Wrap Text
Provisional summarised audited consolidated results for the year ended 31 March 2018
Sandown Capital Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/013674/06)
Share code: SDC ISIN: ZAE000249645
("Sandown" or "the Group" or "the Company")
PROVISIONAL SUMMARISED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2018
– Restructure implemented and shares listed on JSE and A2X
– Rand strength negatively impacted NAV during the period, with 60% of the Group's assets held offshore
– NAV per share as at 31 March 2018 of 487 cents (FY2017: 102 cents per share)
– Board intention to address discount to NAV
COMMENTARY
These results for the year ended 31 March 2018 reflect the first set of financial results of the Group following the restructure
implemented in October 2017, details of which were set out in our interim results for the six months ended
30 September 2017 announced on SENS on 29 November 2017. The Company's shares were listed on the JSE Limited and
A2X on 29 November 2017, and all the shares in issue were unbundled to shareholders of Peregrine Holdings Limited
("Peregrine or Peregrine Group") on 4 December 2017 ("the Peregrine restructure").
Given the material change in the size of the Group resulting from the restructure, the board of directors of the Company
("Board") believe that it will be of more use to shareholders for this commentary to focus predominantly on the period
following the restructure, being the six months ended 31 March 2018.
As highlighted in the announcement released on SENS on 13 March 2018, the nature of Sandown's business is that of an
investment holding company focused on generating medium to long-term growth in net asset value ("NAV") per share, and
accordingly the Company has elected to adopt NAV per share as its key performance indicator, and for trading statement purposes.
NAV per share of 487 cents per share ("cps") as at 31 March 2018 reflects a decrease of 6.5% relative to the Group's NAV per
share immediately following the restructure (521 cps as at 4 October 2017). With approximately 60% of the Group's
investments being held offshore, the Board tracks the Group's NAV performance in both Rands and Great British pounds
("GBP"). In GBP terms, NAV per share increased over the period, from 28.8 pence per share ("pps") (as at 4 October 2017),
to 29.3 pps as at 31 March 2018, an increase of 1.7%. This illustrates the marked impact the relative strengthening of the Rand
versus the major currencies had on the NAV of the Group (reported in Rands), with the Rand strengthening 12.2% and 8.3%
against the US dollar and GBP respectively, over the six month period.
The main contributors to the decrease in NAV included:
– the Group's investment in Stenprop Limited ("Stenprop"), whose Rand-denominated share price felt the Rand strength
translation effect on its UK, German and Swiss property portfolio;
– the performance of the South African hedge-funds;
– the Rand strength effect on the Global hedge-funds; and
– the currency impact on translation of the Group's offshore cash resources.
Investment Strategy
The Board's stated intention post the restructure of the Group has been to steadily transform the portfolio from an inherited,
relatively passive one into an actively managed portfolio focusing on opportunities that are more appropriate for a permanent
capital vehicle. The aim is to steadily implement a process where, once suitable investment opportunities are identified,
redemptions or sales of existing investments will be made to fund the opportunities.
During the period under review, this process was initiated with two new portfolio investments being acquired, totalling
R125 million, funded by a combination of the Group's cash resources and redemptions of hedge-fund investments.
The Board acknowledges that the transformation of the inherited portfolio to one that has been dynamically implemented is
likely to take some time and that such a strategy would result in less liquidity in the portfolio over time. It is also conscious
that the current shareholder base consists of a mix of shareholders, being those who were recipients of unbundled units as a
result of being Peregrine shareholders (and would likely prefer greater liquidity) and those who have actively chosen to buy into
the Group's investment strategy. Many in the former category have chosen to exit for this reason. As a result of these factors,
the Company's shares have persistently traded at a discount of between 20% and 40% to NAV since listing.
Whilst some discount to NAV is expected in a vehicle of this nature, concern has been expressed by a number of shareholders
as to the discount exhibited since Sandown's listing. The Board acknowledges these concerns and is itself concerned that if
sustained, the magnitude of the discount will constrain Sandown's ability to raise capital over time. As a result, the Board
will be engaging with shareholders over the next few months, to explore options that are available to reduce the discount.
