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Coronation predicts big slump in annual earnings due to tax dispute

Coronation Fund Managers. Photo: Supplied

Coronation Fund Managers. Photo: Supplied

Published Oct 23, 2023


Coronation Fund Managers said Friday it expected earnings would decrease by between 55% and 65% as a result of the financial impact of the Supreme Court of Appeal judgement regarding the tax litigation for the group’s international operations.

The group said in a trading update that total assets under management as at September 30, 2023 was R602 billion.

“The full impact on earnings of the tax and interest related to the aforementioned tax ruling amounts to 205 cents per share,” it said in the statement.

The Constitutional Court issued a directive that it would hear the company's application for leave to appeal and hear arguments on the merits of the matter.

The application was still to be set down for hearing by the Constitutional Court.

Fund management earnings per share (FMEPS) for the year to September 30, was expected to decrease by between 55% to 65%, when compared to the 387 cents per share for the prior year.

As a result, FMEPS of between 174.2 to 135.5 cents per share was expected.

Fund management earnings are used by management to measure operating financial performance, being profit for the period excluding the net mark-to-market impact of fair value gains and losses, and related foreign exchange, on investment securities held.

Earnings per share (EPS), headline earnings per share (HEPS) and diluted headline earnings a share (DHEPS) for the year were expected to fall by between 45% to 55% compared to EPS, HEPS and DHEPS of 366.3 cents per share for the prior year.

Included in the earnings was the net impact (mark-to-market, as well as foreign exchange gains and losses on investment securities held) of unrealised fair value gains of 17.7 cents per share, compared to losses of 20.7 cents per share in the prior year.

Coronation’s share price was down 1.65% to R30.41 on Friday afternoon. The share price was in line with the R31.20 closing price on the same day a year before.