Peregrine’s star Citadel becomes a wealth fortress

Shows 19% increase in its headline earnings

SPECIALIST financial services group Peregrine Holdings yesterday singled out its Citadel subsidiary as the star performer with a 19 percent increase in headline earnings for the year to end March.

The group said Citadel pushed its headline earnings 7 percent to R535 million.

It said Citadel, the wealth manager, grew its headline earnings to R207m, up from R174m as compared to last year.

Chief executive Robert Katz said Citadel’s performance was achieved against the volatile rand, which impacted negatively on assets under management.

Katz said strong annuity earnings growth, sound cost controls, healthy inflows, increased performance fees earned and a high client retention rate propped the earning.

He said total assets under management declined to R43.9 billion at the end of the financial year, compared to R44.6bn last year.

Katz said the rand strengthened by 7 percent against the dollar and 6 percent against the pound during the period which affected performance.

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

The company achieved a record inflow of R4.9bn in the year under review as compared to last year’s R4.5bn.

Citadel, Stenham, Peregrine Capital, Peregrine Securities and Java Capital delivered an increase in earnings of 7 percent to R470m.

The group also reported a strong growth in annuity earnings and increased performance earnings from Citadel, Peregrine Capital and Stenham Asset Management.

It said these were countered by a reduction in earnings from Peregrine Securities, where revenues were lower primarily as a result of a reduction in higher margin revenue from retail and hedge fund clients.

The operating businesses increased annuity earnings by 6 percent to R362m and accounted for 77 percent of the aggregate earnings of the operating businesses.

Headline earnings per share (Heps) increased by 4 percent to 238.5 cents a share.

The board declared an ordinary cash dividend of 170c a share, up by 10 percent from the 155c declared last year.

Mood

Katz said the improved business mood since the election of President Cyril Ramaphosa to the position had 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,” he said.

The group has decided to dispose its Peregrine Securities business in a board meeting held on June 12.

“The price offered in terms of the non-binding proposal which has been received from Legae Holdings, an entity representing certain management of Legae Securities and Peregrine Securities and a black economic empowerment, attributes a value of R910m for the group’s 65 percent investment in the Securities business as at March 2018,” Katz said.

Peregrine Holdings gained 5.95 percent on the JSE yesterday to close at R21.18.