Wrap Text
Peregrine Holdings reviewed condensed consolidated provisional results for the year ended 31 March 2018
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 2018
- Segmental headline earnings up 7% to R535 million (248.0 cents per share)
- Segmental headline earnings relating to operating businesses up 7% to
R470 million (218.0 cents per share)
- Annuity segmental headline earnings relating to operating businesses up 6% to R362 million
- Dividend up 10% to 170 cents per share
COMMENTARY
The 12 months ended 31 March 2018 was a reasonable year for markets despite the significant
political uncertainty during the period, both locally and internationally. Whilst geopolitical
headlines did not seem to dramatically disrupt global equity markets, locally the Group felt the
impact of volatility in local equity markets and the strengthening of the Rand against the US
Dollar and GB Pound.
Whilst the election of Mr Ramaphosa was a welcome outcome for the country, the impact of
"Ramaphoria" has not yet translated into an economic resurgence, as was evident in the
contraction in GDP in the first quarter of 2018. Within the context of this environment, the
Group performed well and delivered solid results.
As a result of the unbundling of the Group's surplus non-operating assets during the period
under review, for ease of comparability, the Group's results for the 12 months ended 31 March
2018 have been presented in such a way so as to separate earnings from the Group's operating
businesses from earnings that arose from the Group's surplus non-operating assets.
The main operating businesses in the Group, namely Citadel, Stenham, Peregrine Capital,
Peregrine Securities and Java Capital, delivered an increase in earnings of 7% to R470 million.
There was strong growth in annuity earnings from Citadel and increased performance fees from
Citadel, Peregrine Capital and Stenham Asset Management, countered by a reduction in
earnings from Peregrine Securities where revenues were lower primarily as a result of a
reduction in higher margin revenue from retail and hedge fund clients. Similarly, Java Capital
produced lower earnings primarily as a result of a weaker environment in both general
corporate finance and in capital raising (particularly property markets) during the latter part of
the financial year.
Across the operating businesses of the Group, annuity earnings grew by 6% to R362 million
and accounted for 77% (2017: 78%) of the aggregate earnings of the operating businesses.
Variable and performance fee earnings increased by 9% to R108 million, in the main due to
higher performance fees earned across the Group, partially offset by lower variable earnings in
Peregrine Securities. Almost every business in the Group benefits from a weaker Rand with
42% (33% at the interim reporting stage) of the Group's operating earnings emanating directly
from offshore entities in the period under review. It is unsurprising that the strengthening of
the Rand against the GB Pound and the US Dollar in the financial year under review had a
meaningful yet negative impact on the Group's translated earnings. Adjusting for the impact
of this strengthening, headline earnings at an attributable operating level would have grown by 13%.
Included in the results for the last time are earnings from proprietary investments which
increased by 11% to R65 million. As previously communicated to investors, in order to remove
the unpredictable and volatile returns associated with these investments, the decision was made
to unbundle these investments effective 2 October 2017 (discussed in more detail later on in
this announcement).
The Group continues to implement its strategy of reinforcing its offering as a highly cash
generative, low capital intensive, high return on equity business.
Financial results
Basic earnings attributable to ordinary shareholders amounted to R504 million (2017: R490
million) with basic earnings per ordinary share amounting to 238.5 cents per share (2017:
236.9 cents per share). Headline earnings increased by 6% to R504 million (2017: R476 million) with
headline earnings per ordinary share increasing by 4% to 238.5 cents per share (2017:
230.0 cents per share). The reason for the difference between the 6% and 4% is a lower weighted
average number of treasury shares, which carry participating rights, in the current year.
Consistent with that of the prior year, in addition to providing the above disclosed IFRS
earnings, segmental earnings are disclosed as follows:
- segmental headline earnings increased by 7% to R535 million (2017: R499 million);
- segmental headline earnings per share increased by 7% to 248.0 cents (2017: 231.6 cents per share).
Group segmental operating revenue increased by 5% to R2.4 billion (2017: R2.3 billion).
