2018 Reviewed Interim Results for the six months ended 31 March 2018 22 May 2018 Anton Pillay: Chief Executive Officer John Snalam: Chief Financial Officer 2
Agenda Highlights Business update Financial results Closing comments
Highlights - Author
Business highlights For the six months ended 31 March 2018 Revenue Business performing in line wit h management expect at ions R2.1 bn AUM of R588bn & slowdown in net out flows t o R15.5bn Diluted headline earnings per share Act ive management delivered excellent performance over t he long -t erm for client s - near-t erm performance in line wit h peer average 223.4c Focused invest ment in our business infrast ruct ure, t echnology and people t o achieve Total dividend st rat egic obj ect ive of becoming a global, world-class asset management company per share 223.0c Init iat ives t o achieve t rue t ransformat ion cont inue t o deliver meaningful and subst ant ive result s 5
Business update 6
Coronation: 25 years of building a sustainable business We remain an act ive manager wit h a long-t erm focused valuat ion-driven invest ment philosophy Our business is cyclical - revenue is geared t o market ret urns and t he out performance we generate on behalf of client s As a significant manager of savings in Sout h Africa, we cont inue t o focus on being a good corporat e cit izen and ensuring t he best out comes for all our st akeholders We put clients’ interests first – wit hout client s we do not have a business – Our key focus is on invest ment out performance and service excellence – Re-opened st rat egies t hat were closed t o new inst it ut ional client s for a period of five years – Changes t o administ ration model represents a seminal moment in our hist ory • Asset services and t ransfer agency t o be provided by new service providers will be fully implement ed in 2018 7
Asset administration services Consolidated to ensure integrated delivery of world-class service Growing global franchise necessit at es change t o achieve single, consist ent oversight model Fund account ing services t o be provided by J.P. Morgan delivers addit ional benefit s – ‘ Follow t he sun’ service allowing ext ended daily availability of services – Globally dist ribut ed operating model allowing for seamless servicing from mult iple j urisdictions Transit ion progressing well and current ly running new and exist ing syst ems in parallel Proj ect on t rack for complet e t ransfer of service in Q3 2018 8
Support of black-owned business Establishing transfer agency platform for delivery of exceptional client service Since our incept ion, Coronat ion’ s ent repreneurial spirit has been t he cat alyst for t he creat ion of numerous new financial services businesses, allowing us t o remain purely focused on asset management We support a number of proj ect s t hat will deliver t angible result s in SME space (e.g. CEO Init iat ive SA SME Fund, Black S t ockbroker S upport Programme) More recent ly, we are support ing t he est ablishment of a new black-owned business, Int embeko, t o provide t ransfer agency services t o Coronat ion – 100% black owned (Coronat ion has no shareholding) – Infrast ruct ure and people in place t o deliver world-class service – New service t o be provided from Q4 2018 9
Transformation journey A key strategic focus… not about ticking the boxes Black ow ned Cont inue t o play a role in achieving meaningful and sust ainable 23 % t ransformation in all areas of our business & societ y As m easured by the FSC Indust ry-leading t ransformation across our business – 56% of our employees are black 59 % – 50% of all our employees are female – 75% of key business execut ives are black Of our black em ployees are fem ale – 63% of t he board of direct ors are black Real progress on transformation of S A -focused invest ment t eam 75 % – 3 out of 4 key invest ment leadership roles are black (Head of Fixed Income, Head of S A Equity Research, Head of S A Equity) Of all new hires over past – 43% of senior port folio managers in t he S A-focused invest ment 18 m onths are black t eam are black 10
