Specialist financial services group Peregrine announced another impressive set of results today, reflecting an increase in profit before tax of 60% to R568 million and delivering a return on equity exceeding 40%. Assets under management grew 46% to R34 billion at year end and, for the first time in the group's history, revenue exceeded R1 billion for a year under review.

During the course of the year the group successfully implemented its BEE transaction, giving rise to a charge of R39.5m included in operating expenses as a cost of acquiring BEE credentials. "If one looks at the strength of the group's performance excluding this BEE charge, our profit before tax is up 71% and above R600 million for the first time" says Executive Chairman, Sean Melnick.

Peregrine reported basic earnings per share up 48% to 193.6 cents and headline earnings per share up 49% to 166.3 cents. Stripping out the effect of the one-off cost of acquiring BEE credentials, Peregrine's basic earnings per share increased by 64% to 214.0 cents and headline earnings per share increased by 67% to 186.7 cents.

"Peregrine's dominant role in the burgeoning local hedge fund industry, together with a highly satisfactory performance from the group's private client wealth management business, Citadel, provided the platform for this very pleasing set of results. This has enabled us to increase our dividend by 50% to 45 cents" added Keith Betty, CEO.

Total revenue (comprising operating revenue and investment income) increased by 61% to R1.13 billion from R692.7 million, as a result of good investment performances off a materially larger asset base.

Investment income, which includes the proprietary returns on hedge fund investments, profit on sale of shares in the JSE Limited (R54.9 million) and returns on the group's investment banking portfolio increased to 18% of total revenue compared to 13% in the prior year.

"An outstanding feature of these results is the extent to which all four of the operating divisions has made a very similar contribution to profitability confirming that the strategic effort to diversify the group's reliance away from any single area has been successful" said Betty.

Private client wealth management firm, Citadel, produced a 99% increase in profit from ordinary activities to R146.4 million, contributing 26% to group profitability. The asset management division also delivered a strong performance and collectively increased its contribution to group profitability by 22% to R133.5 million, or 24% of group profitability. Peregrine Capital, Peregrine Investment Managers and Caveo Fund Solutions contributed R120.5 million and Peregrine Quant, which now manages in excess of R16 billion, contributed R13 million.

The broking and structuring activities housed within Peregrine Securities produced an 82% increase in profits to R149.5 million, contributing 27% to group profit from ordinary activities. "The current year's profitability, whilst the beneficiary of increased market activity generally, reflects many years of investment and effort. It is not only a record performance for Peregrine Securities but also for each of its three main operating divisions, including Peregrine Derivatives, which remains a top rated SA derivative house and for the 12 months under review was the number one independent broker on the local futures exchange by volume." commented Melnick.

Return on group investments (net of group costs) increased by 143% to R133.4 million, contributing 23% to group profitability. "Particularly pleasing returns were achieved within the group's proprietary investment banking and hedge fund portfolios", added Melnick.

Citadel's inflows increased to just under R135 million on average per month and, together with positive investment performance for the year and a client retention percentage above 96%, resulted in the asset base growing to above R12 billion at year end. "More than two-thirds of the families we serve are now in performance fee territory, with a substantial portion of the balance on the threshold of paying performance fees. This really confirms the alignment of interests between us and our clients," Betty said.

Regarding the asset management division he noted that Peregrine is currently South Africa's largest single strategy hedge fund manager, managing more than R4.3 billion of single strategy hedge funds. In addition Caveo, its fund of hedge fund joint venture with Investment Solutions manages in excess of R1billion after having just completed its first full year of operations.

Hedge fund returns were once again satisfactory across the group's suite of hedge funds with meaningful performance fees being earned in the second half of the year. "Whilst it is difficult to predict returns in any single year, we envisage that the growth in the hedge fund industry (and consequentially in our funds) will continue at a significant pace and that returns will continue to be attractive on a risk-adjusted basis over the medium to long-term" concluded Melnick.

ISSUED BY:

PEREGRINE HOLDINGS LIMITED

For further information please contact:

Sean Melnick
Executive Chairman
Tel: (011) 722 7415 or 083 675 4745
E-mail: seanm@peregrine.co.za

OR

Keith Betty
Chief Executive
Tel: (011) 722 7610 or 083 266 9882
Email: keithb@peregrine.co.za

OR

Daleen Cornelissen
Media Liaison
Tel: (012) 470 2500 or 083 302 0827
daleenv@citadel.co.za