Business Segments Review


Citadel 2018 2017
Revenue R943 million R822 million
Headline earnings R207 million R174 million
Assets under management R43.9 billion R44.6 billion


About the business

Citadel celebrates 25 remarkable years in 2018. Currently serving 8,600 high-net-worth clients, the Group’s focus remains firmly on being the best wealth management company in South Africa. Key to achieving this goal are its 450 employees, all pulling together to ensure that the Group consistently provides superior advice and service, supported by a client-centric approach. This is borne out by Citadel’s impressive 97% client-retention rate.

In an increasingly crowded and competitive industry, Citadel’s clients take comfort in the combination of traditional values and expertise with award-winning solutions, quality advice and personal attention. Achieving this level of service sophistication hinges on the Group’s human capital. As a result, the Group strives to hire in accordance with its values and works hard to create an environment which is both dynamic and accommodating.

Review of operations

The above-mentioned approach certainly proved successful for Citadel over the past financial year. Revenue increased by 15% to R943 million (2017: R822 million). Headline earnings rose to R207 million (2017: R174 million). The strengthening of the Rand over the period did, however, impact assets under management and advice, and thereby also impacting the return on these assets. Assets under management dropped to R43.9 billion (2017: R44.6 billion) predominantly as a result of the strengthening of the Rand and the disposal of portions of two businesses during the current financial period.

From a business perspective, recent years have been focused on expansion and growth. Towards the end of the financial year, the Group engaged with Electus Fund Managers to acquire a 30% minority stake in the company. Electus is an equity specialist fund manager with, among other achievements, the founders having a 17-year track record in managing the Nedgroup Investments Growth Fund – this collective investment scheme portfolio has outperformed both its South African peers and the broad JSE indices, but with a much lower level of risk. For the benefit of Citadel’s clients, Electus has been appointed to manage key components of select Citadel collective investment schemes and share portfolios.

Creating sustainable value for clients remains a key deliverable, which is why the Group successfully launched Citadel Financial Protection in 2017 – the provision of expert and holistic risk solutions aimed at ensuring peace of mind and choice for Citadel’s clients. This development also puts the Group in a position to tap into the R13 trillion South African insurance market.

Service offering

The solutions offered by Citadel are global in nature and include:

financial planning and advice;

asset and investment management;

estate planning and structuring;

risk planning;

private client securities;

foreign exchange advice and intermediary services;

offshore structuring;


corporate solutions (including employee benefits and corporate healthcare); and

retirement planning (for both high-net-worth and mass affluent individuals and their families).

This combination of services enables clients to cover their wealth management needs within one organisation and through one advisor.

The development of an inclusive South African economy is crucial to the Citadel Group, as is transformation in the financial industry. In this regard, Citadel initiated the development of BayHill Capital, a specialist private client share portfolio company, in 2016. In April 2017, Citadel Holdings concluded a B-BBEE transaction by funding the acquisition of a 51% controlling stake in BayHill Capital to African Financial Group Wealth (AFG), thereby leveraging AFG’s mutual interest in transformation. Citadel retained a 49% stake in the business and provides operational support and structure to ensure the success of BayHill Capital.

Looking forward

In the lead-up to the 2019 national elections, Citadel clients remain keen for independent political insights which might inform their investments. Therefore, Citadel and the political insight firm, the Paternoster Group, will continue to collaborate on a series of updates about South Africa’s socio-political environment.

As Citadel marks its silver jubilee with joy and optimism, there is also much to be hopeful about in South Africa. President Ramaphosa has put out a call, Thuma Mina – or “Send Me”. Citadel joins in that chorus – not out of expediency, but because Citadel has always been willing to step up, to walk the ethical path, and be “sent”. Citadel is a company with a heritage we can all be proud of, and a future that looks both secure and remarkable.

Peregrine Capital

Peregrine Capital 2018 2017
Revenue R266 million R217 million
Headline earnings R59 million R51 million
Assets under management R6,3 billion R6,5 billion
Assets under advisory mandates R1,1 billion R1,7 billion


About the business

On 30 June 2018, Peregrine Capital commemorated a significant milestone anniversary of twenty years and has earned its place as the oldest hedge fund manager in the South African market. The hedge funds managed by Peregrine Capital are underpinned by a common investment philosophy and style and have delivered exceptional results since inception.

The investment team is made up of highly qualified and experienced investment professionals with complementary knowledge and market skills, but similar investment DNA.

Service offering

In the complex landscape of investing, whether in bull or bear markets, the Peregrine Capital suite of hedge funds provide investors with the means to reduce portfolio risk, increase returns and diversify their investments.

This is achieved by disciplined and thorough research procedures, which are underpinned by sound bottom up fundamental company research. This is augmented by Peregrine Capital’s long-term corporate relationships.

Review of operations

During the last quarter of the year, the asset base, including assets under advisory mandates, decreased to R7,4 billion, predominantly as a result of outflows towards the end of the financial year which was partially driven by offshore investors that have changed their view of South Africa due to the political uncertainty faced during the year.

