PGR: PEREGRINE HOLDINGS LIMITED - Reviewed condensed consolidated provisional results for the year ended 31 March 2019 and changes to the board
Reviewed condensed consolidated provisional results for the year ended 31 March 2019 and changes to the board
Peregrine Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/006026/06)
Share code: PGR ISIN: ZAE000078127
('Peregrine' or 'the Group')
REVIEWED CONDENSED CONSOLIDATED PROVISIONAL RESULTS FOR THE YEAR
ENDED 31 MARCH 2019 AND CHANGES TO THE BOARD OF DIRECTORS
- ASSETS UNDER MANAGEMENT UP 20% TO R124 BILLION
- ONGOING SEGMENTAL ANNUITY HEADLINE EARNINGS UP 10%
- ONGOING SEGMENTAL HEADLINE EARNINGS PER SHARE DOWN 7% TO 152.9 CENTS
- OFFSHORE SEGMENTAL EARNINGS NOW COMPRISE 53% OF ONGOING
SEGMENTAL EARNINGS, UP FROM 47% IN THE PRIOR YEAR
- FINAL DIVIDEND OF 100 CENTS PER SHARE, WHICH TOGETHER WITH THE INTERIM DIVIDEND
PAID OF 85 CENTS, AMOUNTS TO 85% OF TOTAL SEGMENTAL HEADLINE EARNINGS
Introduction
The year ended 31 March 2019 was characterised by a challenging environment for global
financial markets in general. Global liquidity tightened significantly due to the slowdown in
global growth. Furthermore, expectations for growth have been hurt by the risk of an all-out
trade war between the US and China. Many emerging markets experienced currency
depreciation against the US Dollar, with Argentina, Turkey, Brazil and South Africa being
amongst the worst affected. After the sell down in markets during December 2018 and the
subsequent rally in the first three months of 2019, on a total return basis, major US and
European markets ended positively but emerging equity markets, as represented by the MSCI
Emerging Market Index, continued to lose ground, ending in negative territory.
Locally, the South African economy had a very difficult 2018 calendar year with markets
posting the worst returns since 2008. The twelve month period ended 31 March 2019 reflected
a slightly better position on a total return basis with the All Share Index closing up 5%.
Ongoing Segmental headline earnings per share decreased by 7% to 152.9 cents due to the
significant drop in performance fees earned in Stenham and Peregrine Capital as well as
earnings from Java Capital in the year under review. Despite this decrease in performance
fees, annuity earnings, comprising 92% of total ongoing earnings, increased by 10% in Rand
terms year on year. Please refer to the Segmental section of this announcement for the
definition of ongoing Segmental earnings.
Financial results
IFRS
Earnings and Headline earnings
Basic earnings attributable to ordinary shareholders amounted to R410 million (2018: R504 million)
with basic earnings per ordinary share amounting to 197.2 cents per share (2018: 238.5 cents
per share). Headline earnings attributable to ordinary shareholders amounted to
R439 million (2018: R504 million) with headline earnings per ordinary share amounting to
210.8 cents per share (2018: 238.5 cents per share).
The difference of R29 million between basic earnings and headline earnings stems from an
impairment of R84 million (after non-controlling interest) on the equity accounted investment
in Java Capital and a capital loss of R2 million (after non-controlling interest) on the disposal
of the equity accounted investment in Green Oak Capital, partially offset by a capital gain of
R57 million (after taxation and non-controlling interest) on the disposal of the Broking &
Structuring business.
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. It needs to be
noted that there are differences between IFRS and Segmental earnings. Annexures disclosing
IFRS and Segmental earnings and the reconciliation between them are available on the
Group's website http://www.peregrine.co.za.
