1 2020 Reviewed Interim Results FOR THE PERIOD ENDED 31 MARCH 2020 - - PowerPoint PPT Presentation

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FOR THE PERIOD ENDED 31 MARCH 2020

2020 Reviewed Interim Results

26 May 2020 Anton Pillay, CEO Mary-Anne Musekiwa, CFO

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Agenda

Economic environment Highlights AUM and financial results Business update Good corporate citizenship Questions Annexure A

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Economic environment

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NO ONE COULD HAVE FORESEEN THE POSSIBILITY OR PREPARED FOR THE IMPACT OF COVID-19

Global & SA macro overview

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2 4 6 8 10 1995 1999 2003 2007 2011 2015 2019

GLOBAL: REAL GDP , % (IMF , APRIL 2020)

World Advanced economies Emerging markets

Source: IMF Source: IRESS & Bloomberg

At the end of 2019, geopolitical tensions eased and world markets began to recover Record-breaking market moves; first quarter of 2020 sharp declines, only to recover with equal speed Policymakers implementing extraordinary measures to limit economic meltdown - deep rate cuts, quantitative easing & fiscal stimulus We expect developed markets will recover reasonably quickly due to demand and stimulus Concerned about low-income emerging countries: lack of ability to finance households & SMMEs; no social safety nets; uncoordinated responses

60 70 80 90 100 110 120 09/2019 10/2019 11/2019 12/2019 01/2020 02/2020 03/2020 04/2020

MARKET MOVEMENT

ALSI (in Rand) MSCI-ACW (NET) MSCI-EMU (NET) MSCI-ACW (US$) MSCI-EMU (US$)

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Highlights

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THROUGH ACTIVE ASSET MANAGEMENT

Singular focus on clients

Total AUM

R508bn

Total dividend per share

178.0c

INVESTMENT PERFORMANCE Very encouraging outperformance by our clients’ portfolios in 2019, supporting continued long-term outperformance REVENUE

R1.8 bn

Increase due to improved performance COSTS

5.2%

Increase in operating costs HEADLINE EARNINGS PER SHARE

178.3c

Increase of 10% Diluted HEPS increase of 12% (excl. IFRS 9 effect)

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AUM & financial results

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AUM REFLECTIVE OF MARKET CONDITIONS

Assets under management

47 57 75 92 122 113 144 188 223 299 407 461 469 444 438 424 406 348 7 7 7 9 12 12 11 15 24 40 85 127 141 155 176 163 164 160 100 200 300 400 500 600 700 Sept 2003 Sept 2004 Sept 2005 Sept 2006 Sept 2007 Sept 2008 Sept 2009 Sept 2010 Sept 2011 Sept 2012 Sept 2013 Sept 2014 Sept 2015 Sept 2016 Sep 2017 Sep 2018 Sep 2019 Mar 2020

Local Rbn International Rbn Avg AUM Rbn

588 155 125 134 101 82 64 54 203 247 339 492 610 599 614 571 587 508

36% 22% 7% 1% 27% 4% 3% Equity Local Fixed Interest Local Cash Local Other Local (UT’s, Hedge, Pooled) Equity Foreign Fixed Interest Foreign Cash Local

Source: Coronation

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Market performance and net flows

• 5,2%
• 3,4%
• 7,5%
• 3,8%

1,3% 3,7% 5,4%

• 6,9%

400,0 420,0 440,0 460,0 480,0 500,0 520,0 540,0 560,0 580,0 600,0

• 8,0%
• 6,0%
• 4,0%
• 2,0%

0,0% 2,0% 4,0% 6,0% 8,0%

2018 Mar-19 2019 Mar-20 Total Flows as % of opening AUM Capital and Currency as a % of opening AUM Closing AUM

NET FLOWS IN LINE WITH EXPECTATIONS

Source: Coronation

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STRONG PERFORMANCE OVER SIX MONTHS

Revenue

Change March 2020 March 2019 Revenue (from fund management)

8% R1 769m R1 632m

Profit (from fund management)

10% R834m R758m

Profit after tax

8% R624m R578m

Cost-to-income ratio

53.5% 54.0%

Source: Coronation

NET FEE MARGIN

0 bps 10 bps 20 bps 30 bps 40 bps 50 bps 60 bps 70 bps 80 bps 90 bps

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VARIABLE COST MODEL CONTINUES TO PROVE ITS STRENGTH

Cost control

Change March 2020 March 2019 Fixed costs 11% R402m R362m Variable costs* 1% R533m R527m Operating costs 5% R935m R889m Other costs** R15m R2m

