The decline in Heps was due to the significant drop in performance fees earned in Stenham, Peregrine Capital and Java Capital.
Chief executive Robert Katz said that despite the decrease in performance fees, annuity earnings, comprising 92percent of total ongoing earnings, increased by 10percent in rand terms year-on-year.
“The year under review was characterised by challenging market conditions, both locally and globally as global economic growth slowed. Despite these conditions, the group’s continuing focus on growing annuity revenue streams is reaping rewards and will remain a major focus,” Katz said.
The group’s assets under management increased by 20percent to R124billion, while segmental headline earnings decreased by 14percent to R461million. Core operating revenue grew by 4percent to R1.5bn, while performance fee-related income decreased by 65percent to R94m, resulting in total operating revenue falling by 4percent to R1.6bn.
The group disposed of its capital-intensive assets, and the board accepted an offer from an empowerment consortium Nkholi Consolidated Investments in conjunction with Peregrine Securities’ management to acquire Peregrine’s 65percent interest in Peregrine Securities from October 1, 2018.
The group’s wealth manager division, Citadel, grew core revenue by 7percent to R943m, and private client assets under management increased to R51.2bn. Its headline earnings increased by 13percent to R234m, with the group attributing the increase to strong annuity earnings’ growth, effective cost-controls, strong vertical integration initiatives relating to recent acquisitions, healthy inflows, and moderate performance fees earned off the back of good fund performance.
Guernsey and UK-based Stenham’s headline earnings increased by 36percent to R126m. But excluding an ad hoc performance fee received in the current year, as well as the contribution of the division’s investment in proprietary assets in the prior year, headline earnings from ongoing businesses fell by 27percent to R68m.
Its asset management’s headline earnings decreased by 33percent to R50m as a result of a significant decrease in performance fees due to fund performance affected by lower markets in 2018’s final quarter.
Peregrine declared a final dividend of 100c a share, as well 85c in its half-year results, to take the total dividend to 185c.