Acquisitions
The Group identified and implemented two portfolio investments during the second half of the year, in line with the
investment strategy.
– In December 2017, Sandown acquired a 30% associate interest in Nala A2X Proprietary Limited ("Nala A2X"), which
associate acquired a 10% empowerment stake in one of the new challenger exchanges in South Africa, A2X Proprietary
Limited. The R23 million acquisition was fully funded by Sandown, by way of a preference share structure.
– In March 2018, Sandown Ventures Limited, a wholly-owned subsidiary of Sandown Capital International Limited
("SCIL"), acquired a non-controlling 60% equity interest in Capital Step Holdings Limited ("Capital Step"), an
alternative finance solution provider to the small and medium enterprise market in the UK and Ireland. In addition, the
Group advanced a shareholder loan to Capital Step and provided a five year term loan to its specialist funding entity,
Capital Step Funding Limited. The initial investment was GBP6.05 million (R101 million), with a further commitment of
an additional GBP6.25 million (R104 million) subject to various performance conditions.
The assets acquired under the Peregrine restructure are dealt with separately in this Report.
Disposals
The following disposals were made during the financial year under review:
– Prior to the Peregrine restructure, the Company disposed of its entire shareholding in African Dawn Capital Limited for
net sale proceeds of R1.9 million. In addition, as part of the restructure, 21,668 shares in Peregrine were transferred to the
Peregrine Group for no consideration.
– Following the Peregrine restructure, Sandown disposed of two inherited private equity investments, being part of the
restructure, which included equity and loan arrangements, for an aggregate sale consideration of R4.7 million.
– In order to fund the private equity acquisitions set out above, and to part-settle a vendor loan outstanding to Peregrine,
the Group made redemptions totaling R68 million from its hedge-fund portfolio, which redemptions were made from
the South African hedge-funds (R25 million) and the offshore hedge-funds (R43 million).
Portfolio Overview
The Group's investment portfolio (excluding cash holdings of R76.4 million), valued at R1.119 billion as at 31 March 2018, comprised:
Hedge-Funds (45% of the Portfolio)
As year end the Group held four hedge-fund investments totalling R507 million made up of:
– R389.9 million in the Peregrine Partners' Fund, a multi-strategy fund managed by Peregrine Capital Proprietary Limited
(predominantly High Growth Fund strategy) and Green Oak Capital Proprietary Limited (Fixed Income).
– R51 million, net of gearing, in the PNF Peregrine Fund, a Long/Short (L/S) equities fund. The investment, managed by
Peregrine Capital Proprietary Limited tracks its High Growth Fund strategy.
– R36.5 million in the SA Alpha Peregrine High Growth USD Fund, a US$-hedged feeder-fund into the Peregrine Capital
High Growth Fund.
– R29.7 million in the Stenham Targeted Skills II Fund, a multi-strategy fund managed by Stenham Asset
Management Limited.
Stenprop (32% of the Portfolio)
The dual-listed property holding company with property assets in the UK and Europe, in which Sandown holds a 6.9%
interest, is expected to benefit from its new focused strategy in the UK multi-tenant industrial park sector and from the
diversification of its shareholder base following its recent conversion to UK REIT status and listing on the LSE. At year-end,
Stenprop traded at a discount of approximately 20% to its underlying NAV, which discount is expected to narrow as it new
strategy unfolds. Liquidity in the counter will hopefully improve as a result of its LSE listing. It trades at an historic dividend
yield of almost 7% in GBP.
Rinjani (12% of the Portfolio)
Asset disposals in Sandown's direct UK / German property special purpose vehicle are expected to accelerate in the months
ahead. Recent disposals, combined with market information, provide assurance that our fair value assumptions are attainable
and likely conservative. Rinjani made up 12% of the portfolio at year end with the vast majority of this likely to be realized
in this ensuing financial year.
Capital Step (9% of the Portfolio) See under Acquisitions above.
Nala A2X (2% of the Portfolio) See under Acquisitions above.
Issued share capital
Shares in issue amounted to 226,065,696 as at 31 March 2018.
