Wrap Text
Unaudited results for the six months ended 30 September 2017 and change to the function of a director
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")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 AND CHANGE TO THE FUNCTION
OF A DIRECTOR
- Segmental headline earnings up 6% to R272 million
- Segmental headline earnings relating to operating businesses up 11% to R207 million
- Segmental earnings per share relating to the operating businesses of 95. 9 cents, up 11%
- Annuity segmental headline earnings relating to operating businesses up 20% to R163 million
- Finalisation of separate listing and unbundling of non-operating surplus net assets of
R1.15 billion
COMMENTARY
The main operating businesses in the Group namely Citadel, Peregrine Securities, Peregrine
Capital, Stenham and Java Capital delivered an increase in earnings of 11% to R207 million.
There was growth in earnings from all of the businesses other than Peregrine Securities where
reduced trading volumes on the JSE negatively impacted revenues and earnings in that
business.
Earnings from proprietary investments (which are soon to be unbundled) decreased by 7% to
R65 million primarily due to a significant gain made on the realisation of unlisted property
investments in the comparative period not being repeated. Gains in the current year were
made on hedge fund and other listed investments.
Across the operating entities, annuity earnings grew strongly by 20% to R163 million and
accounted for 79% (2016: 73%) of the aggregate earnings of the operating entities. Variable
and performance fee earnings decreased by 13% to R43 million in the main due to lower
variable type earnings in Peregrine Securities, partly offset by higher performance fees
earned elsewhere in the Group. The contribution from offshore operations continues to play a
meaningful role in diversifying Group income with 33% of the aggregate earnings of the
operating entities being generated from outside of South Africa.
Financial results
Basic earnings attributable to ordinary shareholders amounted to R257 million (2016: R256
million) with basic earnings per ordinary share amounting to 122.0 cents per share (2016:
125.3 cents per share). Headline earnings increased by 6% to R257 million (2016: R242
million) with headline earnings per ordinary share increasing by 3% to 122.0 cents per share
(2016: 118.5 cents per share). The difference between the 6% and 3% can be attributed to a
lower weighted average number of treasury shares, which carry participating rights, in the
current year.
Consistent with the prior year, in addition to providing the above disclosed IFRS earnings
(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 in prior periods), segmental earnings (which more accurately reflect the true
economic results), are disclosed as follows:
- segmental headline earnings increased by 6% to R272 million (2016: R255 million);
- segmental headline earnings per share increased by 6% to 126.0 cents (2016: 118.5 cents
per share).
Group segmental operating revenue decreased by 5% to R1.11 billion (2016: R1.16 billion).
Income from equity accounted investees increased significantly to R57 million (2016: R48
million). An annexure disclosing IFRS and segmental earnings is available on the Group's
website.
Segmental cash generated from continuing operating activities amounted to R305 million
(2016: R289 million), once again highlighting the cash generative nature of the Group.
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
the facts recording each segment'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 financial table below. Management believes that this further aids in the
understanding of each segment's profitability.
Wealth Management
Despite the ongoing difficult investment environment, Citadel continued to capitalise on its
position as a leading private client wealth manager in South Africa. Assets under
management as at September 2017 grew to R45.9 billion (March 2017: R44.6 billion) with
gross inflows for the six months amounting to R2.1 billion (September 2016: R2.4 billion).
The client retention rate in the traditional business amounts to 97%.
Headline earnings for the six months increased by 14% to R94 million (2016: R83 million)
with strong annuity earnings growth, cost controls, healthy inflows and slightly increased
performance fees earned.
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. Headline earnings increased to R42 million (2016: R32 million)
primarily as a result of Peregrine Capital's increased management fees and significant
performance fees earned on high returns on a larger asset base. Peregrine Capital's asset base
grew to R8.5 billion at September (March 2017: R8.2 billion) largely as a result of
investment performance.
Stenham
Post year-end, further share purchase and repurchase transactions took place in Stenham, the
Group's UK and Guernsey based asset management and trust business, subsidiary. As a
result, Peregrine's share in Stenham increased from 88.8% to 100%.
