Wrap Text
Condensed consolidated unaudited results for the six months ended 30 September 2018
Peregrine Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/006026/06)
Share code: PGR ISIN: ZAE000078127
("Peregrine" or "the Group" or "the Company")
CONDENSED CONSOLIDATED UNAUDITED RESULTS FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2018
HIGHLIGHTS
- SEGMENTAL HEADLINE EARNINGS UP 4% TO R283 MILLION
- ANNUITY EARNINGS FROM CONTINUING OPERATIONS UP 15%
- FIRST INTERIM DIVIDEND OF 85.0 CENTS PER SHARE
Introduction
The six months ended 30 September 2018 could best be summarised as an emerging
market risk-off sell-off with safe haven assets and geographies having outperformed riskier
assets with growth potential. On the international front, there was accelerated growth in the
US on the back of fiscal stimulus as well as reduced commodity demand from China, which
resulted in currency depreciation against the US Dollar in many emerging markets and
developing economies with Argentina, Turkey, Brazil and South Africa being amongst the
worst affected. Likewise, the US Dollar was stronger against the Euro, Sterling and Yen.
Locally, the South African economy slipped into a technical recession during the second
quarter of 2018. The possibility of credit-rating downgrades will continue to hang over the
economy well into next year with fiscal slippage and a slow-moving reform agenda likely to
constrain growth over the medium-term. The recent appointment of Tito Mboweni as the new
Minister of Finance represents a step forward in President Ramaphosa's administration's
fight against corruption.
Notwithstanding the difficult trading environment, the operating businesses in the Group
increased Segmental earnings to R283 million with the continuing operations (those
businesses excluding the Broking & Structuring business, which is in the process of being
sold), delivering growth of 31% to R206 million.
Across the continuing operations, on a Segmental basis, annuity earnings grew by 15%
and accounted for 91% (2017: 75%) of the aggregate earnings. Variable and
performance fee earnings decreased by 67% to R13 million mainly due to lower
performance fees earned by Peregrine Capital. The contribution from offshore operations
continues to play a meaningful role in diversifying Group income with 56% (2017: 38%) of
the aggregate earnings from continuing operations being generated from outside of South
Africa. The abovementioned annuity earnings and contribution from offshore operations
relate to Segmental earnings and excludes a one-time performance fee on exit amounting to
GBP3 million (R58 million) received by Stenham during the period arising out of the disposal of
a property which formed part of the property portfolio sold to Stenprop in 2014 ("the ad hoc
performance fee").
Financial results
IFRS basic earnings and headline earnings attributable to ordinary shareholders amounted
to R272 million (2017: R257 million) (+6%) with basic earnings and headline earnings per
ordinary share amounting to 128.7 cents per share (2017: 122.0 cents per share) (+5%).
Consistent with the prior year, in addition to providing the above IFRS earnings, Segmental
earnings (referred to in the Introduction) are disclosed in more detail below.
Continuing operations - Segmental
Total operating revenue, which includes the ad hoc performance fee, grew by 2% to
R789 million (2017: R775 million). Whilst core operating revenue grew by 5% to R704 million,
performance fee related income decreased by 75% to R27 million. Investment and other
income decreased by 95% due to the unbundling of the Group's proprietary assets at the
beginning of the second half of the 2018 financial year.
Discontinued operation - Segmental
Shareholders are referred to previous SENS announcements informing them of the disposal
of the Broking & Structuring business, which disposal is subject to approval by the
Competition Commission, which approval is expected to be received before the end of the
2018 calendar year.
Due to the imminent disposal of the Broking & Structuring business, the Group's interest in
the after tax profit has been separately presented on the face of the statement of
comprehensive income for both IFRS as well as Segmental purposes as "Profit from
discontinued operation (net of income tax)".
