Wrap Text
Reviewed condensed consolidated provisional results for year ended 31 March 2017 and change to board of directors
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" or "the company")
REVIEWED CONDENSED CONSOLIDATED PROVISIONAL RESULTS FOR THE
YEAR ENDED 31 MARCH 2017 AND CHANGE TO THE BOARD OF DIRECTORS
- Normalised basic earnings down 13% to R514 million
- Normalised headline earnings down 16% to R499 million
- Annuity earnings up 5%
- Dividend maintained at 155 cents per share
- Group surplus assets to be unbundled
COMMENTARY
The Peregrine Group delivered stronger annuity earnings which were offset by reduced
variable performance fees and proprietary returns during the year ended 31 March 2017. There
was growth in earnings from the operating businesses of Peregrine Capital, Peregrine Securities
and Java Capital, whilst the stronger Rand impacted negatively on the earnings of Citadel and
the translated earnings of Stenham. Higher returns from proprietary investments within the
hedge funds were offset by significant decreases in the value of listed investments.
Across the Group annuity earnings grew by 5% and accounted for in excess of 90% of Group
revenue and 75% of Group earnings. Variable and proprietary attributable earnings decreased
in the main due to lower performance fees across the Group and reduced listed investment
returns. The contribution from offshore continued to play a meaningful role in diversifying
Group income.
Financial results
Basic profit attributable to shareholders decreased by 13% to R490 million (2016: R561
million) with basic earnings per share amounting to 236.9 cents per share (2016: 275.9 cents
per share). Headline earnings decreased by 15% to R476 million (2016: R561 million) with
headline earnings per share decreasing by 17% to 230.0 cents per share (2016: 275.8 cents per
share).
Consistent with prior years, the board feels that, in addition to providing the above disclosed
IFRS earnings, normalised earnings (which more accurately reflect the true economic results),
are disclosed as follows:
- normalised headline earnings decreased by 16% to R499 million (2016: R591
million);
- normalised headline earnings per share decreased by 16% to 231.6 cents per share (2016:
276.3 cents per share).
Group normalised operating revenue decreased by 8% to R2.33 billion (2016: R2.52 billion).
Income from proprietary investing activities decreased to R85 million (2016: R146 million)
with income from equity accounted investees increasing to R100 million (2016: R70 million).
An annexure, disclosing the reconciliation between IFRS and normalised earnings contained
in the reconciliation of segmental analysis to statement of comprehensive income, is available
on the Group's website.
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 R556 million (2016: R661 million). Normalised cash generated from
operating activities amounted to R629 million (2016: R741 million), once again highlighting
the cash generative nature of the Group.
Aggregate normalised cash in the Group amounted to R930 million at year-end (March 2016:
R786 million), of which R54 million (March 2016: R21 million) was available at the holding
company level, R560 million (March 2016: R451 million) held offshore and the balance of
R316 million (March 2016: R314 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) better reflects and aids in
the understanding of each division's specific economic benefit to the shareholders of the
Group. In addition, operating results are presented before tax and before non-controlling
interests in the reported segment information.
Wealth Management
In a continuingly difficult investment environment, Citadel capitalised on its position as a
leading private client wealth manager in South Africa. Assets under management at year-end
amounted to R44.6 billion (March 2016: R44.9 billion) with gross inflows for the twelve
months amounting to R4.5 billion (March 2016: R3.4 billion). The client retention rate in the
traditional business amounts to 97%.
Due to significantly lower performance fees earned, headline earnings for the twelve months
decreased by 5% to R174 million (2016: R183 million) with very pleasing annuity earnings
growth, cost 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 Group's flagship hedge fund manager, Peregrine
Capital. Peregrine Capital increased earnings by 5% on a larger asset base which grew to R8.2
billion (March 2016: R7.3 billion) largely as a result of strong inflows. Annuity earnings within
the business were significantly higher while performance fees were lower than the comparable
period.
Peregrine disposed of its minority shareholding in Caveo Fund Solutions Proprietary Limited
and realised a net capital gain of R12.7 million on disposal.
Headline earnings for the segment decreased slightly to R63 million (2016: R65 million).
