Coronation Fund Managers Limited · JSE:CML
Coronation Fund Managers — H1 2018 Earnings Presentation
43 slides from Coronation Fund Managers's earnings presentation, May 22, 2018
Slide 1: Coronation
CORONATION TRUST IS EARNED™ +
Slide 2: 2018 Reviewed Interim Results
2018 Reviewed Interim Results for the six months ended 31 March 2018 22 May 2018 Anton Pillay: Chief Executive Officer John Snalam: Chief Financial Officer 2
Slide 3: Agenda
Agenda Highlights Business update Financial results Closing comments
Slide 4: Highlights
Highlights CORONATION TRUST IS EARNED
Slide 5: Business highlights
Business highlights For the six months ended 31 March 2018 Revenue Business performing in line with management expectations R2.1bn AUM of R588bn & slowdown in net outflows to R15.5bn Diluted headline Active management delivered excellent performance over the long-term for clients - earnings per shar
Slide 6: Business update
Business update 6
Slide 7: Coronation: 25 years of building a sustainable business
Coronation: 25 years of building a sustainable business We remain an active manager with a long-term focused valuation-driven investment philosophy Our business is cyclical - revenue is geared to market returns and the outperformance we generate on behalf of clients As a significant manager of savin
Slide 8: Asset administration services
Asset administration services Consolidated to ensure integrated delivery of world-class service Growing global franchise necessitates change to achieve single, consistent oversight model Fund accounting services to be provided by J.P. Morgan delivers additional benefits – ‘Follow the sun’ service al
Slide 9: Support of black-owned business
Support of black-owned business Establishing transfer agency platform for delivery of exceptional client service Since our inception, Coronation’s entrepreneurial spirit has been the catalyst for the creation of numerous new financial services businesses, allowing us to remain purely focused on asse
Slide 10: Transformation journey
Transformation journey A key strategic focus…not about ticking the boxes Black owned Continue to play a role in achieving meaningful and sustainable transformation in all areas of our business & society 23% As measured by the FSC Industry-leading transformation across our business – 56% of our emplo
Slide 11: The environment will remain challenging
The environment will remain challenging Positive local changes… but need to see translation into growth Global growth remains supportive but volatile given geopolitical risks Domestic economy has been extremely constrained for a long time, impacting economic growth More recent data points to a turna
Slide 12: Market movements
Market movements 31 March 2018 3 months to 6 months to 12 months to Economic group March 2018 March 2018 March 2018 % % % All Share (ZAR) (5.97) 1.03 9.60 Resources (3.83) 0.85 10.44 Small Cap (1.27) 2.28 (2.77) Industrials (7.99) (3.69) 5.70 Financials (3.56) 11.85 17.58 USD/ZAR exchange 4.67 14.58
Slide 13: Investment performance
Investment performance Our key focus remains on asset management and the delivery of investment excellence We understand periods of average performance are part and parcel of being an active manager While long-term performance across strategies is excellent, recent performance across certain strateg
Slide 14: Investment performance - Institutional
Investment performance - Institutional Local and global strategies annualised alpha at 31 March 2018 Local strategies Annualised active return (gross of fees) 10 years Since inception – Multi-Asset (Global) 1.92% 1.28% – Specialist Equity 2.51% 2.54% – Absolute Return 5.57% 9.29% – Fixed Income (Bon
Slide 15: Assets under management
Assets under management As at 31 March 2018 700 610 599 614 588 Local Rbn International Rbn Avg AUM Rbn 588 600 141 492 127 155 176 500 153 85 400 339 40 300 247 203 24 461 469 444 407 438 435 200 155 15 134 125 101 11 299 82 12 12 223 100 54 64 9 188 7 122 113 144 7 7 92 47 57 75 0 Sept Sept Sept S
Slide 16: Institutional business
Institutional business Total institutional client AUM of Full range of products and dedicated team available globally to satisfy all our client requirements R355bn Total institutional client outflows significantly declined to R14bn (FY 2017 R36bn) Local institutional AUM BY CLIENT LOCATION - INSTITU
Slide 17: SA institutional clients
SA institutional clients Significant manager of institutional assets in SA SA institutional clients represent R295bn Expect small level of net outflows to continue in foreseeable future Local client net outflows affected by: – SA retirement fund industry remains a net outflow market – Local economic
Slide 18: Global institutional clients
Global institutional clients Over past decade we have made great strides in growing our global franchise, which now represents R60bn of assets under management – International clients net outflows of $260m over the six months – We continue to enhance our relationships with global asset allocators, m
Slide 19: Retail business
Retail business Coronation remains one of the foremost managers in the local unit trust industry Retail AUM R233bn Net outflows of R1.4bn (-R4bn H1 2017; -R6.9bn FY 2017) – Encouraging support for long-term growth funds – Net flow volumes at industry level still very subdued, with a strong bias to f
Slide 20: Financial results
Financial results 20
Slide 21: Robust revenue in tough environment