*Includes distribution costs of R75m **Includes Share-based payment expense and foreign exchange losses

Source: Coronation

Cost-to-income (excl. IFRS 9)

• 40,00%
• 25,00%
• 10,00%

5,00% 20,00% 35,00% 50,00% 65,00% 80,00%

• 0,50

1,00 1,50 2,00 2,50 2015 (Q2) 2016 (Q2) 2017 (Q2) 2018 (Q2) 2019 (Q2) 2020 (Q2)

REVENUE AND COSTS

Total Costs (R'bn) Total Revenue (R'bn) Cost to Income Ratio Cost-to-income Ratio

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INFORMATION TECHNOLOGY & SYSTEMS SPEND TO DRIVE EFFICIENCY & MANAGE RISKS

Fixed costs

Change March 2020 March 2019 Total fixed costs 11% R402m R362m

• Employee costs

6% R195m R183m

• Information systems &

technology 43% R100m R70m

• Professional fees*

28% R32m R25m

• Marketing

(12%) R34m R39m Employee complement 333 339

*Includes MiFD Research Costs

Source: Coronation

49% 8% 25% 10% 8% Employee costs Professional fees Information services & technology Other business Marketing

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100% OF DILUTED HEADLINE EARNINGS PER SHARE DECLARED

Dividend declared reflects cash earnings

Change March 2020 March 2019 Diluted HEPS (cents) 8% 178.3c 165.1c Interim dividend per share (cents) 8% 178.0c 165.0c

94,0% 96,0% 98,0% 100,0% 102,0% 104,0% 106,0% 100 200 300 400 500 600 2015 2016 2017 2018 2019 2020 Interim

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Business update

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26 YEARS OF INTEGRATED STEWARDSHIP OF CLIENT ASSETS

Our business

1Asset-weighted, mandates with >10-year history 2Assets invested in our rand-denominated unit trust funds

An active manager with a singular focus on long-term investing

We put our clients first

We focus on growing the value of client assets over the long term rather than growing the pool of assets under our management Closed institutional strategies for five years Strong symmetry & value for money: fees aligned with client

• utcomes

Continue to ensure clients are kept abreast of market, company and investment strategy developments Do not target AUM or share price,

• nly alpha

Long-term performance

• ur true measure of success

Long-term investment performance remains compelling across our entire fund range Investment approach unchanged – encouraged by excellent

• utperformance in 2019

97% of institutional client assets1 have outperformed their benchmarks since inception 98% of our retail assets2 have

• utperformed peers since inception

Active Corporate Citizen

Response to COVID-19 by business to support affected communities Active participants of CEO Initiative, BSA, BLSA & ASISA Transformation of industry & company remains a key focus Implement good corporate citizenship initiatives to ensure inclusive society and financial services sector ESG analysis integrated into our investment process to allow for collaboration and engagement

Creating a sustainable global business

Cyclical nature of business means we need to manage for the long term Committed to investment in

• rganic growth

Employee ownership level maintained at 25% Cash-generative business with strong balance sheet Seed new products with own cash Employ and retain the best people Diverse product range

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A SIGNIFICANT MANAGER OF INSTITUTIONAL ASSETS IN SA AND A GROWING NUMBER OF GLOBAL CLIENTS

Institutional business

Total client AUM

R292bn

Local client AUM

R224bn

Global client AUM

R68bn

Local Clients

Future focus: Maintaining our world-class client service Continued focus on enhancing ESG integration Build out relationships with key allocators & look to maintain existing clients Future focus: Confident in the long-term outlook for our global strategies as well as our value proposition to clients through active management Continued focus on enhancing ESG integration Build out relationships with key allocators

Global Clients

Client outflows totalling 5.8% of opening balance in line with prior year’s flows; we expect to see continued outflows Client outflows totalling 0.2% of opening balance

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CORONATION REMAINS ONE OF SA’S FOREMOST MANAGERS OF RETAIL SAVINGS AT R216BN AUM

Retail business

Industry remains under pressure due to tough economic conditions and muted medium-term returns

• We expect industry flows to remain under pressure for

the foreseeable future

Coronation unit trust net outflows 2.5% of opening CIS AUM

• Coronation net flow mix similar to industry experience

We remain focused on client outcomes

• Long-term performance remains excellent
• Service clients across the wealth spectrum
• Continuing to invest in client service infrastructure

vs all active single managers (-2.5%) and industry overall (-2.1%) vs all active single managers (-6.4%) and industry overall (-7.0%)

• 2.5%
• 7.3%

R240bn R216bn

Source: Morningstar as at 31 March 2020. All fund categories included. Overall CFM CIS assets adjusted for institutional clients in line with SENS disclosure.