Taking into account the significant gains made on the disposal of certain unlisted investments
in the comparative period, Peregrine's share of Stenham's profit decreased by 19% to R46
million (2016: R56 million), with the earnings from operating businesses amounting to R27
million (September 2016: R48,000 loss, which includes the once off costs of settling a claim
which arose in prior periods) whilst proprietary gains amounted to R19 million (September
2016: R56 million).
Stenham Asset Management continued to perform reasonably and with improved global
market returns, performance fees that crystalise in December 2017 could be substantial if the
current investment performance is maintained. Core revenues in Sterling terms have
decreased primarily due to margin pressures whilst total assets under management and advice
have remained constant since year end at $3.6 billion, with net subscriptions amounting to
$178 million during the period under review. Operating costs, excluding the prior year
settlement claim, have decreased significantly due to cost savings initiatives.
Stenham Trustees performed well in an ever increasing regulatory cost environment with
earnings significantly up primarily as a result of increased time charges and tight cost
controls.
There was a strong performance from the Stenham property portfolio including dividends
received from Stenham's investment in Stenprop Limited, which acquired the Stenham
Property business in exchange for Stenprop Limited shares with effect from 1 October 2014.
Prior year earnings were enhanced significantly by the gain made on the sale of certain
properties. The Stenham property portfolio is one of the assets being transferred to Sandown
Capital Limited ("SDC") as part of the restructure and unbundling referred to below.
Stenham remains strongly cash-flow generative, with no long-term debt.
Broking and Structuring
The very difficult local macro trading environment has resulted in a significant decrease in
trading volumes for Peregrine Securities, which has built several of the industry's leading
franchises in the areas of prime broking and derivative broking and structuring. Brokerage
value has decreased in line with the decrease in value traded on the JSE. Despite the decrease
in revenues, the business remains the top ranked firm in terms of value traded in the equity
derivatives market and number two amongst all JSE brokers in terms of value and volume in
equity trading. Costs which are marginally up on the prior period, remain tightly controlled.
As a result of decreased revenues for brokering and structuring, which now includes an
offshore element, earnings decreased by 38% to R39 million (2016: R63 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 headline earnings contribution for the six months amounted to R18.1 million
(2016: R17.5 million) with Java Capital still having a significant amount of unbilled work in
progress as at the end of the reporting period.
Group
Group investment returns, net of Group costs, increased to R33 million (2016: R4 million)
primarily as a result of the earnings effect of the increase in the market value of Stenprop
Limited post year end. Group hedge fund investment returns remained primarily flat on prior
year. The Group investments, including all investments, both local and offshore, in hedge
funds, have been transferred to SDC as part of the restructure and unbundling.
Issued share capital
Shares in issue amount to 226.066 million and, net of 13.902 million treasury shares (which
includes the 3.418 million Peregrine shares purchased by the Citadel Share Trust), amount to
212.164 million.
Group restructure and unbundling
The board resolved to restructure the Group by transferring all surplus non-operating net
assets held by the Group (i.e. excess cash, investment in hedge funds and other proprietary
investments), to SDC, a wholly owned subsidiary of Peregrine, with effect from 2 October
2017.
Having obtained the necessary regulatory approvals, the restructure and subsequent
unbundling will result in SDC being separately listed on the JSE on Wednesday,
29 November 2017 with the shares in SDC being unbundled to Peregrine shareholders on
Monday, 4 December 2017.
A circular setting out further details of the unbundling and the pre-listing statement of SDC
was sent to Peregrine shareholders on Tuesday, 14 November 2017, with further information,
including the ratio apportionment of expenditure and market value in respect of the
unbundling, to follow in due course.
Directorate
Jonathan Hertz, the previous Group CEO, stepped down on 31 July 2017 and, with effect
from 1 August 2017, Robert Katz was appointed as the interim CEO following the
dispensation obtained from the JSE in respect of this interim CEO appointment.
With effect from 15 November 2017, Robert Katz has been appointed as the permanent CEO
and the board has commenced the process to appoint a CFO. Until such appointment is made
(the intention to make such appointment by no later than 31 March 2018), Robert Katz will
act as both CEO and CFO.