Stenham
During the year, further share purchase and repurchase transactions took place in Stenham, the
Group's UK and Guernsey-based asset management and trust business. As a result, Peregrine's
share in Stenham increased from 85.1% to 88.8%.
As a result of the costs of settling the claim referred to below and a stronger Rand, Peregrine's
share of Stenham's profit decreased by 48% to R74 million (2016: R144 million).
Excluding the once-off costs of settling a claim which arose in prior periods, Stenham Asset
Management performed reasonably with revenues in Sterling terms having decreased primarily
due to decreased performance fees. Despite net outflows amounting to $44 million during the
period under review, total assets under management and advice increased to $3.6 billion
(March 2016: $3.4 billion). Operating costs have decreased significantly due to cost saving
initiatives.
The Stenham property portfolio was significantly impacted by the material drop in the market
value of Stenham's investment in Stenprop Limited which acquired the Stenham Property
business in exchange for Stenprop Limited shares with effect from 1 October 2014. Earnings
were, however, enhanced by the receipt of dividends received from Stenprop Limited and the
significant gain made on the sale of certain properties that were retained by Stenham with the
intention being to realise the remaining properties over time.
Stenham Trustees performed satisfactorily in an ever-increasing regulatory cost environment
and now incorporates the results of the newly established Bellerive 50% joint venture to which
a portion of the trust business was transferred with effect from 1 April 2016.
Stenham remains strongly cash-flow generative, with no long-term debt and 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 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. Earnings for the brokering and structuring segment, which now includes an offshore
element, grew by 6% to R115 million (2016: R108 million).
Advisory
Java Capital, which retains its position as the industry leader in the provision of corporate
finance services in the listed property sector, is widely regarded as the premier independent
corporate advisory house in South Africa competing directly, and successfully, for mandates
against local and international banks.
Java Capital's headline earnings contribution amounted to R39 million (2016: R27 million)
with Java Capital still having a significant amount of unbilled work in progress and pipeline of
new business as at the end of the reporting period.
Group
Despite higher returns generated on the Group's proprietary investments in hedge funds, Group
investment returns, net of Group costs, decreased to R34 million (2016: R65 million) primarily
as a result of the earnings effect of the significant drop in the market value of Stenprop Limited
coupled with the Group's share of associated losses, after tax, in Nala.
Issued share capital
The Group's shares in issue amounts to 226.066 million and, net of 15.611 million treasury
shares (which includes the 5.127 million Peregrine shares purchased by the Citadel Share
Trust), amounts to 210 455 million.
Dividend
The directors have resolved to declare an ordinary cash dividend of 155 cents per share for the
year ended 31 March 2017, which is unchanged from last year's ordinary dividend of 155 cents
per share.
The salient dates applicable to the ordinary dividend:
Last date to trade cum dividend Tuesday, 1 August 2017
Trading ex dividend commences Wednesday, 2 August 2017
Record date Friday, 4 August 2017
Payment date Monday, 7 August 2017
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 20%;
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 124 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, 2 August 2017 and
Friday, 4 August 2017, both dates inclusive.
Payment of the dividend will be made to shareholders on Monday, 7 August 2017. In respect
of dematerialised shares, the dividend will be transferred to the CSDP/broker accounts on
Monday, 7 August 2017. Certified shareholders' dividend payments will be deposited on or
about Monday, 7 August 2017.
Proposed Group restructure and unbundling
Subject to obtaining the necessary regulatory approvals, the board has resolved to restructure
the Group by transferring to Sandown Capital Proprietary Limited ("Newco"), a wholly-owned
subsidiary of the existing listed entity, Peregrine Holdings Limited, all the surplus balance sheet
investments within the Group (i.e. excess cash, hedge fund and other proprietary investments).
The proposed restructure will result in:
- Newco which, based on the values of the balance sheet investments as at 31 March
2017, will have a net asset value in excess of R1 billion, being separately listed with
the shares in Newco being unbundled to Peregrine Holdings shareholders;
- the operating and related entities within the Group which generate higher quality,
diversified, predominantly annuity earnings being housed within Peregrine Holdings,
the intention of the board being, subject to working capital requirements, investments
in new opportunities, meeting the Group's required Return on Equity parameters and
cash required to retire debt within the operating entities, to declare and pay a dividend
equivalent to a substantial portion of each year's normalised headline earnings.
