Message from the CEO
Review of the Results
for the year ended
31 March 2017
The Peregrine Group’s 2017 financial year was characterised by a difficult investment environment, a stronger Rand, local market weakness and a great deal of political uncertainty. Strong operating results and improved annuity earnings could not overcome substantially weaker performance fees and proprietary returns resulting in overall normalised headline earnings reducing for the first time in four years. Normalised headline earnings decreased by 16% to R499 million. Annuity earnings grew by 5% across the Group and account for in excess of 90% of Group revenue and 75% of Group earnings, showing the quality of this set of results and forming a robust base for growth in subsequent years.
It was a year during which there were meaningful contributions in all of the Group’s major business segments with offshore earnings continuing to play a meaningful role, notwithstanding the stronger Rand, and accounting directly for 27% of Group profits. The standout performer for the year was our Corporate Finance business, Java Capital, which managed to capitalise on its market leading positioning and strong activity in the sectors in which it operates and grew its earnings contribution by 46%.
It is worth pointing out that, when compared with the previous financial year, the Group’s proprietary investments in Stenprop Limited, direct property and the Group’s share of associated losses in Nala resulted in an earnings reduction of R127.5 million after tax and non-controlling interests. Considering the unnecessary volatility proprietary investments introduces to the Group’s earnings, by transferring these investments into a separate entity, and giving shareholders direct ownership of this entity, the Group believes that shareholder value will be maximised over time. Subject to obtaining regulatory approvals, we aim to finalise and implement the restructure and unbundling by the end of the current calendar year.
As previously announced, I will be stepping down as Group CEO on 31 July 2017. The Peregrine board has decided to delay the appointment of the new CEO until there is certainty regarding the restructure. Robert Katz, the current Group CFO, has been appointed as the interim CEO with the appointment of a permanent CEO to be made following certainty being reached on the proposed restructure.
Our overall goal is to continue to build businesses which are dominant in their financial services spheres and we are proud to have built several leading franchises in the regions in which we operate. Our businesses are working closely together and are benefitting from cross business revenue opportunities. In the year ahead, apart from concluding the restructuring, we will continue to focus on developing our existing businesses as well as expand the Group through appropriate acquisitions.
Click here to view the Reviewed condensed consolidated provisional results and financial results presentation for the twelve months ended 31 March 2017.