Africa-Press – South-Africa. Coronation Fund Managers has warned it swung into a loss for its half-year to end-March, hit by the loss of a legal battle with the South African Revenue Service (SARS) that could cost it R900 million.
Headline earnings per share are expected to decrease by between 101% and 111% to end-March the company said in a trading update, with total assets under management at R623 billion, down about R2 billion year on year.
Coronation, valued at just over R10 billion on the JSE, booked R697 million in headline earnings in its prior half year, but recently lost a legal battle over whether it the profits of its business in Ireland should be included in its SA taxable income. It has said the estimated liability is between R800 million and R900 million.
Earlier in February, the Supreme Court of Appeal (SCA), which had to decide whether the Irish business qualifies for the tax exemption, ruled in favour of SARS. This prompted Coronation’s shares to crash by more than double digits, wiping out more than R1 billion in shareholder value.
Coronation has said its provision is being based on all financial years from 2012 to 2022 being impacted by the application of the SCA judgment, while the group has also said it doesn’t intend to pay an interim dividend.
“As conveyed in a previous announcement, the company is disappointed with the SCA judgment in favour of SARS, which overturned the decision of the Western Cape Tax Court,” Coronation said on Friday.
“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 2023 financial year concludes at the end of September.
Shares in Coronation had risen slightly on Friday morning, but have fallen by almost a fifth since the judgment.
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