Asset manager Coronation expects to report huge losses as a result of a costly tax case and will not be declaring a dividend for the six months to 31 March 2023.
The company flagged a fund management loss per share of between 21.5 and 43 cents in a trading update on Friday – down from earnings of 214.8 cents per share in the six months to 31 March 2022.
Read: Coronation to apply for leave to appeal SCA judgment
It expects earnings per share, headline earnings per share (Heps) and diluted Heps to decrease by between 201.1 cents and 221 cents – from 199.1 cents in the prior six-month period to a loss of between two cents and 21.9 cents per share.
Coronation said in its update it has R623 billion in assets under management (as at the end of March). This is up from the R574 billion reported at the end of its 2022 financial year.
Additional taxes
In February, the Supreme Court of Appeal (SCA) ordered Coronation to pay the South African Revenue Service (Sars) additional taxes linked to its Irish operations.
In the judgment handed down on 7 February, Coronation was ordered to pay additional taxes (with interest and costs) in respect of profits earned by its international operation – Coronation Global Fund Managers, based in Dublin.
The SCA did however dismiss Sars’s claim for penalties.
Read: Coronation HY dividend hangs in balance as court orders it to pay up in tax case
The judgment meant its earnings and cash flows would be impacted, with the company noting that, as a consequence, it is required to raise a provision.
“The provision is based on all financial years from 2012 to 2022 being impacted by the application of the SCA judgment and is estimated to be between R800 million and R900 million,” the company previously stated.
Coronation reiterated that it will not be paying out a dividend as a result of the financial impact of the case, in which it has applied for leave to appeal.
“The company is disappointed with the SCA judgment in favour of Sars, which overturned the decision of the Western Cape Tax Court,” it said in its update on Friday.
“The company … is firmly of the view that the SCA erred in its ruling.”
If Coronation’s leave to appeal is granted by the SCA the case is likely to be heard in the 2024 financial year, it added.
The group’s share price closed 1.8% down on Friday, at R28.96 a share.
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