As a result primarily of increased net funding revenue as well as significant foreign exchange
gains on US Dollar denominated working capital, the after tax profit from the discontinued
operation increased by 50% to R112 million (2017: R75 million). At a headline earnings
level, this translated into an increase of 54% to R77 million (2017: R50 million), of which
R21 million (2017: R11 million) relates to the notional cost of capital, which, but for the
disposal of the Broking & Structuring business, would have been included as earnings in the
Group Segment.
Total earnings and headline earnings - Segmental
Earnings and headline earnings increased by 4% to R283 million (2017: R272 million), with
earnings and headline earnings per share increasing by 4% to 131.4 cents (2017: 126.0 cents).
Excluding the discontinued operation, earnings and headline earnings from continuing operations
increased by 31% to R206 million (2017: R157 million). Stripping out the impact of the ad hoc
performance fee in the current period and the income contribution of the Group's investment in
proprietary assets in the prior period, earnings and headlineearnings from continuing operations
decreased by 6% to R148 million.
Annexures disclosing IFRS and Segmental earnings, and the reconciliation between them,
as well as a Segmental statement of comprehensive income disclosing Segmental earnings
between continuing operations and the discontinued operation are available on the Group's
website http://www.peregrine.co.za.
Segmental results
Substantial non-controlling interests exist in Peregrine Capital and Peregrine Securities and
as such management believes that headline earnings per reportable Segment (which is the
basis for the commentary below) best reflects the facts recording each Segment's specific
economic benefit to the shareholders of the Group. In addition, reference to operating results
are presented before tax and before non-controlling interests in the financial commentary
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, growing core revenue by
8% to R461 million. Assets under management as at 30 September 2018 grew to R50.8 billion
(March 2018: R43.9 billion) with gross inflows for the current reported six months
amounting to R2.2 billion (September 2017: R2.1 billion). The business remains geared
toward the Rand/US Dollar rate with assets under management positively impacted by the
currency weakness experienced during the latter part of the period under review. The client
retention rate in the business remains strong at 97%. Headline earnings for the current
reported six months increased by 21% to R114 million (2017: R94 million) with strong
annuity earnings growth, effective cost controls, healthy inflows and significantly increased
performance fees earned off the back of improved fund performance.
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 for the division decreased to R13 million
(2017: R42 million) primarily as a result of Peregrine Capital's reduced management fees
earned off the back of a reduced asset base as well as lower performance fees earned as a
result of performance deficits brought forward from the final quarter of the previous financial
year. Peregrine Capital's asset base reduced to R6.7 billion at 30 September 2018
(March 2018: R7.4 billion) largely as a result of industry wide redemptions out of hedge
funds.
Stenham
With effect from 4 July 2017, Peregrine's shareholding in Stenham Limited increased from
90.5% to 100%. In Rand terms, headline earnings increased by over 100% to R92 million
(2017: R46 million). Excluding the ad hoc performance fee in the current period as well as
the contribution of the division's investment in proprietary assets in the prior period, headline
earnings from operating businesses increased by 26% to R34 million (2017: R27 million).
Stenham Asset Management continued to perform well with headline earnings increasing by
23% to R26 million (2017: R21 million). Total assets under management and advice have
increased to $4.1 billion (March 2018: $3.7 billion), with net subscriptions materialising
during the current period. Operating costs have remained well contained due to ongoing cost
savings initiatives.
Stenham Trustees managed to grow revenue in Sterling terms as a result of increased time
charges despite closing a number of inefficient structures. In an environment of ever
increasing regulatory costs, operating costs have increased. Headline earnings increased
by 8% to R18 million (2017: R16 million).
Advisory
Java Capital's earnings were significantly impacted by the continued weak equity capital
markets that have manifested from the beginning of the calendar year. As a result of the
benign activity in the property sector in particular, Java Capital's headline earnings
contribution decreased by 41% to R11 million (2017: R18 million).
Group
Earnings at a head office level decreased to negative R3 million (2018: R33 million), such amount
comprising R21 million (2017: R11 million) in respect of the notional cost of capital income
(see "Discontinued operation - Segmental" above), negative R24 million (2017: negative
R24 million) in respect of unrecovered Group costs and Rnil (2017: R46 million) in respect of
the Group's investment in proprietary assets.
