Peregrine lifts headline earnings by 7% and ups dividend

Specialist financial services group Peregrine on Wednesday reported a 7% increase in segmental headline earnings to R535 million for the year to end March 2018, despite local political uncertainty and market volatility.

Peregrine provides individuals and institutions with investment management solutions in wealth and alternative assets.

Operating revenue climbed 8% to R2.5 billion, however profit from operations declined 7% to R624.2 million.

Segmental headline earnings related to the group’s operating businesses increased by 7% to R470 million, of which annuity segmental earnings constituted R362 million, 77% (2017:78%).

The group declared an ordinary cash dividend of 170 cents per share, up 10% from the 155 cents per share declared in 2017.

“The strengthening of the rand against the British Pound and the US Dollar in the financial year under review had a meaningful negative impact on the group’s translated earnings. Adjusting for the impact of this strengthening, headline earnings at an attributable operating level would have grown by 13%,” said CEO Robert Katz.

He noted that the improved business mood since the election of Cyril Ramphosa as president has thus far not improved the economic situation and said the business
environment remains challenging. “We are pleased with the group’s results in the context of the current environment,” Katz said.

The fortunes of wealth manager Citadel grew strongly with an increase of 19% in its headline earnings to R207 million (R2017: R174 million). “This performance was achieved thanks to strong annuity earnings growth, sound cost controls, healthy inflows, increased performance fees earned and a high client retention rate,” said Katz.

The rand exchange rate negatively impacted the total of assets under management. This amounted to R43.9 billion at the end of the financial year, compared to R44.6 billion at the end of March 2017.

However, the company achieved a record inflow of R4.9 billion in the year under review (March 2017: R4.5 billion).

The Group’s Asset Management division comprises a number of fund management businesses. The largest contributor to the division is the Group’s hedge fund manager, Peregrine Capital.

Headline earnings increased to R68 million (2017: R63 million) primarily as a result of Peregrine Capital’s increased management fees and performance fees earned off the back of an overall larger average asset base during the year, notwithstanding lower returns year on year.

By year end, Peregrine Capital’s asset base decreased to R7.4 billion (March 2017: R8.2 billion) as a result of muted performance in the hedge fund industry during the previous 18 months and the resultant outflows in industry assets, the group said.

“Our focus will remain on growing annuity revenue streams and also to contain costs. Once the sale of our shareholding in Peregrine Securities is concluded we will review potential acquisitions that are consistent with the highly cash generative profile of the other Peregrine businesses,” Katz said.

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Peregrine lifts headline earnings by 7% and ups dividend