The aim is to finalise and implement the restructure and unbundling by no later than the end of
the current calendar year and shareholders will be advised on the progress in due course.
Directorate
While there were no changes to the board during the year under review, shareholders were
notified, in terms of a SENS announcement published on 22 September 2016, that Jonathan
Hertz, the Group CEO, had advised the board of his intention to step down with effect from
30 June 2017.
The board has run a search process resulting in a short-list of potential candidates from which
an appointment could be made, however, as a result of the proposed restructure and unbundling
referred to above:
- the board has decided to delay the appointment of the new CEO until there is certainty
regarding the restructure. In the interim, it has been agreed that Jonathan Hertz will
remain in office until 31 July 2017;
- the board has, with effect from 1 August 2017, appointed Robert Katz as the interim
CEO with the appointment of a permanent CEO to be made following certainty being
reached on the proposed restructure. Dispensation has been obtained from the JSE for
Robert Katz to continue in his role as CFO during this interim period.
The board would like to take the opportunity to thank Jonathan Hertz for the contribution he
has made to the Group in the four years that he was Group CEO. In that time Jonathan was
instrumental in strengthening the focus on the Group's annuity earnings, enhancing Group
marketing and distribution efforts, facilitating and applying Group synergies where appropriate
and reducing central costs. Shareholders benefited as all measures of Group earnings increased
substantially, as did dividends, resulting in a materially higher share price.
The board would like to wish Jonathan success in his future endeavours, particularly those in
which the Group will continue to have a shared interest.
Conclusion
The Group continued to build on its strategy of delivering higher quality, diversified earnings
during the twelve-month period ended 31 March 2017. Peregrine considers that the
unpredictable nature of the annual returns of the Group's proprietary investments has
introduced unnecessary volatility into the company's earnings. By transferring these
investments into a separate entity, and giving shareholders direct ownership of this entity, the
Group believes that shareholder value will be maximised over time.
Jonathan Hertz Sean Melnick
Group CEO Non-executive Chairman
Sandton
13 June 2017
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, Rosebank
Towers, 15 Biermann Avenue, Rosebank, 2196 (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, 14 June 2017.
Condensed consolidated statement of comprehensive income
Reviewed Audited % change 2016
2017 2016 to 2017
R'000 R'000
Operating revenue 2 307 195 2 421 874 -5
Investment and other income 161 777 310 107 -48
Total revenue 2 468 972 2 731 981 -10
Operating expenses (1 798 393) (1 877 114) -4
Profit from operations 670 579 854 867 -22
Net interest received 42 549 86 855 -51
Interest received 105 760 98 658
Interest paid (63 211) (11 803)
Share of profits from equity accounted investees 100 006 70 196 42
Profit before taxation and capital items 813 134 1 011 918
Capital items 21 305 502
Profit before taxation 834 439 1 012 420 -18
Taxation (131 492) (194 324)
Profit for the year 702 947 818 096 -14
Other comprehensive income for the year net of taxation
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (334 350) 246 790
Total comprehensive income for the year 368 597 1 064 886
Profit for the year attributable to :
Equity holders of the company 501 850 592 668 -15
Non-controlling interests 201 097 225 428 -11
702 947 818 096 -14
Total comprehensive income for the year attributable to :
Equity holders of the company 208 424 801 069
Non-controlling interests 160 173 263 817
368 597 1 064 886
Basic earnings per ordinary share (cents)(1) 236.9 275.9 -14
Reconciliation of headline earnings
Reviewed Audited % change 2016
2017 2016 to 2017
R'000 R'000
Profit for the year attributable to equity holders 501 850 592 668 -15
Adjustment relating to earnings attributable to participating treasury shares(1) (11 933) (31 242)
Profit attributable to ordinary shareholders 489 917 561 426 -13
Gross effect of gain on disposal of investment in equity accounted investee (18 573) (475)
Tax effect of gain on disposal of investment in equity accounted investee 4 160 89
Non-controlling interest effect of gain on disposal of investment in equity accounted investee 2 018 170
Gross effect of gain on disposal of intangible assets(2) (2 225) -
Non-controlling interest effect of gain on disposal of intangible assets 436 -
Headline earnings(3) 475 733 561 210 -15
Headline earnings per ordinary share (cents) 230.0 275.8 -17
Cash dividend paid per ordinary share in respect of the previous year (cents) 155.0 150.0 3
Cash dividend per ordinary share declared subsequent to 31 March (cents) 155.0 155.0 -
Number of ordinary shares in issue ('000) 226 066 226 066
Treasury shares held ('000) 15 611 21 848
Weighted average number of ordinary shares in issue ('000) 206 820 203 465
1 The participating treasury shares are the only shares at reporting date which could potentially have a dilutive effect on
conversion to ordinary shares. Diluted earnings per share has not been disclosed as the participating treasury shares
have an anti-dilutive effect.