Prior to the restructure, the Company had 2,000 shares in issue. As part of the Peregrine restructure, an additional 226,063,696
ordinary shares were issued, made up as:
– 161,182,841 shares, which were issued to Peregrine on 29 September 2017; and
– 64,880,855 shares, which were issued to Peregrine on 2 October 2017.
Dividends
The Company declared and paid dividends of R2.5 million (2017: R13 million) during the current financial year. These dividends
were paid when the Company was a wholly-owned subsidiary of Peregrine.
Restructure transactions and unbundling
In terms of the Peregrine restructure, all surplus non-operating assets held by Peregrine (i.e. excess cash, investment in
hedge-funds, property units and other proprietary investments), with a total net value of R1.026 billion, were transferred to
Sandown, a wholly-owned subsidiary of Peregrine at the time, with effect from 2 October 2017.
Conclusion
The Rand strength exhibited in the period under review has reversed post year-end which has had a meaningfully positive
effect on the Group's NAV per share in the current financial year. The Board will continue to actively source and evaluate
new investment opportunities, whilst addressing, as a priority, the issue of the discount to NAV over the coming months.
Sean Melnick Sean Jelley Lawrie Brozin
Chief Executive Chief Financial Officer Non-Executive Chairman
Sandton
26 June 2018
Directors: LZ Brozin* (Chairman); SA Melnick (CEO); SK Jelley (CFO); DJ Randall*; AJ Hannington*; CJ Hess* (*Independent non-executive)
Company Secretary: CIS Company Secretaries Proprietary Limited, Rosebank Towers, 15 Bierman Avenue, Rosebank, 2196,
(PO Box 61051, Marshalltown, 2107).
Registered office: 6A Sandown Valley Crescent, Sandown, Sandton, 2196 (PO Box 650361, Benmore, 2010), Telephone: +27 11 722 400
Transfer Secretaries: Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196,
(PO Box 61051, Marshalltown, 2107)
Sponsor: Java Capital
The Company's Audited Financial Statements will be available on Sandown's website on http://www.sandowncapital.com from
26 June 2018.
Summarised Statement of Financial Position as at 31 March 2018
Audited as at Audited as at
31 March 2018 31 March 2017
R'000 R'000
ASSETS
Non current assets 632 747 2 910
Financial investments 588 949 2 910
Investment in Associates 22 949 –
Deferred tax 20 849 –
Current assets 590 358 175 881
Financial investments 507 094 169 048
Trade and other receivables 162 218
Taxation 6 672 6 172
Cash and cash equivalents 76 430 443
Total assets 1 223 105 178 791
EQUITY AND LIABILITIES
Equity 1 101 687 164 868
Share Capital 474 400 127 374
Currency Translation Reserve (34 961) –
Accumulated profits 662 248 37 494
Non current liabilities – 1 386
Deferred taxation – 1 386
Current liabilities 121 418 12 537
Loans and payables 120 000 9 234
Trade and other payables 1 418 3 303
Total Equity and Liabilities 1 223 105 178 791
Summarised Statement of Comprehensive Income for the year ended 31 March 2018
Audited for Audited for
the year ended the year ended
31 March 2018 31 March 2017
R'000 R'000
Revenue: Investment (losses)/income (44 103) 31 877
Total revenue (44 103) 31 877
Operating expenses (23 932) (8 643)
(Loss) profit from operations (68 035) 23 244
Net interest (paid)/received (5 636) 296
– Interest received 736 296
– Interest paid (6 372) –
(Loss) profit before taxation (73 671) 23 540
Taxation 22 236 (3 742)
(Loss) profit for the year (51 435) 19 798
Other comprehensive (loss)/income for the year net of taxation
Items that can be classified subsequent to profit & loss:
Currency translation differences (34 961) –
Total comprehensive (loss)/income for the year (86 396) 19 798
Basic and diluted (losses)/earnings per share Restated
(Losses)/Earnings (51 435) 19 798
Number of shares in issue at reporting date* 226 065 696 161 184 841
Weighted average number of shares in issue 193 625 269 161 184 841
Basic and diluted (losses)/earnings per share (cents) (26.56) 12.28
* 161 182 841 shares were issued to the Peregrine Group on 29 September 2017 for nominal consideration.
