Wrap Text
Unaudited results for the six months ended 30 September 2014
Peregrine Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/006026/06)
JSE share code: PGR ISIN: ZAE000078127
("Peregrine" or "the Company" or "the Group")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
- Headline earnings up 44% to R217 million
- Headline earnings per share up 43% to 111.8 cents per share
- Normalised headline earnings per share up 41% to 108.1 cents per share
- Normalised cash generated from operating activities of R276 million
COMMENTARY
The Group continued to build on the positive momentum of last year for the six months
ended 30 September 2014 with earnings from local operating subsidiaries growing
significantly, primarily led by Citadel and Peregrine Capital. Proprietary investment returns
were particularly strong whilst profits from offshore operations were slightly weaker largely
as a result of the decreased activity in Stenham Property due to the focus by management on
the sale of the business to GoGlobal Properties Limited (and subsequently renamed Stenprop)
which became effective on 2 October 2014.
Financial results
Basic profit attributable to shareholders amounted to R228 million (2013: R150 million) with
basic earnings per share amounting to 111.8 cents per share (2013: 78.0 cents per share).
Headline earnings increased by 44% to R217 million (2013: R150 million) with headline
earnings per share increasing by 43% to 111.8 cents per share (2013: 78.0 cents per share).
As disclosed at the end of the last financial year, the IFRS headline and basic earnings per
share advised above do not accurately reflect the true economic results due to the application
of IFRS2, which requires that a share based payment (arising in respect of 10 million
Peregrine shares which were purchased by the Citadel Share Trust to incentivise Citadel
employees over a five year period) be recognised over a vesting period of five years rather
than recognising such cost in the years in which they would otherwise have been incurred.
Accordingly, the board of directors feels that it is more appropriate and useful, in addition to
providing the IFRS disclosed earnings, to also disclose normalised earnings.
Normalised basic and headline earnings attributable to shareholders amounted to R220
million with normalised and basic earnings amounting to 108.1 cents per share (2013: 76.6
cents per share).
Group operating revenue increased by 20% to R1.1 billion (2013: R887 million). Income
from proprietary investing activities increased by over 100% to R85 million (2013: R38
million). Net interest earned increased by R4 million to R35 million and income from
associate companies increased by over 100% to R46 million (2013: R18 million).
Normalised cash generated from operating activities amounted to R276 million (2013: R237
million), once again highlighting the cash generative nature of the Group.
Aggregate cash in the group amounted to R575 million at half year-end, of which R14
million was available at the centre, R445 million held offshore and the balance of R116
million held by local subsidiaries.
Segmental results
Substantial non-controlling interests, including empowerment entity Nala's shareholding in
Peregrine SA Holdings, exist in many of the group`s operations. Operating results are
therefore presented before tax, reflecting amounts after non-controlling interests, before
intangible amortisation and impairment and share-based payment costs. This better reflects
and aids in the understanding of each division`s specific economic benefit to the shareholders
of the group.
Wealth Management
Citadel continued to capitalise on its positioning as the leading private client wealth manager
in South Africa. Assets under management (including assets in its wholly owned subsidiary,
Wealthcorp) increased to R33.4 billion (March 2014: R30.8 billion) with gross inflows for
the six months amounting to R1.4 billion, which was a R300 million improvement over the
comparable period in 2013. The client retention rate has improved slightly to 98%.
Profits for the six months increased by 15% to R116 million (2013: R101 million),
continuing the pleasing trend, established in the latter half of the previous financial year, of
significantly improved annuity earnings as well as performance fee revenue, despite a more
difficult investment environment.
Due to the sale of Beauclerc (the offshore based multi-family office) during the previous
financial year, the group no longer has a presence in offshore wealth management and hence
there are no trading results for this period (2013: loss R7 million).
Asset Management
The Group's Asset Management division comprises a number of fund management
businesses. The largest contributor to the division is the Group's flagship hedge fund
manager, Peregrine Capital. Due to a very strong performance by Peregrine Capital, profit
increased to R44 million (2013: R25 million). Peregrine Capital's asset base grew to R3.8
billion by half year end (March 2014: R3.7 billion) largely as a result of its strong investment
returns.
Stenham
Peregrine's share of Stenham's earnings decreased by 5% to R32 million (2013: R33
million).
Stenham Asset Management experienced a meaningful reduction in net outflows, balanced by
growth in investment performance, leaving total assets under management unchanged at the
end of the period at $2 billion. Core revenues in Sterling terms have decreased due to lower
average margins, primarily on new business raised.