Segmental
Continuing operations
Core operating revenue grew by 4% to R1.5 billion, whilst performance fee related income
decreased by 65% to R94 million, resulting in total operating revenue reducing by 4% to R1.6 billion
(2018: R1.7 billion). Investment and other income decreased by 86% to R15 million due
to the transfer of the Group's proprietary assets to Zarclear Holdings Limited (previously
Sandown Capital Limited), which shares were unbundled to Peregrine shareholders at the
beginning of the second half of the 2018 financial year.
Operating expenses were well contained, decreasing by 5% to R1.2 billion (2018: R1.3 billion)
due to cost containment initiatives across the Group and net interest income increased five
fold to R40 million (2018: R8 million). Income from equity accounted investees dropped by
57% to R42 million (2018: R97 million), the contributing factor being Java Capital's reduced earnings.
Profit before tax and capital items decreased by 18% to R548 million (2018: R666 million).
Excluding the contribution of the Group's investment in proprietary assets in the prior year of
R92 million, Profit before tax and capital items decreased by 5%.
Discontinued operations
Shareholders are referred to the SENS announcements informing them of the disposal of the
Broking & Structuring business effective 1 October 2018.
As a result of this disposal, the Group's interest in the after tax profit of the Broking &
Structuring business has been separately presented on the face of the statement of
comprehensive income as 'Profit from discontinued operation (net of income tax)' in both the
current and prior year.
Included in the 'Profit from discontinued operation' is the profit after tax before non-controlling
interests from the Broking & Structuring business of R112 million for the first six months of the
current year (2018: R166 million for 12 months) which, after tax and non-controlling interests
amounted to R77 million (2018: R116 million).
Proceeds received in terms of the disposal amounted to R910 million, which post the
settlement of inter-company loan balances with Broking & Structuring entities as well as the
Group's external revolving credit facility and the payment of the tax arising as a result of the
disposal, left a balance of R550 million available. From these net proceeds, Nala PGR SA
Holdings Proprietary Limited ('Nala') received their attributable share of R92 million and R115 million
was utilised for share buy backs. Consequently at year end a balance of R343 million
remains available, providing the Group with the necessary flexibility in terms of future
acquisitions and/or further share buy backs.
Segmental basic earnings and Segmental headline earnings
Segmental basic earnings decreased by 19% to R432 million (2018: R535 million), with
segmental basic earnings per share decreasing by 18% to 202.8 cents (2018: 248.0 cents).
Segmental headline earnings decreased by 14% to R461 million (2018: R535 million), with
Segmental headline earnings per share decreasing by 13% to 216.6 cents (2018: 248.0 cents).
The difference of R29 million between Segmental basic earnings and Segmental
headline earnings has been explained in the IFRS section above.
On an ongoing basis, Segmental headline earnings decreased by 8% to R326 million (2018: R354 million),
with Segmental headline earnings per share decreasing by 7% to 152.9 cents
(2018: 164.4 cents). Ongoing Segmental headline earnings excludes in the current year, a
one-time performance fee amounting to GBP3 million (R58 million) received by Stenham arising
from the disposal of a property which formed part of the property portfolios sold to Stenprop
in 2014 ('the ad hoc performance fee') and in the prior year, the contribution from the Group's
investment in proprietary assets of R65 million. In addition, in both the current and prior years,
the Segmental headline earnings relating to the disposal of Broking & Structuring division has
also been excluded.
Divisional Segmental results
Substantial non-controlling interests exist in Peregrine Capital as well as in Peregrine SA
Holdings (being the effective 14% interest held by Nala) and, as such, management believes
that headline earnings per division (which is the basis for the commentary below) best reflects
each division'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 division's profitability.
Wealth Management
Citadel continued to capitalise on its position as a leading private client wealth manager in
South Africa, growing core revenue by 7% to R943 million. Private client assets under
management as at 31 March 2019 amounted to R51.2 billion (2018: R43.9 billion) with gross
inflows for the current year amounting to R5.8 billion (2018: R4.9 billion). The business
remains geared towards the Rand/US Dollar rate with assets under management positively
impacted by the currency weakness experienced during the current year. The client retention
rate in the business remained strong at over 97%. Headline earnings for the current year
increased by 13% to R234 million (2018: R207 million) driven by strong annuity earnings
growth, continued effective cost controls, strong vertical integration initiatives relating to recent
acquisitions, healthy inflows and moderate performance fees earned off the back of good fund performance.
