Peregrine sees its earnings tumble by 30%

By Sandile Mchunu Time of article published Jun 24, 2020

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DURBAN – JSE-listed diversified financial services group, Peregrine Holdings, saw its earnings tumble by 29.84 percent for the six months to end March as the Covid-19 outbreak and trade disputes continued to spook the global markets. 

As a result the group’s headline earnings declined to R308 million, down from R439m compared to a year earlier. 

Chief executive Robert Katz said on Tuesday that the year under review presented a challenging environment as on-going trade disputes between the US and China weighed on global markets. 

“However, following policy responses by central banks as the global economy started cooling, investor appetite for risk returned and markets reached new record highs at the end of 2019 and into the beginning of 2020. This changed in the first quarter of 2020 when the Covid-19 pandemic caused economic disruption everywhere. 

“As the impact of the spread of the virus became apparent to the world, markets went into freefall. Against this background the group delivered satisfactory results and proved its resilience,” Katz said. Peregrine’s headline earnings per share (Heps) declined by 28 percent to 151.6 cents a share but its ongoing segmental earnings increased by 7 percent to R348m, boosted by an increase in earnings from its wealth manager unit, Citadel. 

Citadel, an advice led wealth and asset manager, was a star performer during the period as the group said it was less affected by the economic upheaval. Citadel reported a 14 percent increase in revenue to R1.1bn and 11.72 percent increase in assets under management to R57.2 billion and client retention at 98 percent. 

However, the group’s total revenue from continuing operations increased by 6.25 percent to R1.7bn and assets under management increased by 14.52 percent to R142bn. 

Peregrine declared an interim cash dividend of 65c, which was down by 24 percent compared to last year’s 85c. In Peregrine’s other divisions, the UK-based Stenham unit’s headline earnings decreased by 38 percent to R78m while Stenham Asset Management’s (SAM) headline earnings increased by 24 percent to R62m, mainly due to a weaker rand against the pound, lower operating expenses and higher performance fees earned. In Stenham Trustees, headline earnings decreased slightly to R36m while Java Capital saw its earnings decline by 13.33 percent to R13m.  

Looking ahead, the group said management of the underlying operating segments had reassessed and, where appropriate, updated budgets for the year to end March 2021 given the current economic conditions as a result of Covid-19. 

“The results of the revised budgets show no material indication of going concern or cash flow concerns. The directors are therefore satisfied that the group has adequate resources to continue in business for the foreseeable future,” the group said.

BUSINESS REPORT

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