Wrap Text
Reviewed Condensed Consolidated Provisional Results For The Year Ended 31 March 2016
Peregrine Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/006026/06)
JSE share code: PGR ISIN: ZAE000078127
("Peregrine" or "the Group")
REVIEWED CONDENSED CONSOLIDATED PROVISIONAL RESULTS FOR THE
YEAR ENDED 31 MARCH 2016
- Normalised headline earnings up 6% to R591 million
- Normalised headline earnings per share up 2% to 276.3 cents per share
- Final dividend up 3.33% to 155 cents per share
COMMENTARY
The Group continued to build on its strategy of delivering higher quality, diversified earnings
during the twelve month period ended 31 March 2016. Pleasingly there was significant
growth in earnings from the trading and structuring businesses housed within Peregrine
Securities as well as the contribution from offshore which is playing a more meaningful role
in the context of a weaker Rand.
Across the Group annuity earnings grew by 24% and accounted for in excess of 80% of
Group revenue and 60% of Group earnings. Earnings from international subsidiaries and
associates now account for 41% of net profits and more than 50% when profits earned by
local Group entities relating to offshore activities are included. This was tempered by weaker
relative returns within the asset management as well as hedge funds sectors off the back of
global and local market weakness.
Financial results
Headline earnings increased by 5% to R561 million (2015: R534 million) with headline
earnings per share increasing by 2% to 275.8 cents per share (2015: 270.9 cents per share).
However, since the basic profit in the prior year included the non-recurring net capital gain of
R113 million made on the disposal of Stenham Property to Stenprop ("the Stenprop profit"),
the basic profit attributable to shareholders decreased by 12% to R593 million (2015: R677
million) with basic earnings per share amounting to 275.9 cents per share (2015: 327.0 cents
per share).
Consistent with the prior year, the board of directors feels that, in addition to providing the
IFRS disclosed earnings in the above paragraph (which do not accurately reflect the true
economic results due to the accounting treatment relating to share based payments and
employee benefits which resulted in enhanced IFRS earnings), normalised earnings should be
disclosed as follows:
As a result of the inclusion, in the prior year of the Stenprop profit, normalised basic earnings
attributable to shareholders decreased by 13% to R592 million (2015: R676 million) with
normalised basic earnings decreasing by 15% to 276.4 cents per share (2015: 326.2 cents per
share). Normalised headline earnings however increased by 6% to R591 million (2015: R560
million) with normalised headline earnings per share increasing by 2% to 276.3 cents per
share (2015: 270.1 cents per share).
A good indication of the cash generating capacity of the underlying operating businesses is
that normalised total profit before tax, capital items and non-cash amortisations, adjusted for
total minorities, amounted to R661 million (2015: R622 million).
Aggregate normalised cash in the Group amounted to R786 million (2015: R705 million), of
which R21 million (2015: R60 million) was available at the centre, R451 million (2015:
R462 million) held offshore and the balance of R314 million (2015: R183 million) held by
local subsidiaries.
Segmental results
Substantial non-controlling interests, including Nala's shareholding in Peregrine SA
Holdings, exist in many of the Group`s operations. Management believes that headline
earnings per reportable segment (which is the basis for the commentary below) best reflects
and aids in the understanding of each division`s specific economic benefit to the shareholders
of the Group. In addition, operating results are also presented before tax and before non-
controlling interests in the financial table below. Management believes that this further aids
in the understanding of each division`s profitability.
Wealth Management
In a difficult investment environment, Citadel continued to capitalise on its positioning as a
leading private client wealth manager in South Africa. With effect from 1 January 2016,
Citadel acquired the entire share capital of Consolidated Financial Planning Proprietary
Limited ("Consolidated"), which is an authorised planning and advisory business that
provides professional and independent advice to both private clients as well as corporates.
Assets under management (including assets in the wholly owned subsidiaries of Wealthcorp
and Consolidated) increased to R44.9 billion (2015: R34.1 billion) with gross inflows for the
year amounting to R3.4 billion. The client retention rate remained consistent to that at half
year, namely 95%.