Issued share capital
Shares in issue at 30 September 2018 amount to 226.066 million and net of 16.181 million
treasury shares amounted to 209.885 million. The weighted average number of shares in
issue amounted to 211.120 million.
The modification to the Peregrine Holdings Limited long-term executive remuneration
incentive scheme shortly before the end of the 2018 financial year from a cash-settled to an
equity-settled scheme, resulted in the share buyback of 0.702 million Peregrine shares.
In addition, during the period under review, in terms of Peregrine's general authority to
repurchase shares, 0.557 million shares were repurchased with excess cash available and
have been cancelled with effect from 10 October 2018.
Dividend
The directors have resolved to declare a maiden interim cash dividend of 85.0 cents per
share for the six months ended 30 September 2018.
The salient dates applicable to the interim cash dividend:
Last date to trade cum dividend Tuesday, 5 February 2019
Trading ex dividend commences Wednesday, 6 February 2019
Record date Friday, 8 February 2019
Payment date Monday, 11 February 2019
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 interim ordinary cash dividend is 85.0 cents per
share for shareholders exempt from paying dividends tax;
4. The net local dividend amount for the ordinary cash dividend is 68.0 cents per share for
shareholders liable to pay dividends tax;
5. The issued share capital of Peregrine is 225 508 948 shares of 0.1 cent each as at the
date of this announcement; and
6. Peregrine's tax reference number is 9181924847.
Shares may not be dematerialised or rematerialised between Wednesday, 6 February
2019 and Friday, 8 February 2019, both dates inclusive.
Payment of the dividend will be made to shareholders on Monday, 11 February 2019.
In respect of dematerialised shares, the dividend will be transferred to the CSDP/broker
accounts on Monday, 11 February 2019. Certificated shareholders' dividend payments will
be deposited on or about Monday, 11 February 2019.
Directorate
At the annual general meeting of shareholders held on 6 September 2018, the ordinary
resolutions to re-elect SA Melnick and P Goetsch as directors of Peregrine were passed by
the requisite majority. In addition, the appointment of C Coward and B Tlhabanelo as
directors of Peregrine were both approved by the requisite majority of votes exercised.
Conclusion
The Group has delivered a pleasing set of results in a challenging economic environment
which we anticipate will continue for at least the remainder of the Group's financial year.
Despite the tough environment we are delighted to announce that for the first time in our
listed history, and in line with the direction given to shareholders at the time of the
restructure and the unbundling of Sandown Capital Limited in the latter part of 2017, we will
be paying an interim cash dividend.
A significant focus is being placed on driving cross-business revenue and cost synergies
throughout the Group which is already starting to reap benefits. In addition, appetite remains
for potential acquisitions that are consistent with the cash generative nature of the
businesses within the Peregrine Group.