Prior year figures have been restated after applying IAS33 Earnings per share, to take into account the above share issue.
Headline (losses)/earnings per share
(Losses)/Earnings (51 435) 19 798
Adjustment for headline earnings – –
Headline (losses)/earnings (51 435) 19 798
Basic & Headline (losses)/earnings per share (cents) (26.56) 12.28
Net Asset value per share (cents) 487 102
Tangible Net Asset value per share (cents) 487 102
Dividend per share (cents) 1.11 8.07
Summarised Statement of Changes in Equity for the year ended 31 March 2018
Group Currency
Translation Accumulated
R'000 Share capital Reserve Profits Total Equity
Balance as at 31 March 2016 (audited) 127 374 – 30 696 158 070
Total comprehensive income for the period – – 19 798 19 798
Transaction with owners recorded directly in equity – – (13 000) (13 000)
– Dividends paid – – (13 000) (13 000)
Balance as at 31 March 2017 (audited) 127 374 – 37 494 164 868
Total comprehensive income for the period – (34 961) (51 435) (86 396)
Transaction with owners recorded directly in equity 347 026 – 676 189 1 023 215
– Disposal of Peregrine shares for no consideration – – (595) (595)
– Restructure transactions 347 026 – 679 284 1 026 310
– Dividends paid – – (2 500) (2 500)
Balance as at 31 March 2018 (audited) 474 400 (34 961) 662 248 1 101 687
Summarised Statement of Cash Flows for the year ended 31 March 2018
Audited for Audited for
the year ended the year ended
31 March 2018 31 March 2017
R'000 R'000
Cash flow from operating activities (18 449) (35 090)
- Cash utilised by operations (25 760) (17 794)
- Interest received 736 296
- Interest paid (6 372) –
- Interest received from investments 1 507 –
- Dividends received from investments 14 440 264
- Taxation paid (500) (4 856)
- Cash dividends paid (2 500) (13 000)
Cash flow from investing activities (37 312) 17 676
Proceeds from sale of investments 87 965 17 676
Acquisition of financial investments (102 328) –
Investment in Associates (22 949) –
Cash flow from financing activities (23 556) 13 564
Subscription of shares due to restructure – –
(Decrease)/increase in loans payable (23 556) 13 564
Net decrease in cash and cash equivalents (79 317) (3 850)
Cash acquired in restructure 170 567 –
Currency impact on foreign cash balances (15 263) –
Cash and cash equivalents at beginning of the period 443 4 293
Cash and cash equivalents at the end of the period 76 430 443
NOTES AND COMPLIANCE
The provisional summarised audited consolidated financial statements of the Sandown 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 provisional summarised audited consolidated 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 applicable to
summarised financial statements and the measurement and recognition requirements of the 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 IAS34: Interim Reporting.
The accounting policies applied in the preparation of the provisional summarised audited 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. The items are presented using the historical cost basis with the exception of financial assets
designated as at fair value through profit or loss, which are measured at fair value.
Sandown makes private equity investments which in the ordinary course would meet the definition of subsidiary as set out
above, but which, together with the Company, meet the definition of an Investment Entity (IFRS10). The Group applies
the exception to consolidation to these subsidiaries, in line with Investment Entities: Applying the Consolidation Exception
(Amendments to IFRS10, IFRS12 and IAS28), and classifies these investments as "fair value through profit and loss".
Segmental reporting
The Company has no separate operating segments and as such has not made any disclosure in terms of IFRS8.
Hedge-Funds
As the Group's hedge-fund investments are managed by external, independent fund managers and given the fact that Sandown
Capital has no influence on the investment strategies applied within the various hedge-funds, and no unilateral ability to
replace the fund manager, the Group has not consolidated the hedge-fund investments. These are measured at fair value for
financial reporting purposes.
In preparing these provisional summarised audited consolidated financial statements management made judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities. 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 financial statements as at and for
the year to 31 March 2017.