Conclusion
In continuing difficult and challenging market conditions, Peregrine has again managed to
deliver a set of results which has capitalised on its strong base of profitable, cash generative
operating businesses. Annuity income continues to grow strongly, in addition to which the
growth in performance fees and prospective performance fees has also been very pleasing.
The Group continues to focus on growing its businesses organically and through acquisition
and driving cross business revenue synergies, and remains well positioned to capitalise on
further growth opportunities. In addition, further measures are being put in place to ensure
that all the group entities, particularly Peregrine Securities, are optimally capitalised to take
advantage of the ever changing environment.
With the unpredictable nature of the returns of the Group's proprietary investments no longer
introducing unnecessary volatility into the company's earnings (with these interim results and
the results for the year ending 31 March 2018 being the last sets of results which will include
returns on proprietary investments), the Group believes that the predominantly higher quality,
diversified operating annuity earnings streams will result in the ability of the Group to adopt
a substantially higher dividend payout ratio and ultimately maximise shareholder value over
time.
Robert Katz Sean Melnick
CEO and CFO Non-executive Chairman
Sandton
16 November 2017
Directors: SA Melnick^ (Chairman); RE Katz (CEO and 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 Peregrine's
website at http://www.peregrine.co.za on Thursday, 16 November 2017.
Condensed consolidated statement of comprehensive income
Unaudited for
Unaudited for the six months
% change the six months ended 30 Audited for the
2016 to ended 30 September year ended 31
2017 September 2017 2016 March 2017
R'000 R'000 R'000
Operating revenue 1 1 156 612 1 150 898 2 307 195
Investment and other income -58 63 875 150 610 161 777
Total revenue -6 1 220 487 1 301 508 2 468 972
Operating expenses -6 (852 211) (909 282) (1 798 393)
Profit from operations -6 368 276 392 226 670 579
Net interest received 57 32 449 20 632 42 549
Interest received 56 780 50 307 105 760
Interest paid (24 331) (29 675) (63 211)
Share of profits from equity accounted investees 19 57 161 48 104 100 006
Profit before taxation and capital items 457 886 460 962 813 134
Capital items - 21 066 21 305
Profit before taxation -5 457 886 482 028 834 439
Taxation (94 208) (102 965) (131 492)
Profit for the period -4 363 678 379 063 702 947
Other comprehensive income for the period net of taxation
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 84 359 (253 583) (334 350)
Total comprehensive income for the period 448 037 125 480 368 597
Profit for the period attributable to :
Equity holders of the company -2 261 187 267 631 501 850
Non-controlling interests -8 102 491 111 432 201 097
-4 363 678 379 063 702 947
Total comprehensive income for the period attributable to :
Equity holders of the company 342 557 44 994 208 424
Non-controlling interests 105 480 80 486 160 173
448 037 125 480 368 597
Basic earnings per ordinary share (cents)(1) -3 122.0 125.3 236.9
Reconciliation of headline earnings
Unaudited for Unaudited for
% the six the six months
change months ended ended 30 Audited for the
2016 to 30 September September year ended 31
2017 2017 2016 March 2017
R'000 R'000 R'000
Profit for the period attributable to equity holders -2 261 187 267 631 501 850
Adjustment relating to earnings attributable to participating treasury shares(1) (4 141) (11 531) (11 933)
Profit attributable to ordinary shareholders - 257 046 256 100 489 917
Gross effect of gain on disposal of investment in equity accounted investee - (18 206) (18 573)
Tax effect of gain on disposal of investment in equity accounted investee - 4 078 4 160
Non-controlling interest effect of gain on disposal of investment in equity
accounted investee - 1 978 2 018
Gross effect of gain on disposal of intangible assets(2) - (1 954) (2 225)
Non-controlling interest effect of gain on disposal of intangible assets - 391 436
Headline earnings(3) 6 257 046 242 387 475 733
Headline earnings per ordinary share (cents) 3 122.0 118.5 230.0
Cash dividend paid per ordinary share in respect of the previous year (cents) 3 155.0 150.0 155.0
Cash dividend per ordinary share declared subsequent to 31 March (cents) - 155.0 155.0 155.0
Number of ordinary shares in issue ('000) 226 066 226 066 226 066
Treasury shares held ('000) 13 902 19 772 15 611
Weighted average number of ordinary shares in issue ('000) 210 658 204 462 206 820
(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) Annexure A, disclosing the reconciliation of IFRS and Segmental headline earnings, is available on the Group's website.