Rob Katz Sean Melnick
Chief Executive Officer Non-executive Chairman
Sandton
20 November 2018
Directors: SA Melnick^ (Chairman); RE Katz (CEO); C Coward (CFO); M Yachad; BC
Beaver*; P Goetsch^; LN Harris#; S Sithole*; SI Stein*; B Thlabanelo*
^ 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 Sponsors: Deloitte, Java Capital
Condensed consolidated statement of comprehensive income
Results for the Results for the six Results for the
% change six months ended months ended 30 year ended 31
2017 to 30 September September 2017 March 2018
2018 2018 Re-presented Re-presented
R'000 R'000 R'000
Continuing operations
Operating revenue -5 788 987 828 603 1 749 797
Investment and other income -87 8 047 62 027 60 999
Total revenue -11 797 034 890 630 1 810 796
Operating expenses -3 (561 212) (580 308) (1 279 914)
Profit from operations -24 235 822 310 322 530 882
Net interest received 2 125 671 2 963
Interest received 11 762 9 073 24 075
Interest paid (9 637) (8 402) (21 112)
Share of profits from equity accounted investees -37 29 367 46 650 97 099
Profit before taxation 267 314 357 643 630 944
Taxation (37 758) (69 059) (112 924)
Profit for the period from continuing operations -20 229 556 288 584 518 020
Discontinued operation
Profit from discontinued operation (net of income tax)(1) 50 112 422 75 094 166 313
Profit for the period -6 341 978 363 678 684 333
Other comprehensive income for the period net of taxation
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 79 904 84 359 24 898
Total comprehensive income for the period 421 882 448 037 709 231
Profit for the period attributable to :
Equity holders of the company 6 277 461 261 187 513 176
Non-controlling interests -37 64 517 102 491 171 157
-6 341 978 363 678 684 333
Total comprehensive income for the period attributable to :
Equity holders of the company 353 720 342 557 536 783
Non-controlling interests 68 162 105 480 172 448
421 882 448 037 709 231
Basic earnings per ordinary share (cents)(2) 5 128.7 122.0 238.5
Continuing Operations 93.1 98.7 184.8
Discontinued Operation 35.6 23.3 53.7
Reconciliation of headline earnings
Results for the Results for the six Results for the
% change six months ended months ended 30 year ended 31
2017 to 30 September September 2017 March 2018
2018 2018 Re-presented Re-presented
R'000 R'000 R'000
Profit for the period attributable to equity holders 6 277 461 261 187 513 176
Adjustment relating to earnings attributable to participating treasury shares(2) (5 746) (4 141) (9 252)
Basic earnings attributable to ordinary shareholders 6 271 715 257 046 503 924
Headline earnings adjustments - - -
Headline earnings(3) 6 271 715 257 046 503 924
Adjustment for discontinued operation(1) (75 109) (49 091) (113 560)
Headline earnings from continuing operations(3) 196 606 207 955 390 364
Headline earnings per ordinary share (cents) 5 128.7 122.0 238.5
Continuing operations 93.1 98.7 184.8
Discontinued operations 35.6 23.3 53.7
Final cash dividend paid per ordinary share in respect of the previous year (cents) - 155.0 155.0 155.0
Final cash dividend per ordinary share declared subsequent to 31 March (cents) 10 170.0 155.0 170.0
Interim cash dividend per ordinary share declared subsequent to 30 September (cents) 85.0 - -
Number of ordinary shares in issue ('000) 226 066 226 066 226 066
Treasury shares held ('000) 16 181 13 902 14 715
Weighted average number of ordinary shares in issue ('000) 211 120 210 658 211 293
1 Refer to Notes & Compliance section for additional information relating to the discontinued operation.
2 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.