The higher revenues experienced in 2018 are as a result of the increased average assets under management during the course of the financial year.

Investment performance during the period was positive, but below what Peregrine Capital has delivered in the past as well as the JSE All Share Index, which returned growth of 9.6% during the 12 months to 31 March 2018. Several large investments within the hedge funds ended the year well below what Peregrine Capital perceive as fair value and are expected to contribute healthy returns for the hedge funds going forward. The two longest running strategies continue to deliver strong long-term results for investors as indicated in the table below:

Fund Name

Inception date

Return for the year

5yr annualised

Since inception

Peregrine Capital High Growth H4 QI Hedge Fund

Feb 2000




Peregrine Capital Pure Hedge H4 QI Hedge Fund

Jun 1998





During the year under review, Jacques Conradie was appointed as Managing Director and Justin Cousins and Tania Formilan as Executive Directors.

Looking forward

The investment team continues to look for attractive investment opportunities that will play out over the coming months and years and remains confident that the team’s consistent investment philosophy, detailed fundamental research on the companies they cover and resolute focus on investment performance, will continue to generate market-leading returns for Peregrine Capital’s investors over the medium to long-term.


Stenham Asset Management 2018 2017
Revenue R304 million R261 million
Headline earnings R74 million R22 million
Assets under management R44,2 billion R48,8 billion
Stenham Trustees 2018 2017
Revenue R172 million R209 million
Headline earnings R35 million R28 million
Property Portfolio 2018 2017
Headline earnings R22 million * R25 million

* Six months to 30 September 2017 due to the restructure and unbundling (note 12.2 of the Annual Financial Statements)
** Attributable losses for the six months to 30 September 2017 (due to the restructure and unbundling (note 12.2)) relating to the proprietary hedge fund investments amounted to R3 million (full year 2017: gains R16 million)

About the business

Stenham is an international financial services group based in the UK and Guernsey and has been active in investment management for over 25 years. The Stenham Group provides a range of alternative asset management investment solutions and fiduciary services, operating in a number of jurisdictions primarily the Channel Islands and United Kingdom, with assets under management of R44.2 billion (2017: R48.8 billion).

Service offering

The Stenham Group provides alternative asset management investment solutions, operating through two independent divisions: Stenham Asset Management, primarily an asset management business and Stenham Trustees, which provides trust and corporate administration services.

Review of operations

During the year, further repurchase transactions took place in Stenham, as a result, Peregrine’s share in Stenham increased from 88.81% to 100%.

Peregrine’s share of Stenham’s total headline earnings reflected an increase of 49% to R111 million (2017: R74 million), of which R92 million (2017: R33 million) relates to the operating businesses and the balance of R19 million (six months to 30 September 2017) (full year 2017: R41 million) to the surplus non-operating assets.

As part of a restructure and unbundling transaction undertaken by Peregrine during the current financial year (refer to circular to Peregrine Shareholders read together with Sandown Capital Pre-Listing Statement, both of which were issued on Tuesday, 14 November 2017, and can be accessed on the Peregrine website) the above mentioned surplus non-operating assets were transferred to Sandown Capital, then a wholly owned subsidiary of Peregrine. Sandown Capital was separately listed on JSE on Wednesday, 29 November 2017 with the shares in Sandown Capital unbundled to Peregrine shareholders on Monday, 4 December 2017.

For Peregrine, the strengthening of the Rand against the Sterling has had a negative impact on headline earnings.

Stenham remains strongly cash-flow generative, with no long-term debt.

Stenham Asset Management

Stenham Asset Management provides market leading investment solutions to institutions, charities, private banks and family offices, including both discretionary portfolios and funds. The business aims to deliver consistent capital growth, implemented through a strategy of diversification to control the level of risk in a client’s portfolio.

Stenham Asset Management performed very well with attributable earnings of R74 million (2017: R22 million), with increase earnings over the prior year primarily due to increased performance fees coupled with one-off costs. Total assets under management and advice amounted to R44.2 billion ($3.7 billion) (March 2017: R48.8 billion ($3.6 billion)).

Stenham Trustees

Stenham Trustees, operating from Alderney and Guernsey, advises international clients on the establishment of a comprehensive range of onshore and offshore structures which it also administers.

Stenham Trustees performed well with attributable earnings of R35 million (2017: R28 million). These earnings incorporate the results of the Bellerive 50% joint venture, into which a portion of the trust business was transferred with effect from 1 April 2016.

Property portfolio

Attributable earnings for the six months to 30 September 2017 amounted to R22 million. As part of the restructure and unbundling transaction mentioned above the investment in unlisted property funds of R147 million, the Stenprop Limited investment of R263 million, together with cash and net trade and other receivables of R190 million were transferred to Sandown Capital with effect from 2 October 2017.

Unbundling of other surplus non-operating assets **

As part of the same restructure and unbundling transaction mentioned above proprietary hedge fund investments of R125 million were transferred to Sandown Capital with effect from 2 October 2017.