Robust revenue in tough environment March March Change 2018 2017 Revenue (from fund management) R2 079m R1 936m 7% Profit (from fund management) R1 034m R1 012m 2% Profit after tax R782m R763m 2% Cost to income ratio 49.3% 47.9% 21
Slide 22: Interim dividend increased
Interim dividend increased 100% of DHEPS declared March March Change 2018 2017 Diluted HEPS (cents) 1% 223.4 220.7 Interim dividend per share (cents) 1% 223.0 220.0 Actual shares in issue 349 799 102 349 799 102 22
Slide 23: Total net fee margin
Total net fee Stable margin over past 4 years 0,90% 0,79% 0,79% 0,80% 0,70% 0,70% 0,69% 0,68% 0,69% 0,70% 0,64% 0,62% 0,61% 0,60% 0,61% 0,58% 0,59% 0,59% 0,60% 0,56% 0,52% 0,50% 0,40% 0,30% 0,20% 0,10% 0,00% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017 H1 2017 2018 2
Slide 24: Variable cost model continues to contribute to effective management of total costs
Variable cost model continues to contribute to effective management of total costs 5 000 50% March March Change 2018 2017 49% R’m R’m 4 000 48% Fixed costs* (18%) 342 291 3 000 47% Variable costs – including 46% (2%) 645 633 distribution costs 2 000 45% Operating expenses (7%) 987 924 44% 1 000 Othe
Slide 25: Fixed costs
Fixed costs Increase due to continued investment in business March 2018 March 2017 Change R’m R’m Total fixed costs* (18%) 342 291 - Employee costs (13%) 154 136 - Information systems (23%) 63 51 - Professional fees (45%) 28 19 - Marketing (47%) 56 38 Employee complement 319 294 *Excludes foreign ex
Slide 26: Closing comments
Closing comments 26
Slide 27: Our focus
Our focus We remain committed to providing world-class investment excellence We are singularly focused on the delivery of active returns over meaningful periods and remain committed to our long -term investment approach Near-term performance of our funds has been in line with peer average. We remain
Slide 28: Questions
Questions 28
Slide 29: Annexure A: Coronation information
Annexure A: Coronation information 29
Slide 30: About Coronation Fund Managers
About Coronation Fund Managers Founded in Cape Town, South Africa, in 1993 with zero assets under management Listed in 2003 25% 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 m
Slide 31: Annexure B: Market & selected strategy performance
Annexure B: Market & selected strategy performance 31
Slide 32: Local market indicators
Local market indicators Periods ending 31 March 2018 3 years 5 years 10 years (p.a.) (p.a.) (p.a.) % % % All Share 5.05 10.02 9.67 All Bond 8.65 7.72 9.63 Listed Property (0.48) 7.11 13.70 AF Money Market 7.21 6.64 7.10 MSCI World (ZAR) 7.04 15.27 10.00 Global Bonds (ZAR) 2.56 6.31 5.92 CPI 5.40 5.2
Slide 33: Global Houseview Strategy
Global Houseview Strategy Compelling long-term performance (5 years) Competitor 1 11,6% Competitor 2 11,2% Competitor 3 10,9% Coronation 10,7% Competitor 4 9,9% Competitor 5 9,5% Competitor 6 8,8% Competitor 7 8,5% Competitor 8 8,4% Competitor 9 8,0% Source: Alexander Forbes Global Large Manager Wat
Slide 34: Global Houseview Strategy
Global Houseview Strategy Compelling long-term performance (10 years) Coronation 12,4% Competitor 1 11,8% Competitor 2 11,7% Competitor 3 11,4% Competitor 4 10,9% Competitor 5 10,1% Competitor 6 10,0% Competitor 7 9,1% Competitor 8 8,8% Source: Alexander Forbes Global Large Manager Watch™ Survey to
Slide 35: Fixed Income Strategies
Fixed Income Strategies Compelling performance (10 years) Competitor 1 12,1% Competitor 2 11,7% Coronation Active Bond Portfolio (Composite) 10,9% Competitor 3 10,8% Competitor 4 10,7% Competitor 5 10,6% Competitor 6 10,5% Competitor 7 10,5% Competitor 8 10,4% Competitor 9 10,4% Competitor 10 10,4%
Slide 36: 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 9.8 12.7 17.1 CAPI 10.1 10.2 14.6 Active return (0.3) 2.5 2.5 *Since Inception - October 1993 Source: Independent Retirement Fund Survey
Slide 37: 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 8.8 11.3 15.4 CPI 5.3 5.7 6.1 *Since Inception – August 1999 Source: Independent Retirement Fund Survey as at 31 March 2018 37
Slide 38: Global Emerging Markets Equity (USD)
Global Emerging Markets Equity (USD) A highly compelling track record of alpha generation 5 Years *Since inception (p.a.) (p.a.) % % Global Emerging Markets Equity Strategy 5.6 8.1 MSCI Daily TR Net Emerging Markets USD 5.2 3.9 Active Return 0.4 4.2 *Since Inception – 14 July 2008 Returns quoted in
Slide 39: Strong international track record
Strong international track record US dollar returns since their respective launch dates *Active return Offshore USD Funds Launch date % Global Equity Fund of Funds 2.0 01-Jul-00 Global Emerging Markets Equity Strategy 4.2 14-Jul-08 Global Bond 2.1 01-Oct-09 Coronation Africa Frontiers Strategy 10.6
Slide 40: Investment performance - Retail
Investment performance - Retail Domestic flagship funds as at 31 March 2018 Since inception Fund 10-year ranking ranking Long-term Growth (equity only) Top 20 1st Quartile 1st Quartile Long-term Growth (multi asset) Balanced Plus 1st Quartile 1st Quartile Capital Plus 1st Quartile 1st Quartile Incom
Slide 41: Investment performance - Retail
Investment performance - Retail International flagship funds as at 31 March 2018 10-year ranking Since inception ranking Global Emerging Markets - 1st Quartile LT Growth (equity only) Global Opportunities Equity 1st Quartile 1st Quartile LT Growth (multi asset) Global Managed - 1st Quartile Preserva
Slide 42: 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 43: Thank you
sodbos CORONATION TRUST IS EARNED
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