Income from equity accounted investees increased significantly to R131 million (2017:
R100 million). An annexure disclosing IFRS and segmental earnings is available on the Group's
website http://www.peregrine.co.za.
Segmental cash generated from operating activities amounted to R711 million (2017: R695
million), once again highlighting the highly cash generative nature of the Group.
Segmental results
As a result of the substantial non-controlling interests, including Nala's shareholding in
Peregrine SA Holdings, that 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 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 difficult investment environment, Citadel continued to capitalise on its position as
a leading private client wealth manager in South Africa. The business remains highly geared
toward the Rand/US Dollar rate with assets under management negatively impacted by
currency strength and weaker global equity markets in the December 2017 to March 2018
period. Assets under management amounted to R43.9 billion at year end (March 2017:
R44.6 billion) with gross inflows for the twelve months amounting to a record R4.9 billion
(March 2017: R4.5 billion). The client retention rate in the business remains strong at 97%.
Notwithstanding the negative impact of the stronger currency, headline earnings for the twelve
months increased by 19% to R207 million (2017: R174 million) on the back of strong annuity
earnings growth, sound cost controls, healthy inflows, consistent high client retention and
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 hedge fund manager, Peregrine Capital.
Headline earnings increased to R68 million (2017: R63 million) primarily as a result of
Peregrine Capital's increased management fees and performance fees earned off the back of an
overall larger average asset base during the year, notwithstanding lower returns year on year.
By year end, Peregrine Capital's asset base decreased to R7.4 billion (March 2017: R8.2
billion) as a result of muted performance in the hedge fund industry during the previous 18
months and the resultant outflows in industry assets.
Stenham
During the first half of the year, further share purchases took place in Stenham, the Group's
UK and Guernsey based asset management and trust business resulting in Peregrine's share in
Stenham increasing from 88.8% to 100%.
The Group's share of Stenham's headline earnings increased by 49% to R111 million (2017:
R74 million), with earnings from operating businesses up by more than 100% to R92 million
(2017: R33 million) whilst proprietary gains amounted to R19 million (2017: R41 million).
Stenham Asset Management performed well, primarily as a result of significant performance
fees earned off the back of strong investment performance as well as reduced operating costs
due to cost savings initiatives. Core revenues in GB Pound terms decreased primarily due to
margin pressures and currency effects. Total assets under management and advice increased
by approximately $100 million to $3.7 billion.
Stenham Trustees continued to perform well. Despite a steadily increasing regulatory cost
environment, earnings were significantly up primarily as a result of increased activity and tight
cost controls.
The Stenham property portfolio was transferred to Sandown Capital Limited ("Sandown
Capital") with effect from 2 October 2017, as part of the restructure and unbundling referred
to below.
Broking and Structuring
The continuing difficult local macro trading environment resulted in a decrease in trading
margins for Peregrine Securities. As a result of decreased revenues, higher financing and other
costs, and the negative impact of currency movements on operating profitability, earnings for
brokering and structuring (which now includes an offshore element) decreased by 23% to
R89 million (2017: R115 million).
Shareholders are referred to the separate announcement, published simultaneously with this results
announcement, advising that a non-binding proposal has been received from Legae Holdings Proprietary
Limited, an entity representing certain management of Legae Securities and Peregrine Securities and
a Black Economic Empowerment consortium, to acquire the Group's shareholding in the Securities business,
the Group's single capital intensive business, which proposal, the board, at its board meeting held
on 12 June 2018, decided to accept.
Advisory
Java Capital's contribution to earnings amounted to R38 million (2017: R39 million), 4% down
on the previous year. Java Capital's strong deal flow in advisory appointments and equity
capital markets activity in the first nine months of the year was countered by sharply weakening
market conditions in the last quarter of the financial year.
Group
Group investment returns, net of Group costs, fell to R23 million (2017: R34 million). Included
are investment returns relating to proprietary assets unbundled on 2 October 2017.