Despite earnings being impacted by lower performance fees earned, headline earnings for the
year increased by 5% to R183 million (2015: R174 million) due in the main to very pleasing
growth in core annuity earnings, costs controls and healthy inflows.
Asset Management
The Group's Asset Management division comprises a number of fund management
businesses. The largest contributor to the division is the flagship hedge fund manager,
Peregrine Capital, whose asset base grew to R7.3 billion by year end (2015: R4.8 billion)
largely as a result of new business inflows. Due to positive but decreased fund returns relative
to the previous year resulting in a decline in performance fees, headline earnings in this
division decreased to R65 million (2015: R104 million).
Stenham
During the year, further share purchase and repurchase transactions took place in the UK and
Guernsey based asset management and trust business, of Stenham. As a result, Peregrine's
share in Stenham increased from 80.9% to 85.1%.
Peregrine's share of Stenham's headline earnings increased by 25% to R144 million (2015:
R115 million).
Despite muted global market performance and lower performance fees earned, Stenham
Asset Management was able to increase earnings primarily due to stronger annuity earnings.
Net outflows of $26 million (2015: $168 million) moderated significantly during the period
under review with total assets under management and advice totalling $3.4 billion (2015:
$3.2 billion).
The investments in the property portfolio delivered pleasing returns, with the larger
investments increasing strongly in value. Certain properties retained by Stenham with the
intention being to realise these over time are progressing in accordance with such plan.
Stenham Trustees continues to perform well with earnings exceeding that of the prior year.
The division continues to be a significant contributor to Stenham Group earnings.
Stenham remains strongly cash-flow generative, with no long-term debt and significant cash
available to augment future growth.
Broking and Structuring
The positioning of Peregrine Securities as one of the few substantial, independent structuring
and broking entities in South Africa enabled the business to once again perform exceptionally
well. 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. Peregrine Securities increased its contribution by 47% to R108 million
(2015: R74 million).
Advisory
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, which reflected some reduced corporate activity as a result of
increased market volatility amounted to an unchanged R27 million when compared to the
prior year 9 month period.
Group
Despite lower returns generated on the Groups' proprietary investments in hedge funds,
Group investment returns, net of Group costs, were only slightly lower at R65 million (2015:
R66 million).
It is worth noting that an increase in the Rand value of internationally held proprietary
investments of more than R115 million was included in the foreign currency translation
reserve and not within Group earnings.
Issued share capital
The Group's issued shares amount to 226.066 million and net of treasury shares of 21.848
million (which includes the 11.364 million Peregrine shares which were purchased by
the Citadel Share Trust), amount to 204.218 million.
Following the vesting of the final tranche of shares in terms of the executive incentive
scheme which was implemented in 2013, 2.561 million shares were allotted and issued at a
price of R11.02 per share during November 2015. No further extension to the executive
incentive share scheme has been implemented.
Dividend
The directors have resolved to declare an ordinary cash dividend of 155 cents per share for
the year ended 31 March 2016. This represents growth of 3.33% over last year's ordinary
dividend of 150 cents per share.
The salient dates applicable to the ordinary dividend:
Last date to trade cum dividend Tuesday, 2 August 2016
Trading ex dividend commences Wednesday, 3 August 2016
Record date Friday, 5 August 2016
Payment date Monday, 8 August 2016
In terms of the Listings Requirements of the JSE the following additional information is
disclosed:
1. The ordinary cash dividend has been declared out of income reserves;
2. The local dividend tax rate is 15%;
3. The gross local dividend amount for the ordinary cash dividend is 155 cents per share
for shareholders exempt from paying dividends tax;
4. The net local dividend amount for the ordinary cash dividend is 131.75 cents per share
for shareholders liable to pay dividends tax;
5. The issued share capital of Peregrine is 226 065 696 shares of 0.1 cent each; and
6. Peregrine's tax reference number is 9181924847.
Shares may not be dematerialised or rematerialised between Wednesday, 3 August 2016 and
Friday, 5 August 2016, both dates inclusive.