Condensed consolidated statement of financial position
Unaudited as at Audited as at 31 March
30 September 2017 2017
R'000 R'000
Assets
Non-current assets 7 296 534 7 745 954
Property, plant and equipment 124 667 129 335
Intangible assets 690 194 662 536
Investment in equity accounted investees 340 293 341 425
Investments linked to policyholder investment contracts 6 004 932 6 013 781
Financial investments 25 942 485 244
Loans and receivables 15 651 15 265
Deferred taxation 94 855 98 368
Current assets 20 660 685 19 640 590
Financial investments 82 399 537 265
Loans and receivables 172 702 95 987
Trade and other receivables 409 105 434 061
Amounts receivable in respect of stockbroking activities 18 171 036 15 802 935
Taxation 13 079 18 862
Cash and cash equivalents 1 812 364 2 751 480
Asset held for resale(1) 1 456 389 -
Total assets 29 413 608 27 386 544
Equity and liabilities
Equity 3 464 152 3 538 039
Equity attributable to equity holders of the company 3 074 694 3 063 188
Non-controlling interests 389 458 474 851
Non-current liabilities 6 540 840 6 498 581
Policyholder investment contract liabilities 6 004 932 6 013 781
Interest-bearing borrowings 446 551 349 979
Loans and other payables 73 256 123 885
Deferred taxation 16 101 10 936
Current liabilities 19 016 945 17 349 924
Interest-bearing borrowings 44 900 42 800
Loans and other payables 2 871 161 050
Financial instrument liabilities 40 977 215 625
Trade and other payables 1 025 593 857 129
Amounts payable in respect of stockbroking activities 17 854 959 16 040 340
Taxation 47 645 32 980
Liabilities held for resale(1) 391 671 -
Total equity and liabilities 29 413 608 27 386 544
(1) Refer to Net assets held for resale in the Notes & Compliance section for additional information.
Condensed consolidated statement of changes in equity
Total capital and Non-controlling
reserves interests Total equity
R'000 R'000 R'000
Unaudited - 2017
Balance at 31 March 2017 3 063 188 474 851 3 538 039
Profit for the period 261 187 102 491 363 678
Other comprehensive income for the period 81 370 2 989 84 359
Transactions with owners recorded directly in equity: (331 051) (190 873) (521 924)
Dividends paid(1) (326 207) (85 801) (412 008)
Share-based payments 36 165 - 36 165
2015 deferred remuneration scheme 2 settlement(2) (80 136) - (80 136)
Disposal of participating treasury shares(2) 117 273 - 117 273
Acquisition of participating treasury shares(3) (97 470) - (97 470)
Repurchase and cancellation of shares of subsidiary 19 324 (111 832) (92 508)
Subscription of shares in new subsidiary (4) - 6 342 6 342
Additional subscription of shares in subsidiary - 418 418
Balance at 30 September 2017 3 074 694 389 458 3 464 152
Unaudited - 2016
Balance at 31 March 2016 3 227 760 547 774 3 775 534
Profit for the period 267 631 111 432 379 063
Other comprehensive income for the period (222 637) (30 946) (253 583)
Transactions with owners recorded directly in equity: (314 281) (139 326) (453 607)
Dividends paid (316 538) (108 553) (425 091)
Share-based payments (19 971) - (19 971)
Disposal of participating treasury shares 22 228 - 22 228
Repurchase and cancellation of shares of subsidiary - (30 773) (30 773)
Balance at 30 September 2016 2 958 473 488 934 3 447 407
(1) Dividends paid to equity holders of the company relate to the 155 cents per share paid on 7 August 2017.
