Coronation Fund Managers Limited · JSE:CML
Coronation Fund Managers — FY2005 Earnings Presentation
49 slides from Coronation Fund Managers's earnings presentation, Nov 15, 2005
Slide 1: 2005 reviewed results
2005 reviewed results 15 November 2005
Slide 2: Agenda
Agenda • Key themes – Financial summary – Assets under management – Corporate developments • Business reviews – Institutional – Retail – International • Corporate structure and shareholding • Financials • Future focus
Slide 3: Key themes
CORONATION & FUND MANAGERS
Slide 4: Strong financial results
Strong financial results • Attributable earnings per share of 48,5 cents, up 48% • Diluted headline earnings per share of 44,5 cents, up 33% • Final distribution of 36 cents per share • Assets under management of R82 billion, up 29%
Slide 5: Assets under management
Assets under management 90000 81,980 80000 70000 63,759 59,978 60000 53,697 50000 48,114 43,902 40000 30000 28,189 25,920 23,935 20000 12,267 10000 7,520 2,800 803 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Slide 6: Reconciliation of assets under management
Reconciliation of assets under management 6 months 6 months 12 months till March till Sept till Sept Rbn Rbn Rbn Opening market value 63,76 70,04 63,76 Net flows (2,96) (1,71) (4,60) Charges (0,23) (0,28) (0,51) Currency effect (0,28) 0,20 (0,07) Capital appreciation 9,75 13,74 23,48 Closing market
Slide 7: Split of AUM reconciliation
Split of AUM reconciliation Balance Net assets Market Balance 30/09/2004 acquired / Movement 31/03/2005 (lost)* Rbn Rbn Rbn Rbn Institutional 49,56 (7,67) 19,48 61,37 Retail 7,82 2,60 3,27 13,69 International 6,38 (0,12) 0,66 6,92 Total 63,76 (5,19) 23,41 81,98 * Inclusive of charges and currency
Slide 8: AUM by business group
AUM by business group 2005 2004 2003 2002 Institutional 74.9% 77.7% 77.6% 71.0% (excluding international) Retail 16.7% 12.3% 10.4% 10.3% (excluding international unit trusts) International 8.4% 10.0% 12.0% 18.7% (including international unit trusts) 100.0% 100.0% 100.0% 100.0%
Slide 9: AUM asset class summary
AUM asset class summary Asset class Market value % of total AUM Domestic Equity 56,257,105 68.62 Domestic Cash 9,774,822 11.92 Foreign Equity 7,512,664 9.16 Domestic Fixed Interest 5,640,531 6.88 Domestic Other 1,811,863 2.21 Foreign Cash 742,706 0.91 Foreign Fixed Interest 158,296 0.19 Foreign Othe
Slide 10: Corporate developments
Corporate developments • Sale of 25% of Coronation’s equity to staff – BEE deal with the Imvula Trust (10%) – Sale by Coronation Investments and Trading (15%) – Total of 103 staff participated – Enhanced long-term sustainability of the business
Slide 11: Corporate developments
Corporate developments • Establishment of Coronation Fund Managers (Botswana) (Pty) Limited • Continue to benefit from strategic partnership with Namibia Asset Management • Disposal of: – 49% shareholding in Kagiso Asset Management – 26% shareholding in FinSource Group Holdings (Pty) Limited
Slide 12: Review of Institutional business
Review of Institutional business
Slide 13: Institutional highlights
Institutional Highlights • Total assets up 24% to R61,4 billion (2004: R49,6 billion) • Strong focus on client retention and good performance has paid off • Attracted 39 new client mandates, totalling R4.1 billion • Absolute unit now closed to new business on 30 September 2005 (R10 billion) • Progre
Slide 14: Institutional investment performance highlights
Institutional Investment performance highlights • SA balanced portfolios – Ranked 2nd over one and three years and 3rd over five years in Alexander Forbes SA Large Manager Watch survey (30 September 2005) • Global balanced portfolios – Ranked 3rd over one year in Alexander Forbes Global Large Manage
Slide 15: Institutional performance
Institutional performance SA Large Manager Watch 1 year ended 30 September 2005 Allan Gray 46.92% Coronation 44.72% Prudential 43.76% OMAM 42.80% African Harvest 41.70% Investec 41.47% Stanlib 41.38% Metropolitan 40.63% RMBAM 40.06% Sanlam 39.88% Oasis 38.42%
Slide 16: Institutional performance
