The Peregrine group produced an acceptable set of results, under very difficult market conditions, for the year under review. Notwithstanding the highly uncertain environment, the group’s operating subsidiaries produced an aggregate operating profit of R355,9 million after accounting for all minority interests and deducting group head office costs of R16,7 million. All of the group’s divisions remained comfortably profitable for the period.
This level of operating profit includes minimal performance fees for the year under review, in contrast to the previous year in which record performance fees were earned. The absence of performance fees is the principle reason why profit from the group’s existing South African operations was 47% lower than the previous year.
The group’s earnings were further dampened by negative returns on its proprietary investment portfolio as well as a swing from net interest received to net interest paid for the year.
A feature of the year was the acquisition of a controlling interest in international wealth and asset manager Stenham Limited, effective 4 April 2008. This helped boost both the annuity and foreign currency component of the group’s earnings as well as increase its assets under management by 87% to R80 billion at year end.
Results
Whilst operating revenue increased by 41% (boosted by the acquisition of Stenham), total income of R1,45 billion was only 9% higher than the previous year as a result of the negative returns earned on the group’s proprietary investments.
The 72% increase in operating expenses primarily resulted from consolidating the Stenham operations for the first time. If the Stenham expenses are excluded, operating expenses (including profit participation) declined by 11%.
Interest costs on external funding raised at the beginning of the year resulted in the group moving into a net interest paid position for the year of R49,1 million from net interest received of R64,5 million in the previous year.
Attributable earnings were reduced by the amortisation of intangible assets resulting from the Stenham transaction in the amount of R19,5 million. By excluding the effect of this amortisation, basic earnings per share decreased by 71% to 64.6 cents per share.
Headline earnings per share decreased by 85%, the principle adjustment between basic and headline earnings being the deduction of the surplus on the sale of the group’s Sandton head office property as required
by Circular 8/2007 “Headline earnings”.
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