Issued share capital
As at 31 March 2018, the Group's shares in issue amounted to 226.066 million and, net of
14.715 million treasury shares (which includes the 3.881 million Peregrine shares purchased
by Citadel Investment Services Proprietary Limited), amounted to 211.351 million. The
modification to the Peregrine Holdings Limited long-term executive remuneration incentive
scheme shortly before the end of the financial year from cash-settled to equity-settled, resulted
in the share buyback of 350 000 Peregrine shares.
Dividend
The directors have resolved to declare an ordinary cash dividend of 170 cents per share for
the year ended 31 March 2018, which is 10% higher than that of 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, 31 July 2018
Trading ex dividend commences Wednesday, 1 August 2018
Record date Friday, 3 August 2018
Payment date Monday, 6 August 2018
In terms of the JSE Listings Requirements 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 170 cents per share
for shareholders exempt from paying dividends tax;
4. The net local dividend amount for the ordinary cash dividend is 136 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, 1 August 2018 and
Friday, 3 August 2018, both dates inclusive.
Payment of the dividend will be made to shareholders on Monday, 6 August 2018. In respect
of dematerialised shares, the dividend will be transferred to the CSDP/broker accounts on
Monday, 6 August 2018. Certificated shareholders' dividend payments will be deposited on or
about Monday, 6 August 2018.
Group unbundling
During the year under review, the board resolved to restructure the Group by transferring all
surplus non-operating net assets held within the Group (i.e. excess cash, investment in hedge
funds and other proprietary investments), to Sandown Capital, then a wholly owned subsidiary
of Peregrine, with effect from 2 October 2017.
Having obtained the necessary regulatory approvals, the restructure and subsequent unbundling
resulted in Sandown Capital being separately listed on the JSE on Wednesday, 29 November
2017 with the shares in Sandown Capital being unbundled to Peregrine shareholders on
Monday, 4 December 2017.
A circular setting out details of the unbundling and the pre-listing statement of Sandown
Capital 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, being disseminated to shareholders in terms of a SENS announcement
published on 30 November 2017.
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, which appointment was made
permanent with effect from 15 November 2017.
Peregrine shareholders were notified, in terms of a SENS announcement published on 19 April
2018, that Claire Coward had been appointed as the CFO of the Group and an executive director
of Peregrine with effect from 1 June 2018 (until which date Robert Katz had continued to act
as the CFO).
It is the intention of the board, having regard to the Group's racial and gender diversity policies,
as well as the desire to optimise the composition of the board and its subcommittees, to propose
a number of board changes before the Group's next annual general meeting.
Conclusion
With the unpredictable nature of the returns of the Group's proprietary investments no longer
introducing volatility into the Group's earnings (with this years' results being the last set of
results which will include any returns on proprietary investments), the Group's return on equity
is anticipated to increase appreciably. Focus remains on growing annuity revenue streams and
cost containment.
In addition, the dividend payout ratio should increase meaningfully if the Group concludes the
above-mentioned transaction to dispose of its single capital intensive business. There remains
ongoing appetite for potential acquisitions that are consistent with the highly cash generative
profile of the other Peregrine businesses.
Rob Katz Sean Melnick
Chief Executive Officer Non-executive Chairman
Sandton
12 June 2018
Directors: SA Melnick^ (Chairman); RE Katz (CEO); C Coward (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 Wednesday, 13 June 2018.