Institutional performance SA Large Manager Watch 3 years ended 30 September 2005 Allan Gray 31.72% Coronation 29.93% Prudential 28.45% RMBAM 28.28% OMAM 28.18% Sanlam 27.02% Investec 26.72% Metropolitan 26.36% Stanlib 26.34%
Slide 17: Institutional performance
Institutional performance SA Large Manager Watch 5 years ended 30 September 2005 Allan Gray 28.34% Prudential 22.62% Coronation 21.22% OMAM 20.54% Stanlib 20.48% RMBAM 20.32% Investec 19.39% Sanlam 18.63% Metropolitan 16.45%
Slide 18: Institutional performance
Institutional performance Global Large Manager Watch 1 year ended 30 September 2005 Allan Gray 41.44% OMAM 40.15% Coronation 40.02% Prudential 39.74% African Harvest 38.96% Metropolitan 38.27% Investec 37.92% Stanlib 36.65% Sanlam 36.44% RMBAM 36.03% Oasis 35.68%
Slide 19: Absolute return product
Absolute return product Since 1 Year 3 Years inception* Absolute 34.9% 24.0% 21.1% CPIX 4.7% 4.6% 6.4% CPIX +7% 11.7% 11.6% 13.4% *Since inception – August 1999
Slide 20: Review of Retail business
CORONATION & FUND MANAGERS
Slide 21: Retail highlights
Retail Highlights • Total assets up 76% to R13.7 billion, significantly exceeding the industry’s 46.3% growth • Market share (based on total AUM) at 7% • Strong new business across Managed, Equity, Fixed Interest and Property funds • Development of third-generation tax effective retirement products
Slide 22: Retail assets under management
Retail Assets under management Cash funds 1,989 Significant growth over past year in: Managed funds 4,725 Strategic Income (R1bn) Fixed interest and real Capital Plus & SA Capital Plus (R650m) estate funds 3,316 Money Market (R450m) Equity funds Market Plus (R350m) 3,654 Absolute (R300m) Equity (R25
Slide 23: Retail investment performance highlights
Retail Investment performance highlights • 20 consecutive 1st or 2nd place in Plexus Survey (as at end September 2005) • Rated Top Retail Asset Manager in PWC Survey of SA Bankers • Equity and Managed products remain consistently in top quartile • Reasonable Fixed Interest performance • Property lag
Slide 24: Absolute performance
Absolute performance Core funds over the 12 months ended 30 September 2005 Equity 55.3% BM: 51.8% Market Plus 42.7% BM: 38.7% Balanced Plus 42.0% BM: 36.6% Capital Plus 27.6% BM: 4.9% Strategic Income 10.6% BM: 7.6% Money Market 7.2% BM: 7.2% Low risk High risk
Slide 25: CIS Industry market share
CIS Industry Market share: Long-term single managers Ranking excl. cash, institutional, FoF, white-labels (R188bn; 9/05) 1 Allan Gray (15%) R28.6bn 2 Investec (13%) R23.9bn 3 Old Mutual (13%) R23.7bn 4 Stanlib (12%) R22.4bn 5 Nedcor (8%) R14.4bn 6 Coronation (7%) R12.9bn 7 Sanlam (6%) R11.4bn 8 Satr
Slide 26: Review of International business
Review of International business
Slide 27: International highlights
International Highlights • Total assets : US$1.1 billion • Continue to build robust and credible fund of funds business • Provided product which is representative of the varying needs of our different client portfolios • Remain focused on managing international assets of our South African institutio
Slide 28: International investment performance highlights
International Investment performance highlights • Coronation Global Equity Alternative Strategy Fund: − Awarded “Best Large Global Long/Short Fund of Funds of the Year” for 2004 by InvestHedge − Rolling 1 year return: +11.5% − Since inception annual return: +11.7% − Assets in excess of US$500 millio
Slide 29: Global Equity Alternative Strategy Fund vs MSCI World Index
Coronation Global Equity Alternative Strategy Fund vs MSCI World Index 300 Coronation Global Equity Alternative Strategy Fund US$ Morgan Stanley World Index US$ * 250 200 150 100 50 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Aug-96 Apr-97 Aug-97 Apr-98 Aug-98 Apr-99 Aug-99 Apr-00
Slide 30: Coronation Global Equity Long Only Fund
Coronation Global Equity Long Only Fund (October 2005) Coronation Global Equity Long Only 30% Coronation Global Equity Long Only US$ 24.75% 25% MSCI US$ 21.04% 21.00% 20.2% 19.51% 20% 18.6% 15% 10% 5% 2.15% 1.16% 0.04% 0% -0.99% -5% 1 YEAR 2 YEAR 3 YEARS 5 YEARS SINCE INCEPTION