Stenham Property delivered lower profitability relative to the previous year, primarily due to
decreased activity (including as a result of the focus by management on the sale of the
business to Stenprop, as referred to below) and the write down in the valuation of certain
properties in its portfolio which write-downs were partly as a result of the strengthening of
Sterling against the Dollar, Euro and Swiss Franc. Subsequent to the date of this report, the
business has, with effect from 2 October 2014, been sold to Stenprop in exchange for
Stenprop shares, with certain properties being retained by Stenham with the intention being to
realise these over time.
Stenham Trustees continues to perform well and is increasingly becoming a more significant
contributor to Stenham Group profits. Stenham Trustees acquired 100% of Cannon Asset
Management (the Guernsey based trust and fiduciary company) ("Cannon Trustees") on 1
April 2014 in an acquisition which will further augment its operations and client base.
Cannon Trustees has had a solid six months with results exceeding expectations.
Stenham remains strongly cash-flow generative, with no long-term debt and cash available to
augment future growth.
Post this reporting period, a further share repurchase transaction took place and as a result
Peregrine's share in Stenham increased from 70.8% to 80.3%.
Broking and Structuring
The positioning of Peregrine Securities as one of the few substantial, independent structuring
and broking entities in South Africa has enabled the business to continue its good
performance. It has built several of the industry's leading franchises in the areas of prime
broking and derivative broking and structuring, which have benefited from increased
financial market trading volumes and volatility. Peregrine Securities increased its
contribution by 5% to R45 million (2013: R43 million) for the half year.
Advisory
The acquisition of 50% of Java Capital was concluded with effect from 1 July 2014. Java
Capital is widely regarded as the premier independent corporate advisory house in South
Africa competing directly, and successfully, for mandates against local and international
banks. It is also the industry leader in the provision of corporate finance services in the listed
property sector.
Java Capital's contribution for the three months (before tax and after non-controlling
interests), excluding a significant pipeline of business at the end of the reporting period,
amounted to R8 million.
Proprietary Investments
Group investment income of R77 million (2013: R33 million) was derived primarily from
returns on hedge fund investments and through Nala.
Issued share capital
The third tranche of shares relating to the share scheme which was implemented in 2010 is
due to vest during November 2014. It is anticipated that 6.359 million shares will be allotted
and issued at a price of R7.37 per share. Following the issue of such shares and the issue of
3.835 million shares to partly fund the Java Capital acquisition, the group's issued shares, net
of treasury shares of 20.484 million, will amount to 203.022 million.
An extension of the executive incentive scheme was implemented in 2013, in terms of which
a maximum of 2.561 million shares will be allotted and issued, which shares will vest during
November 2015. No further extension to the executive incentive scheme has been
implemented.
Conclusion
Whilst the fortunes of the group remain linked to those of financial markets and many of our
businesses are structured to earn substantial fees in times when financial markets experience
strong positive moves, throughout the group we continue to focus on increasing the level of
annuity income and looking at revenue synergies and cost cutting initiatives. In addition we
are pleased with the contributions made by our core businesses as well as our new
acquisitions.
Jonathan Hertz Sean Melnick
Group CEO Non-executive Chairman
12 November 2014
Condensed consolidated income statement
Unaudited for Unaudited for the
% change the six months six months ended
2013 to ended 30 September Audited for the year
2014 30 September 2014 2013 ended 31 March 2014
R'000 R'000 R'000
Operating revenue 20 1 062 574 887 213 2 015 499