2 No tax effect.
3 An annexure disclosing IFRS and normalised earnings is available on the Group's website.
Condensed consolidated statement of financial position
Reviewed Audited
2017 2016
R'000 R'000
Assets
Non-current assets 7 745 954 8 003 468
Property, plant and equipment 129 335 91 085
Intangible assets 662 536 767 370
Investment in equity accounted investees 341 425 318 969
Investments linked to policyholder investment contracts 6 013 781 5 862 496
Financial investments 485 244 841 305
Loans and receivables 15 265 16 095
Deferred taxation 98 368 106 148
Current assets 19 640 590 20 750 978
Financial investments 537 265 2 499 193
Loans and receivables 95 987 28 871
Trade and other receivables 434 061 910 936
Amounts receivable in respect of stockbroking activities 15 802 935 14 625 911
Taxation 18 862 18 484
Cash and cash equivalents 2 751 480 2 667 583
Total assets 27 386 544 28 754 446
Equity and liabilities
Equity 3 538 039 3 775 534
Equity attributable to equity holders of the company 3 063 188 3 227 760
Non-controlling interests 474 851 547 774
Non-current liabilities 6 498 581 6 422 799
Policyholder investment contract liabilities 6 013 781 5 862 496
Interest-bearing borrowings 349 979 277 288
Loans and other payables 123 885 265 411
Deferred taxation 10 936 17 604
Current liabilities 17 349 924 18 556 113
Interest-bearing borrowings 42 800 49 751
Loans and other payables 161 050 108 506
Financial instrument liabilities 215 625 2 195 876
Trade and other payables 857 129 1 442 573
Amounts payable in respect of stockbroking activities 16 040 340 14 721 859
Taxation 32 980 37 548
Total equity and liabilities 27 386 544 28 754 446
Condensed consolidated statement of changes in equity
Total capital and Non-controlling
reserves interests Total equity
R'000 R'000 R'000
Reviewed - 2017
Balance at 31 March 2016 3 227 760 547 774 3 775 534
Profit for the year 501 850 201 097 702 947
Other comprehensive income for the year (293 426) (40 924) (334 350)
Transactions with owners recorded directly in equity: (372 996) (233 096) (606 092)
Dividends paid(1) (316 538) (192 401) (508 939)
Share-based payments 17 793 - 17 793
2013 deferred remuneration scheme 1 settlement(2) (75) - (75)
Acquisition of participating treasury shares(3) (82 918) - (82 918)
Repurchase and cancellation of shares of subsidiary 8 742 (44 646) (35 904)
Subscription of shares in new subsidiary - 451 451
Additional subscription of shares in subsidiary - 3 500 3 500
Balance at 31 March 2017 3 063 188 474 851 3 538 039
Audited - 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 (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 28 222 - 28 222
Balance at 31 March 2016 3 227 760 547 774 3 775 534
1 Dividends paid to equity holders of the company relate to the 155 cents per share paid on the 8 August 2016.
2 During the current financial year, 10 000 000 Peregrine Holdings Limited ("PGR") shares pertaining to the 2013
deferred remuneration scheme 1 were sold on behalf of the participants and the proceeds plus the cumulative
dividends were paid to the participants, conditional on an extended lock-in period of twelve months. The balance
of the equity settled share based payment charge will be recognised in the March 2018 financial year to be
consistent with the service period.
3 During the course of the third quarter of the current financial year, 3 762 100 PGR shares were acquired on
behalf of the participants in the 2015 deferred remuneration scheme 2.