Directorate
There have been no changes to the board of directors during the year under review.
Conclusion
Peregrine has managed to deliver a set of results which once again bear testimony to its
strong base of profitable, cash generative operating businesses. In a difficult trading
environment, which resulted in a decrease in proprietary returns and significantly lower
performance fees, levels of annuity income, albeit off a larger base, continued to increase
strongly, thus again highlighting the diversified nature of the earnings streams. In addition the
Group continues to focus on growing its businesses organically, seeking strategic acquisitions
and driving cross-business revenue synergies. The Group remains well positioned to
capitalise on further growth opportunities.
Jonathan Hertz Sean Melnick
Group CEO Non-executive Chairman
Sandton
8 June 2016
Directors: SA Melnick^ (Chairman); J Hertz (CEO); RE Katz (CFO); M Yachad; BC
Beaver*; P Goetsch^; LN Harris#; S Sithole*; SI Stein*
^ 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 Independent Sponsor: Deloitte & Touche Sponsor Services Proprietary Limited
Further detail and a print-friendly version of these results are available from the company's
website at http://www.peregrine.co.za on Wednesday, 8 June 2016.
Condensed consolidated statement of comprehensive income
% change
2015 to Reviewed Audited
2016 2016 2015
R'000 R'000
Operating revenue 0.5 2 421 874 2 410 756
Investment and other income 36 310 107 227 596
Total revenue 4 2 731 981 2 638 352
Fair value gains on linked financial investments 268 827 521 337
Fair value loss on policyholder contract liabilities (268 827) (521 337)
Operating expenses 5 (1 877 114) (1 786 412)
Profit from operations 0.3 854 867 851 940
Net interest received 20 86 855 72 196
Interest received 98 658 75 874
Interest paid (11 803) (3 678)
Share of profits from equity accounted investees (1) 70 196 70 568
Profit before taxation and capital items 1 011 918 994 704
Capital items 502 148 086
Profit before taxation (11) 1 012 420 1 142 790
Taxation (194 324) (221 024)
Profit for the year (11) 818 096 921 766
Other comprehensive income for the year net of taxation
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 246 790 43 200
Total comprehensive income for the year 1 064 886 964 966
Profit for the year attributable to :
Equity holders of the company (12) 592 668 676 951
Non-controlling interests (8) 225 428 244 815
(11) 818 096 921 766
Total comprehensive income for the year attributable to :
Equity holders of the company 801 069 714 265
Non-controlling interests 263 817 250 701
1 064 886 964 966
Basic earnings per ordinary share (cents) (16) 275.9 327.0
Diluted earnings per ordinary share (cents) (1) (13) 275.9 318.0
Number of ordinary shares in issue ('000) 226 066 223 505
Treasury shares held ('000) 21 848 20 484
Weighted average number of ordinary shares in issue ('000) 203 465 197 284
Diluted weighted average number of ordinary shares in issue ('000) (1) 203 465 202 898
Reconciliation of headline earnings
%
change
2015 to Reviewed Audited
2016 2016 2015
R'000 R'000
Profit for the year attributable to equity holders (12) 592 668 676 951
Adjustment relating to earnings attributable to participating treasury shares (31 242) (31 779)
Profit attributable to ordinary shareholders (13) 561 426 645 172
Gross effect of net gain on disposal of investment in equity accounted investee (475) -
Tax effect of net gain on disposal of investment in equity accounted investee 89 -
Non-controlling interest effect of net gain on disposal of investment in equity accounted investee 170 -
Gross effect of net gain on disposal of interest in subsidiaries (2) - (142 626)
Non-controlling interest effect of net gain on disposal of interest in subsidiaries - 31 799
Headline earnings 5 561 210 534 345
Headline earnings per ordinary share (cents) 2 275.8 270.9
Diluted headline earnings per ordinary share (cents) (1) 5 275.8 263.4
Cash dividend paid per ordinary share in respect of the previous year (cents) 50 150.0 100.0
Cash dividend per ordinary share declared subsequent to 31 March (cents) 3 155.0 150.0
(1) Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding
assuming conversion of all dilutive potential ordinary shares. At reporting date there were no potentially dilutive ordinary
shares still to be issued (2015: 5 614 074).