Stenham
In Rand terms, headline earnings increased by 36% to R126 million (2018: R111 million).
Excluding the ad hoc performance fee in the current year as well as the contribution of the
division's investment in proprietary assets in the prior year, headline earnings from ongoing
businesses decreased by 27% to R68 million (2018: R92 million).
Stenham Asset Management's headline earnings decreased by 33% to R50 million (2018: R74 million)
as a result of the significant decrease in performance fees due to fund
performance that was affected by the drop in markets in the final quarter of 2018.
Notwithstanding the difficult trading conditions, margin pressures have abated somewhat and
total assets under management and advice increased to $4.0 billion (2018: $3.7 billion), with
net subscriptions materialising during the current year. Operating costs have remained well
contained due to ongoing cost saving initiatives.
Stenham Trustees, which includes the Bellerive joint venture, grew revenue primarily as a
result of an increase in fees earned off the back of increased activity. In an ever increasing
regulatory and servicing cost environment, operating costs remain under pressure. Headline
earnings increased by 6% to R37 million (2018: R35 million).
Asset Management
Whilst the Group's Asset Management division comprises a number of fund management
businesses, Peregrine Capital, the oldest hedge fund manager in South Africa, is the dominant
contributor to earnings. Headline earnings for the division decreased to R35 million (2018: R68 million).
Peregrine Capital's asset base reduced to R6.8 billion at 31 March 2019 (2018: R7.4 billion)
largely as a result of industry wide redemptions out of hedge funds, despite there
being certain large institutional inflows into Peregrine Capital's funds during the year. Due in
the main to the significant performance deficits brought forward from the final quarter of the
previous financial year, minimal performance fees were earned during this financial year,
notwithstanding investment performance being substantially better than the prior year. The
funds performed well during the year with outperformance against the SWIX of around 10%
in the major mandates. Long-term performance remains exceptional and industry leading, with
5% - 10% outperformance per annum of unit trusts with similar risk profiles over 5 and 10 year periods.
Advisory
Java Capital's attributable earnings for the year decreased over that of the prior year by 60%
to R15 million (2018: R38 million) driven by significantly reduced deal flow in both the general
corporate finance arena as well as in equity capital markets during the year. Given current
market conditions in the listed property sector as well as the subdued level of activity in the
equity market as a whole, management believe that an impairment of R100 million before non-
controlling interests is necessary in the current year in order to reflect the Group's estimated
recoverable amount in its equity accounted investment. Java Capital is exploring opportunities
to expand its brand into different areas and is tailoring its cost base to take account of the
current market environment.
Group Head Office
At an attributable level, costs net of recoveries and interest income decreased to R26 million
(2018: R50 million). Contributing to this decrease is the interest earned on the disposal
proceeds relating to the Broking & Structuring business.
Issued share capital
Shares in issue at 31 March 2019 amount to 220.467 million and net of 17.286 million treasury
shares amounted to 203.181 million. Treasury shares are inclusive of 6.1 million shares which
were purchased to cover obligations in terms of the Citadel LTI schemes and which carry
participatory rights. The weighted average number of shares in issue amounted to 208.197 million.
During the year under review, in terms of Peregrine's general authority to repurchase shares,
6.300 million shares were repurchased with available excess cash, of which 556 748 were
cancelled with effect from 10 October 2018 and 5.042 million with effect from 15 January 2019.