Investment income >100 84 904 37 932 101 419
Total revenue 24 1 147 478 925 145 2 116 918
Fair value (loss)/gain on linked financial investments (39 085) 213 388 725 856
Fair value gain/(loss) on policyholder contract liabilities 39 085 (213 388) (725 856)
Operating expenses 21 (818 632) (676 597) (1 454 762)
Profit from operations 32 328 846 248 548 662 156
Net interest received 13 34 507 30 416 53 045
Interest received 36 608 31 443 55 201
Interest paid (2 101) (1 027) (2 156)
Share of profits from equity accounted investees >100 45 516 18 177 40 727
Profit before taxation and capital items 38 408 869 297 141 755 928
Gain on disposal of interest in subsidiary - - 5 139
Profit before taxation 38 408 869 297 141 761 067
Taxation (101 869) (71 258) (156 797)
Profit for the period 36 307 000 225 883 604 270
Profit for the period attributable to:
Equity holders of the company 51 227 640 150 284 425 023
Non-controlling interests 5 79 360 75 599 179 247
36 307 000 225 883 604 270
Consolidated statement of other comprehensive income
Profit for the period 307 000 225 883 604 270
Other comprehensive income for the period net of taxation
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 61 598 156 108 249 758
368 598 381 991 854 028
Total comprehensive income for the period attributable to:
Equity holders of the company 276 756 257 251 600 177
Non-controlling interests 91 842 124 740 253 851
368 598 381 991 854 028
Basic earnings per ordinary share (cents) 43 111.8 78.0 214.1
Diluted earnings per ordinary share (cents) 43 109.0 76.4 205.5
Number of ordinary shares in issue ('000) 217 147 206 791 213 001
Treasury shares held ('000) 20 484 20 484 20 484
Weighted average number of ordinary shares in issue ('000) 193 698 192 700 193 305
Diluted weighted average number of shares in issue ('000) 198 769 196 773 201 409
Reconciliation between earnings and headline earnings
Profit for the period attributable to equity holders 51 227 640 150 284 425 023
Adjustment relating to earnings attributable to participating treasury shares (11 015) - (11 155)
Profit attributable to ordinary shareholders 216 625 150 284 413 868
Gain on disposal of interest in subsidiary(1) - - (5 004)
Headline earnings 44 216 625 150 284 408 864
Headline earnings per ordinary share (cents) 43 111.8 78.0 211.5
Diluted headline earnings per ordinary share (cents) 43 109.0 76.4 203.0
Cash dividend paid per ordinary share in respect of the previous year (cents) 72.0 72.0 72.0
Cash dividend per ordinary share declared subsequent to 31 March (cents) 39 100.0 72.0 100.0
Special cash dividend per ordinary share declared subsequent to 31 March (cents) - 28.0 -
1 No tax effect.
Condensed consolidated statement of financial position
Unaudited as at 30 Audited as at 31
September 2014 March 2014
R'000 R'000
Assets
Non-current assets 7 094 374 6 298 451
Property, plant and equipment 32 275 33 710
Intangible assets 704 846 629 707
Investment in equity accounted investees 304 812 70 796
Investments linked to policyholder investment contracts 5 441 595 5 124 941
Financial investments 541 858 351 067
Deferred taxation 68 988 88 230
Current assets 16 017 970 15 221 591
Financial investments 1 152 371 1 238 995
Loans and receivables 93 739 43 726
Trade and other receivables 482 762 604 968
Amounts receivable in respect of stockbroking activities 12 571 730 11 492 130
Taxation 11 997 5 628
Cash and cash equivalents 1 705 371 1 836 144
Total assets 23 112 344 21 520 042
Equity and liabilities
Equity 2 907 695 2 693 403
Equity attributable to holders of the company 2 246 876 2 063 521
Non-controlling interests 660 819 629 882
Non-current liabilities 5 518 988 5 137 156
Policyholder investment contract liabilities 5 441 595 5 124 941
Interest-bearing borrowings 64 551 -
Loans and other payables 6 244 5 468
Deferred taxation 6 598 6 747
Current liabilities 14 685 661 13 689 483
Loans and other payables 130 752 79 893
Financial instrument liabilities 1 004 530 720 495
Trade and other payables 694 950 1 117 148
Amounts payable in respect of stockbroking activities 12 802 746 11 703 824
Taxation 49 260 43 874
Bank overdraft 3 423 24 249
Total equity and liabilities 23 112 344 21 520 042
Net tangible asset value per ordinary share (cents) 782,5 737,9