At 31 March 2016, 8 911 199 participating treasury shares (2015: 7 896 191) were excluded from the diluted weighted-
average number of ordinary shares calculation because their effect would have been anti-dilutive.
(2) No tax effect
Condensed consolidated statement of financial position
Reviewed Audited
2016 2015
R'000 R'000
Assets
Non-current assets 8 003 468 7 647 773
Property, plant and equipment 91 085 63 228
Intangible assets 767 370 590 262
Investment in equity accounted investees 318 969 313 350
Investments linked to policyholder investment contracts 5 862 496 5 932 805
Financial investments 841 305 648 840
Loans and receivables 16 095 -
Deferred taxation 106 148 99 288
Current assets 20 750 978 22 719 601
Financial investments 2 499 193 1 470 999
Loans and receivables 28 871 146 299
Trade and other receivables 910 936 743 919
Amounts receivable in respect of stockbroking activities 14 625 911 17 892 958
Taxation 18 484 6 089
Cash and cash equivalents 2 667 583 2 459 337
Total assets 28 754 446 30 367 374
Equity and liabilities
Equity 3 775 534 3 230 283
Equity attributable to equity holders of the company 3 227 760 2 660 901
Non-controlling interests 547 774 569 382
Non-current liabilities 6 422 799 5 971 189
Policyholder investment contract liabilities 5 862 496 5 932 805
Interest bearing borrowings 277 288 10 234
Loans and other payables 265 411 8 390
Deferred taxation 17 604 19 760
Current liabilities 18 556 113 21 165 902
Interest bearing borrowings 49 751 -
Loans and other payables 108 506 134 359
Financial instrument liabilities 2 195 876 1 505 297
Trade and other payables 1 442 573 1 173 399
Amounts payable in respect of stockbroking activities 14 721 859 18 303 172
Taxation 37 548 49 675
Total equity and liabilities 28 754 446 30 367 374
Net tangible asset value per ordinary share (cents) 1 156.0 986.8
Net asset value per ordinary share (cents) 1 497.2 1 249.1
Condensed consolidated statement of changes in equity
Total capital and Non-controlling
reserves interests Total equity
R'000 R'000 R'000
Reviewed - 2016
Balance at 31 March 2015 2 660 901 569 382 3 230 283
Profit for the year 592 668 225 428 818 096
Other comprehensive income for the year 208 401 38 389 246 790
Transactions with owners recorded directly in equity: (234 210) (285 425) (519 635)
Dividends paid (1) (304 531) (251 766) (556 297)
Share-based payments 68 698 - 68 698
Disposal of shares in subsidiary to non-controlling shareholders 12 966 5 993 18 959
Repurchase and cancellation of shares of subsidiary (5 210) (39 652) (44 862)
Repurchase of treasury shares (34 355) - (34 355)
Issue of additional shares of the holding company (2) 28 222 - 28 222
Balance at 31 March 2016 3 227 760 547 774 3 775 534
Audited - 2015
Balance at 31 March 2014 2 063 521 629 882 2 693 403
Profit for the year 676 951 244 815 921 766
Other comprehensive income for the year 37 314 5 886 43 200
Transactions with owners recorded directly in equity: (116 885) (311 201) (428 086)
Dividends paid (192 828) (140 522) (333 350)
Share-based payments 19 939 - 19 939
De-recognition of non-controlling interest on loss of control of hedge fund - (74 361) (74 361)
Purchase of shares in subsidiary from the non-controlling shareholders (62 107) 8 617 (53 490)
Repurchase and cancellation of shares of subsidiary (17 408) (104 935) (122 343)
Issue of additional shares of holding company 135 519 - 135 519
Balance at 31 March 2015 2 660 901 569 382 3 230 283
(1) Dividends paid to equity holders of the company relate to the 150 cents per share cash dividend paid on the 11 August 2015.
