Coronation warns of losses, no interim dividend

Coronation Fund Managers’ fund management earnings per share are expected to decline by between 110% and 120% for the six months to 31 March, following a large provision it was forced to make against a tax case with the SA Revenue Service (Sars).

The group, one of the largest asset management firms in South Africa, will also not be declaring an interim dividend due to the material financial impact of the provision, it said in a trading statement on Friday.

“The company is disappointed with the Supreme Court of Appeal (SCA) judgement in favour of Sars, which overturned the decision of the Western Cape Tax Court. The company applied to the Constitutional Court for leave to appeal the SCA judgement, as it is firmly of the view that the SCA erred in its ruling. Should the Constitutional Court grant leave to the parties for the matter to be heard, it is likely to be heard in the 2024 financial year,” Coronation’s directors said.

“Notwithstanding the decision to apply for leave to appeal, the company is required to raise a provision as a consequence of the SCA judgement.

“The provision is based on all financial years from 2012 to 2022 being impacted by the application of the SCA judgement and is estimated to be between N$800 million and N$900m,” the group said in an earlier statement.

Coronation’s assets under management were N$623 billion as at 31 March.

The dispute with Sars related to whether profits of Coronation’s business in Ireland, Coronation Global Fund Managers (CGFM), should be included in the taxable income of its South African holding company.

If the primary operations of CGFM were conducted in Ireland, a tax exemption applied, but Sars found this was not the case and that the exemption did not apply.

Coronation’s share price fell 0,6% to N$29,31 Friday morning, some 30,1% below the N$41,96 that the share traded at on the same day a year ago.

– IOL News