Coronation Fund Managers Limited · JSE:CML
Coronation Fund Managers — FY2006 Earnings Presentation
61 slides from Coronation Fund Managers's earnings presentation, Nov 14, 2006
Slide 1: 2006 Results Reviewed
2006 Results Reviewed 14 November 2006
Slide 2: Agenda
Agenda Financial highlights Overview of company Business review • Institutional • Retail Share buy-back and shareholder analysis Financial results Other
Slide 3: CML vs Financial Index
CML vs Financial Index (capital return based) 250 Jan 06: 36c distribution 225 200 Apr 05: 25c Dec 04: 25c BEE spec 180 dividend distribution 160 Dec 03:13c dividend 140 120 100 80 J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N 2003 2004 2005 2006 CML Financial Ind
Slide 4: Long-term returns for different asset classes
Long-term returns for different asset classes % Per annum 1 Year 3 Years 5 Years 10 Years All Share 36.1% 39.8% 26.3% 15.8% Resources 47.7% 36.8% 29.1% 22.4% Financial 32.2% 42.2% 21.7% 13.9% Industrial 26.0% 41.9% 25.5% 11.0% Property UT 10.6% 32.3% 26.9% 24.8% All Bond 5.0% 9.5% 11.5% 15.6% Cash 7
Slide 5: Financial Highlights
Financial Highlights
Slide 6: Financial Highlights
Financial Highlights AUM R101 bn 24% Headline earnings 52 cps 21% Headline earnings (diluted) 47 cps 14% Earnings pre IFRS 2 66 cps 35% Distribution 53 cps 47%
Slide 7: Financial Highlights (2)
Financial Highlights (2) Revenue R706m 20% Income fund management R294m 16% PAT R196m 16% Cashflow (operating activities) R314m
Slide 8: Company Overview
Company Overview
Slide 9: Assets under management
Assets under management 2003 – 2006 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 Sept Sept Sept Sept
Slide 10: Asset class summary
Asset class summary % of Asset Class Market Value AUM Domestic Equity 70,803,166 68.8 Foreign Equity 10,199,026 10.1 Domestic Cash 9,797,303 9.7 Domestic Fixed Interest 7,876,276 7.8 Domestic Other (UTs,Hedge,Pooled) 1,609,153 1.6 Foreign Cash 827,566 0.8 Foreign Fixed Interest 276,256 0.3 Foreign O
Slide 11: Reconciliation of AUM at 30 September 2006
Reconciliation of AUM (Rbillion) at 30 September 2006 6 months 12 months to Sep to Sep Opening market value 94.15 81.93 Net flows 2.27 1.91 Other 2.08 1.60 Capital appreciation 2.94 16.01 Closing market value 101.44 101.44
Slide 12: Company structure
Company structure at 30 September 2006 Coronation Coronation Fund Fund Managers Managers Limited Limited 90% Coronation Coronation Investments Investments Management Management (Pty) (Pty) Ltd Ltd 100% 100% 100% 100% 100% Coronation Coronation Coronation Coronation Coronation Fund Management Asset L
Slide 13: Company shareholders at 30 September 2006
Company shareholders at 30 September 2006 CIT Limited – 27.23% Allan Gray & Orbis –27.73% Coronation Staff – 18.96% Coronation Coronation Fund Fund Managers Managers Limited Limited Imvula Capital (Pty) Ltd 90% 100% 10% The Imvula Coronation Coronation Investments Investments Trust Management Manage
Slide 14: Company activities
Company activities Share buyback undertaken as part of capital management initiative Increase in staff shareholding further aligning interests with clients and shareholders Empowerdex has provided an “A” rating for two consecutive years Television advertising campaign launched as part of int
Slide 15: Business Review Retail
Business Review Retail
Slide 16: Retail highlights
Retail highlights Total retail AUM have increased by 30% to R18 billion Achieved market share of 7.1% (long-term single managers) Total net flows of R2.1 billion Net flows of R2.7 billion (excluding cash & div income funds) Fixed interest franchise has gained significant retail recognition
Slide 17: Retail highlights