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
As at 30 As at 31 March
September 2018 2018
Restated
R'000 R'000
Assets
Non-current assets 7 219 395 6 991 182
Property, plant and equipment 106 994 121 677
Intangible assets 645 713 658 055
Investment in equity accounted investees 281 295 373 594
Investments linked to policyholder investment contracts 6 057 602 5 670 093
Deferred taxation 64 087 89 661
Financial investments 56 718 46 334
Loans and receivables 6 986 31 768
Current assets 776 138 18 679 074
Financial investments 56 063 87 174
Loans and receivables 8 160 163 863
Trade and other receivables 274 588 441 329
Amounts receivable in respect of stockbroking activities - 15 301 667
Taxation 9 321 18 318
Cash and cash equivalents 428 006 2 666 723
Assets held for resale(1) 17 841 122 -
Total assets 25 836 655 25 670 256
Equity and liabilities
Equity 2 482 056 2 517 853
Equity attributable to equity holders of the company 2 081 062 2 106 366
Non-controlling interests 400 994 411 487
Non-current liabilities 6 214 557 5 879 230
Policyholder investment contract liabilities 6 057 602 5 670 093
Interest-bearing borrowings(2) 119 403 170 428
Deferred taxation 9 628 9 324
Loans and other payables 27 924 29 385
Current liabilities 589 618 17 273 173
Interest-bearing borrowings(2) 245 249 305 298
Financial instrument liabilities - 31 339
Trade and other payables 312 919 777 952
Amounts payable in respect of stockbroking activities - 16 114 151
Taxation 31 450 44 433
Liabilities held for resale(1) 16 550 424 -
Total equity and liabilities 25 836 655 25 670 256
1 Refer to Notes & Compliance section for additional information relating to the discontinued operation.
2 In the prior period, R253 million of the revolving credit facility with Investec Bank Limited has been reclassified from non-current to current. This
reclassification had no other effect on the reported results of the Group as at 31 March 2018.
Condensed consolidated statement of changes in equity
Total capital and Non-controlling
reserves interests Total equity
R'000 R'000 R'000
2018
Balance at 31 March 2018 2 106 366 411 487 2 517 853
Profit for the period 277 461 64 517 341 978
Other comprehensive income for the period 76 259 3 645 79 904
Transactions with owners recorded directly in equity: (379 024) (78 655) (457 679)
Dividends paid(1) (358 699) (78 655) (437 354)
Share-based payments 8 810 - 8 810
Acquisition of participating treasury shares(2) (11 870) - (11 870)
Repurchase of treasury shares(3) (19 470) - (19 470)
Disposal of Sandown Capital Limited shares (adjustment to prior year taxation effect)(4) 2 205 - 2 205
Balance at 30 September 2018 2 081 062 400 994 2 482 056
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 (326 207) (85 801) (412 008)
Share-based payments 36 165 - 36 165
Disposal of participating treasury shares 117 273 - 117 273
2015 deferred remuneration scheme 2 settlement (80 136) - (80 136)
Acquisition of participating treasury shares (97 470) - (97 470)
Repurchase and cancellation of shares of subsidiary 19 324 (111 832) (92 508)
Subscription of shares in new subsidiary - 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
Profit for the period 251 989 68 666 320 655
Other comprehensive income for the period (57 763) (1 698) (59 461)
Transactions with owners recorded directly in equity: (1 162 554) (44 939) (1 207 493)
Dividends paid - (162 090) (162 090)
Distribution in specie (1 198 780) (32 902) (1 231 682)
Disposal of Sandown Capital Limited shares (net of taxation) 27 463 - 27 463
Share-based payments 16 709 - 16 709
Disposal of participating treasury shares - - -
2015 deferred remuneration scheme 2 settlement - - -
Acquisition of participating treasury shares - - -
Repurchase of treasury shares (7 955) - (7 955)
Repurchase and cancellation of shares of subsidiary 9 (9) -
Disposal of investment in subsidiary company - (708) (708)
Subscription of shares in new subsidiary - 17 766 17 766
Additional subscription of shares in subsidiary - 133 004 133 004
Balance at 31 March 2018 2 106 366 411 487 2 517 853
1 Dividends paid to equity holders of the Company relate to the 170 cents per share which was paid on Monday, 6 August 2018.
2 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 provided 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, 557 603 Peregrine shares, which carry participating rights, were acquired during the course of
September 2018.
3 The Peregrine Holdings long-term executive remuneration incentive scheme was modified shortly before the end of the 2018 financial year from cash-settled
(IAS 19) to equity-settled (IFRS 2). The modification resulted in the share buyback of 701 500 Peregrine shares, of which 351 500 shares were acquired
during the course of the current period. In addition, by utilising excess cash reserves, the Company repurchased 556 748 of its shares during the course
of September 2018, which shares were cancelled effective 10 October 2018.
4 As referred to in the March 2018 financial statements as well in the circular to Peregrine shareholders issued on Tuesday, 14 November 2017, following on
the restructure and unbundling the Group received 10 484 314 Sandown Capital Limited shares as a result of 10 484 314 Peregrine shares (which shares were
held as treasury shares) held by the Group at the unbundling record date. On 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. The estimated tax effect thereof amounted to R8 million and was accounted for through equity.