Net asset value per ordinary share (cents) 1 087,2 1 018,9
Condensed consolidated statement of changes in equity
Total capital and Non-controlling
reserves interests Total equity
R'000 R'000 R'000
Unaudited - 2014
Balance at 31 March 2014 2 063 521 629 882 2 693 403
Profit for the period 227 640 79 360 307 000
Other comprehensive income for the period 49 116 12 482 61 598
Transactions with owners recorded directly in equity: (93 401) (60 905) (154 306)
Dividends paid (192 828) (66 442) (259 270)
Share-based payments 11 918 - 11 918
Subscription of shares in subsidiary - 7 377 7 377
Purchase of shares in subsidiary from the non-controlling shareholders - (1 431) (1 431)
Repurchase and cancellation of shares of a subsidiary - (409) (409)
Issue of additional shares of holding company 87 509 - 87 509
Balance at 30 September 2014 2 246 876 660 819 2 907 695
Unaudited - 2013
Balance at 31 March 2013 1 706 938 522 804 2 229 742
Profit for the period 150 284 75 599 225 883
Other comprehensive income for the period 106 967 49 141 156 108
Transactions with owners recorded directly in equity: (309 798) (94 245) (404 043)
Dividends paid (196 306) (50 853) (247 159)
Share-based payments 5 299 - 5 299
Reversal of put option cost arising on buy-back and subsequent cancellation of put option shares 8 271 7 408 15 679
Repurchase and cancellation of shares of a subsidiary - (22 420) (22 420)
Contingent consideration received as a result of an agreement to dispose of interest in subsidiary 498 - 498
Non-controlling interest disposal as a result of the purchase of additional interest in a subsidiary company (20 490) (28 380) (48 870)
Acquisition of treasury shares (107 070) - (107 070)
Balance at 30 September 2013 1 654 391 553 299 2 207 690
Condensed consolidated cash flow statement
Unaudited for the Unaudited for the
six months ended six months ended
30 September 30 September
2014 2013
R'000 R'000
Cash flow from operating activities 323 313 218 747
Cash dividends paid (259 270) (247 159)
Cash flow from stockbroking activities (134 278) 439 791
Cash flow from investing activities (166 910) 181 577
Cash flow from financing activities 105 262 (80 190)
Net (decrease)/increase in cash and cash equivalents (131 883) 512 766
Cash and cash equivalents at beginning of the year 1 811 895 659 131
Effects of exchange rate changes on cash and cash equivalents 21 936 62 666
Cash and cash equivalents at end of the period 1 701 948 1 234 563
Segmental analysis
% change in
Profit/(loss) from profit/(loss) from
ordinary activities ordinary activities
before intangible before intangible
amortisation and share- amortisation and share-
Revenue and based payment cost based payment cost
investment Interest and equity Profit/(loss) from adjusted for non- adjusted for non-
income accounted income ordinary activities controlling interests controlling interests
R'000 R'000 R'000 R'000 2013 to 2014
Unaudited for the six months ended 30 September 2014
Wealth and Asset Management 484 996 18 421 203 532 160 535 34
Wealth Management - local 368 300 11 357 130 656 116 471 15
Asset Management 116 696 7 064 72 876 44 064 74
Broking and Structuring 294 704 13 968 81 178 45 487 5
Stenham 264 196 5 510 32 621 31 503 (5)
Advisory - 6 676 6 676 5 741
Total from operating reportable segments 1 043 896 44 575 324 007 243 266 24
Group 77 072 33 841 68 951 64 619 >100
Operations 1 159 14 085 (15 773) (12 052) (15)
Investment returns (net of the cost of funding) 75 913 19 756 84 724 76 671 >100
1 120 968 78 416 392 958 307 885 43
Unaudited for the six months ended 30 September 2013
Wealth and Asset Management 376 631 14 866 149 759 119 720
Wealth Management - local 306 003 11 022 113 781 101 081
Wealth Management - offshore 1 778 1 (6 636) (6 636)
Asset Management 68 850 3 843 42 614 25 275
Broking and Structuring 264 557 11 134 80 048 43 277
Stenham 231 748 9 105 48 807 33 131
Total from operating reportable segments 872 936 35 105 278 614 196 128
Group 39 847 12 004 18 527 18 792
Operations 90 10 298 (18 838) (14 154)
Investment returns (net of the cost of funding) 39 757 1 706 37 365 32 946
912 783 47 109 297 141 214 920
Note: Group funding costs are disclosed as part of "group" and have not been allocated to the appropriate underlying entities.
