Peregrine interim earnings up
November 4, 2009
Financial services investment group Peregrine Holdings on Tuesday reported a 129% leap in headline earnings per share to 58 cents for the six months ended September.
Operating revenue of R641 million fell by 22%, however, reflecting the tougher trading environment for the group' broking and structuring divisions and its global property investment division, housed within Stenham, as well as the effect of the stronger rand on its offshore revenue.
But investment and other income showed a marked improvement, adding R92.1 million to total income, as opposed to a loss of R91.7 million in the comparative period.
These, together with a reduction in both operating expenses and interest paid on long term debt, resulted in profit attributable to shareholders increasing by 126% to R123 million.
"During the period under review, participants in global financial markets started to accept that monetary and fiscal authorities have managed to prevent the crisis of 2008 from developing into a widely expected and much feared depression.
"Whilst economic indicators gradually stabilised only towards the end of the period, financial markets anticipated this reversal of fortune in a very strong way from early in the period.
"Of the significant amounts of liquidity that were injected into the world financial system, only a portion found its way into the real economy.
The surplus of available liquidity, together with record low interest rates around the world, has resulted in a continuous flow of money into capital markets, especially those of emerging economies.
The effect of this improvement in sentiment not only filtered through to capital markets, but also led to significant strengthening of emerging market currencies - including the rand.
This set of circumstances has, on balance, been positive for our business," Peregrine said.
Looking ahead, Peregrine said that the group's businesses are involved in investing its client's capital, facilitating investment of its client's capital and investing the group's own capital in financial markets.
The fortunes of the group are therefore closely linked to those of financial markets.
"Whilst many of our businesses are structured to earn substantial additional fees when we deliver returns of an absolute nature, the group is capable of producing an annuity level of profit from operations regardless of market conditions.
Through diversifying our activities across different markets, geographies and asset classes, we have reduced our dependence on any individual team or asset class.
"The remainder of the financial year holds uncertainty for investors and participants in markets, as the effects of the events of 2008 and the responses thereto, continue manifesting in world economies and markets.
"In this regard, many of our investment teams are, independently, taking a cautious view and adopting a capital preservation stance in designing their strategy for client portfolios.
"We continue to believe that the 2010 financial year will be one of steady consolidation for the group," the group added.
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