Condensed consolidated statement of comprehensive income
% change
2017 to
2018 Reviewed Audited
2018 2017
R'000 R'000
Operating revenue 8 2 489 142 2 307 195
Investment and other income -61 62 850 161 777
Total revenue 3 2 551 992 2 468 972
Operating expenses 7 (1 927 771) (1 798 393)
Profit from operations -7 624 221 670 579
Net interest received >100 92 597 42 549
Interest received 140 840 105 760
Interest paid (48 243) (63 211)
Share of profits from equity accounted investees 31 130 798 100 006
Profit before taxation and capital items 847 616 813 134
Capital items - 21 305
Profit before taxation 2 847 616 834 439
Taxation (163 283) (131 492)
Profit for the year -3 684 333 702 947
Other comprehensive income for the year net of taxation
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 24 898 (334 350)
Total comprehensive income for the year 709 231 368 597
Profit for the year attributable to :
Equity holders of the company 2 513 176 501 850
Non-controlling interests -15 171 157 201 097
-3 684 333 702 947
Total comprehensive income for the year attributable to :
Equity holders of the company 536 783 208 424
Non-controlling interests 172 448 160 173
709 231 368 597
Basic earnings per ordinary share (cents)(1) 1 238.5 236.9
Reconciliation of headline earnings
%
change
2017 to
2018 Reviewed Audited
2018 2017
R'000 R'000
Profit for the year attributable to equity holders 2 513 176 501 850
Adjustment relating to earnings attributable to participating treasury shares(1) (9 252) (11 933)
Profit attributable to ordinary shareholders 3 503 924 489 917
Gross effect of gain on disposal of investment in equity accounted investee - (18 573)
Tax effect of gain on disposal of investment in equity accounted investee - 4 160
Non-controlling interest effect of gain on disposal of investment in equity
accounted investee - 2 018
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) 6 503 924 475 733
Headline earnings per ordinary share (cents) 4 238.5 230.0
Cash dividend paid per ordinary share in respect of the previous year (cents) - 155.0 155.0
Cash dividend per ordinary share declared subsequent to 31 March (cents) 10 170.0 155.0
Number of ordinary shares in issue ('000) 226 066 226 066
Treasury shares held ('000) 14 715 15 611
Weighted average number of ordinary shares in issue ('000) 211 293 206 820
(1) The participating treasury shares held at reporting date 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
Reviewed Audited
2018 2017
R'000 R'000
Assets
Non-current assets 6 991 182 7 745 954
Property, plant and equipment 121 677 129 335
Intangible assets 658 055 662 536
Investment in equity accounted investees 373 594 341 425
Investments linked to policyholder investment contracts 5 670 093 6 013 781
Financial investments 46 334 485 244
Loans and receivables 31 768 15 265
Deferred taxation 89 661 98 368
Current assets 18 679 074 19 640 590
Financial investments 87 174 537 265
Loans and receivables 163 863 95 987
Trade and other receivables 441 329 434 061
Amounts receivable in respect of stockbroking activities 15 301 667 15 802 935
Taxation 18 318 18 862
Cash and cash equivalents 2 666 723 2 751 480
Total assets 25 670 256 27 386 544
Equity and liabilities
Equity 2 517 853 3 538 039
Equity attributable to equity holders of the company 2 106 366 3 063 188
Non-controlling interests 411 487 474 851
Non-current liabilities 6 132 060 6 498 581
Policyholder investment contract liabilities 5 670 093 6 013 781
Interest-bearing borrowings 423 258 349 979
Loans and other payables 29 385 123 885
Deferred taxation 9 324 10 936
Current liabilities 17 020 343 17 349 924
Interest-bearing borrowings 52 468 42 800
Loans and other payables - 161 050
Financial instrument liabilities 31 339 215 625
Trade and other payables 777 952 857 129
Amounts payable in respect of stockbroking activities 16 114 151 16 040 340
Taxation 44 433 32 980
Total equity and liabilities 25 670 256 27 386 544
Condensed consolidated statement of changes in equity
Total capital and Non-controlling
reserves interests Total equity
R'000 R'000 R'000
Reviewed - 2018
Balance at 31 March 2017 3 063 188 474 851 3 538 039
Profit for the year 513 176 171 157 684 333
Other comprehensive income for the year 23 607 1 291 24 898
Transactions with owners recorded directly in equity: (1 493 605) (235 812) (1 729 417)
Dividends paid(1) (326 207) (247 891) (574 098)
Distribution in specie(2) (1 198 780) (32 902) (1 231 682)
Disposal of Sandown Capital Limited shares (net of taxation)(3) 27 463 - 27 463
Share-based payments 52 874 - 52 874
Disposal of participating treasury shares(4) 117 273 - 117 273
2015 deferred remuneration scheme 2 settlement(4) (80 136) - (80 136)
Acquisition of participating treasury shares(5) (97 470) - (97 470)
Repurchase of treasury shares(6) (7 955) - (7 955)
Repurchase and cancellation of shares of subsidiary 19 333 (111 841) (92 508)
Disposal of investment in subsidiary company - (708) (708)
Subscription of shares in new subsidiary(7) - 24 108 24 108
Additional subscription of shares in subsidiary(8) - 133 422 133 422
Balance at 31 March 2018 2 106 366 411 487 2 517 853
Audited - 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 (316 538) (192 401) (508 939)
Share-based payments 17 793 - 17 793
Disposal of participating treasury shares 107 070 - 107 070
2013 deferred remuneration scheme 1 settlement (107 145) - (107 145)
Acquisition of participating treasury shares (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
(1) Dividends paid to equity holders of the company relate to the 155 cents per share which was paid on Monday,