Retail highlights Ranked 1st or 2nd over 23 consecutive quarters in PlexCrown survey 2005 Unit Trust Company of the Year (3 out of 4 years) Best provider of retail asset management services in PWC Strategic & Emerging Issues in SA Banking survey Recipient of 14 individual awards
Slide 18: Assets, net flows and funds total CIS industry
Assets, net flows and funds total CIS industry Domestic Assets Net Flows No of Funds 600 700 707 496 500 600 391 500 400 400 283 300 300 204 178 200 186 140 200 127 94 100 100 62 54 53 49 30 30 26 22 18 13 0 0 Sep 1998 Sep 1999 Sep 2000 Sep 2001 Sep 2002 Sep 2003 Sep 2004 Sep 2005 Sep 2006 Source: A
Slide 19: Total industry assets - asset allocation
Total industry assets - asset allocation September 01 September 06 Other Other 2% 5% Equity Money Market 30% Equity 29% 33% Money Market 35% Prudential Fixed Interest 5% Varied Specialist Prudential 11% Bond 20% Flexible Flexible Fixed Interest 3% 4% 4% Bond Varied Specialist 11% 8% Source: ACI Quar
Slide 20: CIS industry
CIS industry getting to the real market Assets Under Management Sep 06 Total Industry Assets R546bn Exclude Fund of Funds -R50bn R496bn Exclude Money Market Funds -R145bn R351bn Exclude Dividend Income Funds -R16bn R335bn Exclude Institutional Funds -R53bn R282bn Exclude Multi-Managers -R27bn R255bn
Slide 21: CIS industry market share
CIS industry Market share: Long-term single managers only Ranking excl. cash and dividend income funds Mkt Share Sep 06 Sep 05 1↑ Allan Gray 23% market share growth 19.5% R47.2bn R28.6bn 2↑ Investec 7.5% market share growth 14.3% R34.5bn R23.9bn 3↓ Old Mutual 12.4% R30.1bn R23.7bn 4↓ Stanlib 17% mar
Slide 22: CIS industry net inflows
CIS industry for 12-months ended 30 Sep 2006 Net inflows: Long-term single managers only Ranking excl. cash and dividend income funds Manco 12 months Allan Gray R10,324bn Investec R8,795bn Coronation R2,731bn Old Mutual R2,408bn Sanlam R2,005bn Nedgroup R1,330bn PSG R854m RMB R581m Prudential R255m
Slide 23: AUM of largest unit trusts
AUM of largest unit trusts Sept 2006 Sep Sep Market Values % ’05 ’06 Coronation Strategic Income Fund 1,912 3,236 69 Coronation Capital Plus Fund 1,249 2,513 101 Coronation Absolute Fund 981 1,575 61 Coronation Equity Fund 1,389 1,514 9 Coronation Balanced Plus Fund 911 1,497 64 Coronation Money Mar
Slide 24: Performance
Performance Core funds -12 months ended 30 September 06 Equity 22.0% Benchmark 30.8% Market Plus 20.0% Benchmark 27.8% Balanced Plus 24.6% Benchmark 27.4% Capital Plus 18.0% Benchmark (inflation plus 4%) 9.0% Strategic Income 9.1% Benchmark 6.0% Money Market 7.0% Benchmark 7.0% Low Risk High Risk
Slide 25: PlexCrown
PlexCrown Overall CIS manager ranking Sep06 Jun06 Mar06 Dec05 Oasis 4.666 4.416 3.5831 3.2498 Coronation 3.958 3.875 3.7497 4.0413 Investec 3.533 3.700 3.8747 3.7497 Nedgroup 3.250 3.437 3.4372 3.3747 Prudential 3.375 3.375 2.8748 2.9998 Absa 3.125 3.166 2.5415 2.5831 RMB 3.333 2.970 2.9283 2.8956 S
Slide 26: Business Overview Institutional
Business Overview Institutional
Slide 27: Institutional highlights
Institutional highlights Institutional AUM increased to R75 billion, up 22% yoy Attracted gross new business flows of R10 billion Closer collaboration with UK office continue to focus on providing product to SA clients Increased number of pitches Continue to focus on areas where market sha
Slide 28: Performance
Performance Global Large Manager Watch 1 year ending 30 September 2006 Oasis 30.98% Allan Gray 30.52% RMBAM 27.07% Prudential 26.96% Sanlam 26.73% African Harvest 26.65% Median 26.63% Coronation 25.25% OMAM 24.82% Stanlib 24.57% Metropolitan 24.10% Investec Asset Management 22.69%
Slide 29: Performance