Reconciliation of segmental analysis to income statement
Total from
Wealth and operating
Asset Broking and reportable Non-reportable
Management Structuring Stenham Advisory segments Group segments¹ Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
For six months ended 30 September 2014
Revenue and investment income per segmental analysis 484 996 294 704 264 196 - 1 043 896 77 072 - 1 120 968
Reconciling items: (35 307) 38 920 - - 3 613 (83 687) 106 584 26 510
Operating revenue - internal (33 988) 38 805 - - 4 817 - - 4 817
Operating revenue of non-reportable segment - external - - - - - - 1 697 1 697
Investment income - internal (1 319) 115 - - (1 204) (83 687) 84 891 -
Investment income of non-reportable segment - external - - - - - 19 996 19 996
Revenue and investment income per income statement 449 689 333 624 264 196 - 1 047 509 (6 615) 106 584 1 147 478
Profit before taxation and capital items per segmental analysis 203 532 81 178 32 621 6 676 324 007 68 951 - 392 958
Reconciling revenue and investment income items (35 307) 38 920 - - 3 613 (83 687) 106 584 26 510
Operating expenses of non-reportable segment - external - - - - - (23 856) (23 856)
Deferred profit participation(2) 19 671 - - - 19 671 - - 19 671
Share-based payment charge(2) (8 021) - - - (8 021) - - (8 021)
Interest paid - internal - 1 995 - - 1 995 56 - 2 051
Interest paid - external - - - - - - (1) (1)
Share of profits from equity accounted investees companies - internal - - (443) - (443) - - (443)
Profit before taxation and capital items per income statement 179 875 122 093 32 178 6 676 340 822 (14 680) 82 727 408 869
For the six months ended 30 September 2013
Revenue and investment income per segmental analysis 376 631 264 557 231 748 - 872 936 39 847 - 912 783
Reconciling items: (21 127) 32 268 - - 11 141 (40 663) 41 884 12 362
Operating revenue - internal (21 127) 34 688 - - 13 561 - (13 561) -
Investment income - internal - (2 420) - - (2 420) (40 663) 43 083 -
Investment income of non-reportable segment - external - - - - - - 12 362 12 362
Revenue and investment income per income statement 355 504 296 825 231 748 - 884 077 (816) 41 884 925 145
Profit before taxation and capital items per segmental analysis 149 759 80 048 48 807 - 278 614 18 527 - 297 141
Reconciling revenue and investment income items (21 127) 32 268 - - 11 141 (40 663) 41 884 12 362
Operating expenses of non-reportable segment - external - - - - - - (13 845) (13 845)
Interest received - internal - - - - - - 1 483 1 483
Profit before taxation and capital items per income statement 128 632 112 316 48 807 - 289 755 (22 136) 29 522 297 141
1 Refers to the group's consolidated proprietary hedge and property fund investments which do not meet the quantitative thresholds for determining reportable segments.
2 Management treats the deferred profit scheme (which is settled in PGR shares) as an expense as profits are earned, but for IFRS purposes, it is a share-based payment arrangement, in which the grant date
fair value is recognised over the vesting period.
Analysis of assets and liabilities by financial instrument classification
Non-financial
instruments and
Financial instruments at fair value Loans and receivables Financial liabilities financial instruments Total Fair value of financial
through profit or loss at amortised cost at amortised cost beyond the scope of instrument
IFRS 7
Designated at
Held-for-trading inception
R'000 R'000 R'000 R'000 R'000 R'000 R'000
Unaudited as at 30 September 2014
Non-current assets - 5 983 453 - - 1 110 921 7 094 374 5 983 453
Property, plant and equipment - - - - 32 275 32 275 -
Intangible assets - - - - 704 846 704 846 -
Investment in equity accounted investees - - - - 304 812 304 812 -
Investments linked to policyholder investment contracts - 5 441 595 - - - 5 441 595 5 441 595
Financial investments - 541 858 - - - 541 858 541 858
Deferred taxation - - - - 68 988 68 988 -
Current assets 10 262 946 1 004 619 4 721 328 - 29 077 16 017 970 13 724 101
Financial investments 114 758 1 004 619 32 994 - - 1 152 371 1 152 371
Loans and receivables - - 93 739 - - 93 739 -
Trade and other receivables - - 465 682 - 17 080 482 762 -
Amounts receivable in respect of stockbroking activities 10 148 188 - 2 423 542 - - 12 571 730 12 571 730
Taxation - - - - 11 997 11 997 -
Cash and cash equivalents - - 1 705 371 - - 1 705 371 -