7 August 2017.
(2) Distribution in specie relates to the unbundling and distribution by Peregrine Holdings Limited ("PGR") of all
its shares in Sandown Capital Limited ("Sandown Capital"), being 100% of the issued share capital of Sandown
Capital, in the ratio of one Sandown Capital share for every one PGR share held at close of trade on Friday,
1 December 2017, being the unbundling record date, as detailed in the Circular to Peregrine shareholders issued
on Tuesday, 14 November 2017 ("Restructure and Unbundling Circular").
(3) As a result of the restructure and unbundling, as detailed in the Restructure and Unbundling Circular, the Group
received 10 484 314 Sandown Capital shares as a result of 10 484 314 PGR shares (which shares are held as treasury
shares) held by the Group at the unbundling record date. On the 29 March 2018, the Group entered into an off-market
transaction whereby it sold 10 484 314 Sandown Capital shares at R3.40 per share.
(4) During the course of September 2017, 5 126 190 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.
(5) 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. On the 19 January 2018,
the Group entered into an off-market transaction whereby it swapped 3 417 590 Sandown Capital shares for PGR shares in the
ratio of 1 PGR share for every 7.383 Sandown Capital share, resulting in the Group holding an additional 462 915 PGR shares
at the reporting date.
(6) The modification to the Peregrine Holdings long term executive remuneration incentive scheme shortly before the end of the
financial year from cash-settled to equity-settled resulted in the share buyback of 350 000 PGR shares. These shares could
potentially have a dilutive effect on conversion to ordinary shares. Diluted earnings per share has not been disclosed as the
dilutive effect of the shares is considered immaterial.
(7) During the course of September 2017, Peresec International Limited was incorporated with an initial issued share capital of
R17 million (GBP1 million), with a further capitalisation of R52 million (GBP3 million) taking place on 1 March 2018, of which
65% was subscribed for by Peregrine International Holdings Limited, a wholly-owned subsidiary of PGR and 35% by a
non-controlling shareholder.
(8) During the course of November 2017, Peregrine Securities Proprietary Limited, a subsidiary company of Peregrine SA Holdings
Proprietary Limited ("PSA"), which company is a 80% held subsidiary of PGR, was further capitalised by way of the capitalisation
of shareholder loans of R137 million and the injection of cash of R243 million, of which 65% was provided by PSA and the balance
of 35% by the non-controlling shareholder.