Dividend
In line with the stated dividend pay-out ratio of 80%-90% of Segmental headline earnings per
share, the directors have resolved to declare a final cash dividend of 100.00 cents per share
for the financial year ended 31 March 2019. This dividend, together with the interim dividend
of 85.00 cents per share (paid in February 2019), amounts to 100% of the attributable six
month earnings from the disposed Broking & Structuring division, 100% of the ad hoc
performance fee and 80% of ongoing Segmental headline earnings per share for the year (in
aggregate, 85% of total Segmental headline earnings).
The salient dates applicable to the final cash dividend:
Last date to trade cum dividend Tuesday, 30 July 2019
Trading ex dividend commences Wednesday, 31 July 2019
Record date Friday, 2 August 2019
Payment date Monday, 5 August 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 final ordinary cash dividend is 100.00 cents per
share for shareholders exempt from paying dividends tax;
4. The net local dividend amount for the ordinary cash dividend is 80.00 cents per share for
shareholders liable to pay dividends tax;
5. The issued share capital of Peregrine is 220 467 242 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, 31 July 2019 and
Friday, 2 August 2019, both dates inclusive.
Payment of the dividend will be made to shareholders on Monday, 5 August 2019. In respect
of dematerialised shares, the dividend will be transferred to the CSDP/broker accounts on
Monday, 5 August 2019. Certificated shareholders' dividend payments will be deposited on
or about Monday, 5 August 2019.
Directorate
On 7 March 2019, it was announced that Mandy Yachad would resign as an Executive Director
of Peregrine effective 31 March 2019, and that Andrew Moller would be appointed as an
Executive Director of Peregrine effective 1 April 2019.
At the upcoming annual general meeting of shareholders to be held during the course of
September 2019, in terms of the Company's memorandum of incorporation, Clive Beaver and
Stefaan Sithole are due to retire from office. Clive Beaver has indicated that he will not offer
himself for re-election. Having joined the Peregrine board in January 2005, Clive has served
on the Group's Audit Committee for 14 years and has chaired the Remuneration Committee
since 2014. We would like to sincerely thank Clive for his meaningful contribution to the Group
over the last 14 years.
Conclusion
These results have been achieved against a backdrop of challenging operating conditions
locally, including a weak economy and subdued market sentiment, as well as muted returns
on both local and international equity markets. Despite these conditions, the continuing focus
on growing annuity revenue streams is reaping rewards and will continue to be a major focus
for the Group going forward.
As advised to shareholders, the dividend payout ratio has been meaningfully increased now
that the Group's capital intensive business has been disposed of and it is the continued
intention of the Group to return to shareholders a substantial portion of earnings by way of
dividends going forward.
Rob Katz Sean Melnick
Chief Executive Officer Non-executive Chairman
Sandton
20 June 2019
Directors: SA Melnick^ (Chairman); RE Katz (CEO); C Coward (CFO); A Moller (Executive);
BC Beaver*; P Goetsch^; LN Harris(#); S Sithole*; SI Stein*; B Tlhabanelo*
^ 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
% change
2018 to
2019 2019 2018
R'000 R'000
Continuing operations
Operating revenue -8 1 628 199 1 771 307
Investment and other income -71 17 645 60 999
Total revenue -10 1 645 844 1 832 306
Operating expenses -7 (1 188 894) (1 279 914)
Profit from operations -17 456 950 552 392
Net interest received 34 426 799
Interest received 52 397 24 075
Interest paid (17 971) (23 276)
Share of profits from equity accounted investees -57 41 670 97 099
Profit before taxation and capital items 533 046 650 290
Capital items (101 791) -
Profit before taxation 431 255 650 290
Taxation (84 667) (118 341)
Profit for the year from continuing operations -35 346 588 531 949
Discontinued operations (1) 176 438 152 384
Profit from discontinued operations (net of income tax) -26 113 231 152 384
Capital item from discontinued operation (net of income tax) 63 207 -
Profit for the year -24 523 026 684 333
Items that may be reclassified subsequently to profit or loss: 83 544 24 898
Currency translation differences 87 091 24 898
Less: Gain reclassified to profit or loss on disposal of foreign operation (3 547) -
Items that will not be reclassified subsequently to profit or loss:
Share of other comprehensive income from equity accounted investee (2) (6 607) (67 440)
Other comprehensive income for the year net of taxation 76 937 (42 542)
Total comprehensive income for the year 599 963 641 791
Profit for the year attributable to:
Equity holders of the company -18 422 785 513 176
Non-controlling interests -41 100 241 171 157
-24 523 026 684 333
Total comprehensive income for the year attributable to:
Equity holders of the company 495 942 469 343
Non-controlling interests 104 021 172 448
599 963 641 791
Basic earnings per ordinary share (cents) -17 197.2 238.5
Continuing Operations 133.8 190.6
Discontinued Operations 63.4 47.9
(1) For additional information relating to the discontinued operations please refer to the Notes & Compliance section.