Condensed consolidated statement of cash flow
Reviewed Audited
2017 2016
R'000 R'000
Cash flow from operating activities 219 257 (635 992)
Cash flow from operating activities excluding stockbroking activities 553 105 299 437
Cash dividends paid (508 939) (545 222)
Cash flow from stockbroking activities 175 091 (390 207)
Cash flow from investing activities (346 267) (228 422)
Cash flow from financing activities 311 117 1 005 130
Net increase in cash and cash equivalents 184 107 140 716
Cash and cash equivalents at beginning of the year 2 667 583 2 459 337
Effects of exchange rate changes on cash and cash equivalents (100 210) 67 530
Cash and cash equivalents at end of the year 2 751 480 2 667 583
Segmental analysis
Interest and share
of profits from % change in headline
equity accounted Profit from ordinary earnings
Total revenue investees activities(1) Headline earnings 2016 to 2017
R'000 R'000 R'000 R'000
Reviewed - 2017
Wealth and Asset Management 1 038 925 25 465 401 232 236 531 -4
Wealth Management 821 763 12 319 224 427 173 927 -5
Asset Management 217 162 13 146 176 805 62 604 -3
Broking and Structuring 803 857 49 248 243 035 115 082 6
Stenham 506 330 17 189 99 910 74 369 -48
Advisory - 45 494 45 494(2) 39 125 46
Total from operating reportable segments 2 349 112 137 396 789 671 465 107 -12
Group 67 086 10 691 43 540 34 141 -48
2 416 198 148 087 833 211 499 248 -16
Audited - 2016
Wealth and Asset Management 990 024 40 414 437 080 247 466
Wealth Management 788 158 23 152 263 573 182 940
Asset Management 201 866 17 262 173 507 64 526
Broking and Structuring 888 058 47 023 268 551 108 275
Stenham 725 568 726 195 915 143 732
Advisory - 31 084 31 084(2) 26 732
Total from operating reportable segments 2 603 650 119 247 932 630 526 205
Group 63 640 35 069 81 108 65 066
2 667 290 154 316 1 013 738 591 271
Note : Group funding costs are disclosed as part of the "group" segment 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
Wealth and
Asset Broking and
Management(1) Structuring Stenham(1) Advisory
R'000 R'000 R'000 R'000
For the year ended 31 March 2017 (reviewed)
Total revenue per segmental analysis 1 038 925 803 857 506 330 -
Reconciling items: (46 197) 26 057 - -
Operating revenue - internal (51 030) 26 921 - -
Investment income - internal 4 833 (864) - -
Investment income of non-reportable segment - external - - - -
Total revenue per statement of comprehensive income 992 728 829 914 506 330 -
Profit before taxation and capital items per segmental analysis 401 232 243 035 99 910 45 494
Reconciling total revenue items per above (46 197) 26 057 - -
Operating expenses of non-reportable segment - external (6 782) - - -
Deferred profit participation(3) (3 500) - - -
Share based payment charge(3) (21 364) - - -
Interest paid - internal - 1 335 - -
Interest paid - external (6 867) - - -
Profit before taxation and capital items per statement of comprehensive income 316 522 270 427 99 910 45 494
For the year ended 31 March 2016 (audited)
Total revenue per segmental analysis 990 024 888 058 725 568 -
Reconciling items: (69 926) (31 026) - -
Operating revenue - internal (72 454) (26 872) - -
Investment income - internal 2 528 (4 154) - -
Investment income of non-reportable segment - external - - - -
Total revenue per statement of comprehensive income 920 098 857 032 725 568 -
Profit before taxation and capital items per segmental analysis 437 080 268 551 195 915 31 084
Reconciling total revenue items per above (69 926) (31 026) - -
Operating expenses of non-reportable segment - external - - - -
Deferred profit participation 44 841 - - -
Share based payment charge (49 863) - - -
Interest paid - internal - 2 735 - -
Profit before taxation and capital items per statement of comprehensive income 362 132 240 260 195 915 31 084
Total from
operating
reportable Non-reportable IFRS reported
segments Group segments(2) information
R'000 R'000 R'000 R'000
For the year ended 31 March 2017 (reviewed)
Total revenue per segmental analysis 2 349 112 67 086 - 2 416 198
Reconciling items: (20 140) (88 151) 161 065 52 774
Operating revenue - internal (24 109) - - (24 109)