Condensed consolidated statement of cash flow
Reviewed Audited
2018 2017
R'000 R'000
Cash flow from operating activities 422 785 219 257
Cash flow from operating activities excluding stockbroking activities 780 924 491 612
Cash flow from stockbroking activities 145 270 175 091
Net interest and dividends received 222 758 195 086
Cash dividends paid (574 098) (508 939)
Taxation paid (152 069) (133 593)
Cash flow from investing activities (252 785) (346 267)
Net disposal of financial investments and other assets 56 596 372 992
Net purchase of property, plant and equipment (15 827) (57 579)
Net acquisitions of subsidiaries (18 451) -
Net disposals of interest in equity accounted investee companies - 7 699
De-recognition on the unbundling of Sandown Capital Limited (174 479) -
De-recognition on loss of control of hedge fund (100 624) (679 830)
Proceeds on sale of intangible assets - 10 451
Cash flow from financing activities (241 339) 311 117
Net disposal of treasury shares 11 848 24 152
Settlement of Citadel deferred remuneration scheme (80 136) (107 145)
Net cash flow from equity transactions with non-controlling interest 65 022 (31 953)
Loans and receivables settled/(advanced) 54 690 (53 967)
Net (advances)/settlement of financial liabilities (292 763) 480 030
Net (decrease)/increase in cash and cash equivalents (71 339) 184 107
Cash and cash equivalents at beginning of the year 2 751 480 2 667 583
Effects of exchange rate changes on cash and cash equivalents (13 418) (100 210)
Cash and cash equivalents at end of the year 2 666 723 2 751 480
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 2017 to 2018
Reviewed - 2018 *
Wealth and Asset Management 1 208 786 32 394 490 080 274 629 16
Wealth Management 942 695 20 840 289 434 206 605 19
Asset Management 266 091 11 554 200 646 68 024 9
Broking and Structuring 740 410 79 574 172 913 88 549 -23
Stenham 518 522 20 579 125 357 110 824 49
Advisory - 43 814 43 814(2) 37 680 -4
Subtotal from reportable segments 2 467 718 176 361 832 164 511 682 10
Group 74 712 52 020 50 812 22 803 -33
Total from reportable segments 2 542 430 228 381 882 976 534 485 7
Operating Businesses 2 440 266 227 993 790 932 469 831 7
Surplus Balance Sheet 102 164 388 92 044 64 654 11
Stenham 33 755 367 25 720 18 807 -54
Group 68 409 21 66 324 45 847 >100
Total from reportable segments 2 542 430 228 381 882 976 534 485 7
Non-reportable segments and reconciling items(3) 9 562 (4 986) (35 360) (30 561)
Total per Consolidated Statement of Comprehensive Income 2 551 992 223 395 847 616 503 924 6
Audited 2017 *
Wealth and Asset Management 1 038 925 25 465 401 232 236 531
Wealth Management 821 763 12 319 224 427 173 927
Asset Management 217 162 13 146 176 805 62 604
Broking and Structuring 803 857 49 248 243 035 115 082
Stenham 506 330 17 189 99 910 74 369
Advisory - 45 494 45 494(2) 39 125
Subtotal from reportable segments 2 349 112 137 396 789 671 465 107
Group 67 086 10 691 43 540 34 141
Total from reportable segments 2 416 198 148 087 833 211 499 248
Operating Businesses 2 323 986 168 532 747 951 441 061
Surplus Balance Sheet 92 212 (20 445) 85 260 58 187
Stenham 33 106 180 57 429 41 259
Group 59 106 (20 625) 27 831 16 928
Total from reportable segments 2 416 198 148 087 833 211 499 248
Non-reportable segments and reconciling items(3) 52 774 (5 532) (20 077) (23 515)
Total per Consolidated Statement of Comprehensive Income 2 468 972 142 555 813 134 475 733
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) The non-reportable segment refers to the Group's consolidated proprietary hedge investments which do not meet the quantitative thresholds
for determining reportable segments. The reconciling items relate primarily to the difference in classification of Citadel's long term deferred
remuneration schemes for IFRS purposes and that applied for purposes of providing information to the Chief Operating Decision Makers. Management
treats the 2013 scheme (which was initiated during 2014 financial year and 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.
* Annexure C, disclosing the Segment statement of comprehensive income split between Operating Business and Surplus Balance Sheet, is available on the
Group's website.