The prior year has been re-presented to disclose separately the financial results of the operation which was discontinued
in the current year.
(2) For more information regarding the financial effects of the restatement of prior years on the statements of comprehensive
income please refer to the Notes & Compliance section.
Reconciliation of headline earnings
%
change
2018 to
2019 2019 2018
R'000 R'000
Profit for the year attributable to equity holders -18 422 785 513 176
Adjustment relating to earnings attributable to participating treasury shares (1) (12 323) (9 252)
Basic earnings attributable to ordinary shareholders -19 410 462 503 924
Capital items relating to discontinued operation (2) (56 504) -
Gain on disposal of interest in subsidiary (56 668) -
Fixed assets impaired 164 -
Capital items relating to continuing operations 84 988 -
Loss on disposal of interest in equity accounted investee 1 495 -
Investment in equity accounted investee impaired (3) 83 493 -
Headline earnings (4) -13 438 946 503 924
Adjustment for discontinued operations (2) (75 221) (101 206)
Headline earnings from continuing operations (4) -10 363 725 402 718
Headline earnings per ordinary share (cents) -12 210.8 238.5
Continuing operations 174.7 190.6
Discontinued operations 36.1 47.9
Final cash dividend paid per ordinary share in respect of the previous year (cents) 10 170.0 155.0
Total cash dividend per ordinary share declared (cents) 9 185.0 170.0
Final cash dividend per ordinary share declared subsequent to 31 March (cents) 100.0 170.0
Interim cash dividend per ordinary share declared subsequent to 30 September (cents) 85.0 -
Number of ordinary shares in issue ('000) 220 467 226 066
Treasury shares held ('000) 17 286 14 715
Weighted average number of ordinary shares in issue ('000) 208 197 211 293
(1) The 6.1 million (2018: 3.9 million) participating treasury shares 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.
The dilutory effects of the Peregine equity settled long-term executive remuneration scheme is immaterial.
(2) For additional information relating to the discontinued operation please refer to the Notes & Compliance section.
(3) For additional information relating to the impairment assessment please refer to the Critical accounting treatment and
estimates / judgements paragraph in the Notes & Compliance section.
(4) Annexure A, disclosing the reconciliation of IFRS and Segmental headline earnings, is available on the Group's website.