Investment income - internal 3 969 (88 151) 84 182 -
Investment income of non-reportable segment - external - - 76 883 76 883
Total revenue per statement of comprehensive income 2 328 972 (21 065) 161 065 2 468 972
Profit before taxation and capital items per segmental analysis 789 671 43 540 - 833 211
Reconciling total revenue items per above (20 140) (88 151) 161 065 52 774
Operating expenses of non-reportable segment - external (6 782) - (35 673) (42 455)
Deferred profit participation(3) (3 500) - - (3 500)
Share based payment charge(3) (21 364) - - (21 364)
Interest paid - internal 1 335 - - 1 335
Interest paid - external (6 867) - - (6 867)
Profit before taxation and capital items per statement of comprehensive income 732 353 (44 611) 125 392 813 134
For the year ended 31 March 2016 (audited)
Total revenue per segmental analysis 2 603 650 63 640 - 2 667 290
Reconciling items: (100 952) (43 513) 209 156 64 691
Operating revenue - internal (99 326) - - (99 326)
Investment income - internal (1 626) (43 513) 45 139 -
Investment income of non-reportable segment - external - - 164 017 164 017
Total revenue per statement of comprehensive income 2 502 698 20 127 209 156 2 731 981
Profit before taxation and capital items per segmental analysis 932 630 81 108 - 1 013 738
Reconciling total revenue items per above (100 952) (43 513) 209 156 64 691
Operating expenses of non-reportable segment - external - - (64 224) (64 224)
Deferred profit participation 44 841 - - 44 841
Share based payment charge (49 863) - - (49 863)
Interest paid - internal 2 735 - - 2 735
Profit before taxation and capital items per statement of comprehensive income 829 391 37 595 144 932 1 011 918
1 The capital item of R21 million disclosed on the statement of comprehensive income pertains partly to the Wealth and Asset Management operating
reportable segment (R19 million) and partly to the Stenham operating reportable segment (R2 million).
2 Refers to the Group's consolidated proprietary hedge investments which do not meet the quantitative thresholds for determining reportable segments.
3 The 2013 deferred remuneration scheme 1 was initiated during the 2014 financial year. Management treats the scheme (which is settled in Peregrine
Holdings Limited "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 five year vesting period to 31 March 2018. The 2015 deferred remuneration scheme 2 was initiated during the
2016 financial year, the terms of which provide the participants with the right to participate in an asset pool, partly comprising of PGR shares,
which is settled through an attribution of profits over the service period.
Notes & Compliance
The condensed consolidated provisional financial statements of the Peregrine Group as at and for the year ended 31 March 2017 comprise the company
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.
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 2016.
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 2016.
The Group's results are prepared under the supervision of R E Katz CA (SA), the Group Chief Financial Officer.
Review Report
These condensed consolidated provisional financial statements for the year ended 31 March 2017 have been reviewed by Deloitte & Touche,
who expressed an unmodified review report thereon. A copy of the auditor's review report is available for inspection at the company's
registered office together with the condensed consolidated provisional 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 announcement. 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.
Any prospects detailed in this announcement have not been reviewed or reported on by the auditors.
Acquisitions
1. Peregrine's shareholding in Stenham increased from 85.08% to 88.81% following the buy-back and subsequent cancellation of its own
shares in two tranches.
2. Peregrine Fund Platform Proprietary Limited, a subsidiary of Peregrine SA Holdings Proprietary Limited, acquired 50% of Salient
Quantitative Investment Management Proprietary Limited on 1 March 2017 for R10 million. The investment is equity accounted as an associate.