(2) During the course of September 2017, 5 126 190 Peregrine Holdings Limited ("PGR") shares, which carried participating rights,
were disposed of as a result of the early vesting of the Citadel 2015 deferred remuneration scheme 2 and the proceeds thereon were
paid to the participants, conditional on an extended twelve month lock-in period to 31 March 2021.
(3) The Citadel 2017 deferred remuneration scheme 3 was initiated during the month of September 2017, with an effective date of
1 October 2017 and a maturity date of 31 March 2022, the terms of which provide the participants with the right to participate in
an asset pool, which is settled through an attribution of profits over the service period. In this regard, 3 417 590 PGR shares,
which carry participating rights, were acquired in the month of September 2017.
(4) During the course of September 2017, Peresec International Limited was incorporated with an issued share capital of R18 million
(GBP1 million), of which 65% was subscribed for by Peregrine International Holdings Limited, a wholly-owned subsidiary of Peregrine
Holdings Limited and 35% by a non-controlling shareholder.
Condensed consolidated statement of cash flow
Unaudited for the Unaudited for the
six months ended six months ended
30 September 30 September
2017 2016
R'000 R'000
Cash flow from operating activities (282 973) (774 308)
Cash flow from operating activities excluding stockbroking activities 364 830 323 593
Cash dividends paid (412 008) (425 091)
Cash flow from stockbroking activities (235 795) (672 810)
Cash flow from investing activities 22 206 (496 166)
Cash flow from financing activities (420 060) 533 320
Net decrease in cash and cash equivalents (680 827) (737 154)
Cash and cash equivalents at beginning of the period 2 751 480 2 667 583
Effects of exchange rate changes on cash and cash equivalents 16 814 (80 615)
Cash and cash equivalents at end of the period 2 087 467 1 849 814
Presented and disclosed in the Statement of Financial Position under:
Current assets 1 812 364 1 849 814
Assets held for resale(1) 275 103 -
2 087 467 1 849 814
(1) Refer to Net assets held for resale in the Notes & Compliance section for additional information.
Segmental analysis 1
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 2016 to 2017
Unaudited for the six months ended 30 September 2017
Wealth and Asset Management 596 248 14 280 259 488 136 360 19
Wealth Management 438 719 10 192 129 504 94 324 14
Asset Management 157 529 4 088 129 984 42 036 32
Broking and Structuring 329 528 24 255 82 209 38 715 -38
Stenham 214 448 10 552 56 511 45 713 -19
Advisory - 20 997 20 997(2) 18 057 3
Total from operating reportable segments 1 140 224 70 084 419 205 238 845 -5
Group 69 445 19 755 55 848 32 834 >100
1 209 669 89 839 475 053 271 679 6
Operating Businesses(3) 1 107 596 89 454 382 992 206 821 11
Surplus Balance Sheet(3) 102 073 385 92 061 64 858 -7
1 209 669 89 839 475 053 271 679 6
Unaudited for the six months ended 30 September 2016
Wealth and Asset Management 524 881 14 411 208 561 114 747
Wealth Management 417 591 6 878 120 246 82 870
Asset Management 107 290 7 533 88 315 31 877
Broking and Structuring 422 004 24 960 130 874 62 791
Stenham 262 706 8 306 79 041 56 259
Advisory - 20 338 20 338(2) 17 491
Total from operating reportable segments 1 209 591 68 015 438 814 251 288
Group 50 509 4 063 25 923 4 164
1 260 100 72 078 464 737 255 452
Operating Businesses(3) 1 157 557 84 651 356 659 185 788
Surplus Balance Sheet(3) 102 543 (12 573) 108 078 69 664
1 260 100 72 078 464 737 255 452
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 the condensed consolidated statement
of comprehensive income.
(2) Represents 50% of profit after taxation.
(3) Refer to Segmental analysis 2 for a split between the Operating Businesses and the Surplus Balance Sheet investments per segment.