Notes & Compliance
The condensed consolidated provisional financial statements of the Peregrine Group as at and for the year ended 31 March 2018 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 Listings Requirements for provisional reports and
the requirements of the Companies Act of South Africa. The JSE 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 IFRS and are
consistent with those applied in the previous consolidated financial statements as at and for the year then ended 31 March 2017.
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 2017.
The Group's results are prepared under the supervision of R E Katz CA (SA), the Group Chief Executive Officer, who at the time of preparation
of these results acted as the Chief Financial Officer.
Review Report
These condensed consolidated provisional financial statements for the year ended 31 March 2018 have been reviewed by Deloitte & Touche, who
expressed an unmodified review conclusion 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 Limited 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 ("PTS"), a wholly-owned subsidiary of Citadel Holdings Proprietary Limited, acquired the entire
issued share capital of Impex Treasury Solutions Proprietary Limited ("Impex Treasury") with effect from 1 April 2017 for a total cash
consideration of R20 million. Impex Treasury was acquired as it is aligned with the business profile of PTS. In the twelve months to 31 March 2018,
Impex Treasury contributed revenue of R28.9 million and profit after taxation of R8.5 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 R2.1 million. Trade receivables were not impaired and the full amount had 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 and is presented in Intangible assets on the face of the Statement of Financial Position.
Reviewed 2018
R'000
Identifiable assets 9 894
Intangibles - Customer relationships 6 000
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 6 017
Goodwill arising on acquisition 13 983
Fair value of total net assets assumed 20 000
Group restructure and unbundling
With effect from 2 October 2017, Peregrine Holdings Limited transferred to Sandown Capital Limited, then a wholly-owned subsidiary, all the
attributable surplus balance sheet investments within the Group. The effect of the restructure and unbundling on the Group's assets and liabilities
is presented below. The restructure and unbundling resulted in the operating entities within the Group (which generate predominantly annuity
earnings) being housed within Peregrine Holdings Limited. The intention of the Peregrine board then being, subject to working capital requirements,
to seek new opportunities in investments 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 headline earnings.
The fair values reflected below represent the carrying values as at 2 October 2017 of the unbundled assets and liabilities:
Reviewed 2018
R'000
Identifiable assets unbundled 1 385 935
Financial investments 1 178 865
Trade and other receivables 28 148
Taxation 4 443
Cash and cash equivalents 174 479
Identifiable liabilities unbundled (154 253)
Loans and other payables (136 110)
Trade and other payables (12 316)
Deferred taxation (5 827)
Surplus net assets unbundled 1 231 682
Non-controlling interest (32 902)
Attributable surplus net assets unbundled 1 198 780
Events subsequent to reporting date
The directors are not aware of any other matters or circumstances, other than the receipt of the non-binding proposal to acquire the Group's
65% shareholding in its Securities business which the board, at its board meeting held on 12 June 2018, decided to accept, and is referred to in
the commentary which forms part of this announcement and in more detail in a separate announcement, arising subsequent to the end of the reporting
period which significantly affect the financial position of the Group or the results of its operations.
Contingent liabilities and guarantees issued
Contingent liabilities as at 31 March 2018 amounted to R24.4 million (2017: R109.7 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. There were no new guarantees issued during the reporting period.
Commitments
Operating lease commitments as at 31 March 2018 amounted to R389 million (2017: R451 million).
Supplementary information
Asset value per share
31 March 2018 31 March 2017
Net tangible asset value per ordinary share (cents) 674,5 1121,0
Net asset value per ordinary share (cents) 978,7 1420,9
Applicable exchange rates
Average rates Closing rates
USD:ZAR
31 March 2018 13,00 11,85
31 March 2017 14,05 13,41
GBP:ZAR
31 March 2018 17,22 16,62
31 March 2017 18,41 16,77
This announcement does not include the information required pursuant to paragraph 16A(j) of IAS34. The full reviewed
provisional results report is available on Peregrine's website, at Peregrine's registered offices and upon request.
Date: 13/06/2018 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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