Peregrine Securities

Peregrine Securities 2018 2017
Revenue R740 million R804 million
Headline earnings R89 million R115 million


About the business

Peregrine Securities houses the Peregrine Group’s equity broking, derivative broking and prime broking entities. Through its operating subsidiaries, the business is one of the largest stock-broking operations in South Africa, and is a top JSE equity and derivative member by volume and deals processed. The client base includes local and foreign hedge funds, investment banks, institutional fund managers, life assurers, private wealth managers and high-net-worth individuals.

Service offering

Niche focus on electronic execution, derivatives and prime broking services.

The business model is underpinned by a foundation in technology and electronic trading, offering best execution services and infrastructure, as well as trading products across asset classes.

Provides access to South African, African and International markets including the following asset classes: Equities, Equity derivatives, Currencies, Bonds and Commodity derivatives.

The offering is augmented by an electronic multi-asset prime broking execution and reporting platform, seamless trading products, securities lending and robust market connectivity.

Top rated Derivative and Quantitative Research, with bespoke consulting and product solutions to clients.

Specialist experience in South African trading intricacies and high volume trading associated with hedge funds and active traders.

This provides the client base with access to a highly trained team focused on robust volume trading and high touch client service, as well as access to established relationships with industry participants including administrators, financial institutions, regulators and investors.

Review of operations

The financial performance for the year was challenging as a result of the tough local macro trading environment. Revenues were lower primarily as a result of a reduction in higher marginal revenue from retail and hedge fund clients in the wake of a poor political climate in South Africa. Profitability was also adversely affected by currency translation losses and higher financing costs.

Looking forward

In the coming year, the business intends to prioritise the following:

focus on niche areas of expertise, while continuing to service, grow and diversify the existing client base;

navigate the changing regulatory and compliance environment, and dynamically adapt the business model where required;

improve processes, technology innovation and product rollout across chosen business segments;

consolidate market position and grow earnings where possible within a higher barrier to entry environment;

manage the cost base and associated operational complexities of the business;

retain and develop the existing human capital within the business units; and

augment the overall client experience through innovation, service, technology and brand positioning.

As mentioned in the Chief Executive Officer’s Report, subsequent to year end, Peregrine received a non-binding offer from an entity representing certain management of Legae Securities and Peregrine Securities and a Black Economic Empowerment consortium (the Consortium), for the Consortium to acquire the Peregrine Group’s shareholding in Peregrine Securities, Peregrine Fund Platform and Peresec as well as its investment in Delta One, which offer was accepted by the Board. The proposed transaction is subject to the execution of formal written agreements which will be conditional upon the Consortium securing required regulatory, administrative or governmental authorities’ approval as well as all material licenses and/or permits necessary for the continued operation of the business. Prior to executing the formal agreements the Consortium will be required to satisfy Peregrine that the Consortium has secured funding (or guarantees in respect thereof) in order to be in a position to discharge the full purchase price payable by the Consortium on implementation of the proposed transaction.

Java Capital

Java Capital 2018 2017
Headline earnings R38 million R39 million


About the business

Java Capital is a leading independent corporate finance, merger & acquisitions (M&A) and equity capital markets business, providing advisory and equity capital raising services to listed and privately held companies, institutions and entrepreneurs. Java Capital has an excellent reputation and is a well-regarded brand off which it generates strong deal flows.

Service offering

Java Capital provides a complete range of financial, commercial, tax and transaction execution services. It is licensed as a sponsor of companies listed on the JSE and as a designated advisor on the JSE’s Alternative Exchange.

The Peregrine Group holds a 50% shareholding in Java Capital.

Review of operations

Java Capital’s contribution to earnings amounted to R38 million (2017: R39 million), 4% down on the previous year. Java Capital’s strong deal flow in advisory appointments and equity capital markets activity in the first nine months of the year was countered by sharply weakening market conditions in the last quarter of the financial year. During the period under review the business:

raised circa R24 billion (2017: R25.5 billion) of equity capital (principally in the listed property sector); and

executed on some 95 (2017: 83) M&A and or corporate finance transactions.

In the DealMakers rankings (for the 12 month period ended 31 December 2017) Java Capital was ranked:

1st place General Corporate Finance Advisors (by deal flow);

1st place for M&A Sponsors (by deal value);

1st place for M&A Sponsors (by deal flow);

1st place for General Corporate Finance Sponsor (by deal flow);

2nd place for General Corporate Finance Sponsor (by deal value);

2nd place General Corporate Finance Advisors (by deal value); and

3rd place General M&A Finance Advisors (by deal flow).

The business remains focused on providing the South African corporate finance markets generally, and more specifically the listed property sector, with an integrated, highly solution-orientated professional corporate finance, tax, equity capital markets and transaction support service.

Java Capital continues to explore opportunities to expand its brand into different areas, leveraging where appropriate off the other businesses within the Peregrine Group.