The Group's consolidated financial statements from which the Group results have been extracted were prepared under the
supervision of S K Jelley CA(SA), the Group Chief Financial Officer.
Audit Report
These provisional summarised consolidated financial statements have been extracted from the audited consolidated financial
statements for the year ended 31 March 2018, on which the Auditors of the Company, Deloitte & Touche, have expressed
an unmodified audit opinion. The auditor also expressed an unqualified opinion on the annual consolidated financial
statements from which these summary consolidated financial statements are derived. The directors take full responsibility
for the preparation of the provisional summarised report and for ensuring that the financial information has been correctly
extracted from the underlying audited financial statements. A copy of the auditor's audit report on the summarised consolidated
financial statements and of the auditor's report on the annual financial statements is available for inspection at the Company's
registered office together with the financial statements identified in the auditor's reports.
The auditor's 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 audit engagement, they should obtain
a copy of the auditor's report, together with the accompanying financial information from the Company's registered office.
Any prospects detailed in the announcement have not been reviewed or reported on by the auditors.
Restatement of previous corresponding period NAV per share, earnings per share ("EPS") and dividends per share ("DPS")
In calculating the NAV per share, EPS and DPS for the previous corresponding period (year ended and as at 31 March 2017),
as the Peregrine restructure and subsequent unbundling of the Sandown Capital ordinary shares included the issue of a number
of shares for no consideration, the guidance of IAS33 Earnings per share, paragraph 28, has been applied, in terms of which
the number of ordinary shares outstanding before the restructure has been adjusted to reflect the number of ordinary shares
in issue as if the issue had occurred at the beginning of the earliest period reported. This resulted in a restatement of the NAV
per share as at 31 March 2017, and of the EPS and the DPS for the year ended 31 March 2017.
Analysis of Assets and Liabilities by Financial Instrument Classification
Audited as at 31 March 2018 Financial
R'000 instruments at Non–financial
fair value instruments
through profit and financial Fair
and loss Loans and Financial instruments value of
designated at receivables at liabilities at beyond the Total financial
inception amortised cost amortised cost scope of IFRS 7 ZAR instruments
Non Current assets 611 806 92 – 20 849 632 747
Financial investments 588 949 – – – 588 949 588 949
Investment in Associates 22 857 92 – – 22 949 22 857
Deferred tax – – – 20 849 20 849
Current assets 507 094 76 592 – 6 672 590 358
Financial investments 507 094 – – – 507 094 507 094
Trade and other receivables – 162 – – 162
Taxation – – – 6 672 6 672
Cash and cash equivalents – 76 430 – – 76 430
–
Total assets 1 118 900 76 684 – 27 521 1 223 105
Current liabilities – – 121 418 – 121 418
Loans and payables – – 120 000 – 120 000
Trade and other payables – – 1 418 – 1 418
Total liabilities – – 121 418 – 121 418
Fair value information has not been provided for financial assets and financial liabilities not measured at fair value if the carrying
value is a reasonable approximation of fair value.
Audited as at 31 March 2017 Financial
R'000 instruments at Non–financial
fair value instruments
through profit and financial Fair
and loss Loans and Financial instruments value of
designated at receivables at liabilities at beyond the Total financial
inception amortised cost amortised cost scope of IFRS 7 ZAR instruments
Non-current assets
Financial investments 2 910 – – – 2 910 2 910
Current assets 169 048 661 – 6 172 175 881
Financial investments 169 048 – – – 169 048 169 048
Trade and other receivables – 218 – – 218
Taxation – – – 6 172 6 172
Cash and cash equivalents – 443 – – 443
–
Total assets 171 958 661 – 6 172 178 791
Non-current liabilities –
Deferred taxation – – – 1 386 1 386
Current liabilities – – 9 659 2 878 12 537
Loans and payables – – 9 234 – 9 234
Trade and other payables – – 425 2 878 3 303
Total liabilities – – 9 659 4 264 13 923
Fair value information has not been provided for financial assets and financial liabilities not measured at fair value if the carrying
value is a reasonable approximation of fair value.