In the current period an adjustment of R2 million relating to an overprovision of taxation has been accounted for through equity.
Condensed consolidated statement of cash flow
For the six For the six
months ended 30 months ended 30
September 2018 September 2017
R'000 R'000
Cash flow from operating activities (733 165) (282 973)
Cash flow from operating activities excluding stockbroking activities 207 532 305 421
Cash flow from stockbroking activities (581 331) (235 795)
Net interest and dividends received 125 458 123 675
Cash dividends paid (420 371) (412 008)
Taxation paid (64 453) (64 266)
Cash flow from investing activities 20 823 22 206
Net disposal of financial investments and other assets 35 324 47 365
Net purchase of property, plant and equipment (9 501) (6 708)
Net acquisitions of subsidiaries - (18 451)
Net acquisition of interest in equity accounted investee companies (5 000) -
Cash flow from financing activities 7 056 (420 060)
Net (acquisition)/disposal of treasury shares (31 340) 19 803
Settlement of Citadel deferred remuneration scheme - (80 136)
Net cash flow from equity transactions with non-controlling interest - (85 748)
Loans and receivables settled/(advanced) 167 247 (61 988)
Net settlement of financial liabilities (128 851) (211 991)
Net decrease in cash and cash equivalents (705 286) (680 827)
Cash and cash equivalents at beginning of the year 2 666 723 2 751 480
Effects of exchange rate changes on cash and cash equivalents 44 534 16 814
Cash and cash equivalents at end of the period 2 005 971 2 087 467
Presented and disclosed in the Statement of Financial Position under:
Current assets 428 006 600 679
Assets held for resale (Discontinued Operation)(1) 1 577 965 1 211 685
Assets held for resale (Proprietary Assets) - 275 103
2 005 971 2 087 467
1 Refer to the Notes & Compliance section for additional information relating to the discontinued operation.
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
For the six months ended 30 September 2018 *
Wealth and Asset Management 545 254 8 666 192 155 127 182 -7
Wealth Management 490 404 4 084 157 424 113 859 21
Asset Management 54 850 4 582 34 731 13 323 -68
Broking and Structuring 346 400 57 391 113 797 55 599 44
Stenham 246 966 9 587 94 605 92 357 >100
Advisory - 12 315 12 315(2) 10 591 -41
Subtotal from reportable segments 1 138 620 87 959 412 872 285 729 20
Group 1 873 38 702 10 839 (3 058) >100
Total from reportable segments 1 140 493 126 661 423 711 282 671 4
Operating Businesses Continuing Operations 794 093 35 195 275 839 205 973 31
Operating Businesses Discontinued Operation 346 400 91 466 147 872 76 698 54
Broking and Structuring 346 400 57 391 113 797 55 599 44
Group(3) - 34 075 34 075 21 099 89
Proprietary Assets - - - - -100
Total from reportable segments 1 140 493 126 661 423 711 282 671 4
Non-reportable segment and reconciling items(4) 3 024 (3 703) (8 525) (10 956)
Total per Consolidated statement of comprehensive income 1 143 517 122 958 415 186 271 715 6
For the six months ended 30 September 2017 (re-presented)*
Wealth and Asset Management 596 248 14 280 259 488 136 360
Wealth Management 438 719 10 192 129 504 94 324
Asset Management 157 529 4 088 129 984 42 036
Broking and Structuring 329 528 24 255 82 209 38 715
Stenham 214 448 10 552 56 511 45 713
Advisory - 20 997 20 997(2) 18 057
Subtotal from reportable segments 1 140 224 70 084 419 205 238 845
Group 69 445 19 755 55 848 32 834
Total from reportable segments 1 209 669 89 839 475 053 271 679
Operating Businesses Continuing Operations 778 068 47 165 282 749 156 939
Operating Businesses Discontinued Operation 329 528 42 289 100 243 49 882
Broking and Structuring 329 528 24 255 82 209 38 715
Group(3) - 18 034 18 034 11 167
Proprietary Assets 102 073 385 92 061 64 858
Stenham 33 461 364 25 496 18 642
Group 68 612 21 66 565 46 216
Total from reportable segments 1 209 669 89 839 475 053 271 679
Non-reportable segment and reconciling items(3) 10 818 (229) (17 167) (14 633)
Total per Consolidated statement of comprehensive income 1 220 487 89 610 457 886 257 046
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 of the equity accounted investment.
