months 6 months 12 months Economic group % % % All Share (ZAR) -4.57 -0.83 1.86 CAPI -5.14 -1.31 0.27 Resources -6.40 -4.14 7.85 All Property -4.18 -2.76 -7.66 Industrials -2.54 1.37 1.83 Financials -6.76 -1.69 -4.17 USD/ZAR -6.85
Slide 8: Overview & financial results
Overview & financial results 8
Slide 9: Singular focus on clients
Singular focus on clients THROUGH ACTIVE ASSET MANAGEMENT INVESTMENT Very encouraging outperformance by our clients’ portfolios in 2019, supporting TOTAL AUM PERFORMANCE continued long-term outperformance R571bn NET OUTFLOWS 7.5% Of our opening AUM balance in line with market experience TOTAL DIVIDE
Slide 10: Financial results
Financial results CORONATION TRUST IS EARNED™
Slide 11: Assets Under Management (Rbn)
Assets Under Management (Rbn) DECLINE IN AVERAGE AUM IMPACTED BY SUSTAINED WEAK MARKETS 700 610 571 599 614 587 600 Local Rbn International Rbn Avg AUM Rbn 588 141 127 155 176 492 163 500 164 85 AUM by asset class* 400 339 Local 40 • Equity 42.5% 300 • Fixed Interest & Cash 25.9% 247 • Other 0.7% 20
Slide 12: Revenue
Revenue LOWER AVERAGE AUM LEADING TO REDUCTION IN REVENUE NET FEE MARGIN Sept Sept Change 2019 2018 90 bps 79 bps 79 bps 80 bps Revenue (from fund 70 bps 70 bps 69 bps (14%) R3 291m R3 848m 70 bps 68 bps 69 bps management) 58 bps 59 bps 59 bps 64 bps 60 bps 62 bps 60 bps 60 bps 56 bps 54 bps 52 bps
Slide 13: Cost control
Cost control VARIABLE COST MODEL CONTINUES TO PROVES ITS STRENGTH IN PERIODS OF DECLINING REVENUE REVENUE AND COSTS 6,000 56.0 Sept Sept Change 2019 2018 5,000 54.0 52.0 4,000 Fixed costs (2%) R720m R703m 50.0 3,000 48.0 2,000 Variable costs* 12% R1 069m R1 211m 46.0 1,000 44.0 Operating costs 7% R1
Slide 14: Fixed costs
Fixed costs CONSOLIDATION OF FIXED COSTS IN CURRENT YEAR DELIVERED MEANINGFUL RESULTS Sept Sept Change 2019 2018 Total fixed costs (2%) R720m R703m - Employee costs (12%) R346m R309m - Information systems 4% R136m R141m - Professional fees* 2% R64m R65m - Marketing 13% R82m R95m Employee complement
Slide 15: Dividend declared reflects cash earnings
Dividend declared reflects cash earnings 100% OF DHEPS DECLARED Sept Sept Change 2019 2018 Diluted HEPS (cents) (19%) 341.9c 420.7c Interim dividend per share (cents) (26%) 165.0c 223.0c Final dividend per share (cents) (11%) 176.0c 197.0c Actual shares in issue 349 799 102 349 799 102 15
Slide 16: Business update
Business update CORONATION TRUST IS EARNED™
Slide 17: Our business
Our business 26 YEARS OF INTEGRATED STEWARDSHIP OF CLIENT ASSETS An active manager with a singular focus on long-term investing Long-term performance Active engagement with Creating a sustainable We put our clients first our true measure of success stakeholders global business We focus on growing th
Slide 18: Institutional business
Institutional business A SIGNIFICANT MANAGER OF INSTITUTIONAL ASSETS IN SA AND ON BEHALF OF A GROWING NUMBER OF GLOBAL CLIENTS AUM BY CLIENT LOCATION - INSTITUTIONAL TOTAL CLIENT AUM EU; 3% R331bn United Kingdom; 5% Other; 8% USA; 6% Namibia; 6% LOCAL CLIENT AUM* R265bn *Including Namibia GLOBAL CLI
Slide 19: SA institutional business
SA institutional business Local formal institutional savings market continues to see material outflows as economic conditions continue to impact on growth and employment Total client outflows totalling R23.9bn for the year in line with prior year flows; we expect to see continued outflows Future foc
Slide 20: Global institutional business
Global institutional business CONTINUE TO BUILD ON OUR INTERNATIONAL STRATEGIES’ INVESTMENT TRACK RECORDS Global flows reflect ongoing shifts in industry, including from active to passive strategies Total client outflows totalling R7.0bn for the year Future focus: - Remain confident in the long-term
Slide 21: Investment performance - Institutional
Investment performance - Institutional LOCAL AND GLOBAL STRATEGIES ANNUALISED ALPHA (STRATEGIES WITH A 10-YEAR+ TRACK RECORD) Annualised active return (gross of fees) Local Strategies 10 years Since inception Multi-Asset (Global) 1.0% 1.3% Specialist Equity 0.9% 2.1% Absolute 5.8% 8.8% Fixed Income
Slide 22: Retail business
Retail business CORONATION REMAINS ONE OF SA’S FOREMOST MANAGERS OF RETAIL SAVINGS AT R240BN AUM Industry remains under pressure due to tough economic conditions and muted medium term returns - R56bn net outflows from longer-term funds, mostly from lower-risk multi-asset funds - Offset by R38bn net