Fair Value ("FV") Disclosures
The following table presents the Group's assets and liabilities which are presented at fair value as at 31 March 2018:
R'000 R'000 R'000
Financial assets at FV through profit or loss Level 1 Level 2 Total
Listed equities 358 913 – 358 913
Private equity investments – 230 036 230 036
Hedge Fund investments – 507 094 507 094
Investment in Associates – 22 857 22 857
358 913 759 987 1 118 900
The following table presents the Group's assets and liabilities which are presented at fair value as at 31 March 2017:
R'000 R'000 R'000
Financial assets at FV through profit or loss Level 1 Level 2 Total
Listed equities 2 289 – 2 289
Private equity investments – 5 969 5 969
Hedge Fund investments – 163 700 163 700
2 289 169 669 171 958
Valuation techniques applied and inputs to recurring valuation techniques
Financial assets at fair value Valuation technique used to Significant observable Significant unobservable
through profit or loss determine fair value inputs used in valuation inputs used in valuation
Unadjusted quoted prices in
Listed equities Quoted market prices an active market of underlying N/A
investments
Current market assumptions
for loans, independent
Private equity investments valuations, and cost for recent Market-related interest rate N/A
The fair value is determined Unobservable inputs are mostly
by an independent expense accruals of the hedge-
Hedge-fund Investments Quoted market prices administrator, based on the fund entities that are deducted
quoted market prices of the from the sum of the fair values
underlying investments held of net investments held by the
by the hedge-funds hedge-funds
Current market assumptions
for loans, independent
Investment in Associates valuations, and cost for recent Market-related coupons N/A
transactions
Hedge-funds
A financial asset and a financial liability are offset and the net amount presented in the statement of financial position when
the Group has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously. The unlisted hedge-fund investments were presented net of loans. The
investments made are on a geared basis with permissible loan ratios of up to 100%. The loan agreements against the various
investments in the hedge-funds state that the loans will be settled at the same time as a redemption out of the funds. The
hedge-fund investments are measured at fair value and the loans are measured at amortised cost.
Financial assets subject to offsetting
Gross amounts of
recognised Net amounts of
financial liabilities financial assets
Gross amounts offset in the presented in the
of recognised statement of statement of
R'000 financial assets financial position financial position
31 March 2018 584 468 (77 374) 507 094
31 March 2017 236 302 (72 602) 163 700
Related Party Balances and Transactions
Transactions with Peregrine group companies
The Company was a wholly-owned subsidiary of the Peregrine Group until 1 December 2017, on which date all of Sandown's
issued shares were unbundled to the shareholders of Peregrine. During the period in which the Company was a subsidiary, Sandown
entered into various transactions in the ordinary course of business with a fellow subsidiary company, Peregrine SA Holdings
Proprietary Limited ("Peregrine SA"). The total value of these transactions charged for the period was R229,671 (2017: R414,804).
In addition to the above transactions, Peregrine SA was paid R40,000 for the provision of non-executive director services to the
Company, relating to the services of Mandy Yachad for the period in which he was a non-executive director of the Company.
As part of the Peregrine restructure and the subsequent listing of the Company, Java Capital, an associate company at the time,
was paid a total of R4.7 million with respect to corporate advisory and related fees.
Peregrine restructure transactions
As part of the Peregrine restructure, Stenham Limited, a fellow subsidiary of Sandown in the Peregrine Group at the time,
transferred various assets to SCIL for no consideration, comprising of:
– three hedge-funds investments, valued in aggregate at R125 million;
– foreign cash balances of R171 million; and
– 13.9 million shares in Stenprop Limited, valued at R263 million.
As per the disposal agreement between Peregrine SA and Sandown, Peregrine SA disposed of three hedge-funds investments to
the Company with an aggregate value of R349 million, payment of which was settled by way of two separate vendor loans:
– the first loan, interest-bearing, for an amount of R134,3 million; and
– the remaining balance of R215 million took the form of a non-interest bearing loan, which was subsequently distributed to
Peregrine as a distribution in specie and settled by Sandown by way of the issue of 42 million ordinary shares in Sandown to Peregrine.
