Cape Town - Coronation Fund Managers seems to be banking on an improved investment performance on the markets over the next 12 to 24 months, after the group paid out a substantial final dividend despite slipping into overdraft.
Results released on Tuesday morning showed Coronation paying a final distribution of 30c/share or R95m. This brings the payout for the year to end-September 2008 to 46c.
The final dividend was down 36%, which is in line with Coronation's drop in earnings from 74c/share to just under 50c/share. Revenue from core fund management activities fell 16% to R804m.
Coronation CEO Hugo Nelson noted: "This year's results reflect a period of extreme volatility across world markets and a local economy that has been buffeted by a series of economic shocks."
He said the markets remained challenging and that the financial crisis was undoubtedly one of "the most extreme of modern times".
Despite Nelson's comments, there is hardly a sign that Coronation is battening down the hatches and shoring up its balance sheet to withstand any further shocks to investment markets.
Shareholders doing relatively well
In fact, Coronation shareholders still fared rather well in financial 2008. If share buy-backs are included, Coronation returned about R186m to shareholders this financial year, which Nelson reminded journalists was the first time the group had seen a decline in earnings since listing in 2003.
While shareholders will be pleased at the returns during a particularly rough time for investment specialists, the balance sheet does show Coronation holding an overdraft of R118m.
With cash on hand of R108m, Coronation finished the financial year with a net overdraft of R10m, which is a far cry from the year to end-September 2007 when cash on hand was close to R120m.
Asked whether it was prudent to declare a final dividend under the prevailing trading conditions, Nelson told Fin24.com that he was "completely comfortable with paying a cash dividend at this point".
He stressed that Coronation was a cash-generative business. The cash flow statement showed net cash generated from operations was a reassuring R96m - but this was well off last year's R354m.
But Nelson hinted that great opportunities beckoned for Coronation, noting that the level of asset pricing was attractive. "Assets might be as attractive as we will ever see in our lifetimes. We are confident of making compelling returns."