Coronation to apply for leave to appeal SCA judgment

Fund management company Coronation has announced that it will apply for leave to appeal a Supreme Court of Appeal (SCA) judgment that ordered it to pay the South African Revenue Service (Sars) additional taxes linked to its Irish operations.

“After careful consideration, the boards of the company and CIMSA (Coronation Investment Management SA), informed by the advice of legal counsel and professional tax advisers, have determined that CIMSA should apply to the Constitutional Court for leave to appeal against the SCA judgment and such application will be made within the stipulated timeline,” the company said in a Sens on Wednesday morning.

The share rose in opening trade on Wednesday and was up 1.22% to R31.52 by 10:00.

In the SCA judgment handed down on February 7, the fund manager was ordered to pay additional taxes (with interest and costs) in respect of profits earned by its international operations, Coronation Global Fund Managers (CGFM), based in Dublin. It 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

Coronation said on February 9 that it was in the process of quantifying the financial implications, indicating that it anticipates a material impact on earnings and cash flows.

Providing an update on the financial impact of the SCA ruling in Wednesday’s Sens, Coronation said it 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 judgment and is estimated to be between R800 million and R900 million.

“Shareholders are advised that the expected impact of the provision will reduce earnings per share (EPS), headline earnings per share (Heps) and diluted headline earnings per share (DHeps) for the six months ended 31 March 2023, when compared to the EPS, Heps and DHeps for the six months, ended 31 March 2022,” Coronation said.

Read: Important tax case for SA companies with international operations

It added that due to the material financial impact, the company will not be paying an interim dividend for the period ended 31 March 2023.

“Shareholders are advised that this is not a trading statement in terms of the JSE Listings Requirements, as the company is not in a position where it has a reasonable degree of certainty regarding the expected range for the EPS, Heps and DHeps for the six months ended 31 March 2023.

“The financial information on which this Sens has been based has not been reviewed nor reported on by the Company’s external auditors,” Coronation added.