(2) As a result of the vesting of the 2013 extension to the executive incentive scheme which was implemented during 2010, 2 561 034 million new shares were allotted and issued on 17 November 2015 at a
price of R11.02 per share (after taking into account the special cash distribution made on 11 August 2014).
Condensed consolidated statement of cash flow
Reviewed Audited
2016 2015
R'000 R'000
Cash flow from operating activities (635 992) 641 899
Cash flow from operating activities excluding stockbroking activities 299 437 793 440
Cash dividends paid (545 222) (333 350)
Cash flow from stockbroking activities (390 207) 181 809
Cash flow from investing activities (228 422) (105 218)
Cash flow from financing activities 1 005 130 109 007
Net increase in cash and cash equivalents 140 716 645 688
Cash and cash equivalents at beginning of the year 2 459 337 1 811 895
Effects of exchange rate changes on cash and cash equivalents 67 530 1 754
Cash and cash equivalents at end of the year 2 667 583 2 459 337
Segmental analysis
Interest and share
of profits from
equity accounted Profit from ordinary % change in headline
Total revenue investees activities(1) Headline earnings earnings
R'000 R'000 R'000 R'000 2015 to 2016
Reviewed 2016
Wealth and Asset Management 990 024 40 414 437 080 247 466 (11)
Wealth Management - local 788 158 23 152 263 573 182 940 5
Asset Management 201 866 17 262 173 507 64 526 (38)
Broking and Structuring 888 058 47 023 268 551 108 275 47
Stenham 725 568 726 195 915 143 732 25
Advisory - 31 084 31 084 (2) 26 732 (2)
Total from operating reportable segments 2 603 650 119 247 932 630 526 205 7
Group 63 640 35 069 81 108 65 066 (2)
2 667 290 154 316 1 013 738 591 271 6
Audited - 2015
Wealth and Asset Management 1 056 279 50 027 475 334 277 700
Wealth Management - local 720 076 29 293 248 000 173 589
Asset Management 336 203 20 734 227 334 104 111
Broking and Structuring 667 716 32 720 181 052 73 596
Stenham 633 003 6 397 173 717 114 872
Advisory - 31 879 31 879 (2) 27 416
Total from operating reportable segments 2 356 998 121 023 861 982 493 584
Group 232 376 18 735 129 710 66 200
2 589 374 139 758 991 692 559 784
Note : Group funding costs are disclosed as part of "group" and have not been allocated to the underlying operating reportable segments
(1) Profit from ordinary activities is synonymous with profit before taxation and capital items per reconciliation of segmental analysis to statement of comprehensive income
(2) Represents 50% of profit after taxation
Reconciliation of segmental analysis to statement of comprehensive income
Total from
Wealth and operating
Asset Broking and reportable Non-reportable IFRS reported
Management Structuring (3) Stenham Advisory segments Group segments (1) information
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
For the year ended 31 March 2016
Total revenue per segmental analysis 990 024 888 058 725 568 - 2 603 650 63 640 - 2 667 290
Reconciling items: (69 926) (31 026) - - (100 952) (43 513) 209 156 64 691
Operating revenue - internal (72 454) (26 872) - - (99 326) - - (99 326)
Investment income - internal 2 528 (4 154) - - (1 626) (43 513) 45 139 -
Investment income of non-reportable segment - external - - - - - - 164 017 164 017
Total revenue per statement of comprehensive income 920 098 857 032 725 568 - 2 502 698 20 127 209 156 2 731 981
Profit before taxation and capital items per segmental analysis 437 080 268 551 195 915 31 084 932 630 81 108 - 1 013 738
Reconciling total revenue items per above (69 926) (31 026) - - (100 952) (43 513) 209 156 64 691
Operating expenses of non-reportable segment - external - - - - - - (64 224) (64 224)
Deferred profit participation (2) 44 841 - - - 44 841 - - 44 841
Share based payment charge (2) (49 863) - - - (49 863) - - (49 863)
Interest paid - internal - 2 735 - - 2 735 - - 2 735
Profit before taxation and capital items per statement of comprehensive income 362 132 240 260 195 915 31 084 829 391 37 595 144 932 1 011 918
For the year ended 31 March 2015
Total revenue per segmental analysis 1 056 279 667 716 633 003 - 2 356 998 232 376 - 2 589 374
Reconciling items: (104 722) 175 647 - - 70 925 (242 158) 220 211 48 978
Operating revenue - internal (100 836) 175 880 - - 75 044 - - 75 044
Operating revenue of non-reportable segment - external - - - - - - 1 642 1 642