3 Due to the imminent disposal of the Broking and Structuring division the Group's cost of capital recovery has been presented
as part of Profit from discontinued operation (net of income tax) on the face of the IFRS Statement of Comprehensive Income as
well as part of the Segmental analysis above.
4 The reconciling items relate primarily to the difference in classification of Citadel's long term 2015 deferred remuneration
scheme 2 for IFRS purposes and that applied for purposes of providing information to the Chief Operating Decision Makers.
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 Peregrine Holdings Limited 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.
The non-reportable segment refers to the Group's seed investment, through Peregrine Securities, into the natural selection hedge
fund platform which is required to be consolidated in terms of IFRS 10 but which does not meet the quantitative thresholds for
determining reportable segments. There has been no impact on equity, or profit or loss.
* Annexure C, disclosing the Segment statement of comprehensive income split between the continuing operations and the discontinued
operation as well as the Group's proprietary assets in the prior period, is available on the Group's website.
Notes & Compliance
The condensed consolidated unaudited interim financial statements of the Group as at and for the six months ended 30 September 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 unaudited interim 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 annual financial statements as at and for the year then
ended 31 March 2018. IFRS 9 - Financial Instruments and IFRS 15 - Revenue from Contracts with Customers new and revised Standards
and Interpretations have been adopted in these provisional financial statements. Their adoption has not had any significant impact
on the amounts reported or disclosed in these provisional financial statements.
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 audited consolidated
financial statements as at and for the year ended 31 March 2018.
The Group's results were prepared under the supervision of C Coward CA(SA), the Group Chief Financial Officer.
These financial statements and any forward looking statements have not been reviewed or reported on by the Company's auditors,
Deloitte & Touche.
Discontinued operation
Shareholders are referred to the announcement released on SENS on 13 June 2018 indicating that the Group had received a non-binding
proposal from Legae Holdings Proprietary Limited, an entity representing certain management of Legae Securities and Peregrine
Securities and a Black Economic Empowerment consortium ("the Consortium") to acquire, as one indivisible transaction, with effect
from 1 October 2018:
- from Peregrine SA Holdings Proprietary Limited ("Peregrine SA") its 65% shareholding in both Peregrine Securities Proprietary
Limited and in Peregrine Fund Platform Proprietary Limited (collectively "Peregrine Securities"); and
- from Peregrine International Holdings Limited ("PIH") its 65% shareholding in Peresec International Limited ("Peregrine
Securities International"), (collectively, the "Transaction").
On 26 September 2018, shareholders were further advised that the agreements to dispose of Peregrine Securities and Peregrine
Securities International to Nkholi Consolidated Investments Proprietary Limited and Peresec Holdings Limited (collectively, the
"Purchasers") respectively had been executed on 26 September 2018. The disposal is subject to the fulfilment of certain suspensive
conditions, set out in more detail in the announcement released on 26 September 2018, and it is anticipated that the Transaction
will be implemented during the course of November 2018.
The aggregate purchase price payable by the Purchasers is a minimum of R910 million comprising:
- in respect of Peregrine Securities, R760 million plus 65% of the after tax profits of Peregrine Securities for the six-month period
from 1 April 2018 to 30 September 2018, payable to Peregrine SA; and
- in respect of Peregrine Securities International, R150 million plus 65% of the after tax profits of Peregrine Securities International
for the six-month period from 1 April 2018 to 30 September 2018, payable to PIH.
