Coronation Fund Managers Limited · JSE:CML
Coronation Fund Managers — FY2016 Earnings Presentation
29 slides from Coronation Fund Managers's earnings presentation, Nov 15, 2016
Slide 1: 2016 Reviewed Annual Results
2016 Reviewed Annual Results for the year ended 30 September 2016 Anton Pillay: Chief Executive Officer John Snalam: Chief Financial Officer 15 November 2016
Slide 2: Highlights
Highlights CORONATION
Slide 3: Results in line with management's expectations in a challenging market
Coronation delivered results in line with management’s expectations in a challenging market environment Financial highlights Revenue decreased to R4bn (-9%) Diluted headline earnings per share of 447.6c (-13%) Final dividend of 218c AUM and performance highlights Total AUM decreased to R599bn (-2%)
Slide 4: Business update
Business update CORONATION
Slide 5: A year of heightened market volatility and uncertainty
A year of heightened market volatility and uncertainty 3 months 6 months 12 months Economic group Sept 2016 Sept 2016 Sept 2016 % % % All Share (ZAR) 0.48 0.92 6.59 Resources 8.07 15.03 9.77 Small Cap 5.52 7.92 14.78 Industrials (2.05) (1.55) 4.49 Financials 0.85 (3.53) (0.91) USD/ ZAR exchange rate
Slide 6: Assets under management supported by strong capital appreciation
Assets under management (Rbn) supported by strong capital appreciation in current year 700 610 599 588 600 141 127 155 492 500 85 400 339 40 300 247 203 24 461 469 444 200 407 155 15 134 125 299 11 101 12 12 223 100 82 9 188 54 64 7 144 122 113 7 7 92 57 75 47 0 Sept Sept Sept Sept Sept Sept Sept Se
Slide 7: Coronation remains a significant manager of institutional assets in SA
Coronation remains a significant manager of institutional assets in SA Institutional AUM of R374bn (local and international clients) Expect to continue to experience outflows from SA portfolios: • We operate in a net outflow market within the SA retirement space • We remain closed to new institution
Slide 8: Global Balanced: Long-term performance compelling – 5 years
Global Balanced: Long-term performance continues to be compelling – 5 years Coronation 16,3% Competitor 1 16,1% Competitor 2 16,0% Competitor 3 15,7% Competitor 4 15,4% Competitor 5 14,7% Competitor 6 14,5% Competitor 7 14,4% Competitor 8 14,3% Source: Alexander Forbes Global Large Manager Watch™ su
Slide 9: Global Balanced: Long-term performance compelling – 10 years
Global Balanced: Long-term performance continues to be compelling – 10 years Competitor 1 14,7% Coronation 14,2% Competitor 2 13,7% Competitor 3 13,3% Competitor 4 13,1% Competitor 5 11,8% Competitor 6 11,4% Competitor 7 11,3% Competitor 8 11,1% Competitor 9 10,9% Source: Alexander Forbes Global Lar
Slide 10: Houseview Equity: Compelling active return over 23 years
Houseview Equity: Compelling active return over 23 years *Since 5 Years 10 years 1 Year inception (p.a.) (p.a.) % (p.a.) % % % Houseview Equity 9.9 17.5 15.7 18.0 CAPI 7.2 15.5 12.5 15.1 Active return 2.7 2.1 3.2 3.0 * Since inception - October 1993 Source: Independent Retirement Fund Survey as at 3
Slide 11: Coronation Global Absolute portfolio
Coronation Global Absolute portfolio *Since 5 Years 10 years 1 Year inception (p.a.) (p.a.) % (p.a.) % % % Global Absolute 10.1 13.1 12.9 16.4 CPI 6.3 5.6 6.2 6.2 * Since inception – August 1999 Source: Independent Retirement Fund Survey as at 30 September 2016 10
Slide 12: GEM Equity Strategy
GEM Equity Strategy *Since 5 Years 1 Year inception (p.a.) % (p.a.) % % Global Emerging Markets Equity 32.1 7.5 6.2 Strategy Benchmark 16.8 3.3 1.0 Active Return 15.3 4.2 5.2 Source: Independent Retirement Fund Survey as at 30 September 2016 11
Slide 13: 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 2.2 01-Jul-00 Global Emerging Markets Equity Strategy 5.2 14-Jul-08 Global Bond 1.9 01-Oct-09 Africa Frontiers Strategy 7.8 01-Oct-08