Investment income - internal (3 886) (233) - - (4 119) (242 158) 246 277 -
Investment income of non-reportable segment - external - - - - - (27 708) (27 708)
Total revenue per statement of comprehensive income 951 557 843 363 633 003 - 2 427 923 (9 782) 220 211 2 638 352
Profit before taxation and capital items per segmental analysis 475 334 181 052 173 717 31 879 861 982 129 710 - 991 692
Reconciling total revenue items per above (104 722) 175 647 - - 70 925 (242 158) 220 211 48 978
Operating expenses of non-reportable segment - external - - - - - - (52 601) (52 601)
Deferred profit participation (2) 19 671 - - - 19 671 - - 19 671
Share based payment charge (2) (16 042) - - - (16 042) - - (16 042)
Interest paid - internal - 3 393 - - 3 393 56 - 3 449
Interest paid - external - - - - - - (1) (1)
Share of profits from equity accounted investees - internal - - (442) - (442) - - (442)
Profit before taxation and capital items per statement of comprehensive income 374 241 360 092 173 275 31 879 939 487 (112 392) 167 609 994 704
(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 2013 deferred profit scheme 1 (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. In addition, management treats the 2015 deferred profit scheme 2 (which is partially settled in PGR shares) as an expense as profits are earned,
but for IFRS purposes it is recognised partially as an employee benefit in terms of IAS 19 and partially as a share-based payment arrangement under IFRS 2, in which the liability has been measured using the
projected unit method. Service conditions attached to the arrangement were taken into account in measuring the fair value of the liability. The expense is recognised over the service period.
(3) The capital item of R501 748 disclosed on the statement of comprehensive income pertains to the Broking and Structuring operating reportable segment.
Notes & Compliance
The condensed consolidated provisional financial statements of the Peregrine Group as at and for the year ended 31 March 2016 comprise the company's and its
subsidiaries ("the Group") results and the Group's interests in equity accounted investees.
Basis of preparation
The condensed consolidated provisional financial statements are prepared in accordance with the JSE Limited Listings Requirements for provisional reports and the
requirements of the Companies Act of South Africa. The Listings Requirements require provisional reports to be prepared on a consolidated basis 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 Reporting Pronouncements as issued by the Financial Reporting Standards Council and to also, as a
minimum, contain the information required by IAS 34 - Interim Financial Reporting.
This announcement does not include the information required pursuant to paragraph 16A(j) of IAS 34. The full (provisional) report is available on the company's website, at
the company's registered offices and upon request.
The accounting policies applied in the preparation of the condensed consolidated provisional financial statements are in terms of International Financial Reporting Standards
and are consistent with those applied in the previous consolidated financial statements as at and for the year then ended 31 March 2015.
In preparing these condensed consolidated provisional financial statements, management made judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. 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 2015.
The Group's results are prepared 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 2015, 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.
Review Report
These condensed consolidated provisional financial statements for the year ended 31 March 2016 have been reviewed by KPMG Inc., who expressed an unmodified review
opinion. A copy of the auditor's review report is available for inspection at the company's registered office together with the financial statements identified in the auditor's
review report.
The auditor's review report does not necessarily report on all of the information contained in the condensed consolidated provisional financial statements. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditor's review engagement they should obtain a copy of the auditor's review report
together with the accompanying financial information from the issuer's registered office.