Slide 31: Corporate structure, shareholding and board
Corporate structure, shareholding and board
Slide 32: Corporate structure
Corporate structure 15% Coronation Fund Managers Coronation Staff Ltd Imvula Capital 90% (Pty) Ltd 100% Coronation Investment 10% Management (Pty) Ltd The Imvula Trust 100% 100% 100% 100% Coronation Coronation CFM Coronation Life Asset Management Assurance International Management Company Ltd Compan
Slide 33: Shareholding
Shareholding As at 30 September 2005 Allan Gray* CIT 22.61% 38.40% STANLIB* Coronation Fund Staff 6.04% Managers 15.00% Other RMB (<5% ea) 5.60% 12.35% * On behalf of clients
Slide 34: Board changes
Board changes Old Board New Board Gavan Ryan (Chairman) Gavan Ryan (Chairman) Winston Floquet (Non Exec, Independent) Winston Floquet (Non Exec, Independent) Eric Molobi (Non Exec, Independent) Shams Pather (Non Exec, Independent) Thys du Toit (Exec) Thys du Toit (Exec) Tony Gibson (Exec) Louis Stas
Slide 35: Financials
CORONATION & FUND MANAGERS
Slide 36: Snap shot results
Snap shot results 30 September 30 September % 2005 2004 change R’000 R’000 Earnings 186,321 126,537 47 Headline earnings 181,975 129,507 41 Attributable EPS Normal 48,5 32,8 48 Diluted 45,3 32,5 39 NAV per share 57,6 59,0 (2)
Slide 37: Snap shot results
Snap shot results 30 September 2005 30 September 2004 ROE 83.6% 67.3% Cost to income 53.4% 56.4% Segment contribution SA 92.0% 84.0% International 8.0% 16.0% Annuity income as % of 54.0% 67.7% operating income
Slide 38: Sources of revenue
Sources of revenue Performance fee 38.6% Initial charges 1.8% Interest income 2.0% Other 3.6% Management fee 54.0%
Slide 39: Financial summary
Financial summary 30 September 30 September 2005 2004 Rm Rm Revenue R580,2 R389,0 Performance fees R224,1 R107,2 Management fees R313,1 R263,0 Others R43,0 R18,8 Operating Expenses R309,8 R219,6 PBT R270,4 R169,4 Tax R84,4 R43,0 PAT R186,0 R126,4
Slide 40: Average fixed fee
Average fixed fee 0.88% 0.88% 0.78% 0.74% 0.45% 0.44% 0.34% 0.32% 2004 2005 International Institutional Retail Total
Slide 41: Total fee
Total fee 1.40% 1.28% 1.00% 0.95% 0.74% 0.63% 0.63% 0.59% 0.49% 0.54% 0.27% 0.31% 0.18% 0.15% 0.06% 0.12% 2004 2005 International Institutional Retail Total ---- Performance fee
Slide 42: Funds subject to performance fees
Funds subject to performance fees % of assets under management 2005 2004 Institutional 62% 44% Retail 35% 29% International 69% 64% Total 58% 44%
Slide 43: IFRS 2 effect
IFRS 2 effect 2005 2006 R’000 R’000 December 2003 options 1,729 1,923 Imvula transaction 3,459 5,637 CIT transaction 1 (February 2005) 10,844 19,276 CIT transaction 2 (September 2005) 465 7,200 Total 16,497 34,036
Slide 44: Consolidated accounting treatment of BEE transaction
Consolidated accounting treatment of BEE transaction Financier Preference dividends/interest and capital Imvula Capital Dividend flow through sufficient to cover preference dividend and capital to Financier Coronation Fund Managers Limited Imvula Trust 90% (STC exemption) Dividend pass through 10% (
Slide 45: Imvula Scheme – unwinding
Imvula Scheme – unwinding Financier Coronation shareholders Repay loan Imvula Capital (de-register) Coronation issues 43m shares to Imvula beneficiaries Repay loan Buys back 10 % of CIM Coronation Fund Managers Imvula Trust (de-register) Limited Coronation issues 43m shares Allocate 43m 100% owned C
Slide 46: Future focus
CORONATION & FUND MANAGERS
Slide 47: Future focus
Future focus • Right strategy in place from which we continue to grow a long-term sustainable business − Singularly focused on fund management − Return to a culture of staff ownership, aligning staff interests with those of clients and shareholders − Team of talented and committed people who share p
Slide 48: Future focus
Future focus • Desire to be the exemplar in the fund management industry • Excited about our launch into third generation tax-effective retirement products • Will continue to look for opportunities to enhance returns to clients and shareholders alike
Slide 49: Coronation Fund Managers
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