Slide 14: Coronation remains one of the foremost managers of long-term retail assets
Coronation remains one of the foremost managers of long-term retail assets Retail AUM of R225bn Market share of 13.1% of long-term retail assets in CIS industry Net outflows of R18bn for the year • This follows a sustained period of rapid growth and disproportionate allocation of industry flows Long
Slide 15: Domestic flagship funds consistently remain in the top quartile
Domestic flagship funds consistently remain in the top quartile Since 5-year 10-year 20-year Fund inception ranking ranking ranking ranking Long-term growth Top 20 2nd Quartile 1st Quartile - 1st Quartile (equity only) Long-term growth Balanced Plus 1st Quartile 1st Quartile 1st Quartile 1st Quartil
Slide 16: International flagship funds: maintaining a solid track record
International flagship funds: maintaining a solid track record Since inception Fund 5-year ranking ranking Global Emerging Markets Long-term 1st Quartile 1st Quartile Flex growth (equity only) Global Opportunities Equity 1st Quartile 1st Quartile [ZAR] Feeder Long-term growth Global Managed 1st Quar
Slide 17: Financial results
Financial results CORONATION
Slide 18: Robust revenue in tough environment
Robust revenue in tough environment 2016 Change Revenue (from fund management) R4 046m (9%) Profit (from fund management) R2 069m (14%) Profit after tax R1 574m (13%) Cost to income ratio 49.5% (6%) 17
Slide 19: Net fee margin reflective of cyclical business
Net fee margin reflective of cyclical business 0.90% 0.79% 0.79% 0.80% 0.70% 0.70% 0.69% 0.70% 0.68% 0.69% 0.64% 0.60% 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 FY2016 Total net fee margin (actual revenue
Slide 20: Shareholders again receive 100% of cash earnings
Shareholders again receive 100% of cash earnings September September Change 2016 2015 Diluted HEPS (cents) (13%) 447.6 516.0 Interim dividend per share (cents) (7%) 229 246 Final dividend per share (cents) (19%) 218 270 Actual shares in issue – 30 September 349 799 102 349 799 102 19
Slide 21: Variable cost model contributes to effective management of total costs
Variable cost model continues to contribute to effective management of total costs September September Change 2016 2015 R’m R’m Fixed operational costs (22%) 578 473 Variable costs 10% 1 463 1 632 Total operating expenses 3% 2 041 2 105 20
Slide 22: Fixed costs increased due to continued investment in business
Fixed costs increased due to continued investment in business September September 2016 2015 Change R’m R’m Fixed costs (22%) 578 473 Major contributors: - Employee costs (19%) 253 212 - Information technology (9%) 82 75 - Professional fees 5% 41 43 -Marketing (44%) 88 61 Employee complement 290 277
Slide 23: Closing comments
Closing comments CORONATION
Slide 24: We remain deeply committed to SA and transformation
We remain deeply committed to SA and transformation… Transformation is a key strategic focus Level 3 contributor in terms of FSC scorecard We have achieved meaningful and sustainable transformation • >20% black owned (as measured by the FSC) First staff-only deal in the country – now ungeared • Mo
Slide 25: Business well established in SA with promising international growth prospects
Our business is well established in the SA market with promising international growth prospects Local & international financial markets continue to remain volatile and uncertain Volatility creates opportunities for the long-term active manager to take positions that will deliver compelling returns o
Slide 26: Questions
Questions CORONATION
Slide 27: 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 believes that the expectations reflected in such forward- looking stateme
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 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 29: Thank you
Thank you CORONATION
Coronation Fund Managers — FY2016 Earnings Presentation on 6ix