Acquisitions
1. Peregrine's shareholding in Stenham Limited increased from 80.91% to 85.08% following the buy-back and subsequent cancellation of its own shares in two tranches
during the course of the current year.
2. On 1 January 2016, Citadel Holdings Proprietary Limited ("Citadel") acquired 100% of the issued share capital of Consolidated Financial Planning Proprietary Limited
("Consolidated") (subsequently renamed Citadel Financial Planning Proprietary Limited) and its subsidiaries for a total cash consideration of R152 million. Consolidated was
acquired as it is aligned with the business profile of Citadel.
In the three months to 31 March 2016, Consolidated contributed revenue of R16.9 million. If Consolidated had been consolidated into the Group's attributable earnings for
the twelve months ended 31 March 2016, the revenue contributed would have been R75.7 million and the profit after tax R 12.7 million.
The acquisition had the following effect on the Group's assets and liabilities assumed at the acquisition date. 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 gross acquired trade receivables amounted to R619 610. Trade
receivables were not impaired and the full amount has been received subsequent to the acquisition and before year-end. The goodwill arising from the acquisition consists of
the surplus above net assets and the customer relationships acquired.
R'000
Identifiable assets 95 184
Intangible - Customer relationships 80 000
Deferred taxation 2 268
Equipment 2 133
Trade and other receivables 620
Cash and cash equivalents 10 163
Identifiable liabilities (13 044)
Trade and other payables (12 459)
Taxation (585)
Fair value of identifiable net assets assumed 82 140
Goodwill arising on acquisition 69 827
Fair value of total net assets assumed 151 967
Disposals
1. With effect from 1 April 2015, Stenham Trustees Limited ("Stenham Trust"), a subsidiary of Stenham Limited, disposed of a 6% interest to key management for a cash
consideration of GBP1.1 million (R18.9 million), thereby reducing their interest to 94% from 100% and resulting in a profit of GBP899 304 (R15.9 million), which has been accounted
for directly through equity as a transaction with owners.
2. With effect from 1 April 2015, Peregrine Securities Proprietary Limited disposed of a 15% interest in Legae Securities Proprietary Limited for a cash consideration of R2.5
million, thereby reducing their equity accounted interest from 47.5% to 32.5%, resulting in a capital profit of R501 748.
Events subsequent to reporting date
Subsequent to the reporting date, Stenham Trust entered into a final agreement whereby an independent Trust and Fiduciary company and Stenham Trust have formed a
50/50 joint venture, with effect from 1 April 2016.
The directors are not aware of any other matters or circumstances arising since the end of the financial year which significantly affect the financial position of the Peregrine
Group or the results of its operations.
Contingent liabilities
Contingent liabilities as at 31 March 2016 amounted to R26.4 million (2015: R15.6 million). The contingent liabilities comprise primarily of one day's variation margin due
from broking clients, all of which were settled subsequent to reporting date. The composition of the contingent liabilities remains unchanged.
Commitments
Operating lease commitments as at 31 March 2016 amounted to R205 million (2015: R359 million).
Interest bearing debt
Interest bearing borrowings of R327 million (2015: R10 million) comprise bank term loans of R242 million (2015: R10 million) and a revolving credit facility ("RCF") of R85
million. R157 million of the term loans bear interest at prime less 0.5% and the balance of R85 million at 3 month JIBAR plus 2.85%. The term loans are repayable in 60
monthly payments of interest in arrears and annual capital payments in arrears. R122 million of the term loans are secured. The RCF bears interest at 1 month JIBAR plus
2.5%, interest repayable quarterly in arrears and capital repayable at the end of 3 years.
R250 million of the loans and payables of R374 million (2015: R143 million) comprise unsecured funding injected into one of the Group's subsidiaries during the course of
the year. The loans bear interest at prime and are repayable by no later than February 2046.
Applicable exchange rates
Average rates Closing rates
USD:ZAR
31 March 2016 13,78 14,71
31 March 2015 11,07 12,12
GBP:ZAR
31 March 2016 20,72 21,14
31 March 2015 17,82 17,99
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