Coronation pays interim dividend after solid earnings turnaround

Coronation Fund Manager chief executive Anton Pillay. Photo: LinkedIn

Coronation Fund Manager chief executive Anton Pillay. Photo: LinkedIn

Published May 22, 2024


Coronation Fund Managers has paid a 185 cents a share dividend for the six months to March 31, which should please shareholders considering they did not get a dividend at the end of the half-year stage last year.

There was scope to pay a dividend as its fund management earnings per share increased massively to 185.8c per share from a loss of 13c per share in the prior corresponding period.

Fund management earnings are used to measure operating financial performance – it excludes the net mark-to-market impact of fair value gains and losses, and related foreign exchange, on investment securities held.

The share price appreciated 3.44% to R34.24 on the JSE yesterday afternoon, well up from R29.20 a year ago, indicating that the interim results had been well received by shareholders.

Revenue increased 4.3% to R1.89 billion, and basic and headline earnings a share came to 200.5c, from only 6.2c in the prior period.

The company, which celebrated its 30th birthday last year, said that in the interim period global equity markets delivered strong returns, while South African equity market returns remained relatively anaemic.

“Despite these considerable headwinds, Coronation has delivered exceptional multi-decade out-performance across our fund range, with close to 95% of our portfolios delivering since-inception alpha to investors, while short-term performance is also highly encouraging,” chairperson Alexandra Watson and CEO Anton Pillay said in the results.

Total assets under management (AUM) increased 5% to R631bn and average AUM was flat at R619bn when compared to R618bn as at March 31, 2023, they said.

Net outflows were in line with expectations at 4% of average AUM, largely due to the weak SA savings industry.

It also reflected the broader industry, as active asset managers around the world were experiencing persistent net outflows.

“We expect the domestic savings industry will continue to contract, as South Africa struggles to kick-start economic growth, formal employment remains stagnant, and households remain under pressure, exacerbated by the ongoing externalisation of both retirement and discretionary savings,” said Watson and Pillay.

They also expected a near-term uptick in industry-wide outflows once the new two-pot retirement system was implemented.

“However, we believe that this reform is positive for South African savers and the local savings industry over the long term,” they said.

They said their mission remained unchanged from when the company first opened its doors in 1993: to deliver long-term investment out-performance for clients.

“As of 31 March 2024, Coronation’s Global Houseview Strategy has delivered a since-inception return of 15% per annum. This means if you had invested R100 000 in October 1993, you would now have R7.2 million, compared to R5m returned by the benchmark,” its director said.

The company was awaiting the outcome of a tax matter that the Constitutional Court had heard in February.

Watson and Pillay expected the difficult operating environment to extend into the foreseeable future. “Coronation is a Top 100 JSE-listed company, a leading South African asset management firm, and a household name, positions we have worked hard to earn. We have operated successfully through numerous cycles and remain a resilient, well-capitalised and sustainable business,” they said.

They said they continued to invest in better client service systems, resources to strengthen both local and global investment capabilities, optimising information and technology systems and data management, and ensuring high standards of compliance in a demanding global regulatory environment.