NCCF% MVM% AUM O/B AUM C/B

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Investment performance

Source: Coronation as at 31 March 2020; asset weighted basis Since inception figure refers to strategies with a 10-year+ track record

66% 93% 98% 97% 34% 7% 2% 3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 5 years 10 years 15 years Since Inception

% INSTITUTIONAL FUNDS OUTPERFORMING

% Outperforming % Underperforming

QUINTILE RANKINGS FOR UNIT TRUST RANGE

10 Years

89% 3% 8%

5 Years

19% 6% 67% 8%

15 Years

90% 5% 4%

Since Inception

98%

As at 31 March 2020. Asset-weighted performance of 18 funds representing 97% of rand-denominated CIS funds included above. 5 specialist funds with less than five comparable funds in the industry excluded. Source: Morningstar using primary share classes and formal ASISA categories for all funds, except Global Managed, compared to Global – MA – Flexible & High Equity Categories combined and Market Plus, compared to SA – MA – Flexible. Numbers may not add up due to rounding.

1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile

98% of rand-denominated retail assets have

• utperformed peers since inception

97% of institutional client assets

• utperformed benchmark since inception

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Good corporate citizenship

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Established 3 independent black businesses:

+ African Harvest Fund Managers + Kagiso Asset Management + Intembeko Investment Administrators

A HOMEGROWN SOUTH AFRICAN BUSINESS COMMITTED TO TRANSFORMING FROM WITHIN & THE BROADER INDUSTRY

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black IFA practices through the ASISA IFA Development Programme

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analysts through the Vunani Securities Training Academy

Transforming our business and industry

50%

• f our employees are

female

* As measured by the revised Financial Sector Code All figures are as at 31 March 2020, unless otherwise stated.

78%

• f our Board members

are black

Since 2006 we have allocated:

>R300m

in brokerage to black stockbrokers through the Coronation Business Support Programme

Transforming our business from within

We are a proud South African business

Advancing transformation in

• ur industry

Pre-dating BEE legislation in South Africa, we pioneered corporate initiatives that have contributed to meaningful transformation and the development of skills in the financial services industry

56%

• f our employees are

black

>R225bn1

• f total AUM managed by black

investment professionals

1As at 30 September 2019

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Education programmes

CONTINUED FOCUS ON EDUCATION

Meaningful social impact

>190 000

Learners

5 167

Small-scale farmers

446

Schools

5 961

Educators

Education support Consumer financial education

Sponsor and mentor Young Investor Programme students via South African universities

>300

Young girls reached by staff mentorship

>200

Students awarded study opportunities

67

Internships placed since 2015 2043 3710 1953 545 664 1296 2674 1975 2172 Limpopo Western Cape Eastern Cape KZN Northern Cape North West Gauteng Mpumalanga Free State

>17,000

participants (2019)

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FOCUS ON ENSURING DELIVERY & SUPPORT NOW… WHILE KEEPING AN EYE ON THE FUTURE

Our response to Covid-19

Enabling employees Ensuring clients continue to be serviced Reducing the impact

• n society

Contributing to the way forward

85% seamlessly working from home Well equipped to work from home, including access to support Preventative measures in

• ffice environment

No retrenchments or furloughs Increased communications Focus on fulfilling our primary commitment Uninterrupted service Continue to focus on investment excellence Committed support to 3rd party service providers Company, non-executive directors & 30% of employees contributed total

• f R10m to Solidarity Fund

Matched staff charitable contributions SMME payments expedited Community support programmes including feeding schemes Gender & child abuse prevention programmes Engage with government and regulators Participate in industry structures and initiatives including:

• ASISA
• BLSA
• CEO Initiative

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ONGOING FOCUS AND COMMITMENT TO INVESTMENT EXCELLENCE FOR OUR CLIENTS GLOBALLY

Closing comments

Covid-19 epidemic an unforecastable event & unprecedented in modern times

• with many unknowns and no immediate solutions, there remains large-scale uncertainty in global economies

Responsible continuity of business and engagement

• we are fully operational
• full compliance with lockdown regulations
• continue to invest in the business

Active management has a significant role to play

• encouraged by outperformance across our range of portfolios
• in times of volatility, in-depth research and quick decision making is key
• our focus is on making the right long-term decisions during this crisis; we believe that the quality of our decision-making can
• nly be assessed three- to five years from now
• our long-term performance remains the true measure of our ultimate success on behalf of our clients and stakeholders