21,668 shares in Peregrine, previously held as treasury shares on behalf of the Peregrine Group, were transferred to a Peregrine
Group company as part of the Peregrine restructure, whilst the Company was a wholly-owned subsidiary of Peregrine, for no
consideration. This transfer was accounted for as an adjustment to equity.
In addition, Stenham Group Limited (a wholly-owned subsidiary of Stenham Limited) exchanged its 79.41% shareholding and
claims against Rinjani Holdings Limited, as well as its 100% shareholding in a dormant entity, Sandown Ventures Limited, for the
issue of 900 shares by SCIL, following which the SCIL shares were ultimately distributed to Peregrine by way of a distribution in
specie. Such shares in SCIL were then exchanged by Peregrine for the issue of 22 million shares in Sandown in terms of an "asset-
for-share transaction" contemplated in section 42 of the Income Tax Act. Peregrine also subscribed for an additional 161 million
Sandown shares for R100 at the same time.
As part of the Peregrine restructure, Peregrine Guernsey Limited, a fellow subsidiary with Sandown of the Peregrine Group at the
time, transferred 6.3 million Stenprop Limited shares to SCIL, valued at R120 million, for no consideration.
Sandown Capital disposed of its claims on the Elite Group Proprietary Limited to Peregrine Financial Services Holdings Limited,
for a cash consideration of R4.5 million in October 2017, as part of the Peregrine restructure.
Private equity fund
The Group has a 50% interest in a partnership, Firefly Investments 61, which manages a fund that invests in private equity
opportunities. Sean Melnick, Sean Jelley and Mandy Yachad, directors of the Company during the year ended 31 March 2018,
have co-invested with the Company into the fund, either directly or through an entity in which they have an indirect beneficial
interest. The value of the loan receivable from Firefly Investments 61 as at 31 March 2018 was R695,942 (31 March 2017: R564,208).
Capital Step Transaction
As part of the Capital Step transaction, Sandown Ventures Limited, a wholly-owned subsidiary of SCIL, acquired 2,551 ordinary
shares in Capital Step from Sean Melnick, for a total consideration of R429 (GBP25.51). The disposal of Melnick's 22.5% interest
in Capital Step was a condition set by the Board in order to remove any potential conflict of interest between the Group and the
executive director.
Equity accounted investees
During the year, the Group paid certain expenses, on loan account, with respect to fees incurred in the ordinary course of business
on behalf of entities in which the Group holds an associate interest. These expenses amounted to R91,895 for the year (F2017: Nil).
Investment advisor
The Group entered into an investment advisory agreement with an external investment advisor on 4 October 2017, an entity
in which the executive directors are representatives of and have an economic interest in. The details of the investment advisory
agreement are set out in the Company's pre-listing statement published on 14 November 2017. The advisory fees paid to the
investment advisor by the Group for the period from the commencement of the agreement to 31 March 2018 amounted to
R8 million (2017: Nil). The Company's executive directors received no remuneration from the Group.
Peregrine Restructure
With effect from 2 October 2017, Peregrine transferred to Sandown, a wholly-owned subsidiary of Peregrine at that date, all
the attributable surplus balance sheet investments within the Peregrine Group. The effect of the restructure and unbundling
of the assets and liabilities as at the reporting date is presented below.
The fair values reflected below represent their carrying values as at 30 September 2017.
R'000
Identifiable assets transferred in 1 160 634
Financial Investments 990 067
Hedge-Funds 474 558
Listed equities 383 178
Private equity 132 331
Cash and cash equivalents 170 567
Identifiable liabilities transferred in (134 324)
Attributable net assets 1 026 310
Pursuant to the restructure, Sandown issued Peregrine an additional 64,880,855 ordinary shares, such that the total number of
shares in issue increased to 226,065,696. In addition, as part of the transfer of hedge-fund assets, Peregrine provided Sandown
with a short-term loan facility of R134.3 million, which loan was repaid in full on 1 June 2018.
Having obtained the necessary regulatory approvals, Sandown was separately listed on the JSE on Wednesday,
29 November 2017, with the shares in Sandown being unbundled to Peregrine shareholders on Monday, 4 December 2017.
Date: 26/06/2018 05:45:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