Segmental analysis 2
Profit from ordinary activities Headline earnings
Operating Surplus Balance Operating Surplus Balance
Businesses Sheet Total Businesses Sheet Total
R'000 R'000 R'000 R'000 R'000 R'000
Unaudited for the six months ended 30 September 2017 *
Wealth and Asset Management 259 488 - 259 488 136 360 - 136 360
Wealth Management 129 504 - 129 504 94 324 - 94 324
Asset Management 129 984 - 129 984 42 036 - 42 036
Broking and Structuring 82 209 - 82 209 38 715 - 38 715
Stenham 31 014 25 497 56 511 27 071 18 642 45 713
Advisory 20 997 - 20 997 18 057 - 18 057
Total from operating reportable segments 393 708 25 497 419 205 220 203 18 642 238 845
Group (10 716) 66 564 55 848 (13 382) 46 216 32 834
382 992 92 061 475 053 206 821 64 858 271 679
Unaudited for the six months ended 30 September 2016 *
Wealth and Asset Management 208 561 - 208 561 114 747 - 114 747
Wealth Management 120 246 - 120 246 82 870 - 82 870
Asset Management 88 315 - 88 315 31 877 - 31 877
Broking and Structuring 130 874 - 130 874 62 791 - 62 791
Stenham 2 351 76 690 79 041 (48) 56 307 56 259
Advisory 20 338 - 20 338 17 491 - 17 491
Total from operating reportable segments 362 124 76 690 438 814 194 981 56 307 251 288
Group (5 465) 31 388 25 923 (9 193) 13 357 4 164
356 659 108 078 464 737 185 788 69 664 255 452
% change in headline earnings
Operating Surplus Balance
Businesses Sheet Total
2016 to 2017 2016 to 2017 2016 to 2017
Unaudited for the six months ended 30 September 2017 *
Wealth and Asset Management 19 - 19
Wealth Management 14 - 14
Asset Management 32 - 32
Broking and Structuring -38 - -38
Stenham >100 -67 -19
Advisory 3 - 3
Total from operating reportable segments 13 -67 -5
Group 46 >100 >100
11 -7 6
* Annexure C, disclosing the Segment statement of comprehensive income split between Operating Business and Surplus Balance Sheet,
is available on the Group's website.
Reconciliation between Segment Revenue and Profit before tax and IFRS Revenue and Profit before tax
Wealth and
Asset Broking and
Management(1) Structuring Stenham(1) Advisory
R'000 R'000 R'000 R'000
For the six months ended 30 September 2017
Total revenue per segmental analysis 596 248 329 528 214 448 -
Reconciling items: (16 423) 74 820 - -
Operating revenue - internal (23 342) 73 137 - -
Investment income - internal 6 919 1 683 - -
Investment income of non-reportable segment - external - - - -
Total revenue per statement of comprehensive income 579 825 404 348 214 448 -
Profit before taxation and capital items per segmental analysis 259 488 82 209 56 511 20 997
Reconciling total revenue items per above (16 423) 74 820 - -
Operating expenses of non-reportable segment - external (3 985) - - -
Deferred profit participation(3) 18 457 - - -
Share based payment charge(3) (36 166) - - -
Interest paid - internal - 2 164 - -
Interest paid - external (2 393) - - -
Profit before taxation and capital items per statement of comprehensive income 218 978 159 193 56 511 20 997
For the six months ended 30 September 2016
Total revenue per segmental analysis 524 881 422 004 262 706 -
Reconciling items: (37 932) 21 445 - -
Operating revenue - internal (39 794) 23 568 - -
Investment income - internal 1 862 (2 123) - -
Investment income of non-reportable segment - external - - - -
Total revenue per statement of comprehensive income 486 949 443 449 262 706 -
Profit before taxation and capital items per segmental analysis 208 561 130 874 79 041 20 338
Reconciling total revenue items per above (37 932) 21 445 - -
Operating expenses of non-reportable segment - external (1 862) - - -
Deferred profit participation(3) (6 154) - - -
Share based payment charge(3) (5 702) - - -
Interest paid - internal - 379 - -
Interest paid - external (3 721) - - -
Profit before taxation and capital items per statement of comprehensive income 153 190 152 698 79 041 20 338
Total from
operating
reportable Non-reportable IFRS reported
segments Group segments(2) information
R'000 R'000 R'000 R'000
For the six months ended 30 September 2017
Total revenue per segmental analysis 1 140 224 69 445 - 1 209 669
Reconciling items: 58 397 (60 328) 12 749 10 818
Operating revenue - internal 49 795 - - 49 795
Investment income - internal 8 602 (60 328) 51 726 -
Investment income of non-reportable segment - external - - (38 977) (38 977)