Performance Global Large Manager Watch 3 years ending 30 September 2006 Prudential 32.99% OMAM 32.13% Allan Gray 31.79% Coronation 31.74% RMBAM 31.65% African Harvest 31.58% Oasis 31.55% Median 31.45% Sanlam 31.03% Stanlib 29.93% Investec Asset Management 29.79% Metropolitan 29.20%
Slide 30: Performance
Performance SA Large Manager Watch 3 years ending 30 September 2006 Allan Gray 35.06% Prudential 34.60% Coronation 34.01% RMBAM 32.94% Median 32.93% Sanlam 32.82% OMAM 32.79% African Harvest 32.49% Oasis 31.78% Stanlib 31.77% Investec Asset Management 31.39% Metropolitan 30.44%
Slide 31: Performance
Performance SA Bond Manager Watch 1 year ending 30 September 2006 SYmmETRY Bond Portfolio 6.60% Futuregrowth Yield Enhanced 6.22% African Harvest Core Bond 6.20% Investec Dynamic Bond Portfolio 6.19% Coronation Active Bond Portfolio 6.18% Tri-Linear Fixed Income 6.00% Stanlib Core Bond Portfolio 5.8
Slide 32: Performance
Performance Absolute Return product Period ending 30 September 2006 Since 1 Year 3 Years inception* Absolute 24.0% 29.3% 21.5% CPIX 5.1% 4.5% 6.2% CPIX +7% 12.1% 11.5% 13.2% *Since inception – August 1999
Slide 33: Coronation International AUM
Coronation International AUM Sep 2006 Sep 2005 Sep 2004 Fund of Hedge Funds $666m $844m $846m Global Equity $438m $537m $597m** Relative Value $165m $241m $190m Multi-Strategy $17m $12m $13m Global Macro $8m $32m $28m Other hedge* $38m $22m $18m Long Only Fund of Funds $536m $297m $158m Internationa
Slide 34: International performance tables
International performance tables to September 2006 12-month 24-month 36-month Ranking Ranking Ranking % % % * * * Relative Value 8.86 9/57 7.96 19/57 6.81 21/52 USD GEAS ($) 6.97 10/45 9.19 14/43 9.59 14/37 GEAS (€) 4.65 8/24 8.26 10/21 8.18 N/A Global Equity FoF 14.99 14/46 19.78 5/41 18.55 6/40 (B
Slide 35: Share Buy-back and Shareholder Analysis
Share Buy-back and Shareholder Analysis
Slide 36: Shares in issue
Shares in issue 2006 2005 Opening balance – 1 Oct 382,274,930 382,274,930 Issued during the year 2,618,324 - Bought back and cancelled (35,315,852) - Closing balance – 30 Sep 349,577,402 382,274,930 Weighted average – 30 Sep 376,670,543 382,274,930 *Prefs for Conv – 15 Nov 4,560,000 - * Convertible
Slide 37: Share buy-back
Share buy-back General consent to buy back 20% of issued share capital Board consent to buy back up to 10% within certain parameters June to August 2006 - 35,315,852 shares (9.2%) bought back Cost - R200 167 791 Average price per share – R5.67 All cancelled
Slide 38: Largest shareholders
Largest shareholders 30 September 2006 Company Shares held % Allan Gray + Orbis 96 944 289 27.73 CIT 95 194 989 27.23 Staff 66 269 598 18.96 Tiedemann 13 550 000 3.88 Mcwilliams Family Trust 11 200 000 3.20 RMB 9 102 494 2.60 Stanlib 7 603 566 2.18 Futuregrowth 6 031 262 1.73 87.51
Slide 39: Overview of changes… Sellers
Overview of changes… Sellers No of shares Current Company % sold holding CIT (22 118 810) 95 194 989 (3.33) Stanlib (7 483 309) 7 603 566 (1.76) Futuregrowth (3 450 494) 6 031 262 (0.74) Foord (2 550 000) 560 000 (0.65) Absa Asset Management (1 652 610) 0 (0.43)
Slide 40: Overview of changes… Buyers
Overview of changes… Buyers No of shares Current Company % bought holding Staff 7 011 666 66 269 598 1.06 Tiedemann 2 650 000 13 550 000 1.04 Allan Gray + Orbis 2 184 474 96 944 289 3.05 Centaur Asset 910 081 3 681 210 0.33 Management Regarding Capital 977 951 977 951 0.28 Management
Slide 41: Analysis of CFM fund holdings
Analysis of CFM fund holdings Company Shares held % Coronation Financial Fund 1 553 750 0.44 Coronation Smaller 2 053 750 0.59 Companies Fund
Slide 42: Financial Results
Financial Results
Slide 43: Earnings
Earnings % Change 2006 2005 Attributable earnings 195,528 167,356 EPS 19 51.9 43.8 Headline earnings 195,515 163,937 HEPS 21 51.9 42.9 Diluted HEPS 14 46.8 40.9 Distribution 185,184 138,197 DPS 47 53c 36c