Slide 23: Investment performance - Retail
Investment performance - Retail KEY FUNDS: 2019 YTD VS 2018 & LONG-TERM VS PEER GROUPS 2019 Since YTD 2018 10 years Inception Category Category LOCAL FUNDS Fund Fund quartile rank Top 20 13.9% -12.2% 11.0% 1st 16.9% 2nd Balanced Plus 11.2% -6.3% 10.5% 1st 14.1% 1st Capital Plus 9.0% -2.5% 8.5% 2nd 1
Slide 24: Transforming our business and industry
Transforming our business and industry A HOMEGROWN SOUTH AFRICAN BUSINESS COMMITTED TO TRANSFORMING FROM WITHIN & THE BROADER INDUSTRY Level 2 B-BBEE contributor* Successfully recruited, trained and retained exceptional black and female talent across our business since 1993. Transforming our >R225bn
Slide 25: Closing comments
Closing comments ONGOING FOCUS AND COMMITMENT TO INVESTMENT EXCELLENCE FOR OUR CLIENTS GLOBALLY Financial performance reflects continuing weaker economic conditions, affecting both market returns and the formal savings sector Net outflows reflective of the broader industry – expect this to continue
Slide 26: Closing comments (continued)
Closing comments (continued) ONGOING FOCUS AND COMMITMENT TO INVESTMENT EXCELLENCE FOR OUR CLIENTS GLOBALLY Although encouraged by 2019 outperformance across our range of portfolios, it is our long -term performance that remains the true measure of our ultimate success on behalf of our clients and s
Slide 27: Questions
Questions CORONATION TRUST IS EARNED™
Slide 28: About Coronation Fund Managers
About Coronation Fund Managers Founded in Cape Town, South Africa, in 1993 with zero assets under management Listed in 2003 24.7% employee-owned An independent fund manager with no safety net of in-house assets Singular focus on asset management, outsourcing non-core components of business An active
Slide 29: Annexure A: Selected strategy performance
Annexure A: SELECTED STRATEGY PERFORMANCE 29
Slide 30: Houseview Equity Strategy
Houseview Equity Strategy COMPELLING LONG-TERM PERFORMANCE (10 YEARS) Source: Alexander Forbes SA Equity Manager Watch™ Survey to 30 September 2019 30
Slide 31: Fixed Income Strategies
Fixed Income Strategies COMPELLING LONG-TERM PERFORMANCE (10 YEARS) Source: SA Bond Manager Watch™ to 30 September 2019 31
Slide 32: Houseview Equity Strategy
Houseview Equity Strategy EXCEPTIONAL LONG-TERM ACTIVE RETURNS (ALPHA) OVER 25 YEARS 5 years 10 years *Since inception (p.a.) (p.a.) (p.a.) Houseview Equity 3.2% 11.9% 16.0% FTSE/JSE Capped SWIX 3.6% 11.0% 13.9% Active return (0.4%) 0.8% 2.0% *Since Inception - October 1993 32 Source: Coronation & I
Slide 33: Global Absolute
Global Absolute CONSISTENT DELIVERY OF REAL RETURNS OVER SIGNIFICANT PERIODS 5 years 10 years *Since inception (p.a.) (p.a.) (p.a.) Global Absolute 6.6% 10.9% 14.8% CPI 5.0% 5.1% 5.6% *Since Inception – August 1999 33 Source: Coronation & IRESS
Slide 34: Global Emerging Markets Equity (USD)
Global Emerging Markets Equity (USD) A HIGHLY COMPELLING TRACK RECORD OF ALPHA GENERATION 10 years *Since inception (p.a.) (p.a.) Global Emerging Markets Equity Strategy 6.4% 6.5% MSCI Daily TR Net Emerging Markets USD 3.6% 2.3% Active Return 2.8% 4.2% *Since Inception – 14 July 2008 34 Returns quot
Slide 35: Coronation Africa Frontiers Portfolio
Coronation Africa Frontiers Portfolio PERFORMANCE IN USD - PERIODS ENDING 30 SEPTEMBER 2019 10 years *Since inception (p.a.) (p.a.) Coronation Africa Frontiers Portfolio 5.1% 7.3% JSE Africa Index – ex SA 30 1.9% (1.0%) Outperformance 3.3% 8.3% USD Libor + 5% 5.8% 5.9% *Since Inception – November 20
Slide 36: Strong international track record
Strong international track record US DOLLAR RETURNS SINCE THEIR RESPECTIVE LAUNCH DATES Offshore USD Funds *Active return Launch date Global Equity Fund of Funds 1.6% 01-Jul-00 Global Emerging Markets Equity Strategy 4.2% 14-Jul-08 Coronation Africa Frontiers Strategy 6.4% 01-Oct-08 Global Capital P
Slide 37: Disclaimer
Disclaimer This presentation contains certain forward-looking statements. These forward-looking statements are based on current information and expectations, and involve a number of risks and uncertainties. Although Coronation Fund Managers Limited believes that the expectations reflected in such fo
Slide 38: Thank you
+ + + + . . . . CORONATION TRUST IS EARNED™
Slide 39: Coronation - Trust is Earned
combos CORONATION ({) TRUST IS EARNED™
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