The environment will remain challenging Positive local changes… but need to see translation into growth Global growt h remains support ive but volat ile given geopolit ical risks Domest ic economy has been ext remely const rained for a long t ime, impact ing economic growt h More recent dat a point s t o a t urnaround – Moody’ s maint ained sovereign credit rat ing and rerat ed out look t o st able – S t abilisation of unemployment (albeit at unaccept ably high levels) – Improved confidence levels (business & private sect or) – Import ant polit ical changes & correct ive act ions t o arrest t he descent of count ry and economy Expect SA GDP growt h of 2% for 2018 (vs global growt h of 4% ), but need st ruct ural changes t o effect sust ainable growt h Realist ic expect at ions required given t he t ime frame required t o implement changes 11
Market movements 31 March 2018 3 months to 6 months to 12 months to Economic group March 2018 March 2018 March 2018 % % % All S hare (ZAR) (5.97) 1.03 9.60 Resources (3.83) 0.85 10.44 S mall Cap (1.27) 2.28 (2.77) Indust rials (7.99) (3.69) 5.70 Financials (3.56) 11.85 17.58 US D/ ZAR exchange 4.67 14.58 13.42 MS CI All Count ry World Index (0.96) 4.17 14.85 MS CI Emerging Market s (US D) 1.42 8.96 24.93 Source: Deutsche Bank 12
Investment performance Our key focus remains on asset management and the delivery of investment excellence We underst and periods of average performance are part and parcel of being an act ive manager While long-t erm performance across st rat egies is excellent , recent performance across cert ain st rat egies has been in line wit h peer average Focus remains on delivering performance over meaningful periods Our invest ment approach remains unchanged over t he last 25 years Our bot t om-up, long-t erm valuat ion-driven approach does however require pat ience for benefit s t o mat erialise All our key st rat egies cont inue t o perform against bot h benchmarks and peers over meaningful periods 13
Investment performance - Institutional Local and global strategies annualised alpha at 31 March 2018 Local st rat egies Annualised act ive ret urn (gross of fees) 10 years S ince incept ion – Mult i-Asset (Global) 1.92% 1.28% – S pecialist Equity 2.51% 2.54% – Absolut e Ret urn 5.57% 9.29% – Fixed Income (Bond) 1.46% 1.48% Global strategies (US D) Annualised act ive ret urn (gross of fees) 5 years* S ince incept ion – Mult i-asset 0.31% 1.55% – GEM 0.44% 4.24% – Africa Front iers 5.81% 10.61% * S trategies do not have 10-year performance track records 14
Assets under management As at 31 March 2018 700 610 614 599 588 588 Local Rbn International Rbn Avg AUM Rbn 600 141 492 155 127 176 153 500 85 400 339 40 300 247 203 24 469 461 444 438 435 407 200 155 15 134 125 299 101 11 12 82 12 223 100 64 54 9 188 144 7 122 113 7 7 92 75 57 47 0 Sept Sept Sept Sept Sept Sept Sept Sept Sept Sept Sept Sept Sept Sept Sep Mar 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Local: Equit y 48.6% ; Fixed Int erest and Cash 22.8% ; Ot her 0.4% Foreign: Equit y 22.9% ; Fixed Int erest and Cash 5.0% ; Ot her 0.3% 15
Institutional business Total institutional client AUM of Full range of product s and dedicat ed t eam available globally t o sat isfy all our client R355 bn requirements Tot al inst it ut ional client out flows significant ly declined t o R14bn (FY 2017 R36bn) Local institutional client AUM of AUM BY CLIENT LOCATION - INSTITUTIONAL R295 bn United Kingdom, 4% EU; 3% Other; 6% USA; 5% Global institutional Namibia; 6% client AUM of R60 bn South Africa; 76% 16
SA institutional clients Significant manager of institutional assets in SA SA inst it ut ional client s represent R295bn Expect small level of net out flows t o cont inue in foreseeable fut ure Local client net out flows affect ed by: – S A ret irement fund indust ry remains a net out flow market – Local economic environment improvement not flowing t hrough as yet Reduced t ot al net out flows from SA inst it ut ional business of R11.1bn (FY 2017: R43.7bn) Re-opening of some of our t op-performing port folios which were closed for five years has been posit ively received by client s, but not yet t ranslat ed int o meaningful inflows 17
Global institutional clients Over past decade we have made great st rides in growing our global franchise, which now represent s R60bn of asset s under management – Int ernational client s net out flows of $260m over t he six mont hs – We cont inue t o enhance our relat ionships wit h global asset allocat ors, mainly in our Global Emerging Market s and Global Managed st rat egies We are cont inuing t o build t he t rack records for our Global Equit y and Global Front iers st rat egies A compelling business in it s own right and growing t his franchise will be a key focus going forward, given t hat t he S out h African market is ex growt h 18
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