Slide 44: Earnings ratios
Earnings ratios Change 2006 2005 % % % Cost to income: actual (1) 56.8 56.3 7 49.3 53.2 Cost to income: pre-IFRS2 Annuity income as % of operating 10 59.9 54.5 income
Slide 45: Group balance sheet
Group balance sheet Accounting policy change To reflect NAV inclusive of Goodwill Board decision to utilise once-off opportunity – Conversion to IFRS Goodwill recognition: ¾ Accounting policy change and recognise initial purchase of subsidiaries at fair value ¾ Recognise Goodwill and amortise
Slide 46: Earnings summary
Earnings summary 2006 2005 Rm Rm Revenue R744.1 R619.9 Net Fee Income R706.0 R588.3 Other R37.9 R31.6 Operating Expenses R398.2 R348.6 IFRS 2 charges R51.4 R18.0 PBT R294.5 R253.3 Tax R98.0 R84.4 PAT R196.5 R168.9
Slide 47: Total net fee %
Total net fee % 1.40% 1.31% 1.00% 0.80% 0.74% 0.69% 0.59% 0.53% 2006 2005 International Institutional Retail Total
Slide 48: Funds subject to performance fees
Funds subject to performance fees as a % of AUM 2006 2005 Institutional 58% 62% Retail 43% 35% International 73% 69% Total 56% 58%
Slide 49: CFM expenses (R'm)
CFM expenses (R’m) 2006 2005 Change Fixed costs 139.5 124.1 12.4% IFRS2 charges 51.4 18.0 Restraint 2.5 28.3 Marketing 27.4 14.3 Interest Expense 13.0 6.0 Variable costs 215.8 176.5 OPERATING EXPENSES 449.6 367.2 22.4% Periods ending 30 September 2006
Slide 50: IFRS 2 effect
IFRS 2 effect 2005 2006 2007 R’000 R’000 R’000 December 2003 options 1,729 1,968 912 Imvula transaction 3,460 5,877 5,637 CIT transaction 1 (February 2005) 7,850 13,132 12,621 CIT transaction 2 (April 2005) 4,398 9,556 9,556 CIT transaction 3 (September 2005) 527 8,156 5,490 Preference shares 74 12,
Slide 51: Namibia Asset Management Limited (NAM)
Namibia Asset Management Limited (NAM)
Slide 52: Current shareholding structure
Current shareholding structure /Ae//Gams Charitable Financial Trust Services 95% 5% Coronation Fund /Ae//Gams 5.1% Managers Limited Investments 100% Upfront Investments Empowerment Public & Staff Namibia (Proprietary) Ltd. Consortium Institutions Incentive 17.50% 1.55% 21.24% 6.56% 48.05% Namibia As
Slide 53: Namibia Asset Management (1)
Namibia Asset Management (1) Shares in issue 200,000,000 Current share price 26 cents Market capitalisation (N$) 52,000,000 CFM purchase price (47.14%) 9 cents CFM current shareholding 48.05% Consideration paid by CFM (47.14%) R8,870,000
Slide 54: Imvula Allocation
CORONATION & FUND MANAGERS Imvula Allocation
Slide 55: Allocation reconciliation
Allocation reconciliation 30 September 2006 Original authorised units 42 474 992 Adjustment (3 633 059) Adjusted authorised units 38 841 933 Total units allocated (pre-Oct 06) (13 440 000) New allocation (5 000 199) Total unallocated units 20 401 734
Slide 56: Value of the transaction (R'm)
Value of the transaction (R’m) 30 September 2006 Value of shares 233 Value of debt 140 Net Asset Value 93 NAV per unit 2.41
Slide 57: Advertising
CORONATION & FUND MANAGERS Advertising
Slide 58: Key observations
Key observations Operating in highly competitive, complex & low interest industry Over 50% of people are influenced by a broker/financial advisor when choosing which investment company to use Ad was part of long-term integrated plan to build the brand Coronation received positive feedback on
Slide 59: Future Focus
Future Focus
Slide 60: Future focus
Future focus Strategy in place to grow a sustainable business – Remain singularly focussed on fund management – Committed to delivering Investment Excellence: excellence of investment performance, innovative products and exceptional client service – Promote a culture of staff ownership and entrepr
Slide 61: Thank you
Thank you
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