Coronation shareholders set to score

Coronation will pay shareholders a special dividend of 153 cents per share to share some of its court winnings from its battle against the South African Revenue Service (SARS).

This comes after the Constitutional Court ruled in favour of the asset manager in its case against SARS earlier this year, ending a years-long court battle between the two.

The dispute centred on SARS’s claim that Coronation owed significant taxes on profits from its Irish subsidiary, Coronation Global Fund Managers.

A series of legal challenges unfolded, with SARS initially prevailing in the Supreme Court of Appeal. 

The hefty tax bill, including interest, imposed on Coronation reached over R700 million. However, Coronation appealed the ruling to the Constitutional Court.

Earlier this year, in a significant win for the asset manager, the Constitutional Court overturned the previous rulings, validating Coronation’s interpretation of the relevant tax laws. 

This decision not only absolved Coronation of the substantial tax liability but also reinforced its stance on tax compliance. 

The full impact of the lawsuit as of 31 March 2024 amounted to R794 million and had been provided for in Coronation’s financial accounts. 

In a SENS announcement released on Monday, 20 August 2024, Coronation informed shareholders that, given the resolution of the Tax Matter, its tax provision would be reversed with an estimated impact of 205 cents per share on earnings.

“As the financial year has not yet concluded, a reasonable degree of certainty has not yet been obtained regarding the expected earnings for the year ended 30 September 2024, which is expected to be positive,” the asset manager said. 

“Once a reasonable degree of certainty is obtained regarding earnings per share, headline earnings per share, diluted headline earnings per share and fund management earnings per share, a trading statement will be published, if so required.”

In addition, Coronation announced that its board of directors has approved and declared a non-recurring gross special cash dividend of 153 cents per ordinary share.

The special dividend will be paid from income reserves following the net reversal of the tax provision.

The special dividend net of dividend withholding tax of 20% is 122.4 cents per share for those shareholders who are not exempt from dividend tax.

The dates of this special dividend declaration are as set out below:

• Declaration date: Monday, 19 August 2024
• Anticipated finalisation date: Monday, 2 September 2024
• Last day to trade cum dividend: Tuesday, 10 September 2024
• Trading ex-dividend commences: Wednesday, 11 September 2024
• Record date: Friday, 13 September 2024
• Payment date: Monday, 16 September 2024

“To the extent that the condition is not fulfilled by Monday, 2 September 2024, a further announcement will be released by the company to inform shareholders thereof and to provide an updated timetable in respect of the payment of the special dividend,” the asset manager said.