Citadel has released its latest financial results in what can only be described as a challenging environment.
However, living up to the meaning of our name, Citadel is standing firm during this turbulent time and continues to provide a place of safety – a fortress – for our clients and our employees.
Over the past financial year, which ended 31 March 2020, we delivered solid results. Our total revenue was up by 12% to R1.134 million, of which R1.075 million represented core revenue – exceeding growth in costs by 1.7%. Headline earnings increased to R259 million, while assets under management increased to R57.2 billion. We recorded net inflows – including acquisitions – of R5.2 billion in assets under management over the period, and gross inflows of R9.3 billion.
For the financial year ahead, we are targeting gross inflows of R5.5 billion in assets under management from private clients, and gross inflows of R500 million as part of our employee benefits solutions.
We are confident in these projections based on our trusted investment philosophy and experience in riding out difficult times for global markets. Our portfolios have been carefully constructed to withstand volatile periods and, since our inception in 1993, we have successfully weathered many financial crises. This experience tells us that Citadel, our clients and our 458 employees will come out at the other end stronger, more determined and definitely wiser.
The past few months have required a great deal of adaptability from all our employees, as we swiftly moved to a work-from-home operation prior to the official COVID-19 lockdown. The continued dedication of this exceptional group of people lies at the heart of our award-winning solutions and the quality advice and service for which we are renowned. Currently 8 900 clients receive this level of service and Citadel continues to record a client retention rate of above 98%.
While we will continue to monitor our current work-from-home policy, based on the emergence of new data, we have also taken this opportunity to focus on new systems and processes which are designed to streamline workflows and increase effectiveness, while adding additional layers of value for our clients. At the beginning of May we launched a new website, and at the beginning of June we relaunched our secure client platform, My Secure Zone. Both platforms have been built using the latest technology and make the user experience much easier, faster and simpler.
Our offering, our clients and our people continue to be at the heart of all we do. This will not change, even as Citadel continues to grow through acquisitions in the wealth management space. We remain open to transactions that add value and which allow the Group to unlock synergies and gear off the benefits of an already fully vertically integrated business. But only quality businesses entice us to buy.
This was recently the case when we acquired a 49% stake in Seshego Benefit Consulting, a 15-year-old business renowned for its corporate advice on benefits, investments and risk management. The transaction will see the synergies between both companies leveraged as we bring individual and corporate advice under a single roof. We are confident that this transaction will greatly enhance Citadel’s corporate solutions offering to clients. In turn, Seshego Benefit Consulting’s corporate clients will also have access to Citadel’s expert industry insights through our asset management division and all our other services and solutions.
A NEW CHAPTER
Citadel is also embarking on a new and exciting chapter in its history. The Peregrine Group is currently under offer from a consortium of investors that includes Citadel management. The transaction, when completed, will see a delisting of the Peregrine Group from the JSE.
The offer is being handled by two special purpose vehicles, BidCo and InvestCo. These special purpose vehicles will be owned by a significant portion of Citadel’s management and by Capitalworks. In addition, all current Peregrine shareholders will be given the opportunity to either accept the cash offer or to reinvest within InvestCo – this includes Nala, Peregrine’s Broad-Based Black Economic Empowerment shareholder. Citadel management will also take a 26% stake in the Peregrine Group, including a 15% direct stake in Citadel. We expect that the transaction will become effective in October, once all the regulatory hurdles have been completed.
While these positive changes play out, the Citadel team remains fully committed and focused on our core role of looking after the wealth legacies of our clients and their families.