Condensed consolidated statement of financial position
2019 2018
R'000 R'000
Assets
Non-current assets 7 888 725 7 032 108
Property, plant and equipment 101 028 121 677
Intangible assets 638 282 658 055
Investment in equity accounted investees (1) 267 280 414 520
Investments linked to policyholder investment contracts 6 756 735 5 670 093
Deferred taxation 69 960 89 661
Financial investments 55 440 46 334
Loans and receivables - 31 768
Current assets 1 314 590 18 679 074
Financial investments 46 623 87 174
Loans and receivables 11 932 163 863
Trade and other receivables 310 204 441 329
Amounts receivable in respect of stockbroking activities - 15 301 667
Taxation 21 209 18 318
Cash and cash equivalents 924 622 2 666 723
Assets held for resale 241 931 -
Total assets 9 445 246 25 711 182
Equity and liabilities
Equity 1 914 033 2 558 779
Equity attributable to equity holders of the company (1) 1 823 973 2 007 376
Non-controlling interests (1) 90 060 551 403
Non-current liabilities 6 852 242 5 879 230
Policyholder investment contract liabilities 6 756 735 5 670 093
Interest-bearing borrowings (1) 52 875 170 428
Deferred taxation 9 586 9 324
Loans and other payables 33 046 29 385
Current liabilities 518 903 17 273 173
Interest-bearing borrowings (1) 47 082 305 298
Financial instrument liabilities - 31 339
Trade and other payables 428 914 777 952
Amounts payable in respect of stockbroking activities - 16 114 151
Taxation 42 907 44 433
Liabilities held for resale 160 068 -
Total equity and liabilities 9 445 246 25 711 182
(1) For more information regarding the financial effects of the restatement of prior years on the statements
of financial position please refer to Notes & Compliance section.
Condensed consolidated statement of changes in equity
Total capital and Non-controlling
reserves interests Total equity
R'000 R'000 R'000
Reviewed - 2019
Balance at 31 March 2018: restated 2 007 376 551 403 2 558 779
Profit for the year 422 785 100 241 523 026
Other comprehensive income for the year 73 157 3 780 76 937
Transactions with owners recorded directly in equity: (679 345) (565 364) (1 244 709)
Dividends paid (1) (537 872) (165 327) (703 199)
Share-based payments 25 601 - 25 601
Disposal of investment in subsidiary companies - (400 037) (400 037)
Acquisition of participating treasury shares (2) (46 809) - (46 809)
Repurchase of treasury shares (3) (7 599) - (7 599)
Repurchase and cancellation of shares of the holding company (4) (114 871) - (114 871)
Disposal of Zarclear Holdings Limited shares (previously Sandown Capital Limited)
(adjustment to prior year taxation effect) (5) 2 205 - 2 205
Balance at 31 March 2019 1 823 973 90 060 1 914 033
Audited - 2018
Balance at 31 March 2017: as previously reported 3 063 188 474 851 3 538 039
Financial effect of restatement on profit for the year (6) (7 243) - (7 243)
Financial effect of restatement on other comprehensive income (6) (11 858) - (11 858)
Financial effect of restatement on transactions with owners directly through equity (6) (12 449) 97 366 84 917
Restated balance at 31 March 2017 3 031 638 572 217 3 603 855
Profit for the year: as previously reported 513 176 171 157 684 333
Other comprehensive income for the year: restated (43 833) 1 291 (42 542)
Other comprehensive income for the year: as previously reported 23 607 1 291 24 898
Other comprehensive income for the year restatement (6) (67 440) - (67 440)
Transactions with owners recorded directly in equity: (1 493 605) (193 262) (1 686 867)
Dividends paid: as previously reported (326 207) (247 891) (574 098)
Dividends paid: restatement (6) - 42 550 42 550
Distribution in specie (1 198 780) (32 902) (1 231 682)
Disposal of Zarclear Holdings Limited shares (net of taxation) (5) 27 463 - 27 463
Share-based payments 52 874 - 52 874
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 of treasury shares (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 - 24 108 24 108
Additional subscription of shares in subsidiary - 133 422 133 422
Balance at 31 March 2018: restated 2 007 376 551 403 2 558 779
(1) Dividends paid to equity holders of the Company relate to the 170 cents per share which was paid on Monday, 6 August 2018 and the 85 cents per
share which was paid on Monday, 11 February 2019.
(2) The Citadel 2017 deferred remuneration scheme 3 was initiated during September 2017, with an effective date of 1 October 2017 and a maturity
date of 31 March 2022. The terms of such scheme 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, 2 219 495 Peregrine shares, which carry participating rights, were
acquired during the course of the current year.
