Peregrine final results March 2018
Total revenue for the year increased 3% to R2.6 billion (R2.5 billion) and profit from operations decreased by 7% to R624.2 million (R670.6 million). Profit for the year attributable to equity holders rose by 2% to R513.2 million (R501.9 million). In addition, headline earnings per share increased by 4% to 238.5 cents per share (230 cents per share).
The directors have resolved to declare an ordinary cash dividend of 170 cents per share for the year ended 31 March 2018, which is 10% higher than that of last year's ordinary dividend of 155 cents per share.
The 12 months ended 31 March 2018 was a reasonable year for markets despite the significant political uncertainty during the period, both locally and internationally. Whilst geopolitical headlines did not seem to dramatically disrupt global equity markets, locally the Group felt the impact of volatility in local equity markets and the strengthening of the Rand against the US Dollar and GB Pound. Whilst the election of Mr Ramaphosa was a welcome outcome for the country, the impact of "Ramaphoria" has not yet translated into an economic resurgence, as was evident in the contraction in GDP in the first quarter of 2018. Within the context of this environment, the Group performed well and delivered solid results.
As a result of the unbundling of the Group's surplus non-operating assets during the period under review, for ease of comparability, the Group's results for the 12 months ended 31 March 2018 have been presented in such a way so as to separate earnings from the Group's operating businesses from earnings that arose from the Group's surplus non-operating assets. The main operating businesses in the Group, namely Citadel, Stenham, Peregrine Capital, Peregrine Securities and Java Capital, delivered an increase in earnings of 7% to R470 million. There was strong growth in annuity earnings from Citadel and increased performance fees from Citadel, Peregrine Capital and Stenham Asset Management, 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. Similarly, Java Capital produced lower earnings primarily as a result of a weaker environment in both general corporate finance and in capital raising (particularly property markets) during the latter part of the financial year.
Across the operating businesses of the Group, annuity earnings grew by 6% to R362 million and accounted for 77% (2017: 78%) of the aggregate earnings of the operating businesses. Variable and performance fee earnings increased by 9% to R108 million, in the main due to higher performance fees earned across the Group, partially offset by lower variable earnings in Peregrine Securities. Almost every business in the Group benefits from a weaker Rand with 42% (33% at the interim reporting stage) of the Group's operating earnings emanating directly from offshore entities in the period under review. It is unsurprising that the strengthening of the Rand against the GB Pound and the US Dollar in the financial year under review had a meaningful yet 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%. Included in the results for the last time are earnings from proprietary investments which increased by 11% to R65 million. As previously communicated to investors, in order to remove the unpredictable and volatile returns associated with these investments, the decision was made to unbundle these investments effective 2 October 2017 (discussed in more detail later on in this announcement). The Group continues to implement its strategy of reinforcing its offering as a highly cash generative, low capital intensive, high return on equity business.