Total assets 10 262 946 6 988 072 4 721 328 - 1 139 998 23 112 344 19 707 554
Non-current liabilities - 5 429 623 - 64 551 24 814 5 518 988 5 429 623
Policyholder investment contract liabilities - 5 429 623 - - 11 972 5 441 595 5 429 623
Interest-bearing borrowings - - - 64 551 - 64 551 -
Loans and payables - - - - 6 244 6 244 -
Deferred taxation - - - - 6 598 6 598 -
Current liabilities 10 367 839 707 760 - 3 284 249 325 813 14 685 661 13 807 276
Loans and payables - - - 130 752 - 130 752 -
Financial instrument liabilities 296 770 707 760 - - - 1 004 530 1 004 530
Trade and other payables - - - 418 397 276 553 694 950 -
Amounts payable in respect of stockbroking activities 10 071 069 - - 2 731 677 - 12 802 746 12 802 746
Taxation - - - - 49 260 49 260 -
Bank overdraft - - - 3 423 3 423 -
Total liabilities 10 367 839 6 137 383 - 3 348 800 350 627 20 204 649 19 236 899
Non-financial
instruments and
Financial instruments at fair value Loans and receivables Financial liabilities financial instruments Total Fair value of financial
through profit or loss at amortised cost at amortised cost beyond the scope of instrument
IFRS 7
Designated at
Held-for-trading inception
R'000 R'000 R'000 R'000 R'000 R'000 R'000
Audited as at 31 March 2014
Non-current assets - 5 476 008 - - 822 443 6 298 451 5 476 008
Property, plant and equipment - - - - 33 710 33 710 -
Intangible assets - - - - 629 707 629 707 -
Investment in equity accounted investees - - - - 70 796 70 796 -
Investments linked to policyholder investment contracts - 5 124 941 - - - 5 124 941 5 124 941
Financial investments - 351 067 - - - 351 067 351 067
Deferred taxation - - - - 88 230 88 230 -
Current assets 8 838 524 738 752 5 619 379 - 24 936 15 221 591 12 731 125
Financial investments 293 358 738 752 206 885 - - 1 238 995 1 238 995
Loans and receivables - - 43 726 - - 43 726 -
Trade and other receivables - - 585 660 - 19 308 604 968 -
Amounts receivable in respect of stockbroking activities 8 545 166 - 2 946 964 - - 11 492 130 11 492 130
Taxation - - - - 5 628 5 628 -
Cash and cash equivalents - - 1 836 144 - - 1 836 144 -
Total assets 8 838 524 6 214 760 5 619 379 - 847 379 21 520 042 18 207 133
Non-current liabilities - 5 113 668 - - 23 488 5 137 156 5 113 668
Policyholder investment contract liabilities - 5 113 668 - - 11 273 5 124 941 5 113 668
Loans and payables - - - - 5 468 5 468 -
Deferred taxation - - - - 6 747 6 747 -
Current liabilities 9 645 954 543 509 - 3 131 141 368 879 13 689 483 12 424 319
Loans and payables - - - 79 893 - 79 893 -
Financial instrument liabilities 176 986 543 509 - - - 720 495 720 495
Trade and other payables - - - 792 143 325 005 1 117 148 -
Amounts payable in respect of stockbroking activities 9 468 968 - - 2 234 856 - 11 703 824 11 703 824
Taxation - - - - 43 874 43 874 -
Bank overdraft - - - 24 249 24 249 -
Total liabilities 9 645 954 5 657 177 - 3 131 141 392 367 18 826 639 17 537 987
Fair value information has not been provided for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
The fair value of financial assets classified as loans and receivables at amortised cost and financial liabilities classified as financial liabilities at amortised cost are classified as level 2 in terms of the fair value hierarchy.
Fair value hierarchy
The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market
participants at the measurement date. Underlying the definition of fair value is a presumption that an entity is a going concern without any intention or need to liquidate, to curtail
materially the scale of its operations or to undertake a transaction on adverse terms. Fair value is not, therefore, the amount that an entity would receive or pay in a forced transaction,
involuntary liquidation or distressed sale.
The fair values of financial instruments traded in active markets is based on unadjusted quoted market prices at reporting date. A market is regarded as active if quoted prices for
identical assets or liabilities are readily available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the group is the mid price. These instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniques maximise the use of observable
data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value the instrument are observable, the instruments are
included in level 2.
If one or more significant inputs are not based on observable market data, the instrument is included in level 3.