Total revenue per statement of comprehensive income 1 198 621 9 117 12 749 1 220 487
Profit before taxation and capital items per segmental analysis 419 205 55 848 - 475 053
Reconciling total revenue items per above 58 397 (60 328) 12 749 10 818
Operating expenses of non-reportable segment - external (3 985) - (6 062) (10 047)
Deferred profit participation(3) 18 457 - - 18 457
Share based payment charge(3) (36 166) - - (36 166)
Interest paid - internal 2 164 - - 2 164
Interest paid - external (2 393) - - (2 393)
Profit before taxation and capital items per statement of comprehensive income 455 679 (4 480) 6 687 457 886
For the six months ended 30 September 2016
Total revenue per segmental analysis 1 209 591 50 509 - 1 260 100
Reconciling items: (16 487) (68 541) 126 436 41 408
Operating revenue - internal (16 226) - - (16 226)
Investment income - internal (261) (68 541) 68 802 -
Investment income of non-reportable segment - external - - 57 634 57 634
Total revenue per statement of comprehensive income 1 193 104 (18 032) 126 436 1 301 508
Profit before taxation and capital items per segmental analysis 438 814 25 923 - 464 737
Reconciling total revenue items per above (16 487) (68 541) 126 436 41 408
Operating expenses of non-reportable segment - external (1 862) - (28 123) (29 985)
Deferred profit participation(3) (6 154) - - (6 154)
Share based payment charge(3) (5 702) - - (5 702)
Interest paid - internal 379 - - 379
Interest paid - external (3 721) - - (3 721)
Profit before taxation and capital items per statement of comprehensive income 405 267 (42 618) 98 313 460 962
(1) The capital item of R21 million disclosed on the statement of comprehensive income for the comparative period 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 Citadel 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 Citadel 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 (with the first application thereof being
in the March 2017 financial year). The IFRS effects arise from the obligation being initially measured using the projected unit method in the year
of inception.
Notes & Compliance
The condensed consolidated unaudited interim financial statements of the Peregrine Group as at and for the six months ended 30 September 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 unaudited interim 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 Listing 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 financial statements are in terms of IFRS and are consistent with those
applied in the previous consolidated financial statements as at and for the year ended 31 March 2017.
In preparing these condensed consolidated unaudited interim 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 2017.
The Group's results are prepared under the supervision of R E Katz CA (SA), the Group Chief Financial Officer and CEO.
These financial statements and any forward-looking statements have not been reviewed or reported on by the Company's auditors, Deloitte & Touche.
The prior year audited results are a summary of the consolidated financial statements as at and for the year ended 31 March 2017, which were prepared
under the supervision of R E Katz CA (SA), the Group Chief Financial Officer and CEO. A copy of these financial statements can be obtained
from the issuer's registered office.
Auditor's report for the year ended 31 March 2017
The consolidated and separate financial statements of Peregrine Holdings Limited ("Peregrine") for the year ended 31 March 2017 have been audited
by the company's auditor, Deloitte & Touche. In their report dated 07 August 2017, which is available for inspection at the Company's Registered Office,
Deloitte & Touche 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. Peregrine's shareholding in Stenham increased from 88.81% to 100% following the buy-back and subsequent cancellation of its own shares in
two tranches.
2. Peregrine Treasury Solutions Proprietary Limited, a wholly-owned subsidiary of Citadel Holdings Proprietary Limited, acquired the entire issued
share capital of Impex Treasury Solutions Proprietary Limited with effect from 1 April 2017 for a cash consideration of R20 million. Impex Treasury
Solutions was acquired as it is aligned with the business profile of Peregrine Treasury Solutions.
