Peregrine says volatility is likely to continue


Peregrine says volatility is likely to continue

Published Date: 2020-06-24 | Source: Stephen Gunnion | Author: Stephen Gunnion

Peregrine says volatility is likely to continue

The financial services group says its investments and assets under management remain well diversified as markets experience continued volatility.

Peregrine isn't paying a final dividend as part of a deal that will result in a private-equity buyout of the financial services group and its delisting from the JSE. That's one of the provisions of the R21 per share offer from Capitalworks Atlanta, which was made public in March.

The offer has provided an underpin to Peregrine's shares due a period that it says was characterised by market uncertainty due to the ongoing trade tussle between the US and China. While central banks stepped in to support a cooling global economy with more stimulus, supporting equity market, the outbreak of Covid-19 put a stop to that. It says SA had it even worse as the economy entered recession even before the outbreak of the pandemic the Moody's ratings downgrade in March.

Still, Peregrine says it doesn't have a concentrated focus on any of the industries that will be most affected by supply and demand disruptions as a result of Covid-19, with its investments and assets under management remaining well-diversified. Revised budgets also show no material indication of going concern or cash flow concerns for the group. But it says the next six to twelve months are likely to remain a volatile time in the markets as the world continues to battle the pandemic.

Peregrine owns a number of diversified financial services businesses, including wealth manager Citadel Holdings, Peregrine Capital, Stenham, and SA Alpha. It also owns 50% of independent corporate advisory house Java Capital.

Asset under management increased by 15% to R142 billion in the year to end-March. Ongoing segmental headline earnings increased by 7% to R348 million with ongoing segmental headline earnings per share rising by 9% to 166.4 cents. The increase in ongoing segmental headline earnings was due mostly to Citadel. Annuity earnings, comprising 94% of total ongoing segmental earnings, increased by 10% year on year. Because the comparative 2019 results included a material once-off fee earned by Stenham that was not repeated, as well as profits from the Broking & Structuring business which was disposed of in 2018, its latest results on a total all-inclusive segmental HEPS were down by 24%.

Peregrine said the circular setting out the details of the buyout offer was sent to shareholders earlier this month together with the prospectus for those who wanted to directly reinvest in the company as an unlisted vehicle.

Is shares rose 1.7% to R19.65 yesterday.

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