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The coronation gives increases profits
CORONATION Fund Managers lifted fund management earnings per share by 22.9 percent to 470.9 cents in the year to September 30 supported by stronger markets and an out-performance of client mandates.
Fund management earnings are used by Coronation’s management to measure operating financial performance – it excludes fair value gains and losses, and related foreign exchange, on investment securities held.
Dividends for the company that is 25 percent staff-owned, increased 22.7 percent to 470 cents per share, from 383 cents in the prior corresponding period. A final dividend of 226 (205) cents was declared.
Revenue and earnings from fund management up 17 percent and 23 percent respectively. Markets had perform strongly, after coming off the low base of March 2020.
The MSCI All Country World Index was up 11 percent in US dollars during Coronation’s 12 month reporting period, the MSCI Global Emerging Markets Index was up 18 percent in US dollar, while the FTSE/JSE All Share Index was up 23 percent in rand.
“We believe the out-performance is the result of an unwavering commitment to active, long-term investing, in-depth proprietary research and the benefits that come from a stable and experienced team. It is worth reiterating … these results benefited from a cyclical high in performance fees that will normalise in the years to come,” the company said.
Average AUM (assets under management) increased 9 percent year-on-year to R617 billion and year-end AUM was up 11 percent to R634bn.
However, the primary focus was to grow the value of the client assets over the long term, rather than growing assets under management, the company said.
Measures in support of a more sustainable world included increasing the number of environmental engagements by 248 percent. The company also sent 89 letters to JSE-listed companies requesting their boards to apply the TCFD (Task Force on Climate Related Financial Disclosures) reporting framework.
Total operating expenses increased 8 percent, with the highest growth attributed to the increased regulatory burden and investment in technology.
Diluted and basic headline earnings per share increased 22 percent to 487.9 cents.
The company warned that although the outlook for the global economy was positive, “it needs to be seen in the context of elevated risk and high asset prices.”
The risk of new coronavirus variants, inflation, the withdrawal of unprecedented monetary and fiscal policy and rising geopolitical tensions made for uncertain times.
Locally, the economy was under pressure due to systemic risks, including unsustainable government debt, corruption, the poor condition of state-owned enterprises, load shedding and increasing levels of already high unemployment.
“We are hoping for a ramp up in vaccine roll-outs across the country, to dampen the effects of a likely fourth wave so the economy can sustain more normal levels of activity,” the company said.
Professor Alexandra Watson was appointed as board chairperson from August 10.