The carrying amounts reflected below represent their existing carrying values at the date of acquisition and therefore no fair value adjustments
have been recognised at 30 September 2017, although no downward adjustments are expected. The initial accounting is incomplete as the valuation of
identifiable assets and liabilities acquired is still under consideration. The full amount of the acquired trade receivables are expected to be
collected.
R'000
Identifiable assets 3 894
Deferred taxation 245
Trade and other receivables 2 100
Cash and cash equivalents 1 549
Identifiable liabilities (3 877)
Trade and other payables (3 224)
Taxation (653)
Fair value of identified net assets assumed 17
Goodwill arising on acquisition 19 983
Cash consideration 20 000
Net assets held for resale
With effect from 2 October 2017 Peregrine Holdings Limited transferred to Sandown Capital Limited ("SDC"), a wholly-owned subsidiary at the reporting
date, all the attributable surplus balance sheet investments within the Group. The effect of the restructure and unbundling on the Group's assets
and liabilities as at the reporting date is presented below from both an IFRS and a segmental reporting approach. The restructure and unbundling will
result in the operating entities within the Group (which generate predominantly annuity earnings) being housed within Peregrine Holdings Limited.
The intention of the board then being, subject to working capital requirements, investments in new opportunities that meet 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 segmental headline earnings.
The fair values reflected below represent their carrying values as at 30 September 2017.
Segmental
IFRS disclosure disclosure
R'000 R'000
Identifiable assets held for resale 1 456 389 1 386 101
Financial investments 975 788 1 178 865
Trade and other receivables 200 884 28 143
Taxation 4 614 4 614
Cash and cash equivalents 275 103 174 479
Identifiable liabilities held for resale (391 671) (18 144)
Deferred taxation (5 827) (5 827)
Financial instrument liabilities (132 074) -
Trade and other payables (253 770) (12 317)
Surplus net assets 1 064 718 1 367 957
Non-controlling interest (54 103) (82 101)
Attributable surplus net assets 1 010 615 1 285 856
In terms of current International Financial Reporting Standards (IFRS) 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
within the indicative range outlined within IFRS 10. However, the segmental information reviewed by the Group's Chief Operating Decision Makers
does not consolidate these investments. The segmental information reports these investments as an interest in a financial instrument, reported
as part of the "Group" column in the segmental statement of financial position. The impact of consolidating hedge fund investments is disclosed
in the reconciliation of the segment statement of financial positon to the IFRS statement of financial position in Annexure B, which is available
on the Group's website. Thus the assets and liabilities held for resale of R1.5 billion and R392 million respectively on the face of the IFRS
condensed consolidated statement of financial position are different to the segment assets and liabilities of R1.4 billion and R18 million
respectively disclosed above, which amounts represent the pre-consolidation impact of the assets and liabilities held for sale.
The directors have disclosed the above information and Segmental analysis 1 and 2 on the basis of the Group's segmental reporting approach.
The Directors take responsibility for the reporting on this basis, as it provides information to users which is consistent with the manner in
which the Directors manage the business and is provided for illustrative purposes only, and because of its nature may not fairly
present the company's results of operations. It should not be used for any other purpose.
Events subsequent to reporting date
Other than the Group restructure and unbundling referred to above, the directors are not aware of any other matters or circumstances arising since
the end of the reporting period which significantly affect the financial position of the Peregrine Group or the results of its operations.
Supplementary information
Asset value per share
30 September 2017 31 March 2017
Net tangible asset value per ordinary share (cents) 1107,9 1121,0
Net asset value per ordinary share (cents) 1426,2 1420,9
Applicable exchange rates
Average rates Closing rates
USD:ZAR
30 September 2017 13,19 13,50
31 March 2017 14,05 13,41
30 September 2016 14,53 13,75
GBP:ZAR
30 September 2017 17,07 18,12
31 March 2017 18,41 16,77
30 September 2016 19,98 17,86
This announcement does not include the information required pursuant to paragraph 165A(j) of IAS34. The full interim report is available on Peregrine's
website, at Peregrine's registered offices and upon request.
Date: 16/11/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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