Disposals disclosed as capital items
1. Stenham Trust Limited ("Stenham") entered into a final agreement whereby an independent Trust and Fiduciary company and Stenham have
formed a 50/50 joint venture ("JV"), with effect from 1 April 2016. Stenham has transferred to the JV, that part of its fiduciary trust
business that includes the relationships and engagements with the trusts and trust structures managed by Stenham that relate to the gaming
business and its entire fiduciary trust business relating to certain Family Office clients for a total aggregate cash consideration of
GBP1 million, payable in four equal bi-annual instalments of GBP250 000 over the two years ending 31 March 2018. A non-taxable gross capital
profit of R2.3 million (GBP115 750) has been recognised in the Statement of Comprehensive Income, of which R1.8 million
(GBP93 068) is attributable to ordinary shareholders.
2. With effect from 1 April 2016, Peregrine SA Holdings Proprietary Limited disposed of its 49.99% shareholding in Caveo Fund Solutions
Proprietary Limited for a cash consideration of R20 million, resulting in a gross capital profit of R19 million which has been recognised
in the Statement of Comprehensive Income, of which R12.4 million is attributable to ordinary shareholders.
Consolidation of Hedge Funds in terms of IFRS 10 : Consolidated Financial Statements
In terms of current International Financial Reporting Standards certain of the Group's proprietary hedge fund investments are required
to be consolidated due to the fact that the Group has effective control both in terms of kick-out rights and with direct and indirect
holdings being greater than 50%. In cases which fall within or along the IFRS 10 marginal zone a reasoned judgement as to whether the
fund manager is a principal or an agent is required to be made by management, one such case being the Peregrine High Growth En Commandite
Partnership ("High Growth Fund"), in which the Group held an interest as at 31 March 2016 which required consolidation. The High Growth Fund
was de-consolidated with effect from 31 August 2016, the NAV of which amounted to R2.4 billion (31 March 2016: R1.9 billion), as the percentage
held by the Group at this date had decreased to 12.97% from 18.34% and as a result clearly fell outside the IFRS10 marginal zone between agent
and principal. Furthermore, the Group disinvested in full from the High Growth Fund at the end of December 2016.
Events subsequent to reporting date
Peregrine FX Proprietary Limited, a wholly owned subsidiary of Citadel Holdings Proprietary Limited, acquired 100% shareholding in Impex Treasury
Solutions Proprietary Limited (a treasurer outsourcer in the agricultural sector) with effect from 3 April 2017 for a cash consideration of R20.5 million.
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 and guarantees issued
Contingent liabilities as at 31 March 2017 amounted to R109.7 million (2016: R26.4 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.
A guarantee of R125 million has been issued by one of Peregrine's subsidiary's in favour of several financial institutions on behalf of
one of its securities lending clients. The guarantee was issued to assist the client in providing collateral relating to stock
lending transactions. The guarantee expires on the 31st of July 2018.
Commitments
Operating lease commitments as at 31 March 2017 amounted to R451 million (2016: R205 million); the increase primarily relates to new premises
leased by Citadel Holdings Proprietary Limited's Cape Town based subsidiary company.
Interest bearing debt
Interest bearing borrowings of R393 million (2016: R327 million) comprise bank term loans of R217 million (2016: R242 million) and a revolving
credit facility ("RCF") of R176 million (2016: R85 million). R157 million (2016: R157 million) of the bank term loans bear interest at prime
less 0.5% and the balance of R60 million (2016: R85 million) at 3 month JIBAR plus 2.85%. The bank term loans are repayable in 60 monthly payments
of interest in arrears and annual capital payments in arrears. R121 million (2016: R122 million) of the bank 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.
R261 million (2016: R251 million) of the loans and payables of R285 million (2016: R374 million) comprise unsecured funding injected into
one of the Group's subsidiaries during the course of the prior year. The loans bear interest at prime and are repayable by no
later than February 2046.
Supplemental information
Asset value per share
31 March 2017 31 March 2016
Net tangible asset value per ordinary share (cents) 1 121.0 1 156.0
Net asset value per ordinary share (cents) 1 420.9 1 497.2
Applicable exchange rates
Average rates Closing rates
USD:ZAR
31 March 2017 14,05 13,41
31 March 2016 13,78 14,71
GBP:ZAR
31 March 2017 18,41 16,77
31 March 2016 20,72 21,14
This announcement does not include the information required pursuant to paragraph 16A(j) of IAS34. The full (provisional)
report is available on the issuer's website, at the issuer's registered offices and upon request.
14 June 2017
Date: 14/06/2017 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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