At 30 September 2018, the Broking and Structuring business meets the definition of a discontinued operation in terms of IFRS 5 - Non-current
Assets Held For Sale and Discontinued Operations and has been presented as such in these results. The comparative consolidated statement of
comprehensive income and segmental analysis have been re-presented to reflect the Broking and Structuring business as a discontinued operation.
The results of the discontinued operation included in the Group's results for the period ended 30 September 2018, are detailed below:
Condensed income statement from discontinued operation
Results for the six Results for the six Results for the year
months ended 30 months ended 30 ended 31 March
September 2018 September 2017 2018
R'000 R'000 R'000
Total revenue 346 482 329 857 741 196
Operating expenses (290 076) (271 903) (647 857)
Profit from operations 56 406 57 954 93 339
Net interest received 78 013 31 778 89 634
Share of profits from equity accounted investees 13 453 10 511 33 699
Profit before taxation 147 872 100 243 216 672
Taxation (35 450) (25 149) (50 359)
Profit for the period from discontinued operation 112 422 75 094 166 313
Discontinued operations profit for the period attributable to:
Equity holders of the company 76 698 49 882 115 645
Non-controlling interests 35 724 25 212 50 668
112 422 75 094 166 313
Discontinued operations profit for the period attributable to equity holders 76 698 49 882 115 645
Adjustment relating to earnings attributable to participating treasury shares (1 589) (791) (2 085)
Discontinued operations profit attributable to ordinary shareholders 75 109 49 091 113 560
Headline earnings from discontinued operation 75 109 49 091 113 560
Basic earnings per ordinary share (cents) 35.6 23.3 53.7
Headline earnings per ordinary share (cents) 35.6 23.3 53.7
The effect of the discontinued operation on the statement of financial position of the Group is detailed below:
The assets and liabilities reflected below have been recognised at 30 September 2018 at the lower of their carrying value and fair value less
costs to sell.
As at 30 September
2018
R'000
Assets held for resale 17 841 122
Property, plant and equipment 13 073
Intangible assets 25 460
Investment in equity accounted investees 109 808
Deferred taxation 21 994
Loans and receivables 11 818
Trade and other receivables 83 064
Amounts receivable in respect of stockbroking activities 15 997 940
Cash and cash equivalents 1 577 965
Liabilities held for resale 16 550 424
Loans and other payables 17 329
Financial instrument liabilities 16 120
Trade and other payables 222 768
Amounts payable in respect of stockbroking activities 16 287 892
Taxation 6 315
Surplus net assets 1 290 698
Non-controlling interest (343 789)
Attributable surplus net assets 946 909
The effect of the discontinued operation on the statement of cash flows of the Group is detailed below:
For the six months For the six months
ended 30 September ended 30 September
2018 2017
R'000 R'000
Cash flow from discontinued operation
Net operating cash flows from discontinued operation (481 491) (298 793)
Net investing cash flows from discontinued operation (4 830) (4 891)
Net financing cash flows from discontinued operation 27 321 (414 196)
Net decrease in cash and cash equivalents from the discontinued operation (459 000) (717 880)
Events subsequent to reporting date
Other then the disposal of Peregrine Securities and Peregrine Securities International 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 Group
or the results of its operations.
Supplementary information
Applicable exchange rates
Average rates Closing rates
USD:ZAR
30 September 2018 13.36 14.15
31 March 2018 13.00 11.85
30 September 2017 13.19 13.50
GBP:ZAR
30 September 2018 17.76 18.45
31 March 2018 17.22 16.62
30 September 2017 17.07 18.12
This announcement does not include the information required pursuant to paragraph 16A(j) of IAS 34. The full interim report is available on
Peregrine's website, at Peregrine's registered offices and upon request.
Date of release of this announcement on SENS: 21 November 2018
Date: 21/11/2018 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
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.
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