(3) The Group bought back 701 500 Peregrine shares, of which 351 500 shares were acquired during the course of the current period.
(4) By utilising excess cash reserves, the Company repurchased 5 598 454 of its shares during the course of the year, of which 556 748 shares were
cancelled effective 10 October 2018 and the balance of 5 041 706 shares effective 15 January 2019.
(5) As referred to in the March 2018 financial statements as well in the circular to Peregrine shareholders issued on Tuesday, 14 November 2017,
following the restructure and unbundling the Group received 10 484 314 Zarclear Holdings 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 all of such 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.
(6) For more information regarding the reasons for the restatement of prior years on the statements of changes in equity please refer to Notes &
Compliance section.
Condensed consolidated statement of cash flow
2019 2018
R'000 R'000
Cash flow from operating activities (816 466) 422 785
Cash flow from operating activities excluding stockbroking activities 496 942 780 924
Cash flow from stockbroking activities (581 330) 145 270
Net interest and dividends received 168 393 222 758
Cash dividends paid (732 206) (574 098)
Taxation paid (168 265) (152 069)
Cash flow from investing activities (487 737) (252 785)
Net disposal of financial investments and other assets 46 574 56 596
Net purchase of property, plant and equipment (13 260) (15 827)
Net acquisitions of subsidiaries - (18 451)
Net acquisition of interest in equity accounted investee companies (5 000) -
Net disposal of interest in equity accounted investee companies (1) 88 357 -
Disposal of subsidiary companies (1) (658 030) -
De-recognition on the unbundling of Zarclear Holdings Limited (previously Sandown Capital Limited) - (174 479)
De-recognition on loss of control of hedge fund (1) (5 043) (100 624)
Obtaining control over hedge fund, net of cash acquired (2) 58 665 -
Cash flow from financing activities (401 532) (241 339)
Net (acquisition)/disposal of treasury shares (54 408) 11 848
Shares repurchased and cancelled (114 871) -
Settlement of participatory interests - (80 136)
Net cash flow from equity transactions with non-controlling interest (884) 65 022
Loans and receivables settled 170 246 54 690
Net settlement of financial liabilities (401 615) (292 763)
Net decrease in cash and cash equivalents (1 705 735) (71 339)
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 53 103 (13 418)
Cash and cash equivalents at end of the year 1 014 091 2 666 723
Presented and disclosed in the Statement of Financial Position under:
Current assets 924 622 2 666 723
Assets held for resale (Discontinued Operation) (2) 89 469 -
1 014 091 2 666 723
(1) Refer to the Notes & Compliance section for additional information relating to the disposal of the Broking & Structuring operation.
(2) Refer to the Notes & Compliance section for additional information relating to the discontinued operation.
Segmental analysis
Interest and share
of profits from Profit from % change in
equity accounted ordinary headline
Total revenue (1) investees activities Headline earnings earnings
R'000 R'000 R'000 R'000 2018 to 2019
2019
Wealth and Asset Management 1 154 676 15 531 423 870 268 629 -2
Wealth Management 1 012 846 6 908 326 148 233 672 13
Asset Management 141 830 8 623 97 722 34 957 -49
Stenham 473 346 20 618 131 016 125 563 36
Advisory - 17 679 17 679 (2) 15 204 -60
Subtotal from reportable segments 1 628 022 53 828 572 565 409 396 1
Group 14 880 28 004 (24 454) (25 560) -49
Total from continuing reportable segments 1 642 902 81 832 548 111 383 836 8
Discontinued reportable segments - - - 77 480 -33
Proprietary Assets - - - -
Segmental results 1 642 902 81 832 548 111 461 316 -14
Reconciling items and non-reportable segment (3) 2 942 (5 736) (15 065) (22 370)
Total per Consolidated statement of comprehensive income 1 645 844 76 096 533 046 438 946 -13
2018
Wealth and Asset Management 1 208 786 32 394 490 080 274 629
Wealth Management 942 695 20 840 289 434 206 605
Asset Management 266 091 11 554 200 646 68 024
Stenham 484 767 20 212 99 637 92 017
Advisory - 43 814 43 814 (2) 37 680
Subtotal from reportable segments 1 693 553 96 420 633 531 404 326
Group 6 303 8 240 (59 271) (50 140)
Total from continuing reportable segments 1 699 856 104 660 574 260 354 186
Discontinued reportable segments - - - 115 645
Proprietary Assets 102 164 388 92 044 64 654
Segmental results 1 802 020 105 048 666 304 534 485
Reconciling items and non-reportable segment (3) 30 286 (7 150) (16 014) (30 561)
Total per Consolidated statement of comprehensive income 1 832 306 97 898 650 290 503 924
(1) Total revenue includes annuity revenue of R1.5 billion (2018: R1.4 billion) and performance fee related revenue of R94 million
(2018: R273 million).
