Specialist financial services group Peregrine says a strong rand took the shine off its earnings in the year to end-March.
The group also announced the sale of its share of Peregrine Securities, which it hopes will lead to improved return on equity and higher dividend payout ratios.
The rand traded at R13 to the dollar on average over the period, from R14.05 in the previous year, and at R17.22 to the pound, from R18.41.
This affected translated earnings, Peregrine said in its results statement on Wednesday morning.
"Almost every business in the group benefits from a weaker rand, with 42% of the group’s operating earnings emanating directly from offshore entities in the period under review," CEO Robert Katz said in the statement.
Group headline earnings rose 6% to R504m and headline earnings per ordinary share 4% to 238.5c.
Adjusting for the effect of the stronger rand, headline earnings at an attributable operating level would have grown by 13%, according to Katz.
Citadel, Stenham, Peregrine Capital, Peregrine Securities and Java Capital, which are the main operating businesses in the group, delivered an increase in earnings of 7% to R470m.
The market cheered the results, with the share price gaining 5% to R21.01 in early trade on the JSE, giving it a market value of R4.7bn.
Wealth manager Citadel grew headline earnings by 19% to R207m, as a result of what the company said was "strong annuity earnings growth, sound cost controls, healthy inflows, increased performance fees earned and a high client retention rate".
But Citadel’s assets under management dropped to R43.9bn from R44.6bn, courtesy of the stronger rand. Inflows were at a record R4.9bn, from R4.5bn a year before.
Offshore asset manager Stenham contributed R111m to the group’s earnings, from R74m a year ago. Peregrine now owns Stenham outright, after gradually building its holding in the UK-based asset and trust business.
Brokering and structuring business Peregrine Securities reported a 23% decline in earnings to R89m as a result of "decreased revenues, higher financing and other costs as well as the negative impact of currency movements on operating profits".
Peregrine’s board decided on Tuesday to accept an offer from Legae Holdings — which represents "certain management" of Legae Securities and Peregrine Securities and a black economic empowerment consortium — for Peregrine’s 65% share of the South African and international securities businesses.
Peregrine said this sale should "appreciably" increase the group’s return on equity, as it removes the volatility of the proprietary investments operation.
"In addition, the dividend payout ratio should increase meaningfully if the group concludes the above-mentioned transaction to dispose of its single capital-intensive business," it said.
A dividend of 170c per share was declared, up 10% on the year-earlier period.