The following table presents the group's assets and liabilities that are measured at fair value as at:
Unaudited as at Audited as at
30 September 31 March
2014 2014
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Financial assets at fair value though profit or loss
Held-for-trading: 10 262 946 - - 10 262 946 8 838 524 - - 8 838 524
Amounts receivable in respect of stockbroking activities: Equities 10 148 188 - - 10 148 188 8 545 166 - - 8 545 166
Equities and bonds held by Hedge funds 114 758 - - 114 758 293 358 - - 293 358
Designated at inception: 1 029 454 5 641 081 317 537 6 988 072 788 467 5 305 932 120 361 6 214 760
Unit trusts 24 638 2 - 24 640 25 169 2 - 25 171
Variable rate debenture - 6 917 - 6 917 - 5 273 - 5 273
Investments linked to policyholder investment contracts - 5 441 595 - 5 441 595 - 5 124 941 - 5 124 941
Share portfolio investments - unlisted - 291 - 291 - 277 - 277
Private equity investments – listed 10 493 - 10 493 21 751 - 21 751
Private equity investments – unlisted - 15 188 2 260 17 448 - 23 283 2 103 25 386
Property fund investments - listed 104 245 99 535 - 203 780 95 891 95 294 - 191 185
Property fund investments - unlisted - - 315 277 315 277 - - 118 258 118 258
Hedge fund investments - unlisted - 75 624 - 75 624 - 56 862 - 56 862
Equities and bonds held by Hedge funds 890 078 1 929 - 892 007 645 656 - - 645 656
Total financial assets carried at fair value 11 292 400 5 641 081 317 537 17 251 018 9 626 991 5 305 932 120 361 15 053 284
Financial liabilities at fair value though profit or loss
Held-for-trading: (10 367 839) - - (10 367 839) (9 645 954) - - (9 645 954)
Amounts payable in respect of stockbroking activities: Equities (10 071 069) - - (10 071 069) (9 468 968) - - (9 468 968)
Instruments held by Hedge Funds: Short equity positions, options and bonds (296 770) - - (296 770) (176 986) - - (176 986)
Designated at inception: - (6 137 383) - (6 137 383) (22 405) (5 634 772) - (5 657 177)
Net assets attributable to outside investors in the Hedge Funds - (707 760) - (707 760) - (521 104) - (521 104)
Policyholder investment contract liabilities - (5 429 623) - (5 429 623) - (5 113 668) - (5 113 668)
Financial instrument liability: Basket portfolio - - - - (22 405) - - (22 405)
Total financial liabilities carried at fair value (10 367 839) (6 137 383) - (16 505 222) (9 668 359) (5 634 772) - (15 303 131)
Fair value disclosures are not required where the carrying amount is a reasonable approximation of fair value for example short-term receivables and payables.
The fair value, if disclosed, of financial assets classified as loans and receivables at amortised cost and financial liabilities classified as financial liabilities at amortised cost, would be classified as level 2 in terms of the fair value hierarchy.
Level 3 reconciliations per class:
Unaudited as at
30 September Audited as at 31
2014 March 2014
Financial instruments at fair value through profit or loss: Private
equity investments – unlisted
Designated at inception
R'000 R'000
Opening balance 2 103 1 835
Total gains/(losses) recognised in:
Profit or loss: Investment and other income 61 (189)
Other comprehensive income: Currency translation differences 96 457
Closing balance 2 260 2 103
Financial instruments at fair value through profit or loss:
Property fund investments - unlisted
Designated at inception
R'000 R'000
Opening balance 118 258 127 713
Total gains/(losses) recognised in:
Profit or loss: Investment and other income (15 899) (1 327)
Other comprehensive income: Currency translation differences 9 799 29 542
Purchases 209 701 6 732
Disposals (6 582) (44 402)
Closing balance 315 277 118 258
At 30 September 2014 and 31 March 2014 a change of one or more of the inputs used in the fair value measurement calculation of the level 3 instruments did not result in a significant
change to the fair values of these instruments.
Notes and Compliance
The condensed consolidated interim financial statements of the Peregrine group as at and for the six months ended 30 September 2014 comprise the company and its
subsidiaries ("the group") results and the group's interests in equity accounted investees.
Basis of preparation
The condensed consolidated interim financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for interim reports and
the requirements of the Companies Act of South Africa. The Listings Requirements require interim reports to be prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the information
required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS of
the International Accounting Standards Board (IASB) and are consistent with those applied in the consolidated financial statements as at and for the year ended 31 March
2014.
The preparation of these condensed interim financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise judgement in the process of applying the group's accounting policies. The significant judgements made by management in applying the group's
accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31
March 2014.
The preparation of the group's results have been under the supervision of R E Katz CA (SA), the Group Chief Financial Officer.
The prior year audited results are a summary of the consolidated financial statements as at and for the year ended 31 March 2014, which were prepared under the
supervision of R E Katz CA (SA), the Group Chief Financial Officer. A copy of these financial statements can be obtained from the issuer's registered office.
These financial results have not been reviewed or reported on by the Company's auditor KPMG Inc.
Auditor's report for the year ended 31 March 2014
The consolidated and separate financial statements of Peregrine Holdings Limited ("Peregrine") for the year ended 31 March 2014 have been audited by the company's
auditor, KPMG Inc. In their audit report dated 6 August 2014, which is available for inspection at the Company's Registered Office, KPMG Inc. state that their audit was
conducted in accordance with the International Standards on Auditing and have expressed an unmodified conclusion on the consolidated and separate financial statements
of Peregrine.