(2) Represents 50% of profit after taxation of the equity accounted investment. This investment was impaired by R100 million during the current
financial year and is reflected as 'Capital items' on the face of the Condensed consolidated statement of comprehensive income. For additional
information relating to the impairment assessment please refer to the Critical accounting treatment and estimates / judgements paragraph in
the Notes & Compliance section.
(3) The reconciling items of R22 million (2018: R31 million) relate to the following adjustments:
(3.1) Accounting for the earnings attributable to participating treasury shares of R12 million (2018: R9 million);
(3.2) 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 of R10 million (2018: R22 million).
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; and
(3.3) The non-reportable segment arose in terms of IFRS 10 whereby certain of the Group's proprietary hedge fund investments were required to be
consolidated in the comparative period. The consolidated proprietary hedge fund investments did not meet the quantitative thresholds for
determining reportable segments in 2018 and were grouped together as a non-reportable segment. There was no impact on equity, or profit or loss
in the comparative period.
Notes & Compliance
The reviewed condensed consolidated provisional financial statements of the Group as at and for the year ended 31 March 2019 comprise the company
and its subsidiaries ('the Group') results and the Group's interests in equity accounted investees.
Basis of preparation
The reviewed 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 reviewed 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 ended 31 March 2018 other than
for IFRS 9 - Financial Instruments and IFRS 15 - Revenue from Contracts with Customers (new and revised Standards and Interpretations) that have
been adopted in the reviewed condensed consolidated provisional financial statements. The former was adopted retrospectively, the impact of which
is detailed below whilst the latter had no significant impact on the amounts reported or disclosed in the reviewed condensed consolidated
provisional financial statements.
In preparing the reviewed 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 expenses. Actual results may differ from these
estimates. Other than the critical accounting estimates and judgements outlined below, 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.
Review Report
These reviewed condensed consolidated provisional financial statements for the year ended 31 March 2019 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 reviewed 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.
Discontinued operations
The disposal of the Broking & Structuring business (refer to Disposal paragraph below) during the current year resulted in the profit after tax of
the business being presented as a separate line item on the condensed consolidated statement of comprehensive income in terms of IFRS 5 - Non-current
Assets Held For Sale and Discontinued Operations. The comparative condensed consolidated statement of comprehensive income and segmental analysis
have been re-presented to reflect the Broking & Structuring business as a discontinued operation.
In addition the Group invested seed capital of R80 million into the Flexible Opportunity Fund on 1 March 2019, with a withdrawal date, as agreed
between the parties, of no later than 1 March 2020. In terms of IFRS 10 - Consolidated Financial Statements the investment has to be consolidated.
Consequently, with effect from 1 March 2019, the Group consolidated the fund.
Attachments
- Original document
- Permalink
Disclaimer
Peregrine Holdings Limited published this content on 20 June 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 June 2019 05:33:06 UTC