Message from the CEO

31 MARCH 2019

Our strategy to grow annuity income streams continues to bear fruit and provided some protection against the impact of a challenging market environment, both locally and globally, affecting performance fees in some Group companies driving earnings per share down. However, we remain confident that the robust management approach and focus on containing costs will drive future growth.

The results announced for the financial year to end March were achieved against a backdrop of volatile market conditions. Despite the challenging operating conditions, the Group announced a meaningful increase in the dividend payout ratio now that the Group’s capital-intensive business has been disposed of. 

Within the 2019 financial year, the Group continued to implement the decision to improve the quality of earnings through the disposal of our capital-intensive assets. This led to the Board accepting an offer from an empowerment consortium, in conjunction with Peregrine Securities’ management, to acquire Peregrine’s 65% interest in Peregrine Securities. As a result of this, effective 1 October 2018, Peregrine Securities no longer forms part of the Peregrine Group.

Segmental basic earnings decreased by 19% to R432 million (2018: R535 million), whilst segmental headline earnings decreased by 14% to R461 million (2018: R535 million). The difference of R29 million between segmental basic earnings and segmental headline earnings predominantly relates to a R100 million impairment of the Group’s investment in Java Capital (R86m after non-controlling interest) and a R117 million capital gain (R58m after non-controlling interest and tax) on the disposal of the Broking & Structuring business. 

On an ongoing basis, segmental headline earnings decreased by 8% to R326 million (2018: R354 million), with segmental headline earnings per share decreasing by 7% to 152.9 cents (2018: 164.4 cents). Ongoing segmental headline earnings excludes in the current year, a one-time performance fee amounting to £3 million (R58 million) received by Stenham arising from the disposal of a property which formed part of the property portfolios sold to Stenprop in 2014 and in the prior year, the contribution from the Group’s investment in proprietary assets of R65 million. In addition, in both the current and prior years, the segmental headline earnings relating to the disposed of Broking & Structuring division have been excluded. 

The Peregrine Group has proved its resilience in challenging market conditions and the Board has adapted the company’s corporate strategy to make the most of new opportunities and to explore new additions to the group suited to the long-term strategy. The disposal of Peregrine Securities forms part of our longer term thinking to focus on less capital-intensive operations.

We are encouraged by the income earned internationally, despite the challenges faced by the UK and Guernsey based business against the uncertainty caused by the drawn-out Brexit process. Locally the South African economy is likely to take some time to recover from the general economic decline experienced. Despite the tough conditions ahead, the Group remains well positioned for solid future performance.

Robert Katz

Group CEO 

Click here to view the reviewed condensed consolidated provisional results presentation for year ended 31 March 2019.