We are optimistic about the opportunities that key markets present and believe that clients should see better returns in the next five years

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Questions

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About Coronation Fund Managers

Founded in Cape Town, South Africa, in 1993 with zero assets under management Listed in 2003 25% employee-owned An independent fund manager with no safety net of inhouse assets Singular focus on asset management, outsourcing non-core components of business An active manager with a long-term valuation-driven investment approach A single global investment team and process SA-based business with offices in Cape Town, Johannesburg, Durban, Pretoria, London and Dublin

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MARKET PERFORMANCE

Annexure A:

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Capital markets

Economic group 3 months % 6 months % 12 months %

All Share (ZAR)

• 21.38%
• 17.74%
• 18.42%

CAPI

• 22.86%
• 19.09%
• 20.15%

Resources

• 25.27%
• 14.97%
• 18.50%

All Property

• 48.07%
• 47.47%
• 48.92%

Industrials

• 8.44%
• 8.44%
• 7.18%

Financials

• 39.48%
• 37.77%
• 38.82%

USD/ZAR

• 21.58%
• 15.22%
• 18.82%

AF Money Market/CASH 1.68% 3.42% 7.13% CPI 1.64% 1.99% 4.20% Small Cap

• 32.55%
• 32.06%
• 33.03%

MSCI Emerging Markets (USD)

• 23.60%
• 14.55%
• 17.69%

MSCI All Country World Net USD

• 21.37%
• 14.33%
• 11.26%

FTSE/JSE All Africa ex SA 30 Index (USD)

• 28.12%
• 22.64%
• 21.30%

MSCI Frontier Markets NET USD

• 26.59%
• 21.73%
• 18.96%

MSCI World (USD)

• 21.05%
• 14.30%
• 10.39%

*Alexander Forbes Money Market Returns as at end March 2020

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Disclaimer

This presentation contains certain forward-looking statements. These forward-looking statements are based on current information and expectations, and involve a number

• f risks and uncertainties. Although Coronation Fund Managers Limited believes that the expectations reflected in such forward-looking statements are reasonable, no

assurance can be given that such expectations will prove to have been correct. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to changes in economic and market conditions, changes in regulatory environment, fluctuations in security prices and exchange rates, and business and operational risk management. Coronation Fund Managers Limited is under no obligation to update these statements once it has been posted or released. Coronation Asset Management (Pty) Limited, Coronation Investment Management International (Pty) Limited and Coronation Alternative Investment Managers (Pty) Limited are authorised Financial Services Providers regulated by the Financial Sector Conduct Authority of South Africa. Coronation Asset Management (Pty) Limited, Coronation Investment Management International (Pty) Limited and Coronation Alternative Investment Managers (Pty) Limited are subsidiary companies of Coronation Fund Managers Ltd, a company incorporated in South Africa and listed on the JSE (ISIN:ZAE000047353). The Information is for information purposes only and does not constitute or form part

• f any offer to the public to issue or sell, or any solicitation of any offer to subscribe for or purchase an investment, nor shall it or the fact of its distribution form the basis
• f, or be relied upon in connection with, any contract for investment. Opinions expressed in this document may be changed without notice at any time after publication.

Nothing in this document shall constitute advice on the merits of buying and selling an investment. Coronation Investment Management International (Pty) Ltd is an investment adviser registered with the United States Securities and Exchange Commission (“SEC”). An investment adviser’s registration with the SEC does not imply a certain level of skill or training. Additional information about Coronation Investment Management International (Pty) Limited is also available on the SEC’s website at www.adviserinfo.sec.gov.The information in this document has not been approved or verified by the SEC or by any state securities authority. Unit trusts should be considered a medium-to long-term investment. The value of units may go down as well as up, and is therefore not guaranteed. Past performance is not necessarily an indication of future performance. Note that individual investor performance may differ as a result of the actual investment date, the date of reinvestment of distributions and dividend withholding tax where applicable. Where foreign securities are included in a fund it may be exposed to macroeconomic, settlement, political, tax, reporting or illiquidity risk factors that may be different to similar investments in the South African markets. Fluctuations or movements in exchange rates may cause the value of underlying investments to go up or down. Coronation Management Company (RF) (Pty) Ltd is a Collective Investment Schemes Manager approved by the Financial Sector Conduct Authority of South Africa in terms of the Collective Investment Schemes Control Act. Unit trusts are traded at ruling prices set on every trading day. Unit trusts are allowed to engage in scrip lending and borrowing. Coronation Fund Managers Limited is a Full member of the Association for Savings & Investment SA (ASISA).

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Thank you

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