Acquisitions
1. Stenham Limited acquired the entire issued share capital of Cannon Asset Management (Cannon AM) (a Guernsey based trust and fiduciary company) with effect from 1
April 2014 for a minimum purchase consideration of £1 million (R17.6 million) (and maximum dependent on profits to be earned during the year ending 31 March 2015, of £3
million). Cannon AM was acquired as it is aligned with the business profile of Stenham Trustees.
The acquisition had the following effect on the group's assets and liabilities. The fair values reflected below represent their carrying values at the date of acquisition and
therefore no fair value adjustments were recognised on acquisition. The full amount of the acquired trade receivables are expected to be collected.
R'000
Identifiable assets 75 440
Intangibles - Customer relationships 33 383
Equipment 398
Trade and other receivables 21 125
Cash and cash equivalents 20 534
Identifiable liabilities
Trade and other payables (40 300)
Fair value of identifiable net assets assumed 35 140
Goodwill arising on acquisition 17 570
Fair value of total net assets assumed 52 710
Less: Contingent consideration (35 140)
Cash consideration 17 570
Less Cash and cash equivalents assumed (20 534)
(2 964)
2. On 1 April 2014, Citadel Holdings Proprietary Limited acquired an additional 45 ordinary shares in The Wealth Corporation Proprietary Limited (Wealthcorp), which
comprises 30% of its issued share capital, for a total consideration of R24 million, thereby increasing its shareholding in Wealthcorp to 100%.
3. Peregrine SA Holdings Proprietary Limited subscribed for, with effect from 1 July 2014, 50% of Java Capital for a total subscription price of R205 million, of which R120
million was settled in cash and the balance of R85 million in 3 835 000 Peregrine shares. The investment in Java Capital has been accounted for as a joint venture in terms
of IFRS 11.
4. Peregrine's shareholding in Stenham increased from 70.78% to 70.80% in June 2014 following the buy-back and subsequent cancellation of 250 Stenham shares.
Events subsequent to reporting period
1. With effect from 2 October 2014, GoGlobal Properties Limited ('GoGlobal'), a company having a primary listing on the Bermuda Stock Exchange and a secondary listing
on the Alternative Exchange of the JSE Limited acquired from Stenham Limited the entire issued share capital of Stenham Property Holdings Limited and its subsidiaries and
the entire issued share capital of GoGlobal's current investment manager Apex Hi (UK) Limited, in which Peregrine has a 40% shareholding.
Peregrine's investment in Stenham Property will, other than in respect of the retained assets referred to below, be through GoGlobal in which Peregrine will have a direct
(3.2%) and indirect (4.85%) economic investment, the latter through the shares held by Stenham. Certain illiquid assets (£21.1m) previously under the management of
Stenham Property which were not sold to GoGlobal will be retained by Stenham with a view to realising those assets for cash over a period of time.
The financial effects of the collective transactions are estimated to be as follows and will be accounted for in the Stenham results for the second six months ending 31 March
2015:
a. Performance, management and exit fees, net of costs, taxation and non-controlling interests of £1.9m, and
b. Net gain on disposal of assets to GoGlobal of £1.8m.
2. Subsequent to period end, Peregrine's shareholding in Stenham increased from 70.80% to 80.28% following the buy-back and subsequent cancellation of 99,581
Stenham shares.
Applicable exchange rates
Average rates Closing rates
USD:ZAR
30 September 2014 10,66 11,30
31 March 2014 10,11 10,52
30 September 2013 9,73 10,06
GBP:ZAR
30 September 2014 17,86 18,32
31 March 2014 16,10 17,53
30 September 2013 15,02 16,30
Directors: SA Melnick^ (Chairman); J Hertz (CEO); RE Katz (CFO); BC Beaver*; P
Goetsch^; LN Harris# S Sithole*; SI Stein*; M Yachad ^ Non-executive *Independent
non-executive #Lead independent non-executive
Company secretary and registered office: Peregrine Management Services Proprietary
Limited 6A Sandown Valley Crescent, Sandown, Sandton, 2196 (PO Box 650361, Benmore,
2010), Telephone: +27 11 722 7400 Fax: +27 11 722 7410
Transfer Secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall
Street, Johannesburg, 2001, (PO Box 61051, Marshalltown, 2107)
Joint sponsor: Java Capital
Joint sponsor: Deloitte & Touche Sponsor Services
Further detail and a print-friendly version of these results are available from the company's
website at www.peregrine.co.za on Wednesday, 12 November 2014.
12 November 2014